While Blum may have just arrived in the CEO role, he’s a well-known commodity within Schneider, having spent more than 30 years at the company. His fingerprints are all over the changes that have led to Schneider being the first company to top the Global 100 more than once (it first earned top spot in 2021).

Blum led Schneider’s first steps in emission reductions and corporate social responsibility (CSR) 20 years ago. At first, sustainability targets were seen as extra initiatives to be achieved while the organization carried on operating in much the same way. “Very quickly we realized this concept of corporate social responsibility living in a separate part of the [company’s] universe didn’t make a lot of sense,” Blum says. 

With revenues of €36 billion in 2023 and offices in more than 100 countries, Schneider Electric’s universe is vast. It manufactures and sells everything from light switches to electrical panels. It’s also a world leader in helping data centres reduce power consumption, as well as offering AI-based solutions for smart energy and building management, software, micro grids, EV charging, water management and energy management – the division that Blum led prior to his appointment as CEO.

A structure that supports diversity

Much of the company’s marketing material extols the benefits of the smart city of the future – where most everything is electrified, renewable generation and consumption are closely managed, and efficiency drives down energy demand. 

But it is on employee diversity where Blum’s enthusiasm really comes through. Rather than having diversity targets separate from the company’s activities, Schneider learned from its CSR experience and changed its entire structure to promote diversity.

Schneider was a traditional French company with a French headquarters and a leadership that was, consequently, largely French. To break out of this mould, the company invented what it calls a “multi-hub model,” says Blum, who led Schneider’s diversity efforts for five years as head of human resources. The company now has three regional hubs, in the United States, Europe and one serving the Middle East and Asia (Blum is based in Schneider’s Dubai office and was previously in France, India, China and Hong Kong).

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The benefits are very clear to Blum. “If you are working in China, you don’t need to go back for a decision to Paris or to the U.S. to move fast and to have an approval. The second benefit is that when you’re 25 years old, you enter Schneider, for instance, in the U.S., in China, in India, now in the Middle East. You look at that and you say, ‘Oh, I can go to the top of the company even staying in my region.’”

‘Whether we like it or we don’t like it’

But a global company also attracts global criticism. Corporate Knights received dozens of  complaint letters in 2023 after announcing that Schneider Electric was once again ranked one of the 100 most sustainable companies. The complaints centred on the use of Schneider’s technology in a pipeline linking Uganda with the Tanzanian coast.

“I always understand that some people can have a different point of view, but we are very at ease with our position on those kinds of projects,” Blum says. “It will take time to move from fossil fuels to renewables; it’s a fact whether we like it or we don’t like it. So we prefer Schneider to be involved in those projects and to help our customers to build pipeline infrastructure” that consumes less energy and therefore emits fewer emissions. 

Roughly 5% of Schneider’s revenues do not meet the EU’s rules on “environmentally sustainable” economic activities or are products with sulfur hexafluoride (used in insulating electrical parts); 74% is considered sustainable.

Despite more pipelines being built, Blum is confident that global momentum for decarbonization is growing at all business levels.

Enduring demand for decarbonization technology

The 2015 Paris Agreement created a big incentive for Schneider to double down on its sustainability focus, but that decision was not echoed in its customer base. Blum reckons that it took three or four years for the enormity of the Paris Agreement to transform into business decisions at many large corporations: “2019 is when we started to see a large number of enterprises taking a lot of interest [in decarbonization]. I was leading strategy and sustainability at that point of time.” 

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Then COVID hit, and rather than impede corporate decarbonization efforts, things started to accelerate – a trend that continues as more climate-reporting obligations in Europe and around the world have spurred even more interest in the last two years. “Many large companies in the world have realized that they have to be part of that story,” Blum says. This has a knock-on effect well beyond the direct emissions of large corporations. “Many of [their suppliers] are small and medium-sized enterprises. And SMEs are seeing that if they want to stay relevant, then for their large customers they also need to have a decarbonization strategy,” he says.

The end result is growing demand for the decarbonization technology that Schneider Electric offers. The company has been tracking all the companies that publicly commit to net-zero with science-based targets, and the list, Blum says, is doubling in size every year.

“Now is a very interesting place because we meet all the largest companies in the world, and all of them put sustainability in their strategy,” he says.

Adrian Hiel is a Canadian writer who has spent the last two decades in Brussels.

The post This French energy-solutions powerhouse is the world’s most sustainable company of 2025 appeared first on Corporate Knights.

In fact, European Commission President Ursula von der Leyen was downright jubilant after the elections, saying that the political centre was “holding” as her European People’s Party (EPP) won 189 of 720 seats to remain the largest party by far. While the liberal (Renew) and socialist (S&D) parties lost seats, the groups together held enough ground to have a workable majority in Parliament. The Greens, who lost 19 seats to return to their pre-2019 size, also look likely to support the conservative EPP, ensuring a comfortable majority.

There were serious concerns heading into the election that the far right would win enough seats to force itself into a ruling coalition and roll back parts of the continent’s Green Deal (a sweeping package to boost renewables, energy efficiency and building renovations; reduce methane emissions; develop a carbon border tax; boost EVs; expand carbon taxes and more), but that bullet has been dodged, and in doing so, von der Leyen has secured her single greatest legacy.

“The election results show that while the far right has gained some ground, they do not have enough seats to form a stable ruling coalition or dismantle the European Green Deal,” says Linda Kalcher, executive director of Strategic Perspectives, a Brussels-based think tank. “Any rollback would be economic insanity as it would create uncertainty for business and investors at times when the U.S. and China are the more appealing destinations for net-zero industries.”

Analysts see two primary concerns about Europe’s climate ambitions in the future: procrastination at the EU level and delay at the national level.

