Handbook on European Union Climate Change Policy and Politics 9781789906974, 9781789906981

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© The Editors and Contributors Severally 2023

This is an open access work distributed under the Creative Commons AttributionNonCommercial-NoDerivatives 4.0 International (https://creativecommons.org/licenses/ by-nc-nd/4.0/) license. Users can redistribute the work for non-commercial purposes, as long as it is passed along unchanged and in whole, as detailed in the License. Edward Elgar Publishing Ltd must be clearly credited as the rights holder for publication of the original work. Any translation or adaptation of the original content requires the written authorization of Edward Elgar Publishing Ltd. Published by Edward Elgar Publishing Limited The Lypiatts 15 Lansdown Road Cheltenham Glos GL50 2JA UK Edward Elgar Publishing, Inc. William Pratt House 9 Dewey Court Northampton Massachusetts 01060 USA

A catalogue record for this book is available from the British Library Library of Congress Control Number: 2023937066 This book is available electronically in the Political Science and Public Policy subject collection http://dx.doi.org/10.4337/9781789906981

ISBN 978 1 78990 697 4 (cased) ISBN 978 1 78990 698 1 (eBook)

Tim Rayner, Kacper Szulecki, Andrew J. Jordan, and Sebastian Oberthür - 9781789906981 Downloaded from PubFactory at 08/15/2023 12:42:34AM via free access

To Edward, Aleksander, Hugo and Gustaw

Tim Rayner, Kacper Szulecki, Andrew J. Jordan, and Sebastian Oberthür - 9781789906981 Downloaded from PubFactory at 08/15/2023 12:42:34AM via free access

Tim Rayner, Kacper Szulecki, Andrew J. Jordan, and Sebastian Oberthür - 9781789906981 Downloaded from PubFactory at 08/15/2023 12:42:34AM via free access

Contents

List of figuresx List of tablesxi List of boxesxii List of contributorsxiii Prefacexix Acknowledgementsxxii List of abbreviationsxxiii 1

The global importance of EU climate policy: an introduction Tim Rayner, Kacper Szulecki, Andrew J. Jordan and Sebastian Oberthür

PART I

1

MAIN ACTORS AND INSTITUTIONS

2

The European Commission: a climate policy entrepreneur Alexander Bürgin

23

3

The European Council, Council and Member States: jostling for influence Rüdiger K. W. Wurzel, Maurizio Di Lullo and Duncan Liefferink

38

4

The European Parliament: a strong internal actor with external ambitions Franziska Petri, Veronika Zapletalová and Katja Biedenkopf

53

5

The European Investment Bank: the EU’s climate bank? Daniel Mertens and Matthias Thiemann

68

6

Business and private finance: their role in the EU’s climate transition Sandra Eckert

83

7

Environmental and climate activism and advocacy in the EU Louisa Parks, Donatella della Porta and Martín Portos

98

8

Cities in EU multilevel climate policy: governance capacities, spatial approaches and upscaling of local experiments Kristine Kern

9

The role of the courts in EU climate policy Marcin Stoczkiewicz

PART II 10

113 129

CORE DYNAMICS SHAPING EU POLICY

Global dimensions of EU climate, energy and transport policies John Vogler

144

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viii  Handbook on European Union climate change policy and politics 11

Climate, ecological and energy security challenges facing the EU: new and old dynamics Richard Youngs and Olivia Lazard

158

12

Green growth and competitiveness in EU climate policy: paradigm shift or ‘plus de la même chose’? Oscar Fitch-Roy and Ian Bailey

173

13

EU climate leadership: domestic and global dimensions Paul Tobin, Diarmuid Torney and Katja Biedenkopf

187

PART III POLICY INSTRUMENTS AND MODES OF GOVERNANCE 14

Instruments and modes of governance in EU climate and energy policy: from energy union to the European Green Deal Michèle Knodt

202

15

Targets, timetables and effort sharing as governance tools: emergence, scope and ambition Seita Romppanen

216

16

Proactive prevention of carbon leakage? The EU Carbon Border Adjustment Mechanism Jørgen Wettestad

231

17

Climate policy integration and climate mainstreaming in the EU budget Katharina Rietig and Claire Dupont

18

Governing EU low-carbon innovation: from Strategic Energy Technology Plan to European Green Deal Jon Birger Skjærseth and Per Ove Eikeland

246

259

PART IV BARRIERS TO MORE AMBITIOUS ACTION IN PARTICULAR SECTORS 19

Agricultural emissions: a case of limited potential or limited ambition? Alan Matthews

275

20

Energy-intensive industries in the EU: overcoming barriers to transition? Tomas Wyns and Gauri Khandekar

289

21

Transport: evolving EU policy towards a ‘hard-to-abate’ sector Helene Dyrhauge and Tim Rayner

305

PART V 22

NEW AND ONGOING CHALLENGES

Carbon dioxide removal: climbing up the EU climate policy agenda Felix Schenuit and Oliver Geden

322

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Contents  ix 23

Brexit: weighing its implications for EU and UK climate governance Brendan Moore

337

24

Green recovery: catalyst for an enhanced EU role in climate and energy policy? 351 Rainer Quitzow, Germán Bersalli, Johan Lilliestam and Andrea Prontera

25

Climate protection versus trade: dilemmas for the EU Natalie Dobson

367

PART VI CONCLUSION 26

The EU: towards adequate, coherent and coordinated climate action? Tim Rayner, Kacper Szulecki, Andrew J. Jordan and Sebastian Oberthür

384

Index402

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Figures

4.1

Number of European Parliament delegates at UNFCCC COPs

62

5.1

Climate action lending at the European Investment Bank, 2009–2020

74

8.1

Dynamics between forerunners and laggards

121

20.1

GHGs from energy-intensive industries (EU 27)

290

21.1

EU27 GHG emissions by sector (million tonnes CO2 equivalent)

307

22.1

Residual emissions and CO2 removal in the EU-27 + UK in 2050

324

24.1

Total CO2 emissions and carbon intensity of primary energy consumption in the EU-28 (1998–2019)

356

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Tables

4.1

Arrangement of European Parliament political groups during the ninth EP after Brexit

58

4.2

Means of EP influence on international climate negotiations

60

5.1

Main sectoral measures in the Climate Bank Roadmap 2021–2025

76

8.1

Local climate governance in EU multilevel governance

115

14.1

Configurations for the governance of European climate and energy policy

204

14.2

Instruments to achieve climate neutrality by 2050/55 per cent GHG reduction by 2030

209

14.3

Legal-political assessment of the scenarios

210

24.1

European Energy Programme for Recovery (EEPR)

354

24.2

‘Green’ recovery measures of selected Member States after the global financial crisis

355

24.3

Next Generation EU breakdown (in € billion)

360

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Boxes 1.1

The European Climate Law

9

5.1

Green bonds

72

6.1

Striving for circularity and decarbonization in the plastics industry

88

6.2

The EU green taxonomy

90

7.1

Fridays for Future and Extinction Rebellion

102

7.2

Activism and the European Green (new) Deal

107

9.1

Czech Republic v. Poland (Mine De Turów, C-121/21)

132

9.2

The Hague District Court Judgment in the case Milieudefenise et al. v. Royal Dutch Shell

138

10.1

The 2015 Paris Agreement to the UNFCCC

145

12.1

New Consumer Agenda priority areas

180

15.1

Including the effects of land use in climate policy through the LULUCF Regulation223

21.1

Overview of key European Green Deal and ‘Fit For 55’ transport-related initiatives

308

23.1

The EU–UK Trade and Cooperation Agreement (TCA)

338

24.1

The Just Transition Fund and its critics

361

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Contributors

Ian Bailey is Professor of Environmental Politics in the School of Geography, Earth and Environmental Sciences at the University of Plymouth, UK. His research focuses primarily on developments in the EU, UK and Australia, and spans various aspects of environmental politics and sustainability, from climate change and the social dimensions of renewable energy to grassroots sustainability transitions, education for sustainable development, and societal engagement with marine environments. Germán Bersalli works as a Research Associate at the Institute for Advanced Sustainability Studies in Potsdam, Germany. His research, combining ecological economics with public policy and transition studies, focuses on transformative change towards a zero-carbon economic system. He has worked as a Lecturer in energy policy and economics. He studied energy and development economics in Grenoble, France and administration and accounting in Entre Rios, Argentina. Katja Biedenkopf is an Associate Professor of Sustainability Politics at the University of Leuven, Belgium. She coordinates the Leuven International and European Studies (LINES) group as well as the Sustainable Futures research group. Her research focuses on global and polycentric climate and environmental governance, carbon pricing policies, chemicals regulation, electronic waste policy, climate justice, and climate diplomacy. Alexander Bürgin is Associate Professor at Izmir University of Economics, Turkey and teaches European Union studies at Zeppelin University, Friedrichshafen, Germany. His research focuses on the EU’s role in international relations and the governance of the EU. His findings have been published by journals such as Journal of Common Market Studies, Journal of European Public Policy, Journal of European Integration, Environmental Policy and Governance and Public Administration. Donatella della Porta is Professor of Political Science at the Scuola Normale Superiore in Florence, Italy, where she leads the Center on Social Movement Studies (Cosmos). Social movements, political violence, terrorism, corruption, and protest policing are her main topics of research. She directed a major ERC Advanced Grant, was the recipient of the Mattei Dogan Prize for distinguished achievements in political sociology, and holds five Honorary Doctorates. Natalie Dobson is an Assistant Professor in International Law at Utrecht University, the Netherlands. Her research focuses on issues of legal regime interaction and climate change, considering the EU as a global environmental actor. Natalie holds an LLM in international and European law (Cambridge University, 2012) and a PhD in public international law (Utrecht University, 2018). Claire Dupont is Research Professor of European and International Governance at the Department of Public Governance and Management, Ghent University, Belgium. Her research focuses on EU climate, energy and environmental governance, and her work has been xiii Tim Rayner, Kacper Szulecki, Andrew J. Jordan, and Sebastian Oberthür - 9781789906981 Downloaded from PubFactory at 08/15/2023 12:43:02AM via free access

xiv  Handbook on European Union climate change policy and politics published in books and journals, including Journal of European Public Policy, Journal of European Integration and West European Politics, among others. Helene Dyrhauge is an Associate Professor in International Public Administration and Politics at the Department for Social Science and Business, Roskilde University, Denmark. Her research focuses on the discourses and politics of sustainable transitions, especially the intersection between transport, energy and climate policy. She has contributed on these themes to edited volumes and journals including the Journal of Common Market Studies and Journal of European Integration. Sandra Eckert is Full University Professor at the Friedrich-Alexander-University Erlangen-Nürnberg, Germany. She was previously a Marie Skłodowska-Curie COFUND Fellow and Associate Professor at the Aarhus Institute of Advanced Studies and Assistant Professor of Politics in the European Multilevel System at the Goethe University Frankfurt am Main. Sandra is an expert on European integration, comparative public policy and international political economy. Per Ove Eikeland is Senior Researcher at Fridtjof Nansen Institute, Norway. He graduated in economics from the University of Oslo, with additional training in international political economy and corporate strategy. His research interests include European climate, energy and technology policies and energy sector corporate transition strategies. Oscar Fitch-Roy is a Senior Research Fellow at the University of Exeter, UK. He teaches and researches the social, organizational and political issues associated with energy system transformation. In particular he is interested in the role of interest groups and other civil society actors. Much of his recent work focuses on EU policymaking and the governance of offshore wind energy industries. Oliver Geden is a Senior Fellow at the German Institute for International and Security Affairs (SWP). His work focuses on European and global climate policy, particularly the governance and politics of carbon dioxide removal. Geden served as lead author for the Sixth Assessment Report of the Intergovernmental Panel on Climate Change (WG III) and for the IPCC AR6 Synthesis Report. Andrew J. Jordan is Professor of Environmental Policy in the Tyndall Centre for Climate Change Research at the University of East Anglia, UK. He has published widely on EU and UK climate policy. His research is currently funded by the UK ESRC (the CAST Centre) and the European Research Council (Advanced Grant, Deep Decarbonisation (‘DeepDCarb’)). Kristine Kern is Professor and Head of the Research Group ‘Urban Sustainability Transformations’ at the Leibniz Institute for Research on Society and Space in Erkner, Germany. She is also affiliated to Åbo Akademi University in Turku, Finland. Her research concentrates on environmental governance and sustainability transformations in multi-level systems, in particular on local and regional climate and energy governance. Gauri Khandekar has been a Researcher at the Brussels School of Governance (BSoG), Vrije Universiteit Brussel since 2017, where she works on European and international climate policy and industrial decarbonization. Prior to joining BSoG, she was Deputy Director and Director Europe at the think-tank Global Relations Forum, Coordinator for the Friedrich Ebert Stiftung’s Energy and Urban Transformation Project and Head of Asia Programme at

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Contributors  xv the Brussels and Madrid-based think-tank FRIDE, amongst others. She is the author/editor of seven books and numerous other publications. Michèle Knodt is Professor of Political Science, Jean Monnet Chair (ad personam) and Director of the Jean Monnet Centre of Excellence ‘EU in Global Dialogue’ (CEDI), Director of the Jean Monnet Centre of Excellence ‘EU@​School’, and Chair of the COST Network ENTER (EU Foreign Policy Facing New Realities). She is especially interested in energy and foreign policy and has received research grants from the German Federal Ministry of Education and Research (BMBF), Federal Ministry of Economic Affairs and Energy (BMWi), the German Research Council (DFG), the Volkswagen Foundation and the European Commission. Olivia Lazard is a visiting scholar at Carnegie Europe, Belgium. Her research focuses on the geopolitics of climate, the transition ushered by climate change, and the risks of conflict and fragility associated to climate change and environmental collapse. Duncan Liefferink is an Associate Professor in the Environmental Governance and Politics group at the Institute for Management Research, Radboud University Nijmegen, the Netherlands. His main research fields are European and comparative environmental politics, with a particular interest in the dynamic interrelationship between national and EU environmental policymaking and implementation. Johan Lilliestam leads the Energy Transitions and Public Policy group at IASS. He holds the professorship for Energy Policy at the University of Potsdam, Germany. His research focus is policies, strategies and instruments for a transition to a completely renewable energy system, including the effects of interactions between different energy policies. Maurizio Di Lullo is a lawyer and linguist by training. He has worked at the General Secretariat of the Council of the EU since 1999. For 15 years he participated in UN climate conferences and negotiations of EU climate legislation. Since 2020, he has followed Home Affairs issues (borders/Schengen/COVID-19), with, inter alia, work on the EU Digital Covid Certificate. Alan Matthews is Professor Emeritus of European Agricultural Policy at Trinity College Dublin, Ireland, where his research has focused on EU agricultural policy, agricultural trade policy, and agricultural trade and development issues. He is a former President of the European Association of Agricultural Economists and has been a member of Ireland’s Climate Change Advisory Council. Daniel Mertens is Professor of International Political Economy at Osnabrück University, Germany. Prior to that, he held positions at Goethe University Frankfurt and the Max Planck Institute for the Study of Societies. He is one of the editors of the International Handbook of Financialization (Routledge, 2020) and has co-edited the volume The Reinvention of Development Banking in the European Union (OUP, 2021). Brendan Moore is a postdoctoral researcher focusing on transformative EU climate change governance at the Institute for European Studies, Brussels School of Governance, Vrije Universiteit Brussel, Belgium. He is also a visiting researcher at the Tyndall Centre for Climate Change Research, University of East Anglia, UK.

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xvi  Handbook on European Union climate change policy and politics Sebastian Oberthür is Director of the Research Centre for Environment, Economy and Energy and Professor for Environment and Sustainable Development at the Brussels School of Governance, Belgium. He is also Professor of Environmental Policy and Law at the Centre for Climate Change, Energy and Environmental Law at the University of Eastern Finland. He served as Academic Director of the Institute for European Studies (now part of the Brussels School of Governance) (2005–15). From 2006 to 2013, he was a member of the Compliance Committee of the Kyoto Protocol to the UNFCCC. Louisa Parks is Associate Professor in Political Sociology at the University of Trento’s School of International Studies and Department of Sociology and Social Research, Italy. She is the author of work on global environmental governance, global civil society, the activism and participation of indigenous peoples and local communities in environmental governance, and the impacts of social movement campaigns on EU policy. Franziska Petri, MA, is a FWO doctoral fellow (2019–2023) at the Leuven International and European Studies at the University of Leuven, Belgium. Her doctoral research focuses on EU climate and energy diplomacy and the role of EU Delegations. Her research interests are EU foreign policy, EU climate and energy policies, the European Parliament, and EU inter-institutional relations. Martín Portos is Ramón y Cajal Fellow in Social Sciences, Universidad Carlos III de Madrid, Spain. He holds a PhD in political and social sciences from the European University Institute. Winner of the Juan Linz Best Dissertation Award in Political Science and the ISA’s Worldwide Competition for Junior Sociologists in 2018, he studies political participation, social movements, inequalities and nationalism. Andrea Prontera is Associate Professor of International Relations and EU Institutions and Policies in the Department of Political Science, Communication and International Relations of the University of Macerata, Italy. His main research interests lie in the areas of international political economy, EU politics and policy, comparative public policy and energy policy. Rainer Quitzow leads a research group on green industrial policy and geoeconomic competition within the context of the transition to climate neutrality at the Institute for Advanced Sustainability Studies (IASS Potsdam), Germany. He is also a Senior Lecturer in the field of innovation and sustainability at the Technische Universität Berlin. Tim Rayner is a Research Fellow in the School of Environmental Sciences at the University of East Anglia, UK. Part of the Tyndall Centre since 2006, he has participated in a range of European Union and national research council-funded projects, covering climate change governance and policy from EU and UK perspectives. He has published widely on mitigation and adaptation-related policy areas, and emerging debates over the potential for greenhouse gas removal. Katharina Rietig is Reader in International Politics at the School of Geography, Politics and Sociology at the University of Newcastle, UK. Her research sits at the intersection of international relations/global governance and European public policy, and revolves around the governance of socio-technical transitions to low carbon economies, with a special focus on new technologies, including Artificial Intelligence, in energy and transport.

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Contributors  xvii Seita Romppanen is a Senior Research Scientist on Law on Sustainability Transitions at the Finnish Environment Institute’s Climate Change Programme (SYKE) and a Senior Lecturer in International Environmental Law at the University of Eastern Finland Center for Climate Change, Energy and Environmental Law (CCEEL). Dr Romppanen has published on topics relating to international and EU environmental law, especially climate law (i.e. the LULUCF and effort sharing sectors’ legal framework, renewable energy, forests and bioenergy, sustainability transitions and Arctic environmental law). Felix Schenuit is a Research Associate at the German Institute for International and Security Affairs (SWP). His research focuses on climate change mitigation policy and politics in the European Union with a particular focus on carbon dioxide removal. He is an associated member of the Center for Sustainable Society Research and the German Cluster of Excellence ‘Climate, Climatic Change, and Society’ at University of Hamburg. Jon Birger Skjærseth is a political scientist working as a Research Professor at the Fridtjof Nansens Institute in Norway. His research interests include European climate, energy, and environmental policies at international, EU, national and industry levels. He has published extensively in these fields, including several books. Marcin Stoczkiewicz is Head of Environmental Law Group (Thriving Planet) at ClientEarth and Climate Litigation Rapporteur (Poland) cooperating with The Sabin Center’s Peer Review Network of Climate Litigation, (Columbia University). He was previously a partner at an environmental law firm and an Associate Professor at the Jagiellonian University (Kraków), Faculty of Law. Kacper Szulecki is a Research Professor in International Climate Governance at NUPI and a fellow at the Include – Centre for socially inclusive energy transitions hosted by the Centre for Development and the Environment (SUM), University of Oslo, Norway. His main research interests are energy, climate and environmental politics, dissent and protest as well as intra-European migration. His work has appeared in, among others, Governance, Climate Policy, Journal of European Public Policy, Energy Research and Social Science, and Environmental Politics. Matthias Thiemann is Associate Professor of European Public Policy at Sciences Po, Paris, France. Prior to that, he held positions at Goethe University Frankfurt and ESSEC Business School. He is the author of The Growth of Shadow Banking: A Comparative Institutional Analysis (Cambridge University Press, 2018) and has co-edited the volume The Reinvention of Development Banking in the European Union (OUP, 2021). Paul Tobin is a Senior Lecturer/Associate Professor in Politics at the University of Manchester, UK. He specializes in the politics and public policy of climate change within Europe. He has published prize-winning articles on these topics in Global Environmental Politics and the Journal of European Public Policy, and has co-edited two books, published by Oxford University Press and Routledge. Diarmuid Torney is an Associate Professor in the School of Law and Government at Dublin City University (DCU), Ireland. His research focuses on climate change politics, policy, and governance. Diarmuid is Co-director of the DCU Centre for Climate and Society and a lead

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xviii  Handbook on European Union climate change policy and politics author on Ireland’s first Five Year Assessment Report on climate change, commissioned by the Environmental Protection Agency. John Vogler is Professorial Research Fellow in International Relations at Keele University, UK. He has researched and published on international environmental politics, global commons and climate issues alongside his work with Charlotte Bretherton on the EU as a global actor. He was a member of the ESRC Centre for Climate Economics and Policy and is author of Climate Change in World Politics (2016). Jørgen Wettestad is a Research Professor at Fridtjof Nansen Institute in Oslo, Norway. He has published widely on international, EU and national environmental, climate and energy policy. His most recent books are Comparative Renewables Policy: Political, Organizational and European Fields, co-edited with Elin Lerum Boasson and Merethe Dotterud Leiren (Routledge, 2021) and The Evolution of Carbon Markets: Design and Diffusion, edited with Lars H. Gulbrandsen (Routledge, 2018). Wettestad is editorial board member of Politics and Governance and was a lead author in WG III in IPCC’s Sixth Assessment Report. Rüdiger K. W. Wurzel is Professor of Comparative European Politics and Jean Monnet Chair in European Union Studies in the School of Politics and International Studies at the University of Hull, UK, where he is Director of the Centre for European Union Studies (CEUS). He has published widely on environmental issues, the EU and German politics. Tomas Wyns is Senior Researcher at the Brussels School of Governance (BSoG) at the Vrije Universiteit Brussel, Belgium. He is working on European and international climate policy, in particular the design of industrial and innovation policy, enhancing global climate action under the Paris climate agreement and the implementation of the EU Emissions Trading System. Prior to BSoG, Tomas worked at think-thank ‘Centre for Clean Air Policy’, the NGO ‘Climate Action Network Europe’ and as a climate policy officer in the Flemish government in Belgium. Richard Youngs is a Senior Fellow at Carnegie Europe, Belgium and Professor of International Relations at the University of Warwick, UK. He has authored 15 books, including recently The European Union and Global Politics (Macmillan, 2021). He co-founded the European Democracy Hub and coordinates Carnegie’s current work on EU climate geopolitics. Veronika Zapletalová is an Assistant Professor at the Department of International Relations and European Studies, Faculty of Social Studies, Masaryk University, Czech Republic. Her majors are the external dimension of the EU energy policy, liberalization of the energy market in the EU, and the shape of governance in the EU.

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Preface

In May 2022, the concentration of carbon dioxide in the Earth’s atmosphere reached 418 parts per million (ppm), 50 per cent higher than pre-industrial levels (NOAA 2022). The average global mean temperature has risen by more than 1°C since pre-industrial times. The United Nations Environment Programme’s Emissions Gap Report (UNEP 2021) shows that national climate policy pledges, combined with other mitigation measures, put the world on track for a temperature rise of 2.7°C by the end of the century, way beyond the 1.5°C limit that countries are urged to strive for in the landmark Paris Agreement adopted in 2015. A hard-hitting report by the Intergovernmental Panel on Climate Change noted that many of the predicted, negative impacts of rising temperatures were already becoming more common, and warned of much worse to come (IPCC 2022). Surveys of young people in ten countries (including some EU Member States) revealed that 75 per cent consider the future to be ‘terrifying’, and 56 per cent think that ‘humanity is doomed’ (Hickman et al. 2021). Yet amidst these dire trends, more hopeful signs can also be identified. The number of adopted climate policies and emission reduction commitments climbed steadily throughout the 2000s and 2010s. Indeed, the countries aiming for ‘climate neutrality’ by mid-century now account for 75 per cent of world GDP. The costs of cleaner energy sources such as wind and solar continue to fall (Hausfather and Moore 2022), opening up the possibility of deeper and faster emission cuts to come (Birol 2021). And finally, sub-national, including city-led, action, as well as corporate commitments to ‘science-based’ targets, continue apace (Jordan et al. 2018). However, stepping up action to avoid dangerous climate change demands much more coordinated and consistent action from all social actors, including those based in Europe. With its 450 million citizens, a €14.5 trillion economy and above-global-average greenhouse gas emissions per capita, the European Union (EU) arguably holds particular responsibility to be a global climate leader. Its political and institutional structures also give it the capacity to drive change. For these reasons, the EU’s drive for decarbonization demands particularly close attention. Dating from the early 1990s – when atmospheric CO2 concentrations stood at little more than 350 ppm – the EU’s climate-related policy activities have had enormous influence within its own borders and beyond, and over time have gradually expanded to encompass a widening range of economic sectors. With the high-profile announcement of its European Green Deal (EGD), the von der Leyen Commission placed climate and environmental policies at the heart of a comprehensive package with broad industrial, innovation, and societal ambitions. The EGD includes a number of significant innovations including a Climate Law that enshrines the goal of net zero greenhouse gas emissions by 2050 and a revised EU Adaptation Strategy that recognizes that more ambitious and urgent efforts are needed to improve resilience to climate impacts. Taken together, it constitutes the most ambitious sustainability strategy produced by a supranational entity to date, with ambitious climate action at its core. In the last 30 years or so, the academic literature on these developments has grown dramatically. The aim of this Handbook is to take stock of EU efforts, assess how far they have come, and consider the EU’s ability to deliver on its increasingly ambitious climate policy xix Tim Rayner, Kacper Szulecki, Andrew J. Jordan, and Sebastian Oberthür - 9781789906981 Downloaded from PubFactory at 08/15/2023 12:43:03AM via free access

xx  Handbook on European Union climate change policy and politics objectives. It combines a detailed description of the main policy dynamics and actors’ various roles within them, conceptual reflection, analysis of how the EU’s approach has evolved over time, and a critical exploration of contemporary challenges and new dilemmas facing EU climate policymakers. The text is broadly divided into six parts. Part I covers the range of actors and institutions whose activities constitute the governance of climate change in the EU. Part II focuses on the internal and external dynamics that have shaped EU climate policy and governance. Part III provides a detailed summary of the main policy instruments and modes of governance employed by the EU to address climate change, and explores their origins, purpose and effectiveness. Part IV focuses on those sectors which, unlike for example electricity production, have proven ‘hard to abate’. Part V addresses particular challenges and controversies affecting contemporary EU climate policy, while Part VI takes stock and assesses future prospects. The 25 chapters within these six parts generally assume a basic understanding of the EU. Readers who require a more detailed account of the EU’s history and/or institutional procedures, including the processes by which particular types of legislation come to be adopted, may wish to consult one of the many existing textbooks on EU policies and institutions (see e.g. Woerdman et al. 2021; Cini and Pérez-Solórzano Borragán 2019, Graziano and Tosun 2022). Overall, the aim is not to achieve comprehensiveness in coverage of all relevant policies. Instead, among its more novel features, this Handbook seeks to address a number of areas that have been relatively neglected by the existing literature, or are regarded as increasingly important, including EU perspectives on the increasing importance of finance and sustainable investment-related issues in reaching climate goals, increased levels of civic activism (including through the courts), and growing policy attention being paid to negative emissions and hard-to-abate sectors such as (international) transport and agriculture. Previously overlooked, but nonetheless influential institutions, such as the European Investment Bank, also receive attention. The literature on EU climate policy spans many different disciplines. Authors were therefore encouraged to state where their analysis fits in terms of conceptual or theoretical frameworks, but this was not obligatory. Some adopt a legal perspective (which is reflected in the style of referencing in some cases), while others pursue a political science or policy sciences-based approach. We have done our best to ensure that these chapters are up-to-date and that their analysis is as robust as it can be in the face of uncertain future events. In the course of putting this volume together, the EU and indeed the world have been struck by several unexpected crises, most especially the COVID-19 global pandemic, and Russia’s full-scale invasion of Ukraine, which have made this an especially challenging proposition. In these turbulent times, we hope nevertheless that this Handbook provides a realistic appraisal of the prospects for continued and enhanced climate policy ambition and delivery by one of the world’s key actors in addressing this most pressing of twenty-first-century challenges.

REFERENCES Birol, F. (2021). COP26 climate pledges could help limit global warming to 1.8°C, but implementing them will be the key – analysis. Paris: International Energy Agency. www​.iea​.org/​commentaries/​ cop26​-climate​-pledges​-could​-help​-limit​-global​-warming​-to​-1​-8​-c​-but​-implementing​-them​-will​-be​ -the​-key (Accessed: 5 September 2022).

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Preface  xxi Cini, M. and N. Pérez-Solórzano Borragán (2019). European Union Politics, Sixth Edition. Oxford: Oxford University Press. Graziano, P.R. and J. Tosun (Eds.) (2022). Elgar Encyclopedia of European Union Public Policy. Cheltenham, UK, Northampton, MA, USA: Edward Elgar Publishing. Hausfather Z. and F.C. Moore (2022). Net-zero commitments could limit warming to below 2°C. Nature. Apr.; 604 (7905): 247–248. doi: 10.1038/d41586-022-00874-1. PMID: 35418626. Hickman, C. et al. (2021). Climate anxiety in children and young people and their beliefs about government responses to climate change: a global survey. Lancet Planetary Health 5: e863-e873. DOI: https://​doi​.org/​10​.1016/​S2542​-5196(21)00278​-3 IPCC (2022). Climate Change 2022: Impacts, Adaptation and Vulnerability. Contribution of Working Group II to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change [H.-O. Pörtner, D.C. Roberts, M. Tignor, E.S. Poloczanska, K. Mintenbeck, A. Alegría, M. Craig, S. Langsdorf, S. Löschke, V. Möller, A. Okem, B. Rama (eds.)]. Cambridge: Cambridge University Press. doi: 10.1017/9781009325844. Jordan, A., D. Huitema, H. van Asselt, and J. Forster (Eds.) (2018). Governing Climate Change: Polycentricity in Action? Cambridge: Cambridge University Press. www​.cambridge​.org/​core/​books/​ governing​-climate​-change/​03​3486F6DA7F​2CD1F8F3D6​011B17909B Jordan, A.J. and V. Gravey, (2021) EU environmental policy at 50: restrospect and prospect. In: A.J. Jordan and V. Gravey (Eds.) (2021). Environmental Policy in the EU. Fourth Edition. London: Taylor and Francis, pp. 357–374. NOAA (2022). Carbon dioxide now more than 50% higher than pre-industrial levels. www​.noaa​ .gov/​news​-release/​carbon​-dioxide​-now​-more​-than​-50​-higher​-than​-pre​-industrial​-levels (Accessed: 5 September 2022). UNEP (2021). Emissions Gap Report 2021. UNEP – UN Environment Programme. www​.unep​.org/​ resources/​emissions​-gap​-report​-2021 (Accessed: 30 August 2022). Woerdman, E., M. Roggenkamp, and M. Holwerda (Eds.) (2021). Essential EU Climate Law. Second Edition. Cheltenham, UK, Northampton, MA, USA: Edward Elgar Publishing.

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Acknowledgements

We have incurred a number of debts in producing this Handbook. Daniel Mather, our Editor at Edward Elgar, originally encouraged us to embark upon this project and showed great patience and support throughout the process. His colleagues Caroline Cornish and Stephanie Roker kept production nicely on track and were always responsive; Andrew Devine’s proof reading was excellent. We are further grateful to Edward Elgar for allowing several chapters to appear online in advance of the publication of this book, to allow their findings to appear in a timely manner. Tim Rayner, Andrew Jordan and Sebastian Oberthür are grateful to the Jean Monnet Network on ‘Governing the EU’s Climate and Energy Transition in Turbulent Times’ (GOVTRAN) under the Erasmus + programme of the European Union for supporting this book project, including financially to enable its publication in an Open Access form. We and a number of other contributors would like to thank Olöf Söebech for making several chapters available on the GOVTRAN website (www​.govtran​.eu). Andrew would also like to acknowledge the support of the ERC-funded DeepDCarb project (882601) (www​.deepdcarb​.org) and the ESRC (ES/S012257/1; CAST Centre). Kacper Szulecki wishes to thank the Include Research Centre for Socially Just Energy Transition at the University of Oslo as well as the Norwegian Ministry of Foreign Affairs (through the ‘Norway and the EU towards 2030’ project) for the support that enabled work on this book. Harro van Asselt and Janet Dwyer offered invaluable advice and feedback on particular chapters. At UEA, we wish to thank Vikki Coe and other administrators for facilitating the lead editor’s continued work on this book project. For patient assistance in finalizing the manuscript, we are indebted to Elsa Lilja Gunnarsdottir at NUPI in Oslo. Tim pays special tribute to Jules and our son Edward for their forbearance while he put in the hours required by a book project of this kind; similarly, Kacper expresses gratitude to Julia and their boys for their understanding. Finally, we are truly grateful to all the contributors who responded with great patience to our numerous and extensive comments and requests, during what have been particularly challenging times. We hope these requests have allowed links between chapters to be elaborated and highlighted in useful ways. In addition, a number of chapter authors commented very constructively on each other’s work, and we are particularly grateful to those who were able to contribute towards the cost of making this Handbook available on an Open Access basis. We hope readers will learn as much from reading their chapters as we have. Tim Rayner, Norwich Kacper Szulecki, Oslo Andrew Jordan, Norwich Sebastian Oberthür, Brussels September 2022

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Abbreviations

ACEA BECCS BIS CAN Europe CAP CBAM CBD CBDRRC CCS CCU CDM CDR CEF-E CEO CJEU COP COPACOGECA

COREPER CORSIA CPI CSDP CSP CST DACCS DG DG CLIMA DG ENTR DG ENER DG ENV

European Car Manufacturers Association Bioenergy with Carbon Capture and Storage Bank for International Settlements Climate Action Network Europe Common Agricultural Policy Carbon border adjustment mechanism Convention on Biological Diversity Common but differentiated responsibilities and respective capabilities Carbon capture and storage Carbon capture and utilization UN Clean Development Mechanism Carbon dioxide removal Connecting Europe Facility for Energy Corporate Europe Observatory Court of Justice of the European Union Conference of the Parties Comité des organisations professionnelles agricoles-Comité général de la coopération agricole de l’Union européenne (Committee of Professional Agricultural Organisations-General Confederation of Agricultural Cooperatives) Comité des représentants permanents (Committee of Permanent Representatives) Carbon Offsetting and Reduction Scheme Climate Policy Integration Common Security and Defence Policy Concentrated solar power Climate Risk Stress Test Direct air capture carbon capture and storage Directorate General Directorate General Climate Action Directorate General Enterprise Directorate General Energy Directorate General for the Environment xxiii Tim Rayner, Kacper Szulecki, Andrew J. Jordan, and Sebastian Oberthür - 9781789906981 Downloaded from PubFactory at 08/15/2023 12:43:05AM via free access

xxiv  Handbook on European Union climate change policy and politics EAP EBA EBRD EC EC ECA ECHR ECR ECSC ECtHR EDA EEA EEAS EEAG EEB EEC EFSI EGD EIB EII EII ENDS ENF ENGO ENVI EP EPI EPP ERA ERTMS ESD ESG ESR ETD ETP ETS EU

Environmental Action Programme European Banking Authority European Bank for Reconstruction and Development European Commission European Community European Court of Auditors European Convention on Human Rights and Fundamental Freedoms European Conservatives and Reformists Group European Coal and Steel Community European Court of Human Rights European Defence Agency European Environment Agency European External Action Service State aid guidelines on environmental protection and energy European Environmental Bureau European Economic Community European Fund for Strategic Investment European Green Deal European Investment Bank Energy-intensive industry European Industrial Initiative Environmental Data Services Europe of Nations and Freedom Environmental non-governmental organization Committee of Environment, Public Health and Food Safety European Parliament Environmental Policy Integration European People’s Party European Research Area European Rail Traffic Management System Effort Sharing Decision Environment, social and governance Effort Sharing Regulation Energy Taxation Directive European Technology Platforms Emissions Trading System European Union

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Abbreviations  xxv F2F FAIR FFF FOEE GATS GATT GCCA+ GDP GDN GGG GHG Greens/EFA HEAL ICAO ILUC IMO IMPEL INDC IPCC IPCEI ISG ITRE IWG JICE JTF JTM LTS LULUCF MSR NDC NECP NGO OECD OLP ORE PCI

Farm to Fork Future Allowance Import Requirement Fridays for Future Friends of the Earth Europe General Agreement on Trade in Services General Agreement on Tariffs and Trade Global Climate Change Alliance Plus Gross domestic product Green Diplomacy Network Green Growth Group Greenhouse gas Group of the Greens and European Free Alliance Health and Environment Alliance International Civil Aviation Organization Indirect land use change International Maritime Organization Network for the Implementation and Enforcement of Environmental Law Intended Nationally Determined Contribution Intergovernmental Panel on Climate Change Important Projects of Common European Interest Inter-service steering group European Parliament’s Industry Committee Implementation Working Group Joint Initiative on Circular Economy Just Transition Fund Just Transition Mechanism Long-term strategy Land-use, land-use change, and forestry Market Stability Reserve Nationally Determined Contribution National Energy and Climate Plans Non-governmental organization Organisation for Economic Co-operation and Development Ordinary legislative procedure Offshore Renewable Energy Projects of common interest

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xxvi  Handbook on European Union climate change policy and politics PESCO PPM ppm QMV RED REIO R&I SAF S&D SDG SDS SEA SET SETIS SG SIDS TCA TEN-E TEU TFEU UK UN UNCED UNEP UNFCCC US WSC WTO XR

Permanent Structured Cooperation Process or production methods Parts per million Qualified majority voting Renewable Energy Directive Regional Economic Integration Organization Research and Innovation Sustainable aviation fuels Group of the Progressive Alliance of Socialists and Democrats Sustainable Development Goal Sustainable Development Strategy Single European Act Strategic Energy Technology The system for reporting technological progress Secretariat General Small Island Developing States (EU-UK) Trade and Cooperation Agreement Trans-European-Energy Networks Treaty on European Union Treaty on the Functioning of the European Union United Kingdom United Nations UN Conference on Environment and Development United Nations Environment Programme United Nations Framework Convention on Climate Change United States World Shippers Council World Trade Organization Extinction Rebellion

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1. The global importance of EU climate policy: an introduction Tim Rayner, Kacper Szulecki, Andrew J. Jordan and Sebastian Oberthür

The EU is one of the major emitters of greenhouse gases (GHGs) in the world, both historically and in terms of the situation prevailing in the 2020s. By international standards, its energy mix is relatively diverse, encompassing fossil fuels, nuclear power and renewables. While the shift towards a greater share of renewables progresses apace, fossil fuels are still reckoned to account for 72 per cent of its energy mix, compared with an 80 per cent share globally (IEA 2020). Recognizing this context, the EU has long tried to act as a leader in international climate policy, both in terms of shaping evolving international institutional arrangements and developing policies and measures to reduce its own emissions. Dating from the early 1990s, its climate-related policy activities have had enormous influence within its own borders and beyond, and over time have gradually expanded to encompass a widening range of economic sectors. Indeed, climate action now has quasi constitutional status in EU law. Although the EU’s founding treaties do not explicitly define climate policy, Article 191(1) of the Treaty on the Functioning of the European Union (TFEU) refers to combating climate change as one of the core objectives of its policy on protecting the environment (Stoczkiewicz 2018). In 2019, with much fanfare, climate change moved to the very top of the EU’s legislative agenda when the European Commission launched proposals for a European Green Deal: a package of measures aiming to reduce net EU emissions to zero by mid-century, in the context of a wider set of environmental and social goals (European Commission 2019). Among the countries and organizations subscribing to the objective of ‘climate neutrality’ by the middle of the twenty-first century, the EU is nonetheless a rather distinctive actor, whose long-standing efforts to deliver decarbonization deserve particularly close attention. With 450 million citizens and a €14.5 trillion economy (European Union 2022), it is neither a sovereign state nor an international organization. The EU’s efforts have been shaped by its characteristics as a complex multi-level institutional landscape, a supranational organization, and a set of 27 Member States of varying levels of wealth and economic size, with different and at times contradictory interests, visions, domestic political dynamics and willingness to act collectively. Although overall the EU is dependent on fossil fuel imports, especially for oil and gas (IEA 2020), some Member States host significant fossil fuel production and supply industries, underpinned by powerful vested interests. In others, the continuation of carbon-intensive economic sectors has powerful backers; in each case, climate policy is rendered economically and politically sensitive at national and EU levels. European ways of life, moreover, are heavily associated with per capita GHG emissions that, although gradually falling, continue to exceed the global average (IEA 2022). Nevertheless, in view of its economic and institutional strength, the EU can be looked upon as a rather benign ‘critical case’: ‘if [it] cannot develop effective climate policies, then the implications for the globe are grim’ (Wettestad 2000: 26). 1 Tim Rayner, Kacper Szulecki, Andrew J. Jordan, and Sebastian Oberthür - 9781789906981 Downloaded from PubFactory at 08/15/2023 12:43:51AM via free access

2  Handbook on European Union climate change policy and politics Over three decades or so, targets and policies to address both climate change mitigation and adaptation have regularly emerged in the EU. Policies currently encompass a wide array of instruments, covering a widening range of economic sectors. As a policy ‘laboratory’, the EU has seen policy and institutional innovations in many areas. For example, novel ways have been developed to share the effort required to reduce emissions between Member States, and across different economic sectors. The EU has also pioneered the use of novel policy instruments such as emissions trading, which have been emulated elsewhere. While the financial resources at its disposal are relatively limited compared to its Member States, important commitments to dedicate increasing proportions of the EU budget to climate purposes have been made (van Asselt et al. 2015; Rietig 2021). Meanwhile, in global-level negotiations, the EU has practised a ‘leadership by example’ approach, and consistently advocated ‘targets and timetables’ to drive action, such as the target that average global temperature rise should not exceed 2°C above pre-industrial levels, and that global GHG emissions should be halved from 1990 levels, by 2050 (Council of the European Union 2007, Council of the European Union 2014). In addition to meeting emission-reduction targets under the Kyoto Protocol, the EU, its Member States (including the UK) and the European Investment Bank have together constituted the biggest contributor of public climate finance to assist developing countries (European Commission undated). Although there have been high-profile setbacks – exemplified by an unexpectedly marginalized role at the Copenhagen UN conference of 2009 – political momentum towards stricter standards has continued. Indeed, the Paris conference of 2015 offered cause for cautious optimism about the EU’s continuing role as an international pace-setter (Oberthür and Groen 2018). On top of this, as the impacts of a warming climate have increasingly been felt, the countries of the EU have increasingly recognized the importance of pursuing greater climate resilience alongside the goal of more ambitious emission reduction (Rayner and Jordan 2010, Biesbroek and Swart 2019). To reflect this increasingly dual focus, Stangl (2015: 13) has helpfully defined EU climate policy as ‘a set of coordinated actions by the EU institutions aimed at counteracting climate change, in particular through the reduction of GHGs [sic] and reducing the consequences of climate change, in particular through adaptation’ (our emphasis). Following the example of more progressive Member States, EU policy moved from a White Paper to a first Adaptation strategy (European Commission 2009, 2013), through to a more comprehensive approach launched eight years later, intended to enhance adaptive capacity, strengthen resilience and reduce vulnerability in the face of present and projected future impacts, including those occurring beyond Europe’s borders (European Commission 2021). This Handbook is intended to take stock of the EU’s efforts, assess how far they have come, and consider the EU’s ability to deliver on increasingly ambitious climate policy objectives. In the next section of this chapter, we begin by providing a necessarily brief outline of the main actors, institutions and policy processes. We go on to offer a brief chronological recapitulation of the evolution of EU climate policy and politics, from the early 1990s up to the 2021 ‘Fit for 55’ package of measures, designed to reduce emissions by 55 per cent by 2030. The final section explains the rationale for the structure of the book, and summarizes the aims and objectives of individual chapters.

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The global importance of EU climate policy  3

EU CLIMATE POLICY: THE MAIN ACTORS, INSTITUTIONS AND PROCESSES The origins of the EU date back to the post-war period, long before the emergence of the modern environmental movement (Jordan, Huitema, and van Asselt 2010). Over time the EU has gradually expanded from six founding states, eventually reaching 28 Member States. Following the UK’s unexpected departure in 2020 after a long and protracted process (‘Brexit’), the EU currently comprises 27 Member States. With so many Member States, several large institutions – the European Commission, the Council of Ministers and the European Parliament to name but three – criss-crossed by myriad formal and more informal networks, it remains a genuinely open question as to who in fact ‘governs’ the EU (Rayner and Jordan 2016). Clearly, it is the Member States who make up the Council of the EU (when represented by national ministers with responsibility for particular areas, such as environment, energy or finance), and the European Council (consisting of Heads of State or government). The Presidency of the Council in turn sets the daily agenda and rotates every six months among Member State governments. On the basis of the Treaties, and sometimes following more specific mandates from the Council, the European Commission acts as ‘guardian’ of what are perceived to be Europe-wide interests, by proposing legislation that, if adopted, is binding across all states. However, it is the way that these EU institutions interact with one another, and with the array of non-state actors that orbit around them, that shapes specific policies and thus constitutes the politics and governance of the EU. In the context of climate policy, the European Commission is arguably the key institutional actor, and one which is quite unique globally, without a comparable equivalent anywhere outside the EU. Its Directorates-General (DGs) are akin to national ministries. These include, since 2010, DG Climate Action, which has joined separate DGs for Energy and for Environment. Although appointed to represent the interests of the EU as a whole, the Commissioners that head each DG also serve as a clearinghouse for the interests of the Member States in policy formulation. Since 2019, the Commission has also boasted an Executive Vice-President for the European Green Deal, a function that aims to achieve environmental policy coordination across all sectors, with climate action as the key goal. The Commission also acts as the EU’s external representative (Vogler 2010) together with the current and incoming Council Presidency. Finally, since 1994, the Commission has been assisted by a technical agency – the European Environment Agency – which shares environmental data and evaluates various policy practices and their effectiveness (Mickwitz 2021). In developing proposals for new legislation, the Commission normally consults national governments and civil society stakeholders (Wallace et al. 2015). Only if such proposals are jointly adopted by national governments (in the Council) and the European Parliament does EU-wide legislation come into effect. In contentious areas, ‘issue linkage’ (combining different issues for joint settlement) and ‘side-payments’ – whereby ‘winners’ can compensate ‘losers’ so that all benefit – may be required to overcome disagreements and arrive at negotiated outcomes (Jordan and Gravey 2021). The Presidency of the Council is influential in deciding which items in the legislative pipeline are pushed towards adoption. For its part, the European Parliament (directly elected since 1979) is essentially a reactive chamber that amends policy proposals from the Commission, and must negotiate with the Council to see its preferences realized in final legislative texts. It nevertheless acts as a key entry point to the legislative process for many societal actors who might otherwise be excluded. Once legislation

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4  Handbook on European Union climate change policy and politics has been adopted, forms of free-riding, non-implementation, or discrimination by Member States can be sanctioned by the Court of Justice of the European Union, potentially through fines (Krämer 2021). However, the EU’s relatively limited enforcement capacity often opens up ‘implementation gaps’ (Zhelyazkova and Thomann 2021). Targets may go unmet because policy delivery mechanisms at the national level have not been specified. The depth and pace of political integration over the last 50 years has been such that, today, the boundary between national policy and EU policy has become blurred in many sectors. Cooperation between actors at sub-national level is also encouraged, as in the case of the Covenant of Mayors: a movement of European cities committed to developing energy efficiency and renewable energy and, more recently, investing in climate resilience. In this multi-level policy-making system, environmental concerns have shifted from being a fairly marginal aspect (in the 1960s) to a high-profile area which, unlike many other EU policy areas, generates relatively strong public support. Environmental issues in general, and climate change in particular, lend themselves logically to supranational rather than national policy. Periodic changes to the EU’s founding Treaties have provided more and more legal authority (or ‘competence’) to act (see e.g. Benson and Jordan 2008). Over time, the EU competence in relation to climate policy has grown, reducing the possibilities that individual Member States have to veto specific legal EU acts. However, in some specific areas that are particularly germane to climate policy, Member States have insisted on preserving a high degree of autonomy – ‘subsidiarity’ in the language of the EU – meaning that the Commission’s influence on core state powers, including taxation, energy supply, as well as land-use planning matters, is limited by the requirement for Member State unanimity on common policies (Delreux 2021). Lack of competence over land use planning aspects, for example, has been one reason why EU policy on adaptation has remained relatively incrementalist in nature (Rayner and Jordan 2010; Russel et al. 2020). The 2007 Lisbon Treaty extended the EU’s energy policy competence in the area of energy markets, security, and infrastructure, but at the same time reconfirmed Member States’ sovereignty over their use of energy resources by requiring that EU decisions are made on the basis on unanimous voting (Szulecki and Westphal 2014, p. 44). Unanimity among Member States is also required in adopting overall emission reduction targets for the EU (Woerdman et al. 2022). Since the late 1980s, when the issue of climate change began to emerge on the international political agenda, policy development has been driven by a mixture of factors. These include the need to avoid national policy differences causing distortions of the EU’s internal market; the potential for climate action to enhance the often shaky legitimacy of the wider project of European integration (see Hofmann 2021); the desire to develop a distinct European identity on the global stage; the need to improve energy security (Buchan and Keay 2015); and the desire to increase the competitiveness of European industry through a programme of ‘ecological modernisation’ (Szarka 2012). At different times, different actors throughout the EU have adopted a policy-entrepreneurial role to highlight these opportunities, and skilfully overcome potential obstacles to policy agreement (Jordan et al. 2012).

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The global importance of EU climate policy  5

THE EVOLUTION OF EU CLIMATE POLICY The Origins of EU Action EU climate policy dates back to the late 1970s (Jordan et al. 2010). However, for a long time, it mainly comprised a collection of informal objectives and broad strategies, with very few concrete policy instruments to achieve them (Jordan and Moore 2020: 64–75). The December 1997 Kyoto Conference of the Parties (COP) to the UNFCCC represented a major milestone in EU, as well as global, climate policy. With the talks fast approaching, the EU moved beyond a set of policies that had been in a sense ‘symbolic’ (Oberthür and Dupont 2011) to negotiate a significant internal ‘burden sharing’ agreement, among its then 15 members. Crucially, this arrangement allowed less developed Member States ‘headroom’ to grow economically and increase their emissions, while quite substantial reductions were made by the richer, more environmentally progressive Member States. The overall effect was to reduce emissions by around 9 per cent by 2012 from 1990 levels. Although this fell short of the 15 per cent that the EU suggested as a reduction target for industrialized countries, it defied expectations that such burden-sharing arrangements were unlikely in multi-levelled governance systems (Ringius 1999). This development marked a significant landmark in the evolution of EU climate policy, even if subsequently the Kyoto Protocol required a lesser, 8 per cent reduction over the same timescale. The Protocol’s ‘targets and timetables’ approach reflected the EU’s preference for a regulatory approach to governing. But it also saw EU negotiators swallow their opposition to ‘flexible mechanisms’ – emissions trading, the Clean Development Mechanism (CDM) and Joint Implementation – that were suspected of providing a means for the US in particular to evade domestic emission reductions. By dropping its opposition, the EU was able to secure US agreement to adopting the Kyoto Protocol – though ironically not, as it happened, its ultimate ratification. EU Climate Policy Takes Shape Internationally, while the EU was taking steps to ensure it could deliver its Kyoto commitments, and demonstrating how flexible mechanisms could be implemented, it was also pressing for the required number of Parties to ratify the Protocol, in order for it to come into effect. Once President Bush had announced the US’s withdrawal (in 2001), the EU worked to secure Russian ratification in 2004, thereby allowing the Protocol to enter into force. As a quid pro quo, the EU agreed to support Russia’s membership of the World Trade Organization, and adjust some of the terms on which Russian gas entered the European Single Market (Bretherton and Vogler 2006). In the aftermath of the Kyoto Protocol, Member States acknowledged that when combined, their national efforts would be insufficient to deliver the necessary 8 per cent emission reduction. In March 2000, the Commission responded by beginning to develop what came to be known as ‘common and coordinated policies and measures’, using a multi-stakeholder dialogue process known as the European Climate Change Programme (ECCP). This programme was able to build on a pioneering voluntary agreement between the Commission and vehicle manufacturers, the centrepiece of an EU strategy to reduce CO2 from cars, signed in 1998. In

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6  Handbook on European Union climate change policy and politics the event, slow progress in vehicle emission reduction led to this being replaced by a binding regulation in 2009 (Jordan et al. 2012; Jordan and Matt 2014). The other major EU-level policy to emerge at this time was the emissions trading system (ETS). Launched in 2005, it encompasses around 40 per cent of the EU’s total GHG emissions; participants are allocated permits to release a certain amount which, in order to incentivize the most cost-effective forms of abatement, are tradable in an emissions market (Skjærseth and Wettestad 2010). The sectors initially covered included power generation and energy-intensive industries such as steel and cement making plus aluminium production. Aviation within the European Economic Area was eventually included. In the initial phase, Member States were given responsibility for producing national allocation plans, which set out the total cap for domestic emissions and the more specific distribution among eligible installations. However, the Commission could reject plans deemed insufficiently ambitious in view of the EU’s Kyoto commitment. The original system was successively amended, on occasion with great difficulty, as the EU implemented its obligations first of all under the Protocol and then the Paris Agreement (see below), setting out its targets and timetables in advance of the 2009, 2015 and 2021 COPs of the UNFCCC (Jordan and Moore 2020). In all these cases, the intent was to call for more ambitious international action while demonstrating the EU’s own credibility, through additional measures promoting energy efficiency and an increase in renewables, as well as reform of the ETS. The ETS continues to be described routinely as the world’s first and largest carbon market, and policymakers maintain the aspiration that it will both encourage and link with similar markets elsewhere in the world. According to the European Commission (2022a), the ETS has proven to be a highly cost-effective tool, with installations covered by the ETS reducing emissions by about 35 per cent between 2005 and 2019. The EU’s Bid for International Climate Leadership The adoption of the ETS, and subsequently a series of other policy instruments, signalled a trend towards deeper, faster and smoother policy harmonization than had been possible in the 1990s (Jordan et al. 2012). A consensus looked to be in place around the idea that the EU should not only lead within Europe, but also – by example – at global level. Between 2003 and 2009, several significant pieces of legislation were adopted. The initial ETS Directive, and its extension to cover aviation, were followed by four proposals that together comprised the 2009 climate and energy package. These included a directive providing for a new phase of the ETS, extending its operation from 2013 to 2020, introducing a common, annually declining cap for the whole EU (replacing the previous system of national allocation plans) and phasing in auctioning as the basis on which to allocate allowances. Additional proposals included a regulation providing for differentiated ‘effort-sharing’ targets to reduce emissions in sectors not covered by emissions trading (such as transport, housing, agriculture); a directive setting out the world’s first legal framework for safe carbon capture and storage (CCS); and a directive including targets for renewable energy sources. Legislation on fuel quality and limiting CO2 emissions from cars was negotiated separately. The first climate and energy package was designed to implement commitments endorsed by European leaders in 2007 that, by 2020: overall emissions should be cut by 20 per cent from 1990 levels; 20 per cent of total energy consumption should come from renewable sources

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The global importance of EU climate policy  7 (corresponding to about 34 per cent of electricity); and the EU’s energy consumption be reduced by 20 per cent (below business as usual).1 Rapid adoption of the ‘20–20–20’ package was prioritized by an EU policy elite now convinced of the necessity of, and benefits from, European leadership, and that others could be persuaded to raise their ambition as part of a post-Kyoto successor agreement due to be negotiated at the Copenhagen COP in December 2009. To Member State leaders such as the UK’s Tony Blair and Germany’s Angela Merkel, EU leadership allowed Europe to distance itself from domestically unpopular positions adopted by the US, and to align themselves with the growing consensus that the costs of climate change mitigation were minor compared to the damages that would eventually be incurred from inaction. Less climate-conscious East Europeans, who had been hit by the withholding of supplies by Gazprom in early 2006 (and who, like Poland, were highly protective of coal-reliant power sectors), were won over by a mixture of the prospect of reduced energy dependence on Russian gas and other side-payments built into the package. Challenged Leadership after the 2008 Financial Crisis At the Copenhagen COP, EU policymakers expected the rest of the world to welcome their adoption of an aspirational emission reduction target of 80–95 per cent for 2050, presented as reflecting the most recent scientific assessment by the Intergovernmental Panel on Climate Change. As part of its negotiating strategy, the EU committed to increasing its domestic reduction target from 20 to 30 per cent by 2020, if its industrialized-world counterparts also made significant pledges. In the event, the appetite for stronger UN-led policies declined significantly after the 2008 financial crisis and in Copenhagen EU negotiators found themselves sidelined (Parker and Karlsson 2010) by countries whose shares of global emissions were considerably larger, and whose willingness to commit to absolute emission reductions was far less; the profoundly disappointing Copenhagen Accord was the result. With hindsight the Copenhagen COP marked a significant turning point in the EU’s leadership approach. When the newly appointed Climate Commissioner Connie Hedegaard proposed a unilateral increase in the EU’s mitigation target to 30 per cent (despite the pre-defined conditions not being met), the idea was flatly rejected not only by Central and Eastern European Member States but many others; even Germany – until then a significant advocate of stronger EU-level action – had no clear position (Fischer and Geden 2015). After that debacle, the EU regained some prestige two years later through negotiation in December 2011 of the ‘Durban Platform’ aimed at working on a new global agreement involving mitigation actions by all Parties, sufficient to prevent the mean global temperature rise from exceeding 2°C, as well as a new focus on adaptation. The EU’s stated ambition was a new climate accord, ‘ambitious, legally binding, multilateral rules-based with global participation and informed by science’ (European Union 2013). At the same time, the EU’s international credibility was being undermined by the chronic inability of the ETS to deliver an allowance price sufficiently high to motivate low-carbon investment and innovation; from a high of around €30/tCO2 in mid-2008, by mid-2013 prices had dropped to under €5/tCO2. The surplus of allowances causing the price to fall was caused by a combination of the economic crisis (which had an unanticipated emission-reducing effect), high imports of international emission credits and, to some extent, successful EU policy to promote renewable energy (Wettestad and Jevnaker 2015).

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8  Handbook on European Union climate change policy and politics Preparations for the 2015 Paris Agreement Consensus on the need to secure a credible position ahead of the next big COP, in Paris, was one reason a ‘rescue’ of the ETS ultimately proved possible, through the agreement, in 2015, to establish a Market Stability Reserve (Wettestad and Jevnaker 2015). The EU also needed to agree new emission reduction targets out to 2030, which could then serve as a contribution to a new round of global-level negotiations. Internationally, it had been agreed that Parties to the UNFCCC should submit ‘intended nationally determined contributions’ (INDCs) by March 2015, the adequacy of which would be reviewed in view of the 2°C target before a new global deal was reached. At their October 2014 summit, EU leaders agreed to a new (2030) climate and energy package, setting targets for an ‘at least’ 40 per cent reduction in overall emissions (from 1990 levels), 27 per cent of overall energy consumption to come from renewable sources, and a 27 per cent improvement in energy efficiency compared to business-as-usual. International emission reduction credits would not count towards the 40 per cent. The consent of Central and Eastern European Member States was ensured only through substantial financial compensation and exemptions (Fischer 2014). For example, a derogation to the EU ETS Directive allowed lower-income Member States to continue free allocation of allowances to the electricity sector until 2019. Although this was meant to be conditional on countries investing at least the equivalent monetary value of the free allowances in the modernization and diversification of their energy systems, concerns were expressed that support for fossil fuel infrastructure was being unnecessarily prolonged, without sufficient transparency and scrutiny (Carbon Market Watch 2016). An additional factor that helped to bring Central and Eastern European Member States on board was the merging of climate policy and energy security agendas under the umbrella of the EU Energy Union. Initially proposed by the Polish prime minister Donald Tusk as a response to the ongoing war in Eastern Ukraine and a perceived threat to gas supplies from Russia (which were cut once again in 2009), the Energy Union idea was picked up and reshaped by the newly established Juncker Commission as a means of integrating climate and energy policy goals (Szulecki et al. 2016). The Commission argued that a 40 per cent emission reduction in 2030 would nonetheless put the EU on course to achieve its longer-term 80–95 per cent reduction goal. The ambition of the targets for renewables and energy efficiency was at the lower end of the spectrum of negotiating positions – another concession to the Central and Eastern European Member States. Nevertheless, agreeing the 2030 package allowed the EU to meet the INDC submission deadline. Arguably, leaving the discussion any longer could have been fatal, given the many calls on leaders’ attention presented by renewed economic problems and the worsening migration/refugee crisis (Oberthür et al. 2021). The 2030 package thus testified to how energy and climate policy was entering a more inter-governmental, or ‘renationalized’, phase (Fischer 2014). The Quest for Net Zero: EU Policy after Paris In the event, the celebrated Paris Agreement of December 2015 did not set targets and timetables as historically favoured by the EU. Instead, it relies on a combination of transparency, peer pressure and national accountability to ensure that pledges made every five years through nationally determined contributions (NDCs) are implemented. Recognizing the need

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The global importance of EU climate policy  9 for greater ambition, the EU, along with partners in the so-called High Ambition Coalition, strongly and successfully advocated a five-yearly review of progress under UN auspices to assess the prospects of remaining under 2°C, and a ‘ratchet’, or ‘ambition mechanism’, to enhance national mitigation plans (Betts 2021). One of the more surprising outcomes was the Agreement’s endorsement of 1.5°C as an aspirational temperature goal. This decision was based on improving evidence of the damage to small island states and vulnerable countries associated even with 2°C of warming. With even 2°C recognized as probably requiring the deployment of as yet untested ‘negative emissions’ technologies, such as bioenergy with carbon capture and storage, the EU’s Climate Commissioner Cañete felt obliged to comment that further research would be needed into such technology (Neslen 2015). In 2018, the EU adopted Regulation (EU) 2018/1999 on the Governance of the Energy Union and Climate Action (often referred to as the Governance Regulation for short) as its main legal instrument to monitor progress regarding the overall GHG reduction objective, as well as objectives for renewable energy deployment and energy efficiency. It committed Member States to reporting regularly on related policies and measures in National Energy and Climate Plans (NECPs), to be regularly evaluated by the Commission, which gives recommendations in cases of insufficient commitments or progress. Following significantly louder public demands (expressed, inter alia by the emerging ‘Fridays for Future’ school strike movement, large-scale marches and direct actions in many national capitals, and by a strong performance by the green parties in the 2019 European Parliament elections), in late 2019 the newly appointed von der Leyen Commission adopted its European Green Deal (EGD). A package of legislative proposals followed, including the European Climate Law (Regulation (EU) 2021/1119) that legally binds the EU to its target of net zero GHG emissions (‘climate neutrality’) by 2050, as well as a 55 per cent net reduction in 2030 (see Box 1.1). Although hailed by the Commission, its proposal to assume power to set binding post-2030 short-term climate targets without unanimous approval from all 27 Member States proved politically unacceptable. Similarly, the Council rejected the setting of a 2050 carbon neutrality target for each Member State. The EGD and Climate Law highlighted the importance not just of climate neutrality by mid-century, but also climate resilience to increasingly severe impacts (Bednar-Friedl et al. 2022). On this, a new and revised EU Adaptation Strategy recognized the necessity for more urgent, ambitious and large-scale efforts to mainstream action across policy sectors, ‘climate proof’ key infrastructure, and build societal resilience, prevention and preparedness (European Commission 2021, Lenaerts et al. 2022). The EGD also proposed a new circular economy action plan, biodiversity strategy, and strategy for a more environmentally friendly and healthy food system. The Sustainable Europe Investment Plan (SEIP), announced in early 2020 as the EGD’s ‘investment pillar’, was expected to mobilize at least €1 trillion by 2030 (European Commission 2020).

BOX 1.1 THE EUROPEAN CLIMATE LAW The European Climate Law (Regulation (EU) 2021/1119) features a range of provisions. Some key aspects include: • The objective to reach climate neutrality by 2050 at the latest is legally enshrined.

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10  Handbook on European Union climate change policy and politics • Agreement to reduce net GHG emissions by ‘at least 55%’ by 2030, compared to 1990 levels is also a legal obligation for the EU and its Member States. The amount of GHG ‘removals’ that can contribute to this target is capped. • Regular checks of progress towards climate neutrality and the consistency of measures with the pathway towards it, with corrective action if necessary. • An independent European Scientific Advisory Board on Climate Change, intended to ensure evidence-based law-making and provide advice on the aligning EU policies with commitments under the Paris Agreement. • All future legislative proposals, including budget-related, should be consistent with the 2030 target and the climate neutrality objective. • An indicative GHG budget for 2030–2050 to be published by the Commission. • Commission to engage with voluntary industry sectoral decarbonization roadmaps, to facilitate and monitor progress. • Continued efforts to ensure the phasing out of fossil fuel energy subsidies, including adoption of methodology for reporting steps towards this goal. • Enhanced action on adaptation, including provisions concerning mandatory strategies, assessments of progress, consistency of measures and mainstreaming; adapting the Governance Regulation to reflect this.

After the COVID-19 Pandemic: EU Policy-Making Maintains Momentum However, shortly after the EGD’s initial presentation in December 2019, the EU, like the rest of the world, faced an unexpected public health emergency and related economic crisis, precipitated by the COVID-19 pandemic. The rupture of global value chains made European policymakers painfully aware of the geo-economic vulnerabilities of the EU – the largest market for manufactured goods in the world, but heavily dependent on the import of raw materials, rare earth minerals, as well as technologically advanced commodities such as semiconductors. Nonetheless, the pandemic-induced recession was seized upon by high-level EU policymakers and some Member States as an opportunity to strengthen climate ambitions (Dupont et al. 2020), in particular by linking the EGD more prominently with an agenda of ‘green recovery’, and specifically the Next Generation EU fund. However, it also led to pressure from some quarters to scale back climate action. Polish and Czech leaders floated the idea of postponing the EGD, and even exempting countries from key policies such as the ETS (Abnett and Baczynska 2020; Euractiv 2020). But the Commission was determined to maintain momentum, and indeed to exploit the opportunities for transformation that the pandemic presented. For example, the pandemic led to an historic drop in energy consumption: in 2020, the EU’s primary energy consumption (which includes all energy uses) and final energy consumption (by end users) reached their lowest levels since 1990, helping the EU meet its 2020 energy efficiency target (EEA 2022). In July 2021, the Commission presented its ‘Fit for 55’ package of policy instruments to reflect the raised 55 per cent GHG reduction objective of the Climate Law. Initially consisting of no fewer than 16 legislative and strategic proposals, it aimed to adjust existing climate and energy acts and introduce new instruments. The proposals encompass more or less the entirety of EU climate policies, ranging from the ETS (the coverage of which would expand to include

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The global importance of EU climate policy  11 maritime emissions), through to effort sharing, land use and forestry, energy taxation, energy efficiency and renewable energies. As well as revising existing instruments, entirely new instruments were also proposed including a second, parallel emissions trading system (‘ETS II’) to encompass the buildings and transport sectors (applying to distributors that supply fuels to these sectors from 2027), a Carbon Border Adjustment Mechanism, designed to tax carbon-intensive products imported from more lightly regulated jurisdictions, and a Social Climate Fund. The latter was designed to compensate poorer households for increased costs imposed by the introduction of carbon pricing (through the ETS II and other instruments) for road transport and domestic heating fuels, potentially to be financed by revenues raised from emissions trading. The Social Climate Fund proposal (COM/2021/568 final), with a limit of €65 billion for the 2025–32 period to be supplemented by national contributions, testified to growing awareness of the importance of equity, not just in the demands placed on the EU’s different Member States, but also within societies. Concerns about the importance of ‘just transition’ towards net zero had been heightened by the emergence of social movements at national level, most notably the French Gilets Jaunes protests against the social impact of increasing fuel taxation as part of climate policies (Kinniburgh 2019). Grievances provoked by such regressive policies were heightened by the knowledge that aviation fuel was exempt from taxes (Tubiana 2021). In January 2020, as part of its Sustainable Europe Investment Plan, the Commission proposed a Just Transition Mechanism as a tool to support more equitable decarbonization, ‘leaving no one behind’ (Sarkki et al. 2022). The mechanism comprised the Just Transition Fund (JTF), supporting investment in alternatives for regions that are highly dependent on fossil fuels and high-emission industry sectors; the Just Transition scheme providing funding for a wide range of low-carbon investments; and a Public Loan Facility available to support eligible areas. Concerns about the need to secure consent to far-reaching policy measures also lay behind increased apparent openness to public involvement, in the form of the Climate Pact, designed to support the EGD by gathering bottom-up climate initiatives originating within Member States (Colli 2021; Tosun et al. 2023). According to the Commission: ‘Game-changing policies only work if citizens are fully involved in designing them … Citizens are and should remain a driving force of the transition’ (European Commission 2019: 22). The Just Transition Platform offered a hybrid, ongoing form of public consultation, to complement standard consultations per legislative proposal (ibid). Rising Gas Prices and the War in Ukraine Concerns about sharply rising gas prices, their impact on consumers and EU climate policy ambitions, led to heightened tensions about the pace and ambition of EU climate policy development throughout 2021 (Rankin 2021, Tubiana 2021, von Homeyer et al. 2022). But a greater shock was looming, carrying profound consequences for EU policy and politics. On 24 February 2022, Russia launched a full-scale invasion of its neighbour Ukraine, causing a humanitarian crisis, with over 7 million refugees entering the EU, and tectonic shifts in the security landscape of a kind previously assumed to be the stuff of history. Unprecedented sanctions followed, negatively affecting not just Russia but European economies too, and highlighting once again the EU’s dependence on the import of strategic resources – now most importantly gas, oil, coal and uranium for energy generation.

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12  Handbook on European Union climate change policy and politics After announcing its intent in March, the Commission presented a REPowerEU plan in May 2022 as a significant boost to the EGD. Its objectives were threefold: reducing dependency on Russian fossil fuel imports, accelerating the transition to a clean economy, and increasing the resilience of the EU energy system (European Commission 2022b). To those ends, it offered a fresh emphasis on energy efficiency (aiming to cut gas consumption 30 per cent by 2030), phasing out of fossil fuels and scaling up the development of renewables. The proposed plan, which relied primarily on diverting unused funding from the COVID-19 Recovery and Resilience Facility (part of Next Generation EU), was published alongside an announcement on the EU’s External Energy Strategy, intended to underpin the EU’s future energy diplomacy and offer an external dimension to the EGD.

PLAN OF THIS HANDBOOK The rest of this volume is divided into six parts. Part I covers the range of actors and institutions whose activities constitute the governance of climate change in the EU. Part II focuses on the internal and external dynamics shaping EU climate policy and governance. Part III provides a detailed summary of the main policy instruments and modes of governance employed by the EU to address climate change, and explores their origins, purpose and effectiveness. Chapters in Part IV focus on those sectors which, unlike for example electricity production, have proven ‘hard to abate’. Part V addresses particular challenges and controversies affecting contemporary EU climate policy, while Part VI takes stock and assesses future prospects. Part I: The Main Actors and Institutions The four chapters in Part I cover some of the principal institutions of the EU. Alexander Bürgin’s chapter introduces the European Commission, outlines its organizational structure, broad motivation and competences in pursuing a climate policy agenda. His chapter also highlights the growing ‘presidentialization’ of the Commission, and its evolving relationship with other key institutions, namely the European Parliament and the Council. Bürgin explores the Commission’s role as a ‘climate policy entrepreneur’: an organization that seizes opportunities to pursue ever more ambitious policies. But his chapter also highlights the importance of economic constraints potentially obstructing deeper decarbonization, as well as challenges of monitoring and enforcing Member State compliance that have hindered the Commission’s ambitions. The following chapter, by Rüdiger Wurzel, Maurizio Di Lullo and Duncan Liefferink, looks at those EU institutions which directly represent the interests of the Member States, namely the European Council and the Council of the European Union. Together, these are the main fora in which national governments exert their influence over EU policy. They pay particular attention to the Environment Council, the impact of the rotating EU Presidency and the often-overlooked role of the Council Secretariat. Member States are shown to exploit various bilateral and multilateral platforms with other governments, and to align into a number of important groupings, such as the Visegrad Group including countries of Central and Eastern Europe, and the Green Growth Group. The third major EU institution, and the only one whose members are directly elected, is the European Parliament. The Parliament, where Members are grouped according to ideo-

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The global importance of EU climate policy  13 logical, not national affiliation, is eager to be seen as a climate policy ‘champion’. In their chapter, Franziska Petri, Veronika Zapletalová and Katja Biedenkopf describe the mechanics of how the European Parliament can influence climate policy outputs, and cite examples of how it has championed higher standards or more innovative legislation than otherwise would have been the case. However, they also draw on an analysis of roll-call votes and plenary debates to nuance the claim that it always champions higher standards. Finally, they trace the Parliament’s engagement in international policy by analysing its involvement in the UN climate negotiations and broader external climate governance. Acknowledging the growing significance of finance in climate policy debate, the section on EU institutions closes with a chapter focusing on a key, but somewhat overlooked EU institution in this regard: the European Investment Bank (EIB). Daniel Mertens and Matthias Thiemann explain what the EIB means by proclaiming itself the EU’s ‘Climate Bank’, outlining the goals, scale, and functioning of the available financial instruments and resources at its disposal for climate action. Their chapter scrutinizes its efforts both empirically and theoretically. First, it reviews the role of public financial institutions in climate change policies as well as the tasks of the EIB in the EU. It then questions the extent and effectiveness of the bank’s reorientation by examining examples of its recent practices. The remaining chapters in Part I investigate the role and impact of non-state actors. Thus, Sandra Eckert looks at the role of business and private finance, employing concepts developed in the international political economy literature to shed light on the instrumental, structural and discursive power of corporate actors in the development of policy. Empirically, she begins with the importance of engagement by business (non-financial sectors), before highlighting the significance of increased involvement of the financial sector with regards to climate change. Among other examples, the EU’s fraught attempt to develop and implement a ‘green taxonomy’ to inform investment decisions is critically examined. Next, Louisa Parks, Donatella della Porta and Martin Portos highlight the importance of European civil society. The existing literature has distinguished between NGOs employing more ‘insider’ strategies closely related to official EU decision-making processes and social movements involved in more ‘outsider’ strategies (see also Berny and Moore 2021). The chapter notes that while action across both types has influenced particular EU decisions, movements such as Fridays for Future and Extinction Rebellion question whether steady accumulation of marginal gains can be relied upon to deliver net zero emission by mid-century, let alone wider environmental and social goals. The mobilization of new sets of actors in a campaign for a Green New Deal for Europe is also highlighted. Alongside supranational and national actors, cities have an important role to play at the subnational level, in terms of adaptation to climate impacts as well as emission reduction. Importantly, they are able to shape climate policy, not just implement it. In her chapter Kristine Kern notes that while effort sharing is negotiated between Member States, the level of ambition for regions and cities is often decided by local authorities. Overall, Kern argues that the level of climate policy ambition among EU municipalities is rising, although subject to ‘leader-laggard’ dynamics. As well as these dynamics, Kern also outlines the relationship of local-level policymaking with EU institutions, through EU-initiated networks such as the Covenant of Mayors. Part I concludes with an investigation of the growing phenomenon of climate litigation, and the role of an increasingly recognized category of climate actor: courts of law. Marcin Stoczkiewicz notes that while it is not the role of courts to shape EU public policy, in practice

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14  Handbook on European Union climate change policy and politics they determine the meaning of legal norms in the judicial process that has a significant impact on how public policy is implemented. The chapter highlights key judgments that have been made that significantly affect, or have potential to affect, the rights and obligations of stakeholders in climate policy, both at the level of the EU and its Member States. Part II: Core Dynamics Shaping EU Policy John Vogler begins Part II by highlighting what might be termed the ‘outside-in’ dynamic, i.e. the influence of the global regime on EU policy, but also the EU’s attempts, in turn, to shape them (an ‘inside-out’ dynamic) (Jordan and Gravey 2021: 361). As noted above, the global climate regime, specifically the UNFCCC, has profoundly influenced the development of EU policies. In terms of specific policy innovations, Vogler notes that the best example is the ETS. He recounts the EU’s subsequent attempts to extend its policy approach to trading to activities such as international transport that operate well beyond its borders, and the international opposition and tensions between the Commission and Member States that have hampered this. EU climate policy has also been shaped by the dynamic relationships between energy security, environmental and climate security issues. These relationships are described by Richard Youngs and Olivia Lazard who underline how the EU has begun to build climate factors into its core foreign and security, and to some extent trade, policies. Yet, moves in this direction remain halting and selective, and the EU has conspicuously failed to complement external climate policy with policies to tackle wider ecological degradation that undermines overall planetary security. Weaknesses in the EU’s approach are seen to derive in particular from a narrow understanding of geo-economics, which overrides the potential for more strategic geopolitical engagement on climate, and from prioritization of immediate, short-term energy security. Another dynamic factor shaping EU action has been the broader, globalized, economic landscape. Oscar Fitch-Roy and Ian Bailey look specifically at green growth and competitiveness considerations. Since the early 1970s, EU policy discourse has emphasized ‘win-win’ narratives in which pro-environmental action contributes to growth and addressing inconsistencies in the internal market. Indeed, the EGD explicitly linked increased climate policy ambition with economic growth; the subsequent COVID-19 pandemic further strengthened talk of a ‘green recovery’. To explore the dynamics of complementarity and tension between economy and environment, their chapter scrutinizes three key areas of the EU’s strategic approach to climate policy: the circular economy, renewable energy development and the so-called New Consumer Agenda. Following these largely external factors, the next chapter by Paul Tobin, Diarmuid Torney, and Katja Biedenkopf turns to the more ‘inside-out’ dynamics related to EU climate policy leadership. In a context shaped by the aftermath of COVID-19 and adoption of the EGD, their chapter discusses what European climate leadership looks like and what it could become. The authors begin by conceptualizing leadership, offering a conceptual innovation in questioning the commonly held assumption that climate leadership is necessarily normatively positive. They then run through various examples of EU leadership domestically and in international climate negotiations, taking stock of the EU’s performance at the 2021 Glasgow COP, as well as analysing the external climate governance more widely.

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The global importance of EU climate policy  15 Part III: The Main Policy Instruments and Modes of Governance Taking as its point of departure the centrality of the energy sector in achieving decarbonization goals, Michèle Knodt’s chapter introduces the range of policy instruments and ‘governance configurations’ by which EU emission reduction goals can in principle be achieved, featuring differing emphases on conventional standard-setting policies and measures and carbon pricing through market-based instruments. The emergence and subsequent evolution of the ‘energy and climate nexus’ in EU policy is traced, from the 2015 Energy Union to the European Green Deal. The dilemmas faced by the Commission in trying to steer the decarbonization of Member States so that overall emission reduction targets can be met by 2030, and the risks that the emerging policy mix lacks coherence and effectiveness, are elaborated. In the following chapter, Seita Romppanen highlights some of the governance tools that have traditionally sat at the heart of EU’s climate policy: effort sharing, based on emission reduction targets and timetables to achieve them. She demonstrates that the development of the concept of effort sharing among Member States has been absolutely key to the evolution of EU’s climate law and policy, in the context of the need to develop the additional measures necessary to achieve an EU-wide emission reduction targets, alongside what eventually became the key instrument, the EU ETS. Her chapter begins by sketching the history of effort sharing, with its built-in concept of solidarity through differentiated emission reduction obligations among Member States. Together with the ETS and the various land use (LULUCF) sectors, effort sharing is seen to be key to the implementation of the EU’s commitments under the Paris Agreement. Romppanen details the Effort Sharing Regulation, its evolving links with LULUCF, and concludes with reflections on the sector’s future role. Next, Jørgen Wettestad introduces the carbon border adjustment mechanism (CBAM) as what might be regarded as a new external ‘arm’ of the EU ETS, mainly designed to address carbon leakage, the situation in which production is transferred to countries with less emission constraining regulation to avoid higher costs. After a brief recapping of the origins and development of the ETS, the focus then shifts to the CBAM idea which, Wettestad shows, is far from new. The chapter documents the development of the concept in EU debates, going back to the initial development of the ‘regime’ for allocating free allowances under the ETS. It then moves on to discuss more systematically the development of positions of key EU institutions, Member States and non-state actors – and how these shaped the evolution of the CBAM. Wettestad concludes with an assessment of prospects for the Mechanism in the light of recent geo-political developments in the world economy, and in Ukraine. Another example of policy innovation has been the integration and mainstreaming of climate priorities into the EU budget. Katharina Rietig and Claire Dupont begin with a recapitulation of how the EU has championed the integration of climate change objectives into other policy areas through Climate Policy Integration (CPI). CPI emerged in the 2000s especially in the areas of energy, agriculture and transport policy as well as in the form of climate mainstreaming into the EU budget from 2014 onwards. Their chapter traces the origins of CPI from the mother concept of Environmental Policy Integration (Dupont and Jordan 2021), through various EU flagship policies which seek to integrate climate objectives, including the EU budget. They discuss the purpose of CPI as central cross-cutting policy objective that goes beyond single-purpose climate policies, as well as and the factors and framework conditions that determine its effectiveness.

