Why the EU Literally Cannot Afford A Weakened Climate Target
The effects of climate change are becoming more and more evident: every year, new temperature records are being registered and extreme weather events are becoming part of the everyday reality of Europeans. Paradoxically, despite these concerning developments, a certain “climate action fatigue” has emerged and, in some instances, even an outright backlash against ecological policies can be observed.
The EU must resist this trend – and it will have a golden opportunity to do so on 2 July, when the European Commission will present its proposal for an EU intermediary climate target for 2040. By setting an ambitious objective to reduce greenhouse gases over the next fifteen years and following it up with a pragmatic enabling policy package, the Union can offer global leadership to protect the planet – all while bolstering its own competitiveness. For this reason, the Technology Industries of Finland have supported a 90 percent emissions reduction target for 2040.
Backtracking on this ambition is not an option, in our industry’s view: it will accelerate the deterioration of the climate we live in, without delivering the oft-vaunted benefits for European industry. This is for the simple reason that climate change is an irrevocable reality: it will unfold only more rapidly if the necessary action is not taken to mitigate and adapt to it. That means that there is no choice other than to get ahead of it. Crucially, leading the way on climate action remains the most reliable means to fulfil the other ambition of this second Commission led by Ursula von der Leyen: to make Europe competitive again.
Finland demonstrates that this is not just true in theory. The experience of the Finnish technology industries has thus amply shown that it is possible to successfully decouple growth from fossil fuel use: between 2020 and 2024, Finland’s technology industries reduced their emissions by 7 percent and their annual use of fossil fuels by 11 percent – all while experiencing a turnover growth of 43 percent. Even more importantly, we are seeing that the clean choice is becoming the easy choice for our companies: since Finland’s virtually emission-free electricity is the cheapest in Europe, climate-friendly solutions are the most cost-efficient and attractive ones for our sector.
The experience of the Finnish technology industries has thus amply shown that it is possible to successfully decouple growth from fossil fuel use.
This also underscores the other competitive dimension of climate action: technology. The future powerhouses of the global economy will be those industries and nations that develop and produce innovative climate-friendly tech that save energy and materials. In many technological fields, EU industry has the opportunity to become a market leader in the coming years if the right incentives are set. What we need now is the political will to create the investment, innovation, and incentives that will build the European prosperity of tomorrow.
To give just one example what that looks like in practice: TIF is calling for an international Carbon Handprint, that is a common voluntary methodology which would make it possible to credibly show which product or service is best in reducing the emissions of an industrial actor. By introducing such market-driven instruments in combination with a high level of climate protection ambition, the EU can boost cutting-edge solutions “made in Europe” and its global economic standing.
Timing is also of the essence in this respect: a robust, science-based climate target of 90 percent emissions reduction for 2040 will give companies the ability to plan ahead and make the right investment decisions now. Delaying the decision will only create uncertainty for businesses who need to know on what conditions they will be operating in the 2030s.
At the same time, it is also clear that ambition alone will not suffice to unleash clean growth. Equally importantly, the EU has to offer more flexibility to companies who will make it happen: during the past mandate, the Commission often instated very detailed rules and tried to “pick winners” among climate-friendly technologies. That is counterproductive, as there is no “one-size-fits-all” solution to decarbonise industries. Each company must be given the freedom to choose the net-zero business model and solutions that fit them best.
The choice ahead of the EU is thus not whether it should slow down its climate protection goals or not. It is whether the EU gets the balance between right when designing its climate policy agenda for the 2030s. If it manages to keep the level of ambition high while giving companies more flexibility to reach that goal, it can pave the way for a European decade of clean competitiveness.
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