‘Brussels effect’ risks faltering over EU green finance rules
The EU heads into the Joe Biden-led climate summit on Thursday wielding a newly agreed climate law that will cement Europe’s position as the world’s leader on decarbonisation. But beyond the headline targets, cracks in Europe’s unity over green policies are hard to miss.
First, the good news: EU governments and MEPs concluded marathon talks at 5am on Wednesday to agree the bloc’s landmark climate law. It committed the EU to a legally binding goal of cutting greenhouse gas emissions 55 per cent by 2030 (compared with 1990 levels) and to net zero by 2050. The figure marked an escalation from an existing 40 per cent target.
Negotiators rushed to get the agreement over the line in time for the US-hosted summit. The two-day virtual shindig will bring together 40 world leaders and formally announce the Biden administration’s return to global climate diplomacy. Washington is expected to unveil its own target of at least a 50 per cent cut in emissions by 2030 (based on 2005 levels) — almost doubling the US commitment made under the Paris agreement.
Europe’s ramped-up climate target and its Green Deal are markers of how far the continent has come in forging a role for itself as the world’s leading force in the race to net zero. Upcoming EU plans for a carbon border levy have attracted questions and concerns from Europe’s trading partners — and that’s exactly how Brussels likes it. “We don’t actually ever want to use it,” said one senior EU official.
But Europe’s position as the world’s foremost climate superpower can no longer be taken for granted, as the US looks to catch up fast.
One area where Washington may try to compete and even usurp European efforts is designing rules to shape the burgeoning world of sustainable finance. The US has expressed interest in developing its own standards for investors, most recently when climate envoy John Kerry visited Brussels in March.
The EU had raced ahead with its green investment “taxonomy” to provide a green gold standard for investors who don’t want to get duped by “greenwashing”.
But Europe’s science-led project has run into a political quagmire. The European Commission’s latest draft has been denounced by climate scientists and NGOs that have spent the past two years helping Brussels design the rules. Here’s the FT’s take on the bickering around delaying decisions on how to label gas and nuclear power and awarding the green label to controversial activities such as logging.
Europe’s taxonomy is being closely watched by investors as a famed example of the “Brussels effect”. As with data protection rules or chemicals regulation, the EU has targeted sustainable finance as an area where Brussels can become the de facto global rule setter by regulating before anyone else.
In this case, Europe’s first-mover advantage might not pay off. Fierce lobbying from the EU’s gas, nuclear and agriculture-dependent countries has turned the taxonomy into a political bun fight.
The exercise risks ending up creating a system of byzantine carve-outs and exceptions rather than bringing the much-needed clarity that investors crave. A space may be opening for the Biden administration to jump in.
Chart du jour: Europe’s trash is Turkey’s treasure
Turkey is the number one destination for European waste, with 13.7m tonnes of trash shipped to Turkey from the continent last year. The level of waste has climbed since China stopped importing EU rubbish in 2018. But Turkey may not remain a dumping ground for much longer. Proposals from Brussels could cut the amount of exported EU waste, forcing more trash to be processed in Europe.
Planet Europe
-
The European Super League has crumbled days after being announced, with the majority of the 12 rich clubs pulling out of the rogue competition after facing condemnation from fans and governments. The FT reveals the millions in financial liabilities the breakaway clubs would have faced as part of the effort to redraw the European game. The 12 are due to escape punishment from football’s European governing body, Uefa, which is under pressure to alter its planned reform of the Champions League in response to the week’s drama. (Guardian)
-
Italy’s prime minister Mario Draghi is readying a €220bn recovery plan to restructure the country’s economy with mass government digitalisation, green investment and high-speed rail projects. The FT has the details on Italy’s national recovery plan, which is due to be published next week, to access funding from the EU’s post-pandemic borrowing fund. Portugal on Thursday became the first member state to formally submit its national plan to Brussels. The timeline to launch the fund was also given a boost when Germany’s constitutional court ruled Berlin could press ahead with ratifying a decision to raise the EU’s budget ceiling despite a pending court challenge.
-
The Council of Europe’s general rapporteur has warned that France’s draft law against separatism “inherently stigmatises” French Muslims by “increasing suspicion and indirectly suggesting a link between [Muslims] and foreign or terrorist threats”.
Coming up today
The European Central Bank holds its monthly governing council meeting in Frankfurt (14.30 CET). No big policy decisions are due but central bank president Christine Lagarde is facing pressure from hawks to begin tapering back record bond purchases.
US president Joe Biden kicks off day one of his virtual climate summit with 40 world leaders. All eyes are on Washington’s updated emissions pledge for 2030.
This is our last Brussels Briefing, but we will be back on Monday in a new format under the banner Europe Express. We will continue to bring you scoops and insights from our Brussels bureau, plus daily dispatches from our correspondents in Paris, Rome, Berlin, Athens and across the continent about what is driving the European agenda.
If this has been shared with you, sign up here for your own copy. Curious about the changes? Register for this live event on April 29. We’d love to hear from you: europe.express@ft.com.