Germany’s Scholz proposes ‘climate club’ to avoid trade friction

Portuguese State Minister for Finance Joao Leao (R) welcomes German Finance Minister Olaf Scholz (L), on the second day of the informal meeting of Economic and Financial Affairs Council (ECOFIN) under the Portuguese Presidency of the Council, in Lisbon, Portugal, 22 May 2021. [EPA-EFE/MARIO CRUZ]

Germany wants the European Union to create a “climate club” with other countries like the United States, Japan and possibly even China to avoid trade friction linked to green tariffs such as a planned carbon border levy.

German Vice Chancellor and Finance Minister Olaf Scholz said on Saturday (22 May) after talks with Portugal’s Prime Minister Antonio Costa, the current holder of the EU’s rotating presidency, that Europe must engage with other countries to agree joint rules and common standards on how to reduce carbon emissions.

Scholz said climate protection measures would have an impact on the competitiveness of German and European companies, especially those in energy-intensive sectors.

“And so it is a wise thing not just to discuss about how the European Union can do this and how we could avoid to have difficulties in the competition on the global market afterwards,” he said.

The EU should approach other countries such as the United States, Canada, Britain, Japan and China to discuss and possibly agree on the same steps and principles.

“And to do this, it’s a good idea to discuss about having a sort of a club, of people willing to do similar things and not competing each other, but fighting for a better climate development in the world.”

The 27 EU government leaders will hold a summit on 24-25 May to discuss how they plan to meet the EU’s new 2030 climate goal – a cut in net emissions of at least 55% from 1990 levels.

The summit will give a steer to the European Commission, which in July will propose a huge package of climate policies to deliver the target, including carbon market reforms and more ambitious renewable energy objectives.

In June, the European Commission is also expected to present proposals on how to expand the bloc’s CO2 emission trading scheme and how to shield investments in green technologies from “dirty competition” by countries with less rigid climate protection policies.

The EU has said countries will be able to avoid the bloc’s proposed carbon border levy if the ambition of their climate policies matches that of Europe.

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