“With increased pressure from the right, the mainstream centre-right European People’s Party might be tempted to push for postponements or watering down some of the most controversial provisions of the Green Deal (such as the 2035 ban on internal combustion engines),” wrote Simone Tagliapietra, a senior fellow at Bruegel, a European think tank that specializes in economics. The other risk is that “Germany, France, Italy and other large countries are expected to do the heavy lifting, but what if their governments do not deliver?”

One national diplomat, who preferred to remain anonymous but was intimately involved in Green Deal negotiations, is optimistic: “As competitiveness and security come into greater focus due to external events, the clearest pathway to achieving these goals is to drive forward with policies that deliver on European renewable and energy-efficiency targets. This is the most cost-effective way to ensure energy security, autonomy, competitiveness and decarbonization.”

During the election campaign, it was clear that climate issues would not be front and centre the way they had been in 2019. “The main priorities [now] will include strengthening industrial competitiveness, enhancing energy security, and addressing the cost-of-living crisis,” Kalcher says. “The new coalition can align on a European industrial strategy that delivers on decarbonization goals, reindustrializing the economy and reducing dependency on fossil fuel imports.”

Essentially, decarbonization efforts are likely to continue, but the motivation will be different – it will be about energy security, protecting jobs and helping industry.

“However, efforts related to biodiversity and nature protection might face more resistance due to the protests by farmers,” Kalcher adds.

Farmer protests have been a regular occurrence in several EU countries over the last year. Irish and Dutch farmers have protested over nitrogen emissions limits, Polish farmers blocked shipments of now tarif-free Ukrainian wheat, French farmers have dumped manure in front of government buildings over low prices and overseas competition, and German farmers protested the end of fuel subsidies. Greece, Portugal and Italy have also seen tractors in their streets.

The first big test for the new Parliament will be the approval of the bloc’s 2040 targets. They are a key complement to the existing legally binding 2030 and 2050 targets. A European Commission report earlier this year recommended a 90% emissions-reduction target compared to 1990 levels, but there has not yet been a formal legislative proposal. That will fall on the incoming Parliament and Commission likely in early 2025.

If conservative parliamentarians do try to weaken the 2040 targets, it could mean that the next few years will be very rocky indeed for European climate action.

Perhaps the biggest surprise of the elections came from France. President Emmanuel Macron called snap legislative elections after his party, Renaissance, was trounced in the European elections. If the far-right National Rally (RN) wins the domestic elections scheduled for June 30 and July 7, it would claim the post of prime minister, while Macron would continue as president until 2027.

Marine Le Pen, who leads the RN in the legislature, threatened to pull France out of the EU Green Deal and to impose a moratorium against wind turbines (on shore and off) and on all solar production. She did promise not to take France out of the Paris Agreement, at least.

The post Climate policy survives the EU election – for now appeared first on Corporate Knights.

Power sector emissions were down a whopping 19% in 2023 compared to 2022, according to a recent report by Ember, an independent energy think tank. 

“The EU’s power sector is in the middle of a monumental shift,” says Sarah Brown, Ember’s Europe program director. She explains that fossil fuels are playing a smaller role than ever as a system with wind and solar as its backbone comes into view.  

Coal dropped 26% in 2023, continuing its long-term decline, and another 20% of coal plants in the EU are expected to close this year and next. And perhaps surprisingly to forecasters, gas did not replace coal in the grid. Gas generation also saw a significant decline of 15%, the fourth consecutive year of decline. That led wind power, which grew by 13%, to overtake gas generation as the second-largest source of electricity in the EU. Combined, solar and wind generated 27% of Europe’s electricity in 2023, up from 23% in 2022. 

And despite rumours to the contrary, “The energy crisis and Russia’s invasion of Ukraine did not lead to coal and gas resurgence – far from it,” Brown says. 

There were other factors involved in muscling out coal and gas from the grid. Both hydro and nuclear generation bounced back to varying degrees after a difficult 2022. Hydropower generators had a terrible 2022 because of drought conditions, though the sector rebounded in 2023 (up 15%) to about average production levels for the last 20 years. 

Nuclear also had an awful year in 2022 as a series of mechanical failures transformed France into Europe’s largest electricity importer rather than its traditional role as Europe’s largest exporter of electricity. But 2023 saw more consistent operations, and generation inched up by 1.5%. Even at these lower levels, nuclear remains the single largest source of electricity in Europe, providing 22.9% of total generation (for comparison, nuclear energy makes up about 15% of Canada’s electricity). 

Conservation was also a significant piece of the puzzle. Total electricity use fell in the EU by 3.4% compared to the previous year. That trend is not expected to continue as Europeans increasingly shift to electric vehicles and heat pumps, driving up electricity demand overall. 

For renewables to expand market share at the expense of fossil fuels and reduce power emissions, they will need to grow faster than new demand is added. The current plan is to double wind and solar’s share of a much larger pie by 2030 – hitting 55% of electrical generation. 

Solar’s future in Europe seems very bright as cost reductions and high electricity prices have made it extremely attractive for homeowners. Solar grew by 17% in 2023 and 29% during the energy crisis of 2022. Additional measures are being put in place to maintain that growth. New building regulations for the 27-country bloc will ensure that all new buildings and existing public buildings have solar panels installed on them by the end of the decade, while most non-domestic buildings, such as warehouses, stores and factories, undergoing a renovation that requires a permit will also have to install solar panels. 

To speed things up even further, the EU is also creating “renewable acceleration areas” where permitting for renewables can be fast-tracked. This is especially helpful for the wind industry, which has faced considerable struggles with years-long permitting processes. Investments in offshore wind energy topped €30 billion in 2023 after a disastrous 2022 saw investment bottom out at just €400 million. 

