EU hits roadblocks in reaching green milestone as elections loom

The EU has the most advanced green legislation in the world. But the bloc is not on track to meet its climate targets, even as it approaches deadlines for delivering detailed road maps on how it will achieve them.

EU climate commissioner Wopke Hoekstra said this week that EU countries would cut emissions by 51 per cent by 2030 compared with 1990 levels — falling short of a 55 per cent goal. This follows more than three decades of hard-won progress in decreasing greenhouse gas emissions from their 1990 peak.

“I am confident that given the conversations we are having . . . that we will make [55 per cent] but there is a bit of homework to be done by a range of us around the table,” he told ministers.

EU governments must submit their plans on how to reduce their share of emissions by June. But Hoekstra’s calculation, based on draft plans put forward by EU member states, appears optimistic. The European Environment Agency has estimated that a 48 per cent reduction is likely.

The difference of what seems like just a few per cent is critical when the world is gradually nearing the 1.5C global warming threshold enshrined by the 2015 Paris Agreement on climate change, as the lower limit of a rise in temperatures since pre-industrial times.

The European continent is heating at twice the global average, according to the World Meteorological Organization.

As part of a midterm review of climate progress published this month, the European Commission said that the pace of emissions reductions should “almost triple the average annual reduction rate achieved over the past decade” in order to meet its climate goals.

But as a global race for clean technology gathers pace, the EU is struggling to compete and sell its ambitious climate agenda to an industrial sector suffering fatigue from high inflation, trade tensions and increasing regulation.

“We decided the policy measures. We have the instruments in hand. And now we need to implement,” said Austrian climate minister Leonore Gewessler. “Despite it being really hard work and a fight every day, you can see that green climate policies deliver. Emissions are going down. Are we there? Have we done everything? No, of course not.”

Data from the Brussels-based Bruegel think-tank shows that Europe is falling behind some of its global competitors in the rollout of the clean technologies central to decarbonisation — despite its pioneering role.

“Subsidies for renewable energy deployment have been among the greatest in the world for the past 20 years and that has positioned Europe as a first mover but that has now been taken up by China,” said Simone Tagliapietra, senior fellow at Bruegel.

Energy think-tank Ember found that despite EU countries installing a record 56GW of additional solar capacity last year, compared with 41GW in 2022, national plans are not yet sufficient to meet renewable power needs by 2030 for their entire populations. Wind power deployment had to increase at 15 per cent per year, it said.

Policymakers in Brussels are particularly concerned about the bloc’s solar panel manufacturers, which have been mothballing operations in part due to oversupply from China.

Yet, Tagliapietra cautioned, the EU should not attempt to “defy gravity” by introducing trade barriers. “China has built economies of scale to an extent that it will be extremely difficult for us and Europe to catch up on manufacturing of solar panels vis-à-vis China.”

Underlying concerns that EU companies will be lured to the US by the $369bn Inflation Reduction Act’s package of tax credits and subsidies also cast a shadow.

Jutta Paulus, a German Green MEP, said EU countries had to be “smarter” about how they spent money, because they had less to offer than China and the US.

Even where investments in clean technology are made, the Bruegel data shows it has not always been the most effective or consistent.

In technologies such as heat pumps, which rely on consumer uptake, roll- out has slowed as subsidies have dried up due to stretched national budgets and a shortfall in skilled labour to install them.

Heat pump sales in 14 European countries fell by about 5 per cent in 2023 compared with 2022, according to the European Heat Pump Association, reversing a decade of growth.

Policies that touch everyday lives have become political flashpoints. Germany, for example, was forced to water down rules that would have outlawed new gas boilers this year after the poorly executed policy almost caused Berlin’s coalition government to implode.

As EU elections approach in June, lawmakers fear that green policies could become a lightning rod for far-right political sentiment and backlash. Farmers have been protesting about red tape from environmental legislation across the bloc, while a landmark law to protect nature is on the verge of collapse after Hungary and the Netherlands voiced sudden opposition this month.

Germany’s liberal FDP has contested several EU green policies, including a far-reaching supply chain law and a ban on combustion engines from 2035, as a way to rejuvenate its dire position in the polls.

Gewessler said the transition would not work without the right incentives. The introduction of a carbon tax system in Austria as part of its “eco-social” reform programme meant the carbon cost was balanced by a “climate bonus” to compensate low-income households.

“When we introduced [carbon pricing], we said: ‘OK, we need an answer for how to make this fair.’ It was never meant as a way to collect money, but . . . as a policy to steer towards the more climate-friendly solutions, through pricing.”

Policymakers in Brussels are discussing whether to set an interim target to cut emissions in the bloc by 90 per cent by 2040 as a road marker towards achieving net zero emissions in 2050, even though target-weary business and industrial associations complain this could be a stretch too far.

But Hoekstra argues that voters want climate action: “It is not easy but it is doable. We will rise to that challenge and it is what our citizens demand.”

Data visualisation by Steven Bernard

Source: Economy - ft.com