Brussels The climate policy of the USA is overtaking the European climate policy: While the laws of the “Fit for 55” package are to be finalized in Brussels after the summer break, the US House of Representatives will also pass a massive subsidy program with the law to combat inflation on Friday. It is considered certain that the deputies will confirm the previously passed legislative resolution of the senators on Sunday.
Although the USA is faster than the EU, it is significantly less ambitious. There is political agreement in Brussels that emissions should be reduced by 55 percent by 2030 compared to 1990 levels. Parliament and the member states passed this law in 2021.
The USA, on the other hand, only wants to achieve a reduction of about 30 percent compared to 1990 with their package. However, because the climate protection package does not use the comparison year 1990 but 2005, the difference to the EU seems even smaller: In the USA there is talk of a reduction of around 40 percent.
The idea of the “climate club” failed for the time being
The reaction to the US plans is also cautious. The decision in Washington is a step in the right direction, says CDU climate politician Peter Liese. “But the whole thing is far from what is necessary to achieve the international climate goals and what we in the European Union have set in motion,” said the MEP.
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The Europeans are not only disappointed by the lack of ambition, but also by the method used. The US climate package consists almost entirely of subsidies. The Biden government wants to spend a total of 369 billion euros over ten years to promote green technologies. The whole thing should be financed by tax money.
Such measures are considered expensive and inefficient in the EU. And the effect is difficult to predict. The Europeans, on the other hand, also rely on efficiency targets for industry, on quotas for renewable energies and above all on CO2 prices: Industrial companies pay money for every ton of the harmful greenhouse gas CO2 that they emit, and at the same time they can trade emission rights among themselves. The resulting market should lead to savings where the emission rights are particularly cheap.
Chancellor Olaf Scholz (SPD) had already promoted the idea of extending this CO2 price to other countries worldwide when he was Finance Minister, thereby creating a “climate club” in which the emissions of CO2 are equally expensive for industry.
Since there is no CO2 price in the US climate package, the idea can be considered a failure for the time being. “The climate law is without question historical,” says Marian Feist from the Stiftung Wissenschaft und Politik. “But it takes a different approach than pricing CO2 emissions.” It had already become apparent at the G7 meeting in Elmau that the USA would not accept the ideas of the Europeans.
Read here: Sanctions against Russia, measures against rising energy prices and a climate club: What the G7 countries agreed in Elmau
Industry is also skeptical about the American plans. “In order for fair competitive conditions to prevail, comparable burdens from the climate protection requirements are necessary,” says Wolfgang Große Entrup, Managing Director of the German Chemical Industry Association (VCI). “Even after the new package has been passed, the USA is still a long way from a uniform and nationwide CO2 price.”
There will also be problems with the CO2 border adjustment
This could lead to problems if the EU raises a CO2 border tax from 2027. This is intended to make CO2-intensive imports more expensive in order to protect European industry from cheap competition from abroad. Anyone who would have a similar CO2 price system as the EU would have to be exempted from this tax. But that is not the case in the United States.
“On the basis of the new law, the EU can hardly exempt the USA from the CO2 border adjustment,” says scientist Feist. CDU MP Liese also criticized: “Even Joe Biden’s original plans would not have been sufficient to get exceptions to the CO2 border adjustment. The weakened plans are by no means sufficient.” Opponents of the Carbon Border Adjustment Mechanism (CBAM) warn of trade disputes if other countries are unwilling to pay the levy or react with retaliatory tariffs.
Climate protectors, on the other hand, want to push the idea of the climate club further, even if coordinated CO2 prices do not seem possible in this context at first. “We have to live with the fact that the approaches to climate policy are very different,” says Alex Scott from the climate protection organization E3G. “Despite the differences, we need a club of states that are serious about climate protection, help each other and work to make their climate protection measures comparable.”
The Greens are calling for the new laws in the USA to be taken as an incentive to advance the local tech industry. “The question is where the electric cars, wind turbines, storage technologies, express trains and many more of these technologies will be built,” says MEP Michael Bloss. “Therefore, it is now all the more important that we rebuild our European solar industry in order to become independent of China and the USA and manufacture the export hit of clean technology here.”
More: EU countries agree on CO2 tax on imports