Current cooperation on green innovation with countries such as Japan, South Korea, India and, of course, the United States should be significantly strengthened, writes Mats Engström.
Mats Engström is a senior advisor at Sieps, the Swedish Institute for European Policy Studies.
A storm is gathering over the carbon border adjustment mechanism (CBAM). Emerging economies in the BASIC-group recently expressed “grave concerns” regarding the plans of the European Union.
US climate envoy John Kerry has also warned Europe not to move forward unilaterally at this stage. Still, the European Commission is sticking to the timetable, planning to propose such a mechanism before summer.
There is now a momentum in the run-up to the Glasgow Climate Convention meeting in November, with a new US administration and many countries establishing net-zero targets.
A carbon border mechanism might be needed, and the plans are perhaps contributing to other parts of the world raising their national ambitions, but it would be unwise of the EU to move forward in a way that could create obstacles to global negotiations.
Instead, the Commission should put forward a broader policy package on green transitions of industry, with an emphasis on international cooperation.
First, a CBAM needs to be framed primarily as a way to move towards net-zero transitions together with as many partners as possible, not as a measure to promote European industry or to raise new own resources.
The EU should start carefully, with pilot schemes and with a significant part of the income helping countries in Europe´s neighbourhood and in the Global South to combat climate change.
Second, the EU should make external aspects of the green transition an integral part of the updated industrial strategy. Cooperation is key. Developing breakthrough technologies in for example the steel and chemicals sectors is a common challenge for the world.
Of course, there will be competition in the commercialisation of such technologies, but there is still much scope for increased cooperation in the early stages of the innovation process, as well as in standards development and in joint measures to promote markets for low-carbon products.
Current cooperation on green innovation with countries such as Japan, South Korea, India and of course the United States should be significantly strengthened. Specifically, there is a need for constructive proposals on access to intellectual property rights for countries in the Global South, as well as for an open dialogue on the use of state aid.
Third, to facilitate net-zero transitions and avoid problems with free-riders, more global coordination of policies for reducing industrial greenhouse gas emissions will be needed. In the long run voluntary initiatives will not be enough, as experience from other international processes show. There is a need for a staged approach to stricter global commitments.
This could as a first step include agreements on better measurement and verification of industrial emissions, and as a second step sectoral roadmaps with some binding elements. The Commission could present a paper on the future global architecture for reducing industrial greenhouse gas emissions as a basis for wide consultation and dialogue with other parts of the world.
Fourth, European leaders need to show a certain degree of humility. Yes, the European Union is a global leader in climate policy, but there are lessons to draw from other countries. Look at South Korea’s green recovery policies and industrial innovation for example. Recognising this more often in public statements will facilitate cooperation on policy measures.
Specifically, regarding the CBAM, the Commission should make clear that companies in other countries producing for example aluminium with lower carbon footprints than competitors in the EU will gain from the system. It should not only be a question of putting a penalty on the laggards, but also of encouraging leaders in green industrial transitions wherever they are.
Europe is right in putting pressure on other parts of the world to speed up climate transitions. However, a broad policy for cooperation is a better way of achieving this aim than trying to impose a CBAM unilaterally as an isolated measure.