The European plan to fight against pollution extends from car manufacturers to airlines; see effects – 07/15/2021 – Market

Cars equipped with internal combustion engines will disappear from European concessions in 2035. Steel and cement manufacturers will have to pay for the carbon dioxide emissions generated by their facilities.

Freighters may not be allowed to dock at ports such as Hamburg, Germany, or Rotterdam, the Netherlands, unless they are running on cleaner fuels. Commercial jets will need to be powered by synthetic fuel, produced from clean energy.

The European Union’s plan to cut its greenhouse gas emissions to less than half by the end of the decade will affect nearly every industry in the trade bloc, with far-reaching consequences for jobs and the economy. economy of member countries. EU leaders say the climate package unveiled on Wednesday could put Europe at the forefront of new technologies such as batteries for electric cars, offshore wind power generation or hydrogen aviation turbines.

But the transition will also be painful for some consumers and businesses, pushing up the cost of a wide variety of goods and services, such as video monitors imported from China, for example, or vacation trips to the Greek islands, or even more. a gas tank. . Companies that manufacture products intended for obsolescence, such as components for internal combustion engines, will have to adapt or close their doors.

The proposals could change polluting sectors such as steel, which directly employs 330,000 people in Europe.

“It is a truth that needs to be told,” said Akio Ito, senior partner at consultancy firm Roland Berger in Munich. “One way or another, we as consumers will have to pay the price for green transformation.”

Ito said the new proposals could challenge industries in several ways. Businesses should switch to cleaner energy sources such as hydrogen, which are likely to be more expensive. There is a risk that European companies will end up shifting some of their most polluting operations, such as iron production, beyond the borders of the European Union, he said.

Frans Timmermans, the commissioner responsible for the so-called Green Deal at the European Commission, admitted on Wednesday that “some sectors will benefit more than others”. He said the onus is on the Commission to demonstrate that the rewards and sacrifices will be distributed fairly.

The European Commission’s “Fit for 55” plan calls on the 27 member countries to reduce their greenhouse gas production by 55% by 2030, against 1990 levels.

The European Union’s target is more aggressive than that of the United States, which has committed to reducing its emissions by 40 to 43% over the same period, but falls short of the British, i.e. a reduction of 68% . China, the leading emitter of greenhouse gases, has just announced that it anticipates a peak in emissions in 2030.

Here’s how the plan would affect European industries.

Cars

Most automakers have announced plans to shift production to electric vehicles, but many have resisted setting a date for the retirement of fossil-fueled vehicles, which continue to generate most of their profits. The European Commission’s plan would effectively require all new cars to have zero emissions from 2035, which takes away any flexibility for companies like Volkswagen, Mercedes-Benz or Renault to continue selling certain petrol or diesel vehicles, including vehicles. diesel hybrids.

The commission’s plan also includes clauses that benefit the industry. Public funds will be used to help build charging stations every 60 kilometers on major highways, an initiative that could help promote the sale of electric cars. The commission will also help fund a network of hydrogen service stations, benefiting companies like Daimler and Volvo that plan to build long-haul trucks that run on fuel cells to convert hydrogen into electricity.

The association representing European car manufacturers said the charging networks designed by the commission were not dense enough and complained that it would be wrong to ban internal combustion engines altogether.

The European Union should “focus on innovation, rather than forcing or even banning specific technology,” said Oliver Zipse, CEO of BMW and chairman of the Association of European Automobile Manufacturers, in a press release.

Airlines companies

Airplanes are great generators of carbon dioxide emissions, but it is difficult to convert them into a non-polluting form of operation. According to the committee’s proposals, airlines would be forced to start blending synthetic fuel with the fossil fuels they currently use and no longer receive tax breaks on fossil fuels. In other words, they will have to pay more to pollute.

Airlines for Europe, an industry lobbying organization representing AirFrance-KLM, easyJet, IAG, Lufthansa Group and Ryanair – the largest domestic airlines and largest budget airlines in Europe – said its members support green transition, but would seek simpler regulation and financial support.

“The taxes drain money from the sector that could be used to support investments in fleet renewal and clean technology, which would reduce emissions,” said Willie Walsh, managing director of Iata (International Air Transport Association) in a press release.

Airbus, the world’s largest aircraft manufacturer, has asked airlines for subsidies to renew their fleets and support for technologies that use sustainable fuels. The European giant, whose main shareholders are the French, Spanish and German governments, has announced its intention to develop emission-neutral aircraft within five years, and recently unveiled a concept of clean aircraft that would run on hydrogen. .

Navigation

The plan sets out river transport companies by making them pay more for the emissions they generate in order to encourage their transition to cleaner energy. Most of the ships in operation today run on poor quality and highly polluting fuel.

Shipping lobbyists complained that it was not clear how the plan would be implemented and which shipping routes would be affected. “Is this just Europeans or is it half of the trade between China and the European Union?” Asked S&P Global Platts, an energy and commodities research firm, in a note to his clients.

heavy industry

The European Commission’s plan would increase the cost of pollution by strengthening the European trading system, which forces companies to pay for the dangerous carbon dioxide they release into the environment. Anticipation of changes has already increased the price of pollution permits by around 50%.

Steelmakers have warned that the proposals could further erode their competitive advantage over Chinese producers and discourage the investment needed to switch to low emissions.

“We will have higher costs per issue, that will be the end result,” said Koen Coppenholle, managing director of Cembureau, a cement industry organization.

Energy

Power producers will be forced to accelerate the transition from coal power to wind, solar and hydropower. The goal is to increase the percentage of these energy sources to 40% by 2030, largely by increasing the penalty that energy companies pay for generating electricity from fossil fuels, which would make the solar and wind power more attractive in financial terms.

Considering all the business interests that are at stake, the plan risks being the subject of furious lobbying by industry representatives while it is underway in Brussels. The committee’s proposals must be approved by the European Parliament and the leaders of national governments in the European Union before they can become law, a process which is expected to take around two years.

Supporters of the Commission’s plan will find strong support from Europeans increasingly concerned about extremely hot summers, forest fires, severe storms and other evidence of the effect of climate change.

“We have seen tornadoes in the Czech Republic. Who would have guessed? Said Timmermans. “Anyone who wants to deny the urgency of the climate crisis should think again.”

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