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16  Handbook on European Union climate change policy and politics In the next chapter, Jon Birger Skjærseth and Per Ove Eikeland look at key policy outputs in the area of clean energy research and innovation. While so-called ‘pull’ policies, to support renewables or establish carbon pricing, have received significant scholarly attention, the EU’s low-carbon technology ‘push’ policies, which seek to leverage private investments by reducing the costs and risks to private investors, remain largely unexplored. In 2008, the EU adopted a Strategic Energy Technology Plan (SET Plan) to improve a hitherto fragmented approach to funding, by focusing on a number of promising technologies. The EU has also joined the international Mission Innovation adopted alongside the Paris Agreement, while the 2018 Governance Regulation defined how the Member States are to address energy-related research and innovation. Latterly, the EGD has aimed to link to innovation. The chapter examines these developments from the perspectives of multilevel governance and policy integration and coordination. Part IV: Barriers to More Ambitious Action in Particular Sectors Part IV examines the so-called ‘hard to abate’ sectors that policymakers will have to address more determinedly if the EU is to deliver on its long-term mitigation goals. Each chapter sets out to identify the reasons that emissions in these sectors have proved hard to abate, the policy tools that might in principle address them, and offers an assessment of the prospects of EU policy delivering decarbonization. Alan Matthews analyses the food and agriculture sector, beginning with a discussion of trends in emissions from farming and related land use sectors. His survey of options to decarbonize concentrates on possible reforms of the Common Agricultural Policy but also the promotion of individual dietary change. The proposed revamping of climate policy architecture through the ‘Fit for 55’ package, and creation of a combined agriculture and land use pillar with its own reduction targets, are identified as potentially significant developments. Tomas Wyns and Gauri Khandekar address the challenges facing the so-called energy intensive industries such as steel and cement manufacturing. After outlining key trends in terms of sectoral emissions and energy use, they set out the innovative technologies and other options to achieve carbon neutrality, addressing levels of technological readiness and capital intensity, general and specific barriers to decarbonizing these industries. Then they address current and emerging EU policies promoting industrial transition, and discuss the prospects for a fundamental transition in the industries in a wider, international context. The last of the ‘hard to abate’ sectors covered in this Part is transport, which is examined by Helene Dyrhauge and Tim Rayner. Despite steadily tightening standards for individual vehicles, the growth in road traffic especially, spurred by the EU’s own liberalization and Single Market agendas, has led to rising GHG emissions, and the link between transport growth and emissions growth has not been broken. Dyrhauge and Rayner first discuss EU sustainable mobility strategies since the 1990s, and outline different emission reduction options across the principal transport modes. In assessing the prospects for long-term decarbonization, the chapter highlights a range of barriers to progress. Part V: New and Ongoing Challenges Although climate policy has developed its own distinct rhythms and procedures, it nonetheless exhibits many of the well-known weaknesses of EU-level action. For example, policy

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The global importance of EU climate policy  17 implementation remains an ongoing problem; the overall progress in achieving mitigation and adaptation goals has been uneven; and emissions have not been brought down as rapidly as long-term targets demand. By 2020, net EU emissions (including international aviation and removals from natural carbon sinks) were down almost 26 per cent on 1990 levels, with data showing that 80 per cent of the cuts came from the heat and power sector, while road transport emissions continued to rise (EEA 2021a; 2021b). Achieving net-zero by 2050 (and climate resilience in a similar time frame) will, however, require a radical and potentially costly overhaul of the EU’s current systems, which will have profound and wide-ranging implications for its Member States and the world beyond. Hence, acute challenges to policy coherence and effectiveness lie ahead, in a Union that remains polarized between more and less environmentally conscious Member States, apparently more susceptible to populism, faced with a less predictable international system, and under pressure to recover quickly from the economic effects of the COVID-19 pandemic (von Homeyer et al. 2021). Against this backdrop, Part V of the book examines some of the new and ongoing challenges confronting EU policymakers. Prominent among these is how to move towards the delivery of negative emissions, increasingly recognized as an integral part of the EU’s plans to achieve net zero. The prospects for carbon dioxide removal (CDR) technologies are presented by Felix Schenuit and Oliver Geden. With the agreement of EU institutions to integrate climate neutrality by 2050 into the European Climate Law, the importance of ‘sinks’ and their enhancement has been thrown into sharper focus. Schenuit and Geden highlight the emergence of different positions in the debate about the introduction of CDR, and the interests underpinning them. Having traced how CDR found its way onto the political agenda, the authors explore what role it might play in EU climate policymaking in the medium to long term. The momentous decision of the United Kingdom to exit the EU – Brexit – dealt a significant blow to the political integration process, and presented a challenge for EU climate and energy policy, where the UK had historically been an influential and often progressive actor. Recapitulating the short but turbulent story of Brexit, Brendan Moore’s chapter looks at its concrete impacts on the EU’s internal climate policy, in particular on the development of the ETS, as well as the change it inevitably implies for UK domestic policy and politics. It analyses the shifting positions and coalitions in the Council of Ministers and the European Parliament in the context of the UK’s departure, and how the European Commission has responded. Rainer Quitzow, Germán Bersalli, Johan Lilliestam and Andrea Prontera analyze the way crises can be turned into climate policy opportunities. Since the financial crisis of 2008, the EU has developed a more activist role in the financing of investments in low-carbon assets, promoting a so-called Green Recovery; a development that has continued in the wake of COVID-19. It has developed a more activist approach to industrial policy as well as financing, and latterly attempted to support fossil-fuel dependent regions using the Just Transition Mechanism. Quitzow et al. take stock of this evolving role, asking how it has been reshaped, and with what implications for ambition on climate and energy policy. Another challenge centres on the relationship between climate protection and trade. Natalie Dobson explores how the law of the World Trade Organization relates to EU unilaterally adopted climate measures that affect international partners. Drawing on selected examples, she first considers the dynamics of the trade–climate nexus, which are intrinsic to the EU’s ambitious and outward-looking climate agenda. The chapter then turns to structural obstacles contained in relevant substantive obligations under the General Agreement on Tariffs and

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18

Handbook on European Union climate change policy and politics

Trade (GATT) and the General Agreement on Trade in Services (GATS), whose rules often lack recognition for climate policy objectives. Faced with a challenge under trade law, Dobson suggests the course that the EU would likely take, and asks whether the tensions between trade and climate need to be so inherent. Finally, Chapter 26 (in Part VI) brings the book to a conclusion, taking stock of what we have learned from the preceding chapters, and using them to inform an assessment of the EU’s prospects for turning its increasing climate ambitions into reality, in the context of the serious headwinds as they manifested themselves in mid-2022.

NOTE 1.

In the event, the EU comfortably met this set of related targets, although the performance of individual Member States showed considerable variation (EEA 2021a).

REFERENCES Abnett, K. and G. Baczynska (2020). Eastern countries reject using EU carbon revenue to repay COVID Debt. Reuters, 19 June. www​.reuters​.com/​article/​us​-eu​-summit​-carbon​-idUSKBN23Q1XT (Accessed: 19/09/2022). Bednar-Friedl, B., R. Biesbroek, D.N. Schmidt, P. Alexander, K.Y. Børsheim, J. Carnicer, E. Georgopoulou, M. Haasnoot, G. Le Cozannet, P. Lionello, O. Lipka, C. Möllmann, V. Muccione, T. Mustonen, D. Piepenburg, and L. Whitmarsh (2022). Europe. In Climate Change 2022: Impacts, Adaptation, and Vulnerability. Contribution of Working Group II to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge, UK and New York, NY, USA: Cambridge University Press, pp. 1817–1927. doi:10.1017/9781009325844.015. Benson, A. and A. Jordan (2008). Environmental politics in multi-level governance systems. In C. Okereke (Ed.), The Politics of the Environment: A Survey. London: Routledge, pp. 87–100. Berny, N. and B. Moore (2021). Interest groups. In A.J. Jordan and V. Gravey (Eds.), Environmental Policy in the EU. Fourth Edition. London: Taylor and Francis, pp. 147–166. Betts, P. (2021). The EU’s role in the Paris Agreement. In H. Jepsen, M. Lundgren, K. Monheim, and H. Walker (Eds.), Negotiating the Paris Agreement: The Insider Stories. Cambridge: Cambridge University Press, pp. 111–138. Biesbroek, R. and R. Swart (2019). Adaptation policy at supranational level? Evidence from the European Union. In E.C.H. Keskitalo and B.L. Preston (Eds.), Research Handbook on Climate Change Adaptation Policy. Cheltenham: Edward Elgar, pp. 194–211. Bretherton, C. and J. Vogler (2006). The European Union as a Global Actor. London: Routledge. Buchan, D. and M. Keay (2015). Europe’s Long Energy Journey Oxford: Oxford University Press. Carbon Market Watch (2016). Fossil fuel subsidies from Europe’s carbon market. Policy Briefing, April 2016. https://​carbonmarketwatch​.org/​wp​-content/​uploads/​2016/​04/​Fossil​-fuel​-subsidies​-from​ -Europes​-carbon​-market​-final​-web​.pdf (Accessed: 15/07/2022). Colli, F. (2021). A Transition for the Citizens? Ensuring Public Participation in the European Green Deal. Egmont Institute. www​.jstor​.org/​stable/​resrep30276 (Accessed: 15/07/2022). Council of the European Union (2007). Brussels European Council 21/22 June 2007 Presidency Conclusions. 11177/1/07 REV 1. Council of the European Union (2014). European Council Conclusions, EUCO 169/14, Brussels, 23/24 October 2014. Delreux, T. (2021). The EU in international environmental negotiations. In A.J. Jordan and V. Gravey (Eds.), Environmental Policy in the EU. Fourth Edition. London: Taylor and Francis, pp. 259–276. Dupont, C. and A.J. Jordan (2021). Policy integration. In A.J. Jordan and V. Gravey (Eds.), Environmental Policy in the EU. Fourth Edition. London: Taylor and Francis, pp. 203–219.

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The global importance of EU climate policy  19 Dupont, C., S. Oberthür, and I. von Homeyer (2020). The Covid-19 Crisis: a critical juncture for EU climate policy development? Journal of European Integration, 42 (8): 1095–1110. EEA (2021a). Trends and Projections in Europe 2021. EEA Report No. 13/2021. Copenhagen: European Environment Agency. EEA (2021b). Annual European Union Greenhouse Gas Inventory 2021. Inventory 1990–2019 and inventory report 2021. Submission to the UNFCCC Secretariat. EEA/PUBL/2021/066. Copenhagen: European Environment Agency. EEA (2022). Primary and Final Energy Consumption in Europe. Copenhagen: European Environment Agency. www​.eea​.europa​.eu/​ims/​primary​-and​-final​-energy​-consumption (Accessed: 19/09/2022). Euractiv (2020). EU should scrap emissions trading scheme, Polish official says. www​.euractiv​.com/​ section/​emissions​-trading​-scheme/​news/​eu​-should​-scrap​-emissions​-trading​-scheme​-polish​-official​ -says/​(Accessed: 19/09/2022). European Commission (undated). International Climate Finance. https://​ec​.europa​.eu/​clima/​eu​-action/​ international​-action​-climate​-change/​international​-climate​-finance​_en (Accessed: 19/09/2022). European Commission (2009). Adapting to Climate Change: Towards a European Framework for Action. COM(2009) 147 final. Brussels: European Commission. European Commission (2013). An EU Strategy on Adaptation to Climate Change. COM(2013) 216 final. Brussels: European Commission. European Commission (2019). The European Green Deal. COM (2019) 640 final. Brussels: European Commission. European Commission (2020). Sustainable Europe Investment Plan. COM(2020) 21 final. Brussels: European Commission. European Commission (2021). Forging a Climate-Resilient Europe – the New EU Strategy on Adaptation to Climate Change. COM(2021) 82 final. Brussels: European Commission. https://​ec​.europa​.eu/​ clima/​eu​-action/​adaptation​-climate​-change/​eu​-adaptation​-strategy​_en (Accessed: 19/09/2022). European Commission (2022a). EU Emissions Trading System (EU ETS). https://​ec​.europa​.eu/​clima/​eu​ -action/​eu​-emissions​-trading​-system​-eu​-ets​_en (Accessed: 19/09/2022). European Commission (2022b). REPowerEU Plan. COM(2022) 230 final. Brussels: European Commission. https://​ec​.europa​.eu/​info/​strategy/​priorities​-2019–2024/​european​-green​-deal/​repowereu​ -affordable​-secure​-and​-sustainable​-energy​-europe​_en (Accessed: 19/09/2022). European Union (2013). Submission by Lithuania and the European Commission on behalf of the European Union and its Member States. https://​unfccc​.int/​files/​documentation/​submissions​ _from​_parties/​adp/​application/​pdf/​adp​_eu​_workstream​_1​_mitigation​_20130916​.pdf (Accessed: 19/09/2022). European Union (2022). Facts and Figures on the European Union Economy. https://​european​-union​ .europa​.eu/​principles​-countries​-history/​key​-facts​-and​-figures/​economy​_en (Accessed: 19/09/2022). Fischer, S. and O. Geden (2015). The changing role of international negotiations in EU climate policy. The International Spectator, 50 (1): 1–7. Fischer, S. (2014). The EU’s new energy and climate policy framework for 2030: implications for the German energy transition. SWP Comments, 55: 8. Hofmann, A. (2021). Making EU environmental policy more legitimate? In A.J. Jordan and V. Gravey (Eds.), Environmental Policy in the EU. Fourth Edition. London: Taylor and Francis, pp. 317–333. IEA (2020). European Union 2020. Energy Policy Review. Paris: International Energy Agency. www​.iea​ .org/​reports/​european​-union​-2020 (Accessed: 19/09/2022). IEA (2022). CO2 emissions per capita in selected countries and regions, 2000–2020. Paris: International Energy Agency. www​.iea​.org/​data​-and​-statistics/​charts/​co2​-emissions​-per​-capita​-in​ -selected​-countries​-and​-regions​-2000–2020 (Accessed: 19/09/2022). Jordan, A., D. Huitema, and H. van Asselt (2010). Climate change policy in the European Union: an introduction. In A. Jordan, D. Huitema, F. Berkhout, H. van Asselt, and T. Rayner (Eds.), Climate Change Policy in the European Union: Confronting the Dilemmas of Mitigation and Adaptation? Cambridge: Cambridge University Press, pp. 3–26. Jordan, A. and E. Matt (2014). Designing policies that intentionally stick: policy feedback in a changing climate. Policy Sciences, 47: 227–247. Jordan, A.J. and B. Moore (2020). Durable by Design? Policy Feedback in a Changing Climate. Cambridge: Cambridge University Press.

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20  Handbook on European Union climate change policy and politics Jordan, A.J. and V. Gravey (2021). EU environmental policy at 50: retrospect and prospect. In A.J. Jordan and V. Gravey (Eds.), Environmental Policy in the EU. Fourth Edition. London: Taylor and Francis, pp. 357–374. Jordan, A.J., H. van Asselt, F. Berkhout, D. Huitema, and T. Rayner (2012). Understanding the paradoxes of multi-level governing: climate change policy in the European Union. Global Environmental Politics, 12 (1): 41–64. Kinniburgh, C. (2019). Climate politics after the yellow vests. Dissent, 66 (2): 115–125. Krämer, L. (2021). The Court of Justice of the EU. In A. Jordan and V. Gravey (Eds.), Environmental Policy in the EU. Fourth Edition. Taylor and Francis, London, pp. 334–354. Lenaerts, K., S. Tagliapietra and G. Wolff (2022). How can the European Union adapt to climate change? Policy Contribution 11/2022. Brussels: Bruegel. Mickwitz, P. (2021). Policy evaluation. In A. Jordan and V. Gravey (Eds.), Environmental Policy in the EU: Actors, Institutions and Processes. Fourth Edition. London: Routledge-Earthscan, pp. 241–258. Neslen, A. (2015). EU says 1.5C global warming target depends on ‘negative emissions’ technology. The Guardian, 14 December. www​.theguardian​.com/​environment/​2015/​dec/​14/​eu​-says​-15c​-global​ -warming​-target​-depends​-on​-negative​-emissions​-technology (Accessed: 19/09/2022). Oberthür, S. and C. Dupont (2011). The Council, the European Council and international climate policy – from symbolic leadership to leadership by example. In R. Wurzel and J. Connelly (Eds.), The European Union as a Leader in International Climate Change Politics, London: Routledge, pp. 74–92. Oberthür, S. and L. Groen (2018). Explaining goal achievement in international negotiations: The EU and the Paris Agreement on climate change. Journal of European Public Policy, 25 (5): 708–727. Oberthür, S., A.J. Jordan, and I. von Homeyer (2021). Special Issue: EU climate and energy governance in times of crisis. Journal of European Public Policy, 28 (7): 959–1114. Parker, C. and C. Karlsson (2010). Climate change and the European Union’s leadership moment: an inconvenient truth? Journal of Common Market Studies, 48 (4): 923–943. Rankin, J. (2021). Split over surge in energy prices overshadows EU climate strategy. The Guardian, 21st October. www​.theguardian​.com/​world/​2021/​oct/​21/​split​-over​-surge​-in​-energy​-prices​ -overshadows​-eu​-climate​-strategy (Accessed: 19/09/2022). Rayner, T. and A. Jordan (2010). Adapting to a changing climate: an emerging European Union Policy? In A.J. Jordan, D. Huitema, H. van Asselt, T. Rayner, and F. Berkhout (Eds.), Climate Change Policy in the European Union: Confronting the Dilemmas of Mitigation and Adaptation? Cambridge: Cambridge University Press, pp. 145–166. Rayner, T. and A. Jordan (2016). Climate change policy in the European Union. In H. Von Storch (Ed.), Oxford Research Encyclopedia of Climate Science. Oxford: Oxford University Press, pp. 1–31. Rietig, K. (2021). Accelerating low carbon transitions via budgetary processes? EU climate governance in times of crisis. Journal of European Public Policy, 28 (7): 1018–1037. Ringius L. (1999). Differentiation, leaders, and fairness: negotiating climate commitments in the European Community. International Negotiation, 4: 133–166. Russel, D. et al. (2020). Policy coordination for national climate change adaptation in Europe: all process, but little power. Sustainability, 12: 5393. doi:10.3390/su12135393. Sarkki, S., A. Ludvig, M. Nijnik et al. (2022). Embracing policy paradoxes: EU’s Just Transition Fund and the aim ‘to leave no one behind’. Int Environ Agreements. https://​doi​.org/​10​.1007/​ s10784–022–09584–5 Schlacke, S., H. Wentzien, E.-M. Thierjung, and M. Köster (2022). Implementing the EU Climate Law via the ‘Fit for 55’ package. Oxford Open Energy, 1: 1–13. Skjærseth, J.B. and Wettestad, J. (2010). EU Emissions Trading: Initiation, Decision-Making and Implementation. Aldershot: Ashgate. Stangl, F. (2015). EU climate policy. In E. Woerdman, M. Roggenkamp, M. Holwerda (Eds.), Essential EU Climate Law. Cheltenham: Edward Elgar, pp. 10–42. Stoczkiewicz. M. (2018). The climate policy of the European Union from the Framework Convention to the Paris Agreement, Journal of European Environmental & Planning Law, 15: 42–68. Szarka, J. (2012). Climate challenges, ecological modernization, and technological forcing: policy lessons from a comparative US-EU Analysis. Global Environmental Politics, 12 (2): 87–109.

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The global importance of EU climate policy  21 Szulecki, K., S. Fischer, A. T. Gullberg, and O. Sartor (2016). Shaping the ‘Energy Union’. Climate Policy, 16 (5): 548–567. https://​doi​.org/​10​.1080/​14693062​.2015​.1135100 Szulecki, K. and K. Westphal (2014). The cardinal sins of European energy policy: nongovernance in an uncertain global landscape. Global Policy, 5(1), 38–51. Tosun, J., J. Pollex and L. Crumbie (2023). European climate pact citizen volunteers: strategies for deepening engagement and impact. Policy Design and Practice, DOI: 10.1080/25741292.2023.2199961 Tubiana, L. (2021). The Green Deal is the New Social Contract. Groupe d’Études Geopolitiques, 28 Sep.  2021. https://​geopolitique​.eu/​en/​2021/​09/​28/​laurence​-tubiana​-green​-deal/​ (Accessed: 19/9/2022). Van Asselt, H., T. Rayner, and A. Persson. (2015). Climate policy integration. In K. Bäckstrand and E. Lövbrand (Eds.), Research Handbook on Climate Governance. Cheltenham: Elgar, pp. 388–399. Vogler J. (2010). The European Union as a global environmental policy actor: climate change. In R. Wurzel and J. Connelly (Eds.), The European Union as a Leader in International Climate Change Politics. London: Routledge, pp. 21–37. von Homeyer, I., S. Oberthür, and A.J. Jordan (2021). EU climate and energy governance in times of crisis: towards a new agenda. Journal of European Public Policy, 28 (7): 959–979. von Homeyer, I., S. Oberthür, and C. Dupont (2022). Implementing the European Green Deal during the evolving energy crisis. Journal of Common Market Studies, online first. https://​doi​.org/​10​.1111/​jcms​ .13397 Wallace, H., M. Pollack, and A. Young (2015). Policy-Making in the European Union. Seventh Edition. Oxford: Oxford University Press. Wettestad J. (2000). The Complicated Development of EU Climate Policy. In M. Grubb and J. Gupta (Eds.), Climate Change and European Leadership. Dordrecht: Kluwer Academic Publishers, pp. 25–45. Wettestad, J. and T. Jevnaker (2015). Rescuing EU Emissions Trading: The Climate Policy Flagship. Basingstoke: Palgrave Pivot. Woerdman, E., M. Roggenkamp, and M. Holwerda (Eds.) (2021). Essential EU Climate Law. Second Edition. Cheltenham, UK, Northampton, MA, USA: Edward Elgar Publishing. Zhelyazkova, A. and E. Thomann (2021). Policy implementation. In A.J. Jordan and V. Gravey (Eds.), Environmental Policy in the EU. Fourth Edition. Taylor and Francis, London, pp. 220–240.

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2. The European Commission: a climate policy entrepreneur Alexander Bürgin

INTRODUCTION The European Commission is a crucial actor in EU climate policy in three regards. First, based on its unique role in the EU system as an initiator of policy proposals, it acts as a policy entrepreneur, contributing to the gradual advancement of EU climate policy (Dupont et al. 2020: 1104; Laffan 1997; Skjærseth and Wettestad 2010). In this role, it has promoted commitments to ever more ambitious greenhouse gas (GHG) emission reduction targets (compared to 1990 levels) that, once agreed, served as the basis for the Commission’s legislative initiatives. Second, as guardian of the treaties (Treaty on the EU (TEU) Art. 17), the Commission monitors EU countries’ compliance with the adopted legislation. To this end, it has constantly improved coordination processes with national governments (Börzel and Buzogany 2019, Bürgin 2021, Peeters and Athanasiadou 2020, Schoenefeld and Jordan 2020). Finally, the Commission is actively involved in EU international climate policy, coordinating bi-lateral and multilateral partnerships on climate change and energy with third countries, contributing to knowledge transfer and policy learning (Biedenkopf and Torney 2014). The Commission’s motivation to push for an ambitious climate policy is twofold. Firstly, it naturally serves the Commission’s institutional self-interest to strengthen its role within the governance of the EU. Secondly, and more importantly, the Commission has an obligation to fulfil its responsibilities, as set out in the treaties. In line with this duty, the Commission considers an ambitious climate policy in response to public demand as a powerful engine for European integration, in particular in a context of shrinking citizens’ trust in the EU and its institutions, and also as a means to strengthen the EU’s role on the global stage (European Commission 2020d, Skovgaard 2013: 1147). The remainder of this chapter is structured as follows. The first section outlines the Commission’s political and administrative structure and provides an overview of the interservice coordination in the policymaking process. The second section describes the main competences of the Commission, which include initiating proposals, monitoring and enforcing implementation, and representing the EU in international cooperation. The final section is an assessment of the constraining and enabling factors for the Commission’s climate policy entrepreneurship, such as international context conditions, the position constellation among the two co-legislators, as well as the Commission president’s internal leadership capacity and strategies.

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ORGANIZATION The College of Commissioners The Commission is headed by the College of Commissioners, composed of the Commission President and the Commissioners. Every five years, the European Council is requested to propose a candidate for Commission President, ‘taking into account the elections to the European Parliament’ and ‘after having held the appropriate consultations’ (Art. 17(7) TEU). The proposed candidate is then to be ‘elected’ by the European Parliament, by an absolute majority. Regarding the Commissioners, each Member State nominates one Commissioner after consultation with the President of the Commission. Once the Parliament has given its consent, the European Council officially appoints the European Commission (see Petri et al., Chapter 4 in this volume). The College of Commissioners functions on the principle of collegiality, implying that all members share responsibility for decisions. Collective responsibility increases the legitimacy of Commission initiatives and contributes to upholding a Europe-wide perspective. College decisions are almost always by consensus, although a vote is possible in theory, if one Commissioner insists (Nugent and Rhinard 2015: 128). Each Commissioner is assisted by a Cabinet of personal advisors who prepare the College meetings and act as the interface between political and the administrative levels, improving coordination and communication. Crucially, for interest groups, other European and international institutions, as well as national governments, Cabinets are the first point of access for obtaining information on upcoming proposals. The President determines the political guidelines of the Commission and allocates portfolios to the Commissioners (TEU Art. 17(6)). In mission letters, the President specifies each Commissioner’s mandate and expected activities. Reflecting its increasing salience, in his second term (2009–14), Commission President José Manuel Barroso decided to separate climate policy from the environment portfolio by creating the new Directorate General for Climate Action, headed by Connie Hedegaard. During his term, Jean-Claude Juncker (2014–19) then merged the energy and climate action portfolios under Commissioner Miguel Arias Cañete. While some argued that this organizational change would weaken climate policies (Čavoški 2015: 504), Juncker defended it as the logical consequence of energy policy’s complementarity to EU’s sustainability and climate goals (Delreux and Hapaerts 2016: 62). This merger was reversed by Ursula von der Leyen on taking office in December 2019. She emphasized her climate credentials by allocating the climate portfolio to first executive Vice-President Frans Timmermans, who was also given responsibility for the wider European Green Deal package, which aims at achieving climate neutrality by 2050. The new setup introduced by von der Leyen gave climate policy greater weight than under the Juncker Commission, where climate and energy Commissioner Cañete jostled for influence with Energy Union Vice President Maroš Šefčovič. As the first Executive Vice President as well as climate commissioner, Timmermans enjoyed a stronger ability to steer and set policy, unlike Šefčovič, who did not head a DG, and, therefore had to attempt to coordinate the efforts of commissioners without direct involvement (Politico 2019). Von der Leyen’s strong prioritization of climate policy has been influenced by the demands of many party groups in the European Parliament that elected her with only a tiny majority of 383 votes, slightly above the absolute majority of 374 required (see Petri et al., Chapter 4 in this volume).

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The European Commission  25 The Services and Internal Coordination Like national administrations, the Commission’s services include various sub-divisions. Most sub-units are called directorate generals (DG) and are responsible for the management of a specific policy area on behalf of a Commissioner. The three DGs with the most prominent roles in climate policy are DG Climate Action (DG CLIMA), DG Energy (DG ENER) and DG Environment (DG ENV). DG CLIMA was established in February 2010, when, as noted above, the climate portfolio was extracted from DG ENV. It leads international climate negotiations and prepares EU climate legislation. DG ENER was also created in 2010, when it was separated from DG Transport, with which it had been combined since 2000. DG ENER’s climate policy-related responsibilities cover mainly energy efficiency, renewable energy and the internal market for electricity and gas. For its part, DG ENV activities contribute to the EU’s climate policy by promoting for instance, strategies for promote a circular economy (European Commission 2020f), or forestry, the latter of which includes a pledge to plant three billion trees by 2030 (European Commission 2021c). When a new climate policy is developed, DG CLIMA usually takes responsibility for drafting the proposed legislation, and chairing a dedicated inter-service steering group, made up of officials from the relevant services, whose agreement is needed before the draft can be sent to the College. This interservice co-ordination is demanding because the cross-sectoral scope of climate policy involves many DGs, each with their respective priorities (Hustedt 2016: 899–902). An important feature of the inter-service coordination process are impact assessments for new initiatives, and, for those building on previous legislation, retrospective regulatory policy evaluations (Radaelli and Meuwese 2010). The former are designed to map out alternative policy solutions to a given policy problem, and to identify potential short- and long-term costs and benefits, through qualitative and quantitative assessments of the economic, environmental and social impacts. The latter are used to assess whether existing EU laws, policies and funding programmes have delivered the intended results at minimum cost. Both instruments form a key part of the Commission’s Better Regulation agenda, which aims to shape the design and evaluation of EU policies and laws so that objectives are met in the most cost-efficient and effective way, and the principle of subsidiarity is respected (European Commission 2016a). The relative advantages and disadvantages of the Better Regulation agenda remain controversial. On the one hand, impact assessments and regulatory evaluations potentially contribute to a more transparent and evidence-based decision-making process, facilitating citizen and stakeholder involvement. On the other, the Commission may use impact assessments to cloak its political preferences in the technical language of ‘evidence-based policymaking’ (Elantonio and Spendzharova 2015). Furthermore, it is challenging to measure the quality and costs of regulation in an objective way (Torriti and Löfstedt 2012: 171). Doubt over employing cost-effectiveness as the most important performance criteria is illustrated by the Commission’s justification in 2014 of a 27 per cent renewable energy target, to be reached by 2030. The Commission argued that the impact assessment found that a share of 27 per cent represents the most cost-effective option for reaching its overall GHG reduction target (‘at least’ 40 per cent by 2050), and that a higher share would lead to an unacceptable increase in costs. However, the impact assessment is more ambivalent, emphasizing that that any higher energy system costs also come with additional benefits, related, for instance, to energy security, health, and air pollution reduction (Bürgin 2015: 701).

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26  Handbook on European Union climate change policy and politics

COMPETENCES OF THE COMMISSION Initiating Proposals According to the Treaty on European Union (TEU), the Commission has the exclusive right to make legislative proposals in areas of EU competences (Art. 17 TEU). The EU’s competence in the field of climate change derives from its competence in environment policy, established by the Single European Act in 1987; and in energy policy, established by the Lisbon Treaty in 2009. The Commission has used its role as initiator of policy proposals to promote ambitious and legally binding climate targets (see Tobin et al., Chapter 13 in this volume; Romppanen, Chapter 15 in this volume). As described in the introductory chapter to this volume, the journey towards a comprehensive EU climate policy started in the 1990s but only gained momentum around the year 2000, when the 1997 Kyoto Protocol approval obliged the EU to reduce GHG emissions by 8 per cent compared to 1990 levels by 2012 (see also Vogler, Chapter 10 in this volume). Thereafter, the Commission pushed for a set of commitments for 2020: to reduce emissions by 20 per cent (compared to 1990 levels); to improve energy efficiency by 20 per cent; and to increase the share of renewable energy by 20 per cent (European Commission 2007). These so-called 20-20-20 targets were subsequently accepted by the European Council in March 2007. In January 2014, the European Commission presented its framework for climate and energy policy for the follow-up period until 2030 and suggested a 40 per cent reduction, relative to 1990 levels, and a share of renewable energy of 27 per cent – a 2030 energy efficiency target would follow (European Commission 2014a). The Member States agreed in October 2014. In December 2019, the Commission proposed its European Green Deal, aiming to transform the EU into a climate-neutral economy by 2050 (European Commission 2019a). To this end, in September 2020, the Commission proposed raising the 2030 GHG emission reduction target to 55 per cent. For its part, the European Council endorsed the objective of making the EU climate-neutral by 2050, in December 2019, and a year later approved the new 55 per cent target. The respective agreements on specific targets noted above provided the Commission with the basis for a set of legislative proposals, to ensure that the targets can be met. Once the unanimity hurdle was overcome in the Council for climate targets (see Knodt, Chapter 14 in this volume, and Stoczkiewicz, Chapter 9 in this volume), it became easier for the Commission to rally the support of a qualified majority required for policy proposals, such as the 2005 Emission Trading System, an effort-sharing decision/regulation, including binding annual GHG emission targets for Member States in sectors outside the EU ETS, such as transport, buildings, agriculture, and waste; and directives on energy efficiency and renewable energy, establishing a set of binding and non-binding measures to support EU targets in these respective areas (for more detailed accounts of the evolving climate policy portfolio see Vogler, Chapter 10 in this volume; Knodt, Chapter 14 in this volume; Romppanen, Chapter 15 in this volume). To align the current laws with the new 55 per cent GHG reduction target by 2030, on 14 July 2021 the Commission presented the (at time of this writing, not yet adopted) ‘Fit for 55’ package (European Commission 2021b), containing legislative proposals to revise the entire EU 2030 climate and energy framework (see the Introduction to this volume). Overall, the

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The European Commission  27 Commission calculated that the proposed measures would lead to a GHG reduction in the ETS sectors of 61 per cent by 2030 compared with 2005, and of 40 per cent in non-ETS sectors. While drafting such policy proposals, the Commission relies on expertise from expert bodies, composed of public and/or private sector members, formally set up by a Commission decision. Generally, recruitment to these must be via public calls for applications, except for those bodies established by Union legislation for providing advice in specific areas. A register of Commission expert groups is meant to further enhance transparency (European Commission 2016b). In addition, the Commission has at its disposal EU agencies, such as the European Environment Agency (EEA) and the European Union Agency for the Cooperation of Energy Regulators (ACER). Under the terms of the 2021 Climate Law (Regulation (EU) 2021/1119), a new, independent European Scientific Advisory Board on Climate Change has been charged with providing expertise and advice to inform policies to reach climate neutrality by 2050. Finally, the Commission regularly seeks the views of citizens and stakeholders when it develops policy and legislation. The benefits of the involvement of expert bodies, agencies and the broader public are twofold (Trondal and Bauer 2017: 85). First, as the Commission possesses limited in-house expertise, it uses expert stakeholder bodies to strengthen its problem-solving capacity (Princen 2011). Second, via organizing consultations, the Commission draws attention to its policy proposals and mobilizes support from a range of key constituencies from the public at large to specific economic groups, which in turn helps it to substantiate specific preferences in the event of political controversy (Jevnaker 2019: 65). Monitoring and Enforcing of Implementation The implementation of EU law is primarily a task for the individual Member States. However, the Commission is provided with competences in this area via two legal instruments: implementing acts, to ensure uniform conditions for implementing basic EU laws, and delegated acts, to supplement or amend them, based on the specifications defined in the legislative act itself. Prior to adopting an implementing act, the Commission submits a draft for approval by Member State representatives in a so-called comitology committee; the European Parliament in this case has no veto powers. By contrast, the Commission adopts delegated acts after consulting national experts and stakeholders, and then submitting these acts for ex-post control by the Council and the Parliament, which in this case both have a right of veto (see Wurzel et al., Chapter 3 in this volume). Consequently, Council members have generally felt more comfortable with the ex-ante control afforded by comitology, and thus favour implementing acts wherever possible. The European Parliament, for its part, prefers delegated acts, where it has more right to supervise the EU executive (Lange 2020). While some scholars consider the comitology committees as control mechanisms designed by Member States to supervise the Commission in its executive duties, others consider them as a forum in which national officials can deliberate with Commission officials over solutions to common policy problems (Pollack 2003). Generally, both these legal instruments consist of a combination of administrative and technical aspects. For instance, the precise emission levels allowed for each country in those sectors not covered by the emission trading system (the so-called effort-sharing legislation) have in the past been decided by the Commission by implementing act, deliberated over in a comitology committee (Peeters and Athanasiadou 2020: 204). Despite their ostensibly technical character, administrative laws may nevertheless

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28  Handbook on European Union climate change policy and politics trigger significant political contestation, as the history of the EU Taxonomy Climate Delegated Act clearly illustrates (Euractiv 2022; Eckert, Chapter 6 in this volume). The Commission has the responsibility to oversee the application of the common rules agreed by the Parliament and the Council, and, if necessary, launch an infringement procedure against a Member State. The procedure follows several steps. First, the Commission sends a letter of formal notice, requesting further information, and the country concerned must send a detailed reply within a specified period. Second, if the Commission concludes that the country is failing to fulfil its obligations under EU law, it may send a reasoned opinion, i.e., a formal request for compliance with EU law. In the absence of compliance, the Commission may decide to refer the matter to the Court of Justice of the EU (CJEU), which may eventually lead to financial penalties; however, few cases reach this stage. The Commission’s enforcement action in the field of climate policy has focused in particular on Member States’ failure to fully implement EU rules on energy efficiency; in 2019, infringement procedures were initiated against 15 Member States (European Commission 2020a). A complementary enforcement strategy of the Commission is to strengthen NGOs and citizens in compliance disputes, by anchoring their right to accede to national courts (Stoczkiewicz, Chapter 9 in this volume). To this end, the Commission organizes workshops on EU environmental laws, compiles and disseminates CJEU decisions which improve the assessment of the chances of bringing a successful complaint, and to facilitate its accomplishment (European Commission 2017c, p. 16). Citizens’ access to justice in environmental matters is regulated by the Aarhus Convention (UNECE 1998, p. 12). While in recent times citizens’ access to national courts in environmental matters has been significantly strengthened, access to the CJEU remained blocked for individuals, and restricted for environmental organizations. Therefore, in March 2017, the Convention’s Compliance Committee decided that the EU had breached the Convention’s rules by granting environmental organizations and citizens insufficient access to justice. In response, the amended Aarhus Regulation (EC 2021/1767), adopted in October 2021, broadened the scope of acts that can be brought before the CJEU by citizens and NGOs; however, NGOs have criticized loopholes, such as its omission of any mention of state aid decisions (Climate Action Network 2021). There are important limitations to the infringement procedure as an enforcement instrument. When Member States report incorrectly, the Commission has limited capacities to verify the data and follow up cases of non‐compliance (Martens 2008: 640). Furthermore, constant pressure on certain Member States to implement community laws might endanger their political support for further ambitious climate policies (Bürgin 2015: 699; Jordan and Tosun 2013: 251). Moreover, there are lengthy delays before cases appear before the CJEU (Jordan and Tosun 2013: 258) and even when judgments are eventually made, Member States can simply resist complying (Falkner 2018: 780), as in the case of Warsaw being ordered to close the coal mine Turow in a dispute initiated by the Czech government (CJEU 2021; Stoczkiewicz, Chapter 9 in this volume). Due to the infringement procedure’s limitations and confrontational character, the Commission has increasingly preferred soft governance mechanisms (Knodt, Chapter 14 in this volume), implying flexible structures and task-specific policymaking arrangements, such as committees, forums, and networks with national and subnational actors (see also Kern, Chapter 8 in this volume). The aim of such soft governance mechanisms is to increase state capacity for the implementation of EU policies. However, there is limited research on the effect of such capacity-building measures (Bondarouk and Mastenbroek 2018: 16), and such

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The European Commission  29 that exists is controversial. On the one hand, there is some evidence that these measures have contributed to a narrower implementation gap (Börzel and Buzogány 2019). On the other, the Commission still identifies the lack of administrative capacity and insufficient financing among the five root causes of implementation deficits across the Member States, in addition to ineffective coordination among local, regional, and national authorities, insufficient compliance assurance mechanisms, a lack of policy integration and policy coherence, and lack of knowledge and data (European Commission 2019b: 12). Soft governance mechanisms are particularly relevant in policy if EU rules are not legally binding at national level. An example is the case of the 2030 renewable and energy efficiency targets. To guarantee that the targets will be met, the Commission proposed a Regulation (EU 2018/1999) on the Governance of the Energy Union and Climate Action, approved by the Member States in 2018. Under the regulation, each Member State is required to establish a 10-year integrated national energy and climate plan (NECP) for 2021–2030, outlining how it intends to address energy efficiency, renewables, greenhouse gas emissions reductions, interconnections, and research and innovation. In exchanges of views, the Commission succeeded in convincing the Member States to elevate their ambitions (see Kacper et al. 2016; Kulovesi and Oberthür 2020: 156; Knodt et al. 2020; Tobin et al., Chapter 13 in this volume). International Cooperation Climate action is an integral part of the EU’s foreign policy agenda. Through climate diplomacy and cooperation initiatives, the EU aims to build an atmosphere of political will and trust to advance an ambitious climate policy. DG CLIMA leads the Commission’s task forces on the international negotiations in the areas of mitigating climate change and coordinates bi-lateral and multilateral partnerships on climate change and energy with third countries. These dialogues have contributed to strategic partnership agreements and joint action plans, in which the EU provides financial, technical, and capacity building assistance. A focus in this regard is EU–China cooperation. Since 2005, the EU–China Partnership on Climate Change has provided a high-level political framework for cooperation and dialogue, contributing to the process of designing and implementing a Chinese emissions trading system (Biedenkopf and Torney 2014), fully in operation since July 2021. Furthermore, climate policy has become an important pillar of the Commission’s activities in the field of development policy. The 2021 Global Gateway aims to mobilize up to €300 billion ($339 billion) in infrastructure investments worldwide by 2027 in sectors such as digitalization, climate and energy, transport, health, education, and research (European Commission and High Representative of the Union for Foreign Affairs and Security Policy 2021). Another important channel for EU support to policy dialogue and specific, targeted climate action in developing countries is the Global Climate Change Alliance Plus (GCCA+), for which grant funding increased from €317.5 million in the first phase (2007–2014) to €420 million in the second (2014–2020; GCCA+, 2021). Finally, based on a mandate from the Council, the Commission negotiates trade agreements with third countries on behalf of the Member States. During the negotiation, the Commission coordinates closely with the Council’s trade policy committee, updates the European Parliament, and holds meetings with representatives of civil society. Since 2015, the Commission has insisted on respect for Paris Agreement commitments as a precondition for the conclusion of trade agreements (Delbeke and Vis 2019: 41). Aligning trade and climate is

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30  Handbook on European Union climate change policy and politics also a priority in its 2021 trade policy review (European Commission 2021d; Dobson, Chapter 25 in this volume). However, the success of this effort has so far been modest, and critical voices have advocated the addition of various sanctions to the EU’s toolbox (Bronckers and Gruni 2021).

INFLUENCE OF THE COMMISSION The EU’s climate policy is shaped by external and internal context factors, as well as numerous actors involved in the policymaking process (see Tobin et al., Chapter 13 in this volume), complicating the assessment of the Commission’s particular influence on EU climate legislation. However, the following section provides an overview of conducive factors for the Commission’s climate policy entrepreneurship, such as a normative context that strengthened the Commission’s argumentation, the presidentialization of the Commission, as well as smart coalition-building strategies. Each of these is taken in turn. Salience and Normative Constraints Positions need to be justified; therefore, the better the Commission can frame its proposal as an appropriate solution for a salient problem, the greater its legitimacy (Zahariadis 2008: 517). In this regard, the increasing public awareness of climate change provides a favourable context condition for climate policy entrepreneurship. Another favourable context condition is the commonly accepted norm of providing directional leadership in international climate diplomacy (Tobin et al., Chapter 13 in this volume; van Schaik and Schunz 2012; Wurzel and Connelly 2011). This norm helped to legitimize the Commission’s proposal for more ambitious emission reduction targets ahead of international climate conferences, in line with arguments that own commitments could be used as leverage in talks with other large emitters (Wettestad et al. 2012). Such framing strategies are also evident in von der Leyen’s push for a climate neutrality goal by 2050, and a 55 per cent GHG emission reduction target by 2030. In her plans for a European Green Deal, she referred to the scientific consensus that the majority of the carbon emission reduction pledges for 2030, made by 184 countries under the Paris Agreement, are clearly insufficient to keep global warming well below 2°C. Von der Leyen was thus able to justify her plans for a European Green Deal as a requirement stemming from Paris, in line with scientific evidence and as a response to the public demand for decisive action (European Commission 2019a; 2020d). Furthermore, she appealed to the EU’s self-understanding of its role as leader in international climate diplomacy. To this end, she presented her plan for a climate-neutral EU at the December 2019 UN COP 25 climate talks in Madrid, shortly before a scheduled European Council summit on the same issue. She followed a similar strategy on the eve of the Climate Ambition Summit 2020, convened to set out new and ambitious mitigation, adaptation and finance commitments under the three pillars of the Paris Agreement. On this occasion, von der Leyen argued that an agreement on 55 per cent by 2030 would encourage international partners to increase their ambition to limit the rise in global temperature to 1.5°C and underline the EU’s continued global leadership (European Commission 2020d).

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The European Commission  31 The Presidentialization of the Commission The coherence of the Commission’s position increases its influence in the negotiations with Council and Parliament (Knodt et al. 2020: 791). However, in the past, the Commission has often appeared as fragmented, with weak top-down leadership and power widely dispersed within the College, and between the services and limited leadership of the Commission President (Kassim et al. 2013). With respect to climate policy, views differed regarding the appropriate policy instruments (market-based vs. regulatory approaches, indicative vs. mandatory renewable energy targets) and the prioritization between three interrelated dimensions (the security of supply, energy market integration and climate policy), often leading to disagreements between Commissioners and DGs (Rietig 2019). The implications of such weak top-down steering were evident, for instance, in the Commission’s attempts to introduce support schemes for renewable electricity production. Seeking to broker a compromise initiative in autumn 1999, then Energy Commissioner Loyola de Palacio found herself, like her predecessor Christos Papoutsis, confronted by severe resistance from other DGs, resulting in ultimate failure (Lauber and Schenner 2011: 516). Another illustration of weak top-down steering can be seen in the negotiation of the EU’s 2030 GHG emission and renewable energy targets in 2013. Commission President Barroso favoured a 40 per cent GHG emission reduction goal, and a nationally binding 27 cent target for renewable energy, while Energy Commissioner Oettinger favoured a more modest 35 per cent GHG reduction target, and a nationally nonbinding renewable energy target. Encouraged by Oettinger’s strong stance, other Commissioners, such as Industry Commissioner Tajani, also maintained their opposition to the higher goal. In the end, Barroso reached a compromise agreement that retained the 40 per cent goal but abandoned the national binding renewable energy targets (Bürgin 2015: 703). There were two main institutional factors that constrained top-down steering by the Commission. First, regarding the relations with the College of Commissioners, the Commission President is not the head of a government, and therefore lacks the hierarchical authority of a Prime Minister over his ministerial colleagues within a particular Member State. The principle of collegiality implies the need for a collective voice, something likely to be hindered by the Commission’s increased competences, the more political nature of its work, and its increased size and heterogeneity after the Eastern enlargement (Kassim et al. 2013: 156). Second, regarding the relations with the Commission services, the President’s Cabinet, and the Secretariat General’s (SG) role in the coordination of services has been limited. The SG has traditionally been the main guardian of collegiality, serving and supporting the College, rather than the President’s personal service. Therefore, it has traditionally had limited involvement in the internal negotiation of policy within the DGs, leaving the President operating at some distance from interdepartmental affairs. This absence of centralized political authority has further contributed to the emergence of quasi-autonomous DGs, pursuing their own agendas relatively free from the President’s political control. In response, the Commission President’s internal leadership has been strengthened by the Amsterdam, Nice and Lisbon Treaties, providing the office holder with a de facto veto over national candidate commissioners, and discretion over task allocation (Nugent and Rhinard 2015: 78–79). In addition to these treaty provisions, organizational reforms in the Commission have aimed at directly strengthening the President. An illustration during the Barroso I Commission, is the SG’s transformation into an administrative command centre for the

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32  Handbook on European Union climate change policy and politics President, playing a more interventionist role in ensuring inter-service coordination (Kassim et al. 2013: 186). These reforms were further developed by Juncker’s introduction of seven Vice-Presidents, each mandated to steer and co-ordinate teams of Commissioners working on specific priority projects. A key function of these seven is to assess whether initiatives proposed by Commissioners align with the President’s political guidelines (European Commission 2014b). In addition, Juncker further increased the SG’s staff, and its range of competences in the co-ordination of the services. In particular, he allocated the SG an important agenda-setting power as chair of all inter-service steering groups (ISGs), dealing with priority initiatives included in the Commission’s work programme. While the lead DG is responsible for drafting both the impact assessment report and the policy proposal, account should also be taken of input from the ISG, and thus from the SG (European Commission 2015: 4). These organizational reforms affected the internal policymaking process in the field of climate policy in two main ways. First, with the increase in the Commission President’s power to exercise political leadership within the Commission, the prioritization of climate policy has become much more dependent on the President’s own personal political agenda. The bottom-up nature of the previous work programme made it difficult for Barroso to impose his will, unlike the more centralized, top-down process steered by von der Leyen in close coordination with her First Vice-President. Second, the introduction of project teams led by Vice-Presidents has promoted the earlier co-ordination of policy at a political level, and thus improved strategic political decision-making among the Commissioners, providing stronger policy guidance to the services. This is particularly important for the coordination of climate policy across the various involved DGs (Bürgin 2020: 387; Bürgin 2018: 844–846, Rietig and Dupont 2021). Relations with European Parliament and Council Another important factor for the Commission’s influence is its ability to form coalitions of ambition within the European Parliament, and within the Council – which presents the greater challenge. Even if no longer a natural ally of the Commission in the struggle between the supranational institutions and the intergovernmental Council (Bauer and Ege 2012; Bürgin 2018: 891), the Parliament remains a strong supporter of an ambitious climate policy (see Petri et al., Chapter 4 in this volume), and recent improvements in Parliament–Commission coordination have contributed to the enhanced standing of both vis-à-vis the Council (Dinan 2016: 111). The Commission’s close coordination with the Parliament has become even more important since the changed power balance after the 2019 elections. For the first time, the majority is no longer constituted by the combination of the two main parties, the European People’s Party, and the Socialists & Democrats. This implies that any Commission initiative now requires the support of at least one other party, offering the Greens potentially greater influence. A more complicated task for the Commission is to win support among the Member States. Despite general agreement in the Council on the necessity of a common climate policy, diverging positions on the levels of ambition and integration have prevented a swift advance of the EU’s decarbonization and CO2 reduction strategy after climate policy gained momentum in the mid-2000s (Wurzel et al., Chapter 3 this volume; Knodt et al. 2020; Ringel and Knodt 2018: 209). In particular, Central and Eastern European countries invoke the high costs of the transition to a low carbon economy. The Euro crisis deepened the division between those

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The European Commission  33 seeing policy on climate change as detrimental to growth, and those seeing it as beneficial (Skovgaard 2014: 1). The Commission’s chances of overcoming resistance in the Council are contingent on several factors. The first relates to the decision-making process. As Commission proposals are more easily accepted than modified, the Commission has conditional agenda-setting power (Tsebelis and Kreppel 1998) if a qualified majority in the Council prefers the Commission proposal to the status quo. Consequently, it is more challenging to win support for ambitious climate targets requiring unanimity among the Member States than for policy proposals requiring a qualified majority. Furthermore, the Commission’s influence also depends on its ability to build new coalitions, break up existing ones or manipulate the Council’s default conditions (Schmidt 2000). Von der Leyen’s promotion of a climate-neutrality goal illustrates such coalition-building strategies crucial for persuading EU countries to adopt the target. For instance, she closely coordinated her initiatives with European Council President Charles Michel, a supporter of her plans and advocate of a deal made at the 2019 December EU summit, namely, the European Council’s endorsement of the objective of a climate-neutral EU by 2050 (despite Poland’s lone objection). Similarly, von der Leyen coordinated closely with Germany and France over her plan to tie a giant coronavirus recovery fund to the stalled talks on the next EU seven-year budget, the Multiannual Financial Framework (MFF) (European Commission 2020g). Von der Leyen intended to use a revamped MFF to address the threat of coronavirus-induced recession and, simultaneously, to advance the European Green Deal agenda by allocating around 30 per cent of the budget for climate policy, criticized as overly ambitious by some Member States (Elkerbout et al. 2020). To revive the stalled budget negotiations, in April 2020, von der Leyen asked Merkel and Macron to give her political cover by cooperating on a proposal for an ambitious recovery fund. Subsequently, Berlin and Paris presented a common proposal for €500 billion in joint debt, guaranteed by all 27 Member States, to be used to issue grants to regions and sectors in greatest need. This Franco-German initiative served as the anchor of von der Leyen’s recovery initiative, which added a further 250 billion Euro-loan programme to the Franco-German Proposal (Herszenhorn et al. 2020). The coupling of the recovery fund, which became known as Next Generation EU, with the MFF increased the pressure for an agreement on the latter, as any delay would affect the urgently needed disbursement of the recovery fund. This pressure contributed to the adoption of the €1.8 trillion seven-year budget and recovery fund in December 2020; thus, the management of the COVID-19 crisis has tended to strengthen and reinforce the EU’s climate policy (Dupont et al. 2020: 1096, see Quitzow et al., Chapter 24 in this volume).

CONCLUSION The European Commission’s policy entrepreneurship contributed to agreements on ever more ambitious climate and energy targets, and on a comprehensive set of legislation to achieve these. GHG emissions in the EU-27 declined by 24 per cent below 1990 levels in 2019, and by an estimated 31 per cent in 2020 (European Environmental Agency 2021). The approximated GHG emissions decrease of 10 per cent between 2019 and 2020 is strongly related to the effects of the COVID-19 pandemic. By comparison, EU-wide emissions fell by only 4 per cent between 2018 and 2019 – years without any notable crisis. If current EU and national policies

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34  Handbook on European Union climate change policy and politics are fully implemented, the original 40 per cent EU-wide reduction target will be reached by 2030 but further efforts are required to reach the more recent 55 per cent target by this date. The rate in decline in emissions needs to double the average annual rate observed between 1990 and 2020 (European Environmental Agency 2021: 14). Without changes to the current policy framework and legislation, the European Commission (2020e: 2) projects only a 60 per cent emissions reduction by 2050. To deliver the additional emissions reductions for 2030, in July 2021 the Commission (2021b) presented a package of proposals to make the EU’s climate, energy, transport and taxation policies aligned with the 2030 GHG emission reduction target. In addition, by September 2023, and every five years thereafter, the Commission will assess the consistency of EU and national measures according to the climate-neutrality objective and the 2030–2050 trajectory. Furthermore, within six months of the second global stocktake referred to in Article 14 of the Paris Agreement, to be concluded in November 2023, the Commission intends to propose a revision of the Union 2040 climate target (European Commission 2020b: 10). Several current contextual conditions are conducive for the Commission’s climate policy entrepreneurship. These include the high salience of climate policy, the EU’s international commitments, its aspiration of climate leadership and the recently agreed transition to climate neutrality by 2050, all of which point to potential for new Commission proposals for more ambitious climate policies. In addition, the Commission’s capacity to promote a coherent climate policy has been strengthened by organizational changes within the Commission, such as the stronger hierarchical steering of the Commission president, the special role of Executive Vice President and Climate Commissioner Timmermans, stronger levels of horizontal coordination among the Commissioners, and the more interventionist role of the Secretariat General in the coordination of the services. Finally, changes in the international political context prior to the 2022 invasion of Ukraine facilitated arguments in favour of a more ambitious climate policy. In his first day in office, US president Joe Biden reversed his predecessor’s decision and re-joined the Paris Agreement, restoring US leadership in international climate cooperation. However, economic constraints represent a major challenge for the EU’s transition to climate neutrality. Even if, in 2021, the EU economy rebounded from the previous year’s pandemic recession faster than expected (European Commission 2021a), the continuing economic consequences made some members more sceptical regarding the EU’s climate policy. This has been amplified by the fallout from the Russian invasion of Ukraine, as soaring energy prices and looming physical energy shortages set political constraints on measures to internalize the costs of CO2 emissions in transport and building sectors and slowed down the phase-out of some fossil fuel energy generation. It will be important to ensure that economic recovery measures remain, as foreseen in the recovery fund, compatible with the European Green Deal priorities, and that priority is given to the social dimension of the energy transition. Another challenge relates to the compliance monitoring capacity of the Commission. It is true that the governance mechanism established a process that allows the Commission to monitor the Member States’ implementation of commitments related to the 2030 targets. However, compliance continues to depend more on the Member States’ good will than the effectiveness of the Commission’s enforcement instruments.

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The European Commission  35

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3. The European Council, Council and Member States: jostling for influence Rüdiger K. W. Wurzel, Maurizio Di Lullo1 and Duncan Liefferink

1. INTRODUCTION This chapter assesses the role of the European Council, the Council of the EU (hereafter the Council) and Member States in European Union (EU) climate policy. Considering their central political importance for the EU and European integration, surprisingly little scholarly attention has been paid to the European Council and Council, although there are important exceptions (e.g. Hayes-Renshaw and Wallace, 2006; Lewis, 2003, 2022). This has prompted Lewis (2022: 158) to argue that ‘[o]f all the EU institutions, the European Council and the … Council are perhaps the least documented’. One of the reasons for this relative dearth of studies is that European Council meetings take place behind closed doors and Council meetings as well, except when dealing with legislation. Moreover, the Council structures and procedures are highly complex and have evolved largely informally, at least below the level of ministers. Much of the general EU studies literature (e.g. Hayes-Renshaw and Wallace, 2006; Lewis, 2003, 2022) and the specialized EU climate policy literature (e.g. Dupont and Oberthür, 2017; Wurzel et al. 2019) has argued that the European Council and the Council each constitute at once a forum for intergovernmental bargaining between Member States (which try to defend their national interests) and an EU institution (in which Member States collectively take decisions in the interest of the EU). Lewis (2022: 159) has therefore argued that the European Council and the Council constitutes a ‘complex and variegated institutional construct which equals more than the sum of its parts (the member states)’. This chapter proceeds as follows: the next two sections analyze the European Council and the Council respectively; the main roles and functions of these two EU institutions are outlined and assessed before their main tasks in EU climate policy are discussed. The penultimate section focuses on the role of EU Member States, before the conclusions summarize the main arguments put forward in this chapter.

2.

EUROPEAN COUNCIL

Composition and Remit The European Council is made up of the Heads of State or Government, who are the most senior political representatives (e.g. the French President, German Chancellor and Italian Prime Minister) of the 27 Member State governments, the European Council President and the European Commission President. The High Representative of the Union for Foreign Affairs and Security Policy also attends when EU foreign affairs issues are on the agenda. Until 38 Rüdiger K. W. Wurzel, Maurizio Di Lullo, and Duncan Liefferink - 9781789906981 Downloaded from PubFactory at 08/15/2023 12:44:25AM via free access

The European Council, Council and Member States  39 2002, the Foreign Ministers also participated in the European Council meetings although this practice has been discontinued. Nowadays the European Council meets formally at least twice every six months. Informal meetings are also occasionally held. In crisis situations (e.g. the Eurozone and migration crises) the number of European Council meetings usually increases significantly. Article 15 of the Treaty on European Union (TEU) states that ‘[t]he European Council shall provide the Union with the necessary impetus for its development and shall define the general political guidelines thereof.’ The European Council defines the overall direction and political priorities of the EU by focusing primarily on ‘high politics’ issues or ‘bigger picture’ issues (Buonanno and Nugent, 2021: 49) for which it offers ‘executive-like collective leadership’ (Lewis 2022: 156). Buonanno and Nugent (2021: 48–49) have summarized the European Council’s main roles as follows: (1) policy initiator, promoter and driver; (2) contributor to the co-ordination of EU policies; (3) final decision-maker, and; (4) forum at the highest political level for building mutual understanding and confidence between Member States. The European Council does not adopt EU laws which are instead negotiated and agreed on by the Council and the European Parliament (see Petri et al., Chapter 4 in this volume) on the basis of a formal proposal that has to be put forward by the Commission (see Bürgin, Chapter 2 in this volume). However, as will be explained below, the European Council can act as arbiter and final decision-maker for dossiers on which the Council of the EU fails to reach agreement due to significant divergences in the positions of Member States. Moreover, occasionally the European Council issues detailed instructions to the Council or the Commission to act on a particular issue. Curtin (2009: 4) has argued that the European Council ‘sometimes gives rather specific instructions to both the Commission and the Council as to (legislative) agenda-setting’. The European Council therefore sits ‘politically, though not legally, at the very summit of the EU policy system’ (Buonanno and Nugent, 2021: 49). Origins Perhaps surprisingly, the European Council only became an EU institution formally with the 2009 Lisbon Treaty. The European Council’s origins can be traced to intermittent, informal summit meetings in the 1950s. These became more frequent and institutionalized from 1974 onward following an initiative by the French President Valéry Giscard d’Estaing and the German Chancellor Helmut Schmidt who both wanted the Heads of State or Government to take on a more proactive role in dealing with the negative economic effects of the 1973 oil crisis. Managing serious crises (such as the Eurozone crisis, the refugee crisis and, although to a lesser extent, the climate crisis) which have affected the EU and its Member States has remained one of the European Council’s main tasks. The 2009 Lisbon Treaty created a semi-permanent President of the European Council who is elected for a two-and-half year once-renewable term. Prior to 2009, the European Council was chaired by Member States holding the six-monthly rotating Presidency of the Council. The 2009 Lisbon Treaty also created the position of a High Representative of the Union for Foreign Affairs and Security Policy and set up the European External Action Service (EEAS) the latter of which contributes significantly to the EU’s climate diplomacy (e.g. Dupont and Oberthür, 2017: 68; Biedenkopf and Petri, 2021). However, while the small Member States tend to rely more strongly on the EEAS climate diplomacy capacity, the large Member States

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40  Handbook on European Union climate change policy and politics often use their own large diplomatic services more heavily for climate diplomacy outreach activities. The European Council and Climate Issues Over the years, the European Council has only intermittently offered leadership on EU environmental policy, which often involves relatively technical ‘low politics’ issues. The main exception has been climate change policy, which has developed into a salient ‘high politics’ issue partly because of the EU’s ambition to act as a leader in international climate change politics (Tobin et al., Chapter 13 in this volume; Oberthür and Roche Kelly, 2008; Jordan et al., 2010; Rayner and Jordan, 2013; Dupont and Oberthür, 2017; Wurzel et al., 2017, 2019; Oberthür and Dupont, 2021). Up to the 2000s, the European Council rarely dealt with EU environmental issues. Important exceptions include the summit meeting in Paris in 1972 which gave the starting signal for a common environmental policy shortly after the 1972 UN Stockholm conference had exposed the EU’s lack of such a policy (Bungarten, 1978). Since about 2007, the European Council has become more active in EU and international climate policy, with notable peaks of activity in 2007–2009 and 2014–2015, associated with the 2009 Copenhagen UN climate conference (COP15) and the 2015 Paris UN climate conference (COP21) respectively (Dupont and Oberthür, 2017) as well as in the run-up to the 2021 Glasgow UN climate conference (COP26). Dupont and Oberthür (2017: 66) have therefore argued that ‘the European Council has moved into an increasingly central position in climate policy’. The European Council’s initial occasional interventions in the EU climate law-making process can be evidenced by its actions during the negotiations of the climate and energy package for 2020, which ran into difficulties at the Council level in 2008. Although the legislative co-decision procedure, which was replaced by the ordinary legislative procedure under the 2009 Lisbon Treaty, was still ongoing between the Council and the EP, detailed compromise solutions were agreed by the European Council in December 2008 (Dupont and Oberthür, 2017: 69). The European Council subsequently asked the Council to integrate its compromise proposal in the negotiations with the EP. Never before had the European Council entered a co-decision process at such a level of detail. Although it does not have formal legislative powers, both the Council and EP nevertheless accepted the European Council’s proposal (e.g. Dupont and Oberthür, 2017; Wurzel et al, 2019). Subsequently more frequent, detailed interventions by the European Council on EU climate policy followed. For example, the European Council under the 2009 Swedish Presidency adopted a detailed position on climate financing, inter alia to support climate adaptation measures in Global South countries, after the Ecofin Council had failed to reach agreement and with the aim of improving the chances for success at the 2009 Copenhagen UN climate conference (Wurzel et al. 2019). In this case the European Council was instrumental in positioning the EU as a leader in the run-up to the 2009 UN climate conference which nevertheless ended in failure (e.g. Jordan et al. 2010; Wurzel et al. 2017; Parker and Karlsson, 2018). The European Council has repeatedly acted as a supreme arbiter on climate change dossiers for which the Council failed to reach agreement due to fundamental differences, especially between the (‘old’) Western European Member States and the (‘new’) Central and Eastern European states (CEES) (e.g. Braun, 2014; Dupont and Oberthür, 2017; Jankowska, 2017; Wurzel et al. 2019). For the 2015 Paris UN climate conference, all Parties had to submit

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The European Council, Council and Member States  41 their Intended Nationally Determined Contributions – essentially voluntary national emission reduction plans – in 2014. Because these plans caused frictions between the CEESs and the Western European Member States, in October 2014 the European Council agreed a detailed plan with a 2030 time horizon which formed the basis for the Environment Council submission (to the UNFCCC Secretariat) in view of the Paris UN climate conference in 2015. Some features of the European Council’s plan found their way into the Commission’s subsequent formal legislative proposals that were required to implement the plan. Although the Commission usually guards its right of initiative jealously, it accepted the European Council’s proposal partly because it significantly increased the likelihood that the Council would accept its formal proposal (Wurzel et al. 2019: 253). The empirical examples presented above confirm the observation of Hayes-Renshaw and Wallace (2006: 2) that ‘[o]ver the years the European Council … has become more and more important, operating increasingly as the senior branch of the Council’ (see also Curtin 2009; Puetter 2014; Lewis 2022). Although such a role is not enshrined in the Treaties, it has nevertheless been accepted by the Council and the Commission as well as, although to a lesser degree, the EP. Because the Heads of State or Government wield considerable formal and informal powers on both the EU level and in their respective Member States, Buonanno and Nugent (2021: 47) have asked rhetorically: ‘If the European Council decides to initiate an action, who is to tell it is exceeding its powers or is acting unwisely?’. Having said this, the European Council’s interventions have mainly been aimed at the overall level of the EU’s greenhouse gas emissions reduction targets and the general burden-sharing criteria among Member States. It has been less interventionist with regard to energy efficiency and renewable energy targets, for example. Shortly after the ambitious European Green Deal (EGD) had been proposed by the Commission, the core objective of climate neutrality by 2050 was endorsed by the European Council in December 2019. When the COVID-19 pandemic rapidly spread in Europe in 2020, many feared that it might derail the EGD, but such fears have not come true (Burns et al. 2020; Rosamond and Dupont 2021). A jumbo-package of legislative proposals encompassing various policy fields (industry, energy, buildings, transport, trade) was submitted by the Commission during 2021 in order to implement the EU’s enhanced 55 per cent (up from 40 per cent) emission reduction target for 2030 and to achieve carbon neutrality by 2050. With rising energy prices, debate has raged within (and outside) the European Council on whether the EU’s climate and energy policies exacerbate those problems and should therefore be downgraded or whether reforms should instead be accelerated in order to ease those problems in the future.

3.

THE COUNCIL OF THE EUROPEAN UNION

Unlike the European Council, the Council – or Council of the European Union as it has formally been called since the 2009 Lisbon Treaty – has been a formal EU institution since the 1950s. It ‘was fathered by the 1951 Treaty of Rome and born of the 1957 Treaties of Rome’ (Hayes-Renshaw and Wallace, 2006: 1). Legally speaking, there is only one Council, although the ministers responsible for particular policy areas usually meet separately in functionally differentiated technical Council formations, such as the Environment Council.

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42  Handbook on European Union climate change policy and politics The Environment Council, whose first meeting took place in 1973, deals with EU climate issues apart from renewable energy and energy efficiency which are usually dealt with by the Transport, Telecommunications and Energy Council. The Environment Council is still not considered to be as senior a formation as, for example, the Economic and Finance Affairs Council (Ecofin) or the Foreign Affairs Council (e.g. Lewis, 2022; Buonanno and Nugent, 2021) although the EGD is likely to raise its profile. While only one annual Environment Council meeting took place between 1973 and 1982, there were at least two annual meetings between 1982 and 1998. Since 1989, there have regularly been four formal Environment Council meetings per year, and even five in 2009, 2015 and 2016. Most Presidencies also organize one informal meeting of Environment Ministers. The Council meetings, which are composed of the ministers, constitute only the tip of the iceberg of the Council machinery (Lewis, 2022: 158). They are prepared by the Committee of the Permanent Representatives of the Governments of the Member States to the EU (known as Coreper) and Council Working Groups. Coreper meetings are attended by high-level national officials (ambassadors and deputy ambassadors to the EU) from Member States’ Permanent Representations in Brussels. Lewis (2022: 156) has pointed out ‘[i]n total, the Council system involves thousands of national officials meeting in dozens of working groups, Coreper, ministerial, and summitry settings each month to negotiate and decide on EU proposals’. The Council Working Groups are attended by attachés from the Permanent Representations who are often assisted by government officials with special expertise. Since 1973, the Environment Working Group has held an average of three to four weekly meetings. Hayes-Renshaw and Wallace (2006: 53) have estimated that approximately 85 to 90 per cent of Council dossiers are agreed on in principle already at the Working Group or Coreper level as so-called A-points which are subsequently adopted by the ministers in the Council without further discussion (see also Lewis, 2013, 2022). However, according to Häge (2008) more than 40 per cent of dossiers are discussed by the Ministers. In any case, the Working Group ‘is the workhorse of the Council’ (Lewis, 2022: 165) which tries to achieve as much consensus as possible on dossiers which end up either as A-points or B-points (the latter of which have to be discussed) on the agenda for the Council meetings. The Rotating Presidency Until the 2009 Lisbon Treaty, the six-monthly rotating EU Presidency, which is taken in turns by Member States according to a pre-determined schedule, was responsible for chairing all meetings of both the European Council and the Council. Since 2009, the Presidency chairs only the Council, including its ministerial, Coreper and Working Group meetings, while the European Council is chaired by a permanent President. The rotating Council Presidency must fulfil the following, at times contradictory, main roles: (1) manager and administrator; (2) honest broker; (3) initiator; (4) point of contact (for other EU institutions and Member States); and (5) external representation (Wurzel, 1996, 2004; Hayes-Renshaw and Wallace, 2006; Lewis, 2022). While the Council Secretariat tends to emphasize the honest broker role, some of the large Member States especially (e.g. France and until Brexit the UK) have stressed the initiator role (Wurzel, 1996, 2004). Prior to 2009, only incremental reforms occurred to the rotating Presidency. The most important reform was the introduction of the so-called trio Presidency with one large Member State forming part of a team of three Member States which adopt a programme at the begin-

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The European Council, Council and Member States  43 ning of their Presidencies. As the Presidency (together with the Commission and the EEAS) formally represents the EU in international climate negotiations, it is seen as beneficial for the EU’s interests that trio Presidencies can draw on the significant diplomatic resources of large Member States. In the 1990s, different Presidencies tried to bring about the integration of environmental requirements into other policy sectors. The UK’s 1992 EU Presidency launched the so-called Cardiff strategy at a European Council meeting in the Welsh capital, according to which all Council formations had to assess how environmental requirements were integrated in the dossiers they dealt with. Environmental policy integration therefore also became one of the rotating Presidency’s main tasks (Wurzel, 2004). However, by the early 2010s the Cardiff strategy was ‘as dead as a dodo’ (Interview, UK official, 2012). With the ambitious EGD, linking climate change policies to major related goals such as the circular economy, sustainable agriculture and sustainable transport, policy integration has once again moved to the top of the EU political agenda (see Rietig and Dupont, Chapter 17 in this volume). It remains to be seen whether the Council and/or European Council (as well as the Commission) will be more successful in achieving climate policy integration compared to environmental policy integration. Climate mainstreaming is facilitated by the fact that the 2021–2027 multiannual financial framework (MFF) foresees a 30 per cent share (up from 20 per cent in the previous period) of the multi-year budget to be used in the various EU policy fields for climate purposes (see Rietig and Dupont, Chapter 17 in this volume). Council Secretariat The General Secretariat of the Council (hereafter Council Secretariat) is frequently overlooked in the literature although it is a central actor, ensuring the smooth organization of the Council meetings in Brussels, adherence to EU rules and procedures and acting as a confidential advisor for the rotating Presidency behind the scenes (Wallace, 2003; Hayes-Renshaw and Wallace, 2006; Lewis, 2022: 165–166). Due to various EU enlargements, staffing levels roughly doubled in the Council Secretariat, with a higher increase for translation service staff compared to policy-related officials. In late 2021, approximately 3,000 officials worked for the Council Secretariat. However, only about 300 of them held policy-related positions, approximately 200 were lawyer-linguists and about 800 translators. The remaining staff worked in human resources and other support jobs (Council Secretariat, written communication, 15.12.2021). The Council Secretariat ‘is the administrative backbone and institutional memory of the Council system’ (Lewis, 2022: 166). It offers a degree of continuity which the six-monthly rotating Council Presidency cannot provide. While faced with ‘increasing numbers of often very technical dossiers’ the rotating Council Presidencies ‘have come to rely more and more on the advice of a Secretariat with many years of accumulated experience in keeping dossiers moving and finding compromise solutions’ (Hayes-Renshaw and Wallace, 2006: 117). The Council Secretariat is ‘an important asset and ally of the presidency, providing logistical assistance, offering advice, and helping to find constructive solutions (the famous “presidency compromise”)’ (Lewis, 2022: 166). However, large Member States, which have greater administrative capacities and staff resources, tend to rely less on the Council Secretariat than small ones (Wurzel, 2004).

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44  Handbook on European Union climate change policy and politics Two significant changes have occurred in the Council Secretariat since the mid-2000s. First, since 2009, the European Council has an elected President whose staff is recruited mainly from within the Council Secretariat or other EU institutions. Second, due to the increased political salience of climate change, the Council Secretariat created a separate climate unit within its Environment Directorate General (DG), which later also integrated inter alia the Energy and Transport DG. The EU’s Role in International Climate Negotiations Dupont and Oberthür (2017: 68) have argued that ‘[i]n practical terms, the Council determines the international negotiation position of the EU with active participation and input from the Commission’. The Council’s Working Party on International Environment Issues (WPIEI) has been of central importance for the preparation of international climate conferences where the EU is formally represented by the rotating Presidency. In 2004, a significant reorganization of the structure of the WPIEI was carried out under the Irish EU Presidency (Oberthür and Roche Kelly, 2008; Delreux and Van den Brande, 2013; Wurzel et al. 2019). It introduced so-called issue leaders and lead negotiators who usually stay in place for several years. The main aim of this reform was to achieve greater continuity (beyond the six-monthly Presidency) and access to specialized expertise and skills from Member States and the Commission (Dupont and Oberthür, 2017; Delreux and Van den Brande, 2013). This reform brought about an informal division of labour between the Presidency, Commission and Member States (Delreux and Van den Brande, 2013). Issue leaders and lead negotiators have been recruited from the Commission and Member States with France, Germany and, until Brexit, the UK constituting the most important recruiting grounds – although the Netherlands and more recently Sweden and Finland have also fielded lead negotiators (Bäckstrand and Elgström 2013; Dupont and Oberthür 2017). This fairly extensive informal structure has remained in place after the 2015 Paris UN climate conference. The complex and somewhat fragmented nature of the EU’s procedures and internal structures for coordinating its international position, with several governmental and supranational actors being obliged to reach consensus or at least a workable compromise before entering international negotiations, has sometimes led to suboptimal outcomes. A case in point is the 2009 Copenhagen UN climate conference (COP15) where the Presidency, the Commission and individual Member States continued their EU internal discussions until the final phases of the conference (e.g. Dupont and Oberthür, 2017). Following a more proactive internal coordination approach and greater outreach activities to build alliances with other like-minded environmental leader states and with Global South countries, the EU was considerably more successful in achieving its leadership ambitions during the negotiations of the Paris Agreement at COP21 in 2015 (Oberthür and Groen, 2018; Oberthür and Dupont, 2021). In contrast to the 2009 Copenhagen UN climate conference, which saw the heavy involvement of the European Council, in particular since the Ecofin Council could not reach agreement on the financing aspects of climate change, the 2015 Paris UN climate conference and the 2021 Glasgow UN climate conference saw the European Council mainly endorsing the conclusions of the Environment Council and the Ecofin Council and issuing a high-level political message underlining the urgency of the matter and asking for swift progress. As the international climate negotiations aimed at reaching a global (post-Kyoto Protocol) agreement started during the 2004 Buenos Aires UN climate conference and concluded with

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The European Council, Council and Member States  45 the Paris Agreement in 2015, the EU and its Member States had sufficient time to iron out their differences. Initially those negotiations (including the 2009 Copenhagen UN climate conference) still saw some EU internal disagreements (e.g. on climate finance and forests). These disagreements were however significantly less marked during the 2015 Paris UN climate conference and had largely disappeared at the 2021 Glasgow UN climate conference. For the 2021 Glasgow conference, the only outstanding issue that needed to be discussed at the Environment Council level prior to the conference was the so-called common time frames, i.e. whether the mitigation ambition reviews under the Paris Agreement should take place every five or ten years. The proposed EGD legislation has caused disputes not only among Member States but raised concerns also outside the EU. In particular, the planned Carbon Border Adjustment Mechanism (CBAM), which was intended to put a carbon levy on certain imports to ease the risk of carbon leakage, was likely to run into opposition from some of the EU’s main trading partners in the same way as the attempted extension of the EU’s emissions trading scheme (ETS) to flights from third countries to the EU and vice versa (see Vogler, Chapter 10 in this volume and Wettestad, Chapter 16 in this volume). The latter was fiercely resisted by the US and China in particular. They applied heavy pressure on large EU Member States, including Germany and France, who in turn pressed for the eventual climbdown by the Commission. Placating some of the EU’s major trading partners if CBAM is adopted is likely to require considerable EU diplomatic efforts. Delegated Legislation The 2009 Lisbon Treaty paved the way for delegated legislation ‘across the full spectrum of EU policy areas, without having to employ the current system of committees of national civil servants … in order to fill in details of legislation’ (Curtin, 2009: 3). Subsequent decisions can be vetoed by Member States only with a qualified majority in the Council (or by the majority of the members of the European Parliament). Delegated legislation has therefore been criticized in the literature for increasing the EU’s democratic deficit (e.g. Curtin, 2009). The potential pitfalls of delegated legislation became clear in 2021–2022. A seemingly technical issue which has raised controversy in the Council and widely beyond is the restriction on the number and types of activities that may be labelled as sustainable, under the so-called Taxonomy Climate Delegated Act.2 In 2021, some Member States, including most prominently Finland and Sweden, raised serious objections to a tightening of the rules for using biomass from forests as a sustainable energy source as had been proposed by the Commission (Euractiv, 2021). On 31 December 2021, the Commission published another ‘taxonomy’ proposal according to which nuclear power stations and gas power plants can (under certain circumstances) be labelled as ‘green’ for investment purposes (see Eckert, Chapter 6 in this volume). This caused an outcry in several Member States, especially Austria, Germany and Luxembourg, while the Spanish government also raised concerns. Germany’s Vice-Chancellor and Economics Minister with responsibility of domestic climate change issues, Robert Habeck (Green Party), accused the Commission of ‘greenwashing’ (Deutsche Welle, 2022). Austria and Luxembourg even threatened to take legal action against the Commission’s decision. The German government however did not support legal action because it considered the Commission to be formally on firm legal grounds with its proposal. The Commission had presented its proposal

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46  Handbook on European Union climate change policy and politics as a delegated act under the taxonomy procedure, which can be vetoed by Member States only with a qualified majority in the Council (or by the majority of the members of the European Parliament). A qualified majority of Member States opposed to the Commission’s proposal did not materialize because France, which relies heavily on nuclear power, was able to drum up sufficient support among the pro-nuclear Member States. Germany has been relying significantly on gas, especially from Russia, while it is phasing out nuclear power and coal at a time when it has embarked on an energy transition towards renewable energy. This helps to explain why Germany’s opposition to labelling gas (under certain circumstances) as ‘green’ was less vociferous than its opposition to labelling nuclear energy as ‘green’.

4.

