► “The United States can stimulate Europe”
Alain Grandjean, founding economist of Carbone 4, a consultancy and research firm specializing in adaptation to climate change
If Joe Biden succeeds in getting his climate target adopted in the United States Senate, where he enjoys a narrow majority, the United States will have the means to go much faster than the European Union, despite the latter’s desire to to be a leader in the energy and climate transition. On both sides of the Atlantic, the very ambitious objectives are in the same order of magnitude: a reduction of between minus 50% and minus 52% by 2030 in CO emissions2 for the United States compared to 2005, against a drop between minus 55% and minus 57% for the EU, taking 1995 as the base year.
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The difference is that Washington can say, while remaining credible, that the widening of deficits due to colossal investments does not pose a particular problem, the dollar remaining for a few years still the great reserve currency at the world level, what the euro is not. The Union, which can be seen as an assembly of co-owners who must agree on everything, does not have the responsiveness of a federal state.
Despite this, the change of course of the United States on the climate can stimulate the EU in the achievement of its objectives, and reassure the industrialists of Eastern Europe, because the competition undoubtedly promises to be fairer. For Europeans and Americans alike, the transformation of the economy will involve investing hundreds of billions a year in each of the major sectors. To renovate buildings, to produce less polluting cars and develop railways, to develop hydrogen and electricity in the most carbon-intensive areas of industry, to solve the problem of fertilizers and methane emissions, in agriculture … Without forgetting the essential expenses in supporting and training people, in this transformation. All of this will be difficult to achieve without going through a review of the Maastricht deficit and debt criteria, and the Americans could show the way.
Finally, we can expect the United States to cooperate heavily on common standards, and a carbon price, so as to avoid any environmental dumping. This could come as an alternative to a carbon tax. The 2015 Paris climate agreement excluded trade, but there is material to agree on demanding clauses, as talks on the EU / US trade deal will be relaunched. For example, we could imagine that in the fields of chemicals or steel, we options together in favor of new energy models, so as not to give the premium to the unfair competition of the most carbon-intensive products.
► “In Europe, the“ Green Pact ”is the key tool”
Sébastien Treyer, director of IDDRI, the institute for sustainable development and international relations.
During the summit of April 22 and 23, a landmark commitment: that of the United States. By announcing a 50% drop in its emissions by 2030, the country has taken a major step towards transforming its economy. This marks a breakthrough, which in its wake involves partner states, such as Canada and Japan: the first has committed to reducing its emissions by 40 to 45% compared to 2005, the second by 46% compared to 1990. .
For its part, the European Union is also setting the bar high, by committing to reducing them by at least 55% by 2030. And to transform the test, it has a key tool, the Green Pact presented by Commission at the end of 2019. What is at stake? That the dozens of texts it contains are not watered down or unraveled as they are adopted by the Member States.
Take the example of vehicles: the Green Pact provides for increasingly stringent CO2 standards to promote the electrification of the fleet. This ambition must not be diminished. France will also have an important role to play, taking over the presidency of the EU in January 2022, the date on which several of these texts will be in the process of being adopted.
The other lever, to transform the test, is the emissions trading system. With a target of 55%, much more ambitious than the initial 40%, the sectors that are eligible – heavy industries, chemicals, etc. – will have to pay more for their right to emit carbon. At the same time, more ecological technologies, green steel for example, will become more competitive.
On one condition, however: that distortions of competition are avoided. And in this regard, trade cooperation is decisive. In his speech on Thursday at the summit, Emmanuel Macron referred to it. He spoke about the importance of giving “A carbon price”, to enable ecological transition, which in particular brings into play “Our commercial relations”, according to him. In fact, on this ground, one cannot go to confrontation, at the risk of being accused of protectionism. We must find, through cooperation, a carbon adjustment mechanism at the borders acceptable to our partners.
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Finally, the last key issue: financing. The French president underlined this on Thursday by welcoming the fact that the American Federal Reserve, the FED, has joined one of the proactive networks in terms of green investments (1). Because here again, nothing will be done without cooperation, to establish common financial rules and make investments in decarbonization attractive.