How the EU is forcing the world to become more sustainable

“We live together on one planet. So no matter where we produce, we all suffer from CO2 emissions,” said Mohammed Chahim. In recent months, he has worked as rapporteur for the EU’s border tax. of the proposal to be put to the vote on Wednesday. “We must ensure that we not only do green as quickly as possible in Europe, but also help and motivate other countries outside Europe to become more sustainable. And the only instrument we have for this , is the CO2 limit tax, CBAM. ”

Abolish free rights

This limit tax was to eventually replace the Emissions Trading Scheme (ETS). Currently, industries covered by the ETS (such as chemicals and steel) have to buy allowances for every tonne of CO2 they emit. These rights now cost more than 80 euros per. ton. The EU wants to quickly reduce the number of allowances in circulation. It will also get rid of the free rights that are still being issued.

“A lot of subsidies go to fossil fuels every year,” Chahim says. “We must transform them into green producers as soon as possible. We have many companies in Europe that are leaders and that produce sustainably, but on a small scale. They want to scale up, but are being held back by legislation or unfair competition. ”

For example, fossil steel companies currently even benefit from the free rights system. “They get more than they have to produce. So they can also sell those rights. Those rights must therefore be phased out quickly. ”

Compete in the global market

With the phasing out of these free rights, companies will pay more and more for the CO2 they emit. But elsewhere in the world, these rules do not apply, which means that there is a danger that European industry will no longer be able to compete in the global market. To prevent this, the EU wants to levy a CO2 tax at the border. CO2 emissions from products from outside the EU will therefore still be taxed.

Products from outside the EU that are not sustainably produced are therefore also more expensive. This also applies to solar panels and wind turbines, which are mainly produced in China. The question is whether the upscaling of sustainable energy production in Europe will slow down because the necessary materials become more expensive.

According to Chahim, the price increase due to the limit tax on CO2 is not that bad. “More expensive is a complicated concept. It has been studied that the effect of green initiatives such as CBAM on the price of almost all consumer products is less than 1 percent. An average car will be 150 euros more expensive if it is made of green steel. At a purchase price of say 10,000 euros it is not much. But globally, we can reduce almost 10 percent of CO2 emissions with this measure. ”

Effective action

According to Chahim, levying a border tax is a very effective way of speeding up sustainability. “I think individual actions are very noble. Behavior change, conscious lifestyle, no flying, no meat eating. It’s very good. But they are drops on a hot plate. I want to put out the flame under that plate.”

And it can be done by ensuring green steel and sustainable aviation By ensuring that there are alternatives to animal proteins, and by making our food production greener. “I think we have to do it through strict legislation so that companies know where they stand. That people know that it pays to invest in sustainability. In this way, the conscious choice becomes the cheapest, easiest and most logical choice. ”

Deindustrialization

During the debates in the European Parliament, opponents warned that companies would turn their backs on Europe. But according to Chahim, it will not go so smoothly. And if companies want to go away and produce pollutants elsewhere, they need to know for themselves. “Okay, but you have to pay at the border.”

In addition, Europe is the second largest consumer market in the world. And other major countries are considering doing the same. “I am in intensive discussions with the Americans. If we do this together, we will already have two thirds of the global economy. Canadians are thinking about it too, and China has already begun.

Lead

That is also the reason why Chahim is not afraid that European producers will price themselves out of the market with their expensive but durable products. “The faster we can scale up sustainable production, the cheaper it will be. And other countries are also starting to price CO2. If we already produce green, we will be cheaper within ten or twenty years because of our lead. ”

Until then, Chahim is stepping in to look within the WTO to see if we can help export-dependent producers in Europe maintain their position in the global market. For example, using so-called export rebates: the free rights for the top ten percent of top performing companies when it comes to CO2 reduction.

International Climate Finance

Chahim expects CBAM to bring the EU between 1 and 2 billion. It has already been considered how it will be used: “We will use this in part to repay the debt that we have raised jointly as the EU. But it is also important that we use it for international climate finance. We must help poorer countries to become more sustainable. We also agreed on that in Paris. ”

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