During its EU Council presidency, Germany will prioritize a carbon border tax and a European carbon price that goes beyond the scope of industries covered by the EU emissions trading system (ETS).
On June 30, Germany released a plan that highlights the need for quick agreement on the EU long-term budget and coronavirus recovery fund while prioritizing long-term environmental goals for its presidency, which begins July 1 and runs through December 31.
German Chancellor Angela Merkel said in a June 29 joint press conference with French President Emmanuel Macron that she hopes EU leaders can reach agreement on the €1.1 trillion multiannual financial framework and €750 billion recovery fund during the upcoming July 17-18 summit.
“Consultations have been underway. . . . We hope to find a solution, though our work’s still cut out for us,” Merkel said.
Merkel and Macron again presented a united front on passing a recovery fund that relies on grants rather than loans and targets the member states most severely hit by COVID-19. The leaders announced a €500 billion green recovery fund financed through EU borrowing in May.
Both leaders expressed support for an EU carbon border adjustment tax, estimated by the European Commission to raise between €5 billion and €14 billion per year. Merkel said the tax must be compatible with the WTO, echoing international concerns that an EU carbon border tax could spark a trade war with the United States.
“In the Council we also want to discuss European approaches to achieving the climate and energy goals, particularly the expansion of carbon pricing to cover all sectors and the introduction of a moderate minimum carbon price within the context of the European emissions trading system,” the German plan says.
An expanded ETS for the maritime and aviation sectors generating €10 billion annually is among the proposals introduced by the commission for new own resources to fund the EU coronavirus recovery package.
German Environment Minister Svenja Schulze told German media outlet Taz on June 29 that Germany aims to achieve a 55 percent reduction in CO2 emissions by 2030 compared with 1990 as part of its nationally determined contribution to the Paris climate agreement to achieve carbon neutrality by 2050. Currently, the 2030 emissions reduction target is set at a 40 percent decrease from 1990 levels.
The ETS will contribute significantly toward the country’s decrease in CO2 emissions, Schulze said, but Germany should look beyond that system to develop EU-wide carbon pricing. “It is clear that emissions outside of emissions trading — from transport, buildings and agriculture — also have to go down further. We can start with common EU-wide goals and rules and thus advance climate protection — for example, with the regulations on energy saving, renewables, or efficiency in buildings,” she said.
Macron announced a €15 billion commitment to France’s green economic transition June 29 in response to a report from the Citizens' Convention on Climate detailing 149 recommendations to reach carbon neutrality by 2050. In his joint press conference remarks, he said it is very important to have “a clear European model” for the recovery efforts and climate goals and said a carbon border adjustment tax will be “developed as need be.”
In a June 9 memo to the EU Permanent Representatives Committee, the future German, Portuguese, and Slovenian presidencies said they will also focus on a fair taxation system, with particular attention to corporate minimum taxation and policies laid out in the EU action plan to prevent tax evasion. Additionally, the presidencies would like to revise the tobacco excise and energy taxation directives, according to the memo.