The Green Deal is facing political pressure, with some in Brussels calling for it to be partly or wholly scrapped in deference to a new buzzword: competitiveness.
At the European Economic and Social Committee (EESC), which advises EU legislative bodies, we believe the Green Deal should remain in place but be recalibrated to reflect current realities – and must continue evolving to stay fit for purpose.
In an opinion published in September, we issued recommendations on how to achieve this – including mapping the adopted measures, examining how different sector and technology-specific targets interact, and monitoring progress. We also propose specific improvements to the Emissions Trading System (ETS), the Carbon Border Adjustment Mechanism (CBAM), and financing models.
Measures to encourage investment
For the ETS, we recommend measures to reduce carbon price volatility, which would encourage more investment. This could include revising the market stability reserve mechanism. The ETS should also be updated to consolidate the various credit sources, perhaps by merging or linking the ETS with ETS2 and other mechanisms such as carbon removal credits or Article 6 credits under the Paris Agreement.
Smoother reporting methods
In terms of CBAM, it must be made easier for businesses to report actual emissions from overseas suppliers. Importers who, despite reasonable and verifiable efforts, are unable to collect real emissions data from their suppliers should be allowed to use best estimates during a provisional period, provided these are not below the relevant default values.
Businesses have also noted that the reporting system is clunky and difficult to use, creating a compliance burden, particularly for smaller companies.
For the Green Deal to avoid placing an excessive burden on businesses, especially in hard-to-decarbonise sectors, it’s crucial that policies prevent an unintentional loss to competitiveness. Otherwise, industries could shift operations outside Europe, potentially worsening global emissions and increasing the EU’s external dependencies.
Green Deal needs an independent monitor
The Green Deal should be continuously monitored and, if necessary, updated to prevent potentially harmful effects on society and the economy. We believe the EESC should be empowered and endowed with the necessary resources to play the role of an independent monitor of Green Deal implementation.
The EU’s climate strategy should not be seen as a static document, but rather a vision for 2050 that should undergo a constant process of adaptation in response to its own progress and the impact of external events.