“As wind and solar grow, gas will be next to enter terminal decline,” Brown says. 

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The French consume more dairy products per capita than anyone else on Earth, and their dairy sector represented 7% of the country’s greenhouse gas emissions in 2017. Decarbonizing agriculture means overhauling a massive industry. Six different “low-carbon” food labels have been launched to certify projects that sequester or avoid agricultural emissions, including “ferme laitière bas carbone” (low-carbon dairy farm).

Fortunately, other sectors are less challenging. France’s nuclear-heavy power sector is ahead of schedule in decarbonization (though it controversially kept two remaining coal plants open through the winter), and in February, President Emmanuel Macron announced a 10-fold increase in renewable energy to 2050, as well as plans for a “nuclear renaissance.”

France’s aging buildings, most of them erected before the Second World War, have an enormous potential to slash emissions by switching from gas to electric heat pumps and district heating, particularly with a decarbonized power sector. The country has good plans for this, including large renovation subsidies and one-stop retrofit shops, says Adeline Rochet of climate-change think tank E3G. “But it will take a few years to see results.” Reticent homeowners should be spurred to renovate by recent energy price hikes. Those higher energy costs should also accelerate industrial-sector efforts to decarbonize.

In 2019, France was just below the EU average for recycling municipal waste. But in early 2020, three ambitious new 2025 targets were announced that should speed up the sector’s emission reductions: 20% reduction in single-use plastics, 100% recycling of plastic packaging and 100% removal of “useless” plastic packaging such as blister packs around batteries. Longer-term, all single-use plastics should be phased out by 2040.

Despite its world-famous electric high-speed trains, France’s transport emissions are proving more difficult to move. Electric cars have boomed in the last couple of years, which will help, but it will not be enough to overcome decades of building car-dependent sprawl. More promisingly, a green wave of municipal leaders was elected in 2020, pushing a pro-cycling agenda inspired by Paris Mayor Anne Hidalgo. Freight emissions remain difficult to move, as almost everything travels on diesel trucks.

“There are some powerful lobbies, deeply rooted in national identity in some cases, that make it difficult to achieve targets in transport and agriculture,” says Rochet. She adds that decreasing single-passenger cars and meat-based diets can go a long way, but public resistance to change is likely. “France has clearly engaged in the transition over the past few years, but it is still not up to the challenge, especially with higher EU emissions reductions targets.”

Adrian Hiel is a Canadian writer who has spent the last 18 years in Brussels.

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The executive vice-president in charge of the European Green Deal, Frans Timmermans, has said that the next decade will be “make or break” in the fight against climate change. Crucially, he has also been clear that tackling the climate crisis needs to be a global endeavour. “We challenge everyone to beat us to it, because in a race to zero we are all winners at the end,” he said in a statement.

The European Commission is hoping that the race to zero well and truly starts in November at the UN’s landmark COP26 climate summit in Scotland. Hurrying to publish the plan in July left four months to convince, cajole and coerce other countries to arrive in Glasgow with detailed targets and plans of their own for big reductions by 2030. Below is a year-by-year blueprint for how the European Commission plans to achieve its emissions-cutting goals over the next decade and beyond. These are proposals that haven’t yet been approved by the European Parliament or the EU Council, where the EU’s prime ministers and presidents gather to approve legislation. The Parliament will want more ambition, while the Council will want less. The most difficult thing about a decade-long sprint is that policy, especially EU policy, doesn’t work that quickly. There are too many layers of government, processes to develop, and plans to be made and approved. So in reality this “make-or-break decade” is more of a five-year sprint. Beginning in 2025, we will start to see far more concrete objectives and milestones about what will be done, spent and built.

2021

Fighting finance greenwashing with a Green Taxonomy. Although it’s not technically part of the European Commission’s Fit for 55 package, the Green Taxonomy is seen as an important part of the effort to achieve the 2030 targets. Essentially, it is a list to help companies and investors know what’s “green”and what’s greenwashing, and it’s seen as a vital tool in achieving the 2030 targets. It builds confidence that “green” investments can be trusted and should help mobilize trillions of euros in private investment and avoid costly stranded assets, like a number of proposed gas infrastructure projects that have been cancelled as they simply won’t be needed in the net-zero future. Just as importantly, it will make business more expensive for companies and technologies with dubious environmental credentials – thereby slowing the growth of polluting business and accelerating investments in clean tech. It covers 13 sectors of the economy that represent about 80% of Europe’s emissions.

But defining “green” is a Sisyphean task. NGOs have walked out of meetings on the topic, while France and Germany have butted heads over whether nuclear energy should be included. For now, the taxonomy has avoided two big powder kegs by delaying decisions on whether nuclear should be considered green and whether gas should be treated as a transition fuel, replacing coal. Expect squabbles on these questions to continue for years to come.

2022

The New Bauhaus. Ending the fossil fuel era isn’t enough; Europeans want to make sure they look good doing it, too. The New Bauhaus initiative is a pet project of European Commission President Ursula von der Leyen, who has said it “combines the big vision of the European Green Deal with tangible change on the ground. Change that improves our daily life and that people can touch and feel – in buildings, in public spaces, but also in fashion or furniture.” The plan is to mobilize designers, architects, engineers, scientists, students and creative minds across other disciplines to reimagine sustainable living in Europe and beyond in ways that are inclusive and affordable. It could lead to nothing or it could spark a deeper cultural shift, a green cultural renaissance designed to infiltrate demography, mobility, construction, artificial intelligence and more. Either way, the EU plans to spend €85 million on the project between 2021 and 2022, bringing together smart and creative people to combine beauty and sustainability at five Bauhaus hubs across Europe.

