How do you couple the long-term climate change and industrialization?
Climate change is one of greatest threats that humankind has ever faced. According to the Special Report on Global Warming of 1.5°C from the Intergovernmental Panel on Climate Change (IPCC), warming of the climate system is unequivocal.
The Special Report issued in October 2018 demonstrates, based on scientific evidence, that human-induced global warming has already reached 1°C above pre-industrial levels and is increasing at approximately 0.2°C per decade. Without taking an immediate international climate action, global average temperature increase could reach 2°C soon after 2060 and continue rising afterwards.
Industrialization has always played a pivotal role in the economic development of any nation. With industrialization come opportunities as well as challenges.
The challenges include higher temperatures, more extreme weather conditions, negative effects on the European economy, and political stability. Due to these challenges, industrialization must take into account climate change and its consequences. This, of course, raises the question of how to couple the long-term climate change and industrialization effectively.
First of all, it is necessary to launch policies supporting the transition to a net-zero emissions economy which also stimulate industrial competitiveness.
The Clean Energy For All Europeans Package is an inspiring example of how to turn climate ambition and promises into action. This includes new ambitious rules on the EU energy market design, renewables, energy efficiency, risk-preparedness, specific measures for the building sector, the governance of the Energy Union and enhanced rules for the Agency for the Cooperation of Energy Regulators.
In addition, it aims to combat climate change in line with the Paris Agreement and maintain the EU’s global leadership on climate action. What is also equally important is that the new set of rules not only facilitate the transition towards a net-zero emissions economy, but also helps the industry to be modern, more competitive and prosperous as a key player in reducing greenhouse gas emissions.
In the coming years, the next Commission is very likely to propose new policies to assure that Europe is on track towards reaching its 2030 energy and climate targets while supporting industries.
I strongly believe that the Commission should further focus on strengthening the European emissions trading scheme (ETS). The results of the ETS reforms have not met our expectations despite the boost from recent reforms.
Low carbon prices and the fact that parallel policies such as energy efficiency, RES support, nuclear support, coal phase outs reduce the prospects for a sufficient carbon price, only prove that the current ETS lacks efficiency.
The EU ETS price is clearly insufficient in the short term as it does not provide a strong and credible enough signal for decarbonisation in the medium to long term.
One solution to this might be to introduce a carbon floor price on emissions. This mechanism would protect investors against sudden ETS price drops, encourage businesses and industries to make more low-carbon investments and speed up the transition to a net-zero emissions economy.
For inspiration, since April 2013, British electricity generation has already been subject to a minimum carbon price and the Dutch government is planning to introduce a similar price floor, beginning at €18 in 2020 and rising to €43 by 2030.
It is also crucial to put in place a functioning framework of supporting measures to ensure a smooth transition for industries to a net-zero emissions economy.
As promised in the Communication from the Commission on the Clean Energy For All Europeans, in 2018 the European Commission has created a Clean Energy Industrial Forum in order to discuss with relevant stakeholders as to how to optimize the benefits of the clean energy transition and to ensure a smooth clean energy transition for European industries, regions and cities.
Furthermore, a successful response to climate change and the modernisation of the EU’s economy require vast investments in research, industrial innovation and deployment and other areas if we want to compete on the global scene.
Horizon Europe, the world’s biggest research and development programme for 2021-2027, is the case. It represents a unique opportunity for research and innovation in Europe, which will certainly foster industrial competitiveness while addressing climate or clean energy transition issues.
The EU has set a global example in terms of climate action and industrialization.
The EU has clearly sent a signal to the rest of the world that it is possible to tackle climate change, grow the economy and promote industrial competitiveness simultaneously.
We are on the right track to deliver on the Paris climate agreement while modernising and decarbonising the EU’s economy. However, what is needed now is proper implementation and enforcement as the Member States must fulfil their targets and promises. This can only be achieved if there is understanding, cooperation and action at all levels such as consumers, SMEs, industries, corporations, local authorities or national governments. Collective and fair action by all is the only way to achieve ambitious actions.