EU Commission’s communication on 2030 climate target gives positive signals to low carbon investors. A greenhouse gas budget is needed to strengthen the targets further.
Honourable Heads of State and Government,
Ahead of the coming European Council meetings, we would like to inform you about our thinking on how to accelerate private sector contributions for the climate investments needed.
The EU needs to drastically increase its climate-related investments, a large majority of which need to come from the private sector.
The European Commission’s communication on Stepping up Europe’s 2030 climate ambition – 2030 Climate target plan estimates that to achieve the 55% target by 2030, the EU will need to invest €350 billion more annually over the next decade than it did during the previous decade. The cumulative additional investment need for 2021 – 2030 would thus be €3,500 billion. Most of the investments will need to come from the private sector. As a comparison, allocating 37% of the €750 billion NextGenerationEU funds (€277 billion) on European Green Deal objectives would contribute about 8% of the additional investment needs for the next decade.
Investment decisions depend on the private sector’s trust in the robustness of the decisions taken by European institutions.
The communication concludes that when the carbon price is sufficiently robust, it becomes a strong driver for immediate change and a strong signal for low carbon investments, and clearer and stronger investment signals are urgently needed. In addition, the communication notes that the EU Emissions Trading System (ETS) has proven to be an effective tool in reducing greenhouse gas emissions and proposes expanding ETS as well as developing supportive policies to increase demand for zero- or very low-carbon technologies and low-carbon products. These observations and outlines are excellent, but they still do not clarify the longer-term targets.
A transparent carbon or greenhouse gas budget would clarify the target and strengthen the mutual trust between the private sector and EU institutions.
A carbon or greenhouse gas budget, setting out the total remaining quantity of greenhouse gas emissions as CO2 equivalent by until 2050, would clarify the long-term target and would create a natural foundation for the right amount of emission allowances within the expanding ETS. A budget would improve predictability and the robustness of the CO2 price. We were pleased when the European Parliament’s Environment, Public Health and Food Safety Committee supported the need to define the greenhouse gas budget.
There is strong support from companies and industries for a carbon or greenhouse gas budget.
In 2018-2019, close to 100 organisations signed the Nordic call for the EU and its Member States to set and agree on sufficiently ambitious climate targets including a binding carbon budget for the remaining GHG emissions. The callers are companies, cities, universities, business networks and The Confederations of Finnish Industries and Danish Industries representing more than 25,000 companies as well as The Central Union of Agricultural Producers and Forest Owners (MTK) in Finland with its more than 300,000 members.
Call for support
Climate Leadership Coalition (CLC), Haga Initiative and Skift – Business Climate Leaders welcome the European Commission’s communication on Stepping up Europe’s 2030 climate ambition – 2030 Climate target plan and the greenhouse gas budget proposal by the European Parliament’s ENVI Committee.
In this light, we as business networks in Sweden, Finland and Norway with the participants of the Nordic call would like to urge you – honourable Heads of State and Government – to set and agree to define a greenhouse gas budget for the EU and to use it as a main policy tool. As climate change proceeds at an alarming rate, this is likely to be the last chance to get the policies right.
We thank you for your consideration.
Jouni Keronen Nina Ekelund Bjørn Haugland
Chief Executive Officer Executive Director Chief Executive Officer
Climate Leadership Coalition Haga Initiative Skift – Business Climate Leaders