Bas Eickhout: EU carbon market needs alignment with 2050 goal

The reform of Europe’s Common Agriculture Policy (CAP) will be one of the first votes in the new Parliament after the EU elections and a key test of how serious other parties are about climate action, says Bas Eickhout. [© European Union 2017 - Source : EP]

This article is part of our special report EU elections: The environmental issue.

The next European Commission will have to reopen the Emissions Trading Scheme directive if it is serious about reaching carbon neutrality by 2050, argues Bas Eickhout, warning the next Commission chief will need to find a broader majority in the European Parliament than his predecessor.

Bas Eickhout is a Dutch Member of the European Parliament. Together with his German colleague Ska Keller, he is co-leading the Greens’ campaign for the European elections. He spoke to EURACTIV’s energy and environment editor, Frédéric Simon.

INTERVIEW HIGHLIGHTS:

  • Greens want EU carbon trading scheme reformed in line with 2050 goal
  • Support tax on kerosene and EU farm policy reform to support climate goals
  • Eickhout calls for “Paris moment” on biodiversity at CBD summit next year
  • But banning pesticides immediately not realistic, transition has to be planned
  • Supports transformation of EIB as “EU climate bank”
  • Backs EU corporate tax and minimum wage
  • Says EU competition rules “need to become more geopolitical” after failed Siemens-Alstom merger
  • Supports carbon tariff at EU border as part of “Green New Deal” for industry
  • Says open to talks on “progressive alliance” in new European Parliament
  • Warns next EU Commission President will need a broader majority than Juncker

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All the major political parties have voiced their support for the European Commission’s proposed net-zero carbon objective for 2050. Even the EPP has now joined, with Manfred Weber and Angela Merkel recently backing it as well. So what makes the Greens stand out from the other parties?

It’s about how to get there, the policies needed to achieve this target. It’s great of course that Weber is now backing this target but that was already the case a few months ago when we voted the resolution in the European Parliament.

In the EU Council of Ministers, however, it’s a different story. We know that not all countries are on board yet. And that’s worrying because we absolutely need to adjust our policies and reopen EU directives because we are not on track with the Paris Agreement objectives.

What directives need to be reopened in your view?

The main one is the emissions trading system (ETS), which is still giving a lot of allowances for free. And that continues to undermine the carbon price and Europe’s efforts to meet the Paris target.

One of the first things that we need to do in negotiations over the new Commission mandate is to reopen the ETS directive.

The ETS has already been reformed last year. Do you think there’s appetite to reopen it so soon?

This is the interesting question, of course. If all the different parties are now genuinely backing net-zero carbon emissions by 2050, then the next step is to reform the ETS. There is no way around it.

If they refuse to change policies in place for 2030, then we are also making the 2050 climate neutrality objective more difficult to reach. Because that would imply a very abrupt reduction in carbon emissions after 2030. And that would mean back-loading all the negative impacts on future generation.

So whether or not there is political appetite to reopen the ETS – this is not really the point. The point is, once you sign up to Paris, you sign up to climate neutrality. And that means putting policies in place to go in that direction.

What other priorities will you push if you become the next President of the European Commission, or as a group leader in the next European Parliament?

Carbon pricing is really fundamental. But on top of that, there are things we can do right away. The coming 10 years will be crucial in turning around our addiction to fossil fuels. That means phasing out coal but also stopping all investments in fossil fuels, including gas infrastructure.

We also need to improve investments in renewables and strengthen cross border electricity connections, with backing from the European budget.

Then, a fundamental step we need to take is on aviation, which is still totally under-priced. Domestic flights are part of the ETS but still with a big majority of free allowances. And we have no policy in place yet for intercontinental flights. There, we really need to make sure kerosene is being taxed, and use the revenues for long-range train links, because cross-border connections are awful.

A third priority is the reform of the Common Agriculture Policy (CAP). This will be one of the first votes in the new Parliament and a key test of how serious other parties are about climate action. If MEPs support what the Parliament’s Agriculture Committee has voted, this will mean a weakening of climate targets, and renationalisation of the way “greening” subsidies are distributed to farmers.