MEMBER STATES

The Council and European Council are the main negotiating forums for member governments to influence the EU’s domestic and foreign climate policy. However, Member States also exploit numerous bilateral and multilateral meetings and contacts with other member governments. For example, France, Germany and Italy as well as the Commission are represented in the G7 which has increasingly focused on climate change issues. As Helen Wallace (2003: 338) has pointed out, the ‘EU institutions … do not monopolize the relationships between the governments of the EU member states’. However, this section will focus primarily on alliances between Member States within the European Council and/or Council, while noting that some of these alliances extend also to states outside the EU. Since the origins of the EU in the 1950s, France and Germany have traditionally had close relations while acting as the engine of European integration (e.g. Hayes-Renshaw and Wallace, 2006). Annual bilateral Franco-German environment minister meetings, which also discuss climate change issues, have taken place since the 1980s. However, the influence of the Franco-German alliance has waned in a greatly enlarged EU made up of 27 Member States. Moreover, Franco-German relations have been less close on environmental issues due to national differences in policy preferences, instruments and regulatory philosophies (Wurzel, 2008). France has traditionally relied heavily on nuclear power which the French government has historically wanted to be recognized as a renewable source of energy (Bocquillon and Evrard, 2017). Such moves have long been strongly opposed by Germany which is due to phase out the use of its domestic nuclear power stations by the end of 2022 in favour of renewable energy such as wind energy and solar power (Jänicke, 2017). However, due to Russia’s war on Ukraine and the subsequent energy crisis, the German Chancellor, Olaf Scholz (Social Democratic Party), imposed on his government coalition a compromise decision to extend the operation of three nuclear power stations to mid-April 2023 (Financial Times, 17 October 2022). The decision was adopted by the German parliament (Bundestag) following a vote on 10 November 2022 in which a majority of Members voted in favour. The decision was welcomed by the French government, although it would have preferred a significantly longer extension from Germany. The Commission’s ‘taxonomy’ decision to label nuclear power as ‘green’ for investment purposes (see above) has shone a spotlight on Franco-German differences on this issue. Over the years, a widely accepted informal convention has developed that permanent or quasi permanent alliances should not be formed within the European Council and the Council. One of the main reasons for this convention is that such alliances are seen as detrimental

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The European Council, Council and Member States  47 to finding compromise solutions to controversial dossiers within the European Council and Council (Liefferink and Andersen, 1998; Hayes-Renshaw and Wallace, 2006; Lewis, 2022). Thus, the traditional ‘green trio’ made up of Denmark, Germany and the Netherlands, which was extended to a ‘green sextet’ in 1995 when Austria, Finland and Sweden joined the EU, has never constituted a permanent alliance of environmental leader states (Liefferink and Andersen, 1998; Wurzel, 2008). Instead, such alliances have had ‘to be formed on an issue-by-issue basis and remain[ed] liable to defection’ (Liefferink and Andersen, 1998: 262). This has however not prevented Finland and Sweden from continuing their close cooperation on climate change policy issues with other Nordic Council countries. Within the Nordic Council there is close cooperation on climate change issues between Denmark, Finland and Sweden, which are all EU Member States, and Iceland, Norway, the Faroe Islands, and Greenland, which do not belong to the EU. The Nordic Council countries all tend to promote relatively ambitious climate policy measures. What has further complicated attempts to build ad hoc alliances between the traditional environmental leader states is the fact that some of them have at least temporarily downgraded their climate policy ambitions. This applied, for example, to Germany and especially the Netherlands during much of the 2010s (e.g. Liefferink et al. 2017). However, the so-called traffic light coalition government, which is made up of the Social Democratic Party, Green Party and the Free Democratic Party (Liberals), which came to power in Germany in December 2021, restored ambition to German climate policy. Although the coalition government which came to power in the Netherlands in January 2022 consisted of the same parties as the previous coalition government, it seriously raised its climate ambitions too. An important trigger for this development was provided by court cases lodged against the Dutch state by activist organization, Urgenda (e.g. Nollkaemper and Burgers, 2020; see Stoczkiewicz, Chapter 9 in this volume). Similarly, in Germany a decision by the constitutional court in 2021 forced the outgoing (grand coalition) government to adopt more ambitious climate policy measures. The CEES and Visegrád Countries Since the accession of the CEES in the 2000s, the East–West split between Member States on EU environmental policy in general and climate policy in particular has become more dominant than the traditional North–South split on these issues (Börzel, 2000). Braun (2014: 457) has argued that the EU has failed to diffuse norms such as ecological modernization to the CEES (see Fitch-Roy and Bailey, Chapter 12 in this volume). Particularly with regard to EU climate change policy the CEES, spurred on by Poland, have tried to form more durable alliances to oppose proposals which they regard as overly ambitious and damaging to their economies (Braun, 2014; Jankowska, 2017; Wurzel et al. 2019). The CEES are characterized by lower GDP levels, often high coal dependency and strong reliance on gas especially from Russia which all constitute important explanatory factors for the often serious divide between the environmental leader states among the Western European Member State and especially the Visegrád group within the CEES (Braun, 2014; Jankowska, 2017; Wurzel et al. 2019). However, with Russia’s full-scale invasion of Ukraine in early 2022, pressure has increased significantly on the CEES and Germany in particular to find alternative energy sources. The Visegrád countries – Czechia, Hungary, Poland, and Slovakia devised highly institutionalized co-ordination mechanisms to agree a common stance on EU environmental and

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48  Handbook on European Union climate change policy and politics climate policy proposals (Wurzel et al. 2019). The Visegrád group’s regular meetings, which are chaired by fixed-term presidencies among its members, seem to go against the convention (noted above) of not forming permanent coalitions. In contrast to the green trio/sextet, on climate policy the Visegrád countries primarily aim to stake out positions that are very far away from the middle ground and therefore do not contribute to ambitious compromises with other Member States. Over time, the Visegrád group has tried to expand its reach to other countries (including Bulgaria and Romania) and invited the then newly acceded Croatia as an observer. This has had the effect of making the enlarged group less homogenous, while Poland’s dominance within the group has increasingly been challenged by other Visegrád countries. Moreover, on energy issues the Visegrád countries frequently take different positions. Slovakia and Czechia both strongly favour nuclear power while highly coal-dependent Poland, which contrary to most other Member States has not yet fixed a legally binding phasing out date for coal, has been taken to the Court of Justice of the European Union (CJEU) by Czechia (which was joined by the Commission) over the coal mine in Turów near the Czech and German border (see Stoczkiewicz, Chapter 9 in this volume). One of the Visegrád group’s main aims has been to be allowed to progress more slowly towards full decarbonization than other Member States which ought to take on a bigger share in the EU’s collective greenhouse gas emission reduction targets. With the targets and timetables enshrined in the EGD becoming more concrete, in particular through the 2021 Fit for 55 package (including policies with a 2030 time horizon to further reduce greenhouse gas emissions), increase of energy efficiency and shift to renewable energy sources, the East–West divide has become more marked. Poland especially has not shied away from making its voice heard. For example, the Polish Prime Minister, Mateusz Morawiecki (Law and Justice Party – PiS), made a scathing attack on the proposed reform of the EU ETS, which, in his view, will lead to the ‘economic destabilization’ of the CEES, in an article in an influential German conservative broadsheet in late 2021 (FAZ, 2021). This position should also be seen in the context of the rule of law debate in Poland and Hungary, in particular the conditionality mechanism for the Next Generation EU recovery funds, which threatens to hold up disbursement on the basis of the alleged infringements of EU’s fundamental principles in both countries. Green Growth Group and Green Diplomacy Network Some Member States reacted to the perceived lack of environmental ambition of the Visegrád group by forming the Green Growth Group (GGG) in the early 2010s. The GGG is a fairly large, loose alliance with a small secretariat (but without a presidency) which was initiated by the UK. Membership of the GGG has fluctuated between ten and 17 European states (some of which are not EU Member States), including Austria, Belgium, Germany, Denmark, Spain, Estonia, Finland, France, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Sweden, Slovakia, the UK and Norway (Wurzel et al. 2019). Its activities include annual ministerial meetings, stakeholder meetings and thematic workshops. For example, the GGG held a meeting a few days before the Environment Council meeting on 6 October 2021 which discussed, inter alia, the EU’s position for the Glasgow UN climate conference in November 2021. The GGG’s ministers hold informal meetings in the margins of the Environment

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The European Council, Council and Member States  49 Council where, however, they do not speak and/or act on behalf of the group. While promoting more ambitious climate and energy targets the GGG has often tried to enlist the EP. In 2003, the Green Diplomacy Network (GDN) was set up by Member States which are keen to integrate environmental objectives into the EU’s foreign policy. Bi- and trilateral initiatives have also taken place among Member States which have made climate change an important priority of their domestic foreign policies. Moreover, the Foreign Ministries of France, Germany and the UK undertook coordinated outreach activities in the run-up to the 2015 UN Paris climate conference (Wurzel et al. 2019). These trilateral activities took place outside the GDN and in addition to EEAS’s outreach activities on climate issues on which especially the small Member States with fewer diplomatic staff resources rely more heavily (see also Biedenkopf and Petri, 2021). Brexit and the Threat of Dismantling EU Climate Policy Measures The ambiguous role of the UK in EU environmental policy prior to Brexit merits brief mention. Although a relatively progressive climate actor, whose departure from the EU in 2021 has weakened the alliance of more ambitious Member States (Moore, Chapter 23 in this volume; Rayner and Jordan, 2017), the UK consistently vetoed on sovereignty grounds any attempts to adopt eco-taxes on the EU level. It seems unlikely, however, that the UK’s departure will pave the way for the re-tabling of the Commission’s 1992 proposal for an EU-wide carbon/energy tax. The adoption of EU tax measures requires unanimity and Member States such as Ireland and Spain (under Conservative governments) have voiced opposition. Over the years there have been several attempts to ‘roll back’ and/or to dismantle EU environmental policy (e.g. Wurzel, 2002; Bauer et al. 2012; Burns and Tobin, 2016). The 2008 financial/Eurozone and the COVID-19 crises further pushed onto the defensive proponents of ambitious EU environmental policy (including climate) measures although, so far, they have not resulted in a scaling back of the EU’s climate ambitions (e.g. Burns and Tobin, 2016; Burns et al. 2020; Rosamond and Dupont, 2021). In the 2010s, environmental EU laws were again in danger of being dismantled, this time motivated by administrative simplification, ‘fitness checks’ and cost-effectiveness considerations which reflect the preferences of industry more strongly than environmental concerns. EU climate policy has however remained relatively insulated from roll-back or policy-dismantling initiatives (Wurzel et al. 2017, 2019; Rosamond and Dupont, 2021). However, concerns particularly among the CEES about the potential negative impact of the EU’s relatively ambitious climate policies on their national economies were reignited by a steep rise in gas and oil prices in 2021/22. Russia’s invasion of Ukraine has exacerbated the issue of rising gas and oil prices. The Commission’s 2020 review of Member States’ National Energy and Climate Plans did prominently flag up the need for a ‘just transition’, which will require significant EU funding especially for coal-dependent Member States such as Poland, as a precondition for the EU’s successful transition to climate neutrality by 2050 (European Commission, 2020; see also Bürgin, Chapter 2 in this volume; Leppänen and Liefferink, 2022).

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50  Handbook on European Union climate change policy and politics

5. CONCLUSION The European Council and the Council each constitute at once supranational EU institutions in which Member States collectively take decisions in the interest of the EU and intergovernmental bargaining arenas for Member States which try to defend their national interests. While the Environment Council has dealt with climate issues since the 1980s, the European Council focused more regularly on climate policy issues only after they became politically salient ‘high politics’ issues. Since about 2007, the European Council has become more active in EU and international climate policy, with notable peaks of activity in 2007–2009 and 2014–2015, associated with the 2009 Copenhagen UN climate conference (COP15) and the 2015 Paris UN climate conference respectively as well as in the run-up to the 2021 Glasgow UN climate conference. Although the European Council is meant to define only the general political directions and priorities for the EU, in recent years it has issued sometimes fairly detailed instructions to the Council (and the Commission) to act on a particular climate policy issue. The Environment Council focuses on EU climate dossiers while renewable energy and energy efficiency are usually dealt with by the Transport, Telecommunications and Energy Council. Council meetings constitute only the tip of the iceberg of the Council machinery. They are prepared by Coreper and Council Working Groups which try to achieve as much consensus as possible on dossiers before they are placed on the agenda of Council meetings. The Council’s Working Party on International Environment Issues has been of central importance for the preparation of international climate conferences where the EU is formally represented by the rotating Presidency. Since 2004, a semi-permanent structure with issue leaders and lead negotiators has been in place and has led to an informal division of labour between the Presidency, Commission and Member States. The Council’s internal structures and administrative capacities to deal with EU and international climate issues have changed considerably over the years. This seems to confirm Helen Wallace’s (2003) assessment that the Council is an ‘institutional chameleon’. Over time there have also been significant changes in the relationships between Member States on EU climate issues, with different alliances emerging inside and outside the European Council and Council. Member States have frequently disagreed about the level of ambition for EU climate policies. The widely accepted informal convention that permanent or quasi permanent alliances between groups of Member States should not be formed within the European Council and/or the Council was repeatedly challenged by the Visegrád countries during the 2010s. This challenge, in conjunction with the decline of the relevance of the green trio/ sextet of countries, triggered the setting up of the Green Growth Group, both of which have, however, purposefully remained ad hoc alliances.

NOTES 1. The views expressed by Maurizio Di Lullo are his own and in no way reflect the views of the Council or the European Council. 2. Under the terms of Regulation (EU) 2020/852 ‘on the establishment of a framework to facilitate sustainable investment’.

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The European Council, Council and Member States  51

REFERENCES Andersen, M.S. and D. Liefferink (Eds.) (1997). European Environmental Policy: The Pioneers. Manchester: Manchester University Press. Bäckstrand, K. and O. Elgström (2013). The EU’s role in climate change negotiations: from leader to ‘leadiator’. Journal of European Public Policy, 20(10): 1369–1386. Bauer, M.W., A. Jordan, C. Green-Pedersen and A. Héritier (Eds.) (2012). Dismantling Public Policy. Oxford: Oxford University Press. Biedenkopf, K. and F. Petri (2021). The European External Action Service and EU climate diplomacy. European Foreign Affairs Review, 26(1): 71–86. Bocquillon, P. and A. Evrard (2017). French climate policy. In R. Wurzel, J. Connelly and D. Liefferink (eds.). The European Union in International Climate Change Politics. Abingdon: Routledge, pp. 98–113. Börzel, T.A. (2000). Why there is no Southern problem. Journal of European Public Policy, (7) 1: 141–162. Braun, M. (2014). EU climate norms in East-Central Europe. Journal of Common Market Studies, 52 (3): 455–460. Bungarten, H.H. (1978). Umweltpolitik in Westeuropa. Bonn: Europa Union Verlag. Buonanno, L. and N. Nugent (2021). Policies and Policy Processes of the European Union. London: Red Globe Press. Burns, C., P. Eckersley and P. Tobin (2020). EU environmental policy in times of crisis. Journal of European Public Policy, 27 (1): 1–19. Burns, C. and P. Tobin (2016). The impact of the economic crisis on European Union environmental policy. Journal of Common Market Studies, 54 (6): 1485–1494. Curtin, D. (2009). Executive Power of the European Union. Oxford: Oxford University Press. Delreux, T. and K. Van den Brande (2013). Taking the lead: informal division of labour in the EU’s external environmental policy-making. Journal of European Public Policy, 20 (1): 113–131. Deutsche Welle (2022). EU proposes labelling gas and nuclear energy as climate friendly, 1 January 2022, www​.dw​.com/​en/​eu​-proposes​-labeling​-gas​-and​-nuclear​-energy​-as​-climate​-friendly/​a​-60308833 (Accessed: 6.1.2022). Dupont, C. and S. Oberthür (2017). The Council and the European Council. In R. Wurzel, J. Connelly and D. Liefferink, (Eds.), The European Union in International Climate Change Politics. Abingdon: Routledge, pp. 66–79. European Commission (2020). An EU-wide Assessment of National Energy and Climate Plans. COM(2020) 564 final, Brussels, 17.9.2020. Euractiv (2020). Finland set to reject EU taxonomy rules over biomass. 22 November 2021. www​.euractiv​.com/​section/​energy​-environment/​news/​finland​-set​-to​-reject​-eu​-taxonomy​-rules​-over​ -biomass/​(Accessed: 21.12.2021). FAZ (2021). Politisches Greenwashing der EU verhindern. Mateusz Marwiecki. Frankfurter Allgemeine Zeitung, 15 December 2021. www​.faz​.net/​aktuell/​politik/​ausland/​mateusz​-morawiecki​-greenwashing​ -der​-eu​-verhindern​-17686235​.html (Accessed: 15.12.2021). Financial Times (2022). Germany extends life of nuclear power plants until next year. www​.ft​.com/​ content/​3f48c18f​-0348​-46b0​-a082​-3bf07e14e589 (Accessed: 10.11.2022). Hayes-Renshaw, F. and H. Wallace (2006). The Council of Ministers. Second Edition. Basingstoke: Palgrave Macmillan. Jänicke, M. (2017). Innovation and climate leadership. In R. Wurzel, J. Connelly and D. Liefferink (Eds.). The European Union in International Climate Change Politics. Abingdon: Routledge, pp. 114–130. Jankowska, K. (2017). Poland’s clash over energy and climate policy. In R. Wurzel, J. Connelly and D. Liefferink (Eds.), The European Union in International Climate Change Politics. Abingdon: Routledge, pp. 145–158. Jordan, A., D. Huitema, H. van Asselt, T. Rayner and F. Berkhout (Eds.) (2010). Climate Change Policy in the European Union. Cambridge: Cambridge University Press. Leppänen, T. and D. Liefferink (2022). Agenda-setting, policy formulation and the EU institutional context: the case of the Just Transition Fund. European Policy Analysis. DOI: 10.1002/epa2.1136.

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52  Handbook on European Union climate change policy and politics Lewis, J. (2003). Informal integration and the supranational construction of the Council. Journal of European Public Policy, 10 (6): 996–1019. Lewis, J. (2022). The European Council and the Council of European Union. In M. Cini and N. Pérez-Solórzano Borragán (Eds.) European Union Politics. Sixth Edition. Oxford: Oxford University Press, pp. 156–174. Liefferink, D. and M. S. Andersen (1998). Strategies of the ‘green’ member states in EU environmental policy-making. Journal of European Public Policy, (5) 2: 254–270. Liefferink, D. and R. K. W. Wurzel (2017). Environmental leaders and pioneers: agents of change? Journal of European Public Policy, 24 (7): 951–968. Liefferink, D., D. Boezeman and H. de Coninck (2017). The Netherlands: a case of fading leadership. In R. Wurzel, J. Connelly and D. Liefferink (Eds.). The European Union in International Climate Change Politics. Abingdon: Routledge, pp. 131–144. Oberthür, S. and C. Roche Kelly (2008). EU Leadership in international climate policy: achievements and challenges. The International Spectator, 43 (3): 35–50. Oberthür, S. and Dupont, C. (2021). The European Union’s international climate leadership: towards a grand climate strategy? Journal of European Public Policy. DOI: 10.1080/13501763.2021.1918218. Oberthür, S. and Groen, L. (2018). Explaining goal achievement in international negotiations: the EU and the Paris Agreement on climate change. Journal of European Public Policy, 25 (5): 708–727. Parker, C. F. and Karlsson, C. (2018). The UN climate change negotiations and the role of the United States. Environmental Politics, 27 (3): 519–540. Puetter, U. (2014). The European Council and the Council. Oxford: Oxford University Press. Rayner, T. and A. Jordan (2013). The European Union: the polycentric climate policy leader?, WIRES Interdisciplinary Reviews: Climate Change, 4 (2): 75–90. Rosamond, J. and Dupont, C. (2021). The European Council, the Council, and the European Green Deal. Politics and Governance, 9 (3): 348–359. Wallace, H. (2003). The Council: an institutional chameleon? Governance, 15 (3): 325–344. Wurzel, R. K. W. (1996). The role of the EU Presidency in the environmental field. Journal of European Public Policy, 3 (2): 272–291. Wurzel, R. (2004). The EU Presidency: ‘Honest broker’ or driving seat? London: Anglo-German Foundation. www​.agf​.org​.uk/​cms/​upload/​pdfs/​R/​2004​_R1258​_e​_eu​_presidency​.pdf (Accessed: 15.12.2021). Wurzel, R. K. W. (2008). Environmental policy: EU actors, leader and laggard states. In: J. Hayward (Ed.) Leaderless Europe. Oxford: Oxford University Press, pp. 66–88. Wurzel, R. K. W., J. Connelly and D. Liefferink (Eds.) (2017). The European Union in International Climate Change Politics. Abingdon: Routledge. Wurzel, R. K. W., D. Liefferink and M. Di Lullo (2019). The European Council, the Council and the Member States: Changing environmental leadership dynamics in the European Union. Environmental Politics, 28(2): 248–270.

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4. The European Parliament: a strong internal actor with external ambitions Franziska Petri, Veronika Zapletalová and Katja Biedenkopf

1. INTRODUCTION The European Parliament (EP) is the European Union’s (EU) directly elected parliamentary chamber. It consists of 705 Members of European Parliament (MEPs) from all 27 EU Member States, grouped according to their political ideologies. While at the inception of the European integration project, the Common Assembly – as the EP was initially called – was equipped with very limited powers, with successive treaty changes over the course of EU history, its role and formal competences have substantially increased, to the point where the Parliament now exercises a key role in influencing EU policies and politics. Today, the EP is a key actor in internal EU climate policy, often portrayed as an environmental or climate ‘champion’ (Burns, 2019; 2021), which also strives to increase its international role (Biedenkopf, 2019). The EP’s formal competences and informal roles in internal and external climate politics and policymaking have evolved over recent decades. Overall, today’s EP fulfils four broad roles in EU (climate) policymaking: (1) shaping EU legislation through, inter alia, the ordinary legislative procedure, in which it stands on equal footing with the Council of the EU; (2) shaping and controlling the EU budget; (3) exercising control over other EU institutions, for example influencing the composition of the European Commission; and (4) representing EU citizens. As such, the EP and in particular its ‘Committee on the Environment, Public Health and Food Safety’ (ENVI), have carved out an influential role among the other EU institutions – most notably the Council of the EU and the European Commission – in determining the EU’s climate policy, making it a central actor for studying the complexities of EU climate policymaking (Judge, 1992). The diversity of positions and priorities of its Members, each with their own national citizenship and political affiliation with one of the various political groups, shapes the EP’s role and influence. Delving into its internal dynamics helps nuance the notion of the EP’s climate ‘championship’. We show that policy positions on climate issues vary significantly across political groups, with left-wing and centre-left groups taking more ambitious positions in this domain, while conservative and Eurosceptic groups hold more critical and even, at the extreme right end of the spectrum, unsupportive or overtly hostile positions towards climate policies (Buzogány & Ćetković, 2021; Huber et al., 2021). Overall, we detect an increasing importance of ideology in EP climate politics. The EP engages in international climate politics through formal and informal involvement in the UN climate negotiations, in addition to some direct interactions with other international actors. Formally, the EP’s competences in the external realm are not equal to its influence in internal EU climate policymaking, but recent academic research has underlined the various channels through which it can exert influence on international climate politics (Biedenkopf, 2019; Delreux & Burns, 2019; Wendler, 2019; Petri & Biedenkopf, 2021). Based on the anal53 Franziska Petri, Veronika Zapletalová, and Katja Biedenkopf - 9781789906981 Downloaded from PubFactory at 08/15/2023 12:44:31AM via free access

54  Handbook on European Union climate change policy and politics ysis of EP reports on its participation in international negotiations and interviews with MEPs and their staff, we show that the EP has consolidated its performance over time, but that its de facto involvement does not match the extent of its ambitions. The rest of the chapter proceeds as follows. The next section (section 2) explores the EP’s role in the EU’s internal climate policymaking. This is followed by a discussion of dynamics within the Parliament itself (section 3). Section four focuses on the EP’s international engagement, while a final section summarizes the factors that condition the EP’s role in shaping the EU’s internal and external climate policy.

2.

THE EP’S ROLE WITHIN THE EU’S POLITICAL SYSTEM AND CLIMATE POLICIES

What started off as a mere assembly of delegates from national parliaments without legislative competences in the 1950s has become ‘one of the world’s most powerful elected chambers’ (Hix, Raunio, & Scully, 2003, p. 192) and ‘one of the most researched parliaments in the world’ (Raunio, 2012, p. 366). Even more relevant for climate policy, the EP has established a reputation as an ‘environmental champion’ (Burns, 2005; Burns, Carter, Davies, & Worsfold, 2013; Judge, 1992) and a ‘strategic environmental advocate’ (Burns, 2019, p. 324) among the EU institutions. This section traces the historical development of its role, and discusses the various tools that the EP can use within EU policymaking, to shape climate policies. 2.1

Historical Evolution

The EP’s history goes back to the very origins of European integration, namely to the creation of the Common Assembly within the 1951 European Coal and Steel Community (ECSC). Its creation was, however, not intended as a significant step towards parliamentary power at the European level, but rather ‘an afterthought, perceived as the least imperfect way in which to address the issue of accountability’ towards the newly created institutions (Shackleton, 2012, p. 126). According to the ECSC founding treaty, the 78 delegates from the six ECSC Member States were to meet on an annual basis (with the possibility of additional sessions) and the Assembly had the right to question and dismiss the High Authority (the European Commission’s predecessor). However, it held no explicit legislative or other competences (Arts. 20–25, Treaty of Paris 1951). As such, equipped with limited powers and limited links to ECSC citizens, the Common Assembly is retrospectively often called a mere ‘fig leaf’ (Shackleton 2012, p. 126) for democratic standards at the supranational level. With subsequent steps of European integration and respective treaty changes, the EP’s institutional characteristics and role among the EU institutions changed significantly. First, the Common Assembly was renamed the European Parliamentary Assembly (1958) and then the European Parliament (1962). Second, in an effort to increase the EP’s link with European citizens, direct elections of its Members were established in 1979 and have been conducted every five years ever since. European elections turnout started at 61.99 per cent in 1979 with a decreasing trend (e.g. 58.41 per cent in 1989, 45.47 per cent in 2004) up until 2019, when it increased to 50.66 per cent (up from 42.61 per cent in 2014) (European Parliament, 2019a). Third, in line with EU enlargement over time, the EP grew to reach 751 MEPs representing 28 EU Member States between 2014 and 2020. On 1 February 2020, with the United Kingdom’s

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The European Parliament  55 EU exit, the EP shrank to 705 MEPs. Fourth, the EP’s competences increased significantly with every treaty change, affording MEPs an ever-more influential role in shaping EU (climate) policies and politics. Significant milestones included the introduction of the assent procedure for international agreements and enlargement (1985) and the co-decision procedure (1992), granting the EP the right to shape concrete (climate) legislation. The next section explains the EP’s various roles and competences according to the 2007 Lisbon Treaty in more detail. 2.2

Roles and Competences in EU Climate Policy, Post-2007

The EP’s main roles following the Lisbon Treaty are fourfold: shaping EU legislation, shaping the EU budget (both together with the Council of the EU), exercising control over other EU institutions, such as the European Commission, and representing EU citizens (Burns, 2021; Nugent, 2017; Raunio, 2012; Ripoll & Servent, 2018; Schmidt & Schünemann, 2014; Shackleton, 2012). First, the EP has multiple ways to influence climate policies through its various legislative roles. Particularly significant among these, the EP plays a considerable role in all legislation passed through the Ordinary Legislative Procedure (OLP) – formerly known as the co-decision procedure – standing on equal footing with the Council of the EU. Commission proposals, Parliament’s amendments and the Council’s common position are subject to interinstitutional negotiations, which generally occur in so-called ‘trilogue’ meetings, where representatives from each institution negotiate an agreed text.1 The OLP is the standard legislative procedure for most EU policy areas, including climate policies. Environmental policies (of which climate policies typically form part) were a priority among adopted OLP acts during the EP’s 2014–2019 legislative term, with the ENVI Committee being one of the most active committees (41 out of a total of 401 adopted OLP acts) (European Parliament, 2020a). Academic research has also confirmed ENVI’s influential role in broader environmental policymaking (Judge, 1992; Kaeding, 2004; Hurka, 2013). The equality of the Council and the EP in shaping the large bulk of EU legislation gives Parliament a significant role in climate policymaking. Studies of EP amendments to Commission legislative proposals on the environment consistently show that the EP has overall proposed ambitious amendments, though interestingly they also find that their content has become less radical over time (Burns, 2019; Burns et al., 2013). An example of the EP’s influence through the OLP has been the process surrounding the revision of the Renewable Energy Directive (2018/2001), originally adopted in 2012, where a key issue was the headline target for 2030. Here, the EP continued to push for higher targets than the Council, and only after five trilogue meetings was a figure agreed of 32 per cent energy from renewable sources at EU level by 2030 (CAN Europe, 2018; Consilium, 2018). Another example was the process of negotiation of the EU Climate Law (Regulation (EU) 2021/1119), which entered into force in July 2021 and in which the EP – among other aspects – successfully included a proposal to set up a European Scientific Advisory Board on Climate Change (European Parliament, 2021). Another legislative role is based on the ‘consent procedure’ – previously known as the assent procedure – which requires the EP’s consent for international agreements concluded by the EU. This concerns bilateral as well as multilateral agreements, such as the 2015 Paris Agreement, to which the EP gave its consent on 4 October 2016. A third legislative role stems from the ‘consultation procedure’, which applies to policy areas such as internal market

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56  Handbook on European Union climate change policy and politics exemptions and competition law. Here, the EP is consulted but cannot formally reject or approve a policy proposal. This links to the fourth legislative role, the informal ways of influencing EU policies through, inter alia, resolutions, own-initiative reports, informal coordination and preparatory inter-institutional talks on legislative initiatives (informal trilogues). Even when the EP is not formally or directly involved in all steps of policymaking, for example in external climate policies, it can use these mechanisms to set the agenda, frame the political debate and thereby indirectly shape policymaking. An illustration is provided by the 2018 EP report on climate diplomacy which called on the EU ‘to step up its climate diplomacy efforts’ and formulated issue-area and regional priorities (European Parliament, 2018), aiming to influence the Council’s climate diplomacy. The EP’s second major role, in the wake of the Lisbon Treaty, has been budgetary, using new competences that see it share responsibility with the Council in giving approval to the EU’s annual budget. Separately, the EP also must approve, via the consent procedure, the EU’s multiannual financial framework – the EU’s seven-year financial umbrella and budgetary planning (Rietig and Dupont, Chapter 17 in this volume). These rights give the EP the direct or indirect possibility to push for certain priorities in the EU’s budgetary planning. For example, in the discussions on the 2021 EU budget, MEPs explicitly inserted the ‘objective of achieving climate neutrality by 2050’ as a key priority for the annual budget (European Parliament, 2020c). In a similar vein, the EP used the negotiations on approving the EU’s 2021–2027 multiannual financial framework (see Rietig and Dupont, Chapter 17 in this volume) to increase funding for causes it deemed important, including the European Green Deal and the Erasmus+ programme (European Parliament, 2020b). Third, the EP holds various control and supervisory powers towards other EU institutions, including the European Commission, which translate into influence on climate policies and politics. Among them, the competence to approve the College of Commissioners – i.e. elect the Commission President and approve the entire College (see Bürgin, Chapter 2 in this volume) – can be a powerful tool to influence the future work of the European Commission (Biedenkopf et al., 2023). While in the past, this approval was considered a standard procedure and largely a formality, confirmation hearings have become more politicized – in some cases including the rejection of candidates. In the nomination process of Ursula von der Leyen as Commission President, discussions between political groups and the designated President were held in July 2019 that resembled negotiations about the Commission’s priorities and work programme. Ambitious climate action was one of the central topics of concern to many political groups, most notably the Group of the Greens/European Free Alliance (Greens/ EFA) and the Confederal Group of European United Left/Nordic Green Left (GUE/NGL), who eventually voted against her arguing that ‘We did not hear any concrete proposals, be it on rule of law or on climate’ (Greens/EFA, 2019) and that her plans were ‘amounting to a cynical greenwashing of climate policy’ (GUE/NGL, 2019). During the EP debate that preceded von der Leyen’s election (European Parliament, 2019b), most political groups either mentioned (European People’s Party (EPP), Renew Europe (Renew), European Conservatives and Reformists Group (ECR)) or stressed (Group of the Progressive Alliance of Socialists and Democrats (S&D), Greens/EFA, GUE/NGL) the need for ambitions climate action. Taken together, this push was considered one of the reasons von der Leyen placed plans for a European Green Deal centre stage for her candidacy and subsequent mandate (Farand, 2019). Furthermore, the EP has the right to dismiss the College of Commissioners, which – despite the very demanding legal requirement of a two-thirds majority – gives MEPs considerable

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The European Parliament  57 power. Further ways to influence other EU institutions take place through the EP President’s participation in European Council meetings, regular debates between the EP and the Council’s rotating Presidencies, reporting by the High Representative to the EP, as well as addressing oral and written questions to the Council and Commission. The variety of channels can be used to push for certain climate policies within all EU institutions and at the highest political levels. One example is the speech by then-EP President Sassoli at the December 2020 European Council meeting, which endorsed the EU’s climate neutrality target (European Council, 2020), and in which he stressed the need for the EU to ‘continu[e] to be a pioneer in the fight against climate change’ (Sassoli, 2020). Fourth, the EP has a representative role as the only directly elected EU institution. The principle of representative democracy is enshrined in the Treaty on European Union (TEU), affirming that ‘[c]itizens are directly represented at Union level in the European Parliament’ (Art. 10). In theory, EU citizens elect direct representatives through European elections and determine the composition of the EP and the majorities among the various political groups. In practice, the often-evoked democratic deficit – a notion based, among others, on arguments of overly limited parliamentary powers, the lack of a European demos and low turnout at European elections – to some extent hinders the EP’s representative function (Follesdal & Hix, 2006; Murdoch et al., 2018; Sorace, 2018). Nevertheless, the EP, its political groups and MEPs actively and rhetorically appeal to citizens, in the climate realm as elsewhere. For example, in March 2019, the EP held a general debate on climate change – with Fridays for Future activists present – during which EP Vice-President Pavel Telička suggested that ‘once the next Parliament is sitting we can have a special event here in the Chamber, with young people, on climate change issues’ (European Parliament, 2019c). Furthermore, interest groups representing citizens gain access to EU policymaking primarily through the EP, including environmental and climate non-governmental organizations that actively lobby the EP’s ENVI Committee (Gullberg, 2008; Judge, 1992; Rasmussen, 2012; for more on the evolving role of civil society groups, see Parks et al., Chapter 7 in this volume).

3.

INTERNAL EU CLIMATE POLICY: EP AMBITIONS, POLARIZATION AND FRAGMENTATION

In recent decades, legislative activity and the decision-making process in the EP have evolved mostly around political groups; partisan entities which perform most of the same functions at the EU level that parties in national parliaments do (McElroy & Benoit, 2007). They control the elections of the EP’s President and committee chairpersons, decide who writes which legislative report, who may speak in plenary debates and for how long, etc. (Hix, Noury & Roland, 2007). Despite these similarities with national parliaments, politics in the EP do not have an explicit government–opposition character, since there is no clearly defined relationship between the executive and the legislative branches (Kroh, 2016; Corbett, Jacobs & Shackleton, 2011). Coalitions are instead formed differently from one policy area to another, and at times even from a single proposal to the next (Rose & Borz, 2013). The never-ending bargaining is supported by the growing competition among political groups, which is seen as the consequence of increasing legislative powers of the EP.

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58  Handbook on European Union climate change policy and politics Table 4.1

Arrangement of European Parliament political groups during the ninth EP after Brexit

Political group

Number of members

European People’s Party (EPP)

175

Group of the Progressive Alliance of Socialists and Democrats (S&D)

145

Renew Europe (Renew)

98

Identity and Democracy (ID)

74

Group of the Greens and European Free Alliance (Greens/EFA)

73

European Conservatives and Reformists Group (ECR)

63

Confederal Group of European United Left/Nordic Green Left (GUE/NGL)

39

Non-Affiliated Members (NI)

38

Total

705

Source:

Authors based on VoteWatch (2021).

3.1

Changing Majorities over Time

Formally, at least 23 MEPs are required to form a political group, and at least one quarter of the Member States must be represented. Membership in more than one political group is forbidden. An MEP may be registered as a ‘non-affiliated member’ (NI), which means without affiliation to a political group. However, the EP system incentivizes affiliation, mainly because groups receive funding for collective staff and parliamentary activities, to which non-affiliated MEPs do not have access. The general rule is that the largest political group receives the most important posts, but there still remains an opportunity for small groups to obtain some of them. As Table 4.1 shows, no single political group enjoys the kind of majority necessary for the approval of new legislation. Therefore, in order to adopt amendments to the legislative proposals presented by the Commission, cooperation between political groups is necessary (Burns, 2021). Historically, the EP political system has been dominated by a ‘grand coalition’ of two main groups (the European People’s Party (EPP) and the Progressive Alliance of Socialists and Democrats (S&D)) which seeks support from the smaller parties. During the ninth parliament (which sat from 2019 to 2024), Renew Europe, associated with/aligned with the party of French President Emmanuel Macron, was the smaller party which lent its support to secure adoption of amendments (Bowler & McElroy, 2015, Brack, 2018). The continuous seeking of inter-group consensus is not the only challenge the EP faces. Since political groups incorporate many national delegations from all EU Member States, and defections from group positions based on perceived national interest are relatively common, obtaining intra-group agreement can at times be challenging (Burns, 2021). These so-called geographical cleavages play a role when it comes to climate policy, as national differences lead to a decrease in the cohesion of European groups (Hix et al., 2005). For instance, Renew Europe ended up in the minority on some of the key votes concerning the carbon border adjustment mechanism (CBAM) due to divisions in its own camp (VoteWatch, 2021). Generally, MEPs from Central and Eastern Europe are less supportive of a speedy climate transition, while the opposite can be said regarding MEPs from France and neighbouring countries (Buzogány & Ćetković, 2021). The dominant position of the above-mentioned ‘grand coalition’ is not unshakeable. Both the centre-right EPP and centre-left S&D have been losing parliamentary seats and the dominance of the coalition is slowly decreasing. At the same time, the development of the EP can be

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The European Parliament  59 described as continuing fragmentation and polarization. After the election in May 2019, EPP and S&D each lost almost 20 per cent of their seats, while Eurosceptics and populists have made significant gains and strengthened their positions. This trend, of course, is influencing the development of EU climate policy. MEPs with a Eurosceptic affiliation also tend to adopt climate-sceptical positions. Eurosceptics view the development of EU climate policy as another step towards a single centralized European government, which would exacerbate the perceived existing democratic deficit. Thus, from their point of view, issues such as climate change mitigation should only be handled by sovereign states, singly or through more ad hoc cooperation. They therefore reject policy designed to create any supranational policy on the EU level (Zapletalová & Komínková, 2020). Representative of this tendency is a plenary speech from MEP de Graaff (4 October 2016), in which he argued: ‘[T]here are happy faces in this room because of this so-called historical landmark [the Paris Agreement], and I understand that as the influence of the EU in this agreement is again evident … At the moment that the EU is proudly ratifying this agreement, I see only one bright spot and that is that the Member States are free to fulfil or not fulfil this agreement any way they like, and that is a good thing’ (European Parliament, 2016). Fragmentation and polarization are not the only trends which can be observed during the ninth EP. Based on VoteWatch data, we may claim that coalitions are still mostly formed on an ad-hoc basis and attempts to form a ‘grand coalition’ can still be detected, especially when a united position against Eurosceptics is needed (e.g. when debating the extension of the Emission Trading Scheme to sectors such as building and road transport). Nevertheless, it has become less usual that even the pivotal members of the ‘grand coalition’ (EPP and S&D) end up in the minority. An analysis of the voting behaviour inside the EP also shows that a coalition between progressive forces (S&D, Greens/EFA and the Left) and Renew is most common on climate topics (VoteWatch, 2021). Occasional disagreements between the pivotal centrist forces (EPP and S&D) on climate issues play to the advantage of the smaller forces, especially Emmanuel Macron’s Renew Europe group. Importantly, as Renew tends to be ‘greener’ than its predecessor ALDE (The Alliance of Liberals and Democrats for Europe), the liberal group is much more likely to form alliances with S&D and the Greens than with the EPP and ECR on climate votes. This represents an interesting change in behaviour because during the EP’s eighth term, ALDE was much closer to the right-conservative ECR on climate policy than to the Greens/EFA. Of course, there are instances when Renew sides with EPP. In reaction to the Russian invasion of Ukraine, for example, when a large majority of MEPs called for the legally binding target share for renewables for 2030 in the EU energy mix to rise from 32 per cent to at least 45 per cent, EPP and Renew Europe were both vocal proponents of the increased ambition. Preliminary trends also indicate that the Greens/EFA group is increasingly part of majority-building in the EP, showing that the overall balance of power may be shifting towards the left, as the right-wing fringes become more isolated. The most unsupportive groups are ECR and ID, which tend to be sceptical about the order of priorities set by the European Green Deal (VoteWatch, 2021).

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60  Handbook on European Union climate change policy and politics Table 4.2

Means of EP influence on international climate negotiations

 

Means of EP influence

Internal EU processes

Consent procedure

 

Formal and informal information exchanges with the European Commission and the Council

 

EP resolutions

International climate negotiations

EP participation in the EU delegation to Conferences of the Parties

 

Formal and informal cooperation with non-EU parliamentarians and other stakeholders

Source:

Biedenkopf (2019).

4.

EXTERNAL CLIMATE POLICY: STRIVING FOR MORE INFLUENCE

Alongside its strong role in internal climate policymaking, the EP has also attempted to strengthen its role externally. While the Lisbon Treaty enhanced the EP’s role in ratifying international (climate) agreements through introducing the consent procedure, the only options are to accept or reject the respective treaty in its entirety. Thus it lacks the capacity to shape external climate policy in the way that the OLP allows in internal policy. Nonetheless, the EP uses several formal and informal means to influence EU external climate policy, often based on its power to adopt or reject international agreements. Generally, two means of influencing international negotiations can be differentiated: via internal processes influencing the EU position for the negotiations and via direct EP engagement at the negotiations. Table 4.2 provides an overview of these two means of EP influence and the activities they include. 4.1

External Influence via Internal Processes

As noted above, the consent procedure requires that the EP gives approval before an international treaty or other type of agreement can enter into force. This de facto veto power has given the EP some leverage over the other EU institutions in international climate negotiations. It can create a great incentive for the European Commission and the Council to ensure that the EP’s position is sufficiently included in the agreement’s text. While officially the EP is not involved in the negotiation process and the formulation of the EU position for the negotiations, unofficially, it has some influence since the other EU institutions need the EP’s consent for ratification. Article 36 of the Treaty on European Union (TEU) and Article 218 of the Treaty on the Functioning of the European Union (TFEU) require more than EP consent. They also aim to ensure that the EP is informed about the EU negotiators’ activities. In climate negotiations, the European Commission and the Council Presidency jointly represent the EU and negotiate on its behalf. Yet, those provisions do not foresee any procedure through which the EP could officially feed its position into the negotiations. There is no procedure that would resemble EP amendments as they occur in the OLP for adopting internal climate policy. Nor is there any obligation for the EU negotiators to take into account the EP position during negotiations. Yet, as mentioned above, EU negotiators have an indirect incentive to keep the EP satisfied with the negotiation output, given the consent procedure. Article 218(10) TFEU stipulates that the EP must ‘immediately and fully [be] informed at all stages of the procedure’.

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The European Parliament  61 Timely and comprehensive information is a prerequisite for enabling the EP to react to recent developments and make its position heard. The EP has had an agreement with the European Commission on the provision of information by the latter to the EP since 1995. In 2010 – following the entry into force of the Lisbon Treaty – the EP and the Commission adopted a revised Framework Agreement on information provision to operationalize Article 218 in concrete rules and procedures. It specifies how information is communicated, what kind of information and when (EP & Commission, 2010). Yet it is not only the Commission but also the Council that negotiates on the EU’s behalf in climate negotiations (Delreux, 2018; Vogler, Chapter 10 in this volume). This has implications for implementing Article 218 and the EP concluded a separate interinstitutional agreement with the Council in 2011. Its scope is, however, limited to how confidential information should be handled and only grants access to confidential Council documents to certain MEPs such as rapporteurs and committee chairs. It does not detail what kind of information should be shared with the EP. Both the above-mentioned agreements on information provision are unidirectional from the Commission/Council to the EP but there are no official and formalized procedures in the other direction, either in the form of amendments or otherwise. Moreover, the applicability of Art. 218(10) TFEU could be questioned in cases in which international negotiations do not aim to conclude a new international treaty such as the United Nations Framework Convention on Climate Change (UNFCCC) negotiations since the adoption of the Paris Agreement. The EP uses parliamentary resolutions to officially voice its views on international negotiations, such as under the UNFCCC, to the other EU institutions and the wider public. Trying to harness its implicit power derived from the consent procedure, the EP adopts a resolution and organizes a plenary debate prior to all UNFCCC Conferences of the Parties (COPs). The European Commissioner for Climate Action and the Minister in charge of climate change from the Member State that holds the Council Presidency are generally invited to parliament prior to COPs. For example, then-Commissioner Miguel Arias Cañete spoke to MEPs three times in 2015, prior to the key COP in Paris. MEPs actively use the EP plenary sessions in which the pre-COP resolutions are adopted, as well as the sessions following each UNFCCC summit, to give voice to the EP’s vision on the climate negotiations. Common arguments in such plenary debates are calls for the EU to play an international leadership role (e.g. ‘We have to use this conference to show both the EU is ready and willing to take the lead globally’, Christel Schaldemose, S&D, 3 October 2017), calls to lead with ambitious policy commitments (e.g. ‘The bottom line is that we have to make a considerable effort so that we can maintain our resolve to be the world leaders on climate change’, Corinne Lepage, ALDE, 20 January 2010), as well as calls for unity among EU Member States (e.g. ‘Europe is not as united as we are claiming here … there are some Member States that are not on track and we need to set them on the right track’, Karl-Heinz Florenz, EPP, 21 November 2012). While few MEPs – most notably from the right end of the political spectrum (Forchtner, 2019; Lockwood, 2018) – question these ambitious foreign climate policy positions (e.g. ‘climate-obsessive politicians have set various objectives towards establishing targets that would involve the final deindustrialisation of Europe’, Julia Reid, EFDD, 3 October 2017), over the past decade (2009–2019), the majority of MEPs voiced relatively ambitious positions (Petri & Biedenkopf, 2021).

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62  Handbook on European Union climate change policy and politics 4.2

Influence Through Direct Engagement

Individual MEPs also try to influence the UNFCCC negotiations more directly by joining the EU delegation to the annual COPs, and by cooperating with external parliamentarians and other stakeholders. Several MEPs and EP staff join the official EU delegation as observers. However, they are not part of the negotiation team and do not have access to closed meetings. MEPs cannot join the internal EU coordination meetings during which Member State delegates, Council and Commission officials exchange views and discuss their strategy. MEPs have regularly – but so far unsuccessfully – repeated their request to be admitted to the coordination meetings. Instead, they are briefed separately by a Commission or a Council representative. MEPs have attended all COPs – apart from COP2 in 1996 – in continuously growing numbers up until COP15 in 2009, which was attended by 72 MEPs. After this, the EP significantly curtailed the number of MEPs at COPs (see Figure 4.1). Although the number has been reduced, the EP participates in COPs with a sizeable group of representatives. Some MEPs have participated in several COPs and, through this, developed expertise and a sizable network. They can report back to the rest of the EP about their evaluation of the latest developments in international climate negotiations. At the COPs, they engage with other parliamentarians and other stakeholders from non-EU countries. Over time, MEPs have increasingly coordinated within the group of EP representatives. EP staff organize bilateral meetings between MEPs and non-EU actors, but individual MEPs also conduct their own meetings (Biedenkopf, 2019). Examples of joint meetings at COP24 include meetings with the Head of Delegation of the

Source:

Authors based on UNFCCC participants lists; updated version of Biedenkopf (2019).

Figure 4.1

Number of European Parliament delegates at UNFCCC COPs

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The European Parliament  63 Russian Federation, South African Members of Parliament, Polish COP24 President Michał Kurtyka, and the Brazilian Minister of the Environment (European Parliament, 2019d). Ultimately, with the structure of the Paris Agreement, the lines between internal and external climate policy have been blurred. One crucial building block of the Paris Agreement is the requirement for Nationally Determined Contributions (NDCs) that every Party to the Agreement must submit in five-year intervals. The NDCs specify what a certain party will contribute to achieving the Paris Agreement’s (mitigation) goals. As a co-legislator with the Council on internal climate policy, the EP has significant influence on the EU’s NDC. This is, however, somewhat tempered by the tendency since about 2007/2008, for the EU’s greenhouse gas (GHGs) emission reduction targets to be decided at the level of the European Council (see Wurzel et al., Chapter 3 in this volume), leaving less scope for influence for the EP. The broader set of ambitious EU climate policies – beyond setting the targets – does, however, also play a role in international politics, providing the EU credibility by showing how it practices what it preaches.

5. CONCLUSIONS The European Parliament is sometimes labelled as a ‘winner’ in European integration and a major beneficiary of treaty change. While it started life as an unelected Common Assembly to the ECSC with limited powers, it has become a key actor in the EU’s institutional framework and an equal co-legislator with the Council, including in the realm of climate policy. Concerning EU environmental policy, the EP has been described as the ‘greenest’ and most ambitious EU institution. This description can also be used to define its position on climate policy. However, previous research has found that EP amendments have become less radical over time (Burns, 2019; Burns et al., 2013). Furthermore, ‘recent changes, including enlargement and the rise of populist parties, have challenged [the] reputation’ of the EP as a climate or environmental champion (Burns, 2021, p. 129). Yet, through its variety of informal and formal instruments to shape internal and external EU climate policies (see section 2.2), this chapter has highlighted how the EP continues to exert an influence on ambitious EU climate policy. The internal dynamics within the EP are significantly shaped by a set of supranational political groups, that in most instances, apart from small and mostly hard Eurosceptic political groups, behave cohesively, including on climate policy. The assumption that the EP approves legislation through the largest possible majority to show unity, however, is not fully applicable when it comes to climate policy and suggests that seeking support for legislative approval in climate policy is more difficult in the EP than generally expected. With the growing fragmentation and polarization evident in the EP, the increasing importance of ideology can also be detected within EP climate policy. The EP’s mounting climate ambitions are also evident in the EU’s external climate policy. Although the Lisbon Treaty has not granted the Parliament the same level of powers to shape the external dimension of climate policy as internal policy through the OLP, the EP can use internal processes such as the consent procedure, formal and informal exchanges with the Commission and the Council, and EP resolutions to influence the EU’s position at international negotiations. Moreover, the EP supports its position via direct participation of the EU delegation at Conferences of the Parties and cooperation with non-EU parliamentarians and

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64  Handbook on European Union climate change policy and politics other stakeholders. Such direct involvement gives the EP another channel in expressing and supporting its vision of climate change mitigation. In sum, the EP’s roles in EU climate policymaking are manifold and, despite changing majorities and the rising role of ideologies and political cleavages, the EP continues to be a strong internal actor with high external ambitions in climate policies. Visibly, through its 2019 announcement of a ‘climate emergency’, its continued push for increasing ambitions in climate legislation (such as the EU Climate Law), or its steady participation in the UNFCCC climate negotiations, the EP has built itself a place in EU politics to exert positive influence on the EU’s climate agenda.

NOTE 1.

Trilogues may be organized at any stage of the legislative procedure (first, second or third reading). Any provisional agreement reached in trilogues then has to be approved by the formal procedures applicable within Parliament and the Council. In Parliament, the text of the provisional agreement has to be approved by a vote in committee, after which it is confirmed in plenary (European Parliament, undated).

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66  Handbook on European Union climate change policy and politics Greens/EFA. (2019). Greens/EFA to vote against Ursula von der Leyen as Commission President. Press Release, 10 July 2019. Retrieved from www​.greens​-efa​.eu/​en/​article/​press/​greens​-efa​-to​-vote​-against​ -ursula​-von​-der​-leyen​-as​-commission​-president (Accessed: 5 September 2022). GUE/NGL. (2019). Von der Leyen scrapes through as Left vows to resist her status quo policies. Press release, 16 July 2019. Retrieved from https://​left​.eu/​von​-der​-leyen​-scrapes​-through​-as​-left​-vows​-to​ -resist​-her​-status​-quo​-policies/​ (Accessed: 5 September 2022). Gullberg, A. T. (2008). Lobbying friends and foes in climate policy: the case of business and environmental interest groups in the European Union. Energy Policy, 36 (8): 2964–2972. Doi: 10.1016/j. enpol.2008.04.016. Hix, S., A. Noury, & G. Roland. (2005). Power to the parties: cohesion and competition in the European parliament 1979–2001. British Journal of Political Science, 35 (2): 209–234. Doi: 10.1017/ S0007123405000128. Hix, S., A. Noury, & G. Roland. (2007). Democratic Politics in the European Parliament. Cambridge: Cambridge University Press. Hix, S., T. Raunio, & R. Scully. (2003). Fifty Years On: Research on the European Parliament. Journal of Common Market Studies, 41 (2): 191–202. Doi: 10.1111/1468-5965.00418. Huber, R. A., T. Maltby, K. Szulecki, & S. Ćetković. (2021). Is populism a challenge to European energy and climate policy? Empirical evidence across varieties of populism. Journal of European Public Policy, 28 (7): 998–1017. Doi: 10.1080/13501763.2021.1918214. Hurka, S. (2013). Changing the output: the logic of amendment success in the European Parliament’s ENVI Committee. European Union Politics, 14 (2): 273–296. Doi: 10.1177/1465116512471915. Judge, D. (1992). ‘Predestined to save the earth’: the environment committee of the European Parliament. Environmental Politics, 1 (4): 186–212. Doi: 10.1080/09644019208414051. Kaeding, M. (2004). Rapporteurship Allocation in the European Parliament. Information or Distribution?. European Union Politics, 5 (3): 353–371. Doi: 10.1177/1465116504045157. Kroh, C. (2016). Stability amid change: Impact of the 2014 European Parliament elections at the European level. Electoral Studies, 36: 204–209. Doi: 10.1016/j.electstud.2014.10.004. Lockwood, M. (2018). Right-wing populism and the climate change agenda: exploring the linkages. Environmental Politics, 27 (4): 712–732. Doi: 10.1080/09644016.2018.1458411. McElroy, G., & K. Benoit. (2007). Party Groups and Policy Positions in the European Parliament. Party Politics, 13 (1): 5–28. doi: 10.1177/1354068806068593. Murdoch, Z., S. Connolly, & H. Kassim. (2018). Administrative legitimacy and the democratic deficit of the European Union. Journal of European Public Policy, 25 (3): 389-408. Doi: 10.1080/13501763.2016.1268193. Nugent, N. (2017). The Government and Politics of the European Union (Eighth Edition ed.): Red Globe Press. Petri, F. & K. Biedenkopf. (2021). Weathering growing polarisation? The European Parliament and EU foreign climate policy ambitions. Journal of European Public Policy, 28 (7): 1057–1075. Doi:10.108 0/13501763.2021.1918216. Rasmussen, M. K. (2012). Is the European Parliament still a policy champion for environmental interests? Interest Groups & Advocacy, 1 (2): 239–259. Doi:10.1057/iga.2012.12. Raunio, T. (2012). The European Parliament. In E. Jones, A. Menon, & S. Weatherill (Eds.), The Oxford Handbook of the European Union. Oxford: Oxford University Press, pp. 365–379. Ripoll Servent, A. (2018). The European Parliament. Houndmills: Palgrave Macmillan. Rose, R., & G. Borz. (2013). Aggregation and Representation in European Parliament Party Groups. West European Politics. 36 (3): 474–497. doi: 10.1080/01402382.2012.753706. Sassoli, D. (2020). Sassoli: Today it is time to conclude for the good of the citizens. Speech at European Council Meeting, 20 December 2020. Retrieved from www​.europarl​.europa​.eu/​former​_ep​_presidents/​ president​-sassoli/​en/​newsroom/​sassoli​-today​-it​-is​-time​-to​-conclude​-for​-the​-good​-of​-the​-citizens​.html (Accessed: 5 September 2022). Schmidt, S., & W.J. Schünemann. (2014). Europäische Union (Second Edition ed.). Baden-Baden: Nomos. Shackleton, M. (2012). The European Parliament. In J. Peterson & M. Shackleton (Eds.), The Institutions of the European Union. Oxford: Oxford University Press, pp. 124–147.

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5. The European Investment Bank: the EU’s climate bank? Daniel Mertens and Matthias Thiemann

1. INTRODUCTION For a long time, EU integration scholars and the broader public alike have rarely taken notice of an institution that had already been enshrined in the Treaty of Rome and today is nothing less than the largest multilateral lending institution globally: The European Investment Bank (EIB). While ‘hidden in the woods of Luxembourg’ (Financial Times 2019a), opposite the European Court of Justice, the EIB’s evolution into a key vehicle for addressing the financial and economic crisis in the 2010s has moved it to the fore of EU policymaking. Moreover, at the end of that decade, the EIB has become a central actor in the EU’s climate policy landscape. It did so, first, by announcing in November 2019 its intention to transform itself into a ‘climate bank’ proper through aligning its financing operations with the goals of the Paris Agreement and phasing out lending for fossil fuel projects; second, by assuming the role as the main implementing partner in the European Green Deal’s investment pillar, the Sustainable Europe Investment Plan. Underpinning this limelight appearance of the EIB in the climate policy landscape is the growing recognition that the climate and ecological transition requires enormous amounts of money to finance, among other things, renewable energy projects, low-carbon transport, technological innovation and the readjustment of production and consumption processes to a circular economy. The European Commission (EC) has acted on the estimation that a net-zero economy by 2050 requires between €175 billion and €290 billion of additional investments annually (European Commission 2018), but since the cost of non-action increases over time and emissions-reduction targets are adjusted, in 2021 the EC and the EIB updated that estimate to €350 billion annually (Von der Leyen and Hoyer 2021). For comparison, the European budget for 2020 was worth €155 billion in actual spending. Hence, in its strategy for ‘a clean planet for all’, the Commission stated that the ‘financial sector has a key role to play in supporting the transition towards net-zero emissions as it can reorient capital flows and investments towards the necessary solutions while improving efficiency of production processes and reducing the cost of financing’ (European Commission 2018: 18). In other words, climate politics in the EU, as much as globally, have come to entail the search for ‘sustainable’ and ‘green finance’, against which the EIB’s climate bank proposal and investment policies have to be read. This chapter seeks to assess the EIB’s role in the European climate policy landscape and its capacity to live up to its declared ambitions in the field of green finance. It will weigh the option of whether the climate bank agenda is best understood as one of a policy entrepreneur committed to ecological transformation or whether it is de facto a form of ‘organized hypocrisy’ (Brunsson 2002) that mainly seeks to gain legitimacy. To achieve this task, the chapter will first present the EIB’s organizational history, tracing its various reinventions over the 68 Daniel Mertens and Matthias Thiemann - 9781789906981 Downloaded from PubFactory at 08/15/2023 12:44:35AM via free access

The European Investment Bank: the EU’s climate bank?  69 course of the decades, delineating its tasks and position in European policymaking. It will then briefly introduce the pillars of green finance and the role of public financial institutions such as the EIB in it, before exploring the EIB’s climate agenda and its prior activities in terms of climate action. Finally, the chapter will assess the recent changes undertaken by the EIB in terms of its institutional environment and organizational interest.

2.

INTRODUCING THE EUROPEAN INVESTMENT BANK

The European Investment Bank is a special animal among the European institutions. While a body of the EU polity, set up by the Treaty of Rome in 1957 with the task of serving ‘the balanced and steady development of the common market in the interest of the Community’ (Art. 130), it is simultaneously a bank, traditionally granting loans and giving guarantees, but also engaging in a number of other operations to support European integration by financial means (Hachez and Wouters 2012). The EIB is owned by the (post-Brexit) 27 EU Member States who all have subscribed capital (the bank’s equity) according to their economic weight: Germany, France, and Italy each hold a share of 18.8 per cent while Estonia and Malta hold less than 0.1 per cent. This share both reflects the risk that Member States assume for backing up the EIB’s operations as well as the voting power they can exert in the top decision-making bodies: first, in the Board of Governors, in which (usually) finance ministers decide on the general credit policy of the bank and potential capital increases, and, second, the Board of Directors, in which Member State delegates and a representative of the Commission vote on specific financial operations. Over time, the bank has undergone a number of transformations, which are worth considering when assessing its Climate Bank Roadmap1 and earlier climate finance operations. In the first decades of its existence the EIB’s primary role was to support the development of the peripheral regions and to foster European integration by providing capital for supporting economic development and integration. Until the 1990s, the EIB was primarily a Member State bank, with Member States guaranteeing its creditworthiness in return for the cheap financing of large infrastructure projects, such as the Eurotunnel in the 1980s (Robinson 2009). While its underlying business model still operates on preferential access to capital markets, enabled by its pooled sovereign backing (i.e. it can borrow funds for less cost than most of its shareholders), the EIB has strategically oriented itself towards the European Commission and the EU budget in the 1990s and 2000s. Since then, the EIB has come to define itself as an instrument not only of Member State interests but also of policy programmes of the European Commission. In close cooperation with the Commission, the bank became the majority shareholder of the European Investment Fund, a specialized risk capital provider established by EU Member States in 1994. Today, the EIB acts both as a counter-cyclical instrument to relaunch a moribund European economy and an intermediary for European funds by designing and administering financial instruments that blend public and private funds to achieve specific policy goals such as innovation or SME finance. The pinnacle of this mutually beneficial relationship was the launch of the European Fund for Strategic Investment (EFSI) in 2015, the key pillar of the Juncker plan. This plan used the EU budget as a guarantee framework, by which it sought to leverage public funds through capital markets and crowd-in private investors, finally aiming to mobilize €500 billion over five years (Mertens and Thiemann 2019).

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70  Handbook on European Union climate change policy and politics This repositioning as a policy bank (Kavvadia 2018), which latched onto the EU Commission’s desire ‘to do more with less’ (i.e. shifting European funds from grants to loans), turned out to be immensely profitable for the EIB as a whole, allowing not only for an increase in legitimacy but also securing a steady income for the organization that permitted expansion and professionalization: whereas in 1999 the EIB’s balance sheet stood at €200 billion, it had grown to over €550 billion 20 years later. In the 2010s, the EIB on average lent out almost €70 billion annually. But while the bank is a non-profit making institution de jure (now Art. 309 TFEU), it has established a surplus culture over the decades. The EIB prides itself on having ‘recorded surpluses in its statutory accounts in each year of its existence’ and having established ‘conservative lending policies’ (EIB 2020a). In other words, this history of strong institutional growth underpinning the EIB’s status today as the largest multilateral lender globally has come with an entrenchment of risk aversion that seeks to secure the organization’s survival in terms of bankability. Thus, European integration scholarship has emphasized two mutually compatible, but potentially contentious traits of the EIB. The first concerns the bank’s position as a policy entrepreneur, able to mobilize institutional capacities and expertise in order to address prevailing economic or social – or environmental – challenges. It is not simply a tool or a rule-taking institution, but provides resources in policy windows, which it co-creates with other political actors and which it frames in line with its financial preferences. The second highlights the bank’s position as a resource-dependent organization that seeks to secure its survival and legitimacy by adjusting its business strategies towards these ends (Kavvadia 2018; Liebe and Howarth 2020; Mertens and Thiemann 2019; 2022). Over the course of the last decade, these traits have set in motion institutional developments that led to the present positioning of the EIB as the EU’s climate bank. As much as the EIB offered a set of financial tools to address the European crisis in the 2010s, it also tailored its profile to the needs of the incoming Juncker presidency in 2014. This, in turn, enabled a set of institutional relations and financial practices on which the EIB could build in 2019, when ‘climate’ appeared at the core of both the French government and the incoming Von der Leyen presidency, and the bank announced its full-fledged transformation into a ‘climate bank’ – even though it had already earlier proclaimed some climate goals. Understanding what this transformation entails and how it relates to the organizational history depicted in this section, requires a brief introduction to the phenomenon of green finance and how public financial institutions are conventionally meant to contribute to ecological transition.

3.

GREEN FINANCE AND THE ROLE OF PUBLIC FINANCIAL INSTITUTIONS

The idea of green finance, shorthand for the use of private as well as public financial flows and institutions to foster sustainable development, has been in the making for at least 40 years (Chiapello 2020). While it has no commonly agreed and universal definition (Berrou et al. 2019: 31), predominant approaches understand it as (financial) market mechanisms aimed at mitigation and risk alleviation against climate change and environmental degradation. More specifically, ‘climate finance’ has been referred to as ‘local, national or transnational financing – drawn from public, private and alternative sources of financing – that seeks to support mitigation and adaptation actions that will address climate change’ (UNFCCC 2019, cited

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The European Investment Bank: the EU’s climate bank?  71 in Bracking and Leffel 2021). Such definitional efforts reflect an emergent understanding of harnessing the financial system to the goal of ecological transition, which is as much driven by (self-imposed) limits on public spending given the size of the challenge as by the interest of (private) financial actors to regain legitimacy and make sustainable investments profitable after the global financial system collapsed in 2008 (Chiapello 2020). While the caveat of this discourse is that the climate crisis is mostly framed as a financial problem, not so much a problem of dominant modes of production, exchange, and consumption, it highlights the multiple ways in which finance and climate policy interact. In the status quo, finance – including central banks and multilateral lenders – is contributing to environmental degradation because it supports and enables fossil fuel-based and generally resource-intensive industrial patterns without pricing in the so-called externalities of their funding or the climate risks associated with such investments, further endangering financial stability (Bigger and Carton 2020; Dafermos et al. 2020).2 This means, reorienting these financial flows and adding further resources from financial institutions, corporate actors and households with incentives other than short-term capital gains is central to rebuilding low-carbon economies. Although the shift towards green finance is often described as industry-led, and therefore prone to dangers of ‘greenwashing’ and capture (see Eckert, Chapter 6 in this volume), it also entails a critical role for public financial institutions such as the EIB. In fact, development finance institutions such as the multilateral World Bank or the German KfW have long been vocal on anchoring climate finance and sustainable development goals in their (market-based) financial operations (Bracking and Leffel 2021; Chiapello 2020; Clapp and Dauvergne 2011). Here, four elements are of particular importance to understand the EIB’s operations with regard to EU climate policy (see e.g. European Commission 2018). First, greening the loan portfolio and divesting from carbon-intensive sectors are key aspects of reorienting finance towards climate goals. This requires the integration of climate issues into lending decisions much more systematically and, in particular, the setting of targets with regard to the carbon impact of a funded project or the positive or negative environmental impact of the sector/firm financed. In general, these activities can be seen as applicable to every financial actor, but carry extra weight if public financial institutions systematically follow this agenda. This is because: (a) public institutions such as the EIB can be benchmarking institutions or anchor investors in specific market segments and thereby attract more financial actors to follow its practices; (b) public institutions operate on public money, state guarantees and public ownership, and, hence, should display a stronger commitment to the environmental norms and agreements supported by their sovereigns while being subject to democratic control; and (c) public investment banks are usually considered providers of long-term capital, which is arguably better equipped for the financing needs of the transition. Second, and relatedly, public financial institutions have taken on the task to ‘blend’ private and public financial sources for climate action. Taken from the context of development finance, it rests on the diagnosis that public funds will not suffice to address climate change and, hence, private capital must be mobilized through a set of incentives such as risk-sharing arrangements. Operating on the assessment that some investments may be beneficial from an ecological (long-term) point of view, but not from the perspective of (short-term) profit-seeking or risk-averse investors, public financial institutions underwrite risk and debt, serve as anchor investors and first-loss taking co-financiers to crowd-in private investors. In other words, both national and multilateral development banks, including the EIB, seek to

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72  Handbook on European Union climate change policy and politics make ‘green’ investments attractive for private financial actors by de-risking some of the asset classes and eliminating barriers to investment (Gabor 2020; Mertens and Thiemann 2018). Third, ‘green bonds’ are another financial tool by which private capital can be channelled towards ecologically beneficial projects and key to the green finance paradigm (see Box 5.1). Multilateral development banks, especially the EIB, have been pioneering in issuing bonds whose proceeds are earmarked for environmental projects that fulfil certain eligibility criteria. Though a small market segment, green bonds have seen rapid growth over the past decade, now extending to both governments and corporates. However, observers have also stressed risks relating to ‘greenwashing’, i.e. that the bonds’ proceeds do not finance genuinely ‘green’ projects, especially due to weaknesses in standardization, disclosure, and transparency (Berensmann et al. 2018: 334; Chiapello 2020).

BOX 5.1 GREEN BONDS One means through which governments and corporations, including banks, can (re)finance their expenses is bonds. When a corporation issues a bond, it basically borrows money from the buyer of that bond – usually an investor – in exchange for a binding promise to repay the buyer on the terms fixed by the bond. For instance, a corporation may issue a bond that states repayment after five years at a fixed interest rate of 6 per cent per year. There can be very different forms of bonds, depending on the terms they prescribe. Green bonds, as the Bank for International Settlements (BIS) authoritatively defines, are bonds ‘whose proceeds are used to finance new or existing eligible green projects, e.g. projects to combat pollution, climate change or the depletion of biodiversity and natural resources’ (Fender et al. 2019: 54). The bond issuers – or borrowers – must declare the types of green projects for which the funds obtained will be used. While green bonds are the biggest part of so-called sustainable investments, judged by environment, social and governance (ESG) standards, they have no universal legal definition and can in principle be self-labelled ‘green’ by any issuer. That is why their phenomenal growth over the past two decades has also led to concerns over their authenticity, giving further rise to reporting standard initiatives and a flourishing rating industry for ESG criteria (Financial Times 2021). This links to the fourth and final element, in which public financial institutions have been key contributors to developing the regulatory framework for green finance. Most crucially, this concerns agreements over what counts as ‘green’ or ‘sustainable’ when earmarking the proceeds from green bonds or lending to a specific sector or project. Here, multilateral development banks, including the EIB, have cooperated with the International Development Finance Club to construct joint principles for tracking climate finance; work that also informed the EU’s regulation on a ‘framework to facilitate sustainable investment’, known as the EU sustainable finance (or ‘green’) taxonomy (Berrou et al. 2019; see Eckert, Chapter 6 in this volume). It is against this background of green finance that we can turn to the EIB’s climate bank agenda.

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The European Investment Bank: the EU’s climate bank?  73

4.

THE EIB AS THE EU’S CLIMATE BANK

This section now turns to the question of what the EIB means when it proclaims itself the EU’s climate bank, and broadly assesses its record. As noted above, the EIB mainly operates through lending, borrowing on capital markets, steering and de-risking private funds, and advising (Marini 2019). In this regard, the bank’s announcement in 2019 of its intention to become the EU’s climate bank should not only be interpreted as a radical break with its history, but also as layering on top of, as well as converting, its existent practices. Already throughout the 1990s, sustainability, environmental protection, biodiversity and renewable energy received more attention in the EIB’s annual reports, both in the context of the Kyoto Protocol and EU-level environmental policy evolution. At the beginning of the new millennium, the bank also began to set up specific financing initiatives tackling GHG emissions, such as the Climate Change Financing Facility in 2004, accompanying the introduction of the EU Emissions Trading System (EU ETS). The rise of ‘green finance’ became particularly prominent in the institution when the EIB became the first issuer of a green bond (Climate Awareness Bond) in 2007 to fund climate action. In fact, by issuing green bonds worth €38.6 billion between 2007 and 2020, the EIB has become the main institutional issuer of these bonds globally, even though they remain a fragment of its overall bond issuance (EIB 2020c). However, while climate change considerations were said to be ‘increasingly being mainstreamed into the EIB’s operations’ (EIB 2009), to our knowledge there is no systematic analysis of the operations conducted under a number of new ‘green’ labels. Also, the financial and economic crisis partly subdued attention to climate goals, before the EIB began to adopt a more visible and targeted stance with its Climate Statement in 2013 and its Climate Strategy in 2015, subtitled ‘mobilising finance for the transition to a low-carbon and climate-resilient economy’ (EIB 2015). Most importantly, during the 2010s, the bank repeatedly committed to achieving lending targets for climate mitigation while stating that financing for adaptation remained constant at a meagre 1–2 per cent of annual lending in the decade (EIB 2020b). This imbalance has given rise to concerns, pushing the EIB to announce a strategy for accelerating adaptation finance at COP26 in Glasgow. While the share of EIB adaptation finance rose to 3.7 per cent of lending in 2020, it is supposed to reach 7.5 per cent by 2025 (EIB 2021).3 Again, lending is the traditional and principle activity of the EIB. In greening its lending portfolio, the EIB can built its efforts on the gradual shift in lending priorities which occurred over recent decades. The EIB had adjusted its lending targets successively from 20 per cent of total lending going to climate action in 2010 and 25 per cent at the beginning of the 2010s to 35 per cent in the mid-2010s (Marini 2020: 139f). Figure 5.1 below shows that the EIB has been on track reaching its targets (grey line), but that despite these announcements, nominal lending for climate action was largely stagnant over the 2010s, with a hike only appearing in 2020. At the same time, climate action in relative terms began to rise significantly after 2016. The reason for the change in lending priorities in 2020 has been the announcement of the EIB’s shift to become the EU’s climate bank in 2019, linked to the prominent climate agenda of then president-elect Ursula von der Leyen, the growing ‘Fridays for Future’ movement (see Parks et al., Chapter 7 in this volume) as well as the promise of French President Macron during the European election campaign of 2019 to create a EU climate bank. In this political context, the EIB offered itself as a central tool in these policy endeavours, much like it had done with the Juncker Commission’s Investment Plan for Europe.

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74  Handbook on European Union climate change policy and politics

Figure 5.1

Climate action lending at the European Investment Bank, 2009–2020

It is hence not surprising to find the EIB to be a main implementing partner of the European Green Deal and backbone of the Sustainable Europe Investment Plan, which seeks to mobilize €1 trillion by 2030 from public and private sources (see also Quitzow et al., Chapter 24 in this volume). This includes the Just Transition Fund, set up to compensate for losses associated with the move from coal-fired energy production especially for countries in the East of the EU (target envelope of €143 billion), as well as those – partly overlapping – elements of InvestEU, the successor to the Juncker Plan, which focus on the green transition (target envelope of €279 billion). In these two elements, the EIB takes up the role of intermediator and lead investor (the EIB is implementing 75 per cent of the EU guarantee). Much in the same way as during the Juncker Plan, these plans are based on EU budgetary guarantees, which the EIB uses ‘to invest in more and higher-risk projects, crowding in private investors’ (European Commission 2020b). This goal of mobilizing €1 trillion through the Sustainable Europe Investment Plan is complemented by another trillion of mobilized investment through genuine EIB operations during the 2020s, a pledge made in the context of the publication of the EIB’s Climate Bank Roadmap (EIB 2020b). In it, the EIB pledged that it ‘will increase its level of support to climate action and environmental sustainability to exceed 50 per cent of its overall lending activity by 2025 and beyond, and thus help to leverage €1 trillion of investment by the EIB Group over the critical decade ahead’ (EIB 2020b: iv). It furthermore pledged to ‘align all financing with the goals of the Paris Agreement by the end of 2020 … to ensure that all its activities do no significant harm to the low-carbon and climate resilient goals of the Agreement’ (EIB 2020: iv). Until 2025, the EIB hence plans on investing €30 to 35 billion a year directly in climate action, with the other half of its lending operations in line with sustainable development goals from an environmental point of view, hence guaranteeing that the climate action part is not undone by the other half of lending. To achieve the trillion, the EIB assumes that based on its co-financing agreements, it is mobilizing €100 billion annually.

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The European Investment Bank: the EU’s climate bank?  75 In this regard, the EIB climate bank model operates basically on the tools of blended finance, ‘leveraging the financial system to green the European economy’. This means that achieving the Green Deal and Climate Bank trillions very much hinges on successful multi-level and public–private cooperation and the consent of financial investors. While some schemes such as Private Finance for Energy Efficiency (PF4EE) or the Joint Initiative on Circular Economy (JICE) have exemplified how the EIB can combine lending operations, risk-sharing arrangements and technical advice for furthering climate action (Mazzucato and Mikheeva 2020), critics have bemoaned the limits of ‘financial alchemy’ and the ‘window dressing’ of such high-powered numbers (Claeys et al. 2020; Counter Balance 2020). After its 2019 climate bank announcement, the EIB indeed received plenty of criticism for its continued misaligned investment practices, especially regarding the continued funding of carbon-intensive industrial agriculture, airport expansions and the construction of new conventional energy plants including gas (Counter Balance 2020). In the negotiations of the Climate Bank Road Map 2021–2025, critical discussions focused exactly on energy and transport sectors, which are the largest sources of GHG emissions in the EU. These sectors, which are also at the centre of the ‘Fit for 55’ package passed by the EU in July 2021 to achieve ‘climate neutrality’ by 2050, have been at the heart of EIB infrastructure finance for decades and, through its impact on integration and development, partly its raison d’être. At the same time, the EIB came under pressure from different interest groups and politicians over the competitiveness of the EU or individual Member States, opposing concerns over the environmental impact of such projects (Financial Times 2019b). The adoption of the Road Map was therefore not a purely technical exercise, but also a political compromise that indeed underlines the transformative potential of the climate bank proposal as opposed to the more gradual shifts of the EIB portfolio over recent decades. This political character, however, also led to the absence of clearly defined lending targets and decarbonization conditionality, and instead rested on a promise of alignment with the EU sustainable finance (green) taxonomy4 and the Paris objectives based on economic tests and the shadow cost of carbon (EIB 2020b). Table 5.1 shows the final compromises as adopted by the Board of Governors. This overview based on the Roadmap certainly supports the EIB’s self-image (an aspiration) as the world’s largest multilateral financier of climate action. It shapes significant aspects of the green finance agenda with a number of tools and operations that are being adjusted towards the ecological transition – though largely allocated within the European Union.5 But it also specifies the strong phase-out announcements made by the EIB for fossil fuels, especially gas, and airport financing. While withdrawal from such investments by 2022 has been approved after intense Member State negotiations, loopholes remain. Therefore, civil society organizations, whose advocacy has played a significant part in shaping the Climate Bank Roadmap, remain concerned. For example, the NGO Counter Balance (2020: 9) criticizes the EIB for lacking a holistic approach to its lending business, as its main focus is ‘on the individual projects and operations it finances while paying much less attention to the track record, profile and strategy of its clients’. This short-termism and focus on individual projects can become particularly dangerous if, as the think tank E3G suggests (2020: 49), the EIB itself might persistently underestimate ‘the climate-related financial risks associated with a transition to climate neutrality by 2050’.6 Despite these criticisms regarding its risk and portfolio management, the EIB remains confident that it is capable of withdrawing from existing commitments in dirty assets without endangering its profitability. How far it will effectively be able to do so and how it and its shareholders will decide whether ecological transition goals run counter to

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76  Handbook on European Union climate change policy and politics Table 5.1

Main sectoral measures in the Climate Bank Roadmap 2021–2025

Sector

Measures

Energy

Based on 2019 Energy Lending Policy ● support for power generation technologies under an emissions threshold of 250g CO2 per kilowatt-hour ● phasing out support to large-scale heat production based on unabated oil, natural gas, coal or peat, upstream oil and gas production, and traditional gas infrastructure

Transport

Based on sector-specific decarbonization pathways ● public transport considered largely electrified, but thresholds for vehicles emitting less than 50g CO2 per passenger kilometre until 2025 potentially permit support for diesel buses and trains where there are conditions of high ridership (likely for some cohesion regions) ● in aviation, support shall be withdrawn for airport capacity expansions and conventionally fuelled aircraft, but not for improving existing airport capacity through safety and security projects, rationalization and explicit decarbonization measures ● project-based assessment for carbon impact of road infrastructure projects; continued support for TEN-T road network; support for modal shift, efficiency improvements, increased electrification, and increased use of alternative fuels in the road sector; ‘Do No Significant Harm’ criteria for cars, vans and trucks in SME finance

Industry (research,

Based on addressing market failures associated with innovation, environmental and carbon externalities

development and

● no support for new capacity in energy-intensive industry based on traditional high-carbon processes without abatement technologies

innovation)

● support for existing plants based on energy efficiency considerations, circular economy or pollution reduction Buildings

Based on cross-cutting policy goals and sectors ● support spanning urban regeneration programmes, infrastructure (public buildings), innovation and SMEs ● alignment with Energy Performance of Buildings Directive, no support for buildings associated with fossil fuels

Bio-Economy

Based on taxonomy approach to secure agricultural and forestry land to store carbon and avoid emissions

(agriculture and

● support for meat and dairy industries adopting sustainable animal rearing methods that contribute to

land-use)

improved GHG efficiency ● support of Farm-to-Fork strategy of the EGD ● no longer support of export-orientated agro-business models that focus on long-distance air transport for commercialization

Source:

EIB (2020, chapter 4); own compilation.

its conventional economic reasoning remains to be seen. For a preliminary assessment of these issues, one may turn to the institutional environment in which the EIB operates and the battle lines that undergird its transformation.

5.

LIMITS TO THE CLIMATE BANK MODEL

Given that it is too early to tell how far the 2019–2020 announcements represent a genuine change, the following reflections, based upon institutional scholarship on the EIB but also other (multilateral) development banks, hope to guide future researchers in their evaluation of the EIB’s climate shift. We identify four structural obstacles linked to the environment of

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The European Investment Bank: the EU’s climate bank?  77 the EIB that may prevent it from fulfilling the promise of a ‘climate bank’ and redirecting its investments in a time-critical manner. 1. Self-preservation. To begin with, it is important to emphasize that the climate bank model adds explicit goals to the existing public policy mandate that could endanger the profitability of the bank. Though not part of its mandate, profitability has been a condition for its autonomy and financing capabilities, by allowing it to negotiate with its shareholders an expansion of its equity base and its activity (Kavvadia 2018). This means that policies consistent with net-zero could be hampered by the pain they might inflict upon the balance sheet of the EIB, which is seen as the bulwark to maintain independence. Organizational interests in self-preservation, emphasized for a long time in both the old and new institutionalist tradition in sociology (DiMaggio and Powell 1991), may, however, lead to ‘organized hypocrisy’ (Brunsson 2002): seeking to establish legitimacy with respect to its diverse stakeholders, such as other European institutions, Member States, civil society and the financial sector can come at the cost of pervasive gaps between the EIB’s action and words. Existing studies on the World Bank, for instance, suggest that in the face of high-reaching, radical-sounding goals the bank might devote comparatively few resources to the actual implementation (Babb 2009; Weaver 2008). From this angle, the climate bank model may reflect the ‘myths of the institutional environment instead of the demands of their work activities’ (Meyer and Rowan 1977: 341) and thus run the risk of performing ceremonial activities to establish legitimacy to outside stakeholders. This reading is in line with the repeated adjustment of the EIB’s business model to secure organizational survival and the proven ingenuity in relabelling investment activities during the EFSI programming period (Griffith-Jones and Naqvi 2021). In this vein, the most important institutional conflict with the European Parliament and the Commission has revolved around the question of the actual increase in the risk-taking by the EIB, which implies larger potential losses for the EIB (ibid). 2. Resource dependency. A further barrier to the success of the climate bank model may stem from the EIB’s dependency on crucial actors in its environment, be they Member States or large capital market investors. Being governed by the ministries of finance of the EU Member States, the EIB is subject to political pressures to adhere to their policy priorities, which might strongly diverge from its own stated goals. Here, powerful Member States, such as Germany or France, in alliance with other countries have already sought to veto the phasing out of investment projects regarding gas, or push for the inclusion of nuclear power. These Member States will have ever-more leverage if their interests fall in line with the particular exposures the EIB has accumulated in recent decades so that it creates a coalition for preventing the strong devaluation of ‘climate-forcing assets’ (Colgan et al. 2020). At the same time, the political momentum of taking binding decisions at the EU level, such as the ‘Fit for 55’ package, also means that the EIB could, in principle, be empowered to act against the financial logic of the profit and loss account and instead actually accept financial losses in the pursuit of political goals. In this process, however, capital market actors might come to limit the EIB’s climate ambitions. Bond investors – depending on the regulatory environment – may become unwilling to invest in high-impact high-risk efforts required for the green transition; rating agencies might downgrade the EIB’s triple-A rating fundamental to its business model; and the institutional investors instrumental to the blended finance approach might also endorse climate goals as a ‘myth’

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78  Handbook on European Union climate change policy and politics and engage in ‘ceremonial’ activities without endangering their bottom line. In other words, resource dependency on powerful private and public actors may become a significant barrier. 3. Transparency and accountability. Another caveat concerns the transparency and accountability requirements that the shift towards climate goal-driven investment policies imply. As suggested, the Climate Bank Roadmap can serve as a credible commitment to climate action only if sufficient supervision and stakeholder control is in place – by the European Court of Auditors, the European Parliament, or civil society actors. In the past, accountability procedures, which would allow identification of criteria such as additionality or regional distribution, were deficient and often blocked by the EIB on grounds of technical complexity and expertise (Ban and Seabrooke 2016; Mertens and Thiemann 2022). The enormous growth of principles, classification schemes and eligibility criteria associated with the rise of green finance will likely fortify the EIB’s position here, as will the nature of its financial operations. Here, issues with respect to disclosures can arise when environmental information is not or cannot be disclosed due to the intricate complexities, secrecy arrangements and/or use of financial intermediaries of some of the investment constructs the EIB (and the EIF) engages in. This will make it difficult for outside stakeholders, lacking access or capacity, to exert fair-minded control, notwithstanding the efforts made regarding the EU green taxonomy (see Eckert, Chapter 6 in this volume; for an account of how the bank became the subject of a legal case brought by ClientEarth, demanding a review of its decision-making over a controversial biomass power plant, see Stoczkiewicz, Chapter 9 in this volume). 4. Taxonomy. This issue of expertise that underlies the difficulty in the evaluation of the investment decisions the EIB takes to live up to its climate goals may be further aggravated by the difficulty of establishing clear green taxonomies. In other words, the danger of ‘greenspeak’/’greenwashing’ and associated loopholes is heightened by the lack of a simple and unequivocal yardstick by which the activities of the EIB could be measured. The political character of green taxonomies is making such assessments difficult, and the fact that the EIB is involved in the institutional work on developing these metrics is not necessarily reassuring. This is not to say that the work of the EIB is not genuine, nor that its results could not be of fundamental value as the EU green taxonomy is finally implemented, yet it requires the researcher to test whether institutional interests are inscribed into these metrics (Best 2012). These politics of accounting are made even trickier by the fact that the nature of blended finance and green investments do not lend themselves easily to such an assessment (Clapp and Dauvergne 2011: 223). In the end, some of these issues can be well approached in a first approximation by the amount of money the EIB will set aside in the following years for expected losses related to its climate-related investments. If this risk provisioning should tend strongly upwards in the years to come, researchers will have a first indication of the extent to which the EIB is actually putting its balance sheet at the service of reaching a net-zero emission economy. If this upward trend is not due to mistaken investment policies but to a shift in the investment policies into higher risk categories, the EIB will have committed itself to a course of action that goes beyond marketing announcements and instead will have made climate change policies the central pillar of its organizational existence. But this endeavour will also require the will and capacity of public institutions and (support for) NGOs supervising the climate bank model.

