A blind increase in EU climate targets further erodes the purchasing power

Two weeks ago, the votes on the package of climate laws, “Fit For 55”, turned out to be a fiasco. The reform of the Emissions Trading Scheme did not win a majority, and the rapporteurs withdrew other related dossiers. After some patching up by and between the three major groups in parliament, the plans were given the green light. The N-VA voted against it.

“Everyone is convinced of the need for a sustainable transition for the European Union. But that transition must be more than just sustainable; it must also provide the necessary certainty, safeguard jobs and be affordable,” says Johan Van Overtveldt, who is following the dossier for the N-VA delegation.

Reform of the Emissions Trading Scheme (ETS)

In the vote on 8 June, the N-VA voted against it. Mainly because of the unrealistic level of ambition and the impact of the rising carbon price on the electricity price and the bill for citizens and businesses. The N-VA also considers expanding the Emissions Trading Scheme to buildings and transport unacceptable. These two problems also remain in the new texts.

As regards the phasing out of free rights for the carbon mechanism at the border, the N-VA is maintaining 2034, as proposed by the European Commission, and thus not as early as 2032. The N-VA has thus abstained. “We are in favour of the measure, but it is new and must therefore be introduced with care,” says Geert Bourgeois, N-VA delegation leader and coordinator of the Committee on International Trade. “We are asking for a comprehensive evaluation and monitoring of the impact on the business community. Jobs and Competitiveness The extent to which companies in one country can compete with similar companies in another country. A law came into force in Belgium in 1996 to monitor competitiveness. This stipulates that Belgian salaries may not evolve faster than the average of those in the three neighbouring countries. The Central Economic Council (CEC) performs an annual measurement to see if the objectives have been obtained. competitiveness must not be lost.”

Social Climate Fund built on quicksand

The N-VA shares the concern about the social impact of the climate policy. However, the creation of a European fund to cope with this is fundamentally the wrong choice. Conducting social policy is a task for the Member States. The N-VA is advocating a decentralised and targeted approach. The financing of this fund is built on quicksand, as it relies on the revenues from emissions trading for buildings and transport, the effect of which is still unknown. Finally, this fund comes on top of existing redistribution mechanisms and threatens to become mainly a grab bag, with Flanders becoming a net contributor. For all these reasons, the N-VA finally voted against it. 

Greenflation

“The current Inflation The increase in the general price level. The original meaning (literally “to blow up”) is monetary inflation, which means that the amount of money increases. Today, inflation primarily refers to price inflation. This means an implicit monetary depreciation. This causes the purchasing power to drop. inflation is not only driven by the rising prices of fossil fuels and the disruption of global supply lines as a result of the pandemic. We are also dealing with ‘greenflation’: the upward pressure on the price level due to the transition to a green economy,” says Johan Van Overtveldt.

This concerns ever-rising commodity prices of rare metals and other necessities. We also see that our infrastructure has not been adequately adapted, and huge investments will also have to be made there. Further acceleration of this process will only further increase that greenflation and have an even greater impact on prices, which are already under pressure.

Bidding for climate targets

“I find it extremely worrying that certain groups in parliament continue to lose themselves in bidding for climate targets. This sky-high ambition will soon cost citizens money in the form of high charges. And that is at a time when purchasing power is already under severe pressure. I am therefore calling on the Commission to seek solutions to achieve energy independence. And thus not to use the crisis to accelerate the green transition with further rising prices as a result,” Johan Van Overtveldt concludes.