You are currently viewing The ecological transition of Europe, a huge collective challenge

Today, Spanish and European companies, as well as citizens, expect their future to be green, climate-neutral and socially fair. The key is how we can achieve it. Will we have the strength and will we be able to set our continent and the rest of the world on a path where car, steel or cement manufacturers, airlines, electricity producers and all of our energy consuming industries as well as households , can drastically reduce their carbon footprint, while improving quality employment and well-being?

The European Parliament and the Council of the EU, the European co-legislators, are now working on the ‘Objective 55’ legislative package, better known by its name in English ‘Fit for 55’. In concrete terms, it means that EU countries will have to cut more than 30% of their emissions of greenhouse gases in the next eight years, since it has been agreed to increase the EU’s objective to reduce these emissions by 55% by 2030 compared to 1990 levels.

If you compare it to the 12% drop in CO2 emissions in Europe due to the huge economic slowdown in 2020 due to the Covid-19 pandemic, you can see the Herculean task facing us all: combining quality growth with a climate-neutral future.

A task that means that our companies will have to supply enough sustainable aviation fuels, while airlines continue to operate flights profitably. It also implies a widespread expansion of green mobility based on renewable electricity, lithium batteries, hydrogen and renewable fuels, while rapidly reducing emissions from gasoline and diesel vehicles to a affordable cost for households in a way that does not jeopardize political stability.

It also means redoubling efforts to renovate buildings, transform infrastructure and electrify industrial processes, which could more than double global energy demand by 2050.

Our companies will have to supply enough sustainable aviation fuels, while airlines continue to operate flights profitably

Likewise, in order to achieve the 55% objective in the times foreseen by the EU, it will be necessary to pay attention to the price of carbon through the EU emission rights trading system, so that it does not affect million jobs in industries of steel, aluminium, cement or chemicals, and avoid the risk of relocation outside the EU, where lower climate ambition allows for cheaper, but not necessarily more sustainable, production.

All this It may seem like an impossible mission. However, the dialogue between the legislator and the private sector can be decisive in squaring this circle and correctly establishing the necessary conditions to face this enormous collective challenge.

First of all, you have to increase public support and speed up the processing, authorization and installation times for clean energy generation and distribution projects.

Take EU wind power as an example: to meet the requirements of the EU’s ‘Goal 55’ package, Europe’s wind power needs to increase from 220 to over 450 gigawatts by 2030.

Some faster authorization procedures would allow it to do so and phase out fossil fuels in the energy sector. We will also have to use all available technologies (wind turbines, solar energy, better networks, nuclear energy, hydrogen, renewable fuels, gas, energy savings, product innovation) to achieve the energy transition to net zero emissions.

Dialogue between the legislator and the private sector can be decisive in squaring this circle

Now it is It is essential to take into account the international context. Europe emits 8% of global CO2 emissions and reduces its climate footprint much faster than other major economies, but climate action can only succeed on a global scale.

This means that Europe’s emissions trading needs to keep enough free allowances for business, avoiding hurting our industry as long as big emitters like the US or China don’t follow suit in terms of climate ambition.

This is essential, since European companies must have the ability to invest in their own transformation and, ultimately, to produce carbon-free steel, chemicals, or aluminum.

In addition, it means that a border adjustment mechanism for carbon emissions must be approved; an instrument that, above all, must be economical and efficient to help Europe counteract carbon leakage and prevent the relocation of industry to more polluting regions.

Without the proper instruments, any European government will face the job losses and public oppositionespecially since we will be accompanied by numerous uncertainties until 2030.

Without the right instruments, any European government will face job losses and public opposition,

Will the global installed capacity of renewable electricity actually increase by more than 60% by 2026, as projected, which is equivalent to the current global energy capacity of fossil fuels and nuclear power?

Will this increase in renewable energies be maintained with the increase in the prices of raw materials on a global scale? Prices of polysilicon used in photovoltaic panels have quadrupled since 2020 and we have seen sharp price increases for steel (+50%), aluminum (+80%) and copper (+60%). Will gas prices continue to rise, or is the current rise in inflation just temporary?

To ensure the success of the ecological transition in Europe, two complementary conditions must be met. First of all, we need a solid industrial base in Europewith competitive companies.

The vast majority of practical solutions, innovation and technologies to ensure the green transition come directly from industry, so any measure that undermines the competitiveness of European companies would have a negative impact on the green transition.

Second, the simplification, coherence, flexibility and consistency of the new rules of the ‘Objective 55’ package must be a priority. Regulatory complexity is the enemy of innovation, and innovation is what we need to deliver future solutions to the climate challenge.

*** Pierre Gattaz is President of BusinessEurope and Antonio Garamendi is President of CEOE.

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