2023

Carbon border tax on six products. Known by the acronym CBAM (carbon border adjustment mechanism), six imported products (iron, steel, aluminum, cement, fertilizers and electricity) will be targeted with a carbon levy to ensure that European producers don’t face unfair competition from countries that have no carbon tax. It’s a way of levelling the playing field so that a Swedish steelmaker using more expensive hydrogen won’t be undersold by imported steel made with cheaper, and dirtier, coal. The money raised will be used to cover the costs of administering the CBAM, with any surplus going into general revenues. That’s not to say it’ll be a big moneymaker, as putting the tax in place, gaining World Trade Organization approval and then actually administering the tax is likely to be incredibly complicated and expensive. Canadian firms should be largely unscathed, since Canada’s carbon tax will make the adjustment unnecessary, depending on where the EU carbon price lands in the coming years. The EU will launch a reporting system in 2023 to ensure a smooth rollout and plans to get the whole system up and running by 2026, when importers will start paying money into it.

We challenge everyone to beat us, because in a race to net-zero we are all winners at the end.

—Frans Timmermans, executive vice-president, European Green Deal

2024

A nice, draft-free library, and super-efficient sports hall, too. Decarbonizing buildings is a massive undertaking. It’s a beast of a file to standardize, and most homeowners would rather get a new kitchen or bathroom than a heat pump. To get around this, the European Commission has proposed mandatory deep energy retrofits for all government buildings (national, provincial, regional and local), as well as ones that serve the public interest such as health, fitness or educational buildings. This will most likely come into effect in 2024 so that there is time for projects to be developed and tendered. Other renovation encouragements will include slapping gas heating with a new carbon tax and the likely development of minimum energy-performance standards for existing buildings. Each EU country will also develop a plan and funding to directly help homeowners double the renovation rate.

2025

The road to more EVs. In a bid to maintain the recent momentum of electric vehicle (EV) sales, the EU plans to build a comprehensive charging network with one million chargers by 2025. The main European highways will see 300-kilowatt (kW) charging (enough to add a 100-kilometre range to your car in less than five minutes) every 60 kilometres. Heavy-duty usage is also being promoted, with 1400kW charging appearing just as often for EV trucks. Five years later those peaks should double and also fan out to Europe’s broader, secondary highway network. By 2030 the EU expects there should be a total of 3.5 million chargers on European roads.

2026

Separating the forest and the trees. The EU burns a lot of trees for energy. As of 2026, Europe will end financial support for electricity-only biomass plants (biomass plants that produce electricity and produce heat aren’t excluded). It’s part of a broader shift to improve the use of biomass (mostly trees, but also 27% agriculture and 12% waste), which represents an enormous 60% of renewable energy consumption in the EU. There will be crackdowns on where biomass can come from, and smaller five-megawatt facilities that generate both electricity and heat for district heating or industrial uses like paper making will be subject to emissions regulations for the first time. This would dovetail with the EU’s new 2030 target to boost forests as carbon sinks, potentially by planting three billion trees and paying forest owners for providing ecosystem services such as cleaning air and water, fighting erosion or decomposing waste.

2027

The Social Climate Fund. Maybe it’s the gilets jaunes (yellow vest) effect of France’s 2018 gas tax protesters, or maybe it’s just good politics, but there is a clear effort to ensure that funding goes toward smoothing out public opposition to the inevitable increase in gas heating costs and at the pump. 2027 will be the final year of the first fund, which begins in 2025 and will disperse €23.7 billion ($35.36 billion) to low-income households. The EU will spend another €48.5billion between 2028 and 2032, mainly supporting the poorest regions in Europe.

Ending the fossil fuel era isn’t enough; Europeans want to make sure they look good doing it, too.

2028

More wind turbines, fewer gas plants. There are a slew of initiatives designed to tinker with Europe’s energy markets by 2028. They aren’t transformative, but collectively they should make a big difference in reducing GHGs. The 2030 renewable energy target gets increased to “at least 40%” from the current “at least 32%.” An “energy efficiency first” principle will be mandated to apply to all major policy and investment decisions. And the EU’s methane reduction strategy for all energy-related methane emissions received a big boost in September when a shared 30% reduction target with the U.S. was announced and more countries quickly joined the pact.

2029

Cutting aviation and shipping’s CO2. By 2029, airlines will have just one year left to ensure that 5% of their fuel is sustainable aviation fuel (SAF). It doesn’t look like much, but that will rise to 63% by 2050. To encourage uptake, taxes on SAF will be low, while traditional aviation fuel will be subject to carbon taxes for the first time. The targets and taxes will apply only to flights within Europe (so, Canadians, your flights to Europe shouldn’t cost any more). Maritime shipping will be treated similarly, though GHG shipping fuel targets will apply to voyages outside of Europe as well.

2030

Hydrogen highway. The buzz around hydrogen has started to fade as the physics of what it can efficiently achieve become better understood. But big things are still being planned. In 2030, the EU intends to produce 10 million tonnes of green hydrogen. This is the point at which the European Commission expects green hydrogen made from renewable electricity to become cost-competitive with blue hydrogen made from fossil fuels. And while much of the hydrogen will be destined for chemicals, fertilizers and other industrial uses, there is also a goal to have hydrogen refuelling stations along the core highway network.

2035

Farewell to the internal combustion engine. Technically, the proposal is not a ban on fossil-fuelled engines but a requirement that all vehicles sold as of 2035 be zero-emitting. That has left parts of Europe’s auto supply industry scrambling to promote e-fuels (synthetic biofuels made with animal fats, oily plants and electricity) as a way to save their business and meet emissions targets. But as the NGO Transport and Environment points out, e-fuels have an overall efficiency of just 13% (compared to 73% for direct-charging EVs). In the long run, e-fuels may find a niche keeping antique cars on the road. With many carmakers vowing to completely shift from gas-powered cars to EVs prior to the 2035 deadline, this should be one of the easiest targets to hit. Fully electric vehicles are about 10% of sales in Europe and are growing quickly.

