Sven Giegold

Heart of the European Green Deal agreed

Dear Friends, dear interested,

Following the Council of Member States, the European Parliament has just adopted the heart of the European Green Deal. The package includes:

  • The tightening of the EU Emissions Trading Scheme for energy production and industry (ETS1).
  • Reform to include aviation in emissions trading
  • The safeguard for energy-intensive industry through a border adjustment mechanism (“CBAM”)
  • The introduction of a second emissions trading scheme for the buildings and transport sectors (ETS2)
  • The introduction of an EU climate social fund

EU emissions trading sets hard caps on greenhouse gas emissions. Unfortunately, it had so far only applied to a good 40% of total emissions. With the new emissions trading for buildings and transport, as well as the extension of the ETS1 for smaller industrial plants, over 85% of all EU greenhouse gas emissions will now be covered by emissions trading in the future. Even transport and buildings, which have so far performed particularly poorly in climate protection, are now covered by a real emissions cap. That is the essence of success today. In addition, we are increasing the emission reduction effort for industry and power plants to -62% by 2030 compared to 2005 (previously it was -43%).

This means that we are doubling the annual greenhouse gas reduction in a legally binding way across the EU.

In this way, we are taking a giant step forward in meeting our climate targets. This climate package was only made possible by the escalation of the climate crisis and the Fridays for Future protest movement. It had a major influence on the outcome of the 2019 European elections, including the strengthening of us Greens in the European Parliament and in many member states.

The Green Deal and the measures adopted today put Europe at the forefront of climate policy worldwide. 

The package was adopted with the pro-European majority of Conservatives/Christian Democrats, Social Democrats, Liberals and Greens. Right-wing extremists, right-wing populists and the radical left, on the other hand, have rejected at least large parts of the package.

However, it is also true that the tightening of climate protection was long overdue and has been long and unanimously demanded by climate science. It is equally true that us Europeans are not yet making our fair contribution to the 1.5 degree target. But we have taken a big step forward.

The EU Commission and the majority in the European Parliament have made the deal stronger. Within the Council of Member States, the German government has successfully pushed for climate protection. We pushed through the extension of emissions trading to buildings and transport against tough resistance from the European Parliament and several Member States. For its part, the European Parliament has advocated a strong climate social fund, the extension of emissions trading to more industrial plants, fewer free certificates for industry and a higher level of ambition overall.

Unlike regulatory measures or financial support for climate protection in individual sectors, emissions trading enforces a hard limit on greenhouse gas emissions. It does not require ever new political decisions, but the market price enforces the politically agreed reduction of emissions. This “market-based environmental protection” and its expansion is a great step forward that we supported in the German coalition agreement.

But it is a misunderstanding to believe that emissions trading replaces other measures such as regulatory laws, technological standards, ecological infrastructure or support measures. 

The opposite is the case. Because when the prices for emission certificates go through the roof, commuters or residents of unrenovated houses on low incomes, for example, are driven into “energy poverty”. Likewise, high certificate prices harm industry in international competition – even with border adjustment. Ultimately, too high certificate prices are also a political risk for climate protection, because the acceptance of emissions trading itself comes under pressure.

Price instruments and ecological industrial policy, certificates and regulatory law – are not contradictory, but complement each other. Climate protection needs the commitment of society as a whole. Emissions trading, however, provides transparency and an automatic correction mechanism that shows everyone together whether we are on the democratically agreed course.

But it is precisely the extension to buildings and transport that raises social questions. 

This is why Europe has broken new ground here: For the first time ever in European law, the EU decides on a strong social compensation by majority vote. For the first time, the EU is simultaneously adopting a regulatory measure in the internal market and a compensation for social follow-up costs. The climate social fund will already start in 2026, while the ETS2 will not start until 1 January 2027. In total, the EU and the member states will provide around 87 billion euros to make climate protection socially just. Now it is up to the member states to spend these funds in a way that precisely reaches the most vulnerable citizens.

Just as climate protection must be socially just, effective climate protection promotes innovation, investment and competitiveness of the economy. Therefore, it was important to the German government that the phasing out of free certificates does not happen too quickly. Likewise, it is now important to take the Green Deal into a new phase with green industrial policy.

In the Council as well as in Parliament, the overall package of Green Deal measures was a complex compromise. 

This included the end of the conventional combustion engine for passenger cars. The veto of the combustion engine phase-out had the potential to jeopardise the entire Green Deal. Therefore, we worked tirelessly to reach a compromise with the EU Commission. It is a load off my mind that this blockade did not happen. The end of the combustion engine in cars is good for the climate and good industrial policy.

As coordinator of the round of German state secretaries for the Green Deal, I have now done my journeyman’s work. The main part of the work was done by our great team of officials at the BMWK. We worked closely with the Federal Chancellery, the Ministry of the Environment and other offices. Equally important was the close cooperation with the European Parliament. I would particularly like to thank Michael Bloss, Pascal Canfin, Peter Liese, Mohammed Chahim and Tiemo Wölken. All of them have made an important contribution to this success!

But now we move on. With the industrial policy proposals under the Green Deal, the Green Deal enters a new and necessary phase. 

Progress also needs to be made on the circular economy and detoxification of products. The EU Commission has also presented proposals in this area. Unfortunately, proposals for effective measures in the field of agriculture are still missing. This makes it all the more painful that the agricultural sector remains exempt from emissions trading. And finally: With regard to greenhouse gas emissions, the discussions on the EU climate target for 2040 are now beginning.

With happy, European greetings

Sven Giegold

Category: BMWK

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