EN Official Journal of the European Union C 487/24

Opinion of the European Economic and Social Committee on ‘The road from Paris’

(own-initiative opinion)

(2016/C 487/04)

Rapporteur: Tellervo KYLÄ-HARAKKA-RUONALA

Plenary Assembly decision 26.4.2016 Legal basis Rule 29(2) of the Rules of Procedure Own-initiative opinion Section responsible Agriculture, Rural Development and the Environment Adopted in section 5.9.2016 Adopted at plenary 21.9.2016 Plenary session No 519 Outcome of vote (for/against/abstentions) 129/0/0

1. Conclusions and recommendations

1.1. The Paris Agreement is a welcome global commitment to mitigate climate change. The task ahead is to ensure that the agreement is ratified, implemented and developed further. In this opinion the EESC sets out its views on the main approaches for the long-term path to a carbon-neutral world as called for by the Agreement.

1.2. The huge global challenges require a major shift in the European Union’s approach. Instead of focusing solely on its own greenhouse gas emissions, the EU should consider how it can contribute to achieving the greatest climate benefits from a global perspective. The EESC thus calls on the European Commission to put together a long-term strategy on how to grow and maximise the global ‘carbon handprint’ (1) of the EU.

1.3. The EU should also be ambitious in striving for win-win-win solutions with regard to economic, social and environmental aspects. The EESC therefore urges the Commission to frame the climate strategy in a way that helps strengthen the EU economy and enhance the well-being of its citizens, while mitigating climate change.

1.4. Global commitment is essential to achieving meaningful climate impacts and avoiding carbon, investment and job leakage. The EESC calls on the Commission to continue engaging in active climate diplomacy, with the aim of enhancing broad implementation of the Agreement and encouraging major economies to raise their commitments to a similar level of ambition as the EU. The EESC also calls on the Commission to integrate climate considerations into all areas of external policy, notably in the areas of trade and investment, and development cooperation.

1.5. In terms of practical measures, the EU can most successfully contribute to combating climate change by exporting technologies and solutions for reducing emissions and increasing carbon sinks, and by producing world-market products with lower emissions than those of its competitors. The EESC therefore calls for a strong boost for innovation — from research to market entry — so as to place the EU at the global forefront of climate solutions. Particular attention should be paid to the potential of SMEs.

1.6. Regarding the internal dimension of climate policy, the EU should aim to be a Climate Union that is action-oriented, effective and cohesive in its domestic measures.. Every effort must now be focused on implementing the decisions made so far, where both the Commission and the Member States have their own roles.

1.7. Furthermore, the EESC calls on the Commission to base the long-term strategy on an integrated approach. The path forward should be developed as part of related single market ‘unions’, particularly those in the area of energy, transport, digitalisation, industry, agriculture, capital and innovation. Special attention should also be paid to the challenges of sustainable food systems, and the role of carbon sinks.

1.8. In implementing the objectives set by the Paris Agreement, maximum use should be made of market mechanisms. A global pricing system for carbon emissions would be a neutral and effective way of bringing all market players on board. The EESC encourages the Commission to actively explore different routes and steps and to engage with other countries on moving towards global carbon pricing.

1.9. The road from Paris to a carbon-neutral economy is extremely challenging. To manage the transition in a just and controlled way, and to help businesses and citizens adapt to the changes and develop new solutions and skills, proper adjustment measures have to be introduced as part of the climate strategy.

1.10. It is civil society partners that will bring about the shift to a carbon-neutral economy through their action on the ground, while the role of political decision-makers is to provide them with an enabling environment and funding, including awareness-raising on all available funding opportunities. A multi-level governance approach has to be developed to facilitate civil society climate action and to remove obstacles to it. The EESC expects to be fully involved in the development of this multi-stakeholder infrastructure, as well as in the preparation of the EU’s long-term climate strategy.

2. The EU as a strong global climate actor

2.1. The outcome of the Paris climate conference (COP21) was a global deal to put the world on track for limiting global warming to well below 2 oC and pursuing efforts to further limit the temperature increase to 1,5 oC above pre-industrial levels. This will require a huge decrease in global emissions and calls for radical change in societies.

2.2. The global challenges ahead require a radical shift in the EU’s approach to mitigating climate change. It is critical that the EU mount considerable efforts to make an effective global impact. The EU should therefore strive to increase its ‘carbon handprint’ instead of just decreasing its ‘carbon footprint’.