By the time this article hits North American doorsteps in November, it should be clear whether COP26 has been a success or, as the UN chief warned in September, a failure. While Europe can claim global leadership on combatting climate change for now, that leadership is ultimately worth relatively little without developing a broader global coalition for greater ambition. The EU accounts for only about 10% of global emissions, and without global action on emissions, the deadly floods in Belgium and Germany that punctuated the summer of 2021 will become a more common occurrence. On the other hand, the European Commission clearly has its eyes fixed on creating a virtuous circle of international competition driving for net-zero. The more countries strive for it, the cheaper it gets; the cheaper it gets, the faster it goes. The clock is ticking.

Adrian Hiel is a Canadian dad, husband and writer who has spent the last 17 years in Brussels imbibing more Tintin, Gueuze and political dysfunction than he ever thought possible.

Illustration: Jason Raish

The post The race against time appeared first on Corporate Knights.

EU budget negotiations take years, and much of that time is used by various European leaders to posture for their national media about “not sending any more money to Brussels.” In the end there’s nearly always a marathon summit in Brussels to hammer out the details and journalists joke about whether it was a “three-shirt” or a “four-shirt” meeting.

This year, the final negotiations of the leaders’ phase went on for five days and four nights. The end result was a landmark recovery package totalling €1.82 trillion (C$2.83 trillion) from 2021 to 2027, with the largest pot of money ever dedicated to combatting climate change. A record-breaking 30% of the budget, or approximately €550 billion (C$857 billion), must be spent directly on climate action. In principle, the remainder of the budget “should be consistent with Paris Agreement objectives” and targeted at meeting the EU’s 2030 targets for emissions cuts (we’ll come back to what those might be). What’s more, countries that do not agree to a target of “net zero” by 2050 risk losing billions from the Just Transition Fund portion of the spending.

The big caveat is the lack of clarity of what constitutes “climate action,” but this money essentially turbocharges the policy goals laid out in the EU’s Green Deal.

For German Chancellor Angela Merkel, whose country holds the rotating presidency of the Council of the European Union from July to December this year, this budget deal represents an important legacy-building moment on the EU stage as her long career comes to a close in 2021. Baking climate action into the recovery budget was the first of three major feats accomplished by the deal. The recovery package, known as Next Generation EU (NGEU), is to be funded by common European debt on an unprecedented scale. That’s the second big accomplishment. Common debt and common European taxation to pay that debt were unthinkable at the beginning of the year, but Chancellor Merkel and French President Emmanuel Macron began pushing the idea in May as a response to the coronavirus economic downturn.

Many pundits have described this as something of a “Hamiltonian moment” – after the American president who drove the U.S. federal government takeover of individual states’ debts. Taxation is a power that is jealously guarded by member states, and not even the financial crash of 2008 could convince them to give the European Commission the ability to collect taxes (aside from long-standing customs duties and sugar levies). The EU benefits from a strong AAA rating and may even be able to borrow at negative interest rates, with repayment scheduled for 2028 to 2058. It’s not hard to see the inspiration for the motto used by the German presidency of the Council of the EU: “Together for Europe’s recovery.” This historic Franco-German “meeting of minds” was instrumental in paving the way for the leaders’ political agreement in July.

The third big accomplishment is the creation of 21st-century “sin taxes” to pay for the borrowing. A tax on non-recycled plastics will be proposed next year, as will a carbon border tax. Also in the mix is a digital levy that will likely target Google, Facebook, Amazon Web Services and Apple – all of which are tech companies with a history of declaring income creatively. In theory, these taxes should simultaneously help to meet policy goals of reducing plastic waste and emissions while also raising funds to pay back the debt.

If the German presidency had ended after just three weeks, you could do worse than getting a budget deal hailed for its “wisdom and maturity” by the Dalai Lama.

However, as important as the leaders’ deal was, it is not the end of the story. The deal was a political agreement on a broad package. It still needs to be enacted through EU legislation, and here EU leaders have no formal role to play.

As a result, the overriding focus of the German presidency from now until the end of the year will be to shepherd all the various pieces of Green Deal– and NGEU-related legislation through the Council of the EU (whose 27 EU member states take collective decisions) and the European Parliament.

It’s a daunting list of initiatives, and there is no glamour or glory in “shepherding” – a cuddly euphemism that generally means constant meetings, impact assessments, consultations, negotiations and proposals, all building toward a messy compromise that most parties will be able to live with.

The Green Deal component of those priorities that will benefit from €390 billion in grants and €360 billion in loans are:

• the European Climate Pact;
• the Renewed Sustainable Finance Strategy;
• the Renovation Wave initiative;
• an offshore renewable energy strategy;
• the 8th Environment Action Programme;
• a chemicals strategy for sustainability;
• the Strategy for a Sustainable and Smart Mobility;
• the ReFuelEU Aviation initiative (sustainable aviation fuels); and
• the FuelEU Maritime initiative for green European maritime space.

Most importantly, the EU is gearing up for the next big battle – this time over a new set of targets for emissions cuts by 2030 (from a 1990 base). The current target of 40% was set back in 2014 (pre-Paris Agreement), but as part of the budget agreement the 27 EU leaders also agreed to set new 2030 targets by the end of this year.

Because Germany holds the rotating presidency it will be up to German environment minister Svenja Schulze to first agree to a common position with the 26 other environment ministers and negotiate with the European Parliament, which will almost certainly push for a more ambitious target.

As with the five-day budget talks, there is a small group of countries that will need to be cajoled, threatened, charmed and, ultimately, promised money to get them to agree to increased ambitions.