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The European Investment Bank: the EU’s climate bank?  79

6. CONCLUSION This chapter has reviewed the EIB’s commitment to become the EU’s climate bank, focusing on the pathways that led it to take a position in the climate policy landscape of the European Union. It has shown how the bank has gradually expanded its economic policy weight and its climate action portfolio, leading up to a contentious process around the Climate Bank Roadmap 2021–2025. These developments need to be understood in the context of a global move towards green (blended) finance, including the use of public funds to leverage private investments for climate action. At the same time, they also need to be placed within the evolution of EU governance, which understands the EIB both as a new central policy tool for the EU to achieve its ambitious policy goals and as a policy entrepreneur with institutional self-interest. At the time of writing, the efficacy of its climate bank measures cannot be assessed, forcing observers to rely on announcements, plans, or roadmaps, whose implementation processes and scope remain a moving target. The required organizational changes for successful implementation are profound, and may require substantial effort and time. In order to balance the analysis, we hence focused on past experiences and placed the EIB’s recent move in the context of past reinventions. Here, we pointed to the importance of ‘conservative lending policies’, which were a central characteristic of the bank and its rise in recent decades and which somewhat contradict the increased risk-taking that the path towards becoming the EU’s climate bank might involve. It is beyond the scope of this chapter to assess the limits and distributional implications of the move towards green finance in the EU. But we submit that one of the greatest challenges of blended finance is to get the appropriate degree of public risk-taking right, which brings about investments that would not have occurred otherwise, without falling prey to the danger of socializing losses, but privatizing profits. It is therefore crucial to hold the EIB accountable as it embarks upon this endeavour, requiring the necessary transparency in the blended finance deals that will undergird the European Green Deal to avoid the risks of greenwashing and push for real risk-taking and additionality. This places great demands on NGOs, the European Parliament and political observers to hold the EIB to its promises. This becomes even more pressing as the ‘climate bank agenda’ links into a ‘development bank agenda’ (Hoyer 2020), in which the geopolitical repercussions of the Green Deal will impact the EIB’s external mandate and financing operations beyond the EU. At the same time, it is important to remember where the limits of a green finance agenda lie, as well as the institutional environment in which the EIB operates. Without broader transformations towards ‘green’ fiscal, industrial and monetary policies that transform economy and society to face the climate crisis, the EIB’s activity will remain insufficient.

NOTES 1.

The Climate Bank Roadmap 2021–2025 was approved by the Board of Directors in November 2020 and lays out how the bank intends to reach its climate-related objectives. See section 4 for a detailed presentation. 2. Therefore, the 2015 Paris Agreement explicitly links green transition and financial stability. 3. This amounts to 15 per cent of the bank’s overall climate financing, which is the headline figure the EIB has used. The EIB’s Adaptation Plan further provides for the launch of a technical and

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80  Handbook on European Union climate change policy and politics financial advisory platform and for greater financing directed to vulnerable countries outside of the EU, connecting to the EIB’s increasingly global outlook (see below). 4. The EIB has been a permanent member of the platform on sustainable finance, where it assisted ‘the Commission in developing its sustainable finance policies, notably the further development of the EU taxonomy’ (European Commission 2020c). This means that the EIB is also shaping the regulatory framework within which it is operating, evoking important follow-up questions in terms of what guides its advocacy. With the EIB traditionally being heavily invested in carbon-intensive investment projects, such advocacy cannot be deemed interest-free (on the role of the taxonomy, see Eckert, Chapter 6 in this volume). 5. In the past, around 90 per cent of EIB lending was allocated within the European Union. With the establishment of an EIB development banking branch in 2021, this concentration is likely to shrink while development finance itself will also substantially be linked to climate action. 6. In this regard, the EIB has also launched a Climate Risk Assessment Strategy in 2019 to screen its new investment projects for climate change vulnerability and assess the potential for ‘stranded assets’ that may hurt the bank’s balance sheet.

REFERENCES Babb, S. L. (2009). Behind the Development Banks. Washington Politics, World Poverty, and the Wealth of Nations. Chicago: University of Chicago Press. Ban, C. and L. Seabrooke (2016). Investing in Integrity? Transparency and Accountability of the European Investment Bank. Brussels: Transparency International EU. Berensmann, K., F. Dafe and N. Lindenberg (2018). Demystifying green bonds. In S. Boubaker, D. Cumming and D. K. Nguyen (Eds.), Research Handbook of Investing in the Triple Bottom Line. Finance, Society and the Environment. Cheltenham: Edward Elgar, pp. 333–352. Berrou, R. et al. (2020). Defining green finance: existing standards and main challenges. In M. Migliorelli and P. Dessertine (Eds.), The Rise of Green Finance in Europe. Opportunities and Challenges for Issuers, Investors and Marketplaces. Cham: Palgrave Macmillan, pp. 31–51. Best, J. (2012). Ambiguity and uncertainty in international organizations: a history of debating IMF conditionality. International Studies Quarterly, 56 (4): 674–688. Bigger, P. and W. Carto (2021). Finance and climate change. In: J. K. Knox and D. Wójcik (Eds.). The Routledge Handbook of Financial Geography. New York: Routledge, pp. 646–666. Bracking, S. and B. Leffel (2021). Climate finance governance: fit for purpose? WIREs Climate Change, 12 (4): 1–18. Brunsson, N. (2002). The Organization of Hypocrisy: Talk, Decisions and Actions in Organizations. Copenhagen: CBS Press. Bussière, É., M. Dumoulin and E. Willaert (2008). The Bank of the European Union. The EIB, 1958–2008. Luxembourg: European Investment Bank. Claeys, G. and S. Tagliapietra (2020). A Trillion Reasons to Scrutinise the Green Deal Investment Plan. Brussels: Bruegel. Clapp, J. and P. Dauvergne (2011). Paths to a Green World. The Political Economy of the Global Environment. Second Edition. Cambridge: MIT Press. Chiapello, É. (2020). Stalemate for the financialization of climate policy. Economic Sociology_The European Electronic Newsletter, 22 (1): 20–29. Clifton, J., D. Diáz-Fuentes and A. L. Gómez (2018). The European Investment Bank. Development, integration, investment? Journal of Common Market Studies, 56 (4): 733–750. Colgan, J. D., J. F. Green and T. N. Hale (2021). Asset revaluation and the existential politics of climate change. International Organization, 75 (2): 586–610. Counter Balance/Bankwatch (2020). Can the EIB Become the EU Development Bank? https://​bankwatch​ .org/​publication/​can​-the​-eib​-become​-the​-eu​-development​-bank (Accessed: 12 September 2022). Counter Balance (2020). The EIB as EU Climate Bank: Only Halfway There. https://​counter​-balance​.org/​ publications/​eib​-as​-eu​-climate​-bank​-onlyhalfway​-there (Accessed: 12 September 2022).

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The European Investment Bank: the EU’s climate bank?  81 Dafermos, Y., D. Gabor, M. Nikolaidi, A. Pawloff and F. van Lerven (2020). Decarbonising is Easy. Beyond Market Neutrality in the ECB’s Corporate QE. New Economics Foundation. DiMaggio, P. and Powell, W. W. (Eds.) (1991). The New Institutionalism in Organizational Analysis. Chicago: University of Chicago Press. European Commission (2018a). A Clean Planet for All. COM(2018) 773. European Commission (2018b). Action Plan: Financing Sustainable Growth. COM(2018) 97. European Commission (2020a). Sustainable Europe Investment Plan. European Green Deal Investment Plan. COM(2020) 21. European Commission (2020b). The European Green Deal Investment Plan and Just Transition Mechanism explained. https://​ec​.europa​.eu/​commission/​presscorner/​detail/​en/​qanda​_20​_24 (Accessed: 12 September 2022). European Commission (2020c). Platform on sustainable finance. Online: https://​ec​.europa​.eu/​info/​ business​-economy​-euro/​banking​-and​-finance/​sustainable​-finance/​overview​-sustainable​-finance/​ platform​-sustainable​-finance​_en (Accessed: 12 September 2022). EIB (2020a). European Investment Bank Financial Report 2019. Luxembourg: European Investment Bank. EIB (2020b). EIB Group Climate Bank Roadmap 2021–2025. Luxembourg: European Investment Bank. EIB (2020c). CAB & SAB Newsletter. November 2020. Luxembourg: European Investment Bank. EIB (2021). The EIB Climate Adaptation Plan. Supporting the EU Adaptation Strategy to Build Resilience to Climate Change. Luxembourg: European Investment Bank. E3G (2020). The European Investment Bank: Becoming the EU Climate Bank. www​.e3g​.org/​publications/​ the​-european​-investment​-bank​-becoming​-eu​-climate​-bank/​ (Accessed: 12 September 2022). Fender, I., M. McMorrow, V. Sahakyan and O. Zulaica (2019). Green bonds: the reserve management perspective. BIS Quarterly Review, September: 49–63. Financial Times (2019a). European Investment Bank: the EU’s hidden giant. 15 July www​.ft​.com/​ content/​940b71f2​-a3c2​-11e9​-a282​-2df48f366f7d (Accessed: 12 September 2022). Financial Times (2019b). Gas flare-up. The EIB is set for a boardroom showdown over plans to turn itself into a greener lender. 13 November, www​.ft​.com/​content/​a5603a3a​-05d5​-11ea​-a984​-fbbacad9e7dd (Accessed: 31 March 2021). Financial Times (2021). Green bonds face new questions over authenticity. 29 November. www​.ft​.com/​ content/​d797800b​-fb07​-40c7​-8386​-a22de312cd35​?shareType​=​nongift (Accessed: 12 September 2022). Gabor, D. (2021). The Wall Street Consensus. Development and Change, 52 (3): 429–459. Griffith-Jones, S. and M. Carreras (2021). The Role of the EIB in the Green Transformation. Brussels: FEPS. Griffith-Jones, S. and N. Naqvi (2021). Leveraging policy steer? Industrial policy, risk-sharing, and the European Investment Bank. In D. Mertens, M. Thiemann and P. Volberding (Eds.), The Reinvention of Development Banking in the European Union. Industrial Policy in the Single Market and the Emergence of a Field. Oxford: Oxford University Press, pp. 90–113. Hachez, N. and J. Wouters (2012). A Responsible Lender? The European Investment Bank’s Environmental, Social and Human Rights Accountability. Leuven Centre for Global Governance Studies, Working Paper No. 72. Kavvadia, H. (2018). Small Words, Big Changes: Understanding the EU Bank Through its Business Model. Paper for the XVIII World Economic History Conference. Boston. Liebe, M. and D. Howarth (2020). The European Investment Bank as policy entrepreneur and the promotion of public-private partnerships. New Political Economy, 25 (2): 195–212. Marini, V. (2020). Institutional initiatives to foster green finance at EU level. In M. Migliorelli and P. Dessertine (Eds.), The Rise of Green Finance in Europe. Opportunities and Challenges for Issuers, Investors and Marketplaces. Cham: Palgrave Macmillan, pp. 119–149. Mertens, D. and M. Thiemann (2018). Market-based but state-led: the role of public development banks in shaping market-based finance in the European Union. Competition & Change, 22 (2): 184–204. Mertens, D and M. Thiemann (2019). Building a hidden investment state? The European Investment Bank, national development banks and European economic governance. Journal of European Public Policy, 26 (1): 23–43. Meyer, J. W. and B. Rowan (1977). Institutionalized organizations. Organizational structure as myth and ceremony. American Journal of Sociology, 83 (2): 340–363.

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82  Handbook on European Union climate change policy and politics Robinson, N. (2009). The European Investment Bank: the EU’s neglected institution. Journal of Common Market Studies, 47 (3): 651–673. Von der Leyen, U. and W. Hoyer (2021). A global green deal. Project Syndicate, 22 March 2021. https://​ ec​.europa​.eu/​commission/​presscorner/​detail/​en/​ac​_21​_1322 (Accessed: 12 September 2022). Weaver, C. (2010). Hypocrisy Trap. The World Bank and the Poverty of Reform. Princeton: Princeton University Press.

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6. Business and private finance: their role in the EU’s climate transition Sandra Eckert

1. INTRODUCTION Questions concerning the role of business in realizing the EU’s evolving environmental and climate policy agenda are long-standing. Recently, their scope has expanded to encompass increasingly prominent agendas related to ‘green finance’ and ‘sustainable investment’. The scope of issues addressed by policymakers has likewise expanded significantly, shifting beyond regulating traditional industrial sectors and their environmental impact, to a new focus on transforming the financial sector and, by that means, greening the entire economy. With its European Green Deal (EGD), the EU has set out to achieve net zero emissions of greenhouse gases (GHGs) by 2050 for the EU as a whole, and to decouple economic growth from resource use, in line with the ‘circular economy’ agenda. Significantly, it is not only the productive parts of industry (i.e. the ‘real economy’), but also the financial services sector which are now supposed to contribute to this ambitious economic transformation. Estimates suggest that in addition to public funding, an annual green investment of €260 billion will be needed (European Commission 2019: 15). In its capacity as a regulatory state (Majone 1994), the EU strives for leadership, and through its ‘green taxonomy’ (under Regulation 2020/852), adopted in June 2020, it has sought to set the global ‘gold standard’ in defining sustainability criteria for business activities. Against this developing backdrop, this chapter will examine how various business activities are subject to regulation, how business branches engage in voluntary action to address the climate challenge, and how private actors seek to influence the evolving policy agenda. It does so by linking the literatures on business power and European governance. The chapter is structured as follows: section 2 introduces the various ways in which the involvement of private actors has been conceptualized in political science and political economy; section 3 discusses the evolution of EU climate policy and how it has affected and involved business; section 4 offers conclusions addressing the manifold avenues of business involvement.

2.

CONCEPTUALIZING BUSINESS INVOLVEMENT IN THE EU POLICY PROCESS

This chapter deals with a subset of private actors, namely business understood as privately owned companies who sell goods and services, including financial services, and the trade associations that represent them. It thus addresses both the ‘real economy’ and finance. The following subsections will discuss how business involvement has been conceptualized from an institutional and governance perspective, and how it has been addressed in international polit83 Sandra Eckert - 9781789906981 Downloaded from PubFactory at 08/15/2023 12:44:36AM via free access

84  Handbook on European Union climate change policy and politics ical economy research. This will be followed by a short overview of the literature addressing the EU context. 2.1

Alternative Perspectives on the Role of Business

The governance and institutional perspective on the role of business takes as its unit of analysis rules, procedures and organizational structures created by business actors (Abbott & Snidal 2000; Héritier 2003). In this strand of literature, governance networks, co-regulation and self-regulation are often seen as providing solutions to complex policy problems either in addition to, or in place of, public intervention. Grounded in new institutional economics and neo-institutionalism, the focus can also be on individual companies or business associations. Here the goal is to examine and explain how companies act not only individually but also collectively when agreeing on codes of conduct, certification schemes or voluntary commitments (Héritier & Eckert 2009; Prakash 2000; Segerson & Miceli 1999). The motives identified in this literature range from competitiveness to reputational gains, as well as the intention to pre-empt or soften present or future public regulation (Glachant 2003; Halfteck 2008). International political economy research has addressed the increased role of business in international governance, paying attention to environmental policymaking in particular. It builds on earlier work on the market and structural power of corporate actors in the international economy (Strange 1988; Gill and Law 1989). The seminal contribution of Cutler et al. (1999) shifted the focus of international relations scholars to appreciate the role of private actors in various fields of international governance, ranging from technical standards to credit rating. They proposed the concept of ‘private authority’ in order to capture private actors’ role in the political decision-making process. They argue that private authority, which presupposes some type of legitimizing aspect, is often ‘acquired through the special expertise or historical role of the private sector participants’ (Cutler, Haufler, & Porter 1999, p. 4). More critical strands in the literature usually opt for the concept of power to examine how corporations influence international governance (Fuchs 2007; Mikler 2018). Some of this research on corporate and business power counters certain claims formulated in the institutionalist governance literature, notably by questioning the transformative potential of business involvement. Relating to various avenues of influence such as lobbying, market influence and rule-setting as well as issue-framing, distinct types of business power have been identified in this literature, namely instrumental, structural and discursive power (Fuchs 2007; Mikler 2018). Instrumental power results from direct influence through lobbying, campaigning or party finance. Structural power derives from the ability to deliver economic success in terms of growth and jobs, as well as the threat to relocate business activity. Moreover, it can result in concrete regulatory output produced by business, taking the form of public–private partnerships, voluntary standards or self-regulation (Fuchs 2007, pp. 7, 58, 66). One could argue that in the EU context, instrumental and structural power of business captures its ability to partake in the ‘Brussels effect’ (Bradford 2020) (i.e. to be international rule-shapers and rule-makers). Finally, discursive power is a useful concept to capture the ideational and normative conditions of business power, which can play a crucial role not only in shaping problem perceptions and policy choices, but also in reconstructing business actors’ legitimacy. Clearly, these three aspects of business power are interlinked: instrumental power in the form of lobbying is often a precondition for structural power to emerge and operate, while discursive power is a precon-

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Business and private finance  85 dition for, as well as a result of, structural power, and a constitutive element of instrumental power (Fuchs 2007, p. 65). 2.2

Avenues of Business Influence in the EU

There is a rich and growing literature on how the EU context provides for avenues of business influence through lobbying (instrumental power), market influence and rule-setting (structural power) and issue-framing (discursive power). This section takes each in turn. Lobbying in the EU context is a well-established sub-field of European studies (Beyers et al. 2008; Coen 2021; Kohler-Koch et al. 2013). It provides evidence for the high levels of activity and successful business influence in various policy areas (Klüver 2011; Mahoney 2007). Environment and civil society organizations (Parks et al., Chapter 7 in this volume) have become central counterparts of business and their associations, as a result of the decline of trade unions. This raises the issue of the power balance between corporate and diffused interests in EU policymaking (Bunea 2013, Eising 2019), with some arguing that the balance clearly tips to the disadvantage of diffuse interests. Doris Fuchs and her co-authors, for example, posit that the EU ‘may well be not only the world’s largest but also the world’s most asymmetric playground for business interest groups’ (Fuchs et al. 2017). Other contributions draw a line of caution and identify scope conditions determining the relative influence of business, when compared to other interests (Dür et al. 2019). Intuitively, we could assume that business influence prevails in areas which involve high levels of economic and technological expertise, and there is evidence that supports this claim (Klüver 2012; Knill 2001). Structural power through market influence and rule-setting has been a central theme in the debate on international environmental governance (Falkner 2008; Green 2014), where private activity fills a gap often left by international organizations and public regulation. While the situation at the EU level is substantially different, given the degree to which binding measures have been adopted, especially so in the area of environmental policy (Holzinger et al. 2009; Holzinger et al. 2006), the role of structural power cannot be dismissed ‒ quite the contrary, in fact. In the EU, which is predominantly a regulatory state (Majone 1994), there are manifold ways for business to play an active part in the regulatory process (Eckert 2019): as rule-setters where business determines regulation through its participation in standard-setting bodies; as providers of substantial input in rule specification through regulatory committees (see Bürgin, Chapter 2 in this volume); and, finally, they can engage in voluntary action, often with the aim of preventing binding regulation (Héritier & Eckert 2008). In this latter regard, the track record of businesses is mixed. For example, the much-vaunted voluntary commitment of the European automobile industry to reduce CO2 emissions from passenger cars was replaced by a binding regulation in 2009 because industry action had failed to produce adequate results. The market power of business actors plays out in interest politics both at the national and at the supranational level, with the prevalent role of economic interests being a standard theme in integration theories (Moravcsik 1998). Arguments about the negative implications of environmental policy for jobs and growth as well as international competitiveness will not fall on deaf ears with policymakers. This holds for times of economic downturn in particular, but also for any transformative process that typically involves winners and losers and thus requires some sort of socioeconomic compensation. The EU’s horizontal strategies, while including a range of sustainability goals, have repeatedly put strong emphasis on economic growth and

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86  Handbook on European Union climate change policy and politics job creation aspects, especially in response to economic crises (see Quitzow et al., Chapter 24 in this volume). Finally, the fact that insider lobbying is the predominant model of interest politics in the EU (Howlett & Ramesh 2003) provides an advantageous precondition for the exercise of discursive power by business. Through the growing number of dedicated European associations (Eising 2019), business actors dispose of suitable organizational structures to advocate their preferred discourses or policy frames. Empirical research on framing activities of EU associations has shown under which conditions interest groups are successful (Klüver 2009, 2011), or at least can achieve frame congruence with policymakers (Boräng & Naurin 2015; Eckert 2021). The prevalence of ideas of ecological modernization amongst European policymakers, for instance, has been identified as a favourable factor for business influence, as it appears to allow the marrying of economic growth and environmental protection (Grant 2013, pp. 173–175; Fitch-Roy and Bailey, Chapter 12 in this volume).

3.

THE ROLE OF BUSINESS AND FINANCIAL MARKETS IN EU CLIMATE POLICY

Business and private finance have been involved and affected in different ways and to different extents by the EU’s evolving climate policy agenda. In an initial phase, climate policy goals have been very much defined in the context of the European energy policy, focusing on production as well as consumption. Over time, climate policy goals have arguably been mainstreamed, and integrated into various other policy fields, to form a cornerstone of European environmental policy (see Rietig and Dupont, Chapter 17 in this volume). Most importantly, the European Green Deal agenda proposed by the European Commission commits to achieving both a carbon-neutral and resource-efficient economy. A third orientation, which seeks to achieve the green transformation of the real economy through sustainable investment and green finance, has gained traction over the past years. 3.1

The Climate-energy Nexus

The EU’s climate policy has emerged largely as a branch of energy policy, including in its institutional arrangements (Buchan 2020). Its key climate policy instrument, the Emissions Trading System, introduced in 2003, established a scheme for emission allowances. Another decisive step was taken in 2008 with the adoption of the so-called ‘20 20 by 2020’ energy and climate change package (see introduction to this volume). The implementation of the various 20 per cent goals, to be achieved by 2020, coincided with economically tough times in the aftermath of the 2007–2008 economic and financial crisis. Similarly, the realization of the climate and energy policy goals ‘Fit for 55’ formulated by the European Commission as part of the Green Deal faced new challenges both in the context of the recovery from the economic downturn triggered by the COVID-19 pandemic, and the surge in energy prices as of late 2021. In the following sections, I will briefly present how industry is affected by the EU’s policies on emissions trading, renewables and energy efficiency, and how these could be changed if the Fit for 55 policy agenda is adopted as the Commission would wish. The EU’s emission reduction goals, mainly intended to be achieved by the emissions trading system (ETS), target energy-intensive industries as well as the energy producing sector.

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Business and private finance  87 Research on the policy process around the ETS has thus paid particularly attention to business influence. It finds that compared to other controversial measures such as the introduction of an EU-wide CO2 tax (Braun 2009, p. 473) large parts of the European business community were supportive of introducing the ETS scheme (Christiansen & Wettestad 2003). Energy-intensive industry branches, however, lobbied effectively in order to secure special treatment (Wettestad 2009). Existing research shows that expertise generated in the business and policy community has driven the evolution of the ETS to a significant extent (Braun 2009). Evidence also points to a trend where a pro-ETS business lobby and environmentalists have formed a proactive coalition which has advocated more ambitious reforms of the scheme (Fitch-Roy et al. 2020). A major overhaul of EU emissions trading has been proposed to achieve the European Green Deal and ‘Fit for 55’ reduction targets, including expanding coverage to include the maritime sector, and introducing of a separate emissions trading schemes for transport and housing (see also introduction to this volume), flanked by a social fund to compensate for the increased cost for industry and private households (European Commission 2021b, p. 4). Compared to emissions trading, very different support schemes for renewables continue to exist in the Member States (Haas et al. 2011). In essence, notwithstanding the Europeanization of energy policy in other areas, the energy mix remains a national prerogative. This has given industry lobbies an extra entry point to call for demanding special treatment, while hampering EU-wide agreement on a unified scheme (Strunz et al. 2016). The overall increase of renewables in the EU’s energy mix introduced with the Fit for 55 proposal receives support from renewable energy industries, the wind power sector in particular (Morhunova 2021), whereas other industry branches take a more reluctant stance or overtly oppose the Fit for 55 goals, especially so in view of the sharp increase of energy prices throughout 2020, 2021 and 2022 (Eurostat 2022; Sanchez Nicolás 2021b; Simon 2022). Finally, the EU’s mixed results regarding energy efficiency goals can be attributed to a varying commitment of industry branches. The Ecodesign instrument, which relies on both binding regulation and voluntary measures as implementing options, is an instructive example in this respect: it was conducive to significant achievements in the area of household equipment where producers initially engaged in voluntary commitments and subsequently embraced binding standards as a competitive advantage. The information and communication technology sector, by contrast, mobilized its structural power to resist change and to a large extent remained inactive, where it even refrained from voluntary action (Eckert 2019, chapter 5). The huge potential to save energy in transport and housing, by contrast, has remained untapped (Boasson & Dupont 2015). Overall, the transport and heavy-industry sectors have lobbied massively to reduce the ambition of the various policy measures to achieve the 55 per cent energy and climate goals (InfluenceMap 2021; Sanchez Nicolás 2021b). A substantial increase in energy prices, particularly following the outbreak of war in Ukraine, further complicates the realization of the goals, by adding to the social cost of the green transition, and negatively affects economic recovery (FT reporters 2021; Khan 2020; Rachman 2022). Another unanswered question is the extent to which EU industry will be compensated for the additional cost of regulated carbon prices through the proposed carbon-border adjustment mechanism (CBAM). As detailed by Wettestad (Chapter 16 in this volume), the CBAM, which would require non-EU producers to buy carbon certificates for their imports to make up for a price differential compared to a good produced in compliance with the EU’s carbon pricing rules (European Commission 2021a), has been proposed by the European Commission in July

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88  Handbook on European Union climate change policy and politics 2021, and a political agreement reached in the Council in March 2022 (European Council 2022). Critical observers warn that the introduction of CBAM could give a disproportionate advantage to European industry where branches already benefit from preferential treatment and exemptions under the ETS. The energy focus of the EU’s climate action has empowered European industry including energy producing and energy consuming sectors. The formulation and realization of the market integration and the renewables agenda has solicited substantial industry input, giving corporate actors the opportunity to mobilize their instrumental, structural and discursive power. Similarly, energy-intensive branches have lobbied successfully over the cost of regulation and its impact on competitiveness (e.g. securing exemptions from ETS, being compensated for the energy price surge caused by the Ukraine war). Moreover, co-regulatory schemes rely on industry input, to the extent where corporate inaction amounts to regulatory relief for some branches (e.g. ITC industry under Ecodesign). 3.2

Towards a Low-carbon and Resource-efficient Economy

While the low-carbon economy was already a key objective of the seventh Environmental Action Programme (2014–2020) and resource efficiency has been integrated in the EU’s product policy scheme since the early 2000s (Fitch-Roy et al. 2020, p. 990), it was the 2019 European Green Deal that established a systematic link between the climate policy and resource efficiency agenda. More specifically, the Green Deal advocates a ‘resource-efficient and competitive economy where there are no net emissions of greenhouse gases in 2050 and where economic growth is decoupled from resource use’ (European Commission 2019: 2). In the view of the Commission, this can be achieved by ‘mobilising industry for a clean and circular economy’ (European Commission 2019: 7). The Green Deal, therefore, emphasizes industry’s contribution in realizing both decarbonization and circularity. The two agendas are linked in as much as the transition towards a truly circular economy requires the minimization of resource depletion, especially of fossil-based feedstock, and fosters innovation in waste treatment such as energy recovery and recycling. Nevertheless, there may be trade-offs between the agendas, and the case of the plastics industry (Box 6.1) serves to illustrate.

BOX 6.1 STRIVING FOR CIRCULARITY AND DECARBONIZATION IN THE PLASTICS INDUSTRY The international marine littering crisis has put plastics into the spotlight over the last few years. Media attention and international initiatives by environmental organizations (#breakfreefromplastic 2018; Rethink Plastic 2018) have increased since 2015. Plastic pollution and its impact on marine wildlife and, ultimately, human health took centre stage in related campaigning, yet climate change looms as another topic for the industry. With the share of oil production going into plastics forecast to rise from below 10 per cent to above 20 per cent by 2050 (EMF 2016, pp. 25, 27), the fossil-based plastics industry faces a huge challenge in terms of decarbonization. The EU has addressed the environmental impact of plastics mainly in the context of the circular economy agenda, in which the EU Plastics Strategy forms a key component (European Commission, 2015, 2018b), and is seen as a model for regulation to be proposed for other resource-intensive sectors (European Commission

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Business and private finance  89 2020). The most tangible policy measures to have been adopted include the reduction and phase-out of lightweight plastic carrier bags (Directive (EU) 2015/720), restrictions imposed for single-use plastic products (Directive (EU) 2019/904), and the generation of new income for the EU budget through a contribution based on the non-recycled plastic packaging waste (European Council 2020). Alongside these binding measures, the circular economy agenda has, however, also facilitated an active role for business. The European Green Deal builds on this, advocating ‘deeper cooperation across value chains, as in the case of the Circular Plastics Alliance’ (European Commission 2019: 8). In response to mounting regulatory and public pressure, the European plastics industry has mobilized its instrumental, structural and discursive power, with mixed results. Its major associations, including PlasticsEurope representing the resin manufacturers, European Bioplastics representing the value chain of bio-based and biodegradable materials, and the European Plastics Converters association, lobbied against the Single-Use Plastics Directive. However, they failed to prevent its introduction. Industry was more successful in rule-setting, notably by engaging in voluntary agreements such as the PlasticsEurope2030 commitment or VinylPlus, which both focus on resource-efficiency goals and recycling for the plastics and PVC chains. Such industry-driven voluntary pledges have received endorsement through the Circular Plastics Alliance. There is also empirical evidence for frame congruence between industry communication efforts and the Commission’s policy agenda (Eckert 2021). While evidence suggests that the plastics industry has been proactive on circularity, decarbonization poses a greater challenge for the fossil-based industry. Actions taken as part of the EU’s climate policy agenda, such as the introduction of the Green Taxonomy, could seriously threaten the industry’s existing business model: forecasts predict that greenhouse gas emissions throughout the materials’ lifecycle will reach 1.34 Gt per year by 2030, and may exceed 56 Gt by 2050 (Shen et al. 2020). According to environmental organizations, however, the suggested treatment of plastics under the taxonomy lacks ambition. The NGO ‘Zero Waste Europe’, for instance, claimed that the GHG reduction targets set for chemical recycling and production from renewable feedstock in order to be considered would not contribute to meaningful change (Taylor 2021a).

3.3

Transformation through Sustainable Investment and Green Finance

One novelty of the European Green Deal is that it seeks to mainstream climate considerations into all kinds of new policy areas, including the financial sector. Generating substantial private investment in addition to public money will be a crucial precondition for achieving the 2030 climate and energy targets, with estimates of an additional annual green investment of €260 billion being needed (European Commission 2019, p. 15). There are several ways of steering sustainable investment and green finance, including sustainability reporting standards, disclosure rules and taxonomies (for a detailed discussion see Kammourieh & Vallée 2021). In recent years, there has been a shift from voluntary towards binding standards, and from less to more prescriptive rules. A taxonomy is the most prescriptive option, as it creates a classification of economic activities with respect to their environ-

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90  Handbook on European Union climate change policy and politics mental performance. Funding for non-compliant activities will become either impossible or more expensive, or involve reputational cost. Measures regarding sustainable investment were proposed in advance of the launch of the European Green Deal (European Commission 2018a), including an ecolabel for financial products, an EU standard for green bonds and revised non-financial reporting requirements. The most tangible measure is the Taxonomy Climate Delegated Act (under Regulation (EU) 2020/852 ‘on the establishment of a framework to facilitate sustainable investment’), intended to guide the investment decisions of both private and public finance including the European Investment Bank as well as Member State governmental and institutional lenders. Although the EU expresses its ambition to be a global standard-setter in green finance through its taxonomy, it was not the first mover: China, Japan, Russia, Canada and some Asian and Latin American countries, as well as the UK, have introduced or are developing some kind of taxonomy. Moreover, there is a plethora of private initiatives in international sustainable finance (Braeme & Gulbrandsen 2013; Clapp & Meckling 2013, pp. 288, 292–293) which have gained momentum with increasing regulatory ambition. In 2020, for example, business actors launched initiatives such as the international alliance ‘Transform to NetZero’, or the target of net zero emissions by 2050 set by the World Business Council. In the past, voluntary initiatives have often lacked ambition. The track-record of fossil fuel corporations, for example, has been seen as an example of co-option (Dauvergne 2018), and the first evidence regarding the more recent initiatives hinted at a weak net zero commitment from major oil companies (Tong 2020). Although an overall shift from voluntary to binding arrangements can be observed, the massive scope of the green finance agenda still leaves ample room for corporate power – regarding the instrumental (lobbying new policy proposals), structural (formulating and specifying rules) and discursive (framing the debate) dimensions. The development of the green taxonomy is a case in point. The detailed provisions of the taxonomy and processes by which it is adopted are summarized in text box 2, after which, the tensions and conflicts underpinning the classifications of key investments it incorporates are examined.

BOX 6.2 THE EU GREEN TAXONOMY The EU institutions adopted Regulation (EU) 2020/852 ‘on the establishment of a framework to facilitate sustainable investment’ in June 2020. The text was drafted with substantial input from a technical expert group (TEG) that conducted its work between 2018 and 2020, as well as advice from institutional actors including the European Investment Bank (discussed by Mertens and Thiemann, Chapter 5 in this volume). The TEG comprises representatives from governments, academia and civil society as well as from industry and finance. The regulation provides that investment funds and large EU companies have to report about the environmental performance of economic activities in financial (Articles 5–7) and non-financial (Article 8) undertakings, using the taxonomy as a reference point. The assessment of companies’ performance is based on six environmental objectives specified in the regulation (Articles 9–15), namely: climate change mitigation; climate change adaptation; the sustainable use and protection of water and marine resources; the transition to a circular economy; pollution prevention and control; the protection and restoration of biodiversity and ecosystems. In addition, the regulation defines enabling activities (Article

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Business and private finance  91 16) and significant harm to environmental objectives (Article 17). The taxonomy then specifies types of economic activities based on these objectives, differentiating between: 1. a substantial contribution to pollution prevention and control: preventing or reducing pollutant emissions into the environment; improving levels of air, water or soil quality; preventing or minimizing any adverse impact on human health and the environment of the production, use or disposal of chemicals; cleaning up litter and other pollution (Article 14); 2. a substantial contribution to the protection and restoration of biodiversity and ecosystems: nature and biodiversity conservation; sustainable land use and management; sustainable agricultural practices; sustainable forest management (Article 15); 3. enabling activities to make a substantial contribution to at least one of the environmental objectives while not undermining long-term environmental goals and having ‘a substantial positive environmental impact on the basis of asset lifetime’ (Article 16); 4. economic activities that significantly harm environmental objectives including climate change mitigation, climate change adaptation, the sustainable use and protection of water and marine resources, the circular economy, pollution prevention and control (Article 19). The regulation stipulates that the European Commission must adopt several delegated acts (see Wurzel et al., Chapter 3 and Bürgin, Chapter 2 in this volume) in order to establish the criteria for determining the conditions under which a specific economic activity qualifies as sustainable, enabling or harmful. It introduces a phased approach for the adoption of these acts, so that they can be applied from 1 January 2022 and 2023, respectively. The regulation entered into force in July 2020 with the exception of the environmental objectives defined in Article 9, which will be applied as of January 2022 (climate change mitigation and adaptation) and as of January 2023 (other goals), respectively. After the adoption of the regulation, the European Commission published proposals for the delegated acts and launched a public consultation from November 2020 onwards, again drawing on input from the TEG. The debate over the provisions of these acts and related questions proved highly controversial and caused delay. The first delegated acts were adopted by mid-2021, namely the EU Taxonomy Climate Delegated Act, which specified the conditions under which an economic activity qualifies as contributing substantially to climate change mitigation or adaptation, and the Commission Disclosures Delegated Act, which specifies disclosure rules for non-financial statements of both financial and non-financial large undertakings that are required to publish non-financial information, or smaller companies that voluntarily decide to issue such information. Industry and financial market actors play a key role in the transition towards sustainable investment and green finance. Defining the criteria for implementing the taxonomy’s classification requires substantial expert input, and ultimately bears the risk of regulatory capture. Business actors have mobilized to a significant extent in the policy process around the European Green Deal. While the outbreak of COVID-19 had initially slowed down lobbying activities, businesses soon stepped up efforts to influence the Commission’s packed policy agenda (Bayer 2021). The green taxonomy, with a huge number of answers received (more than 40,000) to the public consultation, is a striking example in that respect.

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92  Handbook on European Union climate change policy and politics From the perspective of industry, a key concern centres on the ways in which an adequate transition from ‘brown’ to ‘green’ investment should be facilitated in a socially and economically viable way, for instance in fossil-based sectors. Whereas a classification scheme which proves too strict too quickly could risk putting an additional burden on the public sector, to the extent where public finance would need to make up for the lack of private investment which would no longer flow towards ‘brown’ or ‘lighter green’ activities, a more lenient classification risks supporting greenwashing. As one of the goals is to clean up energy sources, the energy production industry has been a vocal actor in the debate, often drawing on close ties to national governments. Advocating a role in electricity generation for gas-fired power plants and nuclear power plants in the green transition is an illustrative example. The inclusion of gas, not initially considered under the taxonomy, was welcomed by the gas industry as a measure necessary for grid stabilization, whereas environmental groups rejected this classification as greenwashing (Taylor 2021b). Another controversy has centred on the assessment of nuclear energy. EU Member States are divided into a group with important domestic nuclear industries, such as France and Hungary, advocating the low-carbon features of nuclear, and countries with a nuclear-free domestic energy production such as Austria and Denmark, or those like Germany embarking on a phase-out (discussed by Wurzel et al., Chapter 3 in this volume). The European Commission’s so-called ‘New Year’s Eve proposal’ issued on the last day of 2021, to consider both nuclear and gas as green, triggered fervent criticism from anti-nuclear Member States as well as environmental organizations. On this and other occasions scientific, environmental and consumer experts advising the European Commission have voiced criticism regarding a perceived disproportionate role played by industry interests, with some threatening to step down from their role in the TEG (Nielsen 2021; Sanchez Nicolás 2021a). Similarly, the financial sector has engaged in substantial lobbying to shape the taxonomy regulation and its implementation. A significant number of financial trade associations opposed the very concept of using the taxonomy to classify ‘brown’ activities. Instead, in an initial phase these actors sought to push for a voluntary approach to the taxonomy (InfluenceMap 2019). Such resistance does not come as a surprise when considering the degree of change needed. According to a study issued by the European Central Bank (ECB) in its role as banking supervisor in November 2020, only a small proportion of European banks disclosed environmental and climate-related risks, while more than half did not make disclosures on any of the relevant categories (European Central Bank 2020). A test of the taxonomy run by 26 banks following its adoption in 2020 revealed that the availability and quality of data constitute the main challenges with respect to implementing the regulation (UNEP Finance Initiative & European Banking Federation 2021). EU supervision of banks will ultimately, however, integrate climate-related aspects. The European Banking Authority is mandated to develop sustainability information requirements which large banks and investment firms need to fulfil, and to report on the need to include sustainability risks in banking supervision. The EBA’s report on supervision and management of environmental, social and governance (ESG) risks issued in June 2021 contains proposals on the treatment of ESG factors and risks and recommends that institutions embed these in their strategies and processes, internal governance as well as risk management (European Banking Authority 2021, pp. 80, 95). The ECB started examining climate-related risks in 2021 (Alogoskoufis et al. 2021) and in 2022 launched the ECB Climate Risk Stress Test (CST, European Central Bank 2022). The next few years will reveal whether and how the ambitions of stabilizing the financial sector in

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Business and private finance  93 a moment of economic crisis and of fuelling the green transformation can be combined (see also Quitzow et al., Chapter 24 in this volume).

4. CONCLUSIONS This chapter has first revisited conceptual approaches to business involvement in the institutionalist governance literature and international political economy research, and then considered how the EU’s climate policy agenda affects and involves business actors. It has become clear by now that business is expected to make a substantial contribution in the green transition, an idea which resonates with arguments made by governance scholars about the problem-solving capacity of private actors, as well as with the notion of private authority in international economic politics (Cutler, Haufler & Porter 1999; Green 2014). Past experience with business involvement and private governance has, however, also pointed to the limits of its transformative impact, and the risks of co-option and regulatory capture. The more critical perspective offered by the literature on the political power of business actors (Fuchs 2007; Mikler 2018) proves instructive in this regard. In order to realize its ambition to achieve net zero by 2050 and to decouple economic growth from resource use, the EU is currently seeking to mobilize both the productive parts of industry and the financial service sector. At the time of writing, compliance with environmental and climate-related regulation has thus become a key concern for business actors across the board; yet they still dispose of manifold ways of shaping the evolving policy agenda, notably through expert input and proposing voluntary measures. Linking the literature on business power and governance, this chapter has illustrated how business can mobilize its instrumental, structural and discursive power on climate-related issues. The role of industry and financial market actors is likely to gain momentum, as a result of the recent shift in the EU’s climate policy towards sustainable finance, but also the contextual condition of continued economic, and more recently, a geopolitical crisis. The crucial challenge for the EU is to strike the right balance between allowing for private actor expertise in shaping green regulation, while also making effective use of regulatory tools to steer and control economic activities. In short, the regulatory power that the EU seeks to exert, and indeed export beyond its jurisdiction (Bradford 2015) is both a blessing and a curse when it comes to business influence: it is a blessing where it incentivizes private actors who want to play a proactive role in policymaking and have their share in the EU’s regulatory power (Eckert 2019); and it is a curse where it attracts disproportionate lobbying activities and attempts to capture the regulatory process.

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Business and private finance  97 Sanchez Nicolás, E. (2021a). Experts threaten to quit over new EU ‘green finance’ rules. EUobserver. 2 April 2021. https://​euobserver​.com/​climate/​151437. Sánchez Nicolás, E. (2021b). Industry lobbied against quick climate action in ‘Fit-for 55’. EUobserver. 12 July 2021. https://​euobserver​.com/​climate/​152407. Segerson, K., & T. J. Miceli (1999). Voluntary approaches to environmental protection: the role of legislative threats. In C. Carraro & F. Lévêque (Eds.), Voluntary Approaches in Environmental Policy (pp. 105–120). Dordrecht, Boston, London: Kluwer Academic Publishing. Shen, M., W. Huang, M. Chen, B. Song, G. Zeng, & Y. Zhang (2020). (Micro)plastic crisis: un-ignorable contribution to global greenhouse gas emissions and climate change. Journal of Cleaner Production, 254, 120138. doi: https://​doi​.org/​10​.1016/​j​.jclepro​.2020​.120138. Simon, F. (2022). EU business group voices ‘sympathy’ for moratorium on green laws. Euractiv, 11 July. www​.euractiv​.com/​section/​energy​-environment/​news/​eu​-business​-group​-voices​-sympathy​ -for​-moratorium​-on​-green​-laws/​. Strunz, S., E. Gawel, & P. Lehmann (2016). The political economy of renewable energy policies in Germany and the EU. Utilities Policy, 42: 33–41. doi: https://​doi​.org/​10​.1016/​j​.jup​.2016​.04​.005. Taylor, K. (2021a). Last minute EU taxonomy changes water down sustainability criteria for waste, NGOs say. Euractiv. 23 April 2021. www​.euractiv​.com/​section/​circular​-materials/​news/​last​-minute​ -eu​-taxonomy​-changes​-water​-down​-sustainability​-criteria​-for​-waste​-ngos​-say/​. Taylor, K. (2021b). LEAK: EU considers expanding role of gas in green finance. Euractiv. 11 March 2021. www​.euractiv​.com/​section/​economy​-jobs/​news/​leak​-eu​-considers​-expanding​-role​-of​-gas​-in​-green​ -finance/​. Tong, D., Oci team (2020). Discussion Paper: Big Oil Reality Check: Assessing Oil and Gas Climate Change Plans. Briefings, Energy Transitions & Futures. Washington: Oil Change International. 23 September 2020. http://​priceofoil​.org/​2020/​09/​23/​big​-oil​-reality​-check/​. Wettestad, J. (2009). EU energy-intensive industries and emission trading: losers becoming winners? Environmental Policy and Governance, 19 (5): 309–320. doi: https://​doi​.org/​10​.1002/​eet​.516.

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7. Environmental and climate activism and advocacy in the EU Louisa Parks, Donatella della Porta and Martín Portos

INTRODUCTION According to Eurobarometer survey data, 90 per cent of respondents – at least three quarters in each Member State – think that greenhouse gas (GHG) emissions should be lowered to allow the EU economy to become climate-neutral by 2050. As many as 93 per cent of Europeans perceive climate change as a serious problem, and 18 per cent rank it as the most serious problem facing the world as a whole, slightly ahead of all other global challenges, such as poverty, hunger, disease and lack of drinking water (Eurobarometer, 2021: 7). Any exploration of how EU citizens express their opinions about environmental problems, including climate change, would be incomplete without paying attention to broader trends within the environmental movement which, particularly in recent years, has sought to place both environmental problems and climate change in a complex justice perspective. Since 2018, new movements such as Fridays for Future and Extinction Rebellion have gained prominence, repeatedly hitting the headlines in Europe in particular, and brought many onto the streets. Meanwhile, in more behind-the-scenes work, advocacy by long-established and professionalized non-governmental organizations (NGOs), aimed at reforming EU climate and environmental policy, continues to be an important feature of interest representation in Brussels. Against this backdrop, this chapter explores contemporary environmentalism and how it engages with the institutions of the European Union in the era of the European Green Deal. In order to explore this theme, we make a conceptual distinction between activism and advocacy as a useful heuristic tool to inform our broad overview of how environmentalism has unfolded with reference to the EU over time. Specifically, the distinction allows us to pay attention to both headline-grabbing and behind-the-scenes strategies used by different actors at different times. As scholars working within the tradition of political sociology and the study of civil society and social movements, we understand activism and advocacy as modes of action. To better define these for the purposes of this chapter, it is useful to outline our general view of civil society as a broad space within which environmentalism plays out. In a nutshell, our view is in line with prominent scholarship from the turn of the millennium about the idea of global civil society as a field that comprises both formally organized, NGO-style actors (including trade unions) and informally organized, social movement actors (defined as networks of groups and individuals that engage repeatedly in contentious action forms, including protest, to make their claims), and all those other actors that lie in between (e.g. Kaldor, 2003; Keane, 2003). The basis of this view is that historically, civil society actors have grown in symbiosis with States, and have continued to develop alongside supranational and global governance regimes. Just as the actions of civil society were part and parcel of the emergence of European states, so the emergence of the structures of global, and indeed European governance are tied to them 98 Louisa Parks, Donatella della Porta, and Martín Portos - 9781789906981 Downloaded from PubFactory at 08/15/2023 12:44:37AM via free access

Environmental and climate activism and advocacy in the EU  99 (McAdam, Tarrow and Tilly, 2001). This understanding serves both to justify attention to civil society activism as necessary for a full understanding of the EU and its actions today, and to point to our emphasis on modes of action. One consequence of such a broad definition of civil society is that it is nigh on impossible to supply an exhaustive list of the types of groups it comprises. It includes an array of actors with both particularistic (bringing benefits to the actors claiming an interest) and altruistic interests (aiming to bring benefits to others), different funding and membership models, and more and less hierarchical organization. Most importantly, many of these are hard to pigeonhole. Trade unions, for example, have lobbied the EU over proposed reforms of the Emissions Trading System (Thomas, 2021) and other aspects of climate policy, but have also been involved at the core of campaigns for human and environmental rights, such as the right to water (Parks, 2015; Bailey et al., 2017; Bieler, 2021). Labels based on actor types can thus mask heterogeneity, shifting alliances, and the use of different strategies. Civil society should instead be seen as composed of more and less formally networked actors, even if the organized actors tend to last longer than waves of social movement protests (Berny and Rootes, 2018). In this chapter we focus instead on modes of action, sketching a more complete overview of the most prominent groups and strategies followed in European environmentalism without becoming caught up in debates about which actors are social movements, which are NGOs, and which are somewhere in between. The more interesting story, as we argue throughout, is about the general emphasis on different modes of action during different phases or waves of environmentalism. As mentioned, we distinguish between two main modes of action: activism and advocacy. Activism is usually understood as the preserve of social movements and social movement organizations, though these may also at times include a range of NGOs of different types. Activism can take the form of protest, but also includes a range of other types of actions that can be summed up as ‘outsider’ strategies in the sense that those engaged in them do not have a role, access or close contacts within the targeted organization, or at least they do not choose to use these in planning an action. In many cases these strategies take place outside arenas of decision-making in a literal sense, in the form of protests, counter-summits and the like. Advocacy, on the other hand, is usually understood as the preserve of more formally organized NGOs, though social movement actors can and do use this mode of action too. Advocacy includes a range of actions that can be grouped under the umbrella term of ‘insider’ strategies, which mean that advocates draw on their role, access and close contacts within a targeted organization.1 In the following sections we explore environmental activism and advocacy in turn. Though we organize these discussions in discreet sections, we seek to show that over time, cyclical shifts from one mode to the other are evident, in distinct phases. These can be read as logical and strategic reactions to evolutions in understandings of environmental degradation and climate change, changes in the geopolitical context, and to perceived opportunities and barriers to the influence of environmentalism in different spheres of governance. We therefore seek to tell a story of interlinked and overlapping waves or phases of environmentalism, as it has related to concerns over climate change specifically. There have always been tensions between activist and advocacy modes of action, but the primacy of one or other mode can be read within a longer history of adaptation: moves from activism towards advocacy are made as opportunities for insider influence open up in different sites of environmental governance. Conversely, when opportunities close, or as actors decide they have been co-opted, the emphasis shifts back to outsider strategies and activism.

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100  Handbook on European Union climate change policy and politics In the history of environmental movements, a number of significant junctures can be identified (della Porta and Parks, 2014). Environmentalism’s first phase began with the conservationism of the late nineteenth century, focused on saving distinct species of flora and fauna or preserving certain spaces as ‘pristine’ nature in an apparently apolitical frame (though the framing of spaces as pristine and untouched was in many cases politically mobilized to justify the displacement of indigenous peoples and local communities). The Cold War and accompanying environmental threats from nuclear weapons testing saw a first major moment of politicization (e.g. Kitschelt, 1986) and a move towards more disruptive activism in a second phase. As part of the broader ’68 New Left social movement protests, social movement groups such as Greenpeace emerged. They picked up the baton for species protection, but expanded the environmentalist agenda to oppose nuclear testing, and drew on frames that questioned the prevailing bloc system of hegemonic powers and their constant readiness for war. Following the end of the Cold War, as the architecture of global environmental governance blossomed with the Rio Treaties and multilateralism at its centre, environmentalism moved into a more advocacy-oriented mode. This we can identify as a third phase. Indeed, the peak of effective advocacy in the EU context, discussed in detail later in the chapter, unfolded at this time, which also saw the birth and progressive construction of EU environmental competences and policy. Arguably, however, this advocacy-oriented third phase has now been succeeded by a fresh, fourth phase, characterized by a new turn towards activism. In developing this argument, the next section explains the activism-oriented phases of environmental activism: the second, from the end of the 1968 cycle of protest to the end of the Cold War, and the fourth from more recent years, and especially since the late 2010s. We provide detail about this most recent activist phase, placing its development in Europe in the context of disillusionment with multilateral environmental governance, and particularly the Rio Treaty processes. In the following section, we explore the advocacy-oriented phase following the end of the Cold War. We also reflect in this section on how advocacy has adjusted in light of the fourth activist phase of environmentalism, noting a move towards emphasizing compliance that includes recent climate litigation. Here, we offer brief thoughts on contemporary campaigns around the European Green Deal which suggest a new wave of attention from actors that are either of recent creation or have not traditionally been involved in EU-level environmental politics. Concluding, we suggest some specific explanations for the clear demarcation of roles in EU environmental activism, where social movements push for change through horizontal forms of protest and transnational campaigns that target governments at various levels, while more advocacy-oriented actors use lobbying, public opinion campaigns and participatory opportunities offered by the institutions of the EU, such as the European Climate Pact, to push for changes in policy. Participatory spaces are identified in particular as a fruitful area for future research, as they may provide locations where activists and advocates find common ground.

SOCIAL MOVEMENTS AND ENVIRONMENTAL AND CLIMATE ACTIVISM In this section we provide a broad overview of environmental and climate activism by social movements with a focus, albeit not a strict one, on Europe. Narrowing this story entirely to Europe would risk obscuring changes in the environmental movement in recent decades that

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Environmental and climate activism and advocacy in the EU  101 are best explained by the convergence of different movements, campaigns and organizations from across the planet. As discussed in the introduction, the activist mode of action is the one most often associated with social movements. In the literature, social movements are conceptualized as distinct social processes characterized by actors that: engage in contentious forms of collective action; are in conflict with clearly identified opponents; are connected through dense, informal networks; and share distinct collective identities (della Porta and Diani, 2020: 21–22). Social movement activism operates by posing ‘a sustained challenge to power holders’, which is repeatedly displayed through public performances which demonstrate a movement’s ‘worthiness, unity, numbers, and commitment’ (Tilly, 1999: 257). These public displays help social movements convey crucial political messages to their targets and relevant publics (Tilly, 1999). Environmental movements are in turn defined as ‘a loose, non-institutionalised network of informal interactions that may include, as well as individuals and groups who have no organisational affiliation, organisations of varying degrees of formality, that are engaged in collective action motivated by shared identity or concern about environmental issues’ (Rootes, 2004: 610). According to Giugni and Grasso (2015: 354–355), environmental movements have traditionally displayed three characteristics. They are heterogeneous in terms of the actors and organizations involved (from supranational professionalized organizations to local and loosely structured milieus), in terms of issues, goals and strategies (from radical to moderate activism), and the effects of their actions are also varied. Like other social movements they have transformed, as new actors, issues and frames have emerged around environmental struggles within a more general shift from conservationism to justice-oriented movement streams. Moreover, environmental movements have tended to provide fertile ground for more formally organized groups to emerge (known in social movement studies as a process of institutionalization) (ibid.). These newly emerged organizations in turn take different forms, including Green political parties and organized civil society groups. The latter have often shifted their attention to include specific policy issues as well as the broad claims of movements, adopting an advocacy mode of action as their principal strategy. The European branches of Greenpeace and Friends of the Earth, mentioned later, are examples where such a shift can be seen over time. The transformations of environmental movements in light of new actors, issues and frames form a useful point of departure to reflect on how environmentalism can be described over time. Different junctures in environmental struggles help to highlight changes in activism around these transformations. Shifts of scale from local activism to national, and even transnational, levels have often been accompanied by a politicization of collective action frames, with more explicit aims of political change. While the first phase of conservationist environmentalism saw saving species and wild nature as beyond politics, the second activist-oriented phase politicized environmentalism, linking it to the Cold War. The fourth activist-oriented phase sees movements question the fitness of existing governance systems to effectively tackle climate change (see Kenis, 2019), and increasingly disruptive forms of action. The move from the third phase of environmentalism, characterized by advocacy, to the fourth, activist phase, illustrates these points in more detail. As time wore on after the end of the Cold War it became clear that the institutions of global environmental governance were failing to deliver effective action to halt environmental degradation and climate change. This led to some tensions about how to move forward within organized, advocacy-oriented groups operating at the global level of environmental governance (see the following section). As a result, groups convinced that activism was the answer formed the Climate Justice Now!

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102  Handbook on European Union climate change policy and politics network in 2007. As Hadden (2015) notes, these emerging, more radical groups converged at a critical juncture – the counter-summit at the 2009 Copenhagen UNFCCC COP. They held large-scale street protests and attempted to penetrate the ‘red zone’ where official negotiations took place. In 2010 they met with like-minded national governments at an international meeting in Cochabamba, Bolivia. The emerging climate justice movement stressed grassroots, polycentric participation and participatory democracy in opposition to the top-down models of the United Nations, most notably the Framework Convention on Climate Change (UNFCCC), the performance of which was judged disappointing, particularly following the Doha Conference of the Parties in 2012. It is important to note that this movement also emerged in a context of increasing repression, including the assassinations of several climate justice activists, as well as the campaigns of climate change deniers, supported by the most polluting industries. The framing of environmental and climate issues also shifted at this juncture. One clear limit of the multilateral approach is the fact that, despite their apparent commitment to environmental protection, professed in multilateral forums, States allow business as usual in the form of damaging extractive projects to continue within their borders. The frames of environmental justice and climate justice reflect this, conceiving of environmental issues as social justice issues. These insights were raised concretely in local struggles across the globe, ranging from grassroots groups in the United States that opposed the effects of environmental racism (Agyeman et al., 2016), to indigenous peoples’ opposition to deforestation, land grabs and extractives industries, and European movements against infrastructure projects. Longstanding Europe-based campaigns against ‘mega infrastructure’ projects show how events shape local conflicts that may then escalate and connect transnationally. The campaigns against the expansion of the international airport in Munich (Friends of the Earth Europe, 2012) and the high-speed train in Val di Susa, Italy (della Porta and Piazza, 2008) are two such examples from the European context (see Mertens and Thiemann, Chapter 5 in this volume, on how such events have brought the climate credentials of the European Investment Bank into the spotlight). In others, environmentalists have come together with pacifist struggles in contentious politics over military bases and other ‘Locally Unwanted Land Uses’, using global frames to define their diagnosis and prognosis (della Porta and Fabbri, 2016). It is against this background that a new wave of protest for climate justice developed globally and gained momentum (Wahlström et al., 2019; de Moor et al., 2020; Zamponi et al., 2021) in the late 2010s, following the Paris Agreement. In Europe this wave of protest has been dominated by the Fridays for Future movement and its School Strikes for the Climate, bringing younger generations into the frame of environmental activism. Another prominent example is Extinction Rebellion, which began in the UK and has since spread to other countries, and has marked a shift towards civil disobedience reminiscent of that seen in activism against nuclear testing in the 1970s (see Box 7.1).

7.1

FRIDAYS FOR FUTURE AND EXTINCTION REBELLION

In Europe, Swedish teenager Greta Thunberg started a school strike in August 2018 that quickly spread across the globe. After school pupils had ritually gone on strike every Friday to call for urgent action against climate change, on 15 March 2019, Fridays for Future (FFF)

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Environmental and climate activism and advocacy in the EU  103 organized a global ‘day of action’ for climate justice involving 1.6 million people worldwide (della Porta and Portos, 2021; see Wahlström et al., 2019; de Moor et al., 2020). Another three global days of action were called that same year, culminating in the September day of action just three days before the UN Climate Action Summit in New York. This saw 7.6 million participants on the streets in 6,000 protest events across 185 countries in what can be considered the largest climate protest in world history (de Moor et al., 2020, 2021). Along with the FFF protests, born in Europe, the more transgressive Extinction Rebellion (XR) emerged on 31 October 2018 in the UK with a ‘Declaration of Rebellion’ against the British government. XR has three core claims promoted through civil disobedience and non-violent direct actions: governments must: (1) tell ‘the truth by declaring a climate and ecological emergency‘; (2) act ‘to halt biodiversity loss and reduce greenhouse gas emissions‘; and (3) create ‘and be led by the decisions of a Citizens’ Assembly on climate and ecological justice’ (https://​rebellion​.global/​about​-us/​; see de Moor et al., 2021). Both FFF and XR have broadened their repertoires of action (beyond school strikes and provoking mass arrests, respectively) and spread globally. According to Hagedorn and colleagues (2019: 139–140), ‘the enormous grassroots mobilisation of the youth climate movement … shows that young people understand’ the urgent need to protect the climate and other foundations of human well-being. Moreover, in contrast to ‘“do-it-yourself” forms of action such as developing grassroots solutions and taking direct action against the fossil fuel industry’, Joost de Moor and colleagues (2021: 4; see also Zamponi et al., 2021) have noted that ‘FFF and XR represent a “return to the state”’ in the sense that these groups ask national governments to act to find effective answers to the climate crisis, which arguably tallies with a disillusionment with multilateralism. XR sees citizens’ assemblies as a key part of this. At the same time, protest survey data from FFF climate strikes in Europe reveals that individual activists believe that putting pressure on politicians to act, while crucial, needs to be accompanied by individual action (de Moor et al., 2021; della Porta and Portos, 2021). While national government action is key to the demands of both FFF and XR, citizens are still seen as a central to change. Thus, protesters’ calls for state responsibility are also accompanied by a focus on promoting changes in individual behaviour, new mutualism or alternative forms of production. Pro-climate actors have developed previous concepts of energy democracy as well as introducing new ones including the shared economy, consumer ownership of renewables and connection of community power in the energy sector (Jenkins, 2018; Stephens, 2019). Overall, we can conclude alongside Togami and Staggenborg (2019) that ‘recent developments in grassroots activism on climate change provide reason for optimism. In response to political intransigence, grassroots activists are marching in the streets, boycotting fossil fuel corporations, halting pipeline projects, and lobbying elected officials for comprehensive climate change legislation’, both in Europe and elsewhere. Attempts to build transnational coalitions and solidarity both between European groups and beyond have long been underway. Nevertheless, there are clear tensions and challenges to this movement building (de Moor, 2020). In addition, anti-climate activism is on the increase and climate change denialism has been linked to support for right-wing populism, a growing political force in Europe (Lockwood, 2018). Although it is difficult to prove direct effects between activism and decision-making by national and international institutions, it is well established that movements do have consequences, and that they tend to be complex – they combine and mix with other sources of

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104  Handbook on European Union climate change policy and politics influence when they come to bear on official decision-making, including EU-level decisions (Bosi, Giugni and Uba, 2016). In the long term, environmental activism is also argued to have played a role in injecting imaginative and radical ideas into societal and state understandings of environmental problems (Dryzek and Stevenson, 2011).

ORGANIZED CIVIL SOCIETY AND ENVIRONMENTAL ADVOCACY IN EUROPE Advocacy in the EU context is the focus for this section. It is useful to place this within the broader global story of the different stages of environmentalism outlined so far, before looking in more detail at the work of environmental NGOs based in the EU. The previous section touched briefly on the first and second phases of environmentalism before delving into the fourth. This fourth wave was described as emerging from frustration with multilateralism following a period where parts of social movements became more organized, with a view to exploiting post-Cold War opportunities to engage with the developing architecture of global environmental governance. These opportunities were opened by environmental activism from the 1970s onwards, with environmental concerns brought onto the agenda by anti-nuclear activists in both the 1972 United Nations Conference on the Human Environment and the 1975 Helsinki Accords. Numbers of NGOs, including environmental NGOs, increased exponentially at the end of the Cold War to take advantage of new opportunities to advocate and shape institutions of global governance (e.g. Keck and Sikkink, 1998; Kaldor, 2003). This advocacy-oriented phase of environmentalism continued with the first major multilateral governmental discussions on climate change at the United Nations Earth summit on Environment and Development in 1992 and the Rio Treaties it produced (the UNFCCC, the United Nations Convention on Biological Diversity, and the United Nations Convention to Combat Desertification). The trend persisted with the adoption of important implementing protocols, particularly the Kyoto Protocol to the UNFCCC concluded in 1997. NGOs capitalized on the opening up of spaces for their participation in these treaty processes and multilateral meetings, and advocacy became the natural strategy for many. Collective action in this third phase of environmentalism thus followed a predominantly insider logic, via targeted advocacy led at the global level by a coalition of large environmental NGOs. Among the most visible groups active on climate change issues prior to the spread of disillusionment with multilateral environmental governance (see previous section) is the Climate Action Network (CAN). Founded in 1989, it gathers about 700 mainly environmental organizations and has several branches, with one of the most active being CAN-Europe. The history of NGO advocacy in the European Union can be read as one ‘branch’ of this broader story of shifts between phases characterized by an emphasis on either advocacy or activism. The Single European Act (1987) brought the creation of a specific chapter on the environment and a range of other more ‘social’ competences within the EU’s remit, and has generally been seen as the moment when the numbers of NGOs in Brussels began to climb in response to this opportunity (Greenwood, 2017). Scholars have focused on an increasing variety of aspects of the work and influence of these ENGOs, with earlier work concentrating on the perspective of interest representation or lobbying (Wurzel et al., 2017). Some core ENGOs, particularly those that formed the ‘Green 8’ (now the ‘Green 10’) were identified as central to network-building and influence on EU decisions on environmental matters. These

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Environmental and climate activism and advocacy in the EU  105 ENGOs included both umbrella organizations of national conservationist NGOs, notably the European Environmental Bureau (EEB), created specifically to influence EU policy, as well as branches of groups with more activist histories, such as the Greenpeace European Unit and Friends of the Earth Europe. In particular, it has been argued that the Green 8 facilitated a thematic division of labour to cover the increasing volume of EU environmental legislation that occurred from the first decade of the millennium (Biliouri, 1999; Parks, 2015), and, prior to that, to have even contributed to the development of the EU Commission’s Environment Directorate General (DG ENVI) through a ‘revolving door’ between NGO and Commission staff and their ongoing close relationships (Ruzza, 2004). Related to this, ENGOs, including prominent members of the Green 10 such as the EEB, also receive funding from the European Commission, both for specific projects and for their operational costs under the last LIFE programme (European Commission, 2015; see Bürgin, Chapter 2 in this volume). Scholars have reflected on the possibilities for co-optation via such funding, which may create dependencies between ENGOs and the institutions they seek to influence. Empirical studies have found this to be complex and navigated using the aforementioned division of labour, whereby more advocacy-oriented and institutionally funded ENGOs stick to insider strategies, and ENGOs with different funding models seek to also employ outsider strategies (Parks, 2015). There is no scholarly evidence that ENGOs have directly avoided critical approaches to EU policy as a result of receiving funding, rather, cooptation can take place through more nuanced processes where funding and involvement in official consultation processes may over time shape organizational forms and logics in ways that make critical standpoints less likely (ibid; see also Choudry and Kapoor, 2013). In empirical terms, numbers of ENGOs, or more precisely NGOs with a declared interest in the environment, in the EU transparency register suggest that the story of advocacy on EU environmental decision-making remains important, even as environmental activism in the form of prominent movements like FFF and XR has risen. At the time of writing, these accounted for 1,598 out of 3,350 NGO entries (though many also register other interests). In other words, approaching half of all registered NGOs, who must register if they want to engage with EU institutions, declare ‘the environment’ as a major concern. The coverage of the register can only be taken as a general indication given its various limitations (Greenwood, 2017: 12). Nevertheless, it is considered a good source for estimating trends in organized civil society, particularly since the decision to make registration mandatory was taken in December 2020. Variations in numbers year on year have in the past followed developments in debates over the nature of the register, such as the requirement to be registered in order to be able to meet with a Commissioner, added in 2016 (Greenwood, 2017: 12). The jump in NGOs declaring the environment among their interests in 2020 and 2021 likely indicates this improved coverage of the register. Yet these increases in numbers also correlate with significant climate and environment-related policy junctures, such as the Paris Agreement and the announcement of the European Green Deal. This underlines the impression that ENGOs active in the EU sphere have continued in their advocacy. It also shows that, like activist-oriented social movement groups, ENGOs develop in light of significant events. A deeper investigation of the literature suggests that ENGO advocacy and its impacts in the EU have changed over time in a way that ties in with the broader story of a shift towards activism in recent years. While earlier work points to ENGOs’ influence on specific legislative and policy decisions (e.g. Ruzza, 2004), more recent scholarship suggests a shift towards monitoring and compliance as a main focus (Börzel and Buzogány, 2019). In more detail, the

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106  Handbook on European Union climate change policy and politics nascent ENGO sector was seen as peculiarly unified, and a useful source of expertise for the Commission and its new DG ENVI (Biliouri, 1999). Empirical studies then revealed whether and where influence was wielded by ENGOs, focusing on the first, more spectacular cases of influence, such as the late 1990s campaign that led to the moratorium on the imports of foods containing genetically modified organisms (Kettnaker, 2001). Clear-cut cases like this are not found in climate change policy, where broad agendas tend to be decided in international arenas, and ENGOs have tended to seek to influence either by guiding norms or to reform specific details of policies such as the Emissions Trading System (Moore and Jordan, 2020). Comparative studies have sought to explain ENGO influence on environmental (and social) issues in a broader perspective. Effective coalitions, political opportunities in the form of either powerful allies in the EU institutions or, conversely, the possibility of mobilizing grassroots members to act in particularly influential Member States, are found to be central to explaining influence over EU decisions (Ruzza, 2004; Parks, 2015). A still broader view seeks to explain ENGO influence on EU decisions in terms of policy preference alignments, strategic choices, and issue areas (Bunea, 2013; Junk, 2016). With the European sovereign debt crisis of the 2010s, scholars foresaw, and subsequently found evidence of, a decline in the EU’s environmental ambition and policy (Gravey and Jordan, 2016). Nevertheless, over time this decline has been attributed by several scholars less to the financial crisis than to the pursuit of a policy agenda defined by a discourse of ecological modernization (Machin, 2019; see also Fitch-Roy and Bailey, Chapter 12 in this volume), on the one hand, and the increasingly diverging interests of Member States, on the other (Burns, Eckersley and Tobin, 2020). This is supported by research that notes a shift in attention towards improving the implementation of the existing EU environmental acquis (Börzel and Buzogány, 2019). Anecdotal evidence from the few EU-oriented environmental campaigns to percolate into the mass media in recent years, such as the campaign surrounding the renewal of the glysophate licence by the EU Chemicals Agency, supports this argument about advocacy shifting away from the aim of influencing decisions and towards ensuring enforcement, and identifies a role for ENGOs in this process (Hofmann, 2019). The role of NGOs in enforcement is often welcomed by the Commission (European Commission 2017) and facilitated in international law by the Aarhus Convention (Bürgin, Chapter 2 in this volume). A focus on implementation is also suggested by research on influence and relative preferences. In particular, Bunea (2013: 553) finds that median positions ‘are more likely to be translated into policy outcomes’, and that neither issue salience and the polarization of preferences, nor inter-organizational ties, have a direct effect on policy influence, suggesting the peculiarity of the dynamics described in case study-based research. Shifting towards ensuring the full implementation of EU environmental legislation, even if found to fall short, makes strategic sense according to this view. If influence is rare and relies on factors outside the control of ENGOs, investing more energy in compliance makes sense, particularly at a moment in which broader change is being demanded via activist means. Indeed, the progressive engagement of advocacy-oriented groups in judicial activism alongside citizens via climate litigation at the Member State level suggests awareness of this limitation. Prominent successful cases in this line include that against the government of the Netherlands (see Stoczkiewicz, Chapter 9 in this volume) and subsequently against Royal Dutch Shell, as well as against the German government. Support for this view can also be drawn from the literature on social movements. The move to an environmental justice frame in activism was the result of work to achieve convergences,

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Environmental and climate activism and advocacy in the EU  107 shifts in local struggles to address global issues, and spillover effects between such struggles, as well as disillusionment with multilateralism. In the previous section we underlined the local struggles in which these justice frames can be seen. Yet justice frames are also clearly traceable to the traditions of the global justice movement, which also considered environmental themes. This movement engaged with the EU only to ask for systemic change, underlining that ‘Another Europe is Possible’ (della Porta et al., 2006). The same could be said about the more recent activist phase of environmentalism, where the idea of environmental and climate justice has come to the fore. Here too international organizations are addressed as systems (one of FFF’s most well-known slogans is ‘system change not climate change’) and, as discussed earlier, more state responsibility is demanded. Though the evidence at present is anecdotal, the broad pattern of cycles of contention over time suggests this explanation may hold. Environmental advocacy at the EU level has focused on specific policies, and more recently on compliance, while broader demands have been brought by the movements already discussed, or by relatively new EU political actors that fall into the category of ‘movement parties’ (della Porta et al., 2017) (see Box 7.2). Moving towards a preference for outsider strategies to raise broader questions beyond implementation makes strategic sense in an EU where discourses other than ecological modernization, such as those of the Green New Deal, are marginalized (Machin, 2019) (see Box 7.2).

BOX 7.2 ACTIVISM AND THE EUROPEAN GREEN (NEW) DEAL A notable example of a new actor at the European level making broad demands about environmental and climate governance is the movement party Diem25, which has led a campaign for a European Green New Deal linked to the wider international movement for environmental justice. They argue that the Commission’s European Green Deal (EGD) has adopted the language of the new deal in name only, while at the same time it continues to reproduce hegemonic discourses of market-led economic growth, and to call for the mobilization of private finance without meaningful democratic accountability. The result is the promotion of policies that require nothing more than cuts in GHG emissions and new energy policies for growth to continue, supposedly without causing further environmental damage (Samper et al., 2021). In justice-focused and holistic Green New Deal approaches the value of economic growth, and the role of private capital, is fundamentally challenged. Thus the EGD seeks to reproduce and co-opt the language of the new deal, but not its content: it reproduces rather than challenges the nature/culture divide, closing off real political debate about transformation. Although details of how the EGD and the Just Transition Mechanism are actually to be achieved remain hazy, initial experiences indicate that funds may be susceptible to elite capture (Gabor, 2020; Samper et al., 2021), and the European Trade Union Confederation remains sceptical as to how far it will directly benefit affected workers (ETUC, 2020). A final consideration when discussing the shift in ENGO advocacy towards implementation and compliance is that the fourth, activist-oriented phase of environmentalism has led states and indeed the EU to seek direct input from citizens. This has not led to new opportunities for ENGOs to engage in advocacy around policy directions, as input is sought in ways that bypass

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108  Handbook on European Union climate change policy and politics civil society to speak directly to citizens. There is a growing trend among EU Member States and the EU itself to set up citizens’ assemblies to gather opinions and input for environmental decision-making. Prominent recent examples in the Member States include Ireland’s Climate Assemblies, France’s Convention Citoyenne pour le Climat, and Germany’s dialogue on the climate protection plan 2050 (see respectively e.g. Devaney et al., 2020; Giraudet et al., 2021; Krick, 2021). In a similar vein, the EU is also apparently seeking to turn more directly to citizens with the recent launch of the European Climate Pact.2 The Climate Pact, a part of the EGD, seeks to create knowledge and learning networks in the EU with a view to developing and scaling up climate solutions. It involves series of events, pledges, and the naming of ‘climate pact ambassadors’ amongst other things (see Tosun, Pollex and Crumbie, 2023), and was developed following an open online public consultation. Efforts to engage with citizens in such forums which are arguably linked to deliberative and direct democracy can be seen in a positive light: citizens’ assemblies are, as noted, a central demand of XR. At the same time, whether these forums have been designed with enough attention to the structural power asymmetries that must be addressed if free and fair deliberation is to be achieved remains under debate. Equally important is the open question of whether and how their outcomes will be taken seriously by governments and EU institutions. Finally, the question of what these experiments mean for civil society – whether activist or advocacy-oriented – also remains to be addressed. These forums have mushroomed at a moment in European politics where the demands of the populist right for a direct link between government and ‘the people’ are prominent, yet this view excludes any democratic role for civil society (Ruzza, Berti and Cossarini, 2021).

CONCLUDING REMARKS In this chapter we have outlined major instances of environmental activism and advocacy in Europe in recent years. In one interpretation, this points to a fairly clear (though not necessarily formal or organized) demarcation of roles in EU environmentalism where social movements push for change through activist strategies including protests and transnational campaigns that target governments at various levels, and EU ENGOs use advocacy strategies initially to push for changes in EU policy and subsequently to monitor compliance and implementation. However, our explorations also sought to underline a more nuanced interpretation by discussing how these currents cross and sometimes take more and less prominent positions. We outlined a broad story of waves of environmentalism when advocacy and activism respectively move into the foreground, linking these shifts to new actors, frames of understanding, and political developments. In that view both advocacy and activism reflect strategic choices. Certain tactics take the spotlight when deemed more effective for achieving influence. This does not mean that others disappear: rather, they take a backseat. Nevertheless, though they overlap and blend, there are clear differences between advocacy and activism approaches to environmentalism, and climate politics, in Europe. What explains this demarcation in the field of environment and climate specifically? We have suggested that the growth in social movement-led activism in the present is linked to justice frames and the increasing recognition of the need for comprehensive, transformative changes to address the planetary crisis. At the same time, the existing dominant view of ecological modernization, seen as underpinning internal European environmental policy, has arguably reached maturity

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Environmental and climate activism and advocacy in the EU  109 in terms of the legislation produced. This consolidation on one hand, and the perception of its fundamental limits on the other, goes some way to explaining the clear differences between ENGOs and social movement organizations in European environmental activism, both during the different phases outlined and at junctures of change. Tensions between those preferring different modes of actions are particularly prominent at these junctures. In the scholarly literature, deep critiques have been forwarded against phases where organized groups engaged in advocacy. Advocacy is soon displaced, they argue, by veritable co-optation as powerful actors shape NGOs and discipline the broader field of civil society through them, leaving little space for activism (Choudry and Kapoor, 2013). Other scholars see these tensions as normal moments of change and strategic reactions to political contexts (Tarrow, 1998). Another layer of explanation relates to the meso level of organizations and their links with members as compared to those with institutions. In the EU in particular, organized civil society groups (ENGOs) that engage mostly in advocacy have tended to become progressively distanced from grassroots members. This is partly because of the information and expertise demands that EU processes place on these groups, and partly because of relatively scarce resources (Parks, 2015). This has been seen as problematic to the extent that ‘[e]nvironmental NGOs that are not consistent with these ideas and preferences [about the role of NGOs in the decision-making process], particularly those that do not bring technical expertise or knowledge to the policy process, are typically viewed as recipients, rather than providers, of policy-relevant information’ (Hallstrom, 2004: 182). The turn towards new forms of participatory climate and environmental policy-making by local, national and even European institutions with the European Climate Pact, matched by demands from some prominent social movement organizations including XR, appears as a promising area for further research. These spaces could in fact potentially provide venues to overcome the gap between activism and advocacy, by bringing together activist and advocacy modes of action in a new configuration, if designed and implemented carefully. Finally, issue salience may also contribute to explain the divide between activism and advocacy, movements and organized groups. Research suggests that influencing EU decisions requires both of these strategies to occur in parallel, and that activist strategies like protest are easier to mobilize where an issue has higher public salience, as is certainly the case for climate justice in the cases of FFF and XR (Junk, 2016; Crespy and Parks, 2017). These movement actors have been proven to command sizeable mobilization capacity at the transnational level. By involving a new generation of activists, recent protest campaigns have transformed organizational configurations and networks as well as action strategies (in particular as regards the combination of street politics and individual lifestyle change). Frames of social inequalities and environmental destruction have been bridged, as the pandemic has also underlined the complex ways in which environmental harm is bound up with health (habitat destruction and dense populations are fertile ground for zoonotic diseases), and lockdowns revealed the importance of nature to wellbeing (della Porta, 2022). Such salience is hard to imagine for individual EU policies, or even for the European Green Deal, which is regarded as an essentially technocratic endeavour by many movement activists.

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110  Handbook on European Union climate change policy and politics

NOTES 1.

For a discussion of insider–outsider framework in social movements, see Briscoe and Gupta (2016) and, for EU civil society specifically, Dür and Mateo (2016). 2. See: https://​ec​.europa​.eu/​clima/​policies/​eu​-climate​-action/​pact​_en. On consultation processes, see e.g. Parks (2015).

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8. Cities in EU multilevel climate policy: governance capacities, spatial approaches and upscaling of local experiments Kristine Kern

1. INTRODUCTION Reaching ambitious GHG emission reduction goals and achieving greater resilience to climate impacts at national and EU levels requires local action. Thus, the importance of cities and towns for climate governance has been recognized by the European Union and its Member States. Leading cities such as Copenhagen are far ahead with respect to long-term climate strategies. Although the accomplishments of such cities are promising, local climate action is not a panacea, because most cities and towns in Europe lag far behind the forerunners. While the allocation of GHG emission reductions among Member States is regulated by effort-sharing agreements, national energy and climate plans focus on the allocation of these reductions among sectors but not among subnational authorities. In most Member States, local and regional climate policy is still voluntary, and even if it is mandatory, local governments decide on ambition levels, timelines and measures. As climate policy competes with other issues, it may not reach, or may disappear from, local political agendas, despite the urgency of the issue. Cities in Europe and North America were the first to start city-level sustainability and climate policy initiatives in the 1990s. Thus, early studies on local climate action focused on these forerunner cities in the Global North (e.g. Betsill 2001; Kern et al. 2005). In Europe, active cities in the Nordic countries, the UK and Continental Europe became forerunners, while there was little action in Southern and Eastern Europe. This changed rapidly in 2008 when the EU Commission launched the Covenant of Mayors (since 2015 Covenant of Mayors for Climate and Energy, or CoM), which attracted municipalities in Italy and Spain, in particular. In response to the pathways of local climate action in Europe, scholarly interest has shifted towards: (1) studies on local climate adaptation, which supplemented research on climate mitigation (e.g. Storbjörk 2007; Uittenbroek 2014; De Rosa et al. 2022); (2) large-n studies, which became more common when the number of active cities increased (e.g. Reckien et al. 2022; Salvia et al. 2021); (3) studies on the CoM (e.g. Lee 2017; Domorenok and Zito 2021; Rivas et al. 2021); (4) studies on municipalities in Southern Europe and on post-socialist cities (e.g. Domorenok 2019; Pietrapertosa et al. 2021; Ferenčuhová 2020); (5) studies on the translation of national and international into local policy goals and on policy performance (Hofstad et al. 2021; Hsu et al. 2020; Kona et al. 2021; Karhinen et al. 2021). Although the scope of research has increased, there is still a bias towards large forerunner cities. In contrast, there is a lack of knowledge on, first, climate action in smaller cities and towns, although the majority of Europeans live in municipalities with fewer than 100,000 113 Kristine Kern - 9781789906981 Downloaded from PubFactory at 08/15/2023 12:44:38AM via free access

114  Handbook on European Union climate change policy and politics inhabitants (van der Heijden 2019; Kern 2020; Otto et al. 2021). Second, research has disregarded ‘ordinary’, less active cities (Haupt et al. 2022). Third, regional and national networks have rarely received attention (Karhinen et al. 2021). Although contextual differences are acknowledged, the embeddedness of local climate action in EU multilevel governance and its dependency on national energy and climate policy is often neglected (Kern 2019). Depending on their location, cities face different challenges. Local transformation pathways are shaped not only by place-specific factors such as existing infrastructure systems, but also by the characteristics of Member States such as the (fiscal) autonomy of municipalities, availability of national and regional funding and the degree of dependency on fossil fuels. Thus, a city located in coal-dependent Poland faces considerable problems to catch up to its Swedish or French peers (Kern et al. 2022). Against this background, this chapter proceeds as follows. The next section discusses the practical and theoretical importance of local climate governance in EU multilevel governance, while section 3 provides a chronological overview on the development, from transnational city networks, through to the CoM (from 2008) and, since 2019, the European Green Deal. Subsequently, the article focuses on the dynamics between leading and lagging cities in Europe.1 On this basis, the challenges ahead are presented in section 5. Finally, some conclusions are drawn in the last section.

2.

LOCAL CLIMATE ACTION IN EU MULTILEVEL GOVERNANCE

The relationship between cities and the European Union has changed over time. In contrast to the Council of Europe, which has promoted local and regional self-government since the 1950s, European legislation had almost no direct impact on local authorities prior to the Single European Act of 1987. However, by the early 1990s almost all areas of local policy were affected by EU legislation. This trend was counterbalanced by the creation of the Committee of the Regions (CoR) in 1994, which gave subnational governments a voice in EU-level policy processes. The biggest and most powerful European cities shifted their attention to EU policymaking, set up offices in Brussels and started lobbying EU institutions. Thus, leading cities developed from policy-takers to policymakers (Schultze 2003). There are various types of governing local climate action in the EU multilevel system (summarized in Table 8.1). Many areas of environmental and climate policies are still dominated by hierarchical governance and hard instruments. Despite the existence of the CoR and lobbying in Brussels, subnational actors have remained ‘policy-takers’ in many areas. Hard instruments include EU regulations, for example on emission standards for cars, as well as EU directives, for example on efficiency standards for new buildings, which are transposed into national law and implemented by subnational authorities. National and regional authorities may require that cities develop climate mitigation and adaptation strategies. The biggest local emitters, such as steel companies, are covered by the EU Emission Trading System and can, therefore, not be regulated locally. Although municipalities operate in a regulatory context determined by EU and national level actions, they can still influence local energy, transport and housing companies, especially if they own them and can decide on service provision. Furthermore, local climate governance depends on national tax systems (e.g. fuel taxes), but municipalities can also levy local taxes and fees (e.g. congestion charges).

