Ursula von der Leyen, European Commission President. Photo: Renew Europe.

The European Commission hopes it will be able to cut emissions and create jobs as it moves to a green economy, backed by targeted support and climate laws.

During COP25 in December, the European Commission launched its plan to become the world’s first climate-neutral continent by 2050, which it defined as “the greatest challenge and opportunity of our times”.

It is meant to mobilise at least €1 trillion (A$1.65 trillion) of targeted support to regions, workers and sectors that are most affected by the transition to a green economy.

Launching it, President of the European Commission Ursula von der Leyen said the “European Green Deal is our new growth strategy. It will help us cut emissions while creating jobs”.

The idea behind the deal is to let European citizens and businesses benefit from the transition to a green economy.

It is accompanied by a roadmap of policies, everything from cutting emissions, to investing in cutting-edge research and innovation, and preserving Europe’s natural environment. It is also  supported by investments in green technologies, sustainable solutions and new businesses.

A European Climate Law, to be put forward in a few weeks, will supply a legal obligation and a trigger for investment and require action by all sectors of the economy.

The only country not to support the deal is coal-dependent Poland. It has been exempted for the time being, forcing European Council President Charles Michel to admit that it was more difficult for some countries and regions to adapt.

Polish Prime Minister Mateusz Morawiecki said Poland would reach climate neutrality “at its own pace”.

The UK government has its own plans to cut greenhouse gas emissions to net-zero by 2050.

Europe will cut greenhouse gas emissions to half of 1990 levels, or even lower, by 2030 – instead of the current target of 40 per cent – and promote a path to more circular economy that would address more sustainable products. There is also a “farm to fork” strategy to improve the sustainability of food production and distribution.

Funding for a Just Transition

The bulk of the funding in Europe will come from the €503 billion climate and energy EU budget, which will provide guarantees to back €279 billion investments from the European Investment Bank, national promotional banks, international financial institutions and public and private investments.

Further finance will come from co-piloting structural funds and the EU emissions trading system.

The money will be linked to a new green taxonomy being devised for the EU.

It is expected that at least €100 billion of this will benefit the regions and sectors most affected by the transition. A Just Transition Fund and Scheme and a public sector loan facility will help the most carbon-intensive regions, and workers employed in the fossil fuel sectors with training, employment opportunities, energy-efficient housing and access to clean, affordable energy.

“We must show solidarity with the most affected regions in Europe, such as coal mining regions and others, to make sure the Green Deal gets everyone’s full support and has a chance to become a reality,” said Executive Vice-President of the European Commission, Frans Timmermans.

There is a promise to citizens of clear air, water and soil, renovated homes, schools and hospitals, better public transport, less waste, healthier food, less pesticides and fertilisers, improved health and more environmentally-friendly products in shops.

Not everyone is happy

The package is not without critics. The Coalition for Energy Savings told Commissioner Kadri Simson to strengthen the ambition for energy efficiency. He said that the problem is that the EU’s energy efficiency target to cut energy use to 32.5 per cent by 2030 is the only one of the EU’s three energy targets (the others are greenhouse gas emissions and renewable energy) that is not binding. That means the bloc is currently on track only to reach 28.3 per cent by 2030, or half way to the target.

Secretary General of the Coalition for Energy Savings Stefan Scheuer explains that the current framework with indicative targets does not deliver.

“We support the European Parliament’s request for national binding targets and higher ambition in line with climate-neutrality.”

Pawel Wargan, a coordinator for the group Green New Deal for Europe, which has put out its own roadmap, has also criticised the Commission’s plan for failing on seven counts: size, scope, structure, scale, strategy, substance, and speed.

He says the plan should include greater investment and faster decarbonisation and complains that it pits Europe against other global superpowers.

He also complains that the deal leaves Europe committed to the “dogma of endless growth” and that von der Leyen’s plan to use the European Investment Bank to “unlock” more huge amounts of private financing for climate investments, should instead use public investment to create public jobs.

Carbon border tax

A key component of the deal is a carbon border tax. Carbon pricing (a tax or a cap-and-trade system) is intended to make carbon-intensive goods more expensive in a bid to shift the economy towards renewables and energy efficiency.

Taxing the embodied carbon of imported goods would encourage other countries to take action to reduce emissions by making their exports less competitive. It would also help to protect the competitiveness of domestic European companies.

The idea is supported in the United States by presidential hopefuls, former vice president Joe Biden and Sen. Elizabeth Warren, who both have carbon taxes in their climate plans.

However, the World Trade Organization prohibits protectionist tariffs, and there will be challenges from those who argue carbon adjustments are protectionist.

One way around this might be to link the border tax to the EU’s internal cap-and-trade initiative, the Emissions Trading System (ETS), although the value of this varies and it would be far more effective if the tax level was based on an estimate of how much carbon was used to create each product.

The UK is currently a part of the EU’s ETS. Post-Brexit, it plans to leave the carbon market and set up its own carbon-pricing equivalent.

French MEP Pascal Canfin told reporters that “for the EU’s industry, you can’t accept that the UK has full access” to the EU’s single market while a lower carbon price is on offer across the Channel.

With a feasibility study in the works to address these problems, the EU border tax won’t kick in until 2021 at the earliest.

“We’ve started designing the carbon border adjustment mechanism. We might imagine that we will apply this mechanism to the UK in order to restore the level playing field,” if the UK decides on a different price for carbon, Canfin said.

Last October’s mayors’ C40 Summit in Copenhagen saw 94 mayors endorse the idea of a global Green New Deal. But it stated that carbon pricing was not necessary; cities can stimulate climate action with policies that reduce costs for beneficial goods and services by creating demand for new technology and developing best practices.

David Thorpe is author of the books The One Planet Life and the new One Planet Cities. He also runs online courses such as Post-Graduate Certificate in One Planet Governance. He is based in the UK.