The case for increasing the 40% target is easy. In fact, a 2019 report outlined that the EU will likely hit 50% cuts under a “business-as-usual” approach thanks largely to planned coal phase-outs in the power sector.

A more recent report laid out the economic and technical feasibility of reducing emissions by 55%. And the Green Deal, released in December, included language about increasing the 2030 ambition to “at least 50% and towards 55%.”

But also in the mix is the European Parliament, where a Swedish Member of the European Parliament (MEP) is pushing for cuts of 65% by the end of the decade. Right now, there doesn’t seem to be a majority to support such ambition, but things have been developing so quickly in the last few months it certainly isn’t outside the realm of possibility. NGOs such as Greenpeace and Climate Action Network (CAN) Europe have been vocal in supporting the 65% target and are lobbying MEPs to adopt the higher figure.

Reaching agreement on 65% will be tough. But Germany’s Schulze told Politico, “We need very, very tough negotiations … not to fulfill the Paris Agreement, not delivering, that’s a global signal the EU shouldn’t give … It’s not an option. The Paris Agreement is clear, we need to deliver [higher ambition] in 2020 … that’s the challenge for the German presidency.”

Peter Vis spent 30 years working at the EU Commission, including five years as Head of Cabinet for the Climate Change Commissioner, and is clear on the scale of the challenge and why 2030 is such a tight deadline. “Since 1990 the EU’s emissions have reduced by about 23%, possibly more by the end of this year in view of the effects of the coronavirus. Between 2020 and 2030 we [would] have to increase emissions cuts by another 30% in just 10 years.”

Because the EU’s legislative process takes years, it’s unlikely the bloc will see a big increase in annual reductions until mid-decade. That leaves just five years to make up the shortfall between 50% and 55% in cuts.

“The reductions needed to meet a 55% target will be unprecedented. The costs of these measures will have to be borne by businesses and households, so this doesn’t make for easy politics. There will be some opportunities and benefits too, so it’s not all negative, but it’s going to be tough. Really tough if we’re really serious,” said Vis, a senior advisor at Rud Pedersen Public Affairs in Brussels.

If the EU manages to agree on a target of 55% by the end of the year, it will have agreed perhaps to the most ambitious target for reducing CO2 levels and the most ambitious spending plan to achieve them, all within a six-month period.

Adrian Hiel is a Canadian dad, husband and writer who has spent the last 16 years in Brussels imbibing more Tintin, Gueuze and political dysfunction than he ever thought possible.

With the support of the Embassy of the Federal Republic of Germany in Canada.

The post Baking a landmark COVID and climate change budget in Brussels appeared first on Corporate Knights.

As EU policy and communications manager for Europe’s association of cities in energy transition, I am here to meet Europe’s energy commissioner, Kadri Simson, along with representatives from businesses, cooperatives, NGOs, industry and think tanks who make up the Coalition for Energy Savings. Simson is responsible for the “renovation wave” component of Europe’s Green Deal, as well as the offshore wind strategy, energy efficiency and other initiatives.

Big changes at an EU level, like the euro, come about as the result of years or decades of painstaking planning. The European Green Deal, in the space of less than 24 months, has gone from NGO wish list to “the new defining mission” of the EU. Faster still has been the EU’s response to the coronavirus. EU leaders have been clear that pandemic response must integrate a “green transition.” And while the urgency of the pandemic will delay some aspects of the Green Deal by weeks or months, the overall package could receive a boost from increased lending and spending as the bloc lays out its plans for economic recovery once the crisis has passed.

Last fall, Canada set the same goal as the EU of reaching net-zero emissions by 2050. But they’re not at the same start line. Between 1990 and 2018 the EU reduced greenhouse gas emissions by 23%. Canada’s GHG emissions rose by 18.9% between 1990 and 2017. If Canada is serious about reaching net zero by 2050 it needs to learn everything it can from the Green Deal. Here are eight lessons for Ottawa on how to design its own Green Deal.

1. Ride the “renovation wave”

Renovating Europe’s notoriously drafty old buildings is set to be the flagship program of the Green Deal. Buildings account for 40% of energy use, and the goal is to renovate 3% of buildings annually in the EU over the next decade. It’s an easy idea to sell but harder to do, as current renovation rates languish between 0.4% and 1.2% in EU countries. Expect a focus on public buildings (schools, hospitals) and social housing. Public ownership makes renovation much easier (for more on greening public housing, see p. 14) and the benefits are much greater. Lower energy costs means more money for schools and health, and tackling energy poverty in social housing can bring huge social benefits.

Renovating private homes and apartment buildings with a mix of owners and renters is more complicated and will require carrots and sticks. The carrots will likely come in the form of low-cost financing, energy-efficiency mortgages and schemes to bundle lots of individual renovations into big projects to lower costs. Sticks might include a checklist of things that need to be done in five-year intervals for homeowners: improved insulation, new windows, new heating systems, for instance, that force people to upgrade their property over time. Or, it might be regulations mandating a deep energy retrofit when a building is sold or tenants change. As with the rest of the Green Deal, the details are still being worked out in Brussels. Either way, there could be pushback from property owners when the final proposal comes out in September. New buildings in the EU will be “nearly zero energy buildings” (NZEB) from the end of this year, and the target for net-zero buildings will be 2025 or earlier.

Lesson for Canada: Setting aggressive energy-retrofit targets for buildings will be key to Canada reaching net zero, too. This is one area where Canada can learn by watching what works and what doesn’t in the EU and rapidly rolling out version 2.0 of the renovation wave. Aside from drastically cutting energy consumption, there should be a big boost for the construction industry (already worth $141.6 billion in Canada in 2018) in urban and rural areas – especially amongst people who wouldn’t benefit from data-driven jobs. The Canada Green Building Council, in its Roadmap for Retrofits in Canada, recommends targeting large buildings, especially in Ontario and Alberta, for retrofits to slash GHG emissions by 30% by 2030 and potentially as much as 51% by 2050.

