Participants:
Valdis Dombrovskis, Executive Vice-President of the European Commission for An Economy that Works for People
David Moran, COP26 Regional Ambassador for Europe, Central Asia, Turkey and Iran
Nick Redman, Oxford Analytica’s Director of Analysis and the Editor in Chief of the Oxford Analytica
Moderator: Prof Alan Riley, Non- Resident Senior Fellow of the Atlantic Council
Introducing the EU green deal, a speaker highlighted that the EU green deal has set out significant goals for carbon neutrality, and it is becoming one of the EU’s flagship policies. The estimates of necessary financing are high, a few hundreds of billions over the next decade, but there will be private financing to steer to green goals. Hence there is a green EU taxonomy being developed. New market mechanisms will be needed – one of the EU financial instruments aims to de-risk the private sector to crowd in private finance.
The second discussant highlights that the green deal is important, but effective outcomes are dependent on being able to convince global partners to act. Now is the best time to act to keep the temperature of the world where it is to avoid the catastrophic outcomes. The 55 by 2030 is a positive commitment, but the short-term commitments are insufficient. The consensus framework of the upcoming Glasgow Climate Change Conference depends on being able to come up with a package that enjoys the support of other countries. The green deal holistic framework is great example for what should be done at Glasgow. As it evolves, however, it is important to send a signal within and beyond EU with the 55 percent plan.
A speaker highlighted that a core problem is in how developing countries react to the push for new changes. Tech and financial support is important for this, and more cooperation is required. Institutions like the world bank must pivot to being able to help in this process.
Third speaker also agrees that the new green deal is a laudable and ambitious plan. However, in regard to developing countries – India, for example, posits that carbon budget belongs to developing countries, and developed countries are not being fair by hogging much of the credit – this is an area of tension. Second, the carbon border aspect – a carbon tax at Borden will be contentious, as it looks like a protectionist measure and has an extra territorial measure, that could be considered an intrusion into sovereignty. The speaker highlights that the cross-border tax could also be gameable. The speaker follows by highlighting that biomass will be an issue, and the EU may set bad example for other countries in terms of biomass definitions. It is unclear whether nuclear power counts, for example.
The discussants note that there is also an opportunity for the EU to sell new tech, as a strategic export – nuclear power is a great option. Even Russia is setting climate change as priority, as melting of ice is setting loss of profits in oil and gas, and setting draughts, and problematic to infrastructure. Heavy carbon taxes on big Russian exports will be significant. The process of setting these new taxes in place will not be easy, however.
The discussants agree that there will be ahigh cost of action. However, the cost of inaction towards climate change is simply much bigger. Changes will be needed in almost every area of infrastructure in every energy sector and dependent sectors. Getting the carbon price high enough to hurt, while not overstress the tolerance of European business will also be a calculation that needs to be made quickly. The circular economy is also a huge change going forward – having technology for life could be a humongous paradigm shift. Ultimately, Europe should make sure they are not discouraged by the vast scale of needs.