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Cities in EU multilevel climate policy  115 Table 8.1

Local climate governance in EU multilevel governance

 

Municipalities

European Union, Member States, regions

Regulation and mandates Legislation

EU regulations; transposition of EU directives in

City ordinances (mandate to connect to local

national law; national and subnational legislation

district heating grid)

Strategies and

Mandatory local climate plans and strategies

Climate mitigation and adaptation strategies;

goal-setting

(mandatory heat plans)

local climate budgets

Provision of services (energy, transport, housing) Regulation of service

EU, national and subnational regulations of public and

Requirements (provision of a certain

providers

private service providers

percentage of green electricity)

Economic instruments, financial incentives Carbon-trading, taxes,

EU ETS; national and subnational taxes and fees

Local taxes and fees (congestion charges)

EU, national, subnational funding programmes (EU

Local funding programmes (funding

Structural and Investment Funds)

programmes for solar PV)

Competitive project

EU, national, subnational funding programmes

Funding of policy experiments (demonstration

funding

(Horizon 2020, Horizon Europe)

and pilot projects)

fees General funding

Voluntary instruments and agreements Agreements and

EU, national, subnational agreements and contracts

Climate city contracts (contracts with national

contracts

(Green Deal Missions, supported by the EIT

actors, EU)

Climate-KIC*) Certifications

Development, implementation, funding of certification

Participation in certification schemes

schemes (European Energy Award, European Climate Adaptation Award) Awards

EU, national, subnational awards for municipalities

Application for awards, setting up local award

(CoM award)

schemes (e.g. for companies)

Capacity-building and enabling Information and advice

Setting up regional and local energy and climate

Cooperation with local energy and climate

agencies; provision of services to municipalities

agencies; provision of services and advice to citizens

Human resources

Funding of costs for personnel at local level

Hiring new personnel, funded by third parties or own budget

Cooperation and networking Associations

Cooperation with associations and networks of

Membership in associations and networks of

and networks of

municipalities (global, European, national, regional)

municipalities

municipalities Functional networks and Setting up networks and platforms at EU, national,

Setting up local networks and platforms

platforms

(climate dashboard)

subnational levels (networks of energy and climate managers)

Note: * Knowledge and Innovation Community, run by the European Institute of Innovation and Technology (EIT Climate-KIC), https://www.climate-kic.org/.

Although hard instruments may cause local conflicts, cities have started to introduce local climate budgets. Based on ambitious climate targets, such as becoming climate-neutral by 2030, local climate budgets are new governance tools, which allocate a yearly maximum of carbon emissions to a city’s territory. Local climate budgets show whether the measures are sufficient to reach the targets, impose obligations on all municipal bodies to submit regular status reports and require real-time monitoring of emissions. If the assessments show that the expected trends will not be met, an iterative process starts, which leads to additional measures.

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116  Handbook on European Union climate change policy and politics In addition, vertical relations have emerged, including direct relations, for example when cities participate in EU-funded projects, as well as indirect relations with transnational city networks as intermediaries. Over time, a wide range of vertical relations between the EU and the local level has developed, comprising funding programmes, voluntary agreements as well as capacity-building and enabling policies of various kinds. Alongside EU Structural and Investment Funds,2 municipalities have many options to apply for EU funding (EU funding instrument for the environment and climate action – LIFE, Horizon 2020, Horizon Europe, etc.) (Negreiros and Falconer 2021; EU Commission 2021a). Options to obtain funding from national and regional governments differ considerably between Member States. Many funding programmes are open to all municipalities such as general funding of personnel and green infrastructure. In addition, there are highly competitive programmes for forerunners both at EU and national levels. Due to existing capacities, forerunner cities have better chances than laggards to apply successfully for external funding. Furthermore, voluntary instruments have been introduced to EU climate governance, ranging from climate contracts to certification schemes and awards (e.g. European Energy Award). In Sweden, the ‘Viable Cities’ programme (Viable Cities 2022) led to 23 climate city contracts between these cities and a consortium of three national agencies (innovation, research and energy), which served as a model for the Green Deal ‘Mission on 100 Climate-Neutral and Smart Cities by 2030’. In addition to this initiative, the Commission launched a Mission on the ‘Adaptation to Climate Change’ (European Commission 2021a, 2022).3 Capacity-building and enabling determines the role of local governments in coordinating and facilitating partnerships with private companies, supports civil society and encourages behavioural changes. Persuasion and ‘nudging’ are tools for governing climate change at local level. They provide information and advice and support the development of human resources. Examples include setting up service points and hotlines for citizens and companies. Horizontal relations between cities within and beyond national borders are also important drivers for local action, but they have changed over time. Today, they are not limited to membership in transnational city networks, because cities and towns have become involved in EU-funded project networks and meet frequently at EU-led events such as the ‘European Week of Regions and Cities’. In addition, the CoM has stimulated the creation of regional networks, in particular in Italy and Spain. Furthermore, new functional platforms and networks emerged, for instance smart city and climate dashboards, networks of climate managers, and the ‘Mayors Alliance for the European Green Deal’ (Eurocities 2021). Local climate governance in the EU multilevel system is changing. Reaching the goals of the Paris Agreement requires harder instruments. Thus, the most ambitious cities concluded climate city contracts and local climate budgets. These are promising experiments, although the transfer potential of such solutions is limited because they depend on the willingness of local populations to accept far-reaching changes. Furthermore, there are many forms of vertical relations and soft instruments such as voluntary agreements. Finally, horizontal relations between cities are important drivers for the transfer of promising experiments. Overall, it can be concluded that different instruments are needed for specific types of cities. While voluntary and experimental approaches and competitive funding programmes are attractive to forerunners, general funding programmes for all municipalities are suited to the needs of less ambitious cities. Latecomers and laggards, often small cities and towns, depend on regional networks and institutions, which provide advice and support capacity building (Kern 2020).

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Cities in EU multilevel climate policy  117

3.

FROM TRANSNATIONAL MUNICIPAL NETWORKS TO THE COVENANT OF MAYORS AND THE EUROPEAN GREEN DEAL

The previous section illustrated how cities and towns have become embedded in EU multilevel climate governance (Kern 2019). It is possible to identify three phases of EU-city relations: (1) the emergence of transnational municipal networks; (2) the establishment of the CoM; and (3) the development of the ‘EU Urban Agenda’ and ‘European Green Deal’. The first phase is characterized by the foundation of transnational municipal networks since the late 1980s. These grew rapidly, while concentrating their activities on the exchange of experience and lobbying at national and EU levels. During this period, general-purpose networks (such as Eurocities) as well as specialized networks (such as Energy Cities) were founded (Kern 2001). These helped their members to establish direct relations between cities and their networks on the one hand, and EU institutions on the other. By direct lobbying in Brussels they bypassed national governments, in particular Member States, which did not support local climate action. Stimulated by the EU Commission, ten transnational city networks, including all three networks in the area of climate policy (Climate Alliance, Cities for Climate Protection, Energy Cities) cooperated under the umbrella of the ‘European Sustainable Cities & Towns Campaign’ (Aalborg Charter 1994). The Campaign grew rapidly, and in spring 2002 around 1,500 municipalities had joined, with almost 1,000 cities and towns located in Italy and Spain. The second phase of EU-city relations began in 2008, when the Commission (DG Energy), supported by the CoR and the EU Parliament, set up the Covenant of Mayors. Its main purpose was to facilitate the implementation of the EU Climate and Energy Package of 2008 at local level. Thus, the CoM required that signatories committed themselves to reducing their CO2 emissions by at least 20 per cent by 2020. In March 2014, the EU Commission (DG Climate Action), together with the European Environment Agency, introduced Mayors Adapt, which merged with the CoM in late 2015 and became the ‘Covenant of Mayors for Climate & Energy’. Finally, the CoM joined forces with the ‘Compact of Mayors’ in 2016 and became the ‘Global Covenant of Mayors for Climate and Energy’. Today, new signatories have to commit to develop integrated climate mitigation and adaptation strategies and reduce their CO2 emissions by at least 55 per cent by 2030. While the daily work of the CoM is run by the CoM Office in Brussels, strategic questions are decided by a Political Board, which consists of mayors and locally elected representatives. The CoM is a unique institutional arrangement, which requires close cooperation of all major European city networks involved in running the initiative, the European Commission, which funds it, and the Commission’s Joint Research Centre (JRC) as a monitoring agency (Kona et al. 2021; Bertoldi et al. 2020; Kern 2019). By April 2022, almost 11,000 cities and towns with around 339 million inhabitants in 54 countries had joined the initiative, including about 10,000 signatories with around 229 million inhabitants in EU Member States. In the EU, the CoM is supported by more than 200 ‘Covenant Coordinators’ (national and regional authorities) and more than 200 ‘Covenant Supporters’ (national and regional city networks and associations, local and regional energy agencies), which assist the signatories to fulfil their requirements. Signatories are obliged to submit emission inventories, action plans, monitoring reports, and risk and vulnerability assessments, which need acceptance by the JRC. In case of non-compliance, they face sanctions. By December 2021, around 70 per cent of the signatories in the EU Member States had submitted emission inventories and almost 8 per cent risk and vulnerability assessments.

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118  Handbook on European Union climate change policy and politics Almost 30 per cent of the signatories had not yet submitted an action plan, 50 per cent had submitted plans, which were accepted, and 6 per cent had plans rejected by the JRC, while the acceptance of the remaining plans was still pending. In addition, around 25 per cent of the signatories had provided monitoring reports (Covenant of Mayors 2022). The number of signatories differs considerably between Member States. Out of around 10,000 signatories, 49 per cent are located in Italy and 28 per cent in Spain, including many small and medium-sized municipalities. While more than 60 per cent of Italian municipalities signed, less than 1 per cent of the German municipalities joined. These differences diminish somewhat if the number of inhabitants is taken into account: 24 per cent of Germans, 33 per cent of French, and 88 per cent of Italians live in CoM municipalities. These differences can at least partially be explained by the parallel development of the CoM and national initiatives. In Member States with their own funding programmes, such as Germany, municipalities have less incentive to join the CoM. As monitoring systems of the CoM and comparable national systems are not fully harmonized, joining the CoM, in addition to participating in national programmes, implies an extra burden and even creates disincentives to join. The CoM differs considerably from transnational municipal networks established during the first phase of EU-city relations. First, it required a coordination of all major, and sometimes competing, networks and associations of local and regional authorities in Europe, which had to build a consortium in order to get EU funding for running the initiative. Thus, they had to learn to speak with one voice to the Commission. Today, the CoM Office in Brussels serves as an interface between the Commission and the signatories. Second, the CoM was not set up ‘by leading cities, for leading cities’ (Kern and Bulkeley 2009). Instead, it offers options for all interested municipalities. Like the ‘Sustainable Cities and Towns Campaign’, it attracted many small cities and towns in Italy and Spain. Third, the CoM has become embedded in EU, national and regional institutions (Kern 2019). In contrast to the first phase of EU-city relations, which was characterized by horizontal relations between municipalities, vertical relations between municipalities and the EU have become far more important. Even small municipalities in Italy can not only turn to their regional coordinators for support but also call a hotline in Brussels and get advice in Italian. In a third phase of EU-city relations, the form of embeddedness of local authorities in the EU’s institutional architecture and its climate policy is changing because Member States have become far more important for EU-city relations. First, the EU Urban Agenda paved the way for stronger cooperation between the EU, the Member States and subnational authorities. The Pact of Amsterdam (2016) stimulated multilevel partnerships, with the objectives of better regulation, better funding and better knowledge, in 12 priority themes, including energy transition, climate adaptation, urban mobility, sustainable land use, circular economy and air quality (Pazos-Vidal 2019) (see also New Leipzig Charter and Ljublana Agreement). Second, the CoR suggested establishing a network of national ambassadors for promoting the CoM in the Member States and formalizing its own role within the CoM by including its representatives in the CoM’s institutional architecture. Third, the implementation plans for the EU Missions on climate adaptation and climate-neutral cities include the Member States and go beyond the cooperation of the European Commission and local authorities (European Commission 2021a, 2021b). Out of 377 cities, which had submitted an expression of interest, in April 2022 the Commission selected 100 cities from all Member States, and 12 additional cities from eight non-EU Member States, for the ‘Climate-Neutral and Smart Cities Mission’. These cities are supposed to develop Climate City Contracts, i.e. strategies to reach climate-neutrality by 2030,

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Cities in EU multilevel climate policy  119 based on a co-creation process that involves local stakeholders and citizens. The Climate City Contracts will include investment plans. As EU funding will not be sufficient, cities will need private investment and greater flexibility within the EU’s Stability and Growth Pact.

4.

CHARACTERISTICS OF MUNICIPALITIES AND DYNAMICS BETWEEN FORERUNNERS AND LAGGARDS

There is empirical evidence that large cities have the best chances to become forerunners (Otto et al. 2021). Among mid-sized cities, old university towns such as Freiburg seem to be the best candidates for acquiring the reputation of a forerunner (Haupt et al. 2022). In contrast, small cities and towns, in particular in rural areas, are ‘unlikely pioneers’ (Homsy 2018; Haupt and Kern 2022). However, there are exceptions such as Växjö in Southern Sweden, which wants to become fossil-fuel free by 2030 or ‘bioenergy villages’ such as Güssing in the Burgenland region of Austria. Forerunners can develop from pioneers, which concentrate on local initiatives, to leaders, which combine such internal with external ambitions and promote successful local experiments outside city borders. There are four types of leadership (Wurzel et al. 2019), which can be applied to cities: (1) structural leadership refers to a city’s economic power and capacities and is thus typical for large metropolitan cities such as Paris; (2) entrepreneurial leadership requires negotiation and diplomatic skills and is typical for internationally visible cities such as Copenhagen; (3) cognitive leadership is based on the ability to develop novel approaches such as Oslo’s and Copenhagen’s local climate budget; and (4) exemplary leadership rests on the development of good examples which can be transferred to other cities. While bigger cities are in a better position to become structural, entrepreneurial and cognitive leaders, smaller cities and towns are most often restricted to exemplary leadership. The relation between the size of a municipality and its capacities for climate policy can be illustrated by the example of Finland. Here, the six largest cities (Helsinki, Espoo, Tampere, Vantaa, Oulu, Turku) together with Lahti, the country’s eighth-largest city, are forerunners. These cities, all of which are internationally networked and whose bold initiatives have drawn international attention, have an average population of around 270,000 inhabitants, covering approximately one third of the Finnish population. The majority of Finns, though, live in one of the more than 300 smaller municipalities, with one quarter of the population living in one of the approximately 220 Finnish small municipalities that have not yet responded adequately to the growing challenges of climate change (Kern 2020). Apart from city size, research has revealed a number of structural characteristics which are essential for becoming a forerunner in local climate policy (Zahran et al. 2008; Withycombe Keeler et al. 2018; Homsy 2018; Kern et al. 2022): 1. population: growing, young and above-average educated and skilled population; 2. economics: sound economic situation and a high number of jobs in the service and green tech industries; 3. politics: political and administrative support for climate action, in particular by the mayor, and political influence of green parties; 4. infrastructure: ownership of public utilities and service companies (energy, transport, housing);

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120  Handbook on European Union climate change policy and politics 5. research environment: research capacities, especially research organizations focusing on energy and climate issues, and institutionalized forms of city-university partnerships; 6. civil society: strong and active stakeholders and citizens, institutionalized forms of stakeholder and citizen participation (including climate advisory councils), environmental groups and new movements such as Fridays for Future (for more on which, see Parks et al., Chapter 7 in this volume). The combination of these characteristics is essential for the transformation of European cities towards climate-neutrality and resilience. Depending on the transformation processes which have already taken place, belonging to a certain type makes a city more or less likely to become a forerunner or a laggard. ‘Green cities’ with a long history of environmental and sustainability initiatives, and knowledge cities, hosting leading universities and research institutes, are in the best position to become climate-neutral and resilient (Haupt et al. 2022). As research has focused on forerunners, there is still a lack of knowledge on cities and towns which face harder conditions, although the majority of Europeans do not live in prosperous metropolitan areas or university towns. Instead, they live in smaller, and often shrinking cities and towns, which historically depended on old industries (shipbuilding, mining, steelmaking) and already underwent a more or less successful transformation. Industrial cities in an early stage of transformation are most likely laggards, in particular if local economy and jobs rely on a single company (Haupt et al. 2022). There are also prosperous cities, which depend on the extraction of fossil fuel and cities which are dominated by the car industry (e.g. Wolfsburg in Germany). Such cities need to develop different transformation pathways than leaders. Thus, there is a need to focus more on mid-sized cities such as Malmö, which reinvented itself as a green city after the decline of the shipbuilding industry, or small municipalities such as Loos-en-Gohelle in Northern France, a former mining community. It is most evident that the transfer of local experiments requires more than replication. Instead, there is a need to develop and test models for different types of cities. Moreover, urban transformation pathways do not always proceed in one direction only. In contrast to leading cities, developments in smaller cities and towns with lower capacities appear to be less path-dependent, and more conditional on the decisions at regional, national and EU levels. Developments are thus much more discontinuous. In practice there is a dynamic that cannot be understood by means of a simple forerunner-laggard model. Alongside forerunners and laggards exists a large number of municipalities that can be allocated to neither one nor the other group. In Finland, for example, besides the seven forerunners and approximately 220 laggards are more than 80 mid-sized cities and towns that do not fit unambiguously among either of these two groups. Instead, six types of cities can be distinguished (Kern 2020) (Figure 8.1): 1. Forerunners staying ahead: a small number of active and internationally networked (larger) cities that were already active at an early stage, have through numerous initiatives received attention both nationally and internationally, and come up with local experiments on a frequent basis; 2. Followers catching up: a group of active cities seeking to catch up with the forerunners, cooperate closely with them, adopt their successful initiatives, tailor them to their local needs, and have become more active internationally;

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Cities in EU multilevel climate policy  121

Figure 8.1

Dynamics between forerunners and laggards

3. Latecomers stepping in: a group of mostly smaller cities and towns that have previously been passive, have little chances of becoming forerunners, but which in recent years have launched first initiatives because they have recognized the urgency of the issue; 4. Stragglers falling behind: a small group of mostly larger cities that were active in the past, for instance initiating a Local Agenda 21, but which have fallen behind the forerunners, and only undertake moderate endeavours in order not to completely lose pace; 5. Dropouts stepping out: a group of municipalities that began climate-policy initiatives which, however, led to considerable local conflicts and ultimately to failure;

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122  Handbook on European Union climate change policy and politics 6. Laggards staying behind: the majority of smaller municipalities, in which climate mitigation and adaptation have never been on the political agenda, due to a lack of local capacity.

5.

CHALLENGES AHEAD

5.1

Strengthening Governance Capacities

Local transformations require capacities for strategic, integrative, adaptive and innovative action. Strategic capacities imply the development of long-term thinking, visions and goals, and the institutionalization of iterative procedures and guardrails for transformation pathways. Long-term goals call for a strategic alignment of goals and frameworks, within and beyond city borders. There is a need for reorganizations (e.g. the introduction of interdepartmental working groups) (Kern et al. 2022). Approaches in leading European cities are, thus, characterized by a high consistency of long-term policies and investment strategies. The emergence of local climate budgets and climate city contracts indicate high strategic capacities. Integrative capacities are also a precondition for successful climate actions in European cities and towns, including new forms of vertical and horizontal integration of climate policies that require administrative reorganization. An assessment of synergies, trade-offs and conflicts between climate mitigation and adaptation is needed. In European cities, three types of integration of climate mitigation and adaptation can be observed: integrated, pillarized and project-oriented approaches (Kern et al. 2022). Although full organizational integration may not be required, integrated climate mitigation and adaptation strategies, and integrated approaches at project level, are essential (Göpfert et al. 2019; Kern et al. 2022). A lack of such approaches in the programming phase, such as two separate Green Deal Missions on adaptation and climate-neutral cities, bears a high risk that climate mitigation and adaptation cannot be integrated at local level. Furthermore, adaptive capacities require knowledge about system dynamics and ideas how systems can become more resilient. Adaptive management is a general approach, which does not refer specifically to climate adaptation (Curtin and Prellezo 2010). It takes risks and uncertainties of complex systems into account and emphasizes the importance of flexibility and learning. Iterative procedures stimulate continuous learning and enables the integration of new knowledge. In the absence of full information on all factors affecting ecosystems, the precautionary principle should be part of adaptive management. Adaptive capacities are needed for both pillars of climate policy. Reorganization of existing, or even the establishment of new, organizations may be required. Improving adaptive capacities calls for strengthening self-organization and polycentric networks, vis-à-vis traditional hierarchical structures of public organizations. Indicators, emission inventories and harmonized monitoring systems are needed for the continuous assessment of policies. Finally, innovation capacities help to overcome path dependencies of local climate action. This includes the development and dissemination of local experiments and technological innovations, based on the cooperation between local companies and local research organizations, facilitated by innovation incubators, urban living labs, and real-world labs. In addition, formalized city-university partnerships help to generate institutional, political and social innovations, including local experiments (Eneqvist 2022) such as demonstration and pilot projects, which make innovative solutions visible to citizens. New solutions need to be contextualized and

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Cities in EU multilevel climate policy  123 aligned with existing practices and narratives. Actors need to anchor novelty in context, learn from successful practices, and stimulate the transfer of innovations. 5.2

Taking the Spatial Dimension into Account

There is an increasing need for cooperation at the regional level (see De Gregorio Hurtado 2021). In the area of climate mitigation, the options to generate renewable energy or produce local food are limited within city borders, and public transport systems need to include the demands of commuters. In the area of climate adaptation, necessary infrastructure projects may cross administrative borders, and actions to control flood risk in one area may displace it to others (Guimarães and Pavlik 2021). In the absence of regional cooperation, innovative cities may face resistance from surrounding municipalities, for example against the installation of wind turbines (Gailing et al. 2020). As local climate action in Europe is embedded in EU multilevel governance, smaller cities and towns, in particular, depend on regional cooperation and national support. Due to the bias towards large forerunner cities in research, ‘ordinary’ cities (Haupt et al. 2021) have been neglected, and research on national and regional networks of municipalities is still very limited. Apart from national networks of cities and towns, such as ‘Klimatkommunerna’ in Sweden and ‘HINKU’ in Finland (Karhinen et al. 2021), the experiences in Europe indicate that transnational initiatives need regional and national support. Thus, European city networks such as ‘Energy Cities’ act at both international and national levels and maintain national sub-networks. In addition, national climate policies have influenced the CoM. In Member States where municipalities could apply for national funding, only bigger forerunner cities joined the CoM, at least in its starting phase. In contrast, the Italian case shows that a lack of national advice and funding stimulates even smaller municipalities to engage at European level. Although no direct funding was provided, joining the CoM opened doors in Brussels and helped with access to advice and EU funding. The Green Deal City Mission follows a similar logic, i.e. participating cities will not receive direct funding but a Mission label. Therefore, national support and regional cooperation will be essential for the success of the City Mission. Moreover, there is a trend to strengthen the spatial dimensions of the CoM. New forms of regional networking have emerged, initiated and driven by actors at EU, national and regional levels. Such initiatives make the CoM work on the ground, for example, by coordinating and supporting the development of joint actions plans for smaller municipalities (Rivas et al. 2015; De Gregorio Hurtado et al. 2015). This trend is supported by the CoR, which launched an initiative to develop a network of national CoM ambassadors. 5.3

Upscaling Local Experiments and Matching Cities

EU programmes such as the Green Deal Missions put considerable emphasis in the creation of good practice by funding demonstrators and then scaling these experiments. An example is the EU’s ‘Smart City and Community Programme’ (Horizon 2020). The idea is that demonstrators in ‘lighthouse cities’ will be replicated by ‘follower cities’. Thus, the EU encourages initiatives in lighthouse cities to ‘act as exemplars helping to plan and initiate the replication of the deployed solution in the fellow cities, adapted to different local conditions’ (European Commission 2018, p. 6). A similar approach was chosen for the Green Deal Mission, which

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124  Handbook on European Union climate change policy and politics aims at creating 100 smart and carbon-neutral cities by 2030, so that others can follow their example by 2050 (European Commission 2021a). This ambition implies two assumptions: First, the scalability of demonstrators is taken for granted and, second, it is expected that lighthouse projects will be adopted by other municipalities voluntarily. However, it is only under certain conditions that successful approaches disseminate widely. Good practice may spread among big and rich forerunner cities, but transfer to smaller and poorer municipalities often fails because the models developed by such forerunner cities are not easily adapted to the context of other municipalities (Kern 2020). Successful transformations depend on the degree of policy change and social learning (Hall 1993). This means that the focus of policy changes needs to shift from existing to new policy instruments, and ultimately lead to changes of the problem interpretation and the underlying policy paradigm. From this perspective, a matching cities approach, focusing on structurally similar cities, seems to be most promising (Kern et al. 2022). As this chapter has described, there is a continuum of types of municipalities, ranging from prosperous and growing university towns and knowledge cities, which are in the best position to become carbon-neutral, to declining and shrinking industrial cities in an early phase of economic transformation, struggling most to develop a new identity (Haupt et al. 2022). From this perspective the successful transformation of industrial cities like Malmö is more interesting than the transformation pathways of typical forerunner cities. There are three steps of matching cities. First, the identification and comparison of candidates, which share many characteristics and show structural similarities (such as a growing population or a vibrant research environment), making them ‘most likely’ forerunners. Second, matching cities exchange their knowledge and experiences, identify already existing institutional and policy innovations with a high transfer potential and adjust them to local conditions. Third, matching cities identify new and emerging challenges, which they face in a similar way. This opens chances for learning and the joint creation of new ideas on how to overcome common challenges and solve common problems (Kern et al. 2022). The matching cities approach is not restricted to forerunners. Instead, it opens various options to link forerunners with other cities and towns with the same or lower levels of climate policy performance.

6. CONCLUSIONS Making Europe the first carbon-neutral continent by 2050 requires urban transformations not only in big forerunner cities but also in smaller cities and towns. However, municipalities in the EU have limited options to influence the major sources of direct and indirect GHG emissions that take place within their territorial boundaries. This applies in particular to all sources regulated by the EU ETS, but also emissions from transport, the built environment etc. In other words, municipalities do not control all leverage points to make a city carbon-neutral and resilient. Transformation pathways in forerunner cities show a hardening of soft instruments. Climate budgets are hard instruments because they are based on long-term commitments and prompt performance monitoring of short-term improvements, even if these commitments are made on a voluntary basis. Such long-term strategies, which are based on less carbon-intensive production methods and lifestyles, may cause trade-offs between input and output legitimacy

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Cities in EU multilevel climate policy  125 because climate policies may be contested and emerging conflicts cannot always be solved by collaboration. Moreover, urban transformations in Europe require governance capacities for strategic, integrative, adaptive and innovative actions. Governance by commitments, contracts and iterative assessments of goal attainment require real-time monitoring of emissions and the creation of open data platforms. This cannot be accomplished by hierarchically organized public organizations, but calls for reorganizations and the establishment of new organizational units and positions (chief climate officers) inside and outside city administration. In addition, acquiring external funding of infrastructure investments will be the key for the success of urban transformations towards climate-neutrality. The Green Deal City Mission will not provide direct EU funding. Instead, participating cities will get tailor-made advice how to attract public and private funding and receive a Mission label for preferential access to EU funding programmes, including Horizon Europe. There is a need to acknowledge the national and regional dimensions of local climate action. Experiments such as the ‘Viable Cities’ initiative in Sweden show the advantages of direct contracts between forerunner cities and national agencies, which have to coordinate their activities accordingly. In contrast, the CoM facilitates and promotes direct relations between cities and the Commission, while excluding the national level. This strategy has advantages for forerunners, but latecomers depend far more on national support. Moreover, the experience of the CoM in Italy and Spain demonstrates the importance of regional cooperation. Smaller municipalities need support by regional coordinators (like provinces) and supporting organizations (like regional energy and climate agencies). Scaling and scalability play an essential role for the EU Urban Agenda in general and the Green Deal City Mission in particular. Although the programme is still in its starting phase, upscaling the experiences of forerunners implies that they can serve as models for other municipalities. This requires that the participants represent the whole landscape of municipalities in Europe, including smaller cities and towns, and types of cities which face considerable challenges to become carbon-neutral and resilient. Overall, urban transformation towards climate-neutrality and resilience depends on the transfer potential of sectoral transitions and cities’ capabilities to change underlying ideas and policy paradigms and thus develop unique transformation pathways.

NOTES 1. Although this chapter focuses specifically on cities in EU Member States, it takes European cities outside the EU into account because they are members of transnational city networks, joined the CoM, and/or got involved in the EU Mission on Climate-Neutral and Smart Cities. 2. For additional information on the European Structural and Investment Funds see https://​ec​.europa​ .eu/​regional​_policy/​en/​funding/​. The share of the EU Regional Development Fund earmarked for sustainable urban development has increased from 5 per cent to 8 per cent. 3. EU Missions are a novelty of the Horizon Europe research and innovation programme for the years 2021–2027. https://​ec​.europa​.eu/​info/​research​-and​-innovation/​funding/​funding​-opportunities/​ funding​-programmes​-and​-open​-calls/​horizon​-europe/​eu​-missions​-horizon​-europe​_en.

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126  Handbook on European Union climate change policy and politics

REFERENCES Bertoldi, P., Rivas, S., Kona, A., Hernandez, Y., Barbosa, P., Palermo, V., Baldi, M., Lo Vullo, E. and M. Muntean (2020). Covenant of Mayors: 2019 Assessment. Luxembourg: European Union. doi: 10.2760/775755, JRC118. Betsill, M. (2001). Mitigating climate change in US cities: opportunities and obstacles. Local Environment 6 (4): 393–406. doi​.org/​10​.1080/​13549830120091699. Bulkeley, H. and K. Kern (2006). Local Government and the governing of climate change in Germany and the UK. Urban Studies 43 (12): 2237–2259. doi​.org/​10​.1080/​00420980600936491. Covenant of Mayors (2022). Covenant in Figures. www​.covenantofmayors​.eu/​about/​covenant​-initiative/​ covenant​-in​-figures​.html. Curtin, R. and R. Prellezo (2010). Understanding marine ecosystem-based management: a literature review. Marine Policy 34 (5): 821–830. doi​.org/​10​.1016/​j​.marpol​.2010​.01​.003. De Gregorio Hurtado, S. (2021). A Green Deal for the urban age: a new role for cities in EU climate action. In H. Abdullah (ed.), Towards a European Green Deal with Cities. Barcelona: CIDOB, pp. 27–38. De Gregorio Hurtado, S., Olazabal, M. and M. Salvia (2015). Understanding how and why cities engage with climate policy: an analysis of local climate action in Spain and Italy. TeMA. Journal of Land Use, Mobility and Environment 8: 23–46. doi​.org/​10​.6092/​1970​-9870/​3649. De Rosa, S.P., J. de Moor, M. Dabaieh (2022). Vulnerability and activism in urban climate politics: An actor-centered approach to transformational adaptation in Malm ̈o (Sweden). Cities 130, 103848. https://​doi​.org/​10​.1016/​j​.cities​.2022​.103848. Domorenok, E. (2019). Voluntary instruments for ambitious objectives? The experience of the Covenant of Mayors. Environmental Politics 28 (2): 293–314. doi​.org/​10​.1080/​09644016​.2019​.1549777. Domorenok, E. and A. Zito (2021). Engines of learning? Policy instruments, cities and climate change. Policy Sciences 54: 507–528. doi​.org/​10​.1007/​s11077​-021​-09431​-5. Eneqvist, E. (2022). Experimental Governance, PhD thesis. Stockholm: Royal Institute of Technology. www​.diva​-portal​.org/​smash/​get/​diva2:​1654486/​FULLTEXT01​.pdf. Eurocities (2021). A Mayors Alliance for the European Green Deal. https://​eurocities​.eu/​latest/​a​-mayors​ -alliance​-for​-the​-european​-green​-deal/​. European Commission (2018). Horizon 2020 Work Programme 2018–2020, European Commission Decision C (2018) 4708 of 24 July 2018. European Commission (2021a). European Missions: 100 Climate-Neutral and Smart Cities by 2030. Implementation Plan. https://​ec​.europa​.eu/​info/​sites/​default/​files/​research​_and​_innovation/​funding/​ documents/​cities​_mission​_implementation​_plan​.pdf. European Commission (2021b). European Missions: Adaptation to Climate Change. Implementation Plan. https://​ec​.europa​.eu/​info/​sites/​default/​files/​research​_and​_innovation/​funding/​documents/​climat​ _mission​_implementation​_plan​_final​_for​_publication​.pdf. European Commission (2022). EU Mission in Horizon Europe. https://​ec​.europa​.eu/​info/​research​-and​ -innovation/​funding/​funding​-opportunities/​funding​-programmes​-and​-open​-calls/​horizon​-europe/​eu​ -missions​-horizon​-europe​_en. Ferenčuhová, S. (2020). Not so global climate change? Representations of post-socialist cities in the academic writings on climate change in urban areas. European Geography and Economics 61 (6): 686–710. doi​.org/​10​.1080/​15387216​.2020​.1768134. Gailing, L., A. Bues, K. Kern and A. Röhring (2020). Socio-spatial dimensions in energy transitions: applying the TPSN Framework to case studies in Germany. Environment and Planning A 52 (6): 1112–1130. doi​.org/​10​.1177​%2F0308518X19845142. Göpfert, C., Wamsler, C. and W. Lang (2019). A framework for the joint institutionalization of climate change mitigation and adaptation in city administrations. Mitigation and Adaptation Strategies for Global Change 24 (1): 1–21. doi​.org/​10​.1007​%2Fs11027​-018​-9789​-9. Guimarães, C. and M. Pavlik (2021). Cross-border cooperation when floods cross borders. https://​ interreg​.eu/​interreg​-highlights/​cooperation/​cross​-border​-cooperation​-when​-floods​-cross​-borders/​. Hall, P. (1993). Policy paradigms, social learning, and the state: the case of economic policymaking in Britain. Comparative Politics 25 (3): 275–296.

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Cities in EU multilevel climate policy  127 Haupt, W., Eckersley, P. and K. Kern (2021). How can ‘ordinary’ cities become climate pioneers?, in: C. Horwarth, M. Lane and A. Slevin (Eds.), Addressing the Climate Crisis: Local Action in Theory and Practice. Cham: Palgrave Macmillan, pp.  83–92. doi​.org/​10​.1007/​978​-3​-030​-79739​-3. Haupt, W., Eckersley, P., Irmisch, J. and K. Kern (2022). How do local factors shape transformation pathways towards climate-neutral and resilient cities? European Planning Studies. Early View. doi​ .org/​10​.1080/​09654313​.2022​.2147394. Haupt, W. and K. Kern (2022). Explaining climate policy pathways of unlikely city pioneers: the case of the German city of Remscheid. Urban Climate 45: 101220. doi​.org/​10​.1016/​j​.uclim​.2022​.101220. Hofstad, H., M. Millstein, A. Tønnesen, T. Vedeld. and K. Bruun Hansen (2021). The role of goal-setting in urban climate governance. Earth System Governance 7: 100088. doi​.org/​10​.1016/​j​.esg​.2020​ .100088. Homsy, G. (2018). Unlikely pioneers: creative climate change policymaking in smaller US cities. Journal of Environmental Studies and Sciences 8: 121–131. doi​.org/​10​.1007/​s13412​-018​-0483​-8. Hsu, A., Tan, J., Ng, Y.M., Toh, W., Vanda, R. and N. Goyal (2020). Performance determinants show European cities are delivering on climate mitigation. Nature Climate Change 10. 1015–1022, doi​.org/​ 10​.1038/​s41558​-020​-0879​-9. Karhinen, S., Peltomaa, J., Riekkinen, V. and L. Saikku (2021). Impact of a climate network: the role of intermediaries in local level climate action. Global Environmental Change 67: 102225. doi​.org/​10​ .1016/​j​.gloenvcha​.2021. Kern, K. (2014). Climate governance in the European Union multi-level system: the role of cities. In I. Weibust and J. Meadowcroft (Eds.), Multilevel Environmental Governance, Cheltenham and Northampton: Edward Elgar, pp. 111–130. doi​.org/​10​.4337/​9780857939258. Kern, K. (2019). Cities as leaders in EU multilevel climate governance: embedded upscaling of local experiments in Europe. Environmental Politics 28 (1): 125–145. doi​.org/​10​.1080/​09644016​.2019​ .1521979. Kern, K. (2020). Von Vorreitern und Nachzüglern: Die Rolle von Städten und Gemeinden in der Klimapolitik. In T. Hickmann and M. Lederer (Eds.), Leidenschaft und Augenmaß, Sozialwissenschaftliche Perspektiven auf Entwicklung, Verwaltung, Umwelt und Klima. Baden-Baden: Nomos, pp.  195–206. doi​.org/​10​.5771/​9783845294292​-195. Kern, K., S. Niederhafner, S. Rechlin and J. Wagner (2005). Kommunaler Klimaschutz in Deutschland – Handlungsmöglichkeiten, Entwicklung und Perspektiven, Wissenschaftszentrum Berlin, DP SP IV 2005-101, https://​nbn​-resolving​.org/​urn:​nbn:​de:​0168​-ssoar​-1967722. Kern, K. and H. Bulkeley (2009). Cities, Europeanization and multi-level governance: governing climate change through transnational municipal networks. Journal of Common Market Studies 47 (2): 309–332. doi​.org/​10​.1111/​j​.1468​-5965​.2009​.00806​.x. Kern, K., Grönholm, S. Haupt, W. and L. Hopman (2022). Matching Forerunner Cities: Climate Policy in Turku, Groningen, Rostock, and Potsdam, Review of Policy Research. Early View. doi​.org/​10​ .1111/​ropr​.12525. Kona, A. et al. (2021). Global Covenant of Mayors: a dataset of greenhouse gas emissions for 6,200 cities in Europe and the Southern Mediterranean Countries. Earth Systems Science Data 13: 3551-3564. doi​ .org/​10​.5194/​essd​-13​-3551​-2021. Lee, T. (2018). Local energy agencies and cities’ participation in translocal climate governance. Environmental Policy and Governance 28 (3): 131–140. doi​.org/​10​.1002/​eet​.1798. Mintrom, M. (2020). Policy Entrepreneurs and Dynamic Change. Cambridge: Cambridge University Press. doi​.org/​10​.1017/​9781108605946. Negreiros, P. and A. Falconer (2021). Financing the green transition of European cities: what does the European Green Deal change? In H. Abdullah (Ed.), Towards a European Green Deal with Cities. Barcelona: CIDOB, pp. 49–59. Otto, A., K. Kern, W. Haupt, P. Eckersley and A. Thieken (2021). Ranking local climate policy: assessing the mitigation and adaptation activities of 104 German cities. Climatic Change 167: 5. doi​.org/​10​ .1007/​s10584​-021​-03142​-9. Pazos-Vidal, S. (2019). Subsidiarity and EU Multilevel Governance. London and New York: Routledge. Pietrapertosa, F. et al. (2021). Multi-level climate change planning: an analysis of the Italian case. Journal of Environmental Management 289. doi​.org/​10​.1016/​j​.jenvman​.2021​.112469.

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128  Handbook on European Union climate change policy and politics Reckien, D. et al (2022). Quality of urban climate adaptation plans over time. npj Urban Sustainability (3) 13. doi​.org/​10​.1038/​s42949​-023​-00085​-1. Rivas, S., et al. (2015). The Covenant of Mayors: In-depth Analysis of Sustainable Energy Action Plans. European Union Joint Research Centre. doi:10.2790/043140. Rivas., S., Hernandez, Y., Urraca, R. and P. Barbosa (2021). A comparative analysis to depict underlying attributes that might determine successful implementation of local adaptation plans. Environmental Science and Policy 117: 25–33. doi​.org/​10​.1016/​j​.envsci​.2020​.12​.002. Salvia, M. et al. (2021). Will climate mitigation ambitions lead to carbon neutrality? An analysis of the local-level plans of 327 cities in the EU. Renewable and Sustainable Energy Reviews 135. doi​.org/​10​ .1016/​j​.rser​.2020​.110253. Storbjörk, S. (2007). Governing climate adaptation in the local arena: challenges of risk management and planning in Sweden. Local Environment 12 (5): 457–469. doi​.org/​10​.1080/​13549830701656960. Uittenbroek C. J. (2014). How Mainstream is Mainstreaming? The Integration of Climate Adaptation in Urban Policy, PhD thesis (Utrecht: Utrecht University). Van der Heijden, J. (2019). Studying urban climate governance: where to begin, what to look for, and how to make a meaningful contribution to scholarship and practice. Earth System Governance 1: 100005. doi​.org/​10​.1016/​j​.esg​.2019​.100005. Viable cities (2022). Together Towards Climate-Neutral Cities. https://​en​.viablecities​.se/​. Withycombe Keeler, L., F. Beaudoin, A. Lerner, B. John, R. Beecroft, K. Tamm A., Wiek and D. Lang (2018). Transferring sustainability solutions across contexts through city–university partnerships. Sustainability 10 (9): 2966. doi:10.3390/su10092966. Wurzel, R., Liefferink, D. and D. Torney (2019). Pioneers, leaders and followers in multilevel and polycentric climate governance. Environmental Politics 28(1): 1–21. doi​.org/​10​.1080/​09644016​.2019​ .1522033. Zahran, S., H. Grover and S. Brody (2008). Risk, stress and capacity: explaining metropolitan commitment to climate protection, Urban Affairs Review 43 (4): 447–474. doi​.org/​10​.1177​%2F1078087407304688.

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9. The role of the courts in EU climate policy Marcin Stoczkiewicz

INTRODUCTION1 Neither the Treaty on European Union (TEU) nor the Treaty on the Functioning of the European Union (TFEU)2 explicitly mention climate policy, although they regulate such EU policies as the common agricultural policy, the common transport policy, competition policy, energy policy or environmental policy. However, the acts of secondary EU law leave no doubt that the European Union de facto implements a climate policy. Stangl (2015: 13) proposed a definition of EU climate policy, according to which it is a set of coordinated actions of the EU institutions aimed at counteracting climate change, in particular through the reduction of greenhouse gases and reducing the consequences of climate change, in particular through adaptation. The TFEU states in Article 191(1) that ‘Union policy on the environment shall contribute to pursuit of the following objectives: preserving, protecting and improving the quality of the environment; protecting human health; prudent and rational utilisation of natural resources; promoting measures at international level to deal with regional or worldwide environmental problems, and in particular combating climate change.’ It follows from Article 191(1) that climate change is an environmental problem and that combating it is one of the objectives of the Union’s policy on the environment. The Union’s climate policy is thus part of its environmental policy. This is because climate is an element of natural environment and climate change problems are essentially environmental in nature (Stoczkiewicz 2018). Since the Union’s objective is to promote the fight against climate change at international level, the fight against climate change is itself an objective of the Union. The starting point for any consideration of the role of the courts in European Union climate policy must be that the legal culture of the EU is based on the Montesquieu principle of a tripartite division of powers between the legislature, the executive and the judiciary. It is not the role of the courts to shape (set directions) or implement public policy, but rather to settle legal disputes and provide legal protection. However, in the course of exercising the administration of justice, courts often specify the meaning of legal norms, which often has significant legal consequences. This applies in particular to the application of climate change law by the courts. The stakeholders of EU climate policy include Member States, EU institutions, companies and EU citizens. Over the last decade, there has been a significant increase in the amount of legislation at international, EU and national law levels that regulates GHGs emissions and codifies the response of States and private actors to climate change. These legal acts have created new responsibilities and rights. Consequently, there have been litigation and judgments in recent years which significantly affect, or at least may affect, the rights and obligations of stakeholders in EU climate policy, both at the level of the European Union and its Member States.3 This chapter poses the question of the extent to which there has been a ‘litigation turn’ in EU climate policy, shifting the burden of initiative and responsibility for addressing the climate crisis to the judiciary, and the limits of litigation as a mechanism for influencing EU climate 129 Marcin Stoczkiewicz - 9781789906981 Downloaded from PubFactory at 08/15/2023 12:44:39AM via free access

130  Handbook on European Union climate change policy and politics policy. ‘Climate litigation’ is defined as lawsuits in which climate change or its impacts are the basis or a key part of the legal argument and judgment (Ganguly, Setzer &. Heyvaert 2018: 3). Voigt (2021) distinguishes three types of litigation in which the courts can play an important role in climate policy. The first is disputes concerning the mitigation of climate change through the reduction of GHGs emissions. In this context, plaintiffs in many cases around the world are seeking to impose obligations on governments to reduce emissions of GHGs or increase removals of these gases. The plaintiffs in these cases are mainly sub-state actors (municipalities), or non-state actors (individuals or NGOs) (for more on the roles of these actors, see Kern, Chapter 8 in this volume, and Parks et al., Chapter 7 in this volume, respectively). The most famous case of this kind is the Urgenda v. the Netherlands (Voigt 2021: 7–12). The second type of disputes relate to cases about addressing the consequences of climate change. These are cases involving the responsibility of states or corporations for the harmful effects of climate change. In this type of case, plaintiffs seek the attribution of liability to individual states or corporations for their acts or omissions that result in climate change and damages that occur at a particular place and time. Plaintiffs seek liability for damages (compensation), cessation of harm, or action to mitigate harm. The most high-profile example of this type is Liuya v. RWE, a case brought against a company operating coal-fired power plants in Germany (RWE) by a Peruvian farmer, Luciano Liuya, who suffered damage to agricultural production as a result of glacial melt.4 The third type are cases challenging the regulatory response of states to the climate crisis. The legal acts that make up climate policy often interfere with freedom of economic activity, property rights, or investment protection agreements. A classic example of such a dispute is Vattenfall v. Germany,5 in which the Swedish energy utility argued that new environmental regulations amounted to expropriation in essence and sought damages from the German government of $1.9 trillion under the Energy Charter Treaty.6 The number of climate disputes is growing rapidly. Particular mention should be made of hundreds of cases concerning local sources of GHGs and actions or omissions of authorities, which are not noted on the front pages of newspapers, but which significantly, on a bottom-up basis, affect the climate policy of individual countries (UN Environment Programme 2020; Sabin Center for Climate Change Law 2022). In proceedings of this kind that take place in EU countries, the public and NGOs representing the public interest are able to make extensive use of procedural rights granted by the Aarhus Convention (UNECE 1998)7 and in the European Union-relevant EU law.8 (For how the Convention relates to the work of the Commission, see Bürgin, Chapter 2 in this volume.) According to 2019 data, the number of cases of litigation directly related to climate change and its impacts worldwide was 1,500 (Leese 2019: 2). There is also an observable trend of invoking human rights in these disputes. Peel and Osofsky (2018: 1–4) describe the increasing number of climate disputes based on human rights as a ‘rights turn in climate litigation’ (e.g. Urgenda v. The Netherlands). Setzer and Higham (2021: 4) point to recent global trends in climate litigation. These trends are also visible in the European Union, and the cases discussed below (added in brackets by the author of this chapter) are good examples. These authors note the following trends: (i) The number of ‘strategic’ cases is dramatically on the rise. These are cases that aim to bring about some broader societal shift (e.g. Carvalho v. European Parliament and Council); (ii) Not all strategic litigation is aligned with climate goals (e.g. Czech Republic v. Poland (Mine de Turów); (iii) Litigation that is aligned with climate goals is, on balance, seeing success and there has been a run of important wins in the last 12 months, such as the Milieudefensie v. Shell case;

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The role of the courts in EU climate policy  131 (iv) Cases are targeting a wider variety of private sector and financial actors and there is more diversity in the arguments being used, for example incorporating themes of greenwashing and fiduciary duty. Businesses need to be aware of litigation risk (e.g. ClientEarth v. European Investment Bank). In the sections that follow, certain cases which are of greater relevance to EU climate policy are examined in depth in the text, while others are highlighted in Boxes 9.1 and 9.2 as examples.

THE ROLE OF THE COURT OF JUSTICE OF THE EUROPEAN UNION To analyze the role of courts in addressing the problem of climate change in the EU, the obvious starting point is to note the opportunities and particular limitations under the Court of Justice of the European Union (CJEU). As laid down in Article 13 TEU, the CJEU is one of the institutions of the European Union. According to Article 19 TEU, it comprises: the Court of Justice, the General Court and specialized courts. The CJEU’s competences are very broad; it has the competences of a constitutional court, when it guards the compliance of the actions of the EU institutions with the treaties; of an administrative court, when it controls the administrative competences of the EU institutions, and of an international court, when it controls the treaty competences of the Union. The CJEU adjudicates disputes brought as a result of complaints by entities entitled to do so. The CJEU plays an enormous role in the interpretation of EU law, and through the interpretation also in the development of the law of climate change in the European Union. This results first of all from the fact that the Member States have committed themselves, by way of the Treaties (TEU and TFEU), to submit all disputes arising out of the interpretation and application of EU law (including disputes concerning future legal regulations) to the adjudication of a specially created judicial body (CJEU) (Czapliński 2003: 173). It is impossible even to cite here all the judgments of the CJEU which directly or indirectly concern the law and climate policy of the European Union. However, a few examples can be given of CJEU rulings in which the court determines the meaning of legal norms, which have significant legal consequences that affect public policies. Poland v. European Parliament and Council (C-5/16) A judgment which, through the application and clarification of the meaning of European law, significantly influenced the climate policy of the European Union was the CJEU judgment in Case C-5/16 Republic of Poland v. European Parliament and Council,9 in which Poland’s complaint against the decision of 6 October 2015 on the Market Stability Reserve (MSR) for the EU ETS policy was dismissed.10 It is worth noting that the EU ETS is the main instrument for reducing greenhouse gases in the European Union and the most important element for the implementation of the Union’s climate policy (see introduction, this volume). The MSR decision was aimed at stabilizing the market for CO2 emission allowances. Poland brought an action for annulment of the MSR decision before the Court of Justice of the EU. The direct effect of this ruling was to streamline the EU ETS. Already in the second half of 2018, the price of emission allowances started to rise, causing investors to switch to low-carbon energy sources. Indeed, in August 2018, the price of emission allowances reached its highest level in

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132  Handbook on European Union climate change policy and politics 11 years, approaching €20 per tonne, and by December 2021, the price had surpassed €90 per tonne.11 However, the ruling also has more general implications for the Union’s climate policy. According to Poland’s most significant plea, the contested decision violated Article 192(1) TFEU read in conjunction with Article 192(2) first subparagraph point (c) TFEU, because it was adopted in accordance with the ordinary legislative procedure, even though that decision constitutes a measure significantly affecting a Member State’s choice between different energy sources and the general structure of its energy supply within the meaning of the latter provision. In that case, according to the applicant, in accordance with Article 192(2) first subparagraph TFEU, the MSR decision should have been adopted by the Council acting unanimously in accordance with a special legislative procedure.12 In its judgment of 21 June 2018, the Court disagreed with Poland’s argumentation and dismissed its action. The Court stated, inter alia, that ‘point (c) of the first subparagraph of Article 192(2) TFEU can provide a legal basis for a Union act only if it is apparent from its aim and content that the first intended result (author’s emphasis) of that act is to exert a significant influence on the choice of a Member State between different energy sources and on the general structure of its energy supply.’13 The quoted CJEU judgment is very important for the future of the EU ETS and EU climate policy. It implies that the arguments concerning the impact of the EU ETS measure on the Member State’s choice between different energy sources and the general structure of energy supply cannot be effectively invoked to apply a special legislative procedure (assuming unanimity). If this were the case, the legal acts regulating the EU ETS would be based on Article 192(2) TFEU. Consequently, those acts would have to be adopted by the Council unanimously. However, according to the Court, in order for the special legislative procedure to be applicable, the impact on the energy mix must be the aim and the first intended result of the act in question. Consequently, it is to be expected that any future amendments concerning the EU ETS will be based on Article 192(1) TFEU and thus adopted through the ordinary legislative procedure. In a nutshell, this means that individual Member States cannot effectively block (veto) the legal acts that make up EU climate policy. This means that the interpretation of EU law made by the CJEU decisively determined the direction of the development of the EU ETS.

BOX 9.1 CZECH REPUBLIC V. POLAND (MINE DE TURÓW, C-121/21) The case concerned the open-cast lignite mine in Turów (Poland) which is situated close to the Czech and the German borders. The lignite extracted from that mine is used by a nearby power plant, in Turów, which produces electricity for about three million Polish households. In 1994, the mine had obtained a concession to extract lignite until 2020. In 2020, it requested the prolongation of that concession for a period of six years. According to the Polish legislation, such a prolongation was possible, without conducting an environmental impact assessment. The mine received the requested prolongation until 2026. The Czech Republic took Poland to the CJEU under Article 259 TFU, arguing that Poland’s prolongation of the authorization to extract lignite until 2026 was unlawful, because no environmental impact assessment had been conducted, according to Directive 2011/92.

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The role of the courts in EU climate policy  133 In February 2021, the Czech Republic asked the CJEU for interim measures, requesting the immediate closure of activities of the lignite mine. The CJEU granted the interim measures by order of 21 May 2021, but Poland did not comply with that order. Faced with this situation on 20 September 2021 the CJEU ordered Poland to pay the European Commission a penalty payment of €500,000 per day, from the date of notification until that Member State complies with the order of 21 May 2021.

Carvalho v. European Parliament and Council (C-5/16) By contrast to the case C-5/16, the case Carvalho v. European Parliament and Council of the European Union14 clearly indicated the limits of the CJEU’s influence on EU climate policymaking. The case, also known as the People’s Climate Case, represented the first attempt to invoke fundamental rights before the CJEU to challenge the inadequacy of EU climate change law in relation to the objectives of the Paris Agreement.15 The complainants in this case were Armando Carvalho and other persons, active in the agriculture or tourism sector (Winter 2020: 143). The applicants sought, firstly, on the basis of Article 263 TFEU (concerning the control of the legality of legal acts issued by EU institutions), the partial annulment of the 2030 climate legislative package. Secondly, the applicants sought an order that the Council and the Parliament adopt, as part of the legislative package in question, measures requiring a reduction of at least 50–60 per cent in greenhouse gas emissions by 2030, compared to their 1990 levels. More generally, they argued that the package failed to deliver the necessary GHG reductions that would be consistent with binding higher-order legal standards, including fundamental rights (the right to life, freedom to conduct business, the right to property and other rights contained in the EU Charter of Fundamental Rights) and international law.16 The applicants argued that they were directly and individually concerned by the greenhouse gas reduction targets set out in the legislative package in question (T-330/18, p. 31). They also sought a novel interpretation of the concept of ‘individual concern’ referred to in Plaumann v. Commission (see below).17 In this case, the General Court dismissed the action as inadmissible on the grounds that the applicants lacked the necessary standing to bring it. The General Court applied the criterion of individual impact, which is well established in case law. It disagreed with the argument that the effects of climate change, and thus the infringement of fundamental rights, were exceptional and different for each person. The General Court held that it is true that any person may be affected in one way or another by climate change, an issue recognized by the European Union and the Member States which have, in effect, undertaken to limit emissions. However, the fact that the effects may be different for one person than for another does not mean that there is a cause of action (i.e. justification) for a general measure.18 The General Court did not therefore rule on the substance of the case. In response, the applicants then appealed to the Court of Justice. On 25 March 2021, the Court dismissed the applicants’ appeal.19 The Court of Justice thus upheld the General Court’s view that the applicants lacked standing to bring the action on the ground that the condition that an individual may bring an action against an act addressed to him, or which is of direct and individual concern to him, was not met.

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134  Handbook on European Union climate change policy and politics When assessing the final decision of the CJEU, it should be noted that the so-called Plaumann test effectively prevents the questioning of legal acts of the European Union (including EU climate law acts), by individuals who are not able to demonstrate that they are in some particular way affected by their impact. As an aside, it is worth noting that in December 2020 the European Council endorsed a binding EU target to reduce net GHG emissions by at least 55 per cent by 2030 compared to 1990 levels, and called on the co-legislators (i.e. the European Parliament and the Council of the European Union) to include this new target in a proposal for a European climate law, and to adopt this proposal expeditiously (European Council 2020). Such a reduction target is in line with the principal demand of the applicants in the Carvalho case (a reduction of at least 50–60 per cent). ClientEarth v. European Investment Bank (T-9/19) On 8 January 2019, environmental NGO ClientEarth filed suit in the General Court against the European Investment Bank (EIB),20 alleging that the bank had improperly rejected ClientEarth’s petition for an internal review of its decision to finance a biomass power plant. ClientEarth argued that in rejecting its petition for internal review, the EIB misapplied the Aarhus Convention and the EU’s regulation to implement it, Regulation (EC) No. 1367/2006.21 The EIB had agreed to provide a €60 million loan to build a 50 megawatt biomass power plant in Spain in 2018. On 9 August, 2018, ClientEarth submitted a request to the EIB for internal review of that decision. The NGO disputed that the project would contribute to renewable energy objectives because, in part, it overestimated environmental advantages associated with biomass and underestimated logging and forest fire emission risks. On 30 October, the EIB rejected the request as inadmissible on the grounds that its financing decision was not an ‘administrative act’, and nor was the decision taken ‘under environmental law’ as defined in the Aarhus Convention, and therefore was not subject to internal review. The EU General Court issued a decision on 27 January, 2021, issuing an order that the EIB must accept ClientEarth’s petition for internal review.22 The Court found that the financing decision was in fact taken ‘under environmental law’ because all acts of public authorities which may violate environmental law, regardless of whether the institution is formed by environmental law, should be subject to internal review. Here the EIB’s decision was based on an assessment of whether it met renewable energy goals and therefore impacted environmental law. Further, the Court found that the decision was an ‘administrative act’, despite the terms and conditions of the loan not yet being set, because it produced definitive legally binding effects on third parties by enabling others to take steps to formalize the loan.23 On April 2021, the EIB brought an appeal against the judgment of General Court to the Court of Justice. The case initiated by the appeal is pending before the Court of Justice at time of this writing.24 It is worth noting that the regulation underlying the ClientEarth’s petition has been amended on 6 October 2021 and now gives a broader basis for internal review and access to justice before the CJEU.25

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The role of the courts in EU climate policy  135

THE ROLE OF THE EUROPEAN COURT OF HUMAN RIGHTS (ECTHR) When considering the role of the courts in EU climate policy, the role of the European Court of Human Rights in Strasbourg cannot be ignored. This court is established to resolve complaints against States which are parties to the European Convention on Human Rights and Fundamental Freedoms (ECHR).26 It is true that the ECHR is not part of European Union law, but it defines a legal order related to the Union. This results from the fact that all Member States of the European Union are members of the Council of Europe and parties to the European Convention on Human Rights and Fundamental Freedoms. The ECtHR judgments also have a significant impact on the interpretation of the national law of EU Member States. The ECtHR has not yet ruled on any case that directly concerns human rights in relation to their threat or violation caused by climate change. However, the jurisprudence of the Strasbourg Court is of relevance to climate cases primarily due to the derivation from Article 2 ECHR of a positive obligation of the State to protect the right to life, including against threats of environmental impairment.27 This directly affects the understanding of the broad scope of these obligations by States and, consequently, the fulfilment of them by the authorities of States parties to the ECHR. The body of ECtHR case law, due to its broad, dynamic and purposive understanding of the obligations arising from Article 2 ECHR, influences (as a so-called persuasive precedents source) the application of human rights law in the EU Member States. However, the ECtHR’s role in adjudicating human rights cases involving state actions and omissions affecting the climate crisis is limited by the ‘margin of appreciation’ doctrine developed by ECtHR jurisprudence (Pedersen 2019: 463–471). According to the ECtHR, this court cannot replace national authorities in their regulatory competences and duties. In doing so, States parties have a certain degree of discretionary freedom, which jeopardizes the rights guaranteed by the Convention.28 This applies in particular to the making of decisions relating to national public policies and decisions.29 In recent case law, this margin of appreciation is no longer described as ‘wide’ but as ‘certain’.30 Moreover, according to the Strasbourg Court, the margin of appreciation has its limits. If the threats or harm exceeds the ‘minimum level’, States have a duty to take regulatory action and safeguard the lives of those at risk.31 In this context, ECtHR decision in the case Agostinho and Others v. Portugal and 32 other States32 will be very important. On 7 September 2020, the case of Agostinho and Others v. Portugal and 32 other States (Application No. 39371/20) was registered at the European Court of Human Rights. This is the first case directly addressing the problem of climate change and human rights that the Court has accepted for hearing. The applicants are six young people, Portuguese citizens, aged between 12 and 20. The case concerns GHGs from 33 States Parties to the ECHR which, according to the complaint, contribute to global warming affecting the living conditions and health of the applicants. The applicants complain that the 33 States have breached their positive obligations under Articles 2 and 8 of the Convention, read in the light of Article 2 of the Paris Agreement (holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the increase to 1.5°C). The applicants also complain that the 33 States have violated Article 14 (prohibition of discrimination), read in conjunction with Articles 2 and 8 ECHR, arguing that global warming affects their generation in a special way and that, given their age, the interference with their rights is more serious than for previous generations, due to worsening climatic conditions that will change over time. They consider that there is no objective and reasonable justification

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136  Handbook on European Union climate change policy and politics for placing the burden of climate change on younger generations by not taking measures to mitigate it. The applicants consider that the ECHR member States have failed to fulfil their obligations under the above-mentioned provisions of the Convention, read in particular in the light of international climate treaties. The President of Section IV of the Court, on 13 October 2020, granted the applicants’ request for priority consideration. It is worth quoting the words of the President of the Strasbourg Court, Judge Spanó, during a conference organized in the framework of the celebration of the 70th anniversary of the ECtHR: The already well-established case law on environmental matters before the Court shows a certain conceptual trajectory, the logical extension of which remains to be determined by the Court using its traditional methodology ... We are now at a watershed moment in human history, a moment of great significance for the planet. No one can legitimately dispute that we are facing a terrible crisis, the overcoming of which requires the coordinated action of all humanity. For its part, the European Court of Human Rights will play a role within the limits of its competence, as a court always aware that the guarantees of the Convention must be effective and real and not illusory (Eicke 2021, para 50).

THE ROLE OF EU MEMBER STATES’ COURTS IN LEGAL CLIMATE PROTECTION In view of the fact that access to the CJEU for individuals is limited by the Plauman test and also that the role of the ECtHR is limited by the doctrine of margin of appreciation, the burden of climate litigation on the impact of EU climate policy is concentrated on the national courts of the individual EU Member States. It is therefore worth considering the role and the limitations of Member State courts in the EU in addressing the problem of climate change. The organization of justice in the Member States is a competence of the latter. However, in exercising that competence, the Member States are required to respect their obligations under Union law and, in particular, the second subparagraph of Article 19(1) TEU.33 This standard provides that ‘Member States shall establish the remedies necessary to ensure effective judicial protection in areas covered by Union law.’ On the basis of that provision, each Member State is required to ensure, in particular, that the authorities which belong as ‘courts’ within the meaning of Union law (to the system of remedies), satisfy the requirements of effective judicial protection.34 (In order to guarantee this protection, preserving the independence of such bodies is essential, as confirmed by the second paragraph of Article 47 of the Charter of Fundamental Rights, which lists access to an ‘independent’ court among the requirements relating to the fundamental right to an effective remedy.35) Urgenda v. The Netherlands Of the many rulings by national courts on climate change mitigation and adaptation, the Urgenda v. The Netherlands was undoubtedly the most famous case on climate change mitigation in recent years. This case shows the potentially important role of the courts of Member States in addressing the problem of climate change, but also points to significant limitations resulting from the principle of separation of powers (the trias politica problem). The Urgenda Foundation (an environmental NGO) sued the Kingdom of the Netherlands in a civil court, namely the District Court of The Hague. In its lawsuit, Urgenda demanded that the Netherlands

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The role of the courts in EU climate policy  137 be required to achieve a greater reduction in GHGs by the end of 2020 than the government had planned. The Dutch government, prior to Urgenda’s lawsuit, had a clearly defined plan to reduce CO2 emissions. This target was set as a 14–17 per cent reduction by the end of 2020. Based on the findings of science, Urgenda demanded that a more ambitious target be set, at a 25–40 per cent reduction by the end of 2020, relative to the 1990 base year. The District Court of The Hague, in a judgment of 24 June 2015, upheld Urgenda’s lawsuit and obliged the state to achieve a reduction of at least 25 per cent of GHGs by the end of 2020, relative to the 1990 base year.36 The Court of Appeal in The Hague on 9 October 2018 upheld the lower court’s judgment,37 and on 20 December 2019 the Supreme Court dismissed the government’s appeal, thereby confirming that the Netherlands has a legal obligation under the court’s judgment to reduce its emissions by at least 25 per cent.38 The Urgenda judgment is the second in the world (after the Leghari judgment)39 and the first in the European Union in which a court (thus the judiciary), has obliged the state (in particular the legislature and the executive) to protect the climate (Lin 2015: 65–81). A major problem in the Urgenda case was that of the division and balance of power. A verdict even partially in line with Urgenda’s demands would, in the government’s view, be a violation of the trias politica. Drawing on Montesquieu’s thought, the separation of powers principle is considered an essential feature of the rule of law. Urgenda took the view that the fact that the court’s judgment in this case may have public policy implications does not mean that the claim in the suit concerns an action in the sphere of public policy (in the sphere of the legislature or the executive). According to Urgenda, the case concerns a strictly legal matter with policy implications and not a matter of public policy. The Foundation argued that a legal question can be submitted to a court for determination even if the determination will have public policy implications (Cox 2014: 133–134). The District Court stated that the function of the judiciary is to provide legal protection, settle disputes and control in terms of the legality of the action of political power. It was for the purpose of providing legal protection that Urgenda had approached the court. What was important in the case was that the object of the demand under consideration was not the adoption of particular legal instruments or the adoption of a particular policy. The State was left entirely free to determine how to fulfil the general climate protection objective. In conclusion, the court of first instance held that the aspects relating to the trias politica did not preclude the State from ordering the generally indicated reduction of greenhouse gases.40 The court of appeal held that the Government’s relevant objection was unfounded because, first, the State had violated human rights and the court must protect them, as a result of the direct application of Articles 2 and 8 ECHR. Second, the State’s obligation to reduce greenhouse gases by a certain percentage leaves the State sufficient room to adopt legislative and executive measures to comply with the court’s order. There is a spectrum of instruments that can be used. The order thus does not create legislation and the state remains entirely free to determine how it will comply with the order.41 The Supreme Court found the appellate court’s reasoning to be reasonable. The Supreme Court stated, citing earlier domestic case law, that a court does not have the power to issue an order containing detailed legislative matter. It may, however, issue an order requiring a public authority to take measures to achieve a specific objective, up to the limits of introducing detailed statutory matter.42 This is the nature of the judgment of the court of first instance. It obliges the State to take measures to achieve a specific aim and leaves the State free to decide on the choice of instruments.43 Responding to the government’s objection that it is not the

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138  Handbook on European Union climate change policy and politics court’s task to decide on climate policy, the Supreme Court stated that the government’s task is to protect human rights protected by the ECHR and the courts’ judgments in this case serve this purpose.44 In the view of this author, there is one extremely important conclusion from the Urgenda case concerning the applicable law. The Dutch courts have held that, in matters of climate change, the legislature and the executive have a wide range of policymaking powers. However, this power is not unlimited. The limit of this power is the duty to protect citizens. It is worth quoting the judgment of the court of first instance in extenso at this point: As stated above, the discretionary powers of the State must also be taken into account. On the basis of Article 21 of the Constitution, the state has broad discretionary power to shape climate policy. However, this discretionary power is not unlimited. Where, as in this case, there is a high risk of dangerous climate change with serious and life-threatening human and environmental consequences, the state has a duty to protect its citizens from it by taking appropriate and effective measures. In this approach it can also rely on the above-mentioned case law of the ECtHR.45

Thus, the Netherlands Supreme Court also decided in the Urgenda case on the distribution of powers and duties between the different authorities, which is fully in line with the doctrine of trias politica. In terms of the human rights dimension, this ruling could be useful as non-binding interpretative guideline for other states parties to the European Convention on Human Rights as to what are the limits of climate policymaking by the legislature and the executive. The judgment of the Supreme Court in Urgenda v. Netherlands showed that in a democratic state under the rule of law, the courts can have a significant influence on climate policy and climate protection law. This judgment shows that in matters of climate change, the legislature and the executive have a wide range of power to shape policy. However, this power is not unlimited. If there is a high risk of dangerous climate change with serious and life-threatening consequences for humans and the environment, the state has a duty to protect its citizens from it by taking appropriate and effective measures. Where human rights are at stake, the courts have the competence and duty to rule to ensure that these rights are respected. Following the Urgenda Foundation, many NGOs have started similar litigation with their countries (e.g. in Belgium, Czech Republic, France, Germany, Ireland, Italy, Poland and Spain).46

BOX 9.2 THE HAGUE DISTRICT COURT JUDGMENT IN THE CASE MILIEUDEFENISE ET AL. V. ROYAL DUTCH SHELL On 5 April 2019, Milieudefenise and six other Dutch NGOs brought a class action supported by 17,379 individuals to the District Court of The Hague against Royal Dutch Shell (RDS). On 26 May 2021, the court issued a judgment ordering RDS, both directly and via the companies and legal entities it commonly includes in its consolidated annual accounts and with which it jointly forms the Shell group, to limit or cause to be limited the aggregate annual volume of all CO2 emissions into the atmosphere due to the business operations and sold energy-carrying products of the Shell group, to such an extent that this volume will have reduced by at least net 45 per cent at end 2030, relative to 2019 levels. In that judgment, the court cited the IPCC findings on climate change, recognizing anthropogenic climate change as a scientific fact, referred to the current atmospheric concentration of

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The role of the courts in EU climate policy  139 GHGs at 401 ppm and the carbon budget concept. The court relied on Book 6 Section 162 of the Dutch Civil Code with reference to the ‘unwritten standard of care’, the UN Guiding Principles on Business over Human Rights, and the Paris Agreement in determining the extent of RDS’s responsibility for reducing group-wide GHG emissions. Shell’s appeal will not suspend its CO2 emission reduction obligations arising from the court decision, as the court has declared the order provisionally enforceable. The court stated that the interest of Milieudefensie et al. for the immediate compliance with the order by Shell outweighs the company’s possible interest in maintaining the status quo until a final and conclusive decision has been made.

CONCLUSIONS This chapter has sought to answer the question of whether there is a ‘litigation turn’ in EU climate policy. The general goal was to analyze the role of courts in the EU in addressing the problem of climate change and status and limits of litigation as a mechanism for influencing EU climate policy. Undoubtedly, there is a new trend in civil society’s response to the changing threats resulting from climate change, which consists in undertaking strategic climate litigation. The number of judicial climate disputes initiated by NGOs and NGO-supported individuals is growing rapidly. It seems that this trend is not a shift in the sense of shifting the burden of initiative and responsibility for addressing the climate crisis from the legislature and the executive. Their role in European climate policy is enormous, as evidenced by the passing of the European Climate Law (Regulation (EU) 2021/1119 establishing the framework for achieving climate neutrality), preparation of the ‘Fit for 55’ package of new legislation surrounding the European Green Deal. The shift is rather towards increased inclusion of the judiciary in decisions influencing EU (and Member State) climate policy. This inclusion takes the form of the settlement of disputes and interpretation of the law. The trend of increasing numbers of climate disputes is the result of increasing public involvement in shaping EU climate policy and frustration with the inadequate response of the legislature and executive to climate threats. It is not the role of the courts either to shape or execute policy and law. Their role is to settle legal disputes and provide legal protection. However, in the exercise of the administration of justice, the courts often determine the meaning of legal norms, which often have significant legal consequences that affect public policies. This applies in particular to the application by the courts of EU climate change law. The main stakeholders in disputes at the European Union level (before the CJEU) are the Member States, EU institutions and undertakings to which EU legal acts are addressed. The role of citizens in climate litigation at the EU level is radically limited by Plaumann test, which at the current stage of development of the jurisprudence of the Luxembourg Court effectively precludes challenges to European Union legal acts (including climate law acts), by individuals who are unable to demonstrate that they are in some particular way affected by their impact. High hopes are placed on the role of the ECtHR in resolving human rights cases brought by individuals in relation to states’ actions and inactions affecting the climate crisis. However, the role of the Strasbourg Court is limited by the margin of appreciation doctrine, according to which the ECtHR cannot replace national authorities in their regulatory powers and duties.

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140  Handbook on European Union climate change policy and politics It follows from these restrictions on individuals’ access to the Luxembourg Court and to the Strasbourg Court that the main burden of strategic climate litigation is concentrated on the national courts of individual EU Member States. The public makes extensive use of procedural environmental rights granted by the Aarhus Convention and relevant EU law to judicially challenge projects negatively affecting the climate (e.g. construction of coal-fired power plants, airports or natural gas transmission pipelines). Judicial questioning of the inadequacy of climate policy goals of individual Member States is much more difficult, due to the traditional understanding of the division of powers in democratic states into legislative, executive and judicial powers. Courts cannot interfere in the formation of public policy (in the sphere of legislative or executive power). As the Dutch Supreme Court has held, although in matters of climate change the legislature and the executive have a wide range of competences in policymaking, this power is not unlimited. The limit of this power is the duty to protect citizens. If there is a high risk of dangerous climate change with serious and life-threatening consequences for humans and the environment, the state has a duty to protect its citizens by taking appropriate and effective measures. In such situations the courts have a duty to rule to ensure that these rights are protected, and it would seem reasonable to conclude that they will continue to do so as threats from climate change continue to escalate.

NOTES 1. I would like to thank editors Tim Rayner and Kacper Szulecki and an anonymous reviewer for valuable comments on earlier drafts of this chapter. Any imperfections in the text remain my own. 2. TUE – Treaty on European Union (consolidated version), Official Journal of the European Union C 326/51 of 26.10.2012. TFEU – Treaty on the Functioning of the European Union (consolidated version), OJ EU C 326/51 of 26.10.2012. 3. See e.g. Case T-699/17, Poland v. Commission, ECLI:EU:T:2021:44; C -121/21 R Czech Republic v. Republic of Poland, ECLI:EU:C:2021:420; Urgenda v. The Netherlands, Judgment of the Supreme Court of 20.12.2019. ECLI:NL:HR:2019:2006; decision of the German Federal Constitutional Court of 24 March 2021. BVerfG, Decision of the First Senate of 24 March 2021. – 1 BvR 2656/.18, 1 BvR 96/20, 1 BvR 78/20, 1 BvR 288/20). 4. Liuya v. RWE AG Case No. 2 O285/15 Essen Regional Court, on appeal. 5. Vattenfall AB v. Federal Republic of Germany ICSID Case No. ARB/12/12. 6. The 1994 Energy Charter Treaty was originally designed to safeguard investments in liberalized eastern European markets after the collapse of the Soviet Union, but has since been used by companies to seek compensation for national policies that act to phase out fossil fuels, using the Treaty’s investor-state dispute settlement provisions (van Asselt 2021). 7. Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters, done at Aarhus on 25 June 1998. https://​unece​.org/​DAM/​env/​pp/​ documents/​cep43e​.pdf (Accessed: 26 September 2022). 8. Directive 2011/92 on the assessment of the effects of certain public and private projects on the environment, OJ 2012, L 26, p. 1. 9. C-5/16 Republic of Poland v. European Parliament and Council, ECLI:EU:C: 2018:483. 10. Decision of the European Parliament and of the Council (EU) 2015/1814 of 6 October 2015 on the establishment and operation of the Market Stability Reserve for the EU Emissions Trading Scheme and amending Directive 2003/87/EC, OJ L 264/1 of 9.10.2015. 11. See: https://​carbon​-pulse​.com/​category/​eu​-ets/​ 12. C-5/16, p. 24. 13. C-5/16, pp. 43–46. 14. T-330/18, ECLI:EU:T:2019:324.

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The role of the courts in EU climate policy  141 15. See: www​.peoplesclimatecase​.caneurope​.org 16. T-330/18, pp. 23, 48. 17. 25/62, EU: C: 1963: 17. 18. T-330/18, p. 50. 19. C-565/19 P, ECLI:EU:C:2021:252. 20. For analysis of the role of the EIB, see Mertens and Thiemann (Chapter 5 in this volume). 21. Regulation (EC) No. 1367/2006 of the European Parliament and of the Council on the application of the provisions of the Aarhus Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters to Community institutions and bodies. 22. T-9/19; ClientEarth v. European Investment Bank, ECLI:EU:T:2021:42, para. 1. 23. T-9/19, pp. 54–57, 80–123, 171. 24. C-212/21 P, European Investment Bank v. ClientEarth. 25. Regulation (EU) 2021/1767 of the European Parliament and of the Council of 6 October 2021 amending Regulation (EC) No. 1367/2006 on the application of the provisions of the Aarhus Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters to Community institutions and bodies (OJ, L 356/1, 8.10.2021). According to Article 1(2)(a) of this regulation, any non-governmental organization or other member of the public meeting certain criteria shall be entitled to make a request for internal review to the Union institution or body that has adopted an administrative act or, in case of an alleged administrative omission, should have adopted such an act, on the grounds that such act or omission infringes environmental law. Pursuant to Article 12(1) of Regulation 1367/2006 as amended, an NGO which has made a request for internal review may institute proceedings before the CJEU in accordance with the relevant provisions of the Treaty. 26. European Convention on Human Rights, Nov. 4, 1950, Europ. T.S. No. 5, 213 U.N.T.S. 221. 27. See: Osman v. United Kingdom, 28.10.1988, RJD 1998-VIII, p. 116; Öneryıldız v. Turkey [GC], judgment of 30 November 2004, p. 71; Makaratzis v. Greece [GC], judgment of 20 December 2004, p. 49; Kolyadenko and Others v. Russia, ECtHR 28 February 2012, No. 17423/05, pp. 165 and 174–180; ECtHR 10 January 2012, No. 30765/08 (Di Sarno and Others v. Italy), p. 110, and ECtHR 24 January 2019, No. 54414/13 (Cordella and Others v. Italy), p. 172; Budayeva and Others v. Russia, Nos. 15339/02, 21166/02, 11673/02 and 15343/02, p. 128). 28. ECtHR, Powell and Rayner v. United Kingdom (1990) EHRR 277 p. 44. 29. ECtHR, Hatton and Others v. United Kingdom 92003, 37 EHRR 28, p. 100. 30. ECtHR, Cordella and Others v. Italy, Nos 54414/13 and 54264/15, 24 January 2019, p. 158. 31. ECtHR Fedayeva v. Russia 92007) EHRR 10, p. 128; Tatar v. Romania 2009, application no. 67021/01, p. 88, Budayeva and Others v. Russia, p. 136. 32. Case of Agostinho and Others v. Portugal and 32 Other States (Application No. 39371/20). 33. CJEU, judgment of 26 March 2020, City of Łowicz and Attorney General, C558/18 and C563/18, EU:C:2020:234, p. 36. 34. CJEU, judgment of 2 March 2021, A.B. and Others. (Appointment of Judges of the Supreme Court – Appeal), C824/18, EU:C:2021:153, p. 112. 35. CJEU, judgment of 18 May 2021, Asociaţia ‘Forumul Judecătorilor Din România’ and Others, C83/19, ‑C127/19, ‑C195/19, ‑C291/19, ‑C355/19 ‑and C397/19‑, EU:C:2021:393, p. 194. 36. Urgenda Foundation v. State of the Netherlands ECLI:NL:RBDHA:2015:7196 (Urgenda I). 37. Urgenda Foundation v. State of the Netherlands ECLI:NL:GHDHA:2018:2610 (Urgenda II). 38. Urgenda Foundation v. State of the Netherlands ECLI:NL:HR:2019:2007 (Urgenda III). 39. Ashgar Leghari v. Federation of Pakistan, W.P. No. 25501/2015, Lahore High Court Green Bench, Orders of 4 Sept. and 14 Sept. 2015. 40. Urgenda I, pp. 4.94–102. 41. Urgenda II, pp. 67–69. 42. Urgenda III, pp. 8.2.6. 43. Urgenda III, pp. 8.2.7. 44. Urgenda III, pp. 8.3.3. 45. Urgenda I, pp. 4.74. 46. See: www​.urgenda​.nl/​en/​themas/​climate​-case/​global​-climate​-litigation/​

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REFERENCES Bürgin, A., Chapter 2 in this volume. The European Commission: a climate policy entrepreneur. Cox, R. H. J. (2014). Case note. The liability of European states for climate change. Utrecht Journal of International and European Law, 30 (78): 125–135. Czapliński, W. (2003). System Instytucjonalny UE. In J. Barcz (Ed.), Prawo Unii Europejskiej. Zagadnienia Systemowe (pp. 155–180). Wydawnictwo Prawo i Praktyka Gospodarcza, Warszawa. Eicke. T. (2021). Human Rights and Climate Change: What Role for the European Court of Human Rights. Inaugural Annual Human Rights Lecture, Department of Law, Goldsmiths University, 2 March 2021. Retrieved from: https://​rm​.coe​.int/​human​-rights​-and​-climate​-change​-judge​-eicke​ -speech/​1680a195d4 (Accessed: 5 September 2022). European Council (2020). European Council meeting (10 and 11 December 2020) – Conclusions. Brussels, 11 December 2020 (OR. en), EUCO 22/20. Ganguly, G., J. Setzer and V. Heyvaert (2018). If at first you don’t succeed: suing corporations for climate change. Oxford Journal of Legal Studies, 38 (4): 841–868. Kern, K., Chapter 8 in this volume. Cities in EU multilevel climate policy: governance capacities, spatial approaches and upscaling of local experiments. Leese, R. (2019). Climate Change Litigation. Clifford Chance. www​.cliffordchance​.com/​briefings/​2019/​ 10/​climate​-change​-litigation​-tackling​-climate​-change​-through​-the​-courts​.html [Accessed: 5 September 2022]. Lin. J. (2015). The first successful climate change negligence case: a comment on Urgenda Foundation v. the State of the Netherlands (Ministry of Infrastructure and the Environment). Climate Law, 5 (1): 65–81. Parks, L., D. della Porta, and M. Portos, Chapter 7 in this volume. Environmental and climate activism and advocacy in the EU. Pedersen, O. W. (2019). European Court of Human Rights and environmental rights. In J. R. May, E. Daly (Eds.), Human Rights and the Environment. Cheltenham, UK, Northampton, MA, USA: Edward Elgar. Peel, J. and H. M. Osofsky (2018). A rights turn in climate litigation? Transnational Environmental Law, 7 (1): 1–31. Sabin Center for Climate Change Law (2022) Climate Change Cases. http://​climatecasechart​.com/​non​ -us​-climate​-change​-litigation/​ [Accessed: 5 September 2022]. Setzer, J. and C. Higham (2021). Global Trends in Climate Litigation: 2021 Snapshot. London: Grantham Research Institute on Climate Change and the Environment and Centre for Climate Change Economics and Policy, London School of Economics and Political Science. Stangl, F. (2015). EU climate policy. In E. Woerdman, M. Roggenkamp, M. Holwerda (Eds.), Essential EU Climate Law (pp. 10–39). Cheltenham, UK, Northampton, MA, USA: Edward Elgar. Stoczkiewicz, M. (2018). The climate policy of the European Union from the Framework Convention to the Paris Agreement. Journal of European Environmental & Planning Law, 15: 42–68. UN Environment Programme (2021). Global Climate Litigation Report: 2020 Status Review. Nairobi: United Nations. van Asselt, H. (2021). Governing fossil fuel production in the age of climate disruption. Earth System Governance, 9 (2–3): 100118. Voigt, Ch. (2021). Introduction. Climate change as a challenge for global governance, courts and human rights. In W. Kahl and M-P. Weller (Eds.), Climate Change Litigation (pp. 2–20). New York: Bloomsbury. Winter, G. (2020). Armando Carvalho and Others v. EU: Invoking human rights and the Paris Agreement for better climate protection legislation. Transnational Environmental Law, 9 (1): 137–164.

