A European Union plan to extend carbon pricing to the gasoline used in automobiles and to heat homes faces early opposition from governments and parliamentarians concerned about public backlash. Supporters find measures to compensate people who will be most affected.
According to leaked drafts, the system would establish an Emissions Trading Scheme (ETS) for transportation and heating, establishing a market price for carbon. The price that fuel suppliers expect to pass on to Europe’s half-billion consumers in the shape of increased bills. It expects to be part of a package of measures on July 14. It will ensure the EU meets its target of decreasing net emissions by 55 percent by 2030.
Critics question whether it is sensible to risk a political reaction for something that will indirectly influence consumer behavior. The EU is already planning tighter CO2 rules for cars and energy-saving requirements for buildings. It will reduce emissions in those sectors, taking such a political risk for such a small gain. The campaign told Reuters. Any strategy suggested by the Commission must be negotiated and ultimately accepted by the European Parliament and member countries.
The Economic, Political, and Social Backdrop
The EU’s existing carbon market has reduced emissions in the electricity industry. Advocates believe that success may reproduce elsewhere to encourage consumers to make more environmentally friendly choices. The economic, political, and societal context for next week’s declaration is undoubtedly tricky.
A year-long market surge in crude oil on the strength of prospects for global economic recovery has already driven up energy prices and inflation rates. In contrast, the epidemic has worsened existing wealth disparities. According to polls, a massive majority of Europeans favor the EU’s aggressive emissions-cutting targets. Even people who are in favor of combating climate change are hesitant to pay for it directly. According to a recent poll, 75% of Germans oppose raising fuel prices to combat climate change. In theory, a carbon pricing mechanism should be the most politically acceptable means to achieve emission-cutting targets, given it is less apparent and punitive than upfront tax increases.
In Canada, a carbon pollution pricing system praised as a model scheme featured a rebate that people could claim back through their annual tax files. However, in Europe, taxation is still mainly in the hands of individual member states.
The Commission has yet to divulge the policy’s social fund details to assist people in need. Those include customers who cannot change their travel habits due to limited transportation options or who rent their home and cannot replace an inefficient boiler. Another issue is that poorer ex-communist nations in the east rely more on coal-fired energy. Hence, they are concerned that EU-wide pricing will disproportionately affect them.
It also gives countries plenty of time to prepare. Therefore, using billions of euros from the EU’s post-pandemic recovery budget to install charging stations for electric cars or make buildings more energy-efficient.
However, reducing carbon emissions will always come at a cost. Cornago believes policymakers must make that clear to the public: “The Commission and member states mustn’t allow the extremist parties to handle the headlines.”