Carbon tax delay reveals EP’s divide on climate crisis

Members of the European Parliament today were locked in one of the most contentious of debates ahead of a vote tomorrow on Europe’s ‘Fit For 55’ package – its mission to reduce carbon emissions by 55% in 2030 and go carbon neutral by 2050.

The Commission wants to slap a carbon price on fossil fuels used for transport and heating to incentivize a switch to cleaner alternatives, but a report led by EPP rapporteurs David Casa and Esther de Lange promotes a gradualitic approach that does not punish businesses immediately.

The ETS is a carbon-pricing mechanism that will tax buildings and road transport (so-called ETS2)  to finance the social climate fund. The compromise proposal is to delay ETS2 on private households and transport users to after 2029.

To mitigate the effects of higher prices, a €72 billion Social Climate Fund is meant to support low-income households — an element especially important for countries in Eastern and Southern Europe, where energy poverty rates are high.

It was European Commission vice-president Frans Timmermans who started the debate, exhorting the MEPs not to delay any carbon tax when buildings and road transport were at the heart of rising tempreatures. “You plan on weakening an instrument that can help people make a green switch,” he told MEPs, reminding them that this is what the social climate fund would help mitigate, but only by taxing the wealthy.

“Your proposal,” he told MEPs supporting the compromise deal, “would cut this by half... something we will have to discuss in the trialogues,” he said, referring to the discussions between MEPs, the Commission and the Council after tomorrow’s vote.

After the debate, Timmermans again appealed to MEPs to head the science that was revealing the intensification of the climate crisis. “Denying science: that is ideology... Who will suffer the most if we procrastinate? The poorest, small businesses, farmers... rich people can always find a different place to live, a way out. I don’t agree with the ETS compromise, we’ll have to see about that in the trialogue. Of course there is a price on the cost on the carbon, but if you combine this with a social fund, then it is justified.”

EPP MEPs Esther de Lange and David Casa questioned the degree to which businesses and corporations should be made to pay, without a gradualist approach that allows them to invest and prepare for carbon neutrality by 2050.

Indeed De Lange challenged Timmermans’s provocation on ETS. “We will succeed only if we do this right: green does not come out of the blue… objectives, standards and percentages will not be enough to make change happen. We need companies willing to invest and for that they need a Green Deal with a business case – investment requires liquidity, and the current economic situation is not making it easy. So let’s not hit them at the start of the ETS, and give them breathing space in these challenging times while still demanding they reach the targets set by the Commission.”

Socialist leader Iratxe Garcia Perez accused the EPP of “emphasising differences” when lawmakers had to be working towards a common aim, by ensuring the social climate fund does not make people choose between paying their energy bills or shopping for food. “The war is no excuse to stop our road to carbon neutrality… it is the sign we must stop being dependent on fossil fuels.”

Green MEP Bas Eickhout was also quick to hit at out at calls for gradualist approaches. “Climate change does not take a break… we are now on the way of overshooting the 1.5-degree increase in the next five years… what is at stake is whether we are ready to keep this target alive. When I hear colleagues talk about a ‘balanced approach’, I ask for what… for industry! Our industry needs clarity – they want to know where they are going, and that’s what we have to deliver. Is it for the innovative companies, or the laggards who still get fossil subsidies?”

At the end of the debate, Timmermans called climate change humanity’s most transformational challenge yet since the time of the industrial revolution. “We come into this late but we can still fix it.”