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10. Global dimensions of EU climate, energy and transport policies John Vogler

INTRODUCTION Over more than three decades, on the basis of its energy, environmental and transport competences, the EU has been in a dynamic but often frustrating relationship with the global climate regime complex. A full representation of the impact of this relationship would stretch across most of the chapters in this book. This chapter will focus, more manageably, on policy initiatives and responses that relate directly to mitigation targets set under the United Nations Framework Convention on Climate Change (UNFCCC), and the parallel attempts to bring international aviation and shipping into line with long-term climate goals. Since 1992, international action to tackle climate change has naturally focused upon the UNFCCC. However, since the signature of the Kyoto Protocol, the Convention’s remit has excluded important and increasing sources of emissions in the international aviation and shipping sectors. While the UNFCCC with its Kyoto Protocol and Paris Agreement seeks to mitigate greenhouse gas (GHG) emissions on a nationally accountable basis, international transport emissions are the province of two long-established international organizations, the International Civil Aviation Organization (ICAO) and the International Maritime Organization (IMO). Taken together they are components of a fragmented climate policy ‘regime complex’ (Keohane & Victor 2010, Vogler 2016). For its part, the EU’s external policies relating to climate and transport have centred on the EU Emissions Trading System (ETS), created in 2005 as the Union’s principal vehicle for fulfilling its ‘commitments’ under the Kyoto Protocol and subsequently its ‘contributions’ under the Paris Agreement (European Commission 2020). This chapter begins by noting the importance of the international stage in offering the EU a means to form its own distinct identity through climate action. It then sketches the origins and development of the ETS in that context (see also introduction to this volume, and Chapters 14 and 16 by Knodt and Wettestad, respectively). This is followed by a review of the problem of international transport emissions and responses to them, tracking global mitigation efforts and the EU’s role therein. Special attention is paid to the EU’s attempts to extend its own policy approaches beyond its borders to aviation and shipping, centring on including these sectors within the ETS, and the international opposition and tensions between the Commission and Member States that have hampered this. The chapter concludes by highlighting some of the challenges regarding the implementation of the European Green Deal launched in 2019, as they pertain to international transport.

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Global dimensions of EU climate, energy and transport policies  145

THE EU ON THE WORLD STAGE The EU has been a climate activist throughout the history of the UNFCCC, dating from its unsuccessful attempt to include binding GHG reduction targets in the original 1992 Convention, and including its pivotal role in the development and implementation of the Kyoto Protocol (Afionis 2017). It is worth considering, at the outset, the political benefits for the Union of climate leadership in the establishment of its credentials as an actor, distinct from its Member States. This social construction of the EU’s identity both externally and in the eyes of its own citizens, is a reputational aspect of international climate politics of some importance (Bretherton & Vogler 2006). Under the Paris Agreement (see Box 10.1), such reputational incentives assume a particular importance in the drive to ‘ratchet up’ nationally determined emission reduction contributions, which are otherwise unable to deliver the UNFCCC’s long-term objective of avoiding ‘dangerous climate change’.

BOX 10.1 THE 2015 PARIS AGREEMENT TO THE UNFCCC The Paris Agreement entered into force in 2016. More detail followed with the agreement of its associated ‘rulebook’ and trading provisions at the 2018 Katowice and the delayed 2021 Glasgow Conferences of the Parties (COP24 and COP26 respectively). The Agreement includes the following key elements: • A mitigation target to restrict temperature growth by 2100 to ‘well below’ 2˚C and to ‘pursue efforts’ to limit it to 1.5˚C, and to achieve a balance between ‘emissions by sources and removals by sinks’ between 2050 and 2100. This was strengthened by COP 26, the outcome of which called for ‘rapid, deep and sustained GHG reductions’ reducing CO2 emissions by 45 per cent relative to 2010 levels by 2030 and to net zero ‘around mid century’. It also, for the first time, included calls for the ‘phasing down’ of coal and fossil fuel subsidies. • All parties to submit ‘Nationally Determined Contributions’ (NDCs) of increasing ambition every five years, preceded by a ‘global stocktake’ (the first of which was due in 2023). Recognizing the inadequacy of efforts to date under this ‘ratchet mechanism’, COP 26 mandated an annual review process to increase pressure on Parties to ratchet their commitments further. A transparency framework to assist with reviewing NDCs and a system of ‘internationally traded mitigation outcomes’ to assist in achieving them (Art. 6) was also finally agreed at COP 26. • Adaptation to have equal status to mitigation. Developed countries to fund mitigation and adaptation activities in developing countries. No specific targets were included in the texts but a long-standing promise of $100 billion per annum is widely seen as a test of developed country commitment, alongside funding for ‘loss and damage’. The Paris Agreement is binding in terms of procedures and reporting, rather than substance. Although the UNFCCC Annexes, differentiating developed and developing Parties, are absent, there are nevertheless subtle differences in the text between the requirements imposed on developed countries and other Parties. A more detailed account of the Paris Agreement can be found in Van Calster and Reins (2021).

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To place this in context, EU climate leadership has exploited the specific opportunities provided by the immediate post-Cold War international system. In 1990, the EU was still second only to the US as a GHG emitter and benefited from the use of this year as a baseline for its emission reduction targets (the merger of East and West Germany enabled substantial cuts after this date, as did the closure of the UK’s deep mined coal industry). US abdication of a climate leadership role, with its rejection of the Kyoto Protocol in 2001, created problems but also opened the way for the EU to play a significant role as an unlikely ‘hegemon’. While the high expectations generated by EU leadership in implementing the Kyoto Protocol remained, significant structural change in the global political economy, especially after 2008, imposed new constraints. These constraints are important for understanding the EU’s role at Copenhagen and Paris and, indeed, the incentives driving current climate policy. The very success of EU climate policy in reducing (or transferring)1 emissions meant that by the wider 2020s its share of total global GHG emissions had been reduced to below 10 per cent. This can be set against the rate of economic and emissions growth of China and to a lesser extent the BASIC group of countries (Brazil, South Africa, India and China), and the re-emergence of US aspirations to climate leadership under the Obama administration from 2008 through to the Paris Agreement of 2015. It should also be recalled that the EU after 2004 was both significantly wider – with Eastern enlargement – but also weaker, because the inclusion of fossil fuel-dependent economies such as Poland greatly complicated internal policy and target setting (see Wurzel et al., Chapter 3 in this volume). Another key enabler of EU aspirations to climate leadership was its recognition by the UNFCCC as a Regional Economic Integration Organization (REIO) in its own right, alongside the Member States. The EU has attained this status in around 50 international environmental agreements, but crucially not in the aviation and shipping sectors.2 In the case of climate, which covered areas of EU and Member State competence, a pattern of shared representation was established. Representation at UNFCCC meetings is shared between the Commission and the Council who both sit behind a common EU plate. In dealing with shipping and aviation, the Union also has shared competences, originating in the Treaty of Rome itself and later developed under TFEU Art 100(2). Although the Commission has long sought to extend its external representation and to speak for the Member States, this is difficult at the IMO and ICAO because, as bodies established before the European Communities, acceptance of the EU as a fully-fledged member would require treaty revision – something that not only other state Parties but also some EU Member States and industry representatives would oppose. Enjoying only observer status, the Commission attempts to advance EU positions at IMO and ICAO meetings by co-ordinating the Member States with the state holding the Presidency of the Council in the lead. This has not always been successful and Member States have been concerned that ‘representation comes to equate to competence’ (HM Government 2014: 2.79).

EMISSIONS TRADING AND THE EU: FROM KYOTO TO PARIS The UNFCCC entered into force in 1994. At this stage, the principal obligation arising from the UNFCCC was the monitoring and reporting of policies, measures and GHG sources and sinks, which the EU performed on a collective basis through its monitoring mechanism, established in 1993 (Romppanen, Chapter 15 in this volume). In 1995, the UNFCCC launched

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Global dimensions of EU climate, energy and transport policies  147 negotiations on actual measures to reduce emissions, a process which resulted in the 1997 Kyoto Protocol. The Union entered the final period of these negotiations with an emission reduction offer based upon an internal arrangement known as the ‘burden sharing bubble’, whereby greater reductions contributed by richer Member States allowed the less economically developed ‘cohesion countries’ to increase their emissions, but still resulted in an 8 per cent overall reduction (see also Romppanen, Chapter 15 in this volume). However, at US insistence, the Protocol included ‘flexibility mechanisms’ to allow it to achieve a 7 per cent reduction through emissions trading and offsetting through Joint Implementation and the Clean Development Mechanism (Bretherton & Vogler 2006: 108). Emissions trading and the creation of carbon markets had been much discussed in the previous decade as an economically efficient way of reducing emissions. Emissions trading systems generally entail the setting of a cap on total emissions, with permits to emit allocated to participating actors, either for no charge (free allocation) or by auction. In order to incentivize the most cost-effective forms of abatement, permits are tradable in an emission market (Skjærseth and Wettestad 2010), and over time the cap may be progressively reduced. While attractive to many economists, this approach ran directly counter to established EU policy doctrine preferring a more ‘command and control’ approach. Embedding emissions trading and carbon markets in the Kyoto Protocol had very significant consequences for the EU. It was evident in 1997, with the passage of the Byrd-Hagel Resolution by the US Senate, that despite having signed the Kyoto Protocol, the US was unlikely to ratify. In fact, the incoming Republican administration of George W. Bush denounced the agreement in 2001, leaving the process of completing the implementing provisions of the Protocol. The Stockholm European Council then took the momentous decision to lead the development and implementation of the Protocol. Key to this process was the development of complex rules for the flexibility mechanisms, and of the EU’s own Emissions Trading System (ETS), legislation for which was adopted in 2003 (Directive 2003/87/EC). Until this time, the impact of the international climate regime on the EU’s internal policies, beyond the monitoring and reporting of policies, measures and GHG sources and sinks noted above, had been minimal. The process of developing the Protocol made it clear that previous disconnection between external aspirations to climate leadership and internal energy policy could not be sustained if the EU was to remain a credible international leader (Oberthür & Pallemaerts 2010). Thus, in a remarkable transformation, emissions trading was placed at the heart of the EU’s response, where it has remained (Cass 2005, Wettestad 2005). With eyes upon the 2009 Copenhagen Conference of the Parties (COP) to the UNFCCC, at which a new, more ambitious climate agreement was anticipated, the ETS was extensively reformulated as part of the EU’s ‘20-20 by 2020’ climate and energy package, agreed in late 2008 after a difficult internal process and a number of concessions to coal-dependent countries in Eastern Europe (Vogler 2016: 66). The EU’s plans underpinned its ‘targets and timetables’ approach to the Copenhagen COP. Ultimately the outcome from Copenhagen was widely seen as a defeat for EU aspirations (Haug and Berkhout 2010), although a last-minute agreement between the US and the BASIC group sketched an ‘Accord’ that turned out to provide a blueprint for the later 2015 Paris Agreement. Nonetheless, the EU pressed on with the reform of the ETS, which introduced a single Union-wide emission cap that was scheduled to be progressively reduced. The approach to the 2015 Paris COP was bedevilled by an excess of allowances and ineffectually low carbon prices, as the Commission struggled to bring the ETS under control. In 2014, the European Council agreed a 2030 Climate and Energy Framework

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148  Handbook on European Union climate change policy and politics with a 40 per cent reduction in emissions as a headline figure for its ‘contribution’ in advance of the Paris COP. A reformed ETS was to be the ‘main instrument’ to achieve the target, with a 2.2 per cent annual reduction of the cap from 2021 but with free allowances retained to energy-intensive industries to avoid risks to competitiveness and ‘carbon leakage’ (European Council 2014). The delayed COP 26, finally held at Glasgow in 2021, was important because it marked the implementation of the Paris Agreement and the first application of its ‘ratchet mechanism’. Conscious of its self-ascribed leadership role (see Tobin et al., Chapter 13 in this volume) in the lead-up to the COP, the EU agreed an ambitious revision of its climate target for 2030, and the outline of a ‘European Green Deal’ (European Commission 2019). In December 2020, a revised ‘Nationally Determined Contribution’ for a 55 per cent emission reduction by 2030 was submitted to the Convention’s secretariat. This target, along with a commitment to carbon neutrality by 2050, was subsequently legally enacted through the 2021 ‘European Climate Law’ (Regulation (EU) 2021/1119) (see introduction to this volume). In its ‘Fit for 55’ package of proposals, presented in 2021, the Commission proposed a significant lowering of the ETS cap to reduce emissions by 61 per cent (against a 2005 baseline) by 2030. The scope of the scheme was also to be expanded to include maritime transport alongside a plethora of other measures to implement the European Green Deal (European Commission 2021a), including a second, parallel emissions trading system (‘ETS II’), envisaged to encompass the building and transport sectors. Aviation had been included in the ETS since 2012 (by means of Directive 2008/101/EC) but here – for reasons to be outlined below – extension of coverage beyond the European Economic Area had been paused until 2023. In addition to its proposed ETS-related reforms, other prominent parts of ‘Fit for 55’ were directed towards international transport (see also Dryhauge and Rayner, Chapter 21 in this volume) including new renewable fuel standards (REFuelEU for aviation and FuelEU for shipping) and a revision of the Energy Tax Directive to remove exemptions enjoyed by aviation fuel (European Commission 2021b and 2021c).

EMISSIONS FROM INTERNATIONAL TRANSPORT: INTERNATIONAL AND EU MITIGATION EFFORTS The main source of GHG emissions from international transport (i.e. not occurring within national jurisdiction) arises from the burning of what are known as ‘bunker fuels’: heavy fuel oil for ships and kerosene for aviation. Because of long-standing concerns to encourage commerce, and the evident possibilities of evasion, historically these fuels have not been subject to taxation. Aviation and shipping emissions of CO2 appear broadly similar in their contribution to the global total – each contributing around 2–3 per cent. Both are intimately linked to a globalizing world economy and tend to track its growth (Rayner 2021). If such amounts were to be attributed to a nation state, international transport would rank among the top ten global emitters. Under business-as-usual assumptions, emissions from each are set to grow significantly; one forecast for shipping, for example, estimates a 90–130 per cent increase on 2008 levels by 2050 (Class NK 2021: 4). There are, however, important differences between the two sectors. For example, apart from CO2, aviation also emits nitrous oxide and water vapour contrails, the full implications of which are inadequately understood. By some estimates, the actual climate impact from

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Global dimensions of EU climate, energy and transport policies  149 aviation is much greater than would be indicated by CO2 emissions alone (Lee et al. 2021). For shipping, in addition to CO2, there are other short lived ‘forcers’ including black carbon (UNCTAD 2018). Opportunities for abatement through technical and operational measures are easier in world shipping than in aviation, where many efficiencies have already been achieved (Bows-Larkin 2015). Maritime ownership and operational structures are more complicated than those for aviation, where there are an identifiable set of commercial airline members of the International Air Transport Association (IATA). Although frequent flying may be the prerogative of relatively rich individuals, any discussion of common but differentiated responsibilities must take into account its vital importance for the tourist industries of various poor developing world economies and especially small island developing states (SIDS). One thing that unites otherwise disparate major global airlines, shipowners and charter firms is a deep suspicion of changes to permissive international rules on the use of hydrocarbon fuels (InfluenceMap 2017). This antipathy of key sectoral actors towards regulation has been reflected in the lacklustre response of both IMO and ICAO to the developing international climate regime (Rayner 2021). The UNFCCC acknowledged the significance of ‘bunker emissions’, but failed to include them in its Kyoto Protocol, preferring to pass responsibility to IMO and ICAO.3 While this respected the organizational fiefdoms of two long-established UN Specialized Agencies and avoided the knotty problem of allocating international emissions to states, it also led to a prolonged stasis in which the problem was discussed without effective action being taken. International transport emissions had been regularly discussed in IMO and ICAO submissions to the UNFCCC’s Subsidiary Body for Scientific and Technical Advice (SBSTA) and were considered in advance of the Paris COP 21, yet they were absent from the Agreement’s text. This refers solely to ‘economy-wide absolute emission reduction targets’ for developed countries and for developing countries who are ‘encouraged to move over time to economy-wide emission reduction of limitation targets in the light of different national circumstances’ (Art. 4.4). Accordingly, international transport emissions do not necessarily figure in the reporting and calculation of NDCs. The IMO notes that ‘No reference to the IMO (nor ICAO) occurs in either the articles of the 2015 Paris Agreement or the decisions to implement the Agreement, including on pre-2020 ambition’ (IMO 2018 Annex: 2). The contribution of this part of the regime complex to international mitigation efforts remained minimal. As elaborated below, perhaps the major moving force in attempting to tackle the problem of international transport emissions, on the basis of its own internal regulation, has been the EU (van Leeuwen & Kern 2013). Aviation ICAO was set up in 1944 under the Chicago Convention. Based in Montreal, its original purpose was to encourage growth of postwar commercial aviation, notably through the prohibition of taxation of aviation fuel on board an arriving aircraft, a norm that has persisted and been developed even as the organization began to recognize the environmental responsibilities of the industry. Thus, a key policy intervention to reduce aviation emissions was excluded and over the years ICAO ineffectually debated operational and technical measures to reduce emissions alongside voluntary instruments, such as air ticket charges, that did not involve taxation. In an organization composed of states, subject to extensive lobbying by the airlines and in which the EU (represented by the Delegation in Montreal) has only observer status,

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150  Handbook on European Union climate change policy and politics there was a clear preference for voluntary action, and an expectation that inclusion of foreign airlines in national emissions trading schemes would require mutual agreements between states. Significantly, the airline industry, through its trade association the International Air Transport Association (IATA), had introduced the norm of ‘carbon neutral growth’, such that any measures that ICAO would take should not impede its expansion. At the same time, ‘[t]he clash between the ICAO’s principle of equal treatment of operators and the need to respect common but differentiated responsibilities espoused in the UNFCCC seemed to pervade all discussions’ (T&E 2009:11). In response to the Kyoto Protocol’s injunction, the ICAO has toyed with the idea of global-scale ‘market-based instruments’ and its governing Assembly’s 2004 Resolution (35-5) envisaged the incorporation of international emissions in contracting states’ trading systems. After repeated calls for action by the Council of Ministers and the European Parliament, in 2005 the Commission proposed the inclusion of aviation emissions in the ETS, bringing forward legislative proposals in late 2006. In a foretaste of conflicts to come, EU Member States entered reservations to a US-backed 2007 ICAO resolution that foreign carriers should only be included in such schemes by mutual agreement (EC 2008: 9). The 2008 Directive amending the ETS to include aviation was comprehensive in scope: ‘From 1 January 2012 all flights which arrive at or depart from an aerodrome situated in the territory of a Member State to which the Treaty (EEA) applies shall be included’ (EC 2008: Annex). The EU-wide cap was set in 2012 at 97 per cent of the average annual emissions for the years 2004–2006, subsequently to be lowered to 95 per cent for the 2013–2020 period. With limited abatement options, airlines would have to engage in carbon trading to acquire sufficient allowances to cover their verified emissions. Despite 85 per cent of the emissions cap being allocated to airlines in the form of free allowances, there was a predictably hostile reaction from the international airlines. They argued that the EU’s proposed action violated customary international law, a claim rebutted by a ruling of the EU Court of December 2011 (ECJ 2011). EU-based airlines worried that continuing with a scheme in the face of such opposition would put them at a competitive disadvantage. They ‘recognised the potential benefits of ETS, but advocated a global system agreed at the ICAO, rather than a regional system that created market distortions’ (HM Government 2014: 2.75). In February 2012, a so-called ‘coalition of the unwilling’, comprising China, Russia, Brazil, India, Mexico, Japan and the US, demanded that action on international emissions should be the sole prerogative of ICAO, and threatened a range of retaliatory countermeasures (Vihma & van Asselt 2014: 3–4). The US Congress passed the Thune Bill, which prohibited US carriers from complying and China pointedly put an order for 55 aircraft from the EU-based Airbus company on hold (Keating 2014a 2014b, Vihma & van Asselt 2014). There were also protests from EU Member States and carriers alarmed at a potential aviation trade war. These developments persuaded the Commission into a retreat which took the form of the so-called ‘stop the clock’ Decision (EU 2013) deferring enforcement of the Directive for flights from outside the European Economic Area. The justification provided was that ICAO had shown renewed interest in a ‘global market-based measure’ and that the EU wished to facilitate this process (EU 2013: 5–6). The Commission still wished to include the proportion of an international flight’s emissions occurring within EU airspace in the ETS, but even this was unpopular amongst the Member States. Therefore the ‘stop-the-clock’ Decision was first extended to the end of 2016 (Regulation (EU) 421/2014) and then to 2023 (Regulation (EU) 2017/2392). It is important to emphasize that, despite these setbacks to the extension of the ETS, the scheme

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Global dimensions of EU climate, energy and transport policies  151 has operated for flights internal to the EEA (including Iceland, Liechtenstein and Norway) from 2012 (see Dyrhauge and Rayner, Chapter 21 in this volume), and that an annual saving of 17Mt of CO2 has been reported, with 99.5 per cent compliance (European Commission 2020). Successive decisions to delay the full implementation of the 2008 Directive were made contingent explicitly upon the implementation of ICAO’s long-awaited global market-based mechanism. Almost two decades after the Kyoto Protocol’s injunction to act, this finally emerged in outline form with the ICAO Assembly’s 2016 decision (ICAO 2016, A39-3) to introduce its Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). CORSIA differs from emissions trading in that there is no cap, and participants are able to buy offsets in projects that involve certified emission reductions in other sectors. CORSIA also allows aircraft operators to reduce their offsetting obligations by using sustainable aviation fuels (SAFs). Offsetting as a means of managing GHG emissions is widely questioned and the CORSIA version has been assessed by the UK’s statutory advisory Climate Change Committee as ‘an insufficient contribution to the goals of the Paris Agreement’ and in its current form incompatible with the UK’s national net zero commitment (CCC 2020: 425). The CORSIA system will be route-based in that the states of departure and arrival must participate in the scheme, initially on a voluntary basis from 2021–2026 (under the pilot phase 2021–2023 and first phase 2024–2026), but from 2027–2035 it will be mandatory. As of January 2023, 119 states had volunteered for one of the two initial phases, including EU Member States and the US, but China and Russia had not (ICAO 2023). CORSIA requires the purchase of offsets based upon increases of emissions from a baseline that originally was to have been calculated using average emissions in 2019–2020. This, in effect, represents a commitment only to carbon neutral growth (in keeping with industry preferences), rather than an attempt to cap and reduce actual emissions. The dramatic downturn in international aviation and consequent emissions brought about by the COVID-19 pandemic in 2020, however, shifted the context significantly. Had the original baseline been maintained, the costs of the scheme for participating airlines would have increased markedly. In response, the 2020 ICAO Council agreed to ‘safeguard’ the aviation sector’s post-pandemic recovery by using 2019 figures alone as the baseline. Most EU states supported this, although it was opposed by Sweden and environmental NGOs (Farand 2020). The ongoing relationship between CORSIA and the EU ETS remains contentious. The ICAO position has been that CORSIA should be ‘the only market-based measure applied to international flights’ and that double counting of emissions should be avoided. EU Member States have not entered reservations at ICAO, instead giving ‘full support’ to CORSIA while also stating that ‘we retain under the Chicago Convention our existing legal framework and policy space, and our ability to go beyond ICAO rules in the light of the EU’s Paris Agreement commitments’ (Morgan 2019: 3). Nonetheless there appears to be a recognition that CORSIA must be given a chance to develop. Thus, the Commission’s ‘Fit for 55’ proposal announced its intention to implement CORSIA for European airlines’ flights beyond the EEA while retaining the ETS for flights within the EEA, where free allowances would be progressively phased out (European Commission 2021b). While this removes the immediate threat to impose ETS participation on international airlines, it holds it in reserve in the event that CORSIA is not fully implemented after 2027 (Keating 2021). The really novel aspect of ‘Fit for 55’ is the proposal to end the exemption from taxation of aviation fuel used on flights within EU airspace (by introducing an EU-wide minimum tax rate), alongside future obligations to introduce

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152  Handbook on European Union climate change policy and politics sustainable fuels (European Commission 2021c) (see also Dyrhauge and Rayner, Chapter 21 in this volume). Aviation policy represents a continuing, significant area of incoherence between the Commission and Member States, particularly at ICAO where the latter are under heavy pressure from national airlines and IATA. Because of its non-recognition as a REIO, the EU has to rely on Member States to maintain its position within ICAO. During the 2012 crisis, Transport Commissioner Slim Kallas was blunt, stating that the whole episode had been a ‘nightmare’ and the blame should be placed firmly on Member States. ‘We could do it [make international flights subject to the ETS] only if we have [a] strong front of Member States’ (Keating 2014a). Climate Commissioner Connie Hedegaard also reflected that ’the way that the aviation issue played out shows how vulnerable Europe can be if we are not united’ (Keating 2014b). Shipping The International Maritime Organization (IMO), which governs international shipping, was created under a 1948 Convention and took organizational shape ten years later as the International Maritime Consultative Organization, renamed IMO in 1982. Like ICAO, it is an organization of (171) Member States, which does not recognize REIOs and admits the EU merely as an observer. However, having developed Union-wide competence for transport, the European Commission seeks to ensure, as in ICAO, that the Union speaks as one. To this end, it applies an informal process for coordinating the positions of the EU Member States, as well as Norway and Iceland. For most IMO meetings, the European Commission prepares a coordination paper, suggesting positions for the Member States to follow. Moreover, several weeks before key IMO sessions, a coordination meeting is held in Brussels for Member States’ representatives to agree on joint positions. However, as pointed out by the European Parliament (2016: 7): ‘In practice … while during IMO meetings the EU Council presidency advances the coordinated position, individual Member States can take the floor and express their own position, sometimes departing slightly from the joint one’. This is perhaps something of an understatement (as it would most certainly be for the operation of similar procedures within ICAO). In contrast to aviation, the maritime sector has significant design, operational and fuel efficiency measures available to mitigate GHG emissions (Bows-Larkin 2015).4 There are also problems of responsibility: the practice of ‘flagging out’ is widespread, whereby ship owners are able to reduce regulatory burdens by putting their ships into the Panamanian, Liberian or Marshall Islands registries and able to shift between flags at short notice (ownership of ships may also change quite frequently). The danger of a ‘race to the bottom’ and ‘carbon leakage’ is therefore inherent, along with the evident difficulty of applying the common but differentiated responsibilities principle when the majority of ships sail under the flags of developing nations. For such reasons, IMO has always adhered to the principle of ‘no more favourable treatment’, such that shipping standards are regarded as being of universal application. As regards the EU, its Member States are important ‘port states’, which, under the international law of the sea, can impose common requirements ‘for the prevention, reduction and control of pollution … as a condition for the entry of foreign vessels into their ports or internal waters’ (UNCLOS Art. 211(3)). After more than a decade of reports and consideration of climate issues within the IMO’s Maritime Environment Protection Committee (MEPC), some emission reduction measures

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Global dimensions of EU climate, energy and transport policies  153 were adopted and in 2011 the IMO agreed to add new technical design and operational efficiency standards which it described as ‘the first legally binding climate change treaty since the Kyoto Protocol’ (MARPOL 2021: 1).5 In noting their introduction, the EU asserted that these standards ‘alone cannot lead to the necessary absolute reductions of greenhouse gas emissions from international shipping to keep efforts in line with the global objective of limiting increases in global temperature to 2˚C’ (EU 2015: 8). In response, the Commission proposed a monitoring, verification and reporting (MRV) system for the maritime sector, partly because this would encourage emissions reductions (up to 2 per cent compared to ‘business as usual’ and cost savings by removing market barriers related to information on fuel costs and efficiency, but also because such a move was a prerequisite for a future international market-based measure (EU 2015: 13). The EU’s 2015 MRV Regulation covered all commercial ships of over 5,000 tons (thereby complying with the IMO principle of non-discrimination between flags) sailing from or to ports under the jurisdiction of Member States. ‘Companies’, defined as shipowners or those, like charterers, assuming responsibility for operating the ship (EU, 2015: Art. 3 d.), were required, from 2018, to collect and submit data on CO2 emissions for each voyage in standardized and then verified form. The Regulation makes it clear that the EU system ‘should serve as a model for the implementation of a global MRV system’ and would be aligned and reviewed if and when such a system came into being. In 2019, IMO introduced its own global Data Collection System under MARPOL Annex VI, possibly as a response to EU plans (Boviatsis & Tselenis 2019). The system had been under consideration since 2014, but is significantly different from the EU MRV in that it requires collection of data on fuel consumption rather than CO2 emissions. Unlike the EU system, data is anonymized and reported to the flag state which then verifies and transmits it to the IMO’s database (Boviatsis & Tselenis 2019). The two systems are not integrated, with some companies having reporting obligations under both. The Commission sought to address this problem by proposing an amendment to the MRV Regulation in 2019. IMO continued to move at a glacial pace, having agreed an ‘Initial Strategy’ in 2018 on the reduction of GHG emissions, the first milestone on its 2016 ‘Roadmap’ (IMO 2018). This included a ‘vision’, aiming to reduce shipping emissions and phase them out ‘as soon as possible in this century’. The emergence of IMO’s new strategy reflected pressure from the Maldives and other ‘High Ambition Coalition’ partners, including the EU (Earsom & Delreux 2021). Levels of ambition included reducing carbon intensity through design standards for new ships and reduction of average emissions by at least 40 per cent by 2030 and 70 per cent by 2050 against a 2008 baseline. IMO’s ‘vision’ was to ‘peak GHG emissions from international shipping as soon as possible and to reduce the total annual emissions by at least 50 per cent by 2050 compared to 2008 while pursuing efforts towards phasing them out at a point on a pathway of CO2 emissions reduction consistent with Paris Agreement temperature goals’ (IMO 2018). The possibility of ‘market-based measures’ had been under discussion over the years but had been placed into ‘abeyance’ in 2012 (ibid). Frustrated by IMO inaction, in early 2020 the European Parliament’s ENVI Committee attempted to improve on the Commission’s MRV amendment proposal by inserting maritime emissions in the proposed revision of the ETS. Internal differences over the future of maritime emission reduction plans were evident at a ‘virtual’ IMO meeting in November 2020 when the EU failed to produce a common position (ClassNK 2021). In December 2020 the Commission set a more decisive course by announcing that it would include maritime emissions within the ETS as part of the European Green Deal. Its implementing ‘Fit for 55’ proposals included

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154  Handbook on European Union climate change policy and politics major revisions of the ETS to include shipping: from 2023, all voyages between EU ports would be required to purchase ETS allowances and the scheme would be extended to cover 50 per cent of the emissions arising from voyages between the EU and third countries (European Commission 2021d). Shipping interests immediately condemned the proposals as an ‘extraterritorial tax upon trade’ and ‘ideological revenue raising exercise’ (Global Trade Review 2021).

CONCLUSIONS This chapter has highlighted important aspects of the dynamic between the EU and the global regime complex. In this context, it has argued that the ETS has proved an unlikely success for the EU, in several respects. Firstly, in the sense that the EU was able to develop such an instrument, despite it being alien to its regulatory tradition, and that the problems (of over-allocation) arising during its initial phases, were managed (see also the introduction to this volume). Related to this, by developing the instrument the EU can justifiably claim to have maintained the momentum necessary to progress in global negotiations under the auspices of the UNFCCC, which might otherwise have faltered. Moreover, this chapter has shown how the EU has been able to use the ETS as the main vehicle for its own ambitious attempt, frequently alone amongst the other major powers in climate politics, to rein in international transport emissions. Such an effort is clearly required: already in 2015, analysis was indicating that to have any prospect of operating within a constrained carbon budget consistent with staying below 2˚C let alone 1.5˚C, emissions from both aviation and shipping would have had to ‘peak’ between 2015 and 2020 (Bows-Larkin 2015). This has evidently not occurred, even with the downturn in aviation caused by the pandemic, and the painfully slow actions of IMO and ICAO offer very limited prospects for significant reductions in the immediate future. This chapter has also served to highlight how EU action in both the shipping and aviation sectors occurs in the context of the contested relationship between European regulation and international action. The legality of the Union’s attempts to internationalize its internal policies and legislation have, in both areas, been challenged by third parties and commercial stakeholders. At the same time, EU rights to participation in international rulemaking remain limited in long-established UN Specialized Agencies and reliant upon sometimes reluctant Member States. As it attempts to galvanize support for its European Green Deal, in which the Commission proposed an extensive raft of climate measures, even envisaging an unprecedented move to tax aviation fuels, the EU stands at a crossroads. The relationship between the ETS and CORSIA may prove to be difficult, and an airline industry battered by the pandemic can be expected to oppose fuel taxation and advocate CORSIA alone, as the single ‘global market-based mechanism’. In parallel, the inclusion of shipping in the ETS is a bold move, bound to attract intense international and industry opposition as it makes its way through the Union’s legislative process. The fallout from the Russian invasion of Ukraine in 2022, in particular the increased pressure it has placed on already high energy costs, has added a further dimension, serving to re-emphasize the importance of removing dependence upon fossil fuels while potentially overshadowing and complicating ongoing negotiations among the EU institutions, and in global-level fora of various kinds. Over the longer term, action to mitigate emissions from international transport is as much, if not more, a test of continuing EU climate policy leadership as anything that occurs within the UNFCCC.

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Global dimensions of EU climate, energy and transport policies  155

NOTES 1. Much carbon-intensive production for European consumption has, under globalization, been transferred to China and elsewhere, reducing official EU emission totals because, under the UNFCCC, only “territorial” emissions are counted (Fezzigina et al. 2019). 2. REIO status allows the Union to participate with and even cast the votes of the Member States in international organizations. It was based upon competences acquired as the European Community legislated across a number of environmental areas and upon the foundational 1971 ERTA Judgment of the European Court of Justice. The court ruled that exclusive internal policy competence automatically gave the Community, and then the Union, external competence (for environment under TFEU Art. 192) and its right to external representation under Art. 218. 3. Parties included in Annex I (developed countries) shall pursue limitation of emissions of greenhouse gases not controlled by the Montreal Protocol from aviation and marine bunker fuels, working through the International Civil Aviation Organization and the International Maritime Organization respectively (Kyoto Protocol Art. 2.2). 4. A good example is speed reduction which, along with other technical measures, could have provided a 50 per cent reduction of projected GHG emissions by 2020. These were regarded as a superior option to a tax on bunker fuels because of the opportunities for evasion (T&E 2009:13). 5. They were the Energy Efficiency Design Index and the Ship Energy Efficiency Plan. However, a study by the Commission has suggested that even in proposed strengthened form, these measures would have only a marginal impact on 2030 emissions (European Commission 2019).

REFERENCES Afionis, S. (2017). The European Union in International Climate Change Negotiations. Abingdon: Routledge. Boviatsis, M. & B. Tselentis (2019). A comparative analysis between EU MRV and IMO DCS – the need to adopt a harmonised regulatory system. Rhodes: 16th International Conference on Environmental Science and Technology, CEST2019_00925. Bows-Larkin, A. (2015). All adrift: aviation, shipping, and climate change policy. Climate Policy, 15 (6): 681–702. Bretherton, C. & J. Vogler (2006). The European Union as a Global Actor. Abingdon: Routledge. Cass, L. (2005). Norm entrapment and preference change: the evolution of the European Union position on international emissions trading. Global Environmental Politics, 5 (2): 38–60. Class, N. K. (2021). Summary of the outcomes of MEPC 75, TEC-1228, 9 February, www​.classnk​.or​.jp. Climate Change Committee (2020). The Sixth Carbon Budget. London. www​.theccc​.org​.uk/​publication/​ sixth​-carbon​-budget/​. EASA, EEA, EUROCONTROL (2019). European Aviation Environmental Report. www​.easa​.europa. Earsom, J. & T. Delreux (2021). A nice tailwind: the EU’s goal achievement at the IMO initial strategy. Politics and Governance, 9 (3): 401–411. EU (2015). Regulation (EU) 2015/737 of the European Parliament and of the Council of 29 April 2015 on the monitoring, reporting and verification of carbon dioxide emissions from maritime transport and amending Directive 2009/16/EC. European Commission (2019). The European Green Deal. COM (2019) 640 final. Brussels: European Commission. European Commission, DG Climate Action (2019). Study on methods and considerations for the determination of greenhouse gas emission reduction targets for international shipping: Final Report: Short-Term Measures. European Commission (2020). EU Emissions Trading System. https://​ec​.europa​.euclima/​policies/​ets​_en. European Commission (2021a). ‘Fit for 55’: Delivering the EU’s 2030 Climate Target on the Way to Climate Neutrality. COM (2021) 550 final. European Commission (2021b). Proposal for a Regulation of the European Parliament and of the Council on Ensuring a Level Playing Field for Sustainable Air Transport, COM (2021) 561 final.

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156  Handbook on European Union climate change policy and politics European Commission (2021c). Proposal for a Regulation of the European Parliament and the Council on the Use of Renewable and Low Carbon Fuels in Maritime Transport and Amending Directive 2009/16/EC 2021/ 0201 (COD). European Commission (2021d). Proposal for a Directive of the European Parliament and the Council amending Directive 2003/87/EC establishing a system of greenhouse gas emission allowance trading within the Union, Decision (EU) 2015/1814 concerning the establishment and operation of a market stability reserve for the Union greenhouse gas emission trading system and Regulation (EU) 2015/757 COM(2921)551final. European Council (2014). Conclusions on 2030 Climate and Energy Policy Framework, Brussels 23 October, SN 79/14. Farand, C. (2020). ‘Final blow’ to aviation climate plan as EU agrees to weaken rules. Climate Change News, 9 June. www​.climatechangenews​.com/​2020/​06/​09/​. Fezzigina, P., S. Borghesi and D. Caro (2019). Revising emission responsibilities through consumption-based accounting. A European post-Brexit perspective. Sustainability, 11: 488. Global Trade Review (2021). Shipping industry slams EU’s proposed new emissions charge as ‘extraterritorial tax on trade’ 21 July, www​.gtreview​.com/​news/​europe. Haug, C. & F. Berkhout (2010). Learning the hard way? European climate policy after Copenhagen. Environment, 52 (3): 20–27. https://​doi​.org/​10​.1080/​00139151003761603. H.M. Government (2014). Review of the Balance of Competences between the United Kingdom and the European Union: Transport. https://​gcn​.civilservice​.gov​,uk/​ (Accessed: 26 March 2021). ICAO International Civil Aviation Organization (2016). Resolutions Adopted at the 39th Session of the Assembly Climate change and AR39 Consolidated Statement of continuing ICAO policies related to environmental protection. www​.icao​.int/​Meetings/​a39/​Documents/​Resolutions/​a39​_res​_prov​_en. ICAO International Civil Aviation Organization (2023). Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). CORSIA News. https://​www​.icao​.int/​environmental​-protection/​ CORSIA/​pages/​default​.aspx. IMO (2018). Adoption of the Initial IMO Strategy on Reduction of GHG Emissions from Ships and Existing IMO Activity Related to Reducing GHG Emissions in the Shipping Sector. Note by the International Maritime Organization to the UNFCCC Talanoa Dialogue. April. InfluenceMap (2017). Corporate Capture of the IMO. https://​influencemap​.org/​report/​Corporate​-Capture​ -of​-the​-IMO90​2bf81co5a0​591c551f96​5020623fda. Keating, D. (2014a). Will MEPs bow to pressure on ETS? European Voice, 13–19 March: 11. Keating, D. (2014b). Climate champion: Connie Hedegaard. European Voice, 6–14 November: 4–5. Keating, D. (2021). EU still flying solo on tackling aviation emissions. Energy Monitor, 11 August. Keohane, R. O. & D. G. Victor (2010). The Regime Complex for Climate Change, Discussion Paper 10–33, Belfer Center for Science and International Affairs, Harvard Kennedy School of Government. Larsson, J., A. Elofsson, T. Sterner & J. Åkerman (2019). International and national climate policies for aviation: a review. Climate Policy, 19 (6): 787–799. Lee, D. S., D. W. Fahey, A. Skowron et al. (2021). The contribution of global aviation to anthropogenic climate forcing for 2000 to 2018. Atmospheric Environment, 244 (2021): 117834. MARPOL Annex VI, n.d., www​.marpol​-annex​-vi​.com/​eedi​-seemp/​. Morgan, S. (2019). EU emissions scheme excluded from UN aviation offsets, 7 November, www​ .climatechangenews​.com/​2019/​10/​. Oberthür, S. & M. Pallemaerts (2010). The EU’s internal and external climate policies: an historical overview. In S. Oberthür & M. Pallemaerts (Eds.), The New Climate Policies of the European Union Internal legislation and Climate Diplomacy, Brussels: VUB Press, pp. 27–63. Pape, M. (2016). The IMO – for ‘safe secure and efficient shipping on clean oceans’. Briefing February 2016, EPRS/European Parliamentary Research Service, PE 577.964. Rayner, T. (2021). Taking the slow route to decarbonisation? Developing climate governance for international transport. Earth System Governance, 8.100100: 1–11. Ritchie, H. (2020). Climate change and flying: what share of global CO2 emissions comes from aviation?’ https://​ourworldindata​.org/​co2​-emissions​-from​-aviation. Skjærseth, J. B., & Wettestad, J. (2010). EU Emissions Trading: Initiation, Decision-Making and Implementation. Aldershot: Ashgate.

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Global dimensions of EU climate, energy and transport policies  157 T & E (2009). Bunker Fuels and the Kyoto Protocol: How ICAO and the IMO Failed the Climate Change Test. Brussels: European Federation for Transport and Environment, www​.​transporte​nvironment​.org. UNCTAD (United Nations Conference on Trade and Development) (2018). Review of Maritime Transport 2018. https://​unctad​.org/​webflyer/​review​-maritime​-transport​-2018. Van Calster, G. and L. Reins (Eds.) (2021). The Paris Agreement on Climate Change. A Commentary. Elgar Commentaries series. Cheltenham: Edward Elgar. Van Leeuwen, J. & K. Kern (2013). The external dimension of European Union marine governance: Institutional interplay between the EU and the International Maritime Organization. Global Environmental Politics, 13 (1): 69–87. Vihma, A, & H. van Asselt (2014). The Conflict Over Aviation Emissions: A Case of Retreating EU Leadership?, FIIA Briefing Paper 150. Helsinki: The Finnish Institute of International Affairs. Vogler, J. (2016). Climate Change in World Politics. London: Palgrave Macmillan. Wettestad, J. (2005). The making of the 2003 EU Emissions Trading Directive. An ultra-quick process due to entrepreneurial proficiency? Global Environmental Politics, 5 (1): 1–23.

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11. Climate, ecological and energy security challenges facing the EU: new and old dynamics Richard Youngs and Olivia Lazard

While the EU’s influential role in international climate diplomacy is well known (see Vogler, Chapter 10 in this volume, Tobin et al., Chapter 13 in this volume), less noted is the way that climate dynamics and related ecological processes have begun to reshape EU foreign and security policies more broadly defined. This chapter outlines how climate change is increasingly acting as a driver of the EU’s global strategy, encompassing security, development and geo-economic dynamics. It also argues that there are limits to how the EU is responding to these new dynamics. Although obviously a global climate leader in terms of its relatively ambitious emission reduction targets, it has been noticeably slower to focus efforts on a wider set of ecological challenges (Rockström et al. 2009), which interact with climate dynamics in complex ways that will pose serious threats to European security if not met with a concerted response. These limitations are the source of serious incoherencies within the EU’s external policies and a truncated commitment to climate geopolitics. Indeed, the European Green Deal’s failure fully to address the foreign-policy dimensions of the EU’s climate and environmental footprint risks generating more instability internationally. In addition, the EU’s longer-established concerns regarding energy security remain high on its agenda, rising to particular salience in light of rising gas prices in 2021 and then Russia’s invasion of Ukraine in early 2022. The EU’s policy responses to these concerns still on occasion undermine the focus on climate security. This chapter begins by describing a range of policy areas where the EU has spearheaded international climate action. It then unpacks current shortcomings in the EU’s conceptual framing of the climate crisis, with reference to natural systems and geopolitical perspectives. The chapter then addresses some key dynamics in the relationship between EU climate and energy security policies. It concludes by summarizing how comprehensive ecological policy drivers still struggle to gain traction in EU external policy relative to both standard energy-security priorities and the focus on relatively narrow understandings of climate security.

CLIMATE DYNAMICS AND EU EXTERNAL ACTIONS Beyond commitments to international efforts to cut carbon emissions, concerns over growing climate stresses have also driven changes in the EU’s wider set of foreign and security policies. A series of EU policy commitments in this sense reflects the vast amount of analytical and academic work that has mapped the gathering geopolitical implications of ecological disruptions

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Climate, ecological and energy security challenges facing the EU  159 (Busby et al. 2010, Busby et al. 2013, Moran et al. 2018), reflected in successive reports of the Intergovernmental Panel on Climate Change (see e.g. IPCC 2018). Policy Commitments Since 2011, the European Commission, the European External Action Service (EEAS) and the Council of the EU have developed climate diplomacy strategies and action plans that encompass a range of activities (Tobin et al., Chapter 13 in this volume). Over the last decade and more, in numerous policy documents, the institutions of the EU have stressed a commitment to place climate factors at the centre of foreign and security policies. In 2008, the Commission and the EU’s High Representative on Common Foreign and Security Policy (CFSP) published an influential joint paper framing climate change as a ‘threat multiplier’ that needed to be placed at the heart of EU security policy (European Commission and the High Representative 2008).1 In 2011, the EU launched a ‘climate diplomacy’ initiative to begin engaging in more tangible and systematic fashion on the foreign policy dimensions of climate change (Council of the EU 2011). In 2013, EU foreign ministers promised a mainstreaming of climate security into all external policies and dialogues (EEAS 2013). In 2018, EU leaders reinforced the need to mainstream the nexus between climate change and security in policy dialogue, conflict prevention, development and humanitarian action and disaster risk strategies. In 2019, they framed climate change as an ‘existential’ issue for all European security policies (Council of the EU 2019). Through an additional layer of commitments, the European Green Deal nominally placed climate aims at the heart of all EU foreign-policy alliances (European Commission 2019). By 2021, the EU was moving to implement a new Climate Change and Defence Roadmap that focuses on climate-related adjustments to the Common Security and Defence Policy (CSDP) (EEAS 2020). Also worth mentioning, given its continuing influence in European defence and security terms, is that after being a relatively early mover on this issue in the 2010s, in 2021 the UK’s Ministry of Defence also published a new strategy to mainstream climate drivers within its defence policy (Ministry of Defence 2021). International Climate Funds Climate dynamics have driven several levels of EU policy adjustment. Most notably, they have been a primary driver of major changes in the allocation of the EU’s budget, both internal and external. The 2021–2027 Multi-Annual Financial Framework stipulates that a minimum of 30 per cent of all EU funding will be spent on climate-related projects (Rietig and Dupont, Chapter 17 in this volume). The European Investment Bank and European Bank for Reconstruction and Development now allocate between a third and half of their external lending to green finance (Mertens and Thiemann, Chapter 5 in this volume). The EU has come to build energy transition-related issues deeply into its broader development policy goals in third countries and has increasingly balanced mitigation with adaptation projects in its funding profiles (ibid). The EU’s climate financing has grown dramatically and totalled €23.2 billion in 2019, around half the global total. Commission President Von de Leyen’s 2021 State of the Union address announced an extra €4 billion for climate finance in the period up to 2027 – in addition to the €25 billion contributed annually by the EU at the time of the announcement (Von der Leyen 2021). With G7 partners, the EU was a leading initiator of a new Just Energy

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160  Handbook on European Union climate change policy and politics Transition Partnership to support South Africa’s decarbonization efforts, in particular phasing out of coal, involving an initial commitment of $8.5 billion for the first phase of financing (European Commission 2021a). Trade and Geo-economics Climate dynamics have also influenced the EU’s perspective on international trade and reshaped its approach towards globalization in a more geo-economic direction, i.e. more concerned with relative economic and commercial positioning, as opposed to the wider strategic concerns of a geopolitical approach. The EU has intensified its use of climate-related trade conditionality, making third countries’ respect of the Paris Agreement a core precondition in its external trade agreements. So-called ‘green clauses’ have become a more prominent part of the Union’s trade agreements and one of the most tangible ways in which the climate dynamics now spill over into areas EU external action. This conditionality has been deployed particularly in trade talks with the South American Mercosur trading bloc2 and the Association of South East Asian Nations (ASEAN) in relation to deforestation and palm oil cultivation respectively (see Dobson, Chapter 25 in this volume). However, the extent to which the Commission has used this conditionality has fallen short of the expectations of critics among NGOs and the European Parliament (Guerra 2020). In a further significant trade-related move, the EU has moved forward with its carbon border adjustment mechanism (CBAM). Intended to shield EU-based industries exposed to competition from counterparts based in jurisdictions without such strong climate policies, the instrument will in effect impose a tax on imports at the border (see Wettestad, Chapter 16 in this volume). The need to ensure access to global supplies of critical minerals, essential to many low-carbon technologies, has also gained prominence in EU policy. As a first step towards diversifying its supply, in 2020 the European Commission formed the European Raw Materials Alliance (Schäfer et al. 2020), and published a strategy to reduce EU dependency on critical rare-earths, framing this as part of its wider post-COVID aim of bringing more production back onshore, especially from China (European Commission 2020b). The EU and Member States individually have begun to organize more formal agreements and initiatives to guarantee supplies of critical minerals from neighborhood countries and from the African, Latin American and Asian countries rich in materials like cobalt and lithium (Pitron 2018; European Commission 2022). All these steps denote an emerging climate policy-led geo-economics, moulded to EU interests in low-carbon transition. Security and Defence Policies Another dynamic is seen in core areas of EU security policy. The EU has begun to incorporate climate factors into its conflict prevention and resolution policies (Ducrotte 2012). Climate stress indicators have progressively been built into EU foresight and early warning processes in fragile contexts. The EU insists that ‘climate action has become an integral part of our work on conflict prevention and sustainable security’ (EEAS 2019). Germany and other EU Member States have worked to build climate factors into UN peacekeeping mandates, and into the heart of the UN architecture. Climate-related refugee flows are also driving more support for border control initiatives within EU conflict and peace-building strategies (European

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Climate, ecological and energy security challenges facing the EU  161 Commission 2021b). The EU’s Civil Protection Mechanism, which is designed to assist populations (within Europe as well as beyond) in disaster response, has been remodelled inter alia to better address potential climate risks.3 The 2020 Climate Change and Defence Roadmap commits the EU to major new defence investments to enable militaries to deploy to climate-stressed areas and indicates a move towards Common Security and Defence Policy (CSDP) missions built around climate drivers. Planning under the Roadmap currently centres on the need to cut defence sector carbon emissions and factor climate change impacts into CSDP operational concepts. It commits the EU to developing more strategic foresight, early warning and situational awareness capabilities related to climate dynamics in specific fragile contexts. It stresses ‘a need to ensure that climate change and environmental protection are mainstreamed across CSDP missions and operations, and that the EU engage with local and international partners to exchange best practices’ (EEAS 2020). The main strand of concern in this Roadmap relates to the defence sector’s own energy consumption and need to reduce this in order to increase missions’ operational autonomy. The thrust is about ensuring climate disruptions do not impede CSDP mission mandates and effectiveness. Planning is also focused on the need for the EU to be more prepared for more disaster relief and humanitarian assistance deployments related in some form to climate drivers. The EU is set to deliver training to help militaries work in harsher climatic conditions. It commits to working with local actors to understand climate factors and to offer awareness-raising on climate issues for African Union missions (EUSS 2020) – although this focus is not as prominent as the concern with the EU’s own capability deployment in more challenging environments. The Roadmap complements a raft of existing defence initiatives aimed at making European defence equipment more relevant to climate-stressed environment. The European Defence Agency (EDA) created an Energy and Environment Programme in 2014, building on ongoing work under its Military Green initiative. Its Energy and Environment Working Group has been meeting regularly ever since to build climate drivers into military equipment procurement and development projects. The EDA oversees a Consultation Forum for Sustainable Energy in the Defence and Security Sector with a raft of commitments to increase the use of renewable energy sources within the European defence sector. In June 2020, EU leaders in the Council invited the EDA to prepare actions addressing the links between defence and climate change as part of the wider climate-security nexus. In January 2020, the Agency was tasked by its Steering Board to create an Incubation Forum on Circular Economy in European Defence, co-funded by the Commission with a view to ensuring that the defence sector contributes to the wider European Green Deal initiative (European Defence Agency 2020). The EU’s new, flagship initiative for security capacity-building, the so-called Permanent Structured Cooperation (known by the acronym PESCO) also exhibits climate-related dynamics. Listings of the 47 PESCO projects funded since the initiative’s inception in 2017 include several that have an indirect or partial relevance to climate factors. A Deployable Military Disaster Relief Capability Package (DM-DRCP) creates a specialized military assets package deployable at short notice including for natural and extreme-weather disaster management. After the 2020 strategic review of PESCO’s work, its 25 participating Member States promised that ‘more precise objectives’ will be forthcoming for climate-change related factors in the next phase of funding (Council of the European Union 2020).

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162  Handbook on European Union climate change policy and politics Summary This collection of policy developments demonstrates how climate change has become a driving factor behind changes to areas of EU external action well beyond core international diplomacy related to the UNFCCC and emission targets. The policy-making structures, processes and mandates of EU foreign and security policy have gradually moulded themselves around the progressively greater prominence of climate dynamics. That said, emission reduction remains the primary focus of the EU’s response to the threat of climate change, to the detriment of a fuller understanding of ecological crisis. In some areas of policy these changes are still incipient and limited for the moment. Much of the adjustment is about the EU’s own institutional capacities rather than tangible policy output and results (Bergamaschi et al. 2019). So far, development and geo-economic dynamics are stronger than hard security-related ones. It is still not clear what the EU is willing and able to do to mitigate or adapt to climate related (external) disruptions, beyond crisis management.

LIMITATIONS, INCONSISTENCIES AND CONFLICTS IN THE EU’S APPROACH This incremental reshaping of EU foreign policy in pursuit of climate ambitions adds to the EU’s overall international credibility and influence in climate action. No other comparable actor has responded to the climate challenge with the ambition and comprehensiveness of the EU’s Green Deal, and associated binding climate law (European Commission 2019). The EU has moved further than other actors in building climate drivers into a wide range of external policies. Yet, as of the time of this writing, the EU has so far failed to develop a fully geopolitical understanding of the European Green Deal – that is, one capable of establishing benign economic interdependencies in what has potential to become a new scramble for the resources necessary for the low-carbon transition, whilst still working to strengthen climate stabilization as well as ecological health worldwide. This failure to date is manifest in a number of particular respects. Economic Interests and the European Green Deal The external dimension of the European Green Deal focuses on reinforcing the EU’s competiveness in the new low-carbon industrial revolution, which may come at the cost of a fair and effective global transition. While this economic move may produce dividends beyond Europe’s borders in terms of climate public goods and technological innovation, it means that these innovations will not be transferred to less developed economies without cost. From the perspective of less developed and climate vulnerable economies, Europe’s climate action may therefore be regarded as entrenching inequality at the international level. This perception is reinforced by a rather technical-commercial approach towards climate diplomacy. This is evident in the development of the CBAM proposal, for example. The CBAM will particularly impact economies that rely on steel, aluminium, cement and fossil exports, some of which may have relatively limited possibilities to diversify (Eicke et al. 2020). Amongst them are countries such as Mozambique, which currently lack the resources to implement cohesive and ambitious climate transitions, all the while having to deal already

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Climate, ecological and energy security challenges facing the EU  163 with severe climate disruptions such as Cyclone Idai, whose damages amounted to about a quarter of the country’s GDP (Nhundu, Sibanda and Chaminuka 2021). Arguably, the EU missed an important opportunity to defuse tensions over its proposal by maintaining that CBAM revenues would be allocated to Member States and to the EU as ‘own resources’, when in principle they could have been used to support developing countries with mitigation and/or adaptation to climate change (Delbeke and Vis 2020). While the EU is one of the international actors stepping up in terms of adaptation finance (EIB 2021, European Commission 2021c), the overall current level of this funding is still negligible in the face of ongoing and incoming climate-related disasters (Harvey et al. 2021, UNEP 2021). Moreover, the EU’s reluctance to support vulnerable developing countries’ calls for a dedicated Loss and Damage fund has been a further source of tension.4 Moreover, the European Green Deal and other elements of EU policy are strongly focused on the bloc’s access to rare earth metals and other critical materials that are needed for solar and wind power, fuel cells, li-ion batteries and for a range of digital technologies. A significant share of these materials is concentrated in China, which raises questions of strategic energy and raw material security for the EU. Many other such materials are also located in the critical ecosystems that regulate the global climate. Gaining access to them depends on extractive activities that are generally both highly polluting and highly water intensive (International Energy Agency 2021). In other words, the EU’s efforts to gain access to such material for energy security and decarbonization may risk pitting climate goals against ecological integrity. In short, they reveal the European Green Deal’s geopolitical and ecological blind spots. Climate Versus Ecological Dynamics In addition, EU policies have been driven by the dynamics of climate security but not by a more widely cast notion of ecological security. EU climate security policies remain focused on the symptoms of climate change rather than its root drivers. As a result, other drivers still often trump climate considerations. For instance, the EU still advances forms of trade that are damaging to the environment, however much it may insist on including formal reference to climate goals in its trade agreements and despite stressing the need for open trade in renewables. The Union insists that third countries sign up to emission reductions, but then pushes them to sign trade agreements that will increase those same emissions, for example in the form of legal and illegal deforestation (Pendrill et al. 2019). The EU continues to deepen security cooperation, for a variety of strategic reasons, with regimes not strongly committed to climate action. And its focus on border control shows an exclusionary approach to migration flows that can only be a limited sticking plaster on what is set to become a signficant feature of global politics, one with potential to aggravate climate-related political tensions and imbalances. In the key logic driving these EU policies, climate change tends to be understood as the consequence of releasing too much greenhouse gas (GHG) emissions into the atmosphere, mostly as a result of fossil-dependent energy systems. Yet this is only one part of the problem. Another part of the climate crisis comes from the loss of biodiversity, carbon-rich soils and water health – that is, from wider processes of ecological degradation that undermine planetary security. Climate change is only one of many ecological crises that humanity is causing, whose dynamics are complex and inter-related. The destruction of ecosystems, for example, breaks the hydrological cycle. Pollution and man-made erosion undermine the ability of soils and vegetation to absorb and store water underground, making them more prone to drought and

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164  Handbook on European Union climate change policy and politics flooding; deforestation causes progressive desertification and breaks down the midwifing of water from liquid to gas in a way that undermines temperature regulation; and hydro-energy infrastructure changes the fluvial geomorphology of water courses and tend to cause heightened levels of evaporation. All this matters because water vapor is one of the most powerful greenhouse gases in interaction with carbon dioxide, with a strong effect on global heat dynamics. At the moment these broader dynamics appear to be absent from EU external policies; at best, recognition of them is scattered and siloed across different institutions. The EU continues to focus on relatively narrow conceptions of the climate crisis, when a more complex set of ecological crises menacing life-support systems globally is at play. EU Water Diplomacy Supporting cooperation over increasingly scarce water resources has long been an important flagship of EU diplomatic action, as displayed by its support to water cooperation in Central Asia and mediation efforts over the construction of the Grand Ethiopian Renaissance Dam (GERD). Yet, if the EU fails to recognize how water grows scarce and how this phenomenon itself both contributes to climate change, and results from it, it runs the risk of following partial avenues of action that fail to address root drivers of water scarcity and climate disruption. This is particularly the case vis-à-vis the role of the hydrological cycle in climate disruptions. Water is either too little (associated with drought and fires) or too much (floods, storms and rapid-onset events). The EU has done little to work with the hydrological cycle to ‘replant’ water, pre-emptively mitigate the effects of disasters or combat water scarcity. More positively, however, the updated and expanded Adaptation Strategy (European Commission 2021d) promises to encourage stronger global adaptation measures based on nature-based solutions and may serve as a step towards ecosystems-level regeneration. The UNFCCC’s COP26, held in Glasgow in 2021, raised the profile of nature-based solutions in adaptation, but these are still largely under-funded, receiving less than 1 per cent of global climate funding flows (Swann et al. 2021). The EU does have a water diplomacy unit within the EEAS that is likely to expand over the coming years as a result of global water challenges. The unit aims to promote cooperation over water basins, especially in regions where cooperation schemes are missing. But the unit is currently not equipped or tasked to promote the regeneration of water-retention landscapes at ecosystems-scale, by using nature-based processes and solutions that go beyond reforestation and afforestation. The dynamics driving EU water diplomacy are geared towards dealing with an ever-growing problem of scarcity through cross-border governance and cooperation. This is necessary, but the lack of policy working with the hydrological cycle to actually reverse scarcity is a limitation. Biodiversity Beyond the EEAS’s water diplomacy, the EU’s biodiversity goals have also been modest. In its Biodiversity Strategy (European Commission 2020), a key pillar of the EU Green Deal, the EU commits to increase organic farming, reduce the use of pesticides, protect 30 per cent of land and water within the EU, restore European rivers and plant 3 billion trees by 2030. Taking these steps within the EU is naturally important for reasons of international credibility. They

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Climate, ecological and energy security challenges facing the EU  165 will also contribute to a global rebalancing of biodiversity loss, and associated ecological functions, with benefits going beyond European borders. The EU also commits to the protection of biodiversity overseas by participating in UN initiatives, and financing protection via several of its funding streams, resulting in programmes like ECOFAC (for Conservation and Sustainable Use of Forest Ecosystems in Central Africa). However, these programmes tend to be siloed away from conflict prevention, climate security and climate action. The EU has not fully integrated ecological security challenges into its understanding of conflict and instability. While the EU does support the fight against biodiversity trafficking, it has not fully integrated how trafficking and natural resources now play into complex conflict systems that merge across border and across continents. The most vibrant ecosystems hosting the most diverse biological reserves are located in fragile and conflict-affected contexts; here, transnational crime has merged increasingly with conflict dynamics, leading to the protraction of local, national and regional drivers of conflicts and fragility. Biodiversity trafficking is now the fourth most lucrative illicit economy, ranking closely behind drug and human trafficking. Yet this has not served as a driver of new EU policies in this domain. The fight against biodiversity trafficking and other types of natural resources are not pursued as part of a comprehensive notion of ecological security. Environmental Peacemaking Environmental peacemaking aims to ensure that nature and environmental considerations are taken into account within political peace processes, and more largely, stabilization, peacebuilding and conflict resolution efforts. It is of particular significance in a climate-disrupted world, since environmental degradation and plundering at the heart of conflict dynamics contribute to the acceleration of climate change and its enduring impacts. Here too, the EU has failed to integrate a fundamental dynamic in reshaping its policies in the face of the climate emergency. Most of the critical terrestrial ecosystems that help to regulate the global climate system are located in conflict-prone and fragile contexts. While the EEAS’s mediation unit is currently deepening its engagement on environmental peacemaking and climate security issues, the EU has not yet fully recognized the links that require upgraded conflict prevention and conflict management ambitions for the purpose of fighting the climate crisis. In fact, while the EU is heavily focusing mostly on reduction on GHG emissions through energy system shifts, it has failed to prioritize conflict management and nature-based processes as a priority aspect of its climate strategy. As with the ecological aspects noted above, EU policy is still not focused fully on addressing the drivers rather than results of climate disruptions. Due to a narrow understanding of ecological dynamics, the EU has commonly pursued relatively limited accords in nature-related conflicts. These tend to focus on isolated natural resources such as timber, water or mineral/ fossil resources. While many peace agreements try and ensure that economic gains from the exploitation of natural resources be distributed to different conflict stakeholders, this can actually undercut the integrity of ecosystems and deepen conflict in future. The EU has so far found it too difficult to build ecological design into peace and security interventions, of the type needed to ensure that landscapes and seascapes are returned to a state of resilience. Wedded to traditional peacekeeping templates, it has not ventured far into cooperating with hydrologists, conservationists and ecological designers to integrate regeneration processes within peace agreements or confidence-building measures.

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166  Handbook on European Union climate change policy and politics In short, ecological and geopolitical concerns are still missing as primary drivers of EU foreign policy, even though they are central to a multitude of crises humanity is facing today. For all the climate-related adjustment to EU external action, the full range of ecological drivers have not yet caused these kinds of far-reaching changes to the Union’s policies and global perspectives. These factors have driven an upgrade in climate action, but not of a magnitude required to serve as fundamental game-changer for the EU’s approach to foreign policy, partnership agreements, trade or efforts to reform the multilateral system. If it is not to continue to outsource GHG emissions and environmental destruction, the external dimension of EU climate action must expand to include supply chain reforms, greater support to adaptation, the rebuilding of ecological integrity, and support for actionable transition plans in partner countries.

ENERGY SECURITY DYNAMICS The above discussion has shown how climate considerations have so far driven a notable but partial and incomplete reconsideration, and incremental reshaping of, the EU’s foreign-policy identity, with more efforts likely to occur in future years. While climate drivers have modestly intensified in the EU’s external policies, as noted at the outset of this chapter more established concerns regarding energy security have not waned in their salience to EU policy debates, particularly as they relate to climate policy. Their precise dynamics have changed, however, in varied ways. The relationship between climate policy and energy security today reflects an increasingly complex set of geopolitical dynamics, and is shaped by the continuing insistence by Member States that they should retain control of their own energy mixes (Knodt, Chapter 14 in this volume). In some senses, heightened concerns over energy security have acted as another driver of EU climate action in the last decade, against the backdrop of concerns over Russian gas pipelines in particular. Yet, on some specific policy decisions, energy-security dynamics still cut across EU climate commitments. Imported Gas: Opportunity – and Constraint – on Climate Policy Since the Gazprom energy crises of 2006 and 2009, when Russia cut off gas exports to Ukraine, the EU has framed climate policy action, including encouragement of renewable energies and greater energy efficiency, as an opportunity to lessen the complications associated with the geopolitics of oil and gas (Jordan and Rayner 2010: 71–72). In this driving dynamic, climate action is seen as an opportunity, a contribution to a long-sought geopolitical agenda of creating more autonomy from difficult hydrocarbon dependencies. The Commission has suggested that if the EU meets all its energy transition commitments, its dependence on external energy supplies would fall from 55 per cent in 2018 to 20 per cent in 2050 (European Commission 2018). As Commissioner Miguel Arias Cañete said in early 2018, ‘energy transition … remains our answer to the geopolitical uncertainties we are facing’ (Arias Canete 2018). Commission Vice President Frans Timmermans, whose mandate encompasses the European Green Deal agenda (Bürgin, Chapter 2 in this volume), reiterated this line of thinking as tensions mounted over Russia’s threat to invade Ukraine in early 2022 (Ainger 2022). Under the Juncker Commission, the Commission initiated an Energy Union initiative, to help overcome discord and blockages within EU energy policy. With the accessions of the

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Climate, ecological and energy security challenges facing the EU  167 Central and Eastern European Member States, climate and energy policy became increasingly politicized, due to opposing energy policy preferences and energy mixes. While the Energy Union formally merged energy security and climate policy logics (Szulecki et al. 2016; see also Knodt, Chapter 14 in this volume), in practice climate concerns have not been strong enough to override energy security drivers. The Energy Union promised that the EU would ‘use all its foreign policy instruments to establish strategic energy partnerships with increasingly important producing and transit countries’ (European Commission 2015). Alongside its climate diplomacy, the EU launched a concept of energy diplomacy, to mobilize foreign policy instruments behind energy security interests. The driving force behind the EU’s new initiatives was to diversify energy supplies and, in particular, reduce dependence on Russia. Diversifying Supplies of Gas During the 2010s, the EU deepened energy partnerships with states around the world, worked to diversify its oil and gas supplies, and backed several incoming oil and gas pipeline projects. It also signed a significant number of new external energy partnerships. By 2020, the EU had 18 energy dialogues with individual countries, 29 memorandums of understanding and declarations on energy cooperation, and seven regional initiatives covering the Eastern Partnership, Union for the Mediterranean, Africa, the Gulf Cooperation Council, ASEAN and the Caspian area. One prominent commitment has been to support the so-called Southern Gas Corridor, with the European Bank for Reconstruction and Development and the European Investment Bank both issuing loans to help finance the project. The EU negotiated a strategic cooperation agreement with Azerbaijan and has offered support to the Turkmen government to link Turkmenistan’s gas into the Southern Gas Corridor. In 2014, the EU agreed to develop Euro-Mediterranean energy platforms to promote market integration, building on an energy partnership with Algeria agreed in 2013. European Investment Bank funds supported the Medgaz pipeline between Algeria and Spain. Spain concluded its own bilateral ten-year supply deal with Algeria in October 2020. The EU signed a similar memorandum with Egypt in 2018, prompted by the discovery of gas in the East Mediterranean. Meanwhile France, Italy, Greece and Cyprus formed the East Mediterranean Gas Forum in 2019, along with Israel, Jordan, Palestine and Egypt, to work up plans to export gas from fields near Cyprus. While the EU has also begun to fund initiatives to help oil and gas producers move away from hydrocarbon dependency (EEAS 2022), these appear insignificant compared to the scale of investments in getting fossil energy resources to Europe. Such support for gas projects is despite the EU already having an incoming pipeline capacity well in excess of what its hydrocarbons consumption must be to keep within its 2050 emission targets. This apparent over-commitment to gas was a source of tension between Member States, even before the Russia–Ukraine crisis of 2022. The German government’s go-ahead for the Nord Stream 2 pipeline, increasing the capacity for gas imports direct from Russia, unleashed strong opposition from many other Member States and became a running sore within EU energy deliberations during the late 2010s (de Jong, Van der Graaf and Haesebrouck 2020). As Russia amassed troops on the Ukrainian border from late 2021 and into 2022, this decision seemed increasingly short-sighted from a strategic point of view, quite apart from any climate-related considerations. In aggregate, an uneasy balance has taken root within EU external action, between climate-change and energy-security dynamics. As well as disagreements between Member

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168  Handbook on European Union climate change policy and politics States, who despite some steps towards a more harmonized energy policy, still retain control over their domestic energy mixes (see Knodt, Chapter 14 in this volume), tensions have also been visible between Commission directorates-general (see Bürgin, Chapter 2 in this volume), with DG Clima increasingly confronting DG Energy on this question. While energy security remains a driving force within EU foreign and security policy, it does so with more apparent limitations. Some (especially Nordic) Member States have increasingly pulled back from support for new pipeline projects, on cost and climate grounds. However, concerns have grown that EU action to promote decarbonization, within its borders as well as beyond, is constrained by multilateral rules protecting energy investment and transit, implemented as part of the 1994 Energy Charter Treaty. The Treaty was originally designed to safeguard investments in liberalized east European markets following the collapse of the Soviet Union, but has been used by companies to seek compensation for national policies to phase out fossil fuels, using the Treaty’s investor-state dispute settlement provision (Tienhaara and Downie 2018, van Asselt 2021). Such concerns led to the Commission proposing to remove investments in fossil fuels from the ambit of the treaty, to bring it in line with the Paris Agreement, a proposal rejected by other signatories in favour of a weaker compromise agreement to gradual reform. Throughout 2022, announcements by more and more Member States of their intentions to withdraw from the Treaty increased pressure on the Commission, making a co-ordinated EU withdrawal appear increasingly unavoidable (Hodgson 2021, Client Earth 2022). Rising Gas Prices and Growing Geopolitical Tensions: 2021 and Beyond Beginning in the latter half of 2021, rising gas prices unleashed significant political turmoil across Europe as voters reacted against markedly higher energy bills. This crisis came after several years of a relatively comfortable market in which production was increasing almost to the point of over-supply and European oil and gas consumption decreased. The crisis pushed traditional energy security issues back to the top of EU concerns. The EU institutions and many Member States redoubled their efforts to negotiate gas supply deals with third-country suppliers. Most Member State governments introduced some form of subsidy to cover consumers’ gas consumption and agreed, to the consternation of many observers, to classify gas as green under new EU taxonomy rules designed to inform sustainable investment decisions (Eckert, Chapter 6 in this volume). They insisted equally that the crisis would not undermine EU climate-change commitments and indeed showed the importance of moving away from reliance on hydrocarbons. While the EU remained on its pathway to changing energy systems, the crisis of 2021 served to remind governments and voters how difficult this move would be and showed that the old dynamics of EU external energy security were still prominent. These tensions intensified even further after Russia’s invasion of Ukraine in mid-February 2022, which was of enormous significance for EU climate and energy strategy. The crisis opened the way to a possible redefinition of the EU’s whole energy security strategy. In a new REPowerEU strategy agreed in May 2022, the EU committed to wean itself off Russian gas and dramatically speed up the development of renewables (European Commission 2022). And yet, a new energy security strategy released at the same time also promised an increase in other gas supplies, including from Egypt, Algeria, Azerbaijan, Nigeria, Angola and Iran (European Commission and High Representative 2022). After Russia cut supplies, Member States have accelerated their quest for alternative suppliers, while reducing their overall level of demand

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Climate, ecological and energy security challenges facing the EU  169 for gas. In response to the crisis, countries including Germany, Austria and the Netherlands began to restart previously mothballed coal-fired power stations. Thus, EU climate, energy security and geopolitics have become even more closely interwoven with each other, with Russia’s military aggression spurring both climate-related commitments and the search for alternative gas supplies. Conclusion The EU has incrementally integrated climate change as a driving force in the design of its foreign, geo-economic and energy policies. While much remains to be done in order to accelerate the decarbonization transition, the EU has made tangible efforts to mainstream climate targets across its external policies. These dynamics appear firmly rooted today in policy areas well beyond the core or traditional areas of EU climate diplomacy. However, the EU’s primary focus on reducing GHG emissions from industrial and energy sources means that dynamics flowing from a range of larger ecological crises are not fully apparent in its external policies. As a consequence, the EU’s international policies are likely to have ecological implications that severely undermine the bloc’s own geostrategic interests. Moreover, policies that are motivated by traditional EU energy security concerns still sit uneasily with climate and ecological priorities, despite much official rhetoric suggesting the contrary. Russia’s invasion of Ukraine poses even sharper challenges in striking the right combination of such strategies. Traditional and emergent policy drivers jostle for primacy in EU external policy formation. The EU is still to take on board wider ecological dynamics as their effects become more palpable. Nor has it yet developed capacities that can support far-reaching nature-based processes. A shift of emphasis from climate security to a wider conception of ecological security will need to drive broader EU approaches to peace and stabilization processes. These powerful drivers will increasingly push the EU towards new kinds of international partnerships, trade relations and security support that so far remain only faintly incipient. The EU has still to reconcile the emerging tensions between its current transition pathway and the need to transform its production and consumption models to fit within planetary boundaries. Finding this equilibrium will entail a series of complex steps and adjustments, from forging new types of partnerships with third countries to new approaches to geo-economics – issues that go well beyond a standard dynamic of climate security. For all the new dynamics driving European policies, the EU has not yet put in place such a comprehensive form of ecological diplomacy as the main element of its foreign policy.

NOTES 1.

The Treaty of Amsterdam established the position of High Representative for Common Foreign and Security Policy, upgraded to become the High Representative of the Union for Foreign Affairs and Security Policy after the Treaty of Lisbon. The High Representative is the chief coordinator and representative of the Common Foreign and Security Policy (CFSP) within the EU. 2. Mercosur, officially the Southern Common Market, is a South American trade bloc first established in 1991. Its full members are Argentina, Brazil, Paraguay and Uruguay. 3. Since its establishment in October 2002, the EU Civil Protection Mechanism has sought to strengthen cooperation on civil protection between EU countries and six additional participating states, improving prevention and preparedness, as well as response to disasters. Countries in Europe and beyond which find their domestic capacity to respond to an emergency overwhelmed can

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170  Handbook on European Union climate change policy and politics request assistance through the Mechanism. The European Commission plays a key role in coordinating the disaster response worldwide. 4. Loss and Damage refers to ‘impacts of climate change that have not been, or cannot be, avoided through mitigation or adaptation efforts’ (Shawoo et al. 2021). While developed countries have argued that finance to address Loss and Damage could be come from existing climate funds, insurance schemes, humanitarian aid, or risk management, many developing countries have called for dedicated financial mechanisms.

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172  Handbook on European Union climate change policy and politics D. (Eds.) Cyclones in Southern Africa. Sustainable Development Goals Series. Springer, Cham. https://​doi​.org/​10​.1007/​978​-3​-030​-74303​-1​_19. Pendrill, F. et al. (2019). Agricultural and forestry trade drives large share of tropical deforestation emissions. Global Environmental Change 56: 1–10. Pitron, G. (2018). La Guerre des Métaux Rares: La Face Cachée de la Transition Énergétique et Numérique. Paris. Les Liens qui Libèrent. Rockström, J.; Steffen, W.; Noone, K.; Persson, Å.; Chapin, F. S. I.; Lambin, E.; Lenton, T. M.; Scheffer, M.; Folke, C.; Schellnhuber, H. J.; Nykvist, B.; de Wit, C. A.; Hughes, T.; van der Leeuw, S.; Rodhe, H.; Sorlin, S.; Snyder, P. K.; Costanza, R.; Svedin, U.; Falkenmark, M.; Karlberg, L.; Corell, R. W.; Fabry, V. J.; Hansen, J.; Walker, B.; Liverman, D.; Richardson, K.; Crutzen, P.; Foley, J. (2009). Planetary boundaries: exploring the safe operating space for humanity, Ecol. Soc. 14 (2): 32. Schäfer, B., M. Gasparon & P. Storm (2020). European Raw Materials Alliance – a new initiative to increase raw material resilience for a greener Europe. Miner Econ 33: 415–416. Shawoo, Z., A. Maltais, I. Bakhtaoui, and S. Kartha (2021). Designing a Fair and Feasible Loss and Damage Finance Mechanism. SEI Briefing Paper. Stockholm Environment Institute. https://​cdn​ .sei​.org/​wp​-content/​uploads/​2021/​10/​211025c​-davis​-shawoo​-loss​-and​-damage​-finance​-pr​-2110l​.pdf​ #page​=​5 [Accessed 14/03/2022]. Swann, S., L. Blandford, S. Cheng, J. Cook, A. Miller, and R. Barr (2021). Public International Funding of Nature-Based Solutions for Adaptation: A Landscape Assessment. Washington: World Resource Institute. Szulecki, K., S. Fischer, A. T. Gullberg & O. Sartor (2016). Shaping the ‘Energy Union’ between national positions and governance innovation in EU energy and climate policy. Climate Policy 16 (5): 548–567. Tienhaara, K. and C. Downie (2018). Risky business? The Energy Charter Treaty, renewable energy, and investor-state disputes. Global Governance 24 (3): 451–471. UNEP (2021). Adaptation Gap Report 2021: The Gathering Storm – Adapting to Climate Change in a Post-pandemic World. Nairobi: United Nations Environment Programme. van Asselt, H. (2021). Governing fossil fuel production in the age of climate disruption: Towards an international law of ‘leaving it in the ground’. Earth System Governance, 9 (2–3):100118. Von der Leyen, U. (2021). State of the Union Address 2021. Brussels: European Commission. World Bank (2021). The Role of Critical Minerals in Clean Energy Transitions. Washington, DC: World Energy Outlook.

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12. Green growth and competitiveness in EU climate policy: paradigm shift or ‘plus de la même chose’? Oscar Fitch-Roy and Ian Bailey

1. INTRODUCTION Green growth and competitiveness have formed core themes of the European Union’s approach to climate policy since (and even before) the Kyoto Protocol negotiations in the 1990s (Geden et al. 2018). The EU’s adherence to green growth climate narratives and policies has arisen in response to a range of legal and political forces, not least the EU’s treaty commitments to promote sustainable and balanced economic growth within a competitive market economy and pressures to demonstrate to international audiences that bold climate action need not be at the expense of a vibrant economy (de Sadeleer 2014; Wurzel and Connelly 2011). The rise of green growth framings within EU climate policy also reflects internal pressures to ease concerns by some Member States that increasing the EU’s climate policy ambition in the wake of the 2008–2010 economic crisis would be detrimental to their growth prospects (Skovgaard 2014). The EU’s efforts to foster synergies between effective climate policy and economic growth have found various expressions over the years, including: the EU emissions trading system (ETS); the renewable energy directives; and the adoption of the circular economy package to stimulate a climate-neutral and resource-efficient economy (European Commission 2015; 2020a; 2020b; 2020c; 2020d). The European Green Deal, adopted in 2019, draws these and other initiatives together into a consolidated vision and roadmap for achieving climate neutrality by 2050. In announcing the package, the European Commission (2019b: 2) described the Green Deal as ‘a new growth strategy that aims to transform the EU into a fair and prosperous society, with a modern, resource-efficient and competitive economy where there are no net emissions of greenhouse gases in 2050 and where economic growth is decoupled from resource use’. The Green Deal’s main measures give further indications of its leanings towards green growth and competitiveness: investment in environmentally friendly technologies; support for industry innovation; the promotion of cleaner, cheaper and healthier forms of private and public transport; decarbonization of the energy sector; energy-efficient buildings; and collaborative working at the international level to improve global environmental standards. In contrast, the original European Green Deal announcement made only passing mention of consumption under general remarks on ‘redirect[ing] public investment, consumption and taxation to green priorities’ (European Commission 2019b: 17). Although a New Consumer Agenda and Green Consumption Pledge were launched in November 2020 and January 2021 to promote greener consumerism, both stressed the need to increase the availability of climate-neutral goods and services in EU markets and to empower consumers in making informed purchasing choices 173 Oscar Fitch-Roy and Ian Bailey - 9781789906981 Downloaded from PubFactory at 08/15/2023 12:45:02AM via free access

174  Handbook on European Union climate change policy and politics without ‘without imposing a specific lifestyle and without social discrimination’ (European Commission 2020e: 5; 2021a). This positioning of the EU’s climate policies can be traced at a more general level to its longstanding allegiance to ideas of ecological modernization from which many strands of green economy thinking derive (Gouldson and Murphy 1996; Leipold 2021; Machin 2019). The central idea underpinning both concepts is that ‘environmental problems [are] politically, economically and technologically solvable within the context of existing institutions and power structures, and continued economic growth’ (Bailey et al. 2011: 683). Although one essential appeal of ecological modernization is its emphasis on creating political spaces for institutional learning and policy reform to address tensions in the economy–environment relationship, criticisms are also levelled at the constraints this can place on how far and fast policy change can be enacted. Such is the potency of green economy narratives within the EU, according to Fitch-Roy et al. (2020b) and Machin (2019), that conceptions of environmental policy which lie outside a narrow range compatible with ecological modernization remain largely marginalized in the EU climate policy discourse. This chapter explores some of the main ways ‘win-win’ narratives of ecological modernization and green economy thinking have shaped EU climate policy and examines both the potency and limitations of green economic thinking as a catalyst for transformative action on climate change. We argue that this policy orientation carries significant risks if green innovation and supply-side solutions fail to deliver climate neutrality because they do not address the social values of overconsumption, but equally shows the EU’s creativity in the face of political and fiscal constraints on its agency. It also creates important opportunities for international leadership in developing and showcasing climate compatible technologies and modes of governance. We begin with an overview of the green economy concept, then examine how high-profile initiatives on the circular economy, renewable energy, and New Consumer Agenda have embodied a growth-centric tendency within the EU’s climate strategy. The chapter concludes with reflections on the implications of green economy thinking for the EU’s ambitions of achieving emissions neutrality and international leadership on climate change.

