The European climate package: Who is going to pay for it?

14 July 2021
Johan Van Overtveldt

On Wednesday, the European Commission is proposing its long-awaited “Fit For 55” package. This climate package is intended to make it possible for the EU to emit at least 55% less CO2 by 2030. To achieve this, there will be new legislation and a review of existing rules. “After two years of plans and slogans, now comes the challenge. We will test the package against the principles of feasibility and affordability. Citizens will feel these measures in their wallets, which can undermine support.”

Focus on prosperity, 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 and innovation

Johan Van Overtveldt stresses that the N-VA is committed to a climate policy that also focuses on prosperity, competitiveness and innovation. “Whoever believes that we can turn the tide without technological progress and innovation is dreaming. We will also test the package against the principles of feasibility and affordability. Citizens will feel these measures in their wallets, which can undermine support. In Belgium, the replacement of nuclear power plants by fossil fuel plants is likely to incur additional costs for consumers. We also remain vigilant for administrative inconvenience: the figurative ‘red tape’ threatens to become ‘green tape’. The impact on the international competitiveness of our companies and the position of SMEs are also an ongoing concern, especially while we are still climbing out of the economic trough of COVID-19.”

Who is going to pay for it?

Fears of reduced purchasing power and yellow vests throughout Europe also seeped into the Berlaymont building. To counter this, the Commission is introducing a new social climate fund.

Johan Van Overtveldt, also chairman of the budget committee, is sceptical: “We already have a Just Transition Fund and other redistribution mechanisms, such as the Cohesion Fund. A new fund would mainly threaten to become a new grab bag. Moreover, its financing is still highly uncertain. Commissioner Timmermans is counting on the revenues from the new emissions trading scheme for buildings and transport for this. However, that new system is controversial and far from being acquired. In addition, the Member States must also agree to hand over any proceeds to the EU. We still have a long way to go. I personally see no reason to organise such a fund centrally. The Member States and federal states are best placed to implement social corrections.”

Johan Van Overtveldt points out that the broader financing of the Green Deal and the recovery measures have not yet been fully acquired either. “The Commission counted on the proceeds of a digital tax for this, among other things. This now seems dead and buried. All this, combined with the ECB’s policy, makes me seriously concerned about the financial credibility of this package and of other recent Commission initiatives.”

Impact assessment

Finally, Johan Van Overtveldt recalls that the adjustment of the 2030 target got off to a bad start. Commission President Ursula von der Leyen owes her appointment largely to this promise, which she made without its impact having been calculated. “I have already called this policy-based evidence-making instead of evidence-based policy-making”, Johan Van Overtveldt says. “However, it is essential that a detailed impact assessment is finally on the table. The speed with which this in-depth analysis needed to be finished, however, does raise questions about its quality. We will investigate this thoroughly.”

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