For several years, the scientists of the Intergovernmental Panel on Climate Change (IPCC) have been warning about the need to act to combat climate change. In its 2018 report, the group of experts noted that the rise in global temperatures should be contained to 1.5°C to limit extreme weather events and the announced development of natural disasters. The 2019 European elections saw a surge of green parties on the continent. Proposed by the Twenty-Seven EU Member States for the post of President of the Commission after the election, Ursula von der Leyen defended before the new MEPs in July 2019 the idea that “our most pressing challenge is the protection of the planet”. “It is the greatest responsibility and the greatest chance that we have today,” she added. The Twenty-Seven Member States, like the European Union, are also signatories to the 1997 Kyoto Protocol, which commits the most developed countries to limiting greenhouse gas pollution. The Paris Agreement, signed in 2015 during COP21, has completed this arsenal of international agreements. It aims to limit global warming to less than 2°C, and ideally to 1.5°C. The Green Deal is thus a set of policies aimed at giving concrete form to the EU's commitments.
The main objective of the Green Deal is for Europe to achieve climate neutrality by 2050. This would mean that all greenhouse gas emissions, which must therefore be considerably reduced, would be captured or absorbed by forests, soils or even the oceans, which we call “carbon sinks”. The beating heart of the Green Deal, the European Climate Law was definitively adopted in June 2021. It set the objective of climate neutrality in European legislation, as well as the intermediate target of a reduction in greenhouse gas emissions. greenhouse effect of at least 55% by 2030 compared to 1990 levels.
As part of the Green New Deal, Europe is implementing a number of tools that will have a dual interest: financing this plan, and directing growth towards greener investments.
The main tool is the European taxonomy, which has partially entered into force for nearly 11,000 organizations since 1 January 2022. The European taxonomy designates a classification of economic activities having a favorable impact on the environment. Its objective is to direct investments towards so-called "green" activities. These activities are defined according to a set of very specific criteria.
This classification includes gas and nuclear energies, which have "a role to play in facilitating the transition to renewable energies" and to climate neutrality. This means that these two energies can be integrated into the labeling system which aims to guide private investment in sustainable activities.
The "Taxonomy" regulation requires investors, as well as companies to publish a report on their social and environmental commitments, to communicate on the percentage of their activities, investments, and/or financial products considered "green" under the taxonomy.
Beyond the taxonomy, there are other fiscal and financial incentives to achieve the ecological transition.
Last July, the climate package presented by the European Commission included various projects, such as a carbon tax at the borders and an extension of the carbon market to fuels and heating oil, a controversial device among the States.
On December 22, the Commission notably detailed its proposal, which will have to be approved by the States and the European Parliament, to tax imports from the EU in five sectors – steel, aluminum, cement, fertilizers, electricity – according to the carbon emissions linked to their production and the European price per tonne of CO2.
This “carbon border adjustment mechanism” must be accompanied by the gradual abolition of free emission quotas. These are currently allocated to European companies to enable them to face competition from countries with less restrictive rules.
After a transitional period in 2023-2026, this carbon border tax would bring one billion euros in revenue per year to the EU budget. According to the Commission, over time, between 2026 and 2030, these new sources of revenue should generate on average between 17 and 20 billion euros for the EU budget. This shows that the fight against global warming also requires the extension of the European budget, greater competence of the Union in the matter, its autonomy in relation to States.
Finally, a third important financial measure is the financing of businesses through green loans. That is to say that the European Central Bank now wants to include the fight against climate change in its mandate in addition to price control.
In concrete terms, this involves the purchase of “green assets”, therefore the purchase of financial assets that are consistent with respect for the environment. According to a study by the New Economics Foundation & Greenpeace, 63% of the 242 billion euros of private assets held by the ECB in July were "intense" in emissions, while they represent only 10% of jobs and 20% of activity in Europe. Almost a year ago, Christine Lagarde took over as head of the European Central Bank and called for people not to “sit around doing nothing” in the face of climate change. From now on, it is the institution that is called upon to urgently green its policy.
In conclusion, it is important to specify that European countries no longer have a choice. They no longer have a choice because the climate deadline is getting closer and the ecological awareness of European citizens is growing ever stronger. Finally, the invasion of Ukraine by Russia has led to a deep rift between the EU and its main supplier of fossil fuels. The environmental and energy transition is therefore more than ever a vital issue for the European continent.