2. Fuel clean tech growth

European Commission President Ursula von der Leyen called the climate crisis a challenge that “we can turn into an economic opportunity . . . Europe has the first-mover advantage. The whole world increasingly needs clean technologies and solutions.” She cited batteries, smart grids, green hydrogen power, offshore wind-power, clean steel and decarbonized gas as industries that “will create innovation, value and jobs.”

Green jobs won’t be just at the manufacturing and construction level. Digitalization is a key part of Europe’s decarbonization strategy. Think smart grids that track when and where electricity is needed and drive down generation, or “5G corridors” for connected and automated mobility. Most excitingly, the EU Commission wants to create a “digital twin” of Earth that would “radically improve Europe’s environmental prediction and crisis management capabilities.” Above all, the goal is to form European digital champions that specialize in monetizing industrial data and ensure those companies are well placed to dominate the field globally.

Lesson for Canada: There’s no decarbonization without digitalization, and this is one area in which Canada could be well placed, with its internationally recognized strength in artificial intelligence. That expertise, however, can be commercialized only if government policy ensures that a market forms quickly enough to maintain a global edge. Canada’s world-class network speeds are also a strong asset in maximizing the technological opportunities of the energy transition, but creaking rural connectivity could leave part of the country behind. The EU is in a similar boat and unlikely to meet its 2013 goal of 100% broadband coverage by the end of this year.

The pandemic may delay aspects of the Green Deal, but the overall package could receive a boost in spending as the EU lays out plans for economic recovery once the crisis has passed.

 

3. Make it right

What and how things get made in the EU is set for a complete overhaul. Some energy-intensive sectors, like steel, chemicals and cement, will get investment to develop new, lower-carbon manufacturing techniques. Using hydrogen to make steel is a good example. Assuming that zero-carbon steel is more expensive than traditionally made steel, a carbon border tax will likely be implemented on imports to make sure they don’t undercut European companies. A “sustainable products” policy will ensure that all products are designed with common principles that prioritize reducing and reusing materials before recycling them (such as the Netherlands’ Fairphone) and prevent environmentally harmful products from being sold. As well, all packaging will have to be reusable or recyclable in an economically viable manner by 2030, with new rules for biodegradable and bio-based plastics.

Lesson for Canada: Canada needs to decide if it wants to sell goods to the world’s largest economy or not. If it does, then it is going to have to read the fine print on the Green Deal closely and change the way it manufactures products. Biofuels, made using Canada’s low-carbon grid, could lead to the production of sustainably sourced aviation biofuels that European airlines will be increasingly anxious to use. Canadian products that don’t meet these emerging standards either won’t be allowed on the market or will be hit with a carbon border tax or something similar. If Canadian manufacturers embrace this change, they will have privileged access to 500 million consumers.

4. Bet the farm on greener food systems

EU food makers are going to be biting off some big changes under the Green Deal. Foods will be grown with drastically fewer pesticides, antibiotics and fertilizers, and sales tax could be lower on things like organic fruit and vegetables. Eating locally produced food is also expected to be strongly encouraged. As the world’s largest importer and exporter of food, the EU is also looking at raising international food standards; in particular, there will be pressure to curtail soybean and beef imports from regions that don’t promote biodiversity or reduce pesticide use.

Lesson for Canada: Canadian farmers are already torn between their biggest market, the U.S., and the higher standards in the EU. Canadian agricultural exports to the EU fell 15% after the Canada-EU Comprehensive Economic and Trade Agreement (CETA) was signed, thanks to Europe’s ban on antibiotics and growth hormones. If Canada wants to improve its trade deficit at all in the coming decades, it will have to raise the bar on greening its farms (see “Seeding Climate Action on Canada’s Farms,” p. 50).

5. Rev into emissions reductions

The Green Deal aims to move substantial amounts of freight off roads and onto rail and rivers. Aviation and maritime fuels face the prospect of new taxes, while emissions from those sectors may soon become subject to payments under the Emissions Trading System. The delicate matter of road-pricing is on the table, and rural EV-charging infrastructure and alternative fuels can look forward to direct financial support. Car emission standards will be reviewed in 2021. Already, tough new standards (set in 2009) that level hefty fines on automakers are being phased in for 2020. The result has been a massive increase in the number of battery-electric and plug-in hybrid cars available in Europe. Groupe PSA (Peugeot, Citroën, Opel, Vauxhall and others) sold more electric cars in January 2020 than in all of 2019. Of course, the pandemic has since stalled that growth. The main European auto industry association has been lobbying to have stricter emissions standards delayed, but VW, Daimler and BMW have said they plan to hit the ambitious targets.

Lesson for Canada: Canada may not think it has the market size to push car manufacturers, but with more than two million new cars purchased each year, it is a larger market than California, which is setting its own fuel economy standards. Canada can put some teeth in its pledge to ban internal-combustion vehicle sales by 2040 and ensure that its ambitious clean-fuel standard is implemented with a sense of urgency.

Canada could also follow the EU’s lead on setting ambitious standards and levying steep penalties on automakers that fail to keep up with the program. This would result in a massive uptake in electric vehicles without costly cash rebates for EV purchasers. Canadian auto sales to Europe rose 83% in 2018 thanks to CETA; if Canada wants to maintain that growth in the coming years, it will need to encourage more EV production, which is almost non-existent in the passenger market at the moment.