2.3. Global commitment is essential to solving the climate problem and avoiding carbon, investment and job leakage. The EU showed leadership ahead of and during the Paris conference, and it should continue in this spirit for the upcoming Conferences of the Parties. In its climate diplomacy, the EU should focus on the countries with the largest greenhouse gas emissions, but also on its toughest competitors and most promising partners from an economic perspective. Climate and economic diplomacy should thus go hand in hand.

2.4. The biggest emitters are China, the United States and the EU, accounting for over 25 %, about 15 % and about 10 % of world emissions respectively. The EU’s share of emissions is projected to decrease to about 5 % by 2030. Therefore, in order to exert maximum influence on climate change mitigation, the EU must make every effort to encourage other parties to raise their ambition level.

2.5. On a practical front, the EU can most successfully contribute to global climate change mitigation by exporting low-carbon solutions, as well as by producing world-market products with lower emissions than those of its competitors.

2.6. Besides the USA, China and other rapidly developing countries have also become important suppliers of low-carbon technologies. Over the last five years, the EU has experienced a marked slump in some sectors in both export and domestic markets, while it has lost its previous position as a global leader in technology. Although the Juncker Commission has expressed the wish to lead the world in renewable energy, this goal is currently a distant prospect.

2.7. A new and additional boost is thus urgently needed to position the EU at the forefront of climate solutions once again. The global opportunities cover a wide range of technologies, products, services and expertise, as well as overall production and consumption models. The exportation of knowhow on carbon sinks, such as sustainable forest management and afforestation, should also be seen as an opportunity to make a global impact.

2.8. The EESC welcomes the fact that the Commission has joined the Mission Innovation Initiative of the world’s leading economies, who have committed to doubling their funding for clean energy research and development over the next five years.

2.9. Effective trade and investment policy is an essential tool to deliver low-carbon solutions and promote progress towards a global carbon neutral economy. To ensure a positive outcome, climate issues must be an integral part of negotiations on trade and investment agreements. The aim should be to eliminate barriers to trade in climate-friendly products, technologies and solutions; the Environmental Goods Agreement would have a significant role to play here. Joint solutions are also needed to avoid trade distortions caused by differences in climate policies and requirements in different regions.

2.10. As for development policy, the current target of USD 100 billion per year pledged by developed countries for financing climate measures was extended at COP21 until 2025 and a practical roadmap was called for to achieve the target. Individual countries also made financial pledges. It is important that the promises be kept and funds used in an economically, environmentally and socially responsible way. Awareness-raising campaigns are needed to provide information on access to funding for civil society players, particularly in developing countries, as proposed by the EESC in the context of the EU-Africa Strategy.

2.11. Technological cooperation also has a role to play in development policy. Here, intellectual property rights (IPR) must be adequately protected as they are crucial for innovation. It is also important to ensure that the solutions provided reflect the conditions in developing countries and — in the spirit of partnership — help them adopt low-carbon growth without hindering their development. Moreover, capacity building is needed to assist developing countries in climate change mitigation and adaptation.

2.12. As a general rule, climate considerations should be mainstreamed in all external EU policies, with the aim of enhancing implementation of the Paris Agreement globally.

3. Towards a more effective Climate Union

3.1. To provide a solid basis for becoming a strong global actor, the EU should aim to be a Climate Union that is fully effective, cohesive and credible in its domestic measures. It must be first and foremost a union of action. Every effort must now be focused on implementing the decisions made so far, where both the Commission and the Member States have their own roles to play.

3.2. Because climate change mitigation applies to all sectors of the economy the Climate Union must rely on an integrated approach. Further climate measures should thus be developed as part of related ‘unions’ such as the Energy Union, the Single European Transport Area, the Single Market for Goods and Services, the Digital Single Market, European Industrial Policy, the Common Agricultural Policy, the Capital Markets Union and the Innovation Union. An optimal approach must also be found to link EU climate policy and national implementation.

3.3. The EU should fulfil its climate commitments in a way that strengthens its economy and enhances the well-being of citizens. Climate policy should not be seen as just balancing economic, social and environmental factors, but win-win-win solutions must be strived for. To this end, efforts are needed to boost low-carbon growth making full use of the opportunities provided by for instance digitisation, clean technologies, the bio-economy and the circular economy.

3.4. As well as globally, substantial low-carbon investments are also needed within the EU. Climate aspects need to inform the financing criteria of public investment programmes, including the use of EU funds. Public-private cooperation, as well as the role of the European Fund for Strategic Investments and the European Investment Bank, are of the utmost importance. The EESC welcomes the launch of the European Investment Project Portal and of the European Investment Advisory Hub, and stresses that the project thresholds must not exclude smaller projects.

