Olaf Scholz rallies the G7 countries to his “climate club” project
The G7 countries have given their support to German Chancellor Olaf Sholz’s idea of creating a “climate club” ambitious countries to accelerate their efforts, which is seen as complementary to the EU border carbon tax.
In 2021, Olaf Scholz, then Minister of Finance, presented his plan to create a country club “ambitious, daring and cooperative”. The targets of the initiative were the countries “which produce large amounts of emissions, including China and the United States”the EU’s major trading partners, countries that put a price on CO2 emissions and those with a large industrial sector.
Today Chancellor, he succeeded in bringing the G7 countries to agreement.
“We need to be more ambitious, more ambitious in order to achieve our climate goals. With the “climate club”, we contribute to the fact that we can also meet this commitment,” explained Mr. Scholz during his final speech at the G7 summit in Elmau, Germany, on June 28.
In their final declaration, some of the world’s largest industrialized countries stress that the G7 “aims to establish a ‘climate club'” with “a particular focus on the industrial sector” by the end of 2022.
It will be based on three types of measures.
First, ambitious policies of” mitigation “ program aimed at reducing the emissions intensity of participating economies, in which members will exchange best practices and strive to reach a common understanding of the economic implications of climate change policies.” mitigation “for example through explicit carbon pricing.
The second pillar will be the joint transformation of industry through the industrial decarbonization program, the “Hydrogen Action Pact” and the expansion of markets for environmentally friendly industrial products, which often struggle to compete on price with their more polluting fossil fuel-based competitors.
The third pillar of “climate club” will be partnerships and cooperation, the statement highlighting the “partnerships for a fair energy transition”, which are programs tailored to countries like South Africa or India. Through these partnerships, countries will receive financial support and technology transfers based on their level of climate ambition.
As Germany, France and Italy are among the only major countries in the world to have a carbon pricing system via the Community Emissions Trading System (EU ETS), the “climate club” moved away from its original carbon pricing objective.
“Today’s climate club announcement puts the decarbonisation of industry at the heart of the initiative. While the idea of focusing on carbon pricing has fizzled out, the shift to heavy industry has the potential to accelerate the development of global green markets through cooperation”explained Domien Vangenechten, political adviser to the think tank on climate issues E3G.
The industry has also welcomed the deal.
“It is good that the G7 is pushing for the creation of an International “climate club”! The aim is to unite countries with similar climate protection ambitions to avoid climate-related trade barriers”explained Thilo Brodtmann, CEO of the association of representatives of the mechanical industry VDMA.
Mr. Scholz’s credibility on climate action had already been damaged by press reports that Germany was seeking to backtrack on a 2021 pledge to end fossil fuel funding abroad. .
The old strategic concept from 2010, which is still officially in force, still stipulates “that there is peace in the Euro-Atlantic area”that “the threat of a conventional attack on NATO territory is low” and that one of the objectives is to have a “true strategic partnership” with Russia.
Russia is therefore still officially a strategic partner. “This will not be the case in the strategic concept that we will adopt in Madrid”Mr. Stoltenberg said.
“I expect allies to make it clear that Russia poses a direct threat to our security, to our values, to the rules-based International order. »
What about the carbon tax at EU borders?
As G7 leaders met in Elmau, EU ministers gathered in Luxembourg to discuss when the EU should start penalizing imports from third countries not subject to the strict protection regime of the EU climate.
The EU Carbon Border Adjustment Mechanism (MACF), commonly referred to as “carbon border tax”worries the German industry, and by extension, the leaders in Berlin.
Robert Habeck, German Minister of Economy and Climate, warned against triggering a “new trade war in the form of hidden pricing” by MCAF in December 2021.
the “climate club” by Mr Scholz is at least considered highly compatible with the EU’s MACF, since countries with a sufficient degree of climate protection would be exempt from it, or even a means of circumventing it entirely.
The Chancellor was quite candid about this with the African countries concerned, some of which are large industrial exporters to the EU and stand to lose a significant share of their GDP once the carbon border tax is introduced.
“As current G7 President, I have particularly insisted that our African partners also come out in favor of an open “climate club” and that they want to participate in it”Scholz said in February following an EU-Africa summit.
This boost in favor of a “climate club” instead of the MACF, which had been a top priority of the outgoing French Presidency of the Council of the EU (PFUE), is reinforced by the anti-MACF positions expressed by senior German officials.
“Given in particular the many question marks of the European project for a carbon border adjustment mechanism (MACF), this [club climat] is more important than ever”Brodtmann said.
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