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20th May 2022

Timmermans urges EU governments to tax carbon

  • Taxation on carbon would allow the EU to develop climate policies - while protecting Europe's economy and industry against carbon-emitting competitors beyond its borders (Photo: European Commission)

The commissioner for the Green Deal, Frans Timmermans, said on Thursday (23 January) that governments across Europe have the responsibility to look at taxes to ensure a sustainable future and climate-neutrality by 2050.

"We need to tax carbon and we need to reduce tax on labour," he told the World Economic Forum in Davos.

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"This shift needs to happen, but many countries are resilient because it creates financial insecurity," he said, adding that European authorities need to show that carbon emissions themselves have a cost.

Last December, the European Commission presented the Green Deal, which included the possibility of having a "carbon border adjustment mechanism" for selected sectors.

This would allow the EU to develop climate policies while protecting Europe's economy and industry against carbon-emitting competition from outside.

"There is no point in only reducing greenhouse gas emissions at home if we increase the import of CO2 from abroad," the EU Commission president, Ursula von der Leyen, said on Wednesday.

"It is not only a climate issue, but it is also an issue of fairness (…) towards our businesses and our workers," she added, inviting trading partners to work with Europe for a global level-playing field, beneficial for all.

However, according to the prime minister of the Netherlands, Mark Rutte, industries must play a major role in the dialogues and implementation of the Green Deal as stakeholders - since it will take about 25 years to transform each industrial sector and all the value chains.

"I don't think we can solve this problem without the participation of the industry and big companies because they can provide leadership in terms of infrastructure," he told the audience in Davos.

The Netherlands has committed to cut emissions by 49 percent by 2030, but this will only be possible "if there are job opportunities and economic growth," said Rutte.

The German chancellor, Angela Merkel, also said during her speech at Davos that industrialised nations have a "technological obligation" to address climate change in terms of both industry and policy.

Greek coal promise

The prime minister of Greece, Kyriakos Mitsotakis, committed to close all lignite coal plants in Greece by 2028 not only to comply with the European Green Deal but also "because burning brown coal it does not make economic sense anymore".

"We all known which energy sources will be important in the future: natural gas will be important in the middle term and renewable energy will be important from day one," he said.

However, Mitsotakis warned Timmermans about the cost of this transition, which will demand a bigger contribution of member states to the long-term EU's budget or a redistribution of other funds.

"The Green Deal has been very well-received among all political families in Europe, but the difficulties will arrive once we start committing real money," Mitsotakis said.

The commission unveiled earlier this month its one trillion euro investment plan to put Europe on track to reach the 2050 emissions-neutrality goal, while also helping coal-producing regions to move away from fossil fuels.

However, the ongoing negotiations on the Multiannual Financial Framework (MFF) might not give the green light to the numbers presented by the commission.

According to Timmermans, "we can no longer say that we cannot afford to do it".

"If we create vertical and horizontal synergies between companies and investors we can mobilise the money," he added.

Feature

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Legal action related to climate change is set to grow considerably in the next few years - especially after a largely-overlooked ruling over Christmas by a Dutch court forced the government to reduce its emission by 25 percent by 2020.

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