3.5. As for the private sector, low-carbon investments have the same prerequisites as any investment. To be able to make full use of the opportunities and business potential provided by climate change mitigation, an encouraging, competitive and stable business environment is essential.

3.6. In order to position itself at the global forefront of climate technologies and solutions, the EU has to invest in an environment conducive to innovation, covering research, development, piloting, demonstration, and finally market entry and expansion internationally. Particular attention should be paid to the innovation potential and the international market entry of SMEs. To this end, it has to be ensured that access to finance does not pose an obstacle for SMEs.

3.7. Since most greenhouse gas emissions originate in energy production, energy lies at the heart of the transition. Key measures include replacing fossil fuels with low-carbon energy sources and improving energy efficiency in all sectors and activities. The increasing electrification of society — where fossil fuels are being replaced — can contribute remarkably to reducing emissions. One of the major challenges and opportunities is the development of electricity storage solutions.

3.8. With regard to the decarbonisation of transport, particularly road transport, a wide variety of measures needs to be introduced. Electricity and alternative energy sources, advanced biofuels, improved energy efficiency of vehicles and logistics, increased use of low-carbon transport modes, co-modality and public transport, as well as land-use planning, have a role to play in the transition. With regard to shipping and aviation, the EESC calls for ambitious global outcomes in the framework of the IMO and ICAO.

3.9. Success in decarbonisation also requires the development of products and production methods. The greatest opportunities lie in finding, innovative business models and developing new low-carbon products with the main focus on the service and function they provide. The potential of all sectors and players should be harnessed, and policy-makers should not ‘pick winners’, for example supporting certain sectors, techniques or products.

3.10. Agriculture and forestry are linked to climate change in several ways. As well as reducing emissions, sequestration of carbon dioxide plays an essential role in climate change mitigation. This highlights the significance of sustainable use of forest resources and proper soil management. On the other hand, agriculture and forestry face significant challenges in adapting to climate change. Intensive research and development work is therefore needed in relation to resilience and adaptation, and to the role of soil as a carbon sink.

3.11. The connection between climate change and food security is vitally important in a context of fast population growth. To respond to the vast challenges of both food security and climate change mitigation, more sustainable food systems are needed, while preventing carbon and job leakage.

3.12. Digitalisation is across-cutting element of de-carbonising society. Automation, robotics and the internet of things make industrial processes and logistics more efficient. Smart energy grids, smart mobility, smart buildings and smart communities involve citizens in decarbonisation and enable consumers to become ‘prosumers’, while digital platforms provide an option for sharing products and services.

3.13. All in all, citizens have a vital role to play in the transition to a carbon-neutral economy. More sustainable consumption patterns and lifestyle changes, e.g. in relation to diet, shopping, mobility and hobbies, can bring about remarkable results. Awareness-raising, product information and education are tools that can be used to help citizens make enlightened choices.

3.14. Regarding more specific measures for moving towards a carbon-neutral future in the abovementioned key areas, the EESC has issued several relevant opinions during the past few years (2).

3.15. The transition towards a carbon-neutral economy inevitably means that there will be winners and losers. It is therefore imperative to manage the transition in a just and controlled way. Proper measures are needed to assist businesses and citizens in adjusting to the new situation. Increasing costs and skills shortfalls are the main threats to be tackled. Targeted financial assistance, based on identification of the most vulnerable sectors and groups of people, is a relevant option here. Efforts should in the main, however, be focused on seeking new solutions and developing skills.

4. Making full use of pricing mechanisms

4.1. Market mechanisms should be utilised as far as possible when implementing measures to achieve the goals and objectives set by political decision-makers under the Paris Agreement. In order to boost climate action in a neutral and efficient way, it is important to strive for global pricing of greenhouse gas emissions. Accordingly, to enable the pricing system to work properly, contradictory or overlapping energy subsidies should be phased out.

4.2. Different kinds of carbon pricing systems, mainly carbon taxation and emissions allowance cap- and trade schemes are already in use in several countries and regions. Measures to link the various systems are also being considered.

4.3. As for the EU emissions trading scheme, the price of emissions allowances has stayed unexpectedly low, because the supply of allowances has clearly exceeded demand, and overlapping subsidies have affected the market. The emissions cap ensures that the emissions reduction target is met but the system does not provide an incentive to invest in low-carbon energy. This would require an increase in the price of carbon, while ensuring that measures are taken to avoid carbon leakage.

