Europe breathes a sigh of relief. Most countries seem to have gained control of the pandemic, the number of cases is largely declining. Some feel that the worst is behind us. The quick spread of the virus has impressively shown the world what a serious impact such crises can have on all areas of life. This might in some circumstances contribute to strengthening public and political awareness for the fight against another crisis – the climate crisis. The International Energy Agency currently works on the assumption that this year CO2 emissions, due to the Coronavirus crisis, will be reduced by ca.  8 %, thereby reaching the level of 10 years ago. Thus, the decline would be six times as high than in the aftermath of the financial crisis. However, the comparison with the financial crisis also shows that the volume of CO2 emissions soared again in 2010. In order to prevent a similar development after the current crisis and to enable a “green” recovery of Europe, it is necessary to take the relevant steps now.

The Commission Proposal

The Commission Proposal on the Climate Law had already been presented prior to the Coronavirus crisis. According to the Commission, the law shall contribute “to set out clearly the conditions for an effective and fair transition, to provide predictability for investors, and to ensure that the transition is irreversible”. Key contents of the proposal are the binding specification of the climate neutrality target for 2050, a potentially more ambitious target regarding the reduction of the EU’s greenhouse gas emission reductions until 2030 as well as special powers for the Commission to set interim goals and target paths – hence, the intended development of the volume of greenhouse emissions at a certain time. There is no doubt that the so-called decarbonisation – the general phasing out of fossil fuels – will be accompanied by economic and social changes. From the AK’s point of view, it has to be ensured, in accordance with a just transition, that climate change policy requirements are taken seriously, and that measures are not being introduced at the expense of workers – especially those in particularly affected sectors.

To guarantee broad social acceptance, which is necessary for achieving climate and energy policy targets, it is vital to consider both the social and distribution policy impact of the respective measures. In cooperation with workers, social and employment policy effects shall be monitored, and measures adjusted to the relevant findings. It is also important do involve the social partners more into the consultations at EU level. Securing energy supply as a public service also has an important role to play. An ambitious climate and energy policy must not lead to a two-tier energy society, where only higher earners can afford photovoltaic installations and zero-energy houses in the country.

Investments von crucial importance

A vast expansion of public investments is needed if one wants to reach or even expand the self-defined goals and climate targets. The expansion of public transport, renewable energies, Research & Development – all these require investments. However, restrictive fiscal rules might put a brake on decarbonisation. Thus, Member States must be able to make climate relevant, environmental and social investments – also after the Coronavirus crisis – without infringing EU fiscal rules; hence, the AK has been demanding a Golden Investment Rule for a long time to make this possible. Determining interim goals and target paths by 2050, is a key policy decision, which should therefore be made within the scope of an orderly legislative procedure. Only then can it be ensured that both EU Parliament and Council are involved in the decision-making process.

Investment agreements undermine climate policy efforts

In the AK’s opinion, to reach the target of climate neutrality it is necessary to review climate change policy requirements with regard to their compatibility with other policy fields. From the AK’s point of view, a number of measures are required to ensure a coherence between EU investment policy and the target of the proposal on Climate Law. For example, excessive compensation to companies within the scope of the necessary phasing out of fossil fuels – for example to coal power station operators – have to be banned. In this context it is also important to abolish the Investor-state dispute settlement (ISDS), as for example granted by the Energy Charter Treaty (ECT). Based on the ECT, the energy group “Uniper” for example is suing the Netherlands before a private arbitration court, because the Netherlands decided on phasing out coal. Due to the nuclear phase-out, the Swedish energy company Vattenfall is suing Germany for over EUR 4.4 billion. Even though the Commission has stressed the incompatibility of ISDS lawsuits within the EU for years, and the ECJ has made a precedent-setting ruling in the “Achmea” case, private arbitration courts – on the basis of treaties such as the ECT - continue to insist on their competence. This shows that with a treaty such as the ECT, it will not be possible to achieve the target of climate neutrality by 2050 and that the protection standards contained in it as well as the Investor-state dispute settlement have to be cancelled for good.

Realignment of the EU trade policy

With its global highly branched value chains and long hauls, associated with it, international trade is a main contributor to the further increase of greenhouse emissions. If one wants to prevent trade rules from being contradictory to climate protection or stopping them from undermining the Green Deal, EU trade policy has to be realigned. Sustainability chapters in trade agreements have to be furnished with an enforcement mechanism to enable the sanctioning of infringements against international social standards. The requirement of the ratification of the Paris Climate Agreement must apply to all trade agreements – so far this has not been the case in a single agreement. In order to prevent unwelcome effects of trade on climate protection efforts, the EU Emissions Trading System (EU-ETS) has to include a minimum price and a Border Carbon Adjustment. Apart from that, a concluded impact analysis and effectiveness analysis should be a requirement for starting trade agreement negotiations and WTO Rules should be adjusted to the requirements of the fight against the climate crisis.

Further information:

AK EUROPE Position Paper: European Climate Law

AK EUROPE: Commission presents Climate Law

AK EUROPE: Green Deal – Quo vadis?

AK EUROPE Factsheet on the Coronavirus crisis: What has been done by EU institutions?

A&W blog: The European Green Deal - out of the corona lockdown into a climate neutral EU!