What to do with Fit for 55? The councils of Clò, Dassù, Prodi and Tabarelli in government and the EU
What do economists and analysts of international politics think of the Fit for 55 European plan – and what they propose – Clò, Dassù, Prodi and Tabarelli
Last week, the European Commission unveiled a reform plan to tackle global warming that aims to transform virtually every aspect of the European Union's economy. The plan is called “Fit for 55”, in reference to the minimum rate of reduction of greenhouse gas emissions – 55 percent less, in fact – that the block will have to achieve overall by 2030, compared to 1990 levels.
No other major world economy – not the United States, not even China – has come up with an ambitious plan like the European one. Frans Timmermans, the vice-president of the Commission put in charge of climate policy, spoke precisely of the "industrial revolution".
WHAT DASSÙ AND MENOTTI THINK (ASPEN)
For it to be successful, however, the plan "will require several conditions, starting with the attempt to moderate the costs – for a part of the industrial system and European citizens – of the energy revolution". Marta Dassù and Roberto Menotti of the Aspen Institute Italia write it on Aspenia online .
The breadth and radicality of the transformation that Brussels wants to achieve "will tend to generate winners and losers", write the two, and "it will certainly not be painless".
WHAT THE COMMISSION WANTS TO DO
Among other things, the European Union aims to expand the ETS system on emissions trading to encourage the switch to renewables by increasing the price of CO2; wants to impose a carbon tax at the border to protect its energy-intensive companies from foreign competition; and establishes a ban on the sale of new petrol and diesel cars from 2035 .
TOO MANY MANAGING IN THE FIT FOR 55?
The fear – argue Dassù and Menotti – is that “even with the best intentions, a method that is too direct and centralized will be adopted, whereby competition and innovation would end up being damaged; moreover, the choice of focusing on a certain mix of technical solutions by the government authorities is always delicate, because the paths of technological progress are by their nature open and uncertain. In essence, however, some necessary compromises will have to emerge between the ambitions of the Commission and the needs of political equilibrium as well as of market mechanisms ”.
INTERNATIONAL ISSUES: CHINA, AMERICA, RUSSIA
The energy transition is not only a climate, industrial and social issue, but also a foreign policy issue: Brussels will have to review its international relations taking into account the need to access the raw materials necessary for renewable plants and electric vehicles (rare earths, copper , lithium …).
“You can't be a global leader without having followers , or at least willing partners ”, explain Dassù and Menotti. Also because the entire European Union is worth less than 10 per cent of the world's total emissions; China's share is about 28 per cent, that of the United States of 15 and that of India of 6 per cent.
According to the two experts, Europe should then actively involve China and India in environmental policies. It will then have to seek an agreement with Joe Biden's United States, similar for climate ambitions even though the carbon tax at the border risks "triggering a protectionist spiral". And it will also have to find a way to manage relations with Russia, an important supplier of natural gas (especially for Germany and Italy). Gas is a fossil fuel, but it is still useful in a transition phase to stabilize the grid and replace more polluting sources such as coal.
PRODI: GOALS ARE NOT ENOUGH, STRATEGIES ARE NEEDED
In an editorial in the Messaggero , former Prime Minister Romano Prodi wrote last weekend that, in addition to setting emissions targets, Brussels should above all "build a scientific structure and implement an industrial policy capable of making the achievement of what is proposed is possible ".
Europe, explains the former president of the European Commission, cannot burden companies, which are unable to withstand the competition with America and China. And it cannot think of winning the challenge of decarbonization "only with decrees that prohibit the use of polluting tools […] without a concrete strategy that replaces what we are forbidden and that others continue to produce at infinitely lower costs" .
Prodi underlines the marginal weight of the Union on the total global emissions and also the Chinese dominance over the chain of technologies for renewable sources, which exposes the block to the risk of heavy manufacturing dependence. And he recalls the increase in the price of electricity and gas bills – buffered by the government's intervention -, also due to the higher cost of carbon in the European emission allowance market. The "bell" of the yellow vests in France, who protested against the rise in the price of petrol and diesel, "rings for everyone and not just for the French", writes Prodi, alluding to the social impact of the energy transition.
TABARELLI: RISK OF INCREASE IN EXCISE DUTIES ON PETROL
Davide Tabarelli, economist and president of Nomisma Energia, also talked about yellow vests and social costs in the last few days in the Sole 24 Ore . “The price of petrol in Italy currently runs around 1.62 euros per liter, of which 1.02 euros are taxes (29 cents of VAT and 73 of excise duty),” he writes. “The excise is already a tax that is equivalent, on balance, to 342 euros per tonne of CO2 emitted when petrol is consumed in engines. What the EU Commission is thinking of is to apply another € 50 per tonne, more or less the current price of emission permits, ie to increase excise duties by 15%, or about 10 cents more on the final price at the pump " .
“Italy has a primacy on fuel taxation, but the situation is somewhat similar throughout Europe, where prices are by far the highest in the world. This is why we have always invested in smaller and more efficient engines, such as diesel or three-cylinder petrol engines, which have enabled our car manufacturers to develop a pioneering position on internal combustion engines ”, explains Tabarelli. But "here too the Commission intervenes heavily, decreeing the end of internal combustion cars in 2035 and forgetting the great advantages of diesel, not only for heavy transport, but also for cars, because it is the most efficient solution and for the same kilometers routes consumes less and also emits less CO2. The Commission, on the other hand, aims at the end of the internal combustion engine ”.
CLÒ: THE FIT FOR 55 IS THE FRUIT OF ECOLOGISTIC FANATISM
The economist Alberto Clò, interviewed by the National newspaper, is also very critical of the Fit for 55 plan. He thinks that the climate policies decided by Brussels are not worth the candle and are the “fruit of ecological fanaticism”, given the marginal weight of Europe compared to the total global emissions.
“The measures to reduce emissions will cost the EU 3.5 trillion between now and 2035”, he argues. "If we invest even just 10 percent of that money to convert the industrial complexes of underdeveloped countries, we will get much better results." Focusing on renewables such as wind and solar power, then, means putting Europe “in the hands of China, which is almost a monopolist of the critical materials needed” for the construction of the plants.
According to Clò, the energy transition “will be a catastrophe. First of all for families, who will see energy costs rise. Then for industry and employment “.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/fit-for-55-cosa-fare-dassu-prodi-tabarelli-clo/ on Tue, 20 Jul 2021 09:58:42 +0000.