6. Go local to get community support

Europeans might have a reputation for being tree-hugging, planet-loving people, but the scope of these changes promises to challenge even their willingness to embrace sustainability. Senior officials have warned of a “tectonic” shift and compared the Green Deal to changes brought about by the industrial revolution. To cope with this, the Green Deal envisages a big effort to engage with citizens to ensure they “remain a driving force.” This is known as the Climate Pact, and the Covenant of Mayors Europe will play a central role in rooting the Commission’s high-level objectives in the local community.

Lesson for Canada: It’s no secret that parts of Canada are less keen on an energy transition than others. Emulating something similar to the Climate Pact to transform headline ambitions into local improvements in infrastructure, air and water quality and other tangible benefits, particularly in rural farming communities, will go a long way to making a Canadian Green Deal more politically palatable.

Canadian products that don’t meet the EU’s emerging standards either won’t be allowed in or could be hit by a carbon border tax.

 

7. Bank on financially savvy climate spending

The European Commission is more of a regulator than a government. Its strength is setting the rules for the game rather than spending money the way a national government does. Its budget is about 1% of Europe’s gross national income. So the headline of €1 trillion in green financing between 2020 and 2030 is substantial. About half the money comes from the regular EU budget – 25% of the EU budget is expected to be spent on climate action. Then there is an existing fund, which will be rebranded and used to leverage €280 billion and another €143 billion of public and private investment, specifically to help regions most reliant on carbon intensive activities. It’s an impressive amount of financial heft when the total amount of new money is a mere €7.5 billion over the next seven-year budget.

A major player in the leveraging and investment is the European Investment Bank (EIB), which announced in November a phase-out of all fossil fuel funding and a ramp-up to 2025, when 50% of its lending will be spent on climate change projects. It is the EU’s “climate bank.” A “green taxonomy” was agreed upon last year that clearly defined what constitutes a green investment to help funnel interested investors. Non-financial risk disclosure rules will be updated to force companies to come clean on the risks they face and actions they are taking to mitigate climate risk. They propose raising additional money with a new tax on non-recyclable packaging waste and rolling out a market for green bonds.

Lesson for Canada: The figures involved in the energy transition can seem large, but making systemic changes to the financial system can bridge the gap between purse strings and ambition. The Canada Infrastructure Bank already has a similar mandate to the EIB, but reimagining the much larger Business Development Bank of Canada as Canada’s climate bank would be a boon to green businesses.

8. Act soon – it’s cheaper than stalling

Economic opportunities aside, climate change is still a bad thing. The EU Commission estimates that a high warming scenario of more than 3 degrees C will result in GDP losses in EU countries ranging from 2% in northern Europe to more than 8% around the Mediterranean as productivity dives and mortality climbs from heat, forest fires, floods and other natural disasters. Climate neutrality, however, is expected to boost GDP by 2% and create millions of jobs.

Lesson for Canada: Canada is already warming twice as fast as the rest of the world, and average temperatures have increased 3.06 degrees since 1948. The cost of coping with the fallout of a warming world will be far more than the cost of climate neutrality.

The three-hour meeting in the Berlaymont is up, and we’ve barely had enough time to have a shallow discussion of the issues involved in energy efficiency. Much like this article, there just isn’t time and space to go into all the details and all the different initiatives because of the Green Deal’s enormous scope, size and ambition.

Two things are clear though. One, Canada has a lot of catching up to do if it is going to hit net zero by 2050. The head of the Business Council of Canada, Goldy Hyder, agrees, recently telling the government “Let’s get on with it,” with respect to the net-zero target and calling on business, government and labour to “lay down the arms on this issue and find a way forward.”

And two, in the EU’s Green Deal, Canadians have a template that can drastically improve their prospects of getting there.

Green Deal plans

 

There are 47 initiatives listed in the Green Deal communication, with the aim of slashing emissions and creating a climate-neutral continent by 2050.

Here are the top 10 that haven’t already been mentioned.

 

Carbon border tax
A carbon tax, likely on just a few sectors to start, to ensure carbon-intensive industry doesn’t move abroad.

Strategy for smart sector integration
Matching industries with complementary energy profiles – think data centres and district heating.

EU industrial strategy
Creating European champions and funnelling subsidies into priorities like e-mobility, hydrogen, health, the Internet of Things and microelectronics. Decarbonization of energy-intensive sectors such as cement, steel and chemicals.

Circular economy action plan
Designed to decouple resource use from growth. Will halve waste, reduce
embodied carbon in construction and put in place sector-specific plans for
textiles, food and transport.

Waste reforms
Tackle over-packaging, mandatory recycled content. New EU-wide model for
separate waste collection and new rules on waste shipments and illegal exports.

EU biodiversity strategy for 2030
Increase biodiversity-rich land under protection, restore damaged ecosystems, “green” cities and increase urban biodiversity.

EU forest strategy
Increase absorption of CO2, reduce forest fires; focus on afforestation, forest preservation and restoration.

Trans-European Network – energy regulation review
Ensure pan-European energy infrastructure is prioritized: smart grids, hydrogen networks, energy storage and carbon capture, storage and utilization.

Zero-pollution action plan
Tackle urban runoff of microplastics, chemicals and pharmaceuticals; revise air
quality standards; create specific measures to help cities improve air quality.

Research and innovation
“Green Deal Missions” will help deliver large-scale changes in areas such as adaptation to climate change, oceans, cities and soil. This will entail funding research and start-ups and forming industry-government partnerships in batteries, clean hydrogen, circular bio-based sectors, food, urban transport and more.

Adrian Hiel is a Canadian dad, husband and writer who has spent the last 16 years in Brussels imbibing more Tintin, Gueuze and political dysfunction than he ever thought possible.

The post 8 economic recovery lessons for Canada from Europe’s Green Deal appeared first on Corporate Knights.