If other parties support this, then we will know for sure that their election pledges on climate change were just campaign rhetoric. So agriculture is really going to be one of those key first voting moments for the new Parliament.

Some like Nathalie Loiseau in France have called for the establishment of a European climate bank, in charge of investing around €1,000 billion which the Commission estimates is necessary for the energy transition. Do you support this proposal?

Finance will be extremely important to get away from fossil fuels. But, to be very honest, I’m getting a bit tired with the plans that Macron is launching because they involve creating new institutions, which is always long and complicated.

We already have a European Investment Bank. And clearly, the EIB must become a climate bank, not investing in fossil fuels anymore. They do have an emission performance standard as a threshold for financing new energy infrastructure projects. That mainly rules out coal, but there are still a lot of investments going into gas infrastructure, which should be eliminated as well.

So I don’t see the point of creating another EU institution. What’s much more important in my view is to update the EIB policy so that it really becomes the EU climate bank.

The Greens are sometimes criticised for being “red on the inside” with support for new taxes. Would you support a budget neutral system when it comes to climate policy? Or would you support new taxes? After all, you did mention the kerosene tax…

As European Greens, our main focus is to shift the burden of taxation on the polluter. Pretending that the consumer won’t notice anything – I don’t think any politician can uphold that.

What we want as Greens is a transition for our whole economy. But it needs to be done in a socially just way. And that means a fundamental shift in our taxation system. Even as we transition to a greener economy, some people will continue to have more purchasing power than others. So we believe it’s the richer people, the big companies, who will have to pay more, not the ones on low incomes.

That has always been our re-distributional program, which needs to go hand in hand with our green program. Otherwise, you will also undermine support for the green transition. We saw that with the ‘Gilets Jaunes’.

Taxation is not an EU competence, the unanimity of member states is required to get anything approved there and some countries will always place their veto. So how can the European level bring added value here?

It’s true that this will be very difficult to do under the current treaty. However, if countries are serious about tackling the climate crisis, they can do it. All the heads of states have shown during the eurozone crisis that a lot of things can be done as soon as it’s perceived as an urgent problem.

Look at how we saved the banks! This is our biggest complaint, in fact. We are dealing here with a very urgent climate crisis. And making this a socially just transition is really crucial. From our perspective, this is also why there is a rise in populism, why people are so disappointed with Europe.

Of course, we are dependent on the member states. But the Commissioner can push an agenda, we saw that during the euro crisis. And if we don’t have all the countries on board right away, then there is always the possibility of going ahead with a vanguard group of countries and let the others join afterwards.

The same applies to the introduction of a minimum wage across Europe, which is also part of our social agenda.

You’re talking about a so-called “enhanced cooperation” procedure allowing a smaller group of countries to forge ahead in some areas without the others. In which areas do you think such a mechanism would be useful?

Certainly on taxation. And also on a minimum wage across Europe. On taxation, countries could, for example, agree not to lower their profit tax below a certain level – say 20% or 80% – and stop the race to the bottom on tax.

If some countries do it, then others will be challenged to join as well.  That’s how the new Commission can put items on the agenda. It has been way too silent on the socially just transition.

You mentioned phasing out fossil fuels earlier. Should independence from fossil fuels be listed as one of Europe’s strategic objectives?

If we are really serious about the energy transition, this is what we have to do. Again, every country might not immediately want to be part of it.

But look, we are importing around €260 billion every year on fossil fuels. That’s the price we are paying to regimes in Russia and the Middle East. That’s a key vulnerability for our economy. And it’s a polluting one. And it’s not even delivering a tremendous amount of jobs.

Which investor will put their money into future energy infrastructure if they don’t have a clear idea of where Europe is going? If every country is free to decide on its own, investors will be reluctant to put their money over in Europe.

The EIB can help of course but most investments will have to come from private capital. And private investors are reluctant because they have no idea where Europe is going. Here also, Europe needs to deliver more so that investments can start flowing in and deliver a new energy system.

You said in an earlier interview that you want to see a “Green New Deal” as part of an industrial policy that puts climate change at the centre. Now, let’s imagine for a moment that the Greens win the elections and that you become the next president of the European Commission. How do you persuade member states to follow your plans?