2.

THE GREEN ECONOMY CONCEPT

The roots of green economy thinking can arguably be traced to European enlightenment concerns about the social and environmental effects of the Industrial Revolution and resulting calls to re-evaluate the relationship between economic growth, social well-being and environmental protection (Benson et al. 2021). Its main precepts crystallized further during the twentieth century as economists such as Arthur Cecil Pigou established the notion of environmental externalities and advocated government intervention to price the negative effects of economic activities, challenging neoclassical economic assumptions that markets would ‘naturally’ self-correct as they detected losses in efficiency (Adaman and Özkaynak 2002). Green economy ideas continued to develop from the 1960s onwards and began to gain greater political attention with the publication of reports such as ‘Blueprint for a Green Economy’ (Pearce et al. 1989), which provided a detailed template for connecting economy and environment through the construction of taxation systems for valuing and maintaining natural and human capital (also Jacobs 1991).

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Green growth and competitiveness in EU climate policy  175 By this point, Benson et al. (2021) argue, green economy thinking was cleaving into two main strands. Proponents of ‘strong’ green economics argued that natural capital could not be substituted by other forms of capital, while supporters of ‘weaker’ forms saw capital substitution as potentially desirable if it resulted in improved overall human welfare. The greater political palatability of ‘weaker’ interpretations of the economy-environment relationship can be partly credited for the ascendancy within mainstream political thinking of ecological modernization views that environmental problems are politically, economically and technologically solvable within the context of existing institutions and continued economic growth (Bailey et al. 2011). This, combined with a growing sentiment that many environmental problems can be tackled more effectively and efficiently through ‘governance’ approaches, where decision-making is distributed between private and public actors rather than being the sole preserve of governments, has reinforced framings of a mutually supportive, rather than an antagonistic, relationship between growth and environmental protection. Green economy thinking has continued to evolve, most notably at the United Nations Rio +20 Conference on Sustainable Development in 2012. Whereas earlier incarnations of the concept, epitomized by Blueprint for a Green Economy, promoted the use of price mechanisms to control environmental externalities, the Rio +20 version envisaged a whole new economic growth paradigm that moved from an economic system ‘that allowed, and at times generated crises towards a system that proactively addresses and prevents them’ (Ocampo 2011: 3). Instead of simply constraining the environmental excesses of production and consumption by imposing financial deterrents on environmentally harmful activities, the Rio +20 vision sought to make environmental protection, sustainable development and poverty eradication primary raisons d’être of, and orientations for, economic activity. The EU was a strong advocate of the green economy agenda at Rio +20 (Mazza and ten Brink 2012) and the idea arguably underpins large elements of the European Green Deal. Alongside considering how different threads of green economy thinking have influenced the EU’s climate policies, it is helpful to consider the mechanisms the EU has used to pursue its green economy ambitions. These have taken two main forms since the 2008–2010 financial crisis. The first has involved the adoption of ‘circular economy’ policy packages as an underpinning for many aspects of EU environmental policy (Fitch-Roy et al. 2020a; 2021). The second has involved the use of Keynesian-style fiscal stimuli to spur growth and steer economic activities towards environmentally sustainable pathways. Such ‘Green New Deals’ echo the objectives and language of Roosevelt’s New Deal in the 1930s (rekindled in the US by the Biden administration since 2021) in which fiscal expansion and investment are used to stimulate economic activity and tackle social challenges through the creation of green industries and ‘green collar jobs’. Despite the influence of green economy thinking in mainstream political discourse and policy, its assertions about reciprocities between economic growth, social development and environmental protection remain contested. Benson et al. (2021: 28) argue that political difficulties arise with policies that have a contradictory ‘focus on moderating downstream demand through government steering of economic objectives without radically altering the upstream structures of supply [that are] increasingly determined by the demands of global capital’. Another criticism is that green economic thinking may not deliver policies that are sufficiently ‘bold’ to tackle environmental contradictions within the economic status quo, even if the underlying idea of decoupling growth from environmental degradation is manifestly radical. Put another way, the tendency towards ‘weaker’ interpretations of the green economy suggests

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176  Handbook on European Union climate change policy and politics that ‘… the envelope of political and administrative possibility may not extend far enough to encompass a fully realised [green] economy’ (Fitch-Roy et al. 2021: 9). The following sections now analyse the EU’s approach to economic greening, beginning with the circular economy package.

3.

THE EU CIRCULAR ECONOMY

One of the most explicit expressions of the green economy in EU policy is the ‘Circular Economy’ (CE), a ‘new’ economic system that allows for ‘natural resource use while reducing pollution or avoiding resource constraints and sustaining economic growth’ (Winans et al. 2017: 825). While there are multiple definitions of the concept (Korhonen et al. 2018), its fundamental objective is to replace ‘the “end-of-life” concept with reducing, … reusing, recycling and recovering materials in production/distribution and consumption processes’ (Kirchherr et al. 2017: 229). Over the last decade, the EU has developed a programme of initiatives to catalyse a CE that ‘make[s] a decisive contribution to achieving climate neutrality by 2050 and decoupling economic growth from resource use, while ensuring the long-term competitiveness of the EU and leaving no one behind’ (European Commission 2020b: 2). EU waste management policy has drawn from ideas associated with economic circularity in successive waves since the 1970s (Fitch-Roy et al. 2020a), but ‘circularisation’ of the European economy only became an explicit strategic goal in 2014 (European Commission 2014b). Although early plans for a CE Directive were abandoned (Fitch-Roy et al. 2020a), an action plan was instead produced in 2015 (European Commission 2015) that included a package of four legislative proposals, passed in 2018 to amend existing Directives for waste (2008/98/ EC), landfill (1999/31/EC), end-of-life vehicles (2000/53/EC), WEEE (2012/19/EU), and batteries and accumulators (2006/66/EC). While strategic documents emphasize ideas of sustainable economic growth recognizably aligned to the green economy, the Commission’s New Industrial Strategy (European Commission 2020c) precipitated an updated CE action plan in 2020. The new plan more explicitly aligns the CE with job creation, framing it as a ‘progressive, yet irreversible transition to a sustainable economic system is an indispensable part of the new EU industrial strategy’ and citing analysis that ‘applying circular economy principles across the EU economy has the potential to increase EU GDP by an additional 0.5 per cent by 2030 creating around 700,000 new jobs’ (European Commission 2020b: 2). The CE concept undoubtedly has far-reaching ramifications for EU environmental policy. However, not all of its articulations are equivalent (Kirchherr et al. 2017). Important distinctions exist between conceptions that make reducing material consumption a principal aim, and more pliable interpretations that are more susceptible to being ‘subverted to the cause of continuing an unsustainable business-as-usual model’ (ibid., p. 227). Previous analyses of the EU’s approach to the CE suggest a tendency towards incremental, rather than radical, action. Despite the shift from monitoring waste to seeking to reshape production and consumption patterns, EU legislative action on the CE has so far consisted mainly of revisions to existing Directives with few bold and indisputably new actions (Fitch-Roy et al. 2020a). At the same time, much of the EU CE policy discourse has been characterized by ‘weaker’ and more politically digestible interpretations of ecological modernization (Leipold 2021). In common with much CE policy implementation at the national level (Fitch-Roy et al. 2021), the EU’s

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Green growth and competitiveness in EU climate policy  177 CE policy appears to draw on politically and practically pragmatic, but less challenging, interpretations of the CE concept.

4.

RENEWABLE AND SUSTAINABLE ENERGY POLICY

The EU has played a role in the energy systems of its Member States since the instigation of the European Coal and Steel Community in 1951. More recently, governance of the energy system has become intimately connected to EU climate policy and the Single Market (see Knodt, Chapter 14 in this volume). In this section, we explore how the evolution of EU policies on sustainable energy from the 1990s has shown a tendency towards ‘market-based’ approaches, in many cases shaped directly or indirectly by the requirements of the Single Market. We then describe a potential shift in this strategy towards a more ‘middle-out’ approach that emphasizes creating broader frameworks for realigning societal relations through, for example, a focus on nurturing new industries for offshore renewable energy and hydrogen production. 4.1

Top-down Markets and Bottom-up Technologies

The EU lacks the core fiscal resources to become involved directly in redistributive investment in technologies and sectors often associated with the green economy, and the Commission’s competence is constrained by the Treaties (Knodt, Chapter 14 in this volume). Nevertheless, competence in other areas, notably trade harmonization, enabled the Commission to establish a de facto role in energy policy from the 1960s (Benson and Russel 2015; Cameron 2011: 125). Since the 1990s, EU action on energy has been primarily focused on energy market harmonization and liberalization, enacted through legislative ‘packages’ designed to remove barriers to the functioning of European gas and electricity markets that have also established the institutional basis of a quasi-European regulatory framework for cooperation between national transmission operators and regulators (Ciambra and Solorio 2015; Eikeland 2011; European Parliament 2020). Until the mid-1990s, EU renewable energy policy was limited to modest coordination of funding for emerging energy supply technologies (Solorio and Bocquillon 2017). However, strategic policy white papers in 1995 and 1997 marked the beginning of a more identifiable EU renewable energy policy (Knodt, Chapter 14 in this volume; Nilsson et al. 2009). During this time, the challenges facing energy policymaking began to be framed in terms of the so-called ‘energy trilemma’ of reconciling energy security, energy equity and environmental sustainability (Falkner 2014). The European Commission also refers to three core objectives including security of supply and sustainability but, in the EU rendition, the ‘equity’ objective is replaced by ‘competitiveness’ (European Commission 2006). By 2001, aspirations to legislate on renewable energy bore fruit in the Electricity Production from Renewable Energy Sources (RES-E) Directive (2001/77/EC) and companion legislation, the 2003 Biofuels for Transport Directive (2003/30/EC). While these Directives did not incorporate binding RES targets for Member States, indicative targets and means to monitor compliance were established. The Commission also made efforts to use ‘guarantees of origin’ to verify RES-E production as the basis for an EU-wide system of tradable certificates designed to replace disparate national financial support systems that were proliferating at this time (Rowlands 2005).

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178  Handbook on European Union climate change policy and politics The Commission’s attempt to create a harmonized EU-wide support mechanism for renewable electricity occurred in the context of a long-running debate among analysts and practitioners over different revenue models used by Member States to support RES expansion. States such as the UK and Ireland had introduced ostensibly ‘market-based’ instruments, first competitive tenders then tradable green certificate (TGC) schemes (Kitzing et al. 2012). Other Member States, most prominently Germany, were promoting and refining feed-in tariff (FiT) schemes that offer fixed price premiums and operate largely outside the purview of markets (Haas et al. 2011). The Commission has long expressed reservations about the German FiT system’s compatibility with the Single Market, and challenged 2012 reforms to the German system at the Court of Justice of the European Union (CJEU) (Vasbeck 2019). In 2001, however, the CJEU resolved a dispute over the legality of German feed-in tariffs under EU competition law involving the utility company Preussen Elektra, ruling that FiTs did not constitute state aid since revenues were not drawn from state resources, (Kuhn 2001). The Preussen Elektra case effectively muted the Commission’s aspirations for a pan-European TGC, at least temporarily (Hildingsson et al. 2012; Lauber 2004; Rowlands 2005). In 2009 a more substantive renewable energy target was adopted under European Directive 2009/28/EC, which legally bound each Member State to produce a specified proportion of its energy consumption from renewables. This period also saw the Commission launch a Strategic Energy Technologies (SET) Plan in 2008 (see Skjærseth and Eikeland, Chapter 18 in this volume) to coordinate energy R&D more assertively in support of its goals (European Commission 2006; 2017). As Skjærseth and Eikeland discuss (Chapter 18 in this volume), the original objectives of the SET Plan only covered energy supply technology innovation, despite widespread acknowledgment of the need for more research on demand-side management (Eikeland and Skjærseth 2021). Eikeland and Skjærseth (2020: 122) argue that one reason for this may be that: ‘the Plan’s priorities were motivated mainly by the need to develop the internal energy market and to forge political agreement on the new EU climate and energy policy package, in order to achieve the goals adopted for 2020’. Also absent from the 2008 plan was the pan-European TGC system that the Commission, particularly DG Competition, favoured (Jacobsson et al. 2009; Nilsson et al. 2009). Knodt (Chapter 14 in this volume) notes that the EU’s major renewable energy policy tool, the Renewable Energy Directive (RED), has since been recast and amended several times to accommodate changing deadlines and ambition levels. In addition to new targets for 2030, notable shifts can be observed in the substance of the Directives. While the 2009 Renewable Energy Directive incorporated legally enforceable renewable energy production targets for 2020 for each Member State, the 2018 recast Directive (2018/2001/EU) established an overarching European goal with a system of planning and reporting by Member States. This occurs through Regulation (EU) 2018/1999 ‘on the Governance of the Energy Union and Climate Action’, generally referred to as the Governance Regulation. However, unlike the 2009 Directive, the 2018 recast specified the types of financial support schemes Member States can offer to renewable energy generators. Here, the Directive invokes the 2014–2020 state aid guidelines on environmental protection and energy (EEAG), which set strict criteria for exempting renewable energy support schemes from state-aid prohibition (European Commission 2014a; Fitch-Roy et al. 2019). Exemptions are assessed against Article 107(3) of the TFEU, and exclusive competence to assess compliance lies with the Commission (European Commission 2018b). The primary criterion for exemption is that Member States employ ‘market instruments, such as auctioning or competitive bidding process open to all

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Green growth and competitiveness in EU climate policy  179 generators producing electricity from renewable energy sources competing on equal footing’ (European Commission 2014a). Here, the EEAG marks a clear shift towards state aid as ‘a regulatory and policymaking tool rather than a mere monitoring and law enforcement tool’ (Jansen 2016: 597). Not only are legal principles for state aid compliance for RES support specified, so too are the economic rationale and policy design in the form of auctions1 (Kahles and Pause 2019). Summing up, a strong preference for market-oriented approached can be seen throughout the history of EU RES policy, reflecting the continuing necessities and constraints of Single Market compatibility. Third time around, the Commission appears to have achieved significant progress towards harmonizing RES support instruments,2 first pursuing a TGC and later an auctions model (Solorio and Bocquillon 2017). The persistence with which harmonization has been pursued offers credibility to Hildingsson et al’s (2012: 28) observation that the ‘key driver of [EU energy policy] has been the concern for the internal market, and not the concern about an impending climate catastrophe’. 4.2

Middle-out: from Markets and Technologies … to Industries

Although ‘green jobs’ or ‘economic growth’ are common refrains in EU policy documents, EU renewable energy policy in the early twenty-first century was characterized by policies that addressed one or other half of a dichotomy between top-down ‘demand pull’ policy, such as the creation of European markets and target setting, and bottom-up ‘technology push’ policies like the SET Plan.3 More recently, the policy direction indicates a turn towards an orientation which, rather than promoting markets and technologies, seeks to establish the broader social and economic relationships through which markets and technologies can ‘meet in the middle’. This tendency is also evident in the energy and climate components of the US Biden administration’s $2 trillion infrastructure spending programme launched in 2021. Two examples of how the European Green Deal is developing a more ‘mission-oriented’ (Mazzucato 2019) approach to managing innovation and its role in the wider economy are the Hydrogen Strategy and the Offshore Renewable Energy (ORE) Strategy, both published in 2020 as part of a broader ‘New Industrial Strategy’ for Europe (European Commission 2020a; 2020c; 2020d). The EU aims to reach 300GW of offshore wind capacity alongside 40GW from other marine sources such as wave and tidal energy by 2050. The Commission estimates that the resulting 30-fold increase in ORE capacity will require approximately €800 billion investment. Framed as part of the European Green Deal, the ORE Strategy acknowledges that such transformations cannot rely on policies that depend solely on spurring technological innovation and creating markets. Offshore renewable energy impacts on numerous policy areas (Fitch-Roy 2016), and a suite of interventions are proposed spanning maritime planning, nature protection, electricity network regulation, electricity market design, the application of state-aid rules, financial innovation, assertive trade policy, research and innovation, and supporting the creation of a European supply chain to fulfil the ambition of the strategy. The Hydrogen Strategy, meanwhile, aims to utilize hydrogen as an energy vector to help decarbonize a range of activities, including industrial processes, transportation systems, and heating for residential and commercial buildings (European Commission 2020a). The strategy proposes that the EU can play an important role in creating a supportive policy framework, coordinating R&D, and using its own financial resources to unlock private investment. From the perspective of the green economy, however, one striking element of the hydrogen strat-

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180  Handbook on European Union climate change policy and politics egy are the actions designed to ‘boost demand’ for hydrogen and create the conditions for investment in capacity. Common to both strategies is tacit acknowledgment that the EU’s ability to direct funding from the EU budget or EU-ETS revenues is very modest compared with the fiscal resources available to the US Federal Government and can only be ‘catalytic’ in encouraging the private investment needed by these industries. While the EU’s rhetoric is transformational, its practical action remains targeted largely towards market making, R&D, and regulatory enabling. Adler and Wargan (2021) describe this approach as ‘tennis ball’ politics: green on the outside but hollow on the inside.

5.

CLIMATE-NEUTRAL CONSUMERISM? THE NEW CONSUMER AGENDA

The New Consumer Agenda adopted in November 2020 forms the main arm of the EU’s strategy for empowering citizens to contribute to achieving climate neutrality and other environmental objectives through their consumption choices (European Commission 2020e). The Agenda’s broader vision, within which climate change nestles, articulates what the Commission describes as ‘a holistic approach’ (ibid., p. 1) to boosting consumer trust in the Single Market and strengthening consumer resilience as part of a sustainable recovery from the COVID-19 pandemic. Five priority areas established for 2020–2025 (Box 12.1) flesh out the Agenda’s ambition to stimulate green, digitally led and equitable growth.

BOX 12.1 NEW CONSUMER AGENDA PRIORITY AREAS 1. 2. 3. 4. 5.

Green transition. Digital transformation. Redress and enforcement of consumer rights. Specific needs of certain consumer groups. International cooperation.

Key to the New Consumer Agenda’s approach to green transition is the idea that providing consumers with reliable information on the climate and sustainability impacts of products sold on EU markets will enable consumers to make informed choices about their purchases and exert consumer sovereignty. Research commissioned by the European Commission prior to the Agenda’s launch indicated that although price, quality and convenience remained the main determinants of purchasing choices for many electronic and textile products, consumers claimed to be much more likely to buy durable and repairable products when provided with reliable information (European Commission 2018a). The Agenda similarly trails new measures to protect consumers from corporate greenwashing by requiring companies to substantiate their environmental claims using recognized product or organizational environmental footprinting standards (European Commission 2020e). The Agenda also discusses initiatives to strengthen information and consumer rights on the availability of replacement parts and repair services to support product durability, including proposals under its Sustainable Product Policy Initiative to give consumers an effective right

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Green growth and competitiveness in EU climate policy  181 to repair, and a review of the Sale of Goods Directive to explore the promotion of repair and more sustainable and circular products by extending minimum liability periods for new or second-hand goods and restarting new liability periods following repairs (Directive (EU) 2019/771). The other major vehicle for empowering consumers and committing businesses to climate neutrality and sustainability is the New Consumption Pledge, a non-regulatory initiative launched in January 2021 to encourage businesses to make voluntary commitments to calculate and reduce the carbon footprint of their companies and flagship products while providing accurate, accessible and up-to-date information to consumers about their carbon footprints (European Commission 2021b). The Pledge’s pilot phase ran between March 2021 and January 2022 before being opened up to all companies that wish to participate. Summing up, the tone of the New Consumer Agenda appears simultaneously clear in its orientation and dextrous in its approach. Its environmental component involves new initiatives but leans heavily on patching onto existing legislation and other components of the European Green Deal that involve a consumer component, including the Farm to Fork Strategy and the Circular Economy Action Plan (Fitch-Roy et al. 2020a). On the other hand, the Agenda rebuts the idea that achieving climate neutrality might require deeper questioning of the social values of consumption. Rather: Consumers across Europe are showing a growing interest in contributing personally to achieving climate neutrality … The challenge is to unlock this potential through measures that empower, support and enable every consumer, regardless of their financial situation, to play an active role in the green transition without imposing a specific lifestyle and without social discrimination. (European Commission 2020e: 5; emphasis added).

Although the Agenda notes that improving environmental information about goods could be complemented by support for new consumption concepts, such as the sharing economy, business models that allow consumers to buy servicing rather than new goods, and community and social-economy organizations like repair cafés and second-hand markets, the overriding message remains – to paraphrase George H. W. Bush’s infamous declaration before the Rio Earth Summit in 1992 – that ‘The European way of life is not up for negotiations’. As Elkerbout et al. (2020) note, the pandemic created an involuntary and painful experiment in de-growth as a climate strategy. It is understandable in this context that the consumer dimension of the Green Deal offered consumers and businesses an empathetic vision of post-COVID consumerism. To talk during the crisis about maintained or further economic contraction or the more radical shifts in consumption indicated by deeper-green interpretations of green economy thinking would have been both politically and ethically problematic. Equally, some commentators argue that climate neutrality may be achievable through a contraction in carbon-intensive activities only, and may be aided by stimulating demand for more climate-friendly alternatives (Elkerbout et al. 2020). The EU’s commitment to green economy thinking nevertheless runs deeper than the exigencies of the pandemic and a consumption strategy based on product standards, information provision and enlightened consumerism arguably represents a gamble that climate change can be confronted without more fundamental reappraisal of the EU’s economic goals. In launching the European Green Deal in 2019, Commission President, Ursula von der Leyen, described it as ‘Europe’s “man on the moon” moment’ (European Commission 2019a: 1). But whether its approach to consumption represents a giant leap or a small step remains open to debate.

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182  Handbook on European Union climate change policy and politics

6. CONCLUSION Despite language declaring old growth models ‘out of date and out of touch with the planet’ (European Commission 2019a: 1) and commitments to transform the EU’s economic modus operandi, the package of measures introduced under the auspices of the European Green Deal gives strong hints that the EU’s approach to climate policy intermixes transformative messages with large chunks of continuity. Tracing EU policy activity across the circular economy, renewable energy strategy and New Consumer Agenda demonstrates the EU’s determination to address climate change within the context of the Single Market’s commitments to economic growth, competitiveness, and improving the quality, availability and price of goods and services. In contrast, measures that challenge growth-centred interpretations of the green economy appear muted within the European Green Deal’s package of measures. Ursula von der Leyen encapsulated this sentiment in a speech on the Green Deal in December 2019, arguing that: ‘the Green Deal is not just about cutting emissions, it is also a new European growth strategy’ (Sánchez Nicolás 2019). Critics of the European Green Deal and its green economic underpinnings might argue that the EU is attempting to solve the climate crisis while ignoring the maladies of growth-centred economics (Harris 2021). Early evaluations of its environmental outcomes certainly offer a mixed picture (EEB 2020). However, it can also be argued that, if pursued with conviction, the approach responds pragmatically to legal, political and fiscal limits on the EU’s capacity to dictate policy to – or the social values of – the Member States. The Commission is obliged to work within its treaty powers and fiscal constraints, and the degree of policy activity outlined in this volume shows considerable ambition and creativity. Brexit equally offers reminders of frailties in some Member States’ support for the European project, while the economic repercussions of COVID-19 have intensified pressures to prove that the Single Market meets the needs of its citizens. The present turn towards more active industrial policy presents potential new horizons for the EU green economy, but also creates challenges to a policy system that lacks the fiscal firepower to deliver on its Keynesian rhetoric. The Green Deal’s growth and competitiveness orientation equally offers opportunities for leadership in developing climate-compatible technologies and modes of governance by utilizing its 27 Member State ‘policy laboratory’ (Börzel and Risse 2009) to demonstrate to international audiences that ambitious climate policy need not involve compromising economic well-being. The EU’s approach to climate neutrality – through evolving existing policies and progressively orienting key economic spheres towards climate goals while continuing to make growth and competitiveness primary justifications and benchmarks for interventions – nevertheless constitutes an act of faith that effective climate action can be achieved without rescripting its values. The recent shift from market efficiency towards active industrial policy raises new questions about whether the EU has the tools to achieve its ambitions. Theories of ecological modernization, from which lighter interpretations of green economy thinking derive, present an optimistic view of the capacity of science and technology, existing institutions, and market processes to solve environmental problems (Bailey et al. 2011). Only time will tell whether this optimism is well-founded or how the EU will respond if the current Green Deal package struggles to deliver on its promises.

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Green growth and competitiveness in EU climate policy  183

NOTES 1. New guidelines to be published in 2022 are likely to maintain the de facto expectation of competitive bidding processes (European Commission 2021). 2. Although a 2019 CJEU judgment finding that Germany’s FiT system was not state aid (Vasbeck 2019) has created uncertainty over the Commission’s discretion, by 2019 auction systems had become de facto standard practice across the EU. 3. The EU emissions trading system arguably plays both roles as a top-down price signal and a generator of funds for bottom-up technology innovation (Eikeland and Skjærseth 2020).

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Green growth and competitiveness in EU climate policy  185 Fitch-Roy, O., D. Benson and D. Monciardini (2021). All around the world: assessing optimality in comparative circular economy policy packages, Journal of Cleaner Production 286: 125493, doi:10.1016/j.jclepro.2020.125493. Fitch-Roy, O., D. Benson and B. Woodman (2019). Policy instrument supply and demand: how the renewable electricity auction took over the world, Politics and Governance 7 (1): 1–11. Fitch-Roy, O., J. Fairbrass and D. Benson (2020b). Ideas, coalitions and compromise: reinterpreting EU-ETS lobbying through discursive institutionalism, Journal of European Public Policy 27 (1): 82–101. Geden, O., V. Scott and J. Palmer (2018). Integrating carbon dioxide removal into EU climate policy: prospects for a paradigm shift, Wiley Interdisciplinary Reviews: Climate Change 9 (4): 1–10. Gouldson, A. and J. Murphy (1996). Ecological modernization and the European Union, Geoforum 27 (1): 11–21. Haas, R., G. Resch, C. Panzer, S., Busch, M. Ragwitz and A. Held (2011). Efficiency and effectiveness of promotion systems for electricity generation from renewable energy sources – lessons from EU countries, Energy 36 (4): 2186–2193. Harris, P. (2021). Pathologies of Climate Governance: International Relations, National Politics and Human Nature, Cambridge: Cambridge Univeristy Press. Hildingsson, R., J. Stripple and A. Jordan (2012). Governing renewable energy in the EU: confronting a governance dilemma, European Political Science 11 (1): 18–30. Jacobs, M. (1991). The Green Economy: Environment, Sustainable Development and the Politics of the Future, Pluto Press. Jacobsson, S., A. Bergek, D. Finon, V. Lauber, C. Mitchell, D. Toke and A. Verbruggen, A. (2009). EU renewable energy support policy: faith or facts?, Energy Policy 37 (6): 2143–2146. Jansen, P. (2016). The interplay between industrial policy and state aid: natural combination or strange bedfellows?, European State Aid Law Quarterly 15 (4): 575–602. Kahles, M. and F. Pause (2019). The influence of European state aid law on the design of support schemes for electricity from renewable energy sources in Germany and other Member States, in E. Gawel, S. Strunz, P. Lehmann, and A. Purkus (Eds)., The European Dimension of Germany’s Energy Transition: Opportunities and Conflicts. Cham: Springer, pp. 67–82. Kirchherr, J., D. Reike and M. Hekkert (2017). Conceptualizing the circular economy: an analysis of 114 definitions, Resources, Conservation and Recycling 127 (September): 221–232. Kitzing, L., C. Mitchell and P. E. Morthorst (2012). Renewable energy policies in Europe: converging or diverging? Energy Policy 51: 192–201, doi:10.1016/j.enpol.2012.08.064. Korhonen, J., A. Honkasalo and J. Seppälä (2018). Circular economy: the concept and its limitations, Ecological Economics 143: 37–46, doi:10.1016/j.ecolecon.2017.06.041. Kuhn, T. (2001). Implications of the ‘Preussen Elektra’ Judgment of the European Court of Justice on the Community Rules on State Aid and the Free Movement of Goods, Legal Issues of Economic Integration 1. Lauber, V. (2004). REFIT and RPS: options for a harmonised Community framework, Energy Policy 32 (12): 1405–1414. Leipold, S. (2021). Transforming ecological modernization ‘from within’ or perpetuating it? The circular economy as EU environmental policy narrative, Environmental Politics 00(00): 1–23, doi:10.1080/0 9644016.2020.1868863. Machin, A. (2019). Changing the story? The discourse of ecological modernisation in the European Union, Environmental Politics 28 (2): 208–227, doi:10.1080/09644016.2019.1549780. Mazza, L. and P. ten Brink (2012). Green Economy: Green Economy in the European Union, Brussels, available at https://​ieep​.eu/​uploads/​articles/​attachments/​071ec7ac​-3e08​-4d92​-8b26​-45a2254489c3/​ KNOSSOS​_Green​_Economy​_Supporting​_Briefing​.pdf​?v​=​63664509783. Mazzucato, M. (2019). Governing Missions in the European Union, Brussels: European Commission, doi:10.2777/014023. Nilsson, M., L. J. Nilsson and K. Ericsson (2009). The rise and fall of GO trading in European renewable energy policy: The role of advocacy and policy framing, Energy Policy 37 (11): 4454–4462. Ocampo, J. A. (2011). The Transition to a Green Economy: Benefits, Challenges and Risks from a Sustainable Development Perspective, available at https://​policydialogue​.org/​files/​publications/​ papers/​Transition​_to​_a​_Green​_Economy​_summary​.pdf.

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186  Handbook on European Union climate change policy and politics Pearce, D. W., A. Markandya and E. B. Barbier (1989). Blueprint for a Green Economy, Oxford: Earthscan. Rowlands, I. H. (2005). The European directive on renewable electricity: conflicts and compromises, Energy Policy 33 (8): 965–974, doi:10.1016/j.enpol.2003.10.019. Sánchez Nicolás, E. (2019). Von der Leyen: ‘Green Deal is our man-on-moon moment’, 2019, available at https://​euobserver​.com/​environment/​146895 (accessed April 2021). Skovgaard, J. (2014). EU climate policy after the crisis. Environmental Politics 23 (1): 1–17. Solorio, I. and Bocquillon, P. (2017). EU renewable energy policy: a brief overview of its history and evolution. In I. Solorio and H. Jörgens (Eds.), A Guide to EU Renewable Energy Policy. Cheltenham: Edward Elgar, pp. 23–42. Vasbeck, D. (2019). Insight State Aid, the Criterion of State Resources and Renewable Energy Support Mechanisms: Fresh Wind from Luxembourg in EEG 2012, European Papers 4 (June): 629–640. Winans, K., A. Kendall and H. Deng (2017). The history and current applications of the circular economy concept, Renewable and Sustainable Energy Reviews 68: 825–833, doi:10.1016/J.RSER.2016.09.123. Wurzel, R. K. W. and J. Connelly (2011). The European Union as a Leader in International Climate Change Politics. In R. K. W. Wurzel and J. Connelly (Eds.), The European Union as a Leader In International Climate Change Politics Oxford: Routledge, pp. 3–20.

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13. EU climate leadership: domestic and global dimensions1 Paul Tobin, Diarmuid Torney and Katja Biedenkopf

1. INTRODUCTION Environmental high performers can identify best practice initiatives, increase their existing standards, and attract followers willing to join them in doing the same (Wurzel et al. 2021). When addressing relatively delimited environmental challenges, the willingness of a central player to act – such as, in the case of the ozone, the USA and its chlorofluorocarbon-producing corporations – can be highly influential for arresting degradation (Falkner, 2005). However, the multiplicity of actors, sectors and gases that contribute to climate change make this specific environmental threat a particularly complex policy challenge. As such, climate leadership anywhere in the world – be it within an individual organization, a local area, or specific sub-sector of the economy – is welcome. However, the European Union (EU), with its 450 million citizens, $18 trillion economy and above-global-average greenhouse gas (GHG) emissions per capita, arguably holds particular capacity, and responsibility, to be a global climate leader. In the early 2000s, the EU played a pivotal role in the entry into force of the Kyoto Protocol (Oberthür and Dupont, 2011; Vogler, Chapter 10 in this volume), and for much of the 2000s, used a narrative of climate leadership as a means of establishing a ‘green myth’ around its international identity (Lenschow and Sprungk, 2010). Since the 2000s, though, much has changed. The remaining time for action, if the worst effects of climate change are to be avoided, has diminished, leading to widespread declarations of a ‘climate emergency’. Global GHG emissions have grown while the EU’s have shrunk, both in absolute terms and as a share of the global total. A decade of crises (Falkner, 2016) has been continued by the pandemic (Dupont et al. 2020) and a return to war (in Ukraine) and geopolitical conflict in Europe reminiscent of the Cold War era. We are more aware than ever of the utility of every actor playing their part within a ‘polycentric’ web (Jordan et al., 2018; Ostrom, 2010), even though responsibility for the most egregious exploitation of resources can be levelled at a small number of individuals and corporations. By 2030, dramatic global emission reductions are needed (IPCC, 2018). Thus, as we approach that year, what kinds of leadership, if any, can we ascribe to the EU, both regarding how it influences the countries, organizations and individuals within its borders, and its international behaviour? This chapter begins with a conceptualization of leadership. We note that ‘leaders’ aim to attract followers while ‘pioneers’ do not, before outlining the varying ‘types’ and ‘styles’ of leadership identified in the field, which later underpin our analytical sections. We critically reflect on this literature, emphasizing that unlike much of the research on political leadership, where an effective leader can be a malevolent force (see Rhodes, 2014), climate leaders have come to be understood as normatively good (e.g. Liefferink and Wurzel, 2017; Wurzel et al., 2019). This framing has created a gap in our understandings of how ‘negative climate leadership’, a term we introduce here,2 could lead others away from progress on climate change. 187 Paul Tobin, Diarmuid Torney, and Katja Biedenkopf - 9781789906981 Downloaded from PubFactory at 08/15/2023 12:45:03AM via free access

188  Handbook on European Union climate change policy and politics From there, we analyze and reflect upon EU climate leadership in three areas: (i) the EU’s European Green Deal; (ii) the EU’s leadership at international climate negotiations; and (iii) the EU’s climate leadership through broader external governance. At the foundation of our analysis is the important understanding that the EU is not a monolithic actor, and so EU leadership will be inherently multi-dimensional and multi-actor to some degree (see Bulkeley and Betsill, 2006; Jänicke and Wurzel, 2018). Moreover, through our three analytical sections, we see the EU exhibit different types and styles of climate leadership. In sum, the EU is a complex and dynamic assemblage that is simultaneously capable of being different types of leader, and/ or potentially also a pioneer, follower and laggard, across multiple levels, and/or to changing degrees over time. We encourage scholars to embrace this complexity, and in our final section, we suggest areas for future research, including a wider conceptualization of what it means to be a ‘leader’ within the realm of climate governance.

2.

CONCEPTUALIZING LEADERSHIP

European states, and the EU, have been the predominant focus of research on climate leadership (e.g. Eckersley, 2016; Grubb and Gupta, 2000; Oberthür and Roche Kelly, 2008; Torney, 2015; Wurzel et al., 2017). As this body of literature has matured, greater conceptual clarity has been pursued around exactly what we mean by ‘leaders’, ‘pioneers’ and any other synonyms for those actors that champion higher ambition in tackling climate change. First, in contrast to ‘laggards’ (e.g. Tobin, 2017), which trail behind the strongest performers, the literature perceives climate leaders as being those that are effective in seeking to protect the climate. As we discuss further below, such an understanding is contrary to the less normatively laden understandings of political leadership that exist outside of studies on climate governance (see Lipman-Blumen, 2006; Rhodes and ‘t Hart, 2014). A second aspect of the conceptualization of climate leadership – established in the literature relatively recently – is that a ‘leader’ is distinguished from a ‘pioneer’: pioneers act without the intention of attracting followers, while leaders do seek to attract followers (Liefferink and Wurzel, 2017). Thus, our focus in this chapter is on leadership dynamics across a multitude of contexts. While this conceptualization of ‘climate leadership’ seems straightforward, scholars have sought to add extra nuances, which merit further examination below. 2.1

Types and Styles of Climate Leadership

There are numerous conceptualizations of what types of climate leaders may exist, which often share many similarities. For example, while Grubb and Gupta (2000) suggested ‘structural’, ‘directional’ and ‘instrumental’ leadership types, Parker, Karlsson and Hjerpe (2015) proposed the addition of ‘idea-based’ leadership. In the late 2010s, Liefferink and Wurzel, plus co-authors, built on these typologies with their own four-part framework (see Liefferink and Wurzel, 2017; Wurzel, Connelly and Liefferink, 2017; Wurzel, Liefferink and Torney, 2019), which has garnered academic traction. This framework is inherently descriptive in its objectives, rather than explanatory, but serves effectively to illustrate leadership practices. Liefferink and Wurzel (2017) begin their conceptualization of climate leadership with cognitive leadership, which is the proposal or development of ideas that shape subsequent action by fellow actors; a case in point here is the wealthier EU Member States’ support for techno-

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EU Climate leadership: domestic and global dimensions  189 logically focused, pro-capitalist ‘Ecological Modernisation’ solutions during the late 1990s/ early 2000s (Jänicke, 2005; see Fitch-Roy and Bailey, Chapter 12 in this volume). The EU’s elaboration of the concept of a comprehensive and cross-cutting European Green Deal (EGD) is the focus of Section 3 in this chapter. Although this might be seen as having followed the cognitive leadership of influential US politicians such as Alexandria Ocasio-Cortez, the EU’s conceptualization of its own proposed equivalent was distinctive (Fitch-Roy and Bailey and Quitzow et al., Chapters 12 and 24 respectively in this volume), and arguably demonstrated exemplary leadership through its earlier introduction of the EGD than any equivalent in the USA, whereby a high-profile attempt was stymied in 2019. Second, entrepreneurial leadership occurs when an actor engages in effective diplomacy and negotiation. The EU’s lack of effectiveness at the 2009 Copenhagen ‘Conference of the Parties’ (COP) of the United Nations Framework Convention on Climate Change (UNFCCC), before engaging as a ‘leadiator’ – leading and mediating at the same time – a year later at the Durban COP (Bäckstrand and Elgström, 2013), reflects how an actor’s climate leadership at international negotiations may ebb and flow. We discuss the EU’s more recent attempts at entrepreneurial leadership at COPs in Section 4. Third, structural leadership is shaped by an actor’s economic and military power, and also its potential importance to negotiations. A significant emitter of GHGs may wield ‘issue-specific’ structural power at international negotiations, derived from its centrality to climate mitigation. Thus, as the EU continues to reduce its emissions relative to other key actors in the global arena, we may see its capacity for structural leadership diminish over time (see Tobin and Schmidt, 2021; Biedenkopf, Dupont and Torney, 2022), necessitating new strategies for international climate leadership. We analyze the EU’s structural external power in more detail in Section 5 of this chapter. The fourth type of leadership, exemplary leadership, is the ‘intentional setting of examples for others’ (Wurzel et al., 2021: 8; emphasis in original). We see instances of exemplary leadership in each of our sections below on the EU’s internal policies, international negotiations and trade activities. Indeed, a leader can demonstrate multiple forms of climate leadership at once, or emphasize some types at certain times or in specific contexts (Wurzel et al. 2021). In short, frameworks of climate leadership, such as Liefferink and Wurzel’s (2017), enable characterizations of climate leadership to be ascertained, which in turn enables scholars to focus on actors’ strategies for pursuing these leadership types, and the implications of doing so. Alongside the type of leadership, we may also note two styles of climate leadership. Building on the work of both Hayward (2008) and Burns (2003), Liefferink and Wurzel (2017) distinguish between humdrum/transactional and transformational/heroic leadership styles.3 A humdrum/transactional leader will be more incremental in its approach, prioritizing marginal but steady adjustments over time. In contrast, transformational/heroic leaders will pursue more abrupt, radical and ‘transformational’ strategies, but perhaps less frequently. Transformational leadership may lead to, or at least aim at, change in the structural makeup of followers, or alterations in the guiding paradigms that underpin how a society functions. In addition to adding analytical nuance, the conceptualization of transactional/transformational leadership styles is useful for bringing the importance and role of followers into conversations around leadership. If, as we note above, a leader is distinguished from a pioneer by its desire to attract followers, then the existence of followers, or not, and the rationales for followers joining leaders, deserve special attention. A first foray into understanding the ‘other side of the coin’ to climate leadership is Torney’s (2018) investigation of which actors become

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190  Handbook on European Union climate change policy and politics followers, the pathways through which followership emerges, and the factors facilitating and hindering followership. Torney’s analysis rests on an understanding of climate governance as being ‘polycentric’ in nature, which we share. Polycentric governance exists when there are multiple private and public organizations, which are independent from one another yet overlap, acting across multiple levels, with implications for shared common pool resources (see Jordan et al., 2018; Ostrom, 2010). While multi-level governance perspectives have often been used to analyze the EU (see Stephenson, 2013), polycentric studies include a wider assemblage of actors (Wurzel, Liefferink and Torney, 2019: 2–3). Thus, in our exploration of EU climate leadership, we examine the Union’s efforts to demonstrate leadership across multiple levels, with an understanding that all governance must be polycentric to some degree. 2.2

Introducing ‘Negative Climate Leadership’

Beyond the types and styles of climate leadership summarized above, there remains a conceptual elephant in the room: how do we label actors within the field of climate governance that do not seek rapid reductions in GHGs, and instead push in a different direction? The wider literature on leadership can offer guidance. Political leadership, Blondel (2014: 705) argues, ‘measures the extent to which political life in a polity can be attributed to its top ruler or rulers of that polity. It is a subcategory of leadership in general.’ It is an important – and unfortunate – reality that political leadership has often been simply incompetent, or even normatively malevolent (Lipman-Blumen, 2006). Yet, many explorations of leadership have focused on the heroes, innovators, and sources of integrity (Rhodes, 2014). Thus, it is no surprise that the widespread understanding of a ‘climate leader’ that has garnered traction assumes an ambitious actor that is seen as normatively good in its pursuit of effective climate policy (Liefferink and Wurzel, 2016; Wurzel et al., 2019). Indeed, scholars seek to identify ‘leaders versus laggards’ (Tobin, 2017) with an implicit, or even explicit, assumption that a leader on climate change will be a high-flying performer, rather than an actor that attracts followers to pursue its climate goals, whatever they may be. In this regard, there exists a gap in the literature on climate leadership (see Tobin and Wylie, 2021). Now that a pro-climate action social norm has been widely established, ‘negative climate leadership’ occurs when an actor voluntarily attracts followers in order to lead them away from more ambitious action on climate change. Yet to date, anti-climate stances have not been explored within the literature on ‘climate leaders’ as manifestations of leadership, creating a tacit assumption that leadership regarding climate change only entails pro-climate action. Although a little more conceptual completeness is obtained through the acknowledgement that negative climate leadership must also exist, employing this term hits upon two immediate snags. First, due to the increasingly influential social norm rooted in international agreement that mitigating climate change is the ‘right thing to do’, we may expect negative climate leaders to wish to keep their activities as clandestine as possible. Indeed, this threat of social opprobrium underscores why scholars of ‘policy dismantling’ emphasize the ‘visibility’ of such behaviour within their studies (Bauer et al., 2012), and researchers have found low-visibility dismantling difficult to demonstrate (see Eckersley and Tobin, 2019). Put simply: negative climate leaders may pursue their goals behind the scenes, hindering academic attempts to research into their actions. Then again, as Donald Trump’s record on climate change suggests, negative climate leadership can be championed because of its contravention of others’ norms (Selin and VanDeveer, 2021).

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EU Climate leadership: domestic and global dimensions  191 Second, as mentioned above, climate change is a complex policy problem, often depicted as a ‘wicked policy problem par excellence’ (Jordan and Moore, 2020: 3). As such, the motivations for why an actor wishes to seek followers in deviating from pro-climate norms may be a lack of resources, or a focus on other policy priorities, such as alleviating poverty or adapting to the impacts of climate change. Labelling less well-resourced actors as negative climate leaders, when the motivations for these climate actors’ actions are situated in a prioritization of other, perhaps seemingly more pressing, issues, appears patronizing or even neo-colonial. Thus, the analysis of anti-climate leadership has been neglected, despite the potential utility, resulting in an understanding of leadership that is skewed only towards pro-climate behaviours. Hence, as with the categories of climate leadership types and styles above, we introduce the concept of negative climate leadership as a descriptive, rather than explanatory, tool, and as a means of providing conceptual completeness when considering climate leadership. With the above caveats in mind, we propose this descriptive term to enable scholars to investigate such activities as manifestations of leadership, and avoid neglecting the political realities of contemporary climate policymaking.

3.

THE EUROPEAN GREEN DEAL

The EU has steadily increased its commitments to climate action since the early 1990s, eliciting extensive academic analysis (e.g. Böhringer, 2014; Jordan et al., 2010; Oberthür and Dupont, 2015; Rayner and Jordan, 2013). Here, we discuss the European Commission’s 2019 flagship strategy, the EGD, which aims to steer EU climate action for decades to come. Commission President Ursula von der Leyen described the EGD as the EU’s ‘man on the moon moment’ (see Hutchison, 2019), reflecting the heroic/transformational style of leadership that the EGD entails. Indeed, the EGD can be characterized as a combination of cognitive and exemplary leadership, with some degree of structural leadership. Yet, when analyzing the EU and its policies, we cannot attribute a single label regarding leadership performance – rather, dynamic trends and numerous constitutive parts collectively produce a complex whole. A comprehensive understanding of global climate action requires the acknowledgment of action at the national and subnational levels (Betsill and Bulkeley, 2006), as well as the involvement of non-state actors within a ‘polycentric’ framework. Thus, any reflection regarding EU climate leadership merits some examination of how it influences other actors – be they states, businesses or individuals – within its borders (see Bürgin, Chapter 2 in this volume). Below, we explore how the EGD overall represents an ambitious and comprehensive step forward, comprising up to €1 trillion in funding and wide-ranging actions that seek to transform almost every sector of politics and the economy. We also note, though, that some of the leadership directed towards individual sectors is more humdrum/transactional in nature, while some Member States have exhibited their own leadership dynamics. The proposed list of actions within the 2019 EGD Communication seeks to achieve a more sustainable Europe across every sector of the economy, with a clear timeline for when each goal should be achieved. The European Climate Law proposed by the Commission in March 2020 and adopted in 2021 enshrines a goal of climate neutrality for the EU by 2050. In October 2020, then-US Presidential candidate Joe Biden announced his 2050 climate neutrality pledge, and Japan’s Prime Minister, Yoshihide Suga, made the same commitment as the USA in the same month, while China set a carbon neutrality target for 2060.

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192  Handbook on European Union climate change policy and politics Underpinning the EGD’s climate neutrality commitment is a wide range of initiatives, such as the ‘Fit for 55’ package of July 2021 that seeks to implement the EGD’s target of a 55 per cent reduction in emissions by 2030, the ‘Farm to Fork’ plan for agriculture (see Matthews, Chapter 19 in this volume), and a dedicated offshore renewable energy strategy. Reflecting the polycentric nature of the governance network being shaped by the EGD, the Commission created a ‘Climate Pact’ public consultation for uniting regions, local communities, businesses and civil society into the policy process (on regions and city-level action, see Kern, Chapter 8 in this volume; on business, see Eckert, Chapter 6 in this volume; on civil society, Parks et al., Chapter 7 in this volume). These initiatives, and several others that support the EGD, demonstrate instances of the Commission’s cognitive leadership. This leadership type was supported by structural leadership; the EU committed up to €1 trillion in funding for sustainable investments, of which €503 billion should come from the EU budget. While €114 billion is expected from national governments, the InvestEU programme, guaranteed by the EU, aims to trigger more than €372 billion of investments from the private sector during 2021–2027, again reflecting the polycentric nature of the EGD. Separately, though, there are concerns that some of the EU’s investments – namely the ‘Just Transition Mechanism’ – will not reach the intended recipients and instead head for those already profiting via the status quo (Gabor, 2020). A similar critique can be made of the Fit for 55: Özdemir (2021) argues that it maintains an assumption around the nature of global trade – and the EU’s role within it – that is not inclusive towards the most vulnerable people and societies of the world. After all, the EU is a capitalist trading bloc; one may question how far such an organization can ever be transformational in its approach to climate change (see Newell and Paterson, 2010, and Fitch-Roy and Bailey, Chapter 12 in this volume). In addition to non-state actors, the EU has sought to lead its 27 Member States. Leadership of such a diverse body of countries, which vary greatly in their size, level of economic development, and emissions of GHGs, is difficult. One instance of cognitive leadership that slightly preceded the EGD was the 2018 requirement of states to create ‘National Energy and Climate Plans’ (for more on which, see Knodt, Chapter 14 in this volume). These extensive documents – of which Czechia’s, for example, is 439 pages long – outline how states intend to improve their energy efficiency, renewables, GHG emission reductions, energy interconnections, and research and innovation. Few, if any, represent new heroic/transformational leadership, and instead are more transactional/humdrum in their approaches, as they primarily summarize existing plans into a single document. The Commission provided feedback on draft versions submitted in December 2019, with a view to more ambitious documents being returned 12 months later; the Commission broadly appears to have succeeded in leading the Member States to elevate their ambitions (see Schultz, 2020). Further research is needed to explore the intricacies of these dense documents, and the extent of the changes made between draft and final documents. Yet, many states altered their NECPs in response to feedback (Moore and Tobin, 2021), reflecting the Commission’s entrepreneurial leadership in necessitating and co-ordinating the NECP process in a manner that generated a willingness to elevate ambition within the Member States. If implemented successfully, the EGD holds the potential to demonstrate transformational leadership from the EU, but this path has not been without challenges. Questions remain regarding the degree to which the EGD sufficiently embeds a long-term perspective through robust long-term governance frameworks. Moreover, Member States have at times dragged their feet in following the Commission’s ambitions, while others have asked for greater

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EU Climate leadership: domestic and global dimensions  193 ambition. For example, several states, including Germany and Ireland, submitted their NECPs months later than requested, which would have cut short the time available for the EU to ramp up ambitions for COP26 in December 2020, had the event not been postponed by a year due to the pandemic. As another example, some Member States, especially those in Central and Eastern Europe, have been cautious in their support for some of the Commission’s proposed increases in ambition. As Wurzel et al. note in Chapter 3 in this volume, Poland has emerged as a somewhat of a negative climate leader amongst the Visegrád states (which also include Hungary, Czechia and Slovakia). This group often agrees common stances regarding EU climate policy proposals far below the ambitions of most other Member States, with Poland’s actions representing negative climate leadership that deviates from the ambitions of most EU states. For example, in December 2020, Poland was vocal in its opposition to elevating the EU’s 2030 emissions target from 40 per cent to 55 per cent on a 1990 baseline, and a year previously had opposed the EU’s net zero emissions target for 2050. Yet, Poland is much less economically developed than most Member States. Thus, this example demonstrates the complexity of labelling actors as negative climate leaders, despite instances of leading other states to oppose stronger goals. In sum, while the EGD is not without its weaknesses, its creation does represent an attempt at heroic/transformational leadership from the Commission, which has sought change through multiple types of leadership. The ‘cognitive leadership’ demonstrated by the EU through the actions leading up to – and including – the EGD may well be inadequate when considering the threats of climate change, but as we examine next, they have enabled the Union to increase its sway on the international stage.

4.

THE EU IN INTERNATIONAL NEGOTIATIONS

The EU has played a significant role in the evolution of the global climate regime since its inception at the beginning of the 1990s (see Vogler, Chapter 10 in this volume). It presented itself from an early stage as a climate leader. To the extent that the EU has played a leadership role in global negotiations, this can be characterized primarily as entrepreneurial leadership, which entails effective diplomacy and negotiation (see above). Entrepreneurial leadership is related in important ways to, and underpinned by, cognitive, exemplary and particularly structural leadership: other things being equal, an actor’s attempts at diplomacy and negotiation are likely to be more effective if that actor has a good story to tell (cognitive leadership), has a model of best practice to underpin its efforts (exemplary leadership), and has structural power resources at its disposal (structural leadership). Furthermore, and relatedly, the external context is likely to shape the opportunities for an actor to exercise entrepreneurial leadership. These factors have interacted in complex ways over the three decades in which the EU has sought to exercise leadership in global climate negotiations. During the 1990s, EU global leadership on climate change was relatively limited. The EU sought to exercise cognitive leadership by announcing internal emissions targets in advance of the key negotiating moments of the 1990s, but this was limited by the fact that the EU had yet to develop a significant suite of domestic policies to back up its climate targets (see Vogler, Chapter 10 in this volume). It was the USA that shaped key design aspects of the Kyoto Protocol. Overall, the EU’s limited attempts to exert cognitive, exemplary and entrepreneurial leadership were not very successful.

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194  Handbook on European Union climate change policy and politics The 2000s were characterized by a shifting international landscape that shaped to a significant extent the opportunities for the EU to show global leadership on climate change. The decision by US President George W. Bush not to submit the Kyoto Protocol to the US Senate for ratification created an opportunity for the EU to step into the breach. The EU was central to the successful conclusion of negotiations on the implementation of the Kyoto Protocol in Marrakech in 2001, and its entry into force in 2005 (Vogler, Chapter 10 in this volume). EU entrepreneurial leadership in the global negotiations was underpinned to a greater extent by the progressive development of EU level climate policies, including in 2005, the launch of the EU Emissions Trading System (ETS), and in 2008/09, agreement on the 2020 Climate and Energy Framework, which developed the EU’s cognitive and exemplary leadership over this period (see Vogler, Chapter 10 in this volume). However, the opportunities for EU structural leadership were progressively declining with its shrinking share of global GHG emissions and the rise of other major emitters, notably China and India (Torney, 2015), and the re-engagement of the US in global climate negotiations following the election of President Barack Obama in 2008. Partly because of these developments, the EU’s attempts at entrepreneurial leadership at the 2009 Copenhagen climate change conference were largely unsuccessful (Bodansky, 2010: 240). Due to its experience at the Copenhagen COP, and as mentioned earlier, in the early 2010s, the EU evolved into what Bäckstrand and Elgström (2013) characterized as a ‘leadiator’. This role entails a more pragmatic approach to leadership that pays greater attention to the changing nature of global climate politics. The EU played a more central role getting the UNFCCC back on track at the 2010 COP in Cancun, but did so at the expense of the ambition of the goals it was seeking to achieve (Groen, Niemann and Oberthür, 2012). Over the following years and in the lead-up to COP21 in Paris, the EU and its Member States invested significantly in its capacity for climate diplomacy (Torney and Davis Cross, 2018). These efforts largely paid off, with a much more proactive role by the EU in the Paris negotiations compared with the Copenhagen negotiations. The EU was central to the creation of the so-called ‘High Ambition Coalition’, which played an important role in pushing for a more ambitious outcome in Paris (Dupont, Oberthür and Biedenkopf, 2018). However, the EU’s approach also involved a moderation of its negotiating position to bring it more into line with the broader international context, and to take account of the continuing decline of the EU’s structural power (Oberthür and Groen, 2018). The post-Paris era has been characterized by significant international turbulence, with the election of populist leaders in key countries, such as Trump in the USA and Jair Bolsonaro in Brazil, a global pandemic from 2020, and the return of war on the European continent and heightened geopolitical tensions in 2022. These factors have all further complicated the context for EU international climate leadership. The EU’s EGD, as discussed, constituted the EU’s response to the need to strengthen ambition, including an increase of the Union’s 2030 decarbonization target from 40 per cent to 55 per cent below 1990 levels, and a revision of the climate and energy framework to bring it into line with this strengthened 2030 target. At the postponed COP26 meeting in Glasgow in November 2021, some commentators characterized the EU as ‘missing in action’ (Mathiesen, 2021), while others suggested a continuation of its role as a pragmatic leadiator (Tosun and Jungmann, 2021). The EU succeeded in achieving many of its core objectives, including completion of the Paris ‘rulebook’, but was left disappointed by the last-minute weakening of language on coal – from phase-out to phase-down – in the Glasgow Climate Pact. Overall, COP26 left much to be done, including on climate

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EU Climate leadership: domestic and global dimensions  195 ambition and implementation, climate finance, and addressing the vexed issues of Loss and Damage (Anisimov et al., 2022).4

5.

THE EU’S EXTERNAL CLIMATE GOVERNANCE

While the UNFCCC negotiations and agreements are at the core of international climate governance, the EU engages in a broader field of external climate governance. This broader field includes structural leadership based on the EU’s market power, and its usage of extensive development cooperation and an external investment strategy called the ‘Global Gateway’, as well as entrepreneurial leadership through diplomatic outreach. As noted in Section 4, the EU’s declining share of global GHG emissions reduces its issue-specific structural power in the negotiations: the less the EU is part of the problem, the less central it is in terms of making additional emission reduction commitments. Yet, the EU derives additional structural power from the size and attractiveness of its market, its financial resources, and low-carbon technological capabilities. While the EU’s economic power also decreases relative to more rapidly growing economies such as China, this decline is less dramatic, and the EU remains the second-largest economy in the world. Pooling Member State and EU-level diplomatic resources, the EU has an expansive network of embassies/delegations and diplomats at its disposal to engage in entrepreneurial leadership. The EU market is attractive for many companies and countries. With its almost 450 million consumers, the EU makes up a significant share of many non-EU companies’ sales. This status gives the EU leverage over production that occurs outside of its borders (see Dobson, and Youngs and Lazard, Chapters 25 and 11 in this volume). There are two main tools that the EU uses in this regard. The first is legislation that determines certain product or process specifications, which are a precondition for selling the respective product or service on the EU market. The legislation applies to any party who is active in the EU market, regardless of whether it is an EU company or an exporter to the EU. One example is EU energy efficiency rules for a range of electronic products. Many of those products are produced outside EU borders but need to comply with EU rules since they are imported. In some cases, EU rules lead to product changes for other markets as well, since such harmony simplifies production processes, and investment in the research and development has been made already (Vogel, 1997). Since these external effects occur as a result of internal EU law, the lines between the EU’s pioneership and its leadership are blurred and depend on the inbuilt intentionality of attracting external followers in addition to regulating the internal market. One example of how the EU intentionally uses (or proposes to use) its market power is the Carbon Border Adjustment Mechanism that is part of the EGD. Products from countries without a carbon price will be charged an extra levy to level the playing field with producers who comply with the EU Emissions Trading System (see Wettestad, Chapter 16 in this volume). The second tool consists of sustainability provisions in free trade agreements. As of 2020, the EU had concluded such agreements with 37 states, such as Japan, and since the 2010s, the EU has increasingly included sustainability clauses in those agreements. Since 2015, EU free trade agreements include a provision that commits the partners to adhere to the Paris Agreement. Structural leadership can also result from development cooperation, external investments and capacity building. The EU has committed to using 30 per cent of its total 2021–2027 budget for climate-related expenditures (Rietig and Dupont, Chapter 17 in this volume). The

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196  Handbook on European Union climate change policy and politics target for the previous budget (2014–2020) was 20 per cent. These commitments also apply to development cooperation. Since the EU jointly with its Member States is the largest donor globally, the mainstreaming of climate objectives can generate significant impact. This status enables the EU to use structural leadership in the many countries that it supports through development cooperation projects. Capacity building is a related activity. For example, the EU has financed capacity building projects in countries that are interested in adopting a domestic GHG emissions trading system, including China, South Korea and Kazakhstan (Biedenkopf et al., 2017). Through targeted support for establishing the necessary technical capacity to design and implement such a policy, but also through sharing lessons about the EU’s own experience, the EU uses its structural power to support learning from the EU’s pioneering ETS policy, combining of exemplary leadership with structural leadership. After the failure of the 2009 Copenhagen UNFCCC COP, the EU recognized that it needed to rethink its climate diplomacy. Since 2011, the European Commission, the European External Action Service, and the Council of the EU have developed several climate diplomacy strategies and action plans that encompass a range of activities (Youngs and Lazard, Chapter 11 in this volume), including raising climate change at high-level political meetings such as the G7 and G20, and bilateral outreach to third countries. A network of more than 140 EU Delegations and offices serve as the EU’s embassy equivalents around the world. In each of them a climate focal point – a member of staff who acts as contact point – is determined and a series of climate diplomacy activities are implemented by each Delegation, albeit with varying levels of intensity and frequency. Delegations execute Démarches, which are meetings with government representatives on certain climate-related topics, and also public diplomacy, such as exhibitions and newspaper op-eds (Biedenkopf and Petri, 2021). Those climate diplomacy activities support and foster various types of EU leadership, in particular exemplary and entrepreneurial leadership.

6.

DISCUSSION AND CONCLUSIONS

Globally, the EU is a vital climate actor that has demonstrated – and continues to demonstrate – multiple styles and types of climate leadership, as well as instances of followership and failed leadership. We began by exploring the literature on climate leadership, and critically reflecting on the existing assumption that ‘climate leaders’ are always normatively positive. This assumption has hindered conceptual completeness; we encourage scholars to analyze the efforts by actors – across differing levels – to lead others away from greater ambition, for varying reasons, as instances of ‘negative climate leadership’. For our analysis, we have explored the positive climate leadership trends of the EU across three areas. In the first section, through a case study analysis of the EGD, we discussed how the EU is seeking to demonstrate multiple types of climate leadership at once, particularly exemplary leadership, within a context of polycentric governance, such as through its Farm to Fork scheme and Climate Pact initiative, and since summer 2021, its Fit for 55 Package. As these nascent approaches mature, new research is welcomed of which strategies have succeeded, and which have not, and which sectors have yet to be tackled meaningfully at all within the EU. Regarding the second section on the EU at international conferences, over 30 years of global climate negotiations have seen various ebbs and flows in EU leadership. The EU has progressively strengthened the basis for its engagement in global negotiations by enhancing its

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EU Climate leadership: domestic and global dimensions  197 domestic record on climate, thereby boosting its capacity for cognitive leadership, while at the same time bolstering its diplomatic capacity, thereby enhancing its ability to exercise entrepreneurial leadership. Its structural environmental power, and by extension, its capacity for both structural and entrepreneurial leadership, has been on a long-term downward trajectory as a result of global power shifts and related changes in the global distribution of GHG emissions (Biedenkopf, Dupont and Torney, 2022). Against this backdrop, EU international engagement on climate has evolved from a narrow focus on the formal UNFCCC process to a broader climate diplomacy strategy, as well as a moderation of its position, which can arguably be characterized as a move from a heroic to a more humdrum style of leadership, in an attempt to match better its approach to the broader global context. The extent to which this strategy is maintained and adapted during and following the COVID-19 pandemic and Russia–Ukraine conflict merits academic investigation. Finally, regarding the EU’s external climate governance beyond international conferences, since the failure of the 2009 Copenhagen climate conference, the EU has broadened its climate leadership strategy beyond the UNFCCC negotiations to a broader set of tools in support of and in addition to the negotiations. This approach includes the use of structural leadership through leverage derived from the EU’s attractive market, free trade agreements, development cooperation, and external investment. The EU’s global economic weight is declining less sharply than its GHG emissions and it still derives significant power for structural leadership, but with the rising power of economies such as China, in the long run, this source of leadership will decline. The EU’s broader climate diplomacy also includes entrepreneurial leadership through its expansive diplomatic network. Active outreach can support the strengthening of other countries’ climate plans under the Paris Agreement and foster learning from EU climate policy experiences (exemplary leadership). Resource constraints in the EU Delegations and the EEAS, however, hamper these efforts. In sum, the EU’s complexity affords it many opportunities to exert climate leadership, but an ongoing context of crisis and turbulence, as well as the difficulties inherent in guiding such an interconnected, multi-level global actor, also stymie this potential. The EU has been an ambitious climate leader to varying degrees over time, but it will need to maintain and elevate this performance in the coming years if its own targets – and those of its partners – are to be achieved.

NOTES 1. The support of the Economic and Social Research Council (ESRC) is gratefully acknowledged, having funded Paul Tobin via grant ES/S014500/1 during the writing of this chapter. 2. We thank Tim Rayner, Sebastian Oberthür, Kacper Szulecki and Ciara Kelly for their insights during discussions of this term. 3. There are slightly different emphases in the focuses of the two framings – the transactional and transformational framing by Burns (2003) emphasizes how leaders achieve their goals; Hayward (2008) focuses on the impact of his transactional/transformational styles (see Liefferink and Wurzel, 2017: 12). For the purposes of this chapter, the two notions of leadership styles are considered essentially synonyms. 4. According to the most cited definition, Loss and Damage refers to ‘impacts of climate change that have not been, or cannot be, avoided through mitigation or adaptation efforts’ (Shawoo et al., 2021). While economically developed countries have argued that finance to address Loss and Damage could come from existing climate funds, insurance schemes, humanitarian aid, or risk management,

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198  Handbook on European Union climate change policy and politics many economically developing countries have called for dedicated financial mechanisms. At COP26, the European Union aligned with the United States in resisting calls for a dedicated Loss and Damage fund (Anisimov et al., 2021).

REFERENCES Anisimov, A. M. Aleksandrova, S. Bauer, and L. Vallejo (2022). The EU and the Glasgow Dialogue: Advancing a Balanced Approach to Loss and Damage. Paris: IDDRI. www​.iddri​.org/​en/​publications​ -and​-events/​policy​-brief/​eu​-and​-glasgow​-dialogue​-advancing​-balanced​-approach​-loss​-and (Accessed 5 September 2022). Bäckstrand, K. and O. Elgström (2013). The EU’s role in climate change negotiations: from leader to ‘leadiator’. Journal of European Public Policy, 20 (10): 1369–1386. Bauer, M. W., A. Jordan, C. Green-Pedersen, and A. Héritier (Eds.) (2012). Dismantling Public Policy: Preferences, Strategies, and Effects. Oxford: Oxford University Press. Betsill, M. and H. Bulkeley (2006). Cities and the multilevel governance of global climate change. Global Governance, 12: 141–160. Biedenkopf, K., C. Dupont, and D. Torney (2022). The European Union: a green great power? In R. Falkner and B. Buzan (Eds.), Great Powers, Climate Change, and Global Environmental Responsibilities. Oxford: Oxford University Press, pp. 95–115. Biedenkopf, K. and F. Petri (2021). The European External Action Service and EU climate diplomacy: coordinator and supporter in Brussels and beyond. European Foreign Affairs Review, 26 (1): 71–86. Biedenkopf, K., S. Van Eynde and H. Walker (2017). Policy infusion through capacity building and project interaction: greenhouse gas emissions trading in China. Global Environmental Politics, 17 (3): 91–114. Blondel, J. (2014). What have we learned? In R. A. W. Rhodes and P. ‘t Hart (Eds.), The Oxford Handbook of Political Leadership. Oxford: Oxford University Press, pp. 705–718. Bodansky, D. (2010). The Copenhagen climate change conference: a postmortem. American Journal of International Law, 104 (2): 230–240. Böhringer, C. (2014). Two decades of European climate policy: a critical appraisal. Review of Environmental Economics and Policy, 8 (1): 1–17. Burns, J. M. (2003). Transforming Leadership. New York: Grove Press. Dupont, C., S. Oberthür, and I. von Homeyer (2020). The COVID-19 crisis: a critical juncture for EU climate policy development? Journal of European Integration, 42 (8): 1095–1110. Eckersley, P. and P. Tobin (2019). The impact of austerity on policy capacity in local government. Policy & Politics, 47 (3): 455–472. Eckersley, R. (2016). National identities, international roles, and the legitimation of climate leadership: Germany and Norway compared. Environmental Politics, 25 (1): 180–201. Falkner, G. (2016). The EU’s current crisis and its policy effects: research design and comparative findings. Journal of European Integration, 38 (3): 219–235. Falkner, R. (2005). The business of ozone layer protection: corporate power in regime evolution. In D. L. Levy and P. J. Newell (Eds.), The Business of Global Environmental Governance. Cambridge, MA: MIT Press, pp. 105–134. Gabor, D. (2020). The European Green Deal will bypass the poor and go straight to the rich. The Guardian. Available from: www​.theguardian​.com/​commentisfree/​2020/​feb/​19/​european​-green​-deal​ -polish​-miners (Accessed 14 March 2022). Groen, L., A. Niemann and S. Oberthür (2012). The EU as a global leader? The Copenhagen and Cancun UN climate change negotiations. Journal of Contemporary European Research, 8 (2): 173–191. Grubb, M. and J. Gupta (2000). Climate change, leadership and the EU. In J. Gupta and M. Grubb (Eds.), Climate Change and European Leadership. Dordrecht: Kluwer, pp. 3–14. Hayward, J. (2008). Leaderless Europe. Oxford: Oxford University Press. Hutchison, L. (2019). ‘Europe’s man on the moon moment’: Von der Leyen unveils EU Green Deal. The Parliament. Available from: www​.t​heparliame​ntmagazine​.eu/​news/​article/​europes​-man​-on​-the​-moon​ -moment​-von​-der​-leyen​-unveils​-eu​-green​-deal (Accessed 14 March 2022).

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EU Climate leadership: domestic and global dimensions  199 IPCC (2018). ‘Summary for policymakers’. Available from: www​.ipcc​.ch/​site/​assets/​uploads/​sites/​2/​ 2019/​05/​SR15​_SPM​_version​_report​_LR​.pdf (Accessed 14 March 2022). Jänicke, M. (2005). Trend-setters in environmental policy: the character and role of pioneer countries. European Environment, 15: 129–142. Jänicke, M. and R. K. Wurzel (2019). Leadership and lesson-drawing in the European Union’s multilevel climate governance system. Environmental Politics, 28 (1): 22–42. Jordan, A. and B. Moore (2020). Durable by Design?: Policy Feedback in a Changing Climate Cambridge: Cambridge University Press. Jordan, A., D. Huitema, H. van Asselt and J. Forster (Eds.) (2018). Governing Climate Change: Polycentricity in Action? Cambridge: Cambridge University Press. Jordan, A., D. Huitema, H. van Asselt, T. Rayner and F. Berkhout (Eds.) (2010). Climate Change Policy in the European Union: Confronting the Dilemmas of Mitigation and Adaptation? Cambridge: Cambridge University Press. Liefferink, D. and R. K. Wurzel (2017). Environmental leaders and pioneers: agents of change? Journal of European Public Policy, 24 (7): 951–968. Lipman-Blumen, J. (2004). The Allure of Toxic Leaders: Why We Follow Destructive Bosses and Corrupt Politicians – and How We Can Survive Them. New York: Oxford University Press. Mathiesen, K. (2021). EU accused of being the ‘missing leader’ at COP26 climate talks. Politico, 11 November. Available from: www​.politico​.eu/​article/​eu​-missing​-leader​-cop26​-climate​-talks​-glasgow/​ (Accessed 14 March 2022). Moore, B. and P. Tobin (2021). Differentiated Climate and Energy Integration at the National Level? Mapping EU Energy Union Policy Responses Via the NECPs. Presented at ECPR Conference of the SGEU. Available from: https://​ecpr​.eu/​Events/​Event/​PaperDetails/​49574 (Accessed 25 May 2021). Newell, P. and M. Paterson (2010). Climate Capitalism: Global Warming and the Transformation of the Global Economy. Cambridge: Cambridge University Press. Oberthür, S. and C. Dupont (2011). The Council, the European Council and international climate policy: from symbolic leadership to leadership by example. In R. K. W. Wurzel and J. Connelly (Eds.), The European Union as a Leader in International Climate Change Politics. Abingdon: Routledge, pp. 74–92. Oberthür, S. and C. Dupont (Eds.) (2015). Decarbonization in the European Union: Internal Policies and External Strategies. Basingstoke: Palgrave Macmillan. Oberthür, S. and L. Groen (2018). Explaining goal achievement in international negotiations: the EU and the Paris Agreement on climate change. Journal of European Public Policy, 25 (5): 708–727. Oberthür, S. and C. Roche Kelly (2008). EU leadership in international climate policy: achievements and challenges. The International Spectator, 43 (3): 35–50. Ostrom, E. (2010). Polycentric systems for coping with collective action and global environmental change. Global Environmental Change, 20: 550–557. Özdemir, I. (2021). Why ‘Fit for 55’ isn’t fit for purpose. EU Observer. Available from: https://​ euobserver​.com/​opinion/​152544 (Accessed 29 July 2021). Parker, C. F., C. Karlsson and M. Hjerpe (2015). Climate change leaders and followers. Leadership recognition and selection in UNFCCC negotiations, International Relations, 29 (4): 434–454. Rhodes, R. A. W. (2014). Public administration. In R. A. W. Rhodes and P. ‘t Hart (Eds.), The Oxford Handbook of Political Leadership. Oxford: Oxford University Press, pp. 101–116. Selin, H. and S. D. Vandeveer (2021). Climate change politics and policy in the United States: Forward, reverse and through the looking glass. In R. K. Wurzel, M. S. Andersen and P. Tobin (Eds.), Climate Governance Across the Globe: Pioneers, Leaders and Followers. Abingdon: Routledge, pp. 123–141. Shawoo, Z., A Maltais, I. Bakhtaoui, and S. Kartha (2021). Designing a Fair and Feasible Loss and Damage Finance Mechanism. SEI Briefing Paper. Stockholm Environment Institute. https://​cdn​ .sei​.org/​wp​-content/​uploads/​2021/​10/​211025c​-davis​-shawoo​-loss​-and​-damage​-finance​-pr​-2110l​.pdf​ #page​=​5 (Accessed 14 March 2022). Stephenson, P., (2013). Twenty years of multi-level governance: ‘Where does it come from? What is it? Where is it going?’. Journal of European Public Policy, 20 (6): 817–837. Tobin, P. (2017). Leaders and laggards: climate policy ambition in developed states. Global Environmental Politics, 17 (4), 28–47.

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200  Handbook on European Union climate change policy and politics Tobin, P. and L. Wylie (2021). National climate mitigation policy in Europe. In J. Sowers, S. D. VanDeveer and E. Weinthal (Eds.), The Oxford Handbook of Comparative Environmental Leadership. Oxford: Oxford University Press, DOI: 10.1093/oxfordhb/9780197515037.013.3. Torney, D. (2015). European Climate Leadership in Question: Policies Toward China and India. Massachusetts, USA: MIT Press. Torney, D. (2019). Follow the leader? Conceptualising the relationship between leaders and followers in polycentric climate governance. Environmental Politics, 28 (1): 167–186. Torney, D. and M. A. K. D. Cross (2018). Environmental and climate diplomacy: building coalitions through persuasion. In C. Adelle, K. Biedenkopf and D. Torney (Eds.), European Union External Environmental Policy. Basingstoke: Palgrave Macmillan, pp. 39–58. Tosun, J. and M. Jungmann (2021). Climate politics and the EU at COP26: a ‘missing’ or a ‘pragmatic’ leader? UK in a Changing Europe, 6 December, available at: https://​ukandeu​.ac​.uk/​climate​-politics​ -and​-the​-eu​-at​-cop26/​ (Accessed 14 March 2022). Vogel, D. (1997). Trading up and governing across: transnational governance and environmental protection. Journal of European Public Policy, 4 (4): 556–571. Wurzel, R. K. W., D. Liefferink and D. Torney (2019). Pioneers, leaders and followers in multilevel and polycentric climate governance. Environmental Politics, 28 (1): 1–21. Wurzel, R. K. W., J. Connelly and D. Liefferink (Eds.) (2017). The European Union in International Climate Change Politics: Still Taking A Lead? Abingdon: Routledge. Wurzel, R. K. W., M. S. Andersen and P. Tobin (2021). Climate Governance Across the Globe: Pioneers, Leaders and Followers. Abingdon: Routledge.

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14. Instruments and modes of governance in EU climate and energy policy: from energy union to the European Green Deal Michèle Knodt1

INTRODUCTION This chapter introduces the different modes of governance and policy instruments by which the EU has developed its climate and energy policy, using the concept of ‘governance configurations’. These configurations are characterized by different modes of governance, targets, as well as instruments, and are rooted within the particular competences of the EU. The prospects for the adoption of legislation, and the way climate and energy issues come to be governed once relevant legislation is adopted, are discussed with particular attention to the significance of treaty base. It highlights in particular how energy remains an area where the EU’s competence to act is less developed, and where as a result governance takes a more ‘soft’ form. It also highlights the opportunities as well as limitations of implementing EU policies intended to achieve climate neutrality by 2050. The aims of EU climate and energy policy have been expressed in terms of a normative triangle of sustainability, competitiveness, and security of supply. The chapter starts by setting out three different configurations of climate and energy governance which can be found in the EU. The next section highlights how a closer linkage between climate and energy fields was sought via the 2016 Energy Union initiative, by which the Commission sought to push the EU’s national energy systems towards stronger climate and energy targets. To realize its targets on renewable energy and energy efficiency, it notes how the EU went on to adopt the 2018 Regulation on the Governance of the Energy Union, supplementing the soft governance characterizing instruments adopted within the energy competence with some harder elements. The next section notes how the European Green Deal, launched by the Commission in 2019, and subsequently the associated ‘Fit for 55’ package, sought to strengthen the energy-climate nexus to deliver more ambitious climate and energy targets. The Commission drafted three main pathways and scenarios for this reform process, focusing either on regulatory policies and measures on one side, or carbon pricing on the other side, as the main driver, and adding a mixed scenario of both worlds. Having outlined the decision by the Commission to follow the mixed scenario, the concluding section notes the existence of a possible trade-off between ease of adoption by the EU institutions and the ultimate coherence and effectiveness of policy.

CONFIGURING CLIMATE AND ENERGY GOVERNANCE From the discussions on energy markets in the 1960s (Council of Ministers of the ECSC 1964) and on energy security through the oil price shock in the 1970s (Council 1974), up to 202 Michèle Knodt - 9781789906981 Downloaded from PubFactory at 08/15/2023 12:45:20AM via free access

Instruments and modes of governance in EU climate and energy policy  203 the turn to the more environmentally sensitive energy policy in the 1990s (Commission of the European Communities, 1995), the European Union has committed to establishing a sustainable, affordable and secure energy policy, and increasingly come to recognize its role in delivering the EU’s climate and energy policy goals. The implementation of such a policy takes place in different ‘governance configurations’ which are characterized by different competences, modes of governance, targets, and instruments. Climate and energy policy is anchored in two different competence areas: the environmental competences afforded the EU through Article 191 and especially Article 192 TFEU, and the energy competence of Article 194 TFEU. In climate and energy governance, it is important to clarify which competence an instrument primarily relates to. If a measure is based on the environmental competence of Article 192(1) TFEU, it is decided by majority vote, although in exceptional cases of para. 2, the principle of unanimity may apply. The latter is the case if ‘measures significantly affect a Member State’s choice between different energy sources and the general structure of its energy supply’ (Art. 192(2) TFEU). The EU’s specific policy objectives, defined in Article 194(1), relate to ensuring energy market functionality and security of supply, promoting energy efficiency and energy saving, supporting the development of new and renewable energy, and promoting the interconnection of energy networks. However, these competences do not impinge on Member States’ right to determine the conditions for exploiting their national energy resources, their choice between different energy sources, and the general structure of their energy supply. This ‘reservation of sovereignty’ in favour of the Member States, pursuant to Article 194(2) TFEU, limits the EU’s ability to steer energy policy. Thus, the possible retention of sovereignty by Article 192(2) constitutes a significant obstacle to effective EU action. To change the Treaty and remove reservation of sovereignty, a unanimous decision by the Member States would be required, according to Article 48 TEU, something which tends to be regarded as politically unrealistic (Knodt and Ringel, 2017: 125). When determining the applicable competence basis (environmental or energy policy), the focus of proposed measures in each case must be considered. The distinction between types of competence is fundamentally important for the governance of climate and energy issues in the EU due to the heterogeneity of Member States’ preferences. Majority voting implies a higher probability that the measure will be adopted in the Council, whereas unanimous decisions are very unlikely, due to the clashing interests of the Member States (see Wurzel et al., Chapter 3 in this volume). Apart from differing voting rules for adopting related legislation, the different competences have an impact on the mode of governance used in the different configurations. Here, a continuum is identifiable from hard to soft governance. For simplification, in this chapter the terms ‘hard’, ‘harder soft’, and ‘soft’ governance are used to express this continuum. Hard governance is characterized by legally binding decisions and enforcement, as in environmental policy. Here, non-compliance can be sanctioned. Soft governance, on the other hand, is voluntary by nature and instruments commonly used are recommendations, guidelines, target setting, and diffusion of information. Soft governance cannot be backed by sanction and is used in areas where the EU does not have competences, such as when it comes to energy mixes at the Member State level (Schmid & Kull, 2005; Deganis, 2006; Anderson, 2015; Mattocks, 2017; Tholoniat, 2010). In the context of the Commission’s Governance Regulation proposal (see below), a scientific debate on harder elements of soft governance has started. The concept of ‘harder soft governance’ in energy policy, introduced by Knodt and Ringel, suggests the

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204  Handbook on European Union climate change policy and politics Table 14.1

Configurations for the governance of European climate and energy policy

 

Configuration 1

Configuration 2

Configuration 3

Competences

Environment

Environment (Art. 192 TFEU)

Energy (Art. 194 TFEU)

(Arts 191, 192 TFEU)

Energy (Art. 194 TFEU)

Governance mode

Hard governance

Hard governance/

Targets

EU-wide quantified targets

Harder soft governance/

harder soft governance

soft governance

EU-wide quantified

EU-wide quantified targets and no set

targets and quantified

targets for Member States

targets for Member States Instruments*

Emission Trading System

Effort Sharing Regulation

2030 targets; Renewable Energy

(ETS)

(ESR)

Directive (RED2014/18);

Renewable Energy Directive

Energy efficiency Directive

(2020 targets/RED2009)

(EED2009/2014/18); Regulation (EU 2018/1999) on the Governance of the Energy Union and Climate Action

Note: * Illustrative examples. The three configurations are partly inspired by acatech et al. 2018 (lead authors Knodt, Schlacke, Böhring), but further developed here. Source: Partly based on acatech et al. (2018); see also endnote 1.

possibility of greater leverage over the Member States in energy transformation issues (Knodt & Ringel, 2017, 2018; Ringel & Knodt, 2018; Knodt et al., 2020; Oberthür, 2019). To assess the degree of hardness or softness of soft governance, the following indicators have to be analyzed: (1) the degree of obligation found in the formulation (or wording) within an agreement or a recommendation; (2) the justification of a state’s policy to justify its reaction/non-reaction to policy recommendations from other actors; (3) the precision with which a target is described in terms of its content; (4) the degree of ‘blaming and shaming’ or degree of the opportunity for public debate about national strategies and recommendations; (5) the political role for third-party actors (including private actors) at the European level; (6) direct (such as financial penalties, infringement procedure) or indirect sanctions (by policy coupling). In the case of indirect sanctions by policy coupling, enforcement could be introduced to a soft governance arrangement by linking it with policy fields that have sanction potential through financially relevant instruments. For example, financial sanctions are possible within the structural policy for the soft governance of the European Semester (Knodt et al., 2020; Knodt/Schönefeld, 2020; Blomqvist, 2018; Graziano & Halpern, 2016; Trubek & Trubek, 2005, 2007; Abbott et al., 2000; Falkner et al., 2005). In the multi-level system of the EU, quantified targets can be set at both EU and Member State levels. In some cases, EU-wide targets do not require additional translation into national targets. In others, there are EU-wide quantified targets with associated national targets, be they binding or non-binding (see Romppanen, Chapter 15 in this volume). If the Member States decide on binding national targets, failure to reach them can result in treaty violation proceedings at the European Court of Justice (ECJ). Insufficient corrective measures to reach the targets could even result in the imposition of penalty payments. These categories can be summarized in terms of three configurations, as shown in Table 14.1.

