You are here

Europe set to overhaul its entire economy in green deal push

doc788ux931dat3flt3b4y_doc7887hgnzmc5gebuinz3.jpg
"If our common goal is to be a climate-neutral continent in 2050, we have to act now," Ursula von der Leyen, president of the European Commission, told a United Nations climate conference.

[BRUSSELS] The European Union is gearing up for the world's most ambitious push against climate change with a radical overhaul of its economy.

At a summit in Brussels next week, EU leaders will commit to cutting net greenhouse-gas emissions to zero by 2050, according to a draft of their joint statement for the Dec 12-13 meeting. To meet this target, the EU will promise more green investment and adjust all of its policy making accordingly.

"If our common goal is to be a climate-neutral continent in 2050, we have to act now," Ursula von der Leyen, president of the European Commission, told a United Nations climate conference on Monday. "It's a generational transition we have to go through."

The commission, the EU's regulatory arm, will have the job of drafting the rules that would transform the European economy once national leaders have signed off on the climate goals for 2050. The wording of the first draft summit communique, which may still change, reflects an initial set of ideas to be floated by the commission on the eve of the leaders' gathering.

sentifi.com

Market voices on:

The EU plan, set to be approved as the high-profile United Nations summit in Madrid winds up, would put the bloc ahead of other major emitters. Countries including China, India and Japan have yet to translate voluntary pledges under the 2015 Paris climate accord into binding national measures. US President Donald Trump has said he'll pull the US out of the Paris agreement.

In a pitch of her Green Deal to member states and the European Parliament on Dec 11, Mrs von der Leyen is set to promise a set of measures to reach the net-zero emissions target, affecting sectors from agriculture to energy production. It will include a thorough analysis on how to toughen the current 40 per cent goal to reduce emissions by 2030 to 50 per cent or even 55 per cent, according to an EU document obtained by Bloomberg News.

In the next step, the commission will propose an EU law in March that would "make the transition to climate neutrality irreversible," Mrs von der Leyen told the UN meeting. She said the measure will include "a farm-to-fork strategy and a biodiversity strategy" and will extend the scope of emissions trading.

The EU Emissions Trading System is the world's largest cap-and-trade market for greenhouse gases. It imposes pollution caps on around 12,000 facilities in sectors from refining to cement production, including Royal Dutch Shell Plc and BASF SE. Mrs Von der Leyen eyes the inclusion of road transport into the market and cutting the number of free emission permits for airlines.

Some of the transportation industry's biggest polluters have already stepped up efforts to reduce their environmental impact. In June, France's Airbus SE, its US rival Boeing Co and other aviation companies pledged to reduce net CO2 emissions by half in 2050 compared with 2005 levels. EasyJet, the U.K.-based discount airline, has promised to offset all of its carbon emissions by planting trees and supporting solar-energy projects, while Air France will take similar steps on its domestic routes.

Germany's Volkswagen, the world's largest automaker, aims to become CO2 neutral by 2050, while Daimler AG plans to reach that target for its Mercedes-Benz luxury car lineup by 2039.

To ensure that coal-reliant Poland doesn't veto the climate goals next week, EU leaders will pledge an "enabling framework" that will include financial support, according to the document, dated Dec 2. The commission has estimated that additional investment on energy and infrastructure of as much as 290 billion euros(S$438.6 billion) a year may be required after 2030 to meet the targets.

The EU leaders will also debate the bloc's next long-term budget next week. The current proposal would commit at least US$300 billion in public funds for climate initiatives, or at least a quarter of the bloc's entire budget for the period between 2021 and 2027.

BLOOMBERG