Europe Union’s new plan to shift from fossil fuels Carbon Border Tax

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EUROPE UNVEILS PLAN TO SHIFT FROM FOSSIL FUELS

SETTING UP POTENTIAL TRADE SPATS !!

Why in NEWS?

In what may be a seminal moment in the global effort to fight climate change, Europe challenged the rest of the world by laying out an ambitious blueprint to pivot away from fossil fuels over the next nine years, a plan that also has the potential to set off global trade disputes.

The most radical, and possibly contentious, proposal would impose tariffs on certain imports from countries with less stringent climate-protection rules.
The proposals also include eliminating the sales of new gas- and diesel-powered cars in just 14 years and raising the price of using fossil fuels.
“Our current fossil fuel economy has reached its limit,” said the president of the European Commission, Ursula von der Leyen.
The effort makes the 27-country bloc’s proposal the most aggressive and detailed plan in the world to reach a carbon-neutral economy by 2050, proposing big changes during this decade.
To force the issue, Brussels has committed in law to reducing its emissions of greenhouse gases 55 percent by 2030 compared with 1990 levels.
The European proposal, which some environmental activists say still does not go far enough, raises the bar for the United States and China.
The United States has promised to reduce emissions 40 to 43 percent by 2030. Scientists have said the world needs to halve emissions by then, which would require history’s biggest polluters, namely the United States and Europe, to make the sharpest, swiftest cuts.
Britain, which will host COP-26, the international climate talks, in Glasgow in November, has pledged a 68 percent reduction.
China, currently the world’s largest emitter of carbon, has said that it aims for emissions to peak by 2030, and it is under pressure to set a more ambitious target before the Glasgow talks.
China announced it would launch a long-awaited national carbon market, which once implemented would be the world’s largest by volume of emissions.
Under the plan, power companies would be allotted a fixed quota of carbon emissions each year, which they could buy and sell depending on their needs.
Coming before the talks in Glasgow, the proposals represent an effort by the European Union to assert global leadership in what must be a multilateral effort to reduce global emissions sufficiently to avert the worst effects of climate change.
At the heart of the European road map is increased prices for carbon. Nearly every sector of the economy would have to pay a price for the emissions it produces, affecting things like the cement used in construction and the fuel used by cruise ships.
Proposed taxes on imports of goods made outside the European Union, in countries with less stringent climate policies, could potentially invite disputes at the World Trade Organization.
There are geopolitical implications. The cross-border carbon tax proposal could have the greatest impact on goods from Russia and Turkey, mainly iron, steel and aluminum, according to data analyzed by the Centre for European Reform.
The proposals, if passed, would see
last gasoline or diesel cars sold in the European Union by 2035;
require that 38.5 percent of all energy be from renewables by 2030;
increase the price charged for carbon emitted to make the use of fossil fuels increasingly expensive; and
financially assist those most affected by potential price increases.
The carbon border tax could not only shake up global trade and invite disputes over protectionism, but it could also create new diplomatic fault lines ahead of the Glasgow talks.
The gathering is an important moment for big polluting nations to show what they will do to address the emissions of greenhouse gases that have set the world on a path to dangerous warming.
All eyes are on targets set by the United States and China, which currently produce the largest share of greenhouse gases.
Although the European Union produces only about 8 percent of current global carbon emissions, its cumulative emissions since the start of the industrial age are among the world’s highest.
But as a huge market, it also sees itself as an important regulatory power for the world and hopes to set an example, invent new technologies that it can sell, and provide new global standards that can lead to a carbon-neutral economy.
However, the proposals did not do enough to help developing countries shift their economies away from fossil fuels.
The E.U. goal of 55 percent, increased by law in June from 40 percent, has prompted significant pushback from industry, lobbying groups and some member countries, especially in poorer Central Europe, that have been more traditionally reliant on fossil fuels.
So, the Commission has tried to build in gradual markers for industry, including free carbon credits for a decade and many millions of euros in financial aid.
One of the key proposals announced is a revision of Europe’s carbon market, known as the Emissions Trading Scheme, under which major carbon producers like steel, cement and power industries pay directly for their carbon emissions.
The proposed laws which the Commission has called “Fit for 55” will be sharply debated and inevitably amended before becoming binding on the 27-member bloc.
There are concerns that the poor will pay an inequitable share of the cost of decarbonization and that it will be seen as an elite project, prompting more political backlash from populist parties and groups, like the 2018 “yellow vest” protests over a climate-related increase in French gasoline prices.
But the proposals also include a Social Climate Fund, raised from these new taxes, that could provide up to 70 billion euros (about $83 billion) to help governments help the people who are most affected.
If there is one principle that should be guiding the negotiations over the next two years, this certainly is the principle of climate justice.
The onus is on the Commission to prove that this leads to solidarity and to fairness in this transition.