4.4. A well-functioning and fair global carbon-pricing system would level the playing field for export businesses in world markets and thus decrease the risk of investment and job leakage. In addition, it would eliminate the competitive advantage of imported goods that are cheaper due to lower climate requirements. Furthermore, it would direct financial flows to developing countries. Significant efforts should therefore be made to establish an appropriate global regime. The Committee points out that it is has also advocated — essentially as an interim solution — a ‘border carbon adjustment’ mechanism until such a global regime is in place (3). However, due attention should be paid to the challenges and risks of such mechanisms.

4.5. In order to explore the prerequisites for and consequences of a proper pricing system, different options should be carefully assessed. The following routes and steps should, as a minimum, be explored: — linking existing regional pricing and trading systems with those of other regions, — establishing sector-wide international emissions trading schemes for the most relevant sectors.

The EESC calls on the Commission to actively explore different routes and steps, share its experiences, and engage with other countries on moving towards a global carbon pricing system.

5. The multiple roles of civil society

5.1. Civil society has a major role to play at global, European, national and local levels in the transition towards a carbon-neutral world. Businesses, workers, consumers and citizens are the ones who actually bring about change through their own action on the ground, while the policymakers should provide them with an enabling and encouraging operating environment.

5.2. A lot of progress is being made in markets: A growing number of private and institutional investors are taking ‘carbon risk’ of their investment targets into account, and climate-related private capital funds have been established. Many companies are renewing and developing their operations and product portfolios to respond to the climate-conscious demands of customers and shareholders. New business ecosystems are being built across sectors and between big companies and SMEs.

5.3. At COP21 a significant strand of activities highlighted the role of sub-national authorities, the private sector and other civil society players in achieving climate objectives and driving new partnerships. The Global Climate Action Agenda needs to maintain momentum and further boost this kind of activity.

5.4. As proposed by the EESC (4), a coalition of policymakers, administration and civil society should be established, to stimulate and increase awareness of non-state climate action at various levels, to provide a forum for structured dialogue, and to remove obstacles standing in the way of action. The EESC expects to be fully involved in developing this kind of coherent multi-stakeholder infrastructure.

5.5. As for civil society cooperation with other regions, in particular the African, Caribbean and Pacific Group of States (ACP) (5) and the Mediterranean, the climate issue — in conjunction with the food security challenge — is high on the EESC agenda.

5.6. The EESC is also keen to partner with the Commission in preparing the EU’s long-term climate strategy on how to move towards a carbon-neutral world.

Brussels, 21 September 2016. The President of the European Economic and Social Committee Georges DASSIS

(1) ‘Handprint’ is a measure of beneficial impacts on the environment or society, whereas ‘footprint’ measures the negative impacts in terms of e.g. emissions. (Norris 2015). Accordingly, ‘carbon handprint’ is a measure of the positive climate impact of decreasing emissions or increasing sinks. The carbon handprint of the EU is the sum of the positive impacts of the EU anywhere in the world.

(2) See for example EESC Opinions: on The impact of the conclusions of COP21 on European transport policy (OJ C 303, 19.8.2016, p. 10); on the State of the Energy Union 2015 ( OJ C 264, 20.7.2016, p. 117); on the circular economy ( OJ C 264, 20.7.2016, p. 98); on the integrated SET Plan (OJ C 133, 14.4.2016, p. 25); on a new energy market design (OJ C 82, 3.3.2016, p. 13); on energy efficiency labelling (OJ C 82, 3.3.2016, p. 6);on Delivering a New Deal for Energy Consumers ( OJ C 82, 3.3.2016, p. 22); on the revision of the ETS (OJ C 71, 24.2.2016, p. 57); on The Paris Protocol ( OJ C 383, 17.11.2015, p. 74); on the Implications of climate and energy policy on agricultural and forestry sectors (OJ C 291, 4.9.2015, p. 1); on A policy framework for climate and energy in the period from 2020 to 2030 (OJ C 424, 26.11.2014, p. 39); on Market-based instruments (OJ C 226, 16.7.2014, p. 1).

(3) See Market-based instruments, points 3.5.1 and 3.5.2 (OJ C 226, 16.7.2014, p. 1).

(4) Opinion on Coalition to deliver commitments of the Paris Agreement, adopted on 14 July 2016 (OJ C 389, 21.10.2016, p. 20).

(5) See the Resolution of the EU-Africa Network of Economic and Social Stakeholders, July 2016, Nairobi.