Europe sets pace for global climate policy

As time runs out to avoid catastrophic climate change, the EU is stepping up its efforts to decarbonise Europe’s economy. On Wednesday the commission launched its “Fit For 55” package of measures to cut carbon emissions 55 per cent below 1990 levels by 2030, on the way to net zero at mid-century.

The task is monumental but necessary. It is to Brussels’ credit to have put together the first policy package by a large jurisdiction that measures up to the scale of the challenge.

It does so primarily by extending carbon pricing to more carbon-intensive sectors and activities — for the first time including aviation, shipping, and buildings — through an expansion of its emissions trading system and the introduction of carbon-related import tariffs. This is the right approach. Carbon pricing offers one of the cheapest and most effective paths to decarbonisation, creating incentives to cut emissions where it is easiest to do so and rewarding low-carbon technologies.

Brussels also proposes meaningful targets and commitments, with strict carbon standards on road transport, a 2035 end to new fossil fuel vehicle sales and the promotion of reforestation.

This kind of comprehensive approach is the only one with a hope of success. It has predictably raised hackles among many business lobbies. But addressing climate change requires a transformation of our productive structure. Economically and politically, that is better done by acting on many fronts at once — making all interest groups jump together — rather than one step at a time.

The loudest business critics are those who have failed to prepare for the transition that must come. In contrast, leaders with the foresight to position themselves for change largely welcome the plans. Brussels is right to think decisive action is good for European technological leadership.

Politics, however, remains the Achilles heel of these commendable plans. So far they are just that: proposals that will be intensely haggled over before they can become commitments with legal force. National governments must now step up to the plate. Member states can legitimately fight for their special interests, but not fall for the temptation of “blaming Brussels” for merely crystallising what decarbonisation means in practice. There is a collective duty to agree concrete measures — and soon. Obstruction will only make delayed action more painful and play into the hands of Eurosceptics and climate change deniers.

It will be essential to reassure individuals who will be most exposed to rising fuel costs. The commission wisely proposes a fund to support incomes and help people switch to more carbon-efficient equipment. But much more may be needed.

Addressing the global side of climate politics is vital. The carbon tariffs, in particular, will be badly received by non-EU exporters of carbon-intensive goods. The EU is right to be wary of third countries, without equally ambitious policies of their own, seeking to exploit the system. But the best strategy will be to get others on board so such tariffs never need to be imposed.

Ahead of November’s COP26 climate conference much diplomatic work must be done. The recent EU-US rapprochement on climate policy must be deepened, and the large emerging economies brought on board — including through rich countries finally fulfilling their promises on climate financing for poor ones. If Europe succeeds with this initiative, it can hope to see others follow its ambitious lead — and in the meantime its industry should be rewarded with a first-mover advantage in a greener world.