Germany’s fuel-price push divides Brussels as EU sets out climate plans

News from Brussels

Source: Politico, 2021-07-14

Germany got what it wanted — now everyone else has to deal with it.

On 14 July, the European Commission unveiled its Fit for 55 mega-package of climate legislation, meant to put the bloc on track to meet its 2050 emissions targets.

At the heart of it was a plan to extend carbon pricing to road transport and buildings via the EU's Emissions Trading System (ETS) — a move championed by two German leaders, Chancellor Angela Merkel and Commission President Ursula von der Leyen, at a summit hosted by US President Joe Biden in April, just as the EU executive was drafting the Fit for 55 laws. 

That plan, however, triggered a split within von der Leyen's Commission and will likely spark criticism from governments across the bloc wary of a social backlash if the proposed measures hit consumers' wallets.

Even on the morning of the launch, the issue of the ETS extension was pushing the college of commissioners close to an extraordinary revolt. A significant cross-party group of commissioners opposed the measure, according to four officials.

They included members of von der Leyen’s own centre-right European Peoples' Party and climate czar Frans Timmermans’ centre-left Socialists, as well as liberals from Renew Europe.

Some commissioners were also infuriated by a perception that von der Leyen had railroaded them into supporting the measure by expounding in detail on the reforms in newspaper interviews published the morning of the legislation's launch. One-third of commissioners, according to officials, asked for their dissent to be noted in the minutes of the commissioners' meeting ahead of the unveiling.

Carbon pricing for transport — which, in practice, will add a few cents per liter to fuel prices by the end of the decade — is a policy few outside Brussels or Berlin have asked for. 

Wary of the Yellow Jackets protests that rocked France in 2018, many capitals are nervous about introducing measures that would directly hit motorists' wallets. The road pricing plan would mean fuel producers have to buy credits and pass the cost, albeit marginal, to consumers. 

Denmark has been the lone supporter of their German neighbors, said the country’s Climate Minister Dan Jørgensen: “It would actually be difficult for me to just point to a big number of other countries that support it."

In a package of proposals that includes a de facto ban on the combustion engine from 2035 and the creation of a €72.2bn Climate Social Fund — to be financed through ETS revenue — the decision to plump for carbon pricing in road transport risks overshadowing the whole package.

Even the plan’s central cheerleader, Commission Vice President Timmermans, wasn’t always on board.

“I myself initially was quite reluctant,” he said in an interview hours before launching the proposals. 

Timmermans will soon head to Prague as part of plans to curry favor across the EU for a dozen pieces of legislation that make up the package. After that, it's a meeting of environment ministers in Ljubljana and a G20 session in Naples.

The aim is to use the run-up to the COP26 climate summit in Glasgow later this year to bang the drum for the legislation and tout it as a global benchmark for tackling climate change.

That's going to be a tough job given the disquiet in Brussels.

One Senior Commission official said Timmermans’ cabinet had “been pushed on the different proposals a great deal by the German mentality, notably in the European Parliament.” The official pointed to Peter Liese, a German MEP with close political ties to von der Leyen and a supporter of the proposal.

The Official said the current Commission treated the ETS as if it were “the be all and end all of things” rather than just an “important tool.” That’s a problem for the political narrative of the European Green Deal, the Official said, because “it takes too much bandwidth” when “nobody inside my house would understand what the ETS is.”

Green groups had previously argued against the policy, arguing it would be a distraction from legislation that mandates the end of the production of petrol and diesel vehicles.

Better to put the onus on the bloc's big carmakers than to tax millions of Europeans, said William Todts, the Executive Director of NGO Transport & Environment.

“The plan faces a lot of opposition and it may be years before it’s agreed,” Todts said of road transport ETS. 

Yet what was once a wonky policy aimed at cleaning up the energy sector is now taking centre stage in the fight against transport emissions.

While other sectors such as energy, industry, housing and agriculture have cut their emissions since 1990, transport hasn’t followed that trend. Emissions from air, road, shipping and rail increased in 2018 and 2019, with road transport being the highest contributor to these emissions.

That means measures to curb the rise had to go beyond raising vehicle fleet COreduction targets, the main policy lever to get carmakers to produce clean cars, Timmermans told MEPs in the European Parliament's environment committee late 14 July.

The committee will shepherd most of the Fit for 55 package through the process of getting it into law.

“Don’t be so optimistic,” the Committee’s Chair, French liberal lawmaker Pascal Canfin, told Timmermans ahead of a testy exchange on the plan late 14 July.


back to ECG news