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The EU's Green Deal - Timmermans announces huge package on CO2

The European Union wants to become climate neutral. That was a long time coming, but the climate package presented by the European Commission on Wednesday is becoming a lot more concrete. Twelve special laws are in place to ensure that European greenhouse gas emissions are at least 55% below 1990 levels by 2030. Experts have announced that the provision of EU subsidies to corporations that are deemed to be big polluters must stop immediately.

Whilst the EU's new 'Green Deal' is about much more than CO2 emissions (the deal also seeks to ensure the development of a 'circular economy' within 30 years and the elimination of all types of pollution), it is carbon that is the major aim of the day.

By 2050, European greenhouse gas emissions should be (net) zero, and by 2030, they must be 55% lower than they were in 1990. All key decision makers have agreed on these aims but now is the time to roll out the real policy of how to achieve them.

The 'fit for 55' package proposed by the European Commission consists of 12 new or amended laws. Together, they actually cover all the subjects that are technically necessary on the road to a sustainable society.

There are, for example, guidelines laid out for renewable energy, energy taxes, forestry and land use and CO2 standards for passenger cars. Large-scale energy savings and the search for alternative fuels for aviation and shipping are also important aspects of the package, as are large-scale infrastructure modifications, such as the construction of a network of charging stations across Europe.

Price of CO2 price above 50 euros

Since 2005, the EU has been working on the emissions trading system, which should encourage some of the key players in the continent's heavy industry to severely reduce emissions. The system is focussed on the fact that polluting must cost these industries money and that, therefore, there is a heavy price to pay on CO2. For several years, that price has been stuck at around ten euros per ton. As a result of this low price, and plentiful carbon credits, polluting has remained cheap and the incentive for businesses to become more sustainable was not sufficiently strong.

Dutch politician Timmermans has shown that the EU gave away too many allowances and that the solution is simple: fewer emission rights within the trading system - supply and demand will drive up the price on their own, and co2 emissions will be reduced. In reality, that appears to have already started. The European price of C02 reached fifty euros per ton for the first time this year and is currently hovering slightly above that price point. This has been reached in anticipation of the European climate package, and also by attracting commerce.

CO2 import tax must end 'emission subsidy'

Sectors affected by international competition receive free allowances. The problem is that it indirectly subsidizes large polluters. In order to solve this, it will soon be reversed: imports of Chinese steel, for example, will have to be taxed at a CO2 rate, so there will be no competitive disadvantage. European aviation receives free allowances for flights within Europe, where there is no competition. This, again, is something that the EU will look at, as the aviation industry is a major polluter.

The EU talks the talk on the new Green Deal, but will it walk the walk? It appears so...

The climate package will be discussed after the summer by the European Parliament and the European Council, which will vote on all individual legislative proposals. That could take years but is a clear demonstration that the EU is taking this issue seriously and punitive measures are on the way in the very near future.

There has never been a better time to invest green, or future proof your business against such action. Contact DGB for more information today.

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