Whether it's the corona crisis, the Russian attack on Ukraine or the energy crisis – nothing has so far been able to dissuade the European Union from its course in climate policy. It has put the Corona Development Fund at the service of the "Green Deal", 37 percent of the funds are reserved for it. Even the rise in energy prices after the end of the corona crisis and Russia's invasion did not slow down the EU climate package presented by the Commission in the summer of 2021.
Hendrik Kafsack
Economic correspondent in Brussels.
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The EU reached an agreement in record time. The expansion of renewable energies and energy efficiency are no longer just climate protection instruments, but also a means of decoupling the EU from Russia – even if the EU worsens its climate balance in the short term due to higher imports of liquefied natural gas (LNG) and the greater use of coal power.
The discussion on the EU's climate policy was thus largely closed. Nevertheless, there is suddenly a fierce debate about which instrument is best suited to make the EU climate-neutral in 2050 as planned. Are they bans or – as propagated not only by the FDP – a CO2 price? Or must the state promote change through subsidies?
Controversial bans and US competition
There are two reasons for the renewed debate: the American Inflation Reduction Act (IRA) and a series of bans and government requirements that enrage many people: for example, the ban on combustion engines, the possible ban on gas and oil heating and the planned EU renovation obligations for old buildings.
Even if the debate about the bans has received greater media coverage, the IRA is giving Brussels politics greater headaches. With the 369 billion dollar package, which is intended to promote the energy transition and promote the establishment of important factories, the USA is pursuing a fundamentally different approach than the EU.
From Brussels' point of view, however, the German dispute over whether bans or a CO2 price better protect the climate is only a rearguard battle. The EU has long since given its answer with the agreement on the climate package at the end of 2022, even if the formal adoption – the ban on combustion engines sends its regards – is still pending.
Climate targets are EU targets. This is, even if it is often forgotten in Germany, the decisive factor. The climate targets are EU targets. It is therefore important whether the Union as a whole reduces CO2 emissions. If Germany leads the way through more ambitious national targets, this will not change the overall balance.
The impact of emissions trading
The European climate package focuses on putting a price on CO2 emissions with the help of emissions trading. Since 2005, emissions from electricity generators and large-scale industry have been covered by emissions trading. Later, part of the air traffic was added. The system has two advantages: First, it limits emissions precisely.
The amount of emission rights will be gradually reduced, so that the EU will initially reduce emissions by 2030 percent by 55 and to zero by 2050. Secondly, the CO2 price that participants have to pay for their emission rights creates an incentive for them to reduce emissions, for example by investing in new technologies or energy-saving measures – especially since the price rises the scarcer the amount of emission rights becomes.