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February 7, 2024

Editor’s note: elephants in the EU’s climate plans

Cattle grazing in a field
EU policymakers have been at pains to show they are listening to farmers, but there is also the uncomfortable truth that agricultural emissions need tackling if climate targets are to be met (Photo: Princeaya/Dreamstime.com)

The latest edition of our Sustainable Views newsletter

Dear reader,

It is only Wednesday, but in the EU bubble it feels like it should be the end of the week already. 

Yesterday, we had the EU’s proposal to cut emissions by 90 per cent by 2040, its carbon management plan and industrial alliance, which includes plans to accelerate the deployment of small modular reactors by early 2030, and a deal on the Net Zero Industry Act

All are aimed at giving investors in EU cleantech a confidence boost. However, the prominence being given to carbon capture and storage is causing some to worry that investors may get the wrong end of the stick and focus on what the WWF is calling “hocus-pocus”, rather than supporting more tried-and-tested clean energy technologies such as wind and solar. Both industries have made clear their troubles in the face of global trends, not least cheaper imports from China.

Green MEP Bas Eickhout suggested the European Commission was trying to “CCS [its] way” out of the climate crisis, while the Institute for Energy Economics and Financial Analysis’s Arjun Flora asked what the strategy was “if technological progress does not proceed as promised, or alternative pathways appear”. He warned that relying on CCS, whose path to success is fraught with technological, cost and societal hurdles, to reach climate goals meant leaving taxpayers to pick up any “long-term liabilities”. 

Eickhout, speaking in the European parliament in Strasbourg as the commission launched its climate communication, also mentioned the elephant in the room that is agriculture. Since the farmers’ protests began, policymakers across the EU have been at pains to show they are listening to farmers, but there is also the uncomfortable truth that agricultural emissions need tackling if climate targets are to be met. The commission yesterday opted to give farmers a free pass, but, as Eickhout said, “ignoring the problem won’t make it go away”.

Meanwhile, the provisional agreement reached this week between the European Council and parliament on a regulation to add clarity around ESG rating activities has been widely welcomed. Linklaters’ Raza Naeem describes the deal as “another important milestone in the international supervision and regulation of ESG ratings providers”, with the proposals going “much further than any of the other regimes we have seen internationally”.

The other big topic that still needs dealing with this week is, of course, the final, heated negotiations around the EU Corporate Sustainability Due Diligence Directive. EU member states are due to meet on Friday to agree a deal, but Germany has thrown a massive spanner in the works with the liberal Free Democratic party deciding it won’t support the law. 

German justice minister Marco Buschmann appears to be on a personal crusade to kill the bill. In a letter sent to all EU member states, and seen by Sustainable Views, he sets out what he sees as the shortcomings of the proposed CSDDD and urges ministers “not to make the mistake of shackling ourselves with bureaucratic regulations”. However, his apparent claim to know what is best for companies is debatable, given that many businesses have spent the past couple of years starting to prepare for the CSDDD and are unlikely to be thrilled if the directive is voted down at the last minute. Indeed, a host of German companies, including chemicals giant Bayer, Mars and supermarket chain Aldi, have signed a statement endorsing the current version of the law.  

The European Sustainable Investment Forum is likewise calling for governments to support the CSDDD, insisting it is “proportionate and workable”. Eurosif says the directive’s approach is in line with the OECD’s guidelines for multinational enterprises and the UN’s guiding principles on business and human rights, which many companies and investors already apply. 

And coming back to the EU’s proposal to cut emissions by 90 per cent by 2040, the only chance the union has of achieving this target and its international climate commitments is if all sectors and industries play ball. Dropping the CSDDD would suggest many policymakers are still yet to understand, or accept, this fact or simply don’t understand the economic risks of failing to cut emissions.

Until tomorrow,

Philippa

Philippa Nuttall is the deputy editor of Sustainable Views 

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