COP26, the EU Green Deal and the road ahead
The Ursula von der Leyen-led European Commission has made green recovery a key part of its post-Covid planning. This includes proposals for a carbon border adjustment scheme, reforming the emission trading scheme in the bloc, and, of course, climate law itself. At the centre of its strategy is the Green Deal, which pledges to make the European Union climate neutral by 2050. Following the Deal’s inception in 2019, it was ratified by the European Parliament at the start of 2020.
Given COP26 is taking place at the time of writing, this is a good opportunity to look at where this all stands as we approach the end of 2021. What is the overarching aim of the summit? To keep the temperature increase to 1.5. With that in mind, as it enters its final weekend, negotiators are busy trying to broker agreement on the final texts.
The picture before the final round of talks
The EU has two of its big hitters in Glasgow: von der Leyen and Frans Timmermans, Executive Vice President of the European Commission for the European Green Deal and European Commissioner for Climate Action since 2019. Despite this, it has been accused by the head of the European Climate Foundation of failing to show leadership:
“the only way to land an ambitious outcome in Glasgow was for the EU to advocate for a deal that would send a signal to international financial institutions that they needed to massively boost the flow of cash to developing countries…if the EU won’t lead now and build the high ambition coalition we need, no one else will.”
It is, of course, important to acknowledge that the comment above is designed to exert pressure, so it may not accurately reflect the level of EU investment in the last fortnight. Still, it shows how high the stakes are.
The EU’s principal approach has been to offer capital for the Global South to help countries adapt to the impacts of climate change. Around $800 million in adaptation finance had been raised, with more than three-quarters of that coming from the EU. Indeed, at the time of writing, the EU is rushing to get a last-minute climate finance proposal accepted that will get rich countries to deliver the target of $100 billion being sent to developing nations.
However, some more vulnerable countries are seeking more robust commitments on adaptation, loss and damage, instead seeking commitments that would facilitate “mobilising the trillions through the whole global financial architecture”, according to independent European climate think tank E3G. Unsurprisingly, financial injustice – the lack of a level playing field – has been an issue at every COP. This requires a version of just transition at the highest level. Public and private finance need to get on the same page regarding this. Compensation remains the biggest sticking point to a deal being reached this weekend.
World leaders, COP26. Photo: Andrew Parsons / No10 Downing St/cropped from original/licensed under https://creativecommons.org/licenses/by-nc-nd/2.0/
A key part of this could be taxing global carbon markets to fund climate adaptation. It’s been on the table for some time now, but a deal has not been struck. Indeed, disputes over the carbon market have in many ways derailed the previous two summits. The EU is cautiously pushing the idea, but it remains the case that some EU countries continue to worry about costs. Of course, such a situation is written into the EU, as it is a supranational bloc that still remains a selection of relatively sovereign countries. The EU can have a view, but not all of its 27 members will like it.
It certainly seems to be the case that the EU is facing the greatest pressure of the major players to make sure the most ambitious outcome is reached. The window on 1.5 degrees is closing, according to COP26 president, Alok Sharma. This is what E3G said on Thursday 11th:
“There is an immediate opportunity for the EU to leverage the political momentum from week one and the US-China statement to build the confidence that the trillions will be mobilised for developing and vulnerable countries for the net-zero and climate-resilient transformation we need.”
The US-China statement refers to the somewhat surprising and welcome news that the two countries have agreed to cooperate more in the bid to keep to 1.5. The EU’s position here can be interpreted in two ways: it is in a unique position to capitalise on this new détente, or it is lagging behind as the third power, and risks being sidestepped.
It’s certainly the case that its leading players are saying the right things. For example, Timmermans has said that the proposal to remove a text reference on phasing out coal and fossil fuel subsidies would be an extremely bad signal. He said this:
“The COP must also send a clear signal about our commitment to halt fossil fuel subsidies and finally turn the page on coal”
It’s also pushing hard for agreement on the rule book, which sets out detailed guidance on how countries should implement the goals agreed in Paris in 2015. This has not begun six years later, so it’s absolutely vital that it is put to bed this weekend.
An interesting development is the pledge by 5 EU countries – Germany, Portugal, Denmark, Austria and Luxembourg – to try to keep nuclear power out of the EU’s green finance taxonomy, its own rulebook. The Joint Declaration for a nuclear-free EU Taxonomy argues that “Nuclear power is incompatible with the EU Taxonomy Regulation’s ‘do no significant harm’ principle”. They are of the view that is a legal issue, and Austria is mounting a legal challenge to nuclear power’s inclusion in the taxonomy. However, it is Germany, as the leading power in the EU, who is the most significant player here. It has a planned 2022 nuclear exit, decided in the wake of the Fukushima disaster in 2011, and faces increasing pressure internally.
At COP, Von der Leyen has also announced €1 billion as the EU contribution to the Global Forests Finance Pledge. This 5-year support package is designed to help partner countries to protect, restore and sustainably manage forests worldwide and deliver on the Paris Agreement.
The Deal
It is all over. A deal has been struck, and not everybody is happy. Larry Elliott in the Guardian called it a ‘messy compromise’, though an unsurprising one, given the difficulties of getting 197 countries at different stages of development to agree. Of countries developing at speed in the last couple of decades, China, India and Brazil are now big enough players and will say no to things they view as not in their interests but in the interests of more developed nations; hence the watering down of the text on fossil fuels at the last minute.
Perhaps even more importantly, there was genuine anger at the failure of the rich countries to meet their target of $100 billion a year to the poorer countries to help them adjust to climate change.
And what of the EU? Ursula von der Leyen said this:
“We have made progress on the three objectives we set at the start of COP26: First, to get commitments to cut emissions to keep within reach the global warming limit of 1.5 degrees. Second, to reach the target of 100 billion dollars per year of climate finance to developing and vulnerable countries. And third, to get agreement on the Paris rulebook. This gives us confidence that we can provide a safe and prosperous space for humanity on this planet. But there will be no time to relax: there is still hard work ahead.”
The key phrase here is ‘made progress’. Perhaps that was all that was ever on the table.