Well, funnily enough, the member states are slowly changing. The green transition is becoming more and more part of the debate also at the national level.

Europe’s geopolitical position with regards to China is also becoming more of a debate. And that’s very much linked to new clean technologies, like low-carbon mobility. Look at the huge debate around the failed merger of Siemens and Alstom in Germany and France!

So I think there is finally a realisation among member states that the liberal agenda – with privatisation, competition, and laisser-faire – has reached its limits.

Would you have given the go-ahead to the Siemens-Alstom merger?

I think it was difficult for the Commission to approve this merger because it had to follow the rules that are currently in place. For me, this shows that we need to take a hard look at those rules, taking the global perspective into account.

Europe does not function in isolation in the world. And I think competition rules need to be updated for such situations because the current rules are only aimed at one thing – preventing a newly-merged company from having a dominant position on the European market.

And that means Europe will need to become more geopolitical in its decisions about competition policy. We live in a world where everyone is doing that already – the Chinese, the Americans, the Russians.

For example, some governments in Europe are concerned that China is buying up harbours in Greece. But it was the same governments who forced Greece to prioritise those harbours during the euro crisis. And now that China jumps in and buys it, suddenly, people are concerned… It makes no sense.

In a way, you’re saying ‘Europe First’ ….

Well, I don’t like the slogan for a number of reasons. But I definitely believe that we have to be more clever with our European rules.

Take the reform of the ETS: you can stop free allowances but at the same time put in place a border adjustment mechanism to equalise the carbon content of imported products. This way, you can combine your trade policies with environmental policies. Because then you are also giving an incentive for producers outside Europe to lower the CO2 content of their products in order to enter the European market.

How would you convince those who are concerned that a carbon tariff would trigger a trade war? Germany is highly dependent on exports and has been traditionally reluctant because of that…

If you are serious about a Climate Neutral economy, then it also means that your industry needs to become climate neutral. And that is quite a transition they have to go through.

That’s why you need a carbon price – because it incentivises low-carbon innovation. That also means ETS revenues should go much more towards helping industries invest in breakthrough technologies.

But while we are in the transition, we also need to make sure that we are not undermining it by letting cheaper and more polluting products enter the European market. It’s an overarching policy that you need to put in place in order to achieve that.

That’s how we can convince Europe’s industry. Because yes, we are asking a lot from them but we can also give them back, with help on investments and leadership in new technologies that will spur a new industrial revolution in Europe, and beyond.

So yes, a carbon tariff might lead to tariff wars. But if you don’t do it, our own transition will be just paperwork. And what we would like to do as European Greens is put the transition into practice.

Let’s return to farming policies. There is mounting evidence that agriculture – including the use of pesticides – is one of the main culprits behind the dramatic fall in biodiversity observed over the past decades. What should Europe do to address this?

First of all, we need a Paris-like moment for biodiversity. In a way, the IPBES is the equivalent of the IPCC for climate change. So the scientific research base is now clearly laid down. The message is clearer and clearer.

What we need now is the policy equivalent, a kind of Paris moment for biodiversity on the international scene like we had in 2015 for climate change. And in 2020, the Convention on Biological Diversity will hold a big conference in China.

We all know that the Paris Agreement was possible because of the deal that the US and China passed the year before, between President Obama and Xi Jinping. And we think the CBD summit in China is the moment to do that. But this time, Europe should be the one doing a deal with China.

What kind of policies could follow from that?

The CAP reform is the biggest homework that Europe has to do in order to protect biodiversity. We also have the Natura 2000 network of protected areas for which implementation should be improved.

But the big step is with our own agriculture support – going for real serious greening, and also stopping money going to the big agri-business companies. Currently, 80% of payments under the CAP’s first pillar are going to just 20% of farmers. These figures need to be reversed.

Should Europe ban pesticides immediately? Or do you believe some kind of transition has to be arranged to soften the impact on farmers? Because a lot of them are simply dependent on these products…

The worst pesticides need to be abandoned – that’s what we said also on glyphosate. Unfortunately, we should have done that earlier so that is certainly something we will put forward after the elections.

