Earlier this month, the European Commission released a package of proposals focused on climate change and the need to lower emissions.
They all led on from the bloc’s European Green Deal that was presented by the Commission in 2019, which aims to make the continent climate neutral by 2050. That deal was further ratified last month when the European Parliament approved a law to make stated emissions targets legally binding.
According to a press release from the Commission on 14 July, the proposals combine the, “[…] application of emissions trading to new sectors and a tightening of the existing EU Emissions Trading System; increased use of renewable energy; greater energy efficiency; a faster roll-out of low emission transport modes and the infrastructure and fuels to support them; an alignment of taxation policies with the European Green Deal objectives; measures to prevent carbon leakage; and tools to preserve and grow our natural carbon sinks”.
The overall goal from the EU is, by 2030, to have reduced emissions levels by 55% from their 1990 levels. If the EU is to be believed, the current status in that aim is, “So far, so good.” According to the same release quoted above, net greenhouse gas emissions have fallen by nearly a quarter (24%), which the EU claims is due to its legislation. This is despite the fact that levels have been falling gradually since that time, although EEA data suggest a sharper downturn since a few years ago.
On the bandwagon
Green New Deals have been popping up with some regularity in recent years. One of the most-contentious proposed pieces of legislation in the US has been its own Green New Deal. Even as world leaders were preparing to travel by private plane from London to Cornwall for the G7 Summit last month, the proponents of that US legislation were gearing up to reintroduce it.
The US and Europe are not the only ones enacting, or seeking to enact, this type of legislation. Since the Paris Climate Agreement in 2015, multiple states around the world have brought in new legislation to shift energy production and consumption to more-sustainable and renewable forms. A lot of this has been spurred on by activist lawsuits that began in the Netherlands and then spread. Even Russia has gotten in on the act, and China pushed its green agenda for years through huge state subsidies.
So it would appear to all be heading in the right direction. Well, not if you listen to the Center for Climate and Energy Solutions, which predicts that emissions are going to rise almost exponentially for at least the next 20 years.
But at least the spirit is willing.
But if everyone is willing to be on the same page re: climate change (and not everyone is, because of money), then why did Euractiv have a story earlier this week in which the advanced biofuels industry came out and criticised the latest slew of proposals from the European Commission?
The criticism centred on the complexity of the proposals and whether it would drive away investors. Quoted in the piece was Marko Janhunen of UPM Biofuels. Janhunen is reportedly also the vice chair of the Advanced Biofuels Coalition. Expert Investor reached out to UPM Biofuels, but there was no one available to comment.
He told Euractiv: “By going too far in revising all possible acts, the Commission is not providing the industry what is needed for making investment decisions now. And we need those investment decisions soon if we want to create green growth.”
Janhunen is not the only person quoted in the Euractiv piece. Also interviewed were Robert Vierhout of Enerkem, a Montreal, Canada-based company in the same industry. Vierhout claimed, according to Euractiv, that the industry was left reassessing a ‘whole new set of variables’.
“While earlier it was relatively easy for the advanced biofuels industry to judge the investment potential,” he told Euractiv, “the Commission is definitely increasing complexity and making it more difficult to calculate the business case for investments.”
He went on: “What now needs to be considered is the role of the Emission Trading System in the transport sector, the impact of the Energy Taxation Directive on fuel prices and the competitiveness of various fuel varieties with different greenhouse gas reductions, the impact of a sustainable aviation fuel and maritime mandate,”
All of this, he said, increases complexity for those looking to invest in the advanced biofuels industry.
Work in progress
Expert Investor spoke to Tribe Impact Capital’s chief impact officer, Amy Clarke. She cautioned that, despite the EU’s aggressively anti-climate change stance, the proposals are unlikely to remain identical once they are in their finished form.
“We are going to see an awful amount of lobbying around this,” she said, “both at the sovereign level—some EU member states will want changes—and from certain industries. It’s not going to be easy for the team behind this strategy to navigate the next few years. There will be compromises and we will have to watch out for them, and what their effects will be.”
For now, though, says Clarke, the EU’s latest raft of proposals has the potential to be a ‘gamechanger’. Given the disaster in the North Rhine Westphalia part of Germany in recent days, along with forest fires across Greece and Spain, and flooding in London, Clarke says that this slew of events may be the point at which the world is beginning to take notice of climate change.
“This is why the 55% strategy from the EU is important,” Clarke says. “We have to view these things always as the first step. It sets a precedent in many ways and I hope it emboldens other economies to follow suit. We’ve definitely seen a shift in the last year around the world, and since Biden came into office in January. So the 55% strategy has the potential to be gamechanging not just from a bloc perspective, but also from an international perspective.”