MBB circular on EU policy and legislation 05/2019

New European Commission political guidelines

In recent weeks, the European Parliament elected a new President for the European Commission, Ms. Ursula Von der Leyen, who will replace outgoing president Jean-Claude Juncker shortly. Recently, the president elect addressed the Parliament outlining her political guidelines for the European Commission for the next 5 years.

This brief provides an overview on the first priority that is expected to be published in the first 100 days after the new European Commission takes office – the European Green New Deal. Below are some actions expected to be included in this strategy.

Climate-neutral by 2050

The European Commission intends to put forward a proposal for legislation that will enshrine the EU’s 2050 climate-neutrality target into law. On this note, the member states have already tried to take a collective position in the European Council, however this was not possible due to 4 member states, Czechia, Estonia, Hungary and Poland, who would not agree to a 2050 target. It will be interesting to see which legal basis the Commission adopts to try to achieve this outcome.

Emission trading scheme

The EU already has an emission trading scheme (ETS), which is a climate change policy tool providing a framework to cap the level of carbon emitted by the largest industrial polluters, mostly power plants, and subsequently creates a market where operators can buy and sell emission allowances. The ETS 2.0 framework will now cover the maritime sector, the construction sector and reduce allowance allocated to airlines over time.

Carbon border tax

This tax is intended to safeguard European industry and create a fair level playing field with industrial polluters in third countries, which are not subject to the same environmental standard and fiscal obligations under EU law. It will avoid what is known as Carbon leakage.

Emission target reduction

To meet climate change commitments and considering the United States’ withdrawal from the Paris agreement on climate change, the EU will need to increase its efforts on carbon emission reduction. The Commission will revisit the current 2030 target agreement set at 40% below 1990 levels and propose a way to increase it up to 55%. This is an extremely ambitious objective and will require equally ambitious support measures to safeguard the competitiveness of European industry.

Just Transition Fund

Ambitious legislation to address climate change will undoubtedly have some impact on the economy, businesses and jobs, particularly in certain EU regions dependent on certain industries. The European Commission therefore intends to propose a Just Transition Fund to support such communities embrace socio-economic changes that these policies bring.

Circular Economy

The European Commission will be proposing a new Circular Economy Action plan that will focus on the use of sustainable resources, focusing especially on resource intensive sectors such as construction.

The Commission will also double its efforts on addressing the plastics problem. Following the adoption of the Single-use Plastics Directive in the last mandate, it will now focus on putting forward proposals to address microplastics.

Green investment

Meeting the EU’s climate change commitments will also require a strong investment into developing the technologies and commercial viability required by a green economy. Following the success of the EU’s Investment Plan, also known as the Juncker Plan, the Commission is now expected to introduce a strategy for green financing, backed by a new instrument to be known as the Sustainable Europe Investment Plan. Public funding will be allocated to mobilise up to Eur1 trillion in private investment.

Furthermore, the Commission will propose turning parts of the European Central Bank into Europe’s climate bank, by increasing the level of investment into green initiatives worldwide from the current 25% to 50%.

Note: European Commission proposals are scrutinized by member states in Council and by MEPs in the European Parliament and are amended accordingly before becoming law.

For questions or more detailed information on any topic please contact EU Affairs Manager Daniel Debono and Senior Advisor Mark Seychell from the Malta Business Bureau’s Brussels Representative Office on infobrussels@mbb.org.mt  

MBB circular on EU policy and legislation 05/2019