But you’re absolutely right, if we were to ban all pesticides immediately, that wouldn’t be realistic. For that, you need to transition. And here, the second pillar of the CAP can help. Support schemes really need to go to greening and also to help farmers transition from the current production system.

And that is not only because pesticides are bad for our health, it’s also because climate change will require an agriculture that is more resilient to climate extremes.

Monocultures, for example, are not resilient at all. And that’s a problem: we have built a very large scale agricultural system, with a lot of monocultures that are very vulnerable, that need pesticides. That makes the soil lose its nutrients so farmers have to put in fertilisers, which is also an oil product.

You know, we have based our entire agricultural production model on that. And that needs to be reverted. We need to move towards “nature inclusive agriculture”. For example, think of agroforestry combinations, which are more climate resilient, and bring more diversity in the production system.

But that needs time and assistance. And this is where CAP money can help us move the agricultural system towards a new model.

Is the money available sufficient to do this? Is it possible with the EU’s current budget proposal for 2021-2027?

Not with the European budget only – that is clear. That’s also why I’m talking about the CAP’s second pillar because it is co-financed by the member states.

Let’s move to politics now. How do you see alliances building up in the next Parliament? The Greens are expected to have a slightly bigger group in the next Parliament. Macron wants to build a “progressive alliance” ranging from left to right. Are you open to talks about a shared programme for a kind of pro-European ‘Grand Coalition’?

For us Greens, the most important is that any coalition is as progressive as possible.

That’s Macron’s proposal then?

Not really. Because in the end, he’s just talking. Macron is good in words but if you listen to what he says, it’s the “Grand Grand coalition”, with the EPP, the S&D and the Liberals. And maybe he wants the Greens on board as well because that makes him feel more comfortable. But that’s it.

Whereas, from our perspective, if we can make GUE part of that progressive coalition, then we would really have much more progressive policies.

So it’s a matter of where you start your negotiations. Macron starts from the centre and tries to build a coalition around him. He thinks of himself as the Sun King in a way… But I start from the left, because I think that’s what Europe needs.

Like I said, if you are really serious about the green transition, it needs to be socially just. This is why Europe needs a left-wing coalition. Of course, it’s unlikely that we will get a majority, so we will have to talk with the Liberals and Macron.

And then there is the big question: what will the EPP do? They need to sort out their strategy. I heard this week that Berlusconi wants to work with the far-right. That’s also what Orban wants. And both are in the EPP. So if that’s their take, it will be without us, very clearly.

But I don’t think the EPP will get a majority with the far-right either. So the EPP needs to decide whether they want to start working with the left. That’s really the key decision that the EPP needs to make. And for now, they are totally divided.

Assuming the EPP does become more hard-line conservative, that will probably raise the pressure on the Greens to form this broad alliance from left to centre that Macron wants, correct?

Yes, absolutely. And that’s why I took the liberty of talking about GUE. Because I have the feeling that Macron is not thinking about that part of the political spectrum in Parliament. And I think we have to forge an alliance that is as progressive as possible.

How does that work? Will you sit down with other party leaders to agree on the main points of a program that you’re ready to sign up to, in broad strokes?

After the elections, we will first look at who has become the biggest political group. That’s democracy: the biggest group has the right to start negotiating first.

And that looks like it’s going to be the EPP. So the EPP will probably invite parties with which they want to form a coalition. This is when we will put our demands on the table.

And what you will see is that, for the first time, there will be a more negotiated program for the new Commission. Five years ago, Juncker had his 10-point plan but that was very general and he became Commission President quite easily because he was supported by the EPP and the Socialists.

This time, it won’t be that easy because both the EPP and the Socialists are both expected to have smaller groups. This means that the next Commission President will have to discuss and negotiate a program with a broader coalition that gives him, or her, a majority. And on the basis of that program, we will decide whether we are going to be part of it or not.

And to be very honest, being together with the EPP is not our first choice – our preference is to have a coalition that is as progressive and left-leaning as possible. That said, if the EPP are the biggest, we will, of course, talk to them. And that means Manfred Weber will need to shift his policies substantially.

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