Wednesday

14th Apr 2021

Timmermans warns on cost of inaction on climate

  • 'There is no way that we can do this [ecological transformation] if we don’t look at taxation,' said Timmermans (Photo: Council of the European Union)

The European commissioner for the Green Deal, Frans Timmermans, warned on Thursday (6 December) that although the fight against climate change requires a huge investment from the public and the private sector, "the costs of non-action are tremendously high".

"All levels of government will have to play their role if we want to succeed in shaping our collective future, this is not something that national governments can do alone," Timmermans said at the Committee of the Regions.

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"We need the European Union to lead [the ecological transition], but it will mean nothing if there are no concrete measures at the local level," he added.

The first-ever European climate law to achieve a transition to climate-neutrality by 2050 will be officially presented in March 2020, although the package will be unveiled by Timmermans on December 11.

The EU Commission president, Ursula von der Leyen, said on Wednesday that she wants to use the EU budget and European Investment Bank to reach €100bn for the Just Transition Fund that would help countries to adapt their industries to the low-carbon economy.

The budget will be discussed by EU leaders next Thursday and Friday at their summit in Brussels.

But von der Leyen is "concerned" about the "severe cuts" to the planned EU budget in the latest proposal by the Finnish presidency.

The Just Transition Fund would partly be used to soften the positions of Hungary, Poland and the Czech Republic, which have objected to the EU's 2050 climate-neutrality goal - the main pillar of the Green Deal.

However, the announcement of this fund, originally expected before the next week's EU summit, has been delayed until January.

As a result, it is unclear if all member states will be able to unanimously agree on the commitment of making the EU climate-neutral by 2050 during the EU council. But Timmermans seemed optimistic.

"These member states know that their energy mix is not sustainable, not only from the climate perspective but also from the economic aspect," he told reporters on Wednesday.

"These countries fear the transition [period] and whether they can afford it", he said, adding that "these member states can ask for European solidarity, [but] the European Union should chip in".

"I am sure that once the urgency of this sinks in, we will be able to mobilise the finance that we need," he added.

Taxation in Green Deal?

According to Timmermans, "there is no way that we can do this [ecological transformation] if we don't look at taxation".

However, the "set of deeply transformative policies" that appear in a draft document of the Green Deal leaked last Friday does not mention a carbon border tax on imports or a fuel tax for the aviation and shipping sectors.

The carbon border tax cannot be excluded from the debate, Timmermans said, adding that if other parts of the word do not take measures to comply with the Paris Agreement, "it is our duty as Europeans to protect our industry and economy against the unfair competition on the basis of a larger carbon footprint".

Likewise, the council on Thursday called on the European Commission to update and modernise the EU energy taxation framework, which was adopted in 2003.

According to the European commissioner for economy, Paolo Gentiloni, "the modernisation of the Energy Tax Directive is needed to reach our climate goals, [since] the directive as it stands is incoherent and unable to deliver EU climate and energy goals".

"Any [new] initiative should revise the treatment of electricity and natural gas products and streamline the wide range of tax differentiations, reductions and exemptions and the current subsidies for fossil fuels," said Gentiloni.

Additionally, most member states voiced their concerns about the lack of fuel taxation on the aviation (kerosene tax) and the maritime sector.

Although Malta pointed out that abolishing fuel tax exemptions on the aviation and maritime sector could have an impact on the connectivity of the island.

Timmermans believes that "it does not have any sense that we tax fuel when we put it in a car but not when we put it in a plane".

However, according to Gentiloni, the commission will carry out an impact assessment to identify problems, such as connectivity or competitiveness issues, before they deliver a proposal for the modernisation of the EU energy taxation framework that will be "ambitious but inclusive".

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