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Instruments and modes of governance in EU climate and energy policy  205 Within the first configuration, the EU Emissions Trading System (ETS), based on the 2003 Directive,2 is an example of a common European instrument that established binding quantified EU-wide targets (Lehmann and Gawel, 2013). The ETS, which covers approximately 45 per cent of total EU emissions, qualifies as hard European governance by EU environmental law. In this configuration, the instrument is chosen on the EU level, leaving Member States no room to manoeuvre. The ETS, often incorrectly referred to as a market-based instrument, is a system based on the ‘cap and trade’ principle. It sets a cap, equivalent to the total amount of certain greenhouse gases that can be emitted by installations covered by the system, and converts this into emission allowances. The allowances are traded by companies, such as large-scale energy plants, or energy-intensive industries and domestic European airlines. In successive rounds, the ETS has reduced the number of certificates in circulation, and is thus a quantity-based instrument. Cap and trade-type instruments are based on the assumption that companies will choose the most cost-efficient solution to reduce their emissions. After around 14 years of teething problems with, among other things, an excess of certificates, and therefore, too low a price, a significant increase in the price has gradually occurred since 2018, although seemingly still far below the level required for an effective incentive, according to economic analyses (see e.g. Hänsel et al., 2020). Despite these rather modest successes to date, during the fourth EU-ETS trading period (2021–2030), emissions from the relevant sectors are expected to be reduced by 55 per cent, compared with 2005 levels, according to the newest decisions under the European Green Deal.3 Within the second configuration, binding quantified targets are set for both the EU overall, and for each Member State. In such cases, Member States can choose their own domestic policy instruments for achieving their targets. Two important examples are the 2009 Effort Sharing Regulation4 and 2009 Renewable Energy Directive.5 The Effort Sharing Regulation (ESR) (see Romppanen, Chapter 15 in this volume) sets the targets for the reduction of greenhouse gas emissions for those sectors of the economy that fall outside the scope of the EU ETS. For these non-ETS sectors, which at the time of writing included transport, buildings, agriculture, non-ETS industry, and waste, the reduction is fixed at 30 per cent by 2030 compared to 2005. The reduction targets in non-ETS sectors account for approximately 55 per cent of total carbon emissions. As a nationally binding instrument, the ESR must be seen as hard governance under EU environmental law. The second example, the 2009 Renewable Energy Directive (RED), sets a binding target for at least 20 per cent of gross final energy consumption in the EU to come from renewable energy sources by 2020, as part of the wider range of 2020 targets. To achieve this target, the RED relies on binding national targets for the total share of energy from renewable sources in gross final energy consumption (electricity, heating, cooling, and transport). Through its anchoring in the EU’s energy competence, soft governance is applied in this case. However, the unanimous adoption of binding national targets makes this a harder kind of soft governance, because the Directive contains very precise obligations, and non-achievement of national targets can thus be sanctioned (financially) through an infringement procedure. The third configuration is characterized by quantified EU-wide targets, but a lack of binding quantified national targets for the Member States, located within the energy competence concerning renewable energy and energy efficiency. This applies most in the case of the 2030 climate and energy framework as agreed in 2014, which includes a binding EU-wide target of increasing the share of renewables in the energy mix to 32 per cent, as well as an EU-wide non-binding ‘Headline Target’ of 32.5 per cent for the improvement of energy efficiency. National targets were not agreed upon due to the heterogeneity of Member States interests, and

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206  Handbook on European Union climate change policy and politics the required unanimity rule for the regulatory interventions in national energy mixes. The ‘reservation of sovereignty’ as such allowed only for a soft governance-type approach. However, the 2014 agreement was revised in 2016, in the context of the winter Clean Energy for all Europeans package (European Commission, 2016), in which the EU adopted Regulation (EU 2018/1999) on the Governance of the Energy Union and Climate Action to harden its otherwise soft governance (see details below).6 Climate policy, framed as a component of environmental policy, has long been part of the EU’s primary competences. It was not until the adoption of the Lisbon Treaty that energy became established as an EU competence (Benson Jordan, 2008). Nevertheless, energy policy has been debated within the European Community since the beginning of the 1950s. The nexus between climate and energy, established by linking sustainability, competitiveness, and security of supply goals in a normative triangle, was first made explicit in the 1994 Green Paper For a European Union Energy Policy (European Commission, 1995). Since then, the three sides of the triangle have received varying amounts of attention, being used by different actors in different time periods, and guiding EU action in different ways (Knodt, 2018). Different stages of European integration in energy policy exhibit varying compositions of, and hierarchies among, these priorities (Herranz-Surrallés, 2015). However, the binding of different climate and energy policy instruments under one concept was only realized by the Energy Union in 2014 (Knodt, 2018). This is described in more detail in the next section.

CLOSER LINKAGE OF CLIMATE AND ENERGY POLICIES WITHIN THE ENERGY UNION Commission President Jean-Claude Juncker initiated the establishment of an Energy Union right at the beginning of his 2014–2019 term in office. This initiative was designed to help overcome discord and blockages within EU energy policy. With the accessions of the Central and Eastern European Member States, climate and energy policy became increasingly politicized, due to opposing energy policy preferences and energy mixes of the new and old Member States. A cleavage arose between the Visegrád group (Poland, Czech Republic, Slovakia and Hungary), as well as Romania and Bulgaria, striving for security of supply as the main goal, on one side, and a group of Northern/Western Member States striving for sustainability as the main goal, on the other (Szulecki et al., 2016) (see Wurzel et al., Chapter 3 in this volume). This left EU Member States unable to agree upon either binding national renewable energy or energy-efficiency targets to achieve the European targets by 2030 (Knodt et al., 2020). Juncker suggested an integration of energy, and implicitly, also climate policy. In doing so, he took up and broadened Polish Prime Minister (later President of the European Council) Donald Tusk’s idea of the Energy Union, expressed in 2014 as a reaction to Russia’s annexation of Crimea (Tusk, 2014), and very much focused on security of supply within the EU (Meyer-Ohlendorf, 2015; Nesbit, 2014; Turner et al., 2015; Turner, 2015).7 Juncker pushed to reach a broader EU consensus to advance community climate and energy policy. In its Communication ‘Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Strategy’ (European Commission, 2015), the Commission presented its vision of a European energy system that addresses all three objectives – competitiveness, security of supply, and sustainability – thus rejecting the prioritization of security of supply. It explicitly states that the achievement of ‘a fundamental transformation of the European energy system’

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Instruments and modes of governance in EU climate and energy policy  207 is necessary (European Commission, 2015, p. 2), leading away from (at this time still) 28 different national regulatory systems and towards a European control system (Knodt, 2018). This explicit nexus builds on ‘climate change and energy sustainability’ as one of the five headline targets of the overall macroeconomic Europe 2020 Strategy for Smart, Sustainable, and Inclusive Growth (da Graça Carvalho, 2012; Helm, 2014; Liobikienė and Butkus, 2017; Ringel/Knodt, 2018). This strategy was implemented within an annual cycle of policy coordination processes, the ‘European Semester’, building on harder soft governance and structured dialogue between European and national levels (Stuchlijk, 2017). With the coordination of the European Semester, all the basic governance aspects that came to be included in the 2018 Governance Regulation were present. In 2015, the EU decided to re-focus the European Semester on economic and fiscal coordination (Stuchlijk, 2017). Political coordination of climate and energy change policies was organized separately within the Energy Union, in line with the climate and energy objectives for 2030, proposed in 2014 (Meyer-Ohlendorf, 2015; Nesbit, 2014; Turner et al., 2015; Turner, 2015, Ringel/Knodt, 2020). Thus, the Energy Union created a comprehensive framework and closer linkage of the different configurations than before. The Energy Union, adopted by the European Council in 2015, contains five dimensions (European Council 2015, p. 1): (1) ensuring energy security; (2) fully integrating the internal energy market; (3) improving energy efficiency; (4) reducing CO2 emissions; (5) (promoting) research, innovation, and competitiveness. The 2016 Clean Energy for All Europeans (Winter) Package of legislation specified these five dimensions. The legislation developed to implement the Energy Union showed unprecedented attention to the climate and energy nexus. The key instrument, as already mentioned, was the Governance Regulation. This required Member States to submit National Energy and Climate Plans (NECPs), alongside long-term strategies (LTSs). In the latter, the Member States are required to report every ten years on their strategies for achieving the Paris climate goals (see Vogler, Chapter in 10 this volume), with a perspective of at least 30 years. Within the NECPs, Member States present their national objectives, targets, and contributions in line with the five dimensions of the Energy Union, their strategies and measures, the current situation, as well as prognoses and impact assessments (Ringel/Knodt, 2018; acatech et al., 2018). Within the Energy Union, and integrated into the Winter Package, the Regulation on the Governance of the Energy Union and Climate Action (Regulation (EU) 2018/1999) has to be seen as a key instrument for the implementation of the renewable energy and energy efficiency targets. Nevertheless, clear differences between the renewable energy and energy efficiency fields can be detected. While the regulation of renewable energy targets, in particular, shows harder soft governance elements, for energy efficiency the approach remains rather soft. All in all, a hardening of soft governance can be identified in the following areas of the Governance Regulation: 1. Member States are required to take due account of the Commission’s recommendations on draft NECPs. 2. At the same time, a justification requirement is established, requiring a Member State to publish reasoning if it does not act on the Commission’s recommendations. 3. In the event of a renewable energy ‘ambition gap’ (where national targets are not ambitious enough to meet the 32 per cent reduction), Annex II of the Governance Regulation provides for an algorithm that assigns the allocation of the missing percentage points to the Member States. This formula helps to overcome the potential problem of Member States missing

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208  Handbook on European Union climate change policy and politics binding national targets that had characterized the previous, 2009 Renewables Directive. Binding national targets would have opened up greater scope for legal enforceability at the national level. However, an equivalent algorithm does not apply to energy efficiency, for which a non-binding ‘headline target’ of 32.5 per cent is set (Schlacke & Knodt, 2019; Schlacke & Lammers, 2018). In addition, national renewable energy contributions to the national energy mix must be supplemented by an ‘indicative trajectory’ about increasing the share of renewable energies. For energy efficiency, the regulation only refers to the possibility of additional European measures to close an ambition gap. 4. The Governance Regulation also offers increased ‘blaming and shaming’ opportunities, compared to the monitoring system for the 2020 targets, as a State of the Energy Union report must be submitted to the Parliament and the Council. 5. The role of the Commission is strengthened, and thus soft governance is also hardened, by the newly introduced possibility of adopting ‘delegated acts’ (see Bürgin, Chapter 2 in this volume). However, despite these developments, the absence of stronger sanction mechanisms from the Governance Regulation means that soft monitoring and control mechanisms have only hardened to some extent (Knodt et al., 2020b). Thus, although the Energy Union has been rightly judged as a ‘watershed moment’ for EU energy policy (Szulecki et al., 2016: 550; see also Eikeland, 2011; Maltby, 2013), the different instruments from the three configurations elaborated above were kept separate.

THE EUROPEAN GREEN DEAL AND CLIMATE NEUTRALITY: MORE AMBITIOUS TARGETS, BUT AN OLD TOOL BOX? A still closer coupling came into force with the launch of the European Green Deal (EGD), with its promise of a carbon-neutral European economy and society by 2050 (European Commission, 2019). After becoming the president of the Commission, Ursula von der Leyen presented her vision for the EGD, launching an official Communication in December 2019 (ibid). To transform the EU’s economy for a sustainable future, 2030 and 2050 climate ambitions were to be increased. This required, among a broader range of actions, measures to develop clean, affordable, and secure energy supplies, as well as to improve energy efficiency. The December 2020 European Council agreed on a new EU-wide climate protection target, in addition to the already agreed goal of climate neutrality by 2050; instead of a 40 per cent reduction in greenhouse gases, a reduction of 55 per cent compared to 1990 was deemed to be achieved by 2030 (see Table 14.2).8 The question of how to achieve the new and ambitious targets was addressed in the September 2020 Impact Assessment.9 Here, the Commission proposed various scenarios to show how the new climate protection targets could be achieved. Three scenarios out of six10 assume that the targets can be achieved: REG, MIX, CPRICE (see Table 14.3). These three differ in the relevance attached to a CO2 price via an (additional or expanded) emissions trading system, the EU Effort Sharing Regulation (ESR), and regulatory ‘policies & measures’ in the areas of energy efficiency and renewable energies. The REG scenario is based on the further development of existing regulatory measures. It provides for intensive increases in ambition, especially in the areas of renewable energies and

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Instruments and modes of governance in EU climate and energy policy  209 Table 14.2

Instruments to achieve climate neutrality by 2050/55 per cent GHG reduction by 2030

Sectoral/policy

ETS sectors (e.g.

Non-ETS sectors

Land-use,

area

energy, industries)

(e.g. buildings,

land-use change,

transport)

and forestry

61%

40%

No debit-rule

GHG reduction by

GHG reduction

2030*

between 2021 and

EU Emissions

Effort Sharing

Trading System

Regulation (ESR)

Renewable Energy Energy efficiency

(LULUCF) Reduction target

at least 40% in

at least 36/39%***

2030*

in 2030*

LULUCF

Renewable Energy

Energy Efficiency

Regulation

Directive (RED)

Directive (EE)

+ Governance

+ Governance

Regulation

Regulation

2030** Instrument

(ETS)

Note: * Compared to 1990, ** compared to 2005, *** final energy consumption/primary energy consumption. For details on LULCUF, see Romppanen, and Schenuit and Geden, Chapters 15 and 22 in this volume.

energy efficiency. Emissions trading remains unchanged except for an extension to intra-EU shipping (see Dyrhauge and Rayner, Chapter 21 in this volume). The coverage of the Effort Sharing Regulation also remains unchanged. The CPRICE scenario envisages carbon pricing as the lead instrument. As intensified climate legislation, it is to be based decisively on the EU’s environmental legislative competence. This means that, in the future, not only industry, energy, and aviation, but also shipping, buildings, and transport are to be included in emissions trading. Buildings and transport would thus be excluded from the Effort Sharing Regulation, which would thus be de facto abolished. The Mix scenario is a combination of the Reg and CPRICE scenarios. It relies both on an increase in ambition in the renewable and efficiency sectors, and on an expansion of emissions trading to include shipping, buildings, and transport. However, the Effort Sharing Regulation is to be retained, without pursuing a high level of ambition. Even though the Commission did not provide a clear prioritization, it was rather clear that it would prefer the Mix scenario, which provides a political compromise between the two more extreme scenarios as the dominant solution. This risk-averse attitude on the part of the Commission is explained by the extremely cautious positions of many Eastern European states with regard to sustainable energy transformation on the one hand and the anticipated further negotiations that are taking place in the trialogue between Commission, European Parliament and Council. Overall, the political and legal risks associated with the MIX scenario are lower, as shown in Table 14.3. Both the REG and CPRICE scenario carry legal and political risks. For REG, the tightening of the EU-wide targets for the expansion of renewable energies and the increase in energy efficiency as a main instrument imply a hardening of the soft governance in this policy field. This would imply either a change of primary law or a decision on harder elements to intervene into the national policy mix, which could only be decided by unanimity. However, the 2018 Governance Regulation negotiations, and the trialogue disputes that characterized them, have already shown that this is hardly feasible. At the European Council on 10–11 December 2020, Poland and Hungary already extracted a commitment to respect Member States’ right to decide on their energy mix when implementing the new 55 per cent target for 2030. For CPRICE, the unanimity requirement enshrined in Article 192(2) TFEU also constitutes a high

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210  Handbook on European Union climate change policy and politics Table 14.3

Legal-political assessment of the scenarios

 

REG

MIX

CPRICE

Focus

RED/EE regulation

Both price and regulation

CO2 Price/ETS

Competences

Energy (Art. 194 TFEU)

Energy + Environment (Arts 194,

Environment + Tax (Arts

192 TFEU)

192, 113 TFEU)

Potential legal and

RED/EE Art. 194(2) TFEU

lower risks in both cases because

Art. 192(2) TFEU

political risks

EFR 192(2) TFEU

of lower intensification

Art. 113 TFEU Art. 311 TFEU

(unanimity required)

(unanimity required) Potential to deliver

Low

Medium

Low

targets

Source:

Based on Knodt et al. 2020a; Schlacke/Knodt 2020, own edit.

bar. In addition, CPRICE might have implied fiscal instruments, adoption of which requires unanimity according to Article 192(2)(a) TFEU and Article 113 TFEU, too. The same applies for the introduction of CO2-related levies, which are to be decided in a special procedure according to Article 311 TFEU, in which the Council unanimously adopts a decision after consulting the European Parliament, which then requires the consent of all Member States under their respective national provisions. On the specific case of the ETS, and its possible expansion, the political interests of the Member States are rather polarized. The EU’s lower-income countries, in particular, have expressed strong reservations about a uniform carbon price, which would put them at a disadvantage. The extension towards the building sector is perceived as bringing with it a ‘frightening’ risk of harming the poor, as a senior Polish official called it (Carbon Forward, 2020). Low-income countries would prefer to maintain the existing system and set national emission targets for non-ETS sectors. From their perspective, regulation by means of the ESR offers greater fairness. Therefore, the probability of legal and political adoption of the related instruments to implement this scenario can be considered low (Knodt et al., 2020a). Thus, it came as no surprise that in the ‘Fit for 55’ package, the Commission preferred the MIX scenario, combining regulation with quantity/market-based measures. The risk that unanimity requirements would stymie the adoption of the measures entailed by the REG and CPRICE scenarios is defused. While proposing to extend the ETS to other sectors (see Dyrhauge and Rayner, Chapter 21 in this volume), the package also maintained the Effort Sharing Regulation. This will lead to an interaction between instruments imposing a carbon price, particularly emissions trading, and the emissions reduction obligations for Member States to act on buildings and transport. This could lead to opposing, and possibly overburdening effects, or potentially lead to lower CO2 prices and reduced effectiveness; in any case, such a design lacks coherence. Depending on their focus, the proposed policy portfolio can be based on environmental and energy competences. Thus, the MIX is much more demanding in terms of managing the instruments and their interactions (Knodt et al., 2020a). Moreover, within the ‘Fit for 55’ package, intensification of policy in the energy field currently only consists of increased targets for renewable energies and energy efficiency; this will not be sufficient. The energy efficiency soft governance-style measures and the renewable energies harder soft governance-type measures, as currently designed, will not deliver higher mitigation targets. Recent research suggests that tougher soft governance leads to more compliance. Knodt et al. (2021) examined the implementation of the Commission’s recommenda-

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Instruments and modes of governance in EU climate and energy policy  211 tions in the National Energy and Climate Plans (NECPs). The first drafts, the Commission’s recommendations, and the final NECPs including the Commission’s evaluation, were examined. It became clear that there are significant differences in the way recommendations for renewable energies and energy efficiency have been dealt with by Member States. In the case of renewable energies, almost half of the Member States have ‘largely addressed’ the Commission’s recommendations, while only six countries have done so in the area of energy efficiency. Thus, we can conclude that harder soft governance leads to better implementation of the Commission’s recommendations. Meanwhile, commitments within NECPs only increased the share of renewables to a total of 33 per cent – still 7 percentage points away from the new target. In the case of energy efficiency, NECP commitments also fell below the target (of 32.5 per cent). Despite the Commission’s efforts, the latter still only reached 30 per cent – not a good sign for the more ambitious target the Commission went on the propose. Despite this, the ‘Fit for 55’ package does nothing to adjust the Governance Regulation to harden the soft governance in energy efficiency or even further develop the harder soft governance in renewable energies. To improve the chances of success of European climate and energy policy, such an adjustment and thus hardening of governance seems urgently needed (Knodt et al., 2021). However, the Commission may have learned from the experience around the preparation of the NECPs. The proposal for the revision of the energy efficiency directives (European Commission, 2021) introduced the same harder soft governance we can witness in the current Renewable Energy Directive. In future, national minimum contributions should be calculable by means of a formula, which the Member States are to take into account when calculating their contribution. Likewise, national indicative target paths are to be introduced in order to identify deviations and address them within one year. Nevertheless, agreement on binding national targets has been dispensed with, in favour of making them binding at the EU level. These additions to the existing governance framework should help to improve the poor performance of the energy efficiency measures of the Member States. Neither the hardening of renewable energy governance to date, nor an imminent hardening of energy efficiency governance will be sufficient to reach the envisaged new targets for 2030. As the introduction of the ETS for the building and transport sector would take effect in 2030 at the earliest, a well-functioning regulation of renewable energy and energy efficiency is of utmost importance.

CONCLUSION This chapter has shown that during the development of climate and energy policy, the different ‘governance configurations’ within the EU have been characterized by different modes of governance, targets and instruments, rooted within the environmental competences (Article 191 and especially Article 192 TFEU) and the energy competence (of Article 194 TFEU). These competences are increasingly connected. While climate policy is often regulated under the environmental competences of the EU, and is thus based on majority voting, in issues of energy policy (including renewable energy and energy efficiency), competences concerning the energy mix remain at the national level and can only be regulated by unanimity. Taking into account the high heterogeneity of interests among Member States, unanimity constraints have to be taken into account when designing coherent climate and energy policy at EU level.

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212  Handbook on European Union climate change policy and politics A first linkage of both fields was reached by the Energy Union, marking a turning point for the EU’s energy transformation. To meet the 2030 targets, the Commission proposed an ambitious governance strategy to accelerate European energy system transformation. The Governance Regulation then complemented the soft governance within the energy competence policies with some harder elements. Subsequently, the European Green Deal introduced a stronger nexus and a mix of the still separated configurations of climate and energy policy. With the ‘Fit for 55’ package, the Commission is following a mixed scenario to implement the Green Deal, carrying the risk of incoherence and ineffectiveness. The Commission proposed enhanced European targets but failed to harden its energy policy to make them fit for the 55 per cent reduction target for 2030, and 2050 climate-neutrality goal. Although the proposed package restructures almost all existing climate and energy legislation and improves governance in the field of energy efficiency, the necessary toughening in the area of renewable energies and energy efficiency within the Governance Regulation remains absent from the ‘Fit for 55’ package. The Commission’s restraint with regard to the Governance Regulation probably testifies to the importance of opposition from some Member States. The agreement reached at the December European Council in Brussels on the 55 per cent reduction target and its enshrinement in climate law was ultimately achieved through assurances of non-interference in the energy mix of EU Member States, especially Poland and Hungary, and the promise of further funding. However, with a renunciation of a stronger enforcement mechanism, the achievement of the 55 per cent target remains in doubt, which itself jeopardizes the overall European Green Deal goal of climate neutrality by 2050. An analysis of the implementation of the Commission’s first recommendations on the ambition gaps in the NECPs in the areas of renewable energies and energy efficiency is revealing: already during the drafting phase of the plans, a clear ‘European’ ambition gap was identified in both areas. The Commission’s recommendations were only implemented by a minority of the Member States, although those states implemented them quite thoroughly. In the area of renewable energies, the ambition gap was just about closed; in the area of energy efficiency, it persists. The national plans to increase the share of renewable energies so far total 33 per cent, only slightly above the old target, but still 7 percentage points away from the new target. In the case of energy efficiency, they have not even reached the current target of 32.5 per cent, but – despite the Commission’s efforts – only 30 per cent. As calls to ramp up targets were again heard in the wake of Russia’s invasion of Ukraine, even before the ‘Fit for 55’ package had been adopted, policymakers will need to ask themselves challenging questions regarding the adequacy of the institutional framework for implementing any further commitments that might emerge.

NOTES 1. This work was supported by German Federal Ministry of Education and Research [Reference: 03SFK4P0, Consortium ENavi, Kopernikus]. 2. Directive 2003/87/EC. 3. Regulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021 establishing the framework for achieving climate neutrality and amending Regulations (EC) No 401/2009 and (EU) 2018/1999 (‘European Climate Law’).

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Instruments and modes of governance in EU climate and energy policy  213 4.

Until 2020 the Effort Sharing Decision (Decision no. 406/2009/EC); for the period 2021 to 2030 the new Effort Sharing Regulation (Regulation (EU) 2018/842). 5. See Articles 1, 3(1) of Directive 2009/28/EC. 6. Regulation on the Governance of the Energy Union and Climate Action (EU) 2018/1999. 7. Tusk was himself revisiting an older idea of Jacques Delors and then-president of the European Parliament Jerzy Buzek from 2010, who had pleaded unsuccessfully for a European Energy Community to integrate the Central and Eastern European Member States into a system of common energy security. Tusk’s article included the statement that ‘Europe should make full use of the fossil fuels available, including coal and shale gas’ (Tusk, 2014). 8. European Council, Conclusions (10–11 December 2020), Brussels, EUCO 22/20, CO EUR 17, CONCL 8. 9. See: https://​ec​.europa​.eu/​clima/​sites/​clima/​files/​eu​-climate​-action/​docs/​impact​_en​.pdf (Accessed: 12 March 2020). 10. The two scenarios BSL and MIX-50 show that the targets will not be met, while the ALLBNK scenario goes beyond them. They will therefore not be mentioned further here.

REFERENCES Abbott, K. W. & D. Snidal (2000). Hard and soft law in international governance. International Organisation, 54 (3): 421–456. https://​doi​.org/​10​.1162/​002081800551280. acatech, Leopoldina and Akademienunion (2018). Governance für die Europäische Energieunion. Gestaltungsoptionen für die Steuerung der EU-Klima und Energiepolitik bis 2030. Schriftenreihe zur wissenschaftsbasierten Politikberatung. Anderson, K. M. (2015). Social Policy in the European Union. London: Macmillan International Higher Education. Benson, D. and A. Jordan (2008). A grand bargain or an ‘incomplete contract’? European Union environmental policy after the Lisbon Treaty. European Energy and Environmental Law Review, 17 (5): 280–290. Blomqvist, P. (2018). Soft and hard governing tools. In C. Ansell & J. Torfing (Eds.), Handbook on Theories of Governance (pp. 267–278). Cheltenham, UK and Northampton, MA, USA: Edward Elgar Publishing. Burns, C. & P. Tobin (2020). Crisis, climate change and comitology: policy dismantling via the backdoor? Journal of Common Market Studies, 58 (3): 527–544. https://​doi​.org/​10​.1111/​jcms​.12996. Carbon Pulse (2020). Carbon Forward: EU ETS extension a ‘frightening’ risk to poor – senior Polish official, 14 October 2020, https://​carbon​-pulse​.com/​111964/​(Accessed: 3 February 2021). Commission of the European Communities (1995). For a European Union Energy Policy, Green Paper, COM(94) 659, final 2, 23.2.1995. Brussels: European Commission. Council of Ministers of the European Coal and Steel Community (1964). Protocol of Agreement on Energy Problems, Reached Between the Governments of the Member States of the European Communities at the 94th Meeting of the Special Council of Ministers of the European Coal and Steel Community, 21 April 1964, Luxembourg, OJ 69, 30.4.1964, 1099–1100. Council of the European Community (1974). Council Resolution Concerning a New Energy Policy Strategy for the Community, 17 September 1974, Official Journal C 153/1, 09.07.1975. da Graça Carvalho, M. (2012). EU energy and climate change strategy. Energy 40: 19–22. Deganis, I. (2006). The politics behind consensus: tracing the role of the Commission within the European Employment Strategy. Journal of Contemporary European Research, 2 (1): 21–40. Dupont, C., S. Oberthür, & I. von Homeyer (2020). The Covid-19 crisis: a critical juncture for EU climate policy development? Journal of European Integration, 42 (8): 1095–1110. https://​doi​.org/​10​ .1080/​07036337​.2020​.1853117. Eikeland, P. O. (2011). The third internal market package: new power relations among Member States, EU institutions and nonstate actors? Journal of Common Marked Studies, 49 (2): 243–263. https://​doi​ .org/​10​.1111/​j​.1468​-5965​.2010​.02140​.x.

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214  Handbook on European Union climate change policy and politics European Commission (2015). A Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy, COM (2015) 80 final, Brussels, 25 February 2015. European Commission (2019). Communication on the European Green Deal. COM(2019) 640 Final. European Commission (2021). Proposal for a Directive of the European Parliament and of the Council on Energy Efficiency (Recast). COM(2021) 558 final. European Council (2015). Presidency conclusions, EUCO 11/15, CO EUR 1, CONCL 1, Brussels, 20 March 2015. Falkner, G., O. Treib, M. Hartlapp, & S. Leiber (2005). Complying with Europe: EU Harmonisation and Soft Law in the Member States. Cambridge University Press. Geden, O. (2007), Energiesolidarität im EU-Reformvertrag, SWP-Aktuell, 34, Berlin: SWP. Graziano, P. R., & C. Halpern (2016). EU governance in times of crisis: inclusiveness and effectiveness beyond the ‘hard’ and ‘soft’ law divide. Comparative European Politics, 14 (1): 1–19. https://​doi​.org/​ 10​.1057/​cep​.2015​.6. Hänsel, M. C., M. A. Drupp, D. J. A. Johansson (2020). Climate economics support for the UN climate targets. National Climate Change 10: 781–789. https://​doi​.org/​10​.1038/​s41558​-020​-0833​-x. Helm, D. (2014). The European framework for energy and climate policies. Energy Policy 64: 29–35. Herranz-Surrallés, A. (2015). An emerging EU energy diplomacy? Discursive shifts, enduring practices. Journal of European Public Policy, 23 (6): 1386–1405. Knodt, M. (2018). Energy policy. In H. Heinelt & S. Münch (Eds.), Handbook of European Policies: Interpretive Approaches to the EU (pp. 224–240). Cheltenham, UK and Northampton, MA, USA: Edward Elgar. Knodt, M. (2019). Multi-level coordination in EU energy policy: a new type of ‘harder’ soft governance? In N. Behnke, J. Broschek, & J. Sonnicksen (Eds.), Multilevel Governance, Configurations, Dynamics, Consequences (pp. 173–192). Basingstoke, Hampshire: Palgrave Macmillan. Knodt, M. & M. Ringel (2017). Governance der Energieunion: Weiche Steuerung mit harten Zügen? [Governance in the Energy Union: Soft Governance with hard elements?]. Integration, 2, 125–140. Knodt, M. & M. Ringel (2018). The European Commission as a policy shaper – harder soft governance in the Energy Union. In M. W. Bauer, J. Ege, & S. Becker (Eds.), The European Commission in Turbulent Times (pp. 181–204). Baden-Baden: Nomos Verlagsgesellschaft. Knodt, M. & J. Schönefeld (2020): Introduction. ‘Harder soft-governance’ in European climate and energy policy: following a new trend? In: M. Knodt & J. Schönefeld (Hrsg.), Special Issue, ‘Harder Soft-Governance’ in European Climate and Energy Policy: Following a New Trend?, Journal of Environmental Policy & Planning, 22(4): 761–773 https://​doi​.org/​10​.1080/​1523908X​.2020​.1832885. Knodt, M., M. Pahle, N. aus dem Moore, O. Edenhofer, U. Fahl, B. Görlach,, M. Kosch, F. Pause, G. Perino & S. Schlacke (2020): Wegmarken für das EU-Klimaziel 2030. Ariadne-Kurzdossier. Potsdam: Kopernikus-Projekt Ariadne. https://​publications​.pik​-potsdam​.de/​pubman/​item/​item​_25262 (Accessed: 18 March 2021). Knodt, M., M. Ringel & R. Müller (2020): ‘Harder’ soft governance in the European Energy Union. Journal of Environmental Policy & Planning, 22 (6): S. 787–800. https://​doi​.org/​10​.1080/​1523908X​ .2020​.1781604. Kulovesi, K., & S. Oberthür (2020). Assessing the EU’s 2030 climate and energy policy framework: Incremental change toward radical transformation? Review of European, Comparative & International Environmental Law. 29 (2): 151–166. https://​doi​.org/​10​.1111/​reel​.12358. Lehmann, P. & E. Gawel (2013). Why should support schemes for renewable electricity complement the EU emissions trading scheme?. Energy Policy, 52: 597–607. Liobikienė, G. & M. Butkus (2017). The European Union possibilities to achieve targets of Europe 2020 and Paris agreement climate policy. Renewable Energy 106: 298–309. Maltby, T. (2013). European Union Energy policy integration: a case of European Commission policy entrepreneurship and increasing supranationalism. Energy Policy, 55: 435–444. https://​doi​.org/​10​ .1016/​j​.enpol​.2012​.12​.031. Mattocks, K. (2017). Co-ordinating co-ordination: the European Commission and the culture open method of co-ordination. Journal of Common Market Studies, 56 (2): 318–334. https://​doi​.org/​10​ .1111/​jcms​.12587. Meyer-Ohlendorf, N. (2015). An Effective Governance System for 2030 EU Climate and Energy Policy: Design and Requirements. Discussion Paper. Ecologic Discussion Paper Series. Berlin: Ecologic.

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Instruments and modes of governance in EU climate and energy policy  215 Nesbit, M. (2014). Getting Delivery Right: The EU 2030 Climate and Energy Targets and the Challenge of Governance. London: Institute for European Environmental Policy. Oberthür, S. (2019). Hard or soft governance? The EU’s climate and energy policy framework of 2030. Politics and Governance, 7 (1): 17–27. https://​doi​.org/​10​.17645/​pag​.v7i1​.1796. Ringel, M. & M. Knodt (2018). The governance of the European Energy Union. Efficiency, effectiveness and acceptance of the Winter Package 2016. Energy Policy, 112: 209–220. https://​doi​.org/​10​.1016/​j​ .enpol​.2017​.09​.047. Ringel, M. & M. Knodt (2019). EU 2030 Energy Policies: a review of the clean energy package from a stakeholder perspective. Zeitschrift für Umweltpolitik und Umweltrecht, 4: 445–467. Schlacke, S. & M. Knodt, M. (2019). The governance system of the European Energy Union and climate action. Journal for European Environmental & Planning Law, 16 (4): 344–360. https://​doi​.org/​10​ .1163/​18760104​-01604002. Schlacke, S. & S. Lammers (2018): Das Governance-System der Europäischen Energieunion. Erreichung der energie- und klimapolitischen Ziele durch weiche Steuerung? Zeitschrift für Europäisches Umwelt- und Planungsrecht, 16 (4): 424–437. Schmid, G. & S. Kull (2005). Die Europäische Beschäftigungsstrategie. Perspektiven der Offenen Methode der Koordinierung [The European employment strategy. Perspectives on the open method of coordination]. In H. Kaelble & G. Schmid (Eds.), Das europäische Sozialmodell. Auf dem Weg zum transnationalen Sozialstaat (pp. 317–343). Edition Sigma. Stuchlijk, A. (2017). European Semester: Assessing the 2017 Priorities. European Parliamentary Research Service, 1–2. www​.europarl​.europa​.eu/​RegData/​etudes/​ATAG/​2017/​599261/​EPRS​_ATA(2017)599261​ _EN​.pdf (Accessed: 5 September 2022). Szulecki, K., S. Fischer, A. Gulberg, & O. Sartor (2016). Shaping the Energy Union: between national positions and governance innovation in EU energy and climate policy. Climate Policy, 16 (5): 548–567. https://​doi​.org/​10​.1080/​14693062​.2015​.1135100. Tholoniat, L. (2010). The career of the open method of coordination: lessons from a ‘Soft’ EU instrument. West European Politics, 33 (1): 93–117. https://​doi​.org/​10​.1080/​01402380903354122. Trubek, D. M. & L. G. Trubek (2005). Hard and soft law in the construction of social Europe: the role of the open method of coordination. European Law Journal, 11 (3), 343–364. https://​doi​.org/​10​.1111/​j​ .1468​-0386​.2005​.00263​.x. Trubek, D. M. & L. G. Trubek (2007). New governance and legal regulation: complementarity, rivalry, and transformation. Columbia Journal of European Law, 13: 540–564. Turner, S. (2015). Embedding principles of good governance into the 2030 Climate & Energy Framework. www​.foeeurope​.org/​sites/​default/​files/​renewable​_energy/​2015/​turner​_2015​-six​_principles​_of​_good​ _governance​.pdf (Accessed: 5 September 2022). Turner, S., Q. Genard, J. Roberts, & I. Luebbke (2015). Four Key Messages for the Governance of the European Climate and Energy Policies after 2030. London: E3G. Tusk, D. (2014). A united Europe can end Russia’s energy stranglehold. Financial Times, 21 April 2014.

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15. Targets, timetables and effort sharing as governance tools: emergence, scope and ambition Seita Romppanen

1. INTRODUCTION Effort sharing has been a central issue in EU climate policy since the 1990s (Haug & Jordan, 2010), but as European efforts tackling climate change intensify, its role grows in importance. Fair allocation of the burden of reducing greenhouse gas (GHG) emissions across Member States and all sectors of the economy is an important prerequisite for the EU to match ambition with action. The EU climate policy framework for 2030 onwards builds on action taken in the context of the EU emissions trading scheme,1 effort sharing2 and land use, land-use change and forestry (LULUCF3) that collectively contribute to achieving the headline emissions reduction target (of 55 per cent)4 and the overarching target of climate neutrality by 2050 (European Commission, 2020a). After decades of incremental regulatory development, the principle of effort sharing has matured to the point that it constitutes a solid component of EU climate law and policy. In contemporary EU policy, the Effort Sharing Regulation (ESR) sets binding annual GHG emission reduction targets for Member States in those sectors of the economy that fall outside the scope of the EU emissions trading system (EU ETS). As of 2021, emissions reduction targets were 43 per cent for sectors covered by the EU ETS (European Council, 2021) and 30 per cent for non-traded sectors outside it (Article 1 ESR). To allocate the burden of decarbonizing these non-traded sectors fairly, the ESR requires all Member States to contribute to the overall EU target through national targets ranging from 0 per cent to 40 per cent as compared to 2005 levels (Annex ESR). The legislative proposals set in motion in July 2021 in the form of the ‘Fit for 55’ package seek to revise the targets laid down in the ESR (European Commission, 2021c). The main change to the existing legislation concerns the targets to be achieved by 2030 in the ESR-sectors. The EU-level GHG emissions reduction target increases from 29 to 40 per cent, compared with 2005, and the national targets are updated accordingly. The Council and Parliament reached a provisional agreement on the revised ESR in November 2022 (Council of the EU, 2022a). Furthermore, while the pre-‘Fit for 55’ package ESR covers emissions from non-ETS sectors including road transport, buildings, agriculture (see Matthews, Chapter 19 in this volume) and waste, the revisions introduced in July 2021 include a proposal to include buildings and road transport within a new emissions trading scheme (European Commission, 2021b). These sectors would also remain under the ESR to ensure an enhanced policy approach to the sectors with so-called ‘hard-to-abate’ emissions (such as transport and agriculture) (European Commission, 2020a). Over half of EU GHG emissions originate from such sectors (European Council, 2021). For example, GHG emissions from transport have increased yearly since 2014. More than one-third of effort sharing-related emissions originate from transport, 216 Seita Romppanen - 9781789906981 Downloaded from PubFactory at 08/15/2023 12:45:21AM via free access

Targets, timetables and effort sharing as governance tools  217 and the sector has not followed the EU’s general decreasing emissions trend (see Dyrhauge and Rayner, Chapter 21 in this volume) (EEA, 2021). For the effort sharing sectors to meet their current target set for 2030, the GHG emissions from transport alone would need to be approximately 15 per cent lower than in 2021 (European Commission, 2020). This decrease requires strong regulatory drivers as well as full implementation at the Member State level. Effort sharing works differently from the EU ETS, which is a cap-and-trade system establishing a market for carbon (see introduction and Chapters 14 and 10 by Knodt and Vogler, respectively, in this volume). The ESR comprises an ex ante mechanism (Peeters & Athanasiadou, 2020) that requires the Member States to reduce emissions along a steady linear trajectory between 2021 and 2030. The emission reduction targets for 2030 follow annual carbon budgets that are distributed based on the relative wealth (GDP) of the Member State, together with additional adjustment criteria (Article 10 ESR). In the post-‘Fit for 55’ package ESR, the calculation method for determining national targets remains based on GDP per capita, with a limited amount of targeted corrections to address cost-efficiency concerns. The ESR’s legal architecture represents a ‘one target, collective action’ approach (Romppanen, 2020a:435). First, the Member States’ individual GHG emission reduction targets are operationalized with an emission reduction trajectory that builds on annual carbon budgets. The legislative framework for this action is the ESR. But secondly, it is the Member States who are responsible de facto for establishing and implementing further national policies in the effort sharing sectors, and measures that enable them to comply with their GHG emission reduction path. Thus, whereas the EU ETS is regulated comprehensively at EU level, the effort sharing sectors are not. The ESR sets the GHG emission reduction targets, but the EU does not regulate how the Member States are to meet these, and entrusts the task of establishing the necessary regulatory frameworks to the Member States. In addition to the features described above, there are also other aspects that make effort sharing a standalone concept of EU climate law. The EU’s Climate and Energy Framework continues to follow the underlying principles of its earlier climate and energy policies, i.e. cost-effectiveness, fairness and solidarity (2. recital to the ESR). These three fundamental principles relate to the distribution of effort across Member States and seek to balance fairness and solidarity with cost-efficiency, taking into account national circumstances (European Commission, 2021a; Woerdman, Roggenkamp & Holwerda, 2015).5 The aim of achieving a fair and prosperous EU will also continue to serve as one of the guiding principles of climate ambition over the coming decades (European Commission, 2020a). The ESR reflects these principles by considering Member States’ varying economic capacities not only through individual national targets but also, for example, through enhancing the so-called ‘flexibility mechanisms’ available to the Member States to support compliance. These mechanisms connect the ESR with LULUCF Regulation by allowing Member States limited usage of net GHG removals, through changes in land use, to offset emissions under the ESR (Article 7 ESR). The EU ETS, effort sharing and LULUCF policies must work collectively for the EU to achieve its climate pledges. The flexibilities allowing linkage between these instruments should be perceived as a tool that enables GHG emission reductions to be made, where possible, with less expense, and not as an opportunity to undermine effective action where it is needed the most (Romppanen, 2020a). After tracing the emergence of the concept, this chapter discusses the role played by the effort sharing sector in the EU 2030 climate and energy policy framework (see also Knodt, Chapter 14 in this volume). It outlines the related regulatory developments and the key legal

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218  Handbook on European Union climate change policy and politics content of the ESR. The chapter analyzes the elements of the effort sharing concept through consideration of its relationship with the LULUCF Regulation. The chapter concludes with future perspectives on how the effort sharing sector might evolve as the EU’s climate ambition yields legal and policy action.

2.

FROM DEBATING BURDENS TO COLLECTIVE RESPONSIBILITY: A BRIEF HISTORY

2.1

The Emergence of the Concept of Effort Sharing

While much of its climate policy focus has been on the development of the EU ETS, the EU has also been steadily developing the mechanisms for effort sharing to achieve its climate targets (Lacasta et al., 2010; Weishaar, 2020; Kulovesi & Oberthür, 2020). Effort sharing represents both a distinctive concept of EU climate law as well as a key governance tool that essentially builds upon the idea of fair distribution of the burden (i.e. cost) of environmental protection (Lacasta et al., 2010; Lenschow, 2005). Taking action to tackle climate change by means of effective EU-wide measures, striking a balance between the needs of richer and poorer Member States with different socioeconomic systems, has never been an easy task (Haug & Jordan, 2010). Nevertheless, over the years the concept of effort sharing has gradually matured from a debate over burdens towards sharing a collective responsibility to abate climate change. The idea of pooling Member States’ climate efforts to achieve an overarching EU-wide reduction of GHG emissions emerged in the 1990s in the context of designing the EU’s joint contribution under the global climate regime (Lacasta et al. 2010), although the idea of burden sharing was ‘implicitly embedded’ in the EU’s policies already by the 1980s (Haug & Jordan, 2010:84). Effort sharing is a longstanding concept in EU climate policy and was earlier referred to as ‘burden sharing’.6 The first internal burden sharing agreement was devised in 1997 (European Council, 1997). Earlier attempts to reach such an agreement failed because it was too challenging to devise a consensual methodology by which to bind Member States to an internal commitment to comply with the vague formulations set out in the international climate convention (Lacasta et al., 2010).7 The burden sharing arrangement from 1997 applied a ‘Triptych approach’, which represents a sectoral approach to burden differentiation and distinguishes between three economic sectors (the energy-intensive industries, the power-producing sector and all the rest together as ‘domestic’ sectors) (Phylipsen et al., 1998). Based on these sectors, the Triptych approach calculated national emission targets and allowances. According to Ringius (1997:35), it simultaneously achieved two things: ‘it defined both the anthropogenic sources of global climate change and suggested a reasonable fair distribution of responsibilities among countries’. However, the Member States did not agree on any major new EU policies or measures to support these targets. Hence some argue that the EU ‘signed up’ to the most informal type of ‘formal’ burden sharing for the sake of a target that was merely declaratory (Haug & Jordan, 2010:85). In 1998, the internal burden-sharing arrangement from the previous year was renegotiated and adjusted to include the regulatory developments brought forward by the Kyoto Protocol.8 The 1998 Burden Sharing Agreement was eventually formalized by means of a Council decision on the ratification of the Kyoto Protocol.9

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Targets, timetables and effort sharing as governance tools  219 2.2

Towards a Collective Climate Policy Framework

The next step was the development of the EU Climate and Energy Package in 2007, which set the objectives to be met by 2020 (European Council, 2007).10 The EU Climate and Energy Package for 2020 comprised of a set of complementary legislation, including a revised Effort Sharing Decision (ESD).11 Through the developments that resulted in the 2020 Climate and Energy Package, the EU extended its climate policy to sectors (such as transport and agriculture) that the European Community (EC) had previously steered away from under the ‘banner of subsidiarity’ (Lacasta et al., 2010). In this context, the development of the now well-established concept of effort sharing has been an influential element of the evolution of the EU’s climate law and policy. From 2009 onwards, the ESD belonged to an overall climate and energy package that targeted, as an ‘umbrella’ instrument, GHG emissions not covered by the EU ETS (Peeters & Stallworthy, 2012:18). The 2020 package was based on a twofold premise that could be described as a collective EU effort – albeit one entailing differentiation between the Member States – towards one target. Hence, although the EU Climate and Energy Package for 2020 distinguished between the ETS and effort sharing, it was important to account for their combined effects in the form of an EU-level reduction target to which both ETS and non-ETS sectors would need to contribute. This was necessary also to satisfy both the cost-effectiveness and fairness principles (Lacasta et al., 2010). This approach, involving a collective effort through differentiation, is still strongly present in the 2030 Climate and Energy Framework. It is worth noting that the ESD entailed replacing the term ‘burden sharing’ with that of ‘effort sharing’, in order to inject greater positivity into the language used to discuss climate policy (Lacasta et al., 2010). The ESD differentiated between Member States’ national GHG emission reduction targets, using relative GDP per capita as the ‘sole indicator’ to allocate targets (Haug & Jordan, 2010). Despite focusing on a concept (effort sharing) that encapsulates sharing responsibility and acting collectively, the ESD (in common with the earlier burden sharing agreements) involved a considerable amount of internal differentiation. Member States whose GDP per capita was below the EU average were required to reduce by less, or were even allowed to increase emissions above 2005 levels in the non-ETS sectors, while Member States whose GDP per capita was above the EU average were required to reduce by more than the average. Furthermore, the ESD applied only to the non-traded sectors, whereas the earlier burden-sharing agreements had, in principle, established economy-wide targets. This distinction between the sectors made the EU’s policy on climate sharper: emissions from diffuse emitters and sectors with hard-to-abate emissions, i.e. transport, agriculture and waste should also be acknowledged and accounted for. Therefore, the need to balance cost-efficiency with fairness considerations was a crucial precondition, given the increased economic and social differences across the enlarged EU (Lacasta et al., 2010) as 12 countries from Central and Eastern Europe and the Mediterranean joined EU in 2004 and 2007. The development of effort sharing in the EU reflects the broad political environment of the time and, more specifically, the prominence of climate change on the political agenda (Lacasta et al., 2010). Haug and Jordan (2010: 89) argue that framing climate change as a collective problem has provided the EU with a ‘justification’ to deepen European integration. The concept embodies the increased harmonization of mitigation policy (Haug & Jordan, 2010) and reflects its increasing ambition. In addition, the effort sharing sector has always had ‘both an external and an internal dimension’ for the EU and its Member States (Lacasta et al.,

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220  Handbook on European Union climate change policy and politics 2010:94; see also Haug & Jordan, 2010). This refers to the international context to indicate that the EU and its Member States are jointly willing to commit to an (external) international climate agreement, but the commitment is operationalized collectively through internal effort sharing (Haug & Jordan, 2010). This aspect is more pronounced than ever in the context of the dynamic and changing 2030 Climate and Energy Framework, in which legal instruments are explicitly designed to be in step with the progress of the global climate regime. Although the system of effort sharing has matured and changed over the years, its central elements remain in the ESR covering the period beyond 2021. In addition to following the underlying principles of cost-effectiveness, fairness and solidarity (2. recital ESR), these include the idea of a collective approach embedded into the concept of effort sharing as well as the wide margin of discretion and flexibility afforded to the Member States in implementing the ESR. While the ESR’s substantive articles are quite technical and complex, rather than taking an article-by-article approach the following sections analyze it on the basis of its central elements.

3.

THE EFFORT SHARING REGULATION

3.1

A Dual Approach: National Targets Operationalized with Annual Emission Allocations

The 2018 ESR represents a revised climate policy tool that largely builds on its predecessor, the ESD. The change in legal form, from a decision to a regulation, was made to enhance the regulatory weight of the legal instrument, and to best pursue the overarching GHG reduction targets of that time. The ESR sets national GHG reduction targets for each Member State that collectively amount to a 30 per cent reduction (Article 1 ESR) in the effort sharing sector between 2005 and 2030. The Member States’ efforts are distributed based on relative GDP (2. recital ESR). All Member States are to contribute to the overall reduction, with the current reduction targets ranging from 0 per cent for Bulgaria to 40 per cent for Luxembourg and Sweden, compared to 2005 levels (Annex I ESR). The Member State specific targets in the post-‘Fit for 55’ package ESR would be more ambitious, ranging from 10 to 50 per cent (European Commission, 2021a). Whereas the ESR retained the approach of setting binding national targets alongside the overarching EU-wide target, a previously similar approach was discontinued under the recast of the Renewable Energy Directive (RED II).12 The Directive adopted in 2018 introduced a new target of 32 per cent renewable energy to be reached at the EU level by 2030 (see also Knodt, Chapter 14 in this volume). The target is binding only for the EU as a whole but not for individual Member States, which were left to determine their own contributions according to national circumstances. The return to non-binding national renewable energy targets has been seen to weaken EU’s legal framework set under the previous Directive13 and this change in policy is regarded as conflicting with EU’s climate ambition more broadly (Monti & Martinez Romera, 2020). The enforcement of the EU’s 2030 renewable energy target is, however, closely coordinated with the common climate and energy policy governance framework as Member States were requested to specify national 2030 renewable energy contributions in their National Energy & Climate Plans (NECPs), following the Governance Regulation (see Knodt, Chapter 14 in this volume).14 The proposal of July 2021 presented an increased target to produce 40 per cent of energy from renewable sources by 2030, with specific targets for

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Targets, timetables and effort sharing as governance tools  221 renewable energy use in transport, heating and cooling, buildings and industry (European Commission, 2021d). Furthermore, in 2022, the Commission introduced a proposal to raise this to 45 per cent as part of its REPowerEU Plan, announced in the wake of the Russian invasion of Ukraine (European Commission, 2022). Under the ESR, the method of distribution is the same as in the ESD and aims to ensure that the relative costs for each Member State are similar. The ESR covers the transport, buildings, agriculture, small industry and waste sectors. Aviation and international maritime sectors are not included (15., 16. recitals and Article 2 ESR). The scope of the legislation remains unchanged from the ESD and includes the GHGs carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), nitrogen trifluoride (NF3) and sulphur hexafluoride (SF6) (Articles 2 and 3 ESR). In the context of the GHG emission target, the ESR’s legal architecture can be characterized as based on a dual approach. In addition to the national emission reduction targets assigned through the regulation, Member States are required to meet emission limits in the form of annual emission allocations (AEAs), which indicate each Member State’s permitted carbon budget. As was the case under the ESD, the AEAs follow a straight line between a defined starting point and the national target for 2030. In the 2018 ESR, the starting point comprises two factors: it is based on the Member State’s average emissions during 2016, 2017 and 2018 and the calculation starts from ‘either at five-twelfths of the distance from or in 2020’ (sic), whichever results in a lower allocation for the Member State (Article 4 ESR). In other words, the measurement of emissions towards the 2030 target commenced from June 2019 and the calculation is based on the average GHG emissions from 2016 to 2018. Member States that could increase their emissions until 2020 (under the ESD) would have their reduction target adjusted (18. recital and Article 10 ESR). The rationale for having both national targets and the AEAs is that the latter are expected to build a steady linear trajectory for the Member States to ensure they decrease emissions at a constant pace throughout the compliance period. The underlying dilemma as to how to allocate costs or burdens persists as one of the defining features of EU effort sharing (Haug & Jordan, 2010). Setting the starting point was perhaps the trickiest of the issues debated in respect of the 2018 ESR. The size of a Member State’s carbon budget, and hence the ‘permitted’ quantity of emissions, is dependent on both the 2030 target and the starting point. The gentler the linear curve, the smaller – and more ambitious – each Member State’s yearly carbon budget would be. Too high a starting point, given the flexibilities involved, might risk undermining the integrity of the overall emission reduction target and could reward non-compliance by those Member States that were not on course to meet their targets under the ESD up to 2020 (Transport & Environment, 2018). 3.2

Flexibilities under the Effort Sharing Regulation

3.2.1 Buying, borrowing or transferring emission allocations In 2014, the European Council stated that the availability and use of existing flexibility instruments within the non-ETS sectors should be significantly enhanced to ensure the cost-effectiveness of the collective EU effort (European Council, 2014). In principle, the flexibilities comprise a set of regulated conditions that can help the Member States to comply with their emission reduction targets and contribute to the collective EU target cost-effectively. Hence the ESR permits Member States certain conditional flexibilities in meeting their AEAs, to increase the cost-effectiveness of their emissions reduction paths. Overall, the role

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222  Handbook on European Union climate change policy and politics of the flexibilities is more pronounced under the 2030 framework as the pace and urgency of climate efforts increase and Member States need ‘all hands on deck’ to reach their targets in a cost-efficient manner. The ESR retains the flexibilities available under the ESD and adds two new flexibilities to help Member States to meet their reduction targets (Articles 5, 6 and 7 ESR). The proposal of July 2021 included only limited adjustments in the way Member States can use existing flexibilities to meet their targets (European Commission, 2021a). Article 5 of the ESR enacts flexibilities by means of borrowing, banking and transfer. Specifically, if yearly emissions are higher than the AEA, Member States can borrow a limited amount of allocations from the following year; up to 10 per cent for 2021 to 2025, up to 5 per cent for 2026 to 2029. If yearly emissions are lower than the AEA, Member States can bank surpluses and use them in later years. Banking between compliance periods is not possible. In addition, any Member States can also transfer (i.e. buy and sell allowances) up to 5 per cent of their AEA for a given year to another in respect of the 2021 to 2025 period, and up to 10 per cent in respect of the 2026 to 2030 period. 3.2.2 New flexibilities The 2018 ESR introduced two new flexibilities: one in relation to the EU ETS and one concerning the LULUCF sector. The flexibility within the EU ETS allows certain Member States to use a limited amount of allowances from the scheme to comply with their AEAs (Article 6 ESR). The mechanism is available to those Member States whose national targets are more stringent than both the EU average and the relevant Member State’s cost-effective reduction potential. In practice, the flexibility mechanism cancels emissions allowances from the EU ETS that the eligible Member State could have otherwise auctioned. Such cancellation cannot cover more than 100 million tonnes of CO2 for the period from 2021 to 2030, and the use and amount of such flexibility needed to be notified to the Commission before 2020. The second of the two new flexibilities connects the ESR with the LULUCF Regulation. The LULUCF Regulation15 complements the EU ETS and ESR’s actions to meet EU climate targets (Romppanen, 2020b; Savaresi, Perugini & Chiriacò, 2020). Indeed, the LULUCF’s contribution is crucial. Unlike ESR and ETS, the LULUCF Regulation measures both removals and emissions of CO2 and is accordingly unique in regulatory terms. Forests act as an important carbon sink by absorbing carbon from the atmosphere and play a central role in reaching net zero emissions and climate neutrality (22. recital European Climate Law). The objective of the EU LULUCF policy is to enhance and strengthen sinks in the long term (Romppanen, 2020b). In the post-‘Fit for 55’ context, the EU aims to move towards a more stringent contribution (i.e. enhanced removals) from the LULUCF sector to ensure compliance with the climate neutrality objective by 2050. The text box below summarizes key points of the current Regulation. The LULUCF flexibility allows Member States to use up to 280 million tonnes of CO2 net removals in the EU as a whole from certain land use categories (forest management is not included) under the LULUCF Regulation to comply with the ESR in the period from 2021 to 2030 (Article 7 ESR). The 280 million tonnes is divided among Member States to acknowledge the lower mitigation potential of, in particular, the agriculture and land use sector (22. recital ESR). The use of this flexibility is, however, conditional and depends on the removals produced within the LULUCF sector from the land use categories listed in the applicable article (Article 2 LULUCF Regulation). In other words, this flexibility is available only if the LULUCF sector complies with its own commitments and if such compliance results

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Targets, timetables and effort sharing as governance tools  223 in net removals (Annex III and Article 7 ESR) (see also Schenuit and Geden, Chapter 22 in this volume).

BOX 15.1 INCLUDING THE EFFECTS OF LAND USE IN CLIMATE POLICY THROUGH THE LULUCF REGULATION The inclusion of the land use sector within the EU’s climate law framework in 2018 was a major step forward in establishing a more holistic EU climate policy. The LULUCF Regulation is an integral component of the EU 2030 climate and energy framework. The current Regulation’s key legal commitment is that emissions may not exceed removals within the LULUCF sector (the no debit rule). In addition to this legal requirement, the regulation lays down: an accounting framework for calculating emissions and removals from different land use categories in relation to the no debit rule; rules on flexibilities, which comprise a conditional possibility to help the Member States meet the no debit rule; and forward-looking rules on compliance with, and future review of, the regulation. The flexibilities create explicit links between the LULUCF Regulation and the ESR. A Member State that cannot meet its no debit rule can cancel a share of its annual emission allocations (AEAs) under the ESR if the effort sharing sector outperforms its target, and use those allowances to meet the no debit rule under the LULUCF Regulation. The ‘Fit for 55’ package of July 2021 proposed several revisions to the LULUCF Regulation, including a commitment to increase the EU’s carbon sinks to levels above 310 million tonnes of CO2 equivalent by 2030. These removals are to be distributed as binding targets for Member States to increase their net carbon removals in the land use and forestry sector for the period from 2026 to 2030 and to significantly simplify compliance rules. The new LULUCF Regulation was provisionally agreed in December 2022 (Council of the EU, 2022b). The provisional agreement solidifies the commitment to remove the 310 MtCO2e from the LULUCF sector by 2030, hence moving away from the no debit rule. From 2026, removals must exceed emissions within the sector and each Member State will have a national obligation for the amount of removals to be delivered by 2030. The Commission also proposed moving towards a more integrated policy framework covering activities related to agriculture, forestry, and land use (AFOLU), under one climate policy tool beyond 2030. The existence of these flexibilities means that emissions from a single Member State may be higher than they would be, but that overall EU-wide emissions remain the same (Siljander, Ekholm, & Lindroos, 2016). The flexibilities enable GHG emission reductions to be made when and where they can be implemented in the least costly way and thus increase possibilities to adapt to annual changes in emission levels. The flexibility mechanisms are designed to enhance the cost-efficiency of mitigation efforts, boost solidarity among Member States and increase systemic flexibility. The ESR reduction targets correspond to Member States’ GDP per capita, with more wealthy countries having higher reduction targets. The transfer of AEAs in the form of buying and selling enhances cost-efficiency and could lead to monetary transfers to less wealthy Member States.

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224  Handbook on European Union climate change policy and politics The flexibilities afforded by the ESR are not without their critics. Environmental NGOs and the research community, for example, have expressed concerns over environmental integrity. For example, banking and borrowing have been seen to delay mitigation action at a time when urgent and timely action should be the fundamental principle (Carbon Market Watch, 2016; Peeters & Athanasiadou, 2020; Kulovesi & Oberthür, 2020). It has also been argued that the LULUCF sector should not be used to offset emissions from the effort sharing sector due to inherent uncertainties related to the natural carbon cycle (e.g. Transport & Environment, 2018). The possibility of using only a limited amount of LULUCF credits for compliance within the ESR was seen by the Commission as a balanced option that allows for flexibility while at the same time respecting environmental integrity and stimulating real additional action (such as new mitigation techniques) in the land use sector, including agriculture (see Matthews, Chapter 19 in this volume) (European Commission, 2016). In addition to the flexibilities, the ESR creates a safety reserve, with a total of 105 million tonnes of CO2 equivalent to be given to less wealthy Member States that have difficulties in meeting their 2030 targets, despite exceeding their targets in the 2013–2020 period. However, the safety reserve is available only if the EU meets its 2030 target, and the Member States are first required to use other available flexibilities (Erbach, 2018). 3.3

Compliance and Review, and Links with the Global Climate Regime

Overall, the provisions on compliance and review provided by the ESR are rather comprehensive. Earlier, the Monitoring Mechanism Regulation16 laid down rules for monitoring and reporting Member States’ GHG emissions that also applied in the context of the ESR. Since 2018, the Governance Regulation has set common rules on planning, reporting and monitoring of all key EU climate legislation, including the ESR (Chapter 4, Governance Regulation). The Commission’s formal compliance check (Article 9 ESR) takes place every five years, instead of every year as under the ESD. If a Member State does not meet its AEA in a given year after using flexibilities, a penalty follows – the shortfall is multiplied by 1.08 and added to the following year’s obligation. In addition, the Member State will also be temporarily prohibited from transferring any part of its AEA to another Member State. Moreover, if a Member State’s emissions in the LULUCF sector exceed the removals, a corresponding number of AEAs is reduced (Article 9 ESR). In other words, if a Member State exceeds its given annual emission levels, the non-compliance triggers an ‘automatic’ sanction in accordance with Article 9 (see also Peeters & Athanasiadou, 2020). The ESR also confers a specific task upon the Commission regarding corrective action in cases where a Member State is not making sufficient progress towards meeting its obligations (Article 8 ESR). The Governance Regulation continues the approach of the annual commitment cycle taken already under the ESD, which requires a comprehensive review of Member States’ GHG inventories to enable the assessment of compliance and the application of corrective action, if necessary (61. recital to the Governance Regulation). Finally, the ESR contains a review clause (Article 15 ESR) that gives the Commission the competence to assess, revise and uphold the requirements laid down in it. This means that the ESR is kept under review considering evolving national circumstances, different sectors’ contributions to GHG emission reductions and international developments and efforts undertaken to achieve the long-term objectives of the Paris Agreement (Article 2 Paris Agreement).17 In practice, the ESR is synchronized with the five-year review cycle of the Paris Agreement. In

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Targets, timetables and effort sharing as governance tools  225 its review after each United Nations global stocktake, the Commission evaluates the appropriateness of the AEAs and the ESR’s overall functioning. The Commission may make proposals for additional measures and, for example, adjust the AEAs based on the review (Article 15 ESR). The built-in review clause acknowledges the dynamic interface between EU and the global climate regime and enhances the adaptivity of the legislative instrument per se. The ESR is not intended as a static regulatory instrument that is in force for the time being, but as a climate policy tool that operates in a period of radical change. 3.4

Regulatory Action beyond the Effort Sharing Regulation

The EU’s policy on the non-ETS sectors relies on a one-target, collective action approach. As already noted, unlike the EU ETS sectors, those covered by the ESR are not, in principle, regulated at EU level. Effort sharing is accordingly a combination of two elements. First, it involves having in place a climate policy tool comprising a binding EU-level legislative framework with individual targets, emission reduction trajectories and explicit compliance as well as review mechanisms (i.e. the ESR). Second, it entails discretion being given to the Member States in relation to the establishment and adequate implementation of sufficient sector-specific policies driving decarbonization as well as supporting compliance with the GHG emission reduction targets. Consequently, the Member States are responsible for national policies and measures to reduce emissions from sectors covered by the ESR. Provided that they comply with the GHG reduction targets and AEAs, Member States retain substantive freedom in developing and implementing their national policies under the ESR (Peeters & Stallworthy, 2012). This also means that although the ESR governs the non-ETS sectors through national emission reduction targets, its effectiveness largely depends on Member States’ ability to design and implement appropriate, far-reaching and ambitious national climate measures capable of contributing to the collective climate target. However, a range of EU-wide measures are in place to help Member States reduce emissions from non-ETS sectors such as transport, which is an example of EU taking specific action – by tackling persistent GHG emissions from road transport (see Dyrhauge and Rayner, Chapter 21 in this volume). Other relevant examples include measures taken in the context of renewable energy, buildings, energy efficiency and the circular economy (see Fitch-Roy and Bailey, Chapter 12 in this volume). In the broader context of the ESR, the interlinkages between and even within the sectors are relevant in the light of the imperative climate goal of curbing and reducing GHG emissions. Therefore, the purpose of having binding national GHG emission reduction targets under the ESR is primarily to ensure that the necessary energy-related emission reductions are achieved through the specific policies in place. The targets incentivize national governments to design and implement policies effectively, while seeking to mitigate distributional impacts between Member States. On the other hand, the targets also aim to ensure that the ESR sectors not addressed by additional EU-wide measures are supported by adequate emission reduction policies at the national level (European Commission, 2020b). At the time of writing, the EU’s climate policy is undergoing a major, far-reaching, and structural revision to significantly step up and speed up its levels of action. The European Commission has enshrined the goal of climate neutrality into EU Climate Law (through Regulation (EU) 2021/1119), together with an EU-wide, economy-wide net GHG emissions reduction target of at least 55 per cent by 2030 compared to 1990. These ambitious targets will

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226  Handbook on European Union climate change policy and politics be implemented by means of a significant legislative reform that will revise all the key climate law instruments, including the ESR (European Commission, 2020a; European Commission, 2021c). Several of the updated instruments, including the ESR, LULUCF Regulation and revisions to the EU ETS) were provisionally accepted in late 2022 (Council of the EU, 2022c). While the revised ESR generally upholds its existing legal architecture and scope, important new features have also been proposed. The EU ETS system would be extended to buildings and road transport, although these sectors would also remain under the ESR. The reason is that insufficient reductions have been made in these sectors and hence there is an urgent need to accelerate progress in order for the non-ETS sectors to meet the increased 2030 target (European Commission, 2021e). The ESR sectors with hard-to-abate emissions present a challenge that demands targeted and intensified action over the coming decade (European Commission, 2020a). The proposed revisions to the EU ETS and effort sharing sectors’ legislative frameworks, including especially the inclusion of buildings and road transport within a dedicated new ETS, have the potential to usher in a new phase in the evolution of EU effort sharing as a climate policy tool. In this context, the new Social Climate Fund, also provisionally accepted in December 2022 (Council of the EU, 2022d), testifies to sensitivity on the part of the Commission over potentially regressive impacts from instruments such as emission trading which raise costs for consumers by pricing carbon in new sectors. The agreement between the Council and Parliament stipulated that the fund would become an integral part of the EU budget and would be funded by external assigned revenues, with a limit of €65 billion, to be supplemented by national contributions. The fund is set to operate between 2026 and 2032, with eligibility of expenditures from 1 January 2026 based on auctioning of 50 million allowances in 2026 to allow for support at the start of the fund. A 25% co-financing requirement for Member States brings the total funding available up to €86.7 billion between 2026 to 2032. After 2027, the fund’s financing would be derived from the new emission trading system. Whether such policies are sufficient to ease the concerns of the EU’s poorer Member States (Taylor, 2021) remains to be seen.

4.

CONCLUDING THOUGHTS: THE ROLE OF EFFORT SHARING IN THE FUTURE

The ESR is a central element of EU climate law and policy, and applies to more than half of the EU’s GHG emissions. Effort sharing has introduced a more collective approach to mitigation together with a built-in concept of solidarity through the assumption of differentiated emission reduction obligations by the Member States. The concept of effort sharing is deeply integrated into the system of EU climate policy through the key features described above. As a result of more than three decades of regulatory development, the ESR has developed into a solid instrument of EU climate policy imbued with unique governance features. The ESR creates an explicit regulatory framework within which Member States may design and implement national climate measures while at the same time leaving ample room for national discretion – as well as responsibility – as to the implementation of this framework. The strong compliance and review clauses inserted in the ESR connect environmental integrity with the Paris Agreement’s long-term goals and ambition mechanism, thus making the ESR open to review and revision in the light of developments in the global climate regime. The ESR reflects

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Targets, timetables and effort sharing as governance tools  227 the strong interdependence between international and EU climate policies, which adds an interesting aspect to the evolution of effort sharing (Haug & Jordan, 2010). The legislative reform of key climate legislation due to be concluded by 2024 is expected to be extensive, but its precise shape remains unclear at the time of this writing. At a minimum, the targets will be revised and the relevant GHG emission reduction trajectories modified accordingly. It is clear that all relevant policy instruments will have to be strengthened and all relevant sectoral policies aligned to match ambition with action (see also Kulovesi and Oberthür, 2020). The reduction potential of the non-ETS sectors may be undisputed, but GHG emission cuts within them call for urgent and cross-cutting policy choices. The non-ETS sectors are targeted by a body of interconnected climate policy tools, each of which has independent features and responsibility to contribute to the tightening collective targets. At a time when all action is accounted for, the role of effort sharing becomes more decisive as it is currently responsible for the hard-to-abate sectors where even greater efforts are needed. The principles of cost-effectiveness, fairness and solidarity have played a pivotal and, to some extent, also determinative role in the evolution of effort sharing from the 1990s to the present day. It has been necessary to implement these fundamental principles in order for EU-wide legislative developments to take effect in diverse political environments and for joint instruments that operate upon differentiation to be utilized effectively. The new policy frameworks uphold these principles while also to some extent altering the language used: the European Green Deal envisages a ‘fair’ or ‘just’ transition (European Commission, 2019), the EU Climate Target plan refers to ‘just and socially fair transition’ to a climate-neutral economy (European Commission, 2020a:1), and the provisions of the new European Climate Law make reference to the concepts of ‘fairness and solidarity’ (Article 2 European Climate Law). The Commission’s emphasis on the importance of its proposed Social Climate Fund makes clear how it recognizes the importance of these principles for the ambitious future of climate action within the EU. Finally, it remains to be seen how the instrument of effort sharing, together with its fine-tuned features, underlying principles and interlinkages with other instruments of EU climate legislation, will be acknowledged in the revised EU Climate and Energy policy framework for 2030 once the ‘Fit for 55’ package has been fully implemented.

NOTES 1. Consolidated Directive (EU) 2018/410 of the European Parliament and of the Council of 14 March 2018 amending Directive 2003/87/EC to enhance cost-effective emission reductions and low-carbon investments, and Decision (EU) 2015/1814, OJ L 275, 25.10.2003, p. 32 and OJ L 76, 19.3.2018, p. 3 (‘EU ETS’). 2. Regulation (EU) 2018/842 on binding annual greenhouse gas emission reductions by Member States from 2021 to 2030 contributing to climate action to meet commitments under the Paris Agreement and amending Regulation (EU) No. 525/2013, OJ L 156, p. 26 (‘ESR’). 3. Regulation (EU) 2018/841 of the European Parliament and of the Council of 30 May 2018 on the inclusion of greenhouse gas emissions and removals from land use, land use change and forestry in the 2030 climate and energy framework and amending Regulation (EU) No. 525/2013 and Decision No. 529/2013/EU, OJ L 156/1 (‘LULUCF Regulation’). 4. Articles 1 and 4, Regulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021 establishing the framework for achieving climate neutrality and amending Regulations (EC) No. 401/2009 and (EU) 2018/1999, OJ L 243/1, (‘European Climate Law’). 5. Cost-effectiveness relates to the approach under which the climate targets should be met collectively by the EU in the most cost-effective manner possible, while preserving the EU’s compet-

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228  Handbook on European Union climate change policy and politics itiveness and considering Member States’ different starting points, national circumstances and emission-reduction potential. Interlinked with cost-effectiveness, fairness and solidarity refer to the need to ensure fair contributions from each Member State in such a way that both the advantages and burdens are shared equally and in a just manner (European Commission, 2021a). 6. Burden Sharing Agreement of 1998. Doc. 9702/98 of 19 June 1998 of the Council of the European Union reflecting the outcome of proceedings of the Environment Council of 16–17 June 1998, Annex I. 7. United Nations Framework Convention on Climate Change (adopted 9 May 1992, entered into force 21 March 1994) 1771 UNTS 107. 8. Burden Sharing Agreement of 1998, Annex I. 9. Council Decision 2002/358/EC of 25 April 2002 concerning the approval, on behalf of the European Community, of the Kyoto Protocol to the United Nations Framework Convention on Climate Change and the joint fulfilment of commitments thereunder, OJ L 130/1. 10. The EU Climate and Energy Package was agreed in 2007 and formally adopted in 2009 (European Council, 2007). The political agreement was reached in December 2008 (European Council, 2009). The EU Climate and Energy Package was formally adopted in April 2009. 11. Decision No. 406/2009/EC of the European Parliament and of the Council of 23 April 2009 on the effort of Member States to reduce their greenhouse gas emissions to meet the Community’s greenhouse gas emission reduction commitments up to 2020, OJ L 140/136 (‘ESD’). 12. Directive (EU) 2018/2001 of the European Parliament and of the Council of 11 December 2018 on the promotion of the use of energy from renewable sources, OJ L 328/82 (‘REDII’). 13. Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC and 2003/30/EC, OJ L 140/16. 14. Article 3, Regulation (EU) 2018/1999 of the European Parliament and of the Council of 11 December 2018 on the Governance of the Energy Union and Climate Action, OJ L 328/1 (‘Governance Regulation’). 15. Prior to the LULUCF Regulation, the sector was regulated by Decision 529/2013/EU, which implements the Kyoto Protocol’s reporting and accounting obligations for the land use, land use change and forestry sector. Decision No. 529/2013/EU of the European Parliament and of the Council of 21 May 2013 on accounting rules on greenhouse gas emissions and removals resulting from activities relating to land use, land use change and forestry and on information concerning actions relating to those activities, OJ L 165/80; the Kyoto Protocol to the United Nations Framework Convention on Climate Change (adopted 11 December 1997, entered into force 16 February 2005) 2303 UNTS 148. 16. Regulation (EU) No. 525/2013 of the European Parliament and of the Council of 21 May 2013 on a mechanism for monitoring and reporting greenhouse gas emissions and for reporting other information at national and Union level relevant to climate change and repealing Decision No. 280/2004/ EC, OJ L 165/13 (‘Monitoring Mechanism Regulation’). 17. Paris Agreement (adopted 12 December 2015, entered into force 4 November 2016) 55 ILM 740.

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Targets, timetables and effort sharing as governance tools  229 Council of the EU (2022b). ‘Fit for 55’: provisional agreement sets ambitious carbon removal targets in the land use, land use change and forestry sector (press release, 11 November 2022). www​.consilium​.europa​.eu/​en/​press/​press​-releases/​2022/​11/​11/​fit​-for​-55​-provisional​-agreement​-sets​ -ambitious​-carbon​-removal​-targets​-in​-the​-land​-use​-land​-use​-change​-and​-forestry​-sector/​ (Accessed: 21 February 2023). Council of the EU (2022c). Fit for 55. www​.consilium​.europa​.eu/​en/​policies/​green​-deal/​fit​-for​-55​-the​-eu​ -plan​-for​-a​-green​-transition/​ (Accessed: 21 February 2023). Council of the EU (2022d). ‘Fit for 55’: Council and Parliament reach provisional deal on EU emissions trading system and the Social Climate Fund (press release, 18 December 2022). www​.consilium​ .europa​.eu/​en/​press/​press​-releases/​2022/​12/​18/​fit​-for​-55​-council​-and​-parliament​-reach​-provisional​ -deal​-on​-eu​-emissions​-trading​-system​-and​-the​-social​-climate​-fund/​ Accessed: 21 February 2023. Erbach, G. (2018). Effort sharing regulation, 2021–2030: Limiting Member States’ carbon emissions. European Parliamentary Research Service briefing. www​.europarl​.europa​.eu/​thinktank/​en/​ document/​EPRS​_BRI(2016)589799 (Accessed: 26 November 2021). European Commission (2016). Commission staff working document, impact assessment accompanying the document, COM(2016) 482 final, SWD(2016) 247 final. European Commission (2019). The European Green Deal, COM(2019) 640 final. Brussels: European Commission. European Commission (2020). EU Climate Action Progress Report. November 2020. https://​ec​.europa​ .eu/​commission/​presscorner/​detail/​en/​IP​_21​_5555 (Accessed: 26.12.2021). European Commission (2020a). Stepping Up Europe’s 2030 Climate Ambition. Investing In A Climate-Neutral Future for the Benefit of Our People, COM(2020) 562 (the EU Climate Target Plan). Brussels: European Commission. European Commission (2020b). Commission staff working document, accompanying the document, COM(2020) 562, SWD(2020) 176 final. Brussels: European Commission. European Commission (2021a). Proposal for a Revised Effort Sharing Regulation, COM(2021) 555 final. Brussels: European Commission. European Commission (2021b). Proposal for a revised EU Emission Trading Directive, COM(2021) 551 final. Brussels: European Commission. European Commission (2021c). ‘Fit for 55’: Delivering the EU’s 2030 Climate Target on the Way to Climate Neutrality, COM(2021) 550 final. Brussels: European Commission. European Commission (2021d). Proposal for a Revised Renewable Energy Directive, COM/2021/557 final. Brussels: European Commission. European Commission (2021e). Questions and Answers – The Effort Sharing Regulation and Land, Forestry and Agriculture Regulation (14 July 2021). https://​ec​.europa​.eu/​commission/​presscorner/​ detail/​en/​qanda​_21​_3543 (Accessed: 9 September 2021). European Commission (2022). REPowerEU Plan, COM(2022) 230 final. Brussels: European Commission. European Council (1997). Council Conclusions (3 March 1997), 6309/97. European Council (2007). Council of the European Union, 8/9 March 2007, Presidency Conclusions (2 May 2007). European Council (2009). Council of the European Union, 11/12 December 2008, Presidency Conclusions (13 February 2009). European Council (2014). Council conclusions (23–24 October 2014). European Council (2021). Infographic – Non-ETS emissions by sector. www​.consilium​.europa​.eu/​en/​ infographics/​non​-ets​-emissions​-by​-sector/​. Accessed: 25.12.2021. European Environmental Agency (EEA) (2021). Greenhouse Gas Emissions from Transport in the EU. www​.eea​.europa​.eu/​data​-and​-maps/​indicators/​transport​-emissions​-of​-greenhouse​-gases​-7/​assessment (Accessed: 25 November 2021). European Parliament (2017). Amendments adopted by the European Parliament on 14 June 2017 on the proposal for a regulation on binding annual greenhouse gas emission reductions by Member States from 2021 to 2030, 2016/0231(COD). Haug, C. & A. Jordan (2010). Burden sharing: distributing burdens or sharing efforts? In A. Jordan, D. Huitema, H. van Asselt, T. Rayner & F. Berkhout (Eds.), Climate Change Policy in the European

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230  Handbook on European Union climate change policy and politics Union: Confronting the Dilemmas of Mitigation and Adaptation? (pp. 83–102). Cambridge: Cambridge University Press. Kulovesi, K. & S. Oberthür (2020). Assessing the EU’s 2030 Climate and Energy Policy Framework: incremental change toward radical transformation? Review of European, Comparative & International Environmental Law, 29 (2): 151–166. Lacasta, N., S. Oberthür, E. Santos & P. Barata (2010). From sharing the burden to sharing the effort. In S. Oberthür & M. Pallemaerts (Eds.), New Climate Policies of the European Union: Internal Legislation and Climate Diplomacy (pp. 94–116). Brussels: Brussels University Press. Lenschow, A. (2005). Environmental policy: contending dynamics of policy change. In H. Wallace, W. Wallace & M. Pollack (Eds.), Policy-making in the European Union, Fifth Edition (pp. 306–327). Oxford: Oxford University Press. Peeters, M. & N. Athanasiadou (2020). The continued effort sharing approach in EU climate law: binding targets, challenging enforcement? Review of European, Comparative & International Environmental Law, 29 (2): 201–211. Peeters, M. & M. Stallworthy (2012). Legal consequences of the Effort Sharing Decision for Member State action. In M. Peeters, M. Stallworthy & J. de Cendra de Larragán (Eds.), Climate Law in EU Member States: Towards National Legislation for Climate Protection (pp. 15–38). Cheltenham & Northampton: Edward Elgar Publishing. Phylipsen, G. J. M., J. W. Bode, K. Blok, H. Merkus & B. Metz (1998). A Triptych sectoral approach to burden differentiation. Energy Policy 26 (12): 929–943. Ringius, L. (1997). Differentiation, Leaders and Fairness: Negotiating Climate Commitments in the European Community. Center for International Climate and Environmental Research. CICERO Report 1997:8. Romppanen, S. (2020a). The EU Effort-Sharing and LULUCF Regulations: complementary yet crucial components of EU’s climate policy beyond 2030. In M. Peeters & M. Eliantonio (Eds.), Research Handbook of European Environmental Law (pp. 428–442). Cheltenham & Northampton: Edward Elgar Publishing. Romppanen, S. (2020b). The LULUCF Regulation: the new role of land and forests in the EU climate and policy framework. Journal of Energy & Natural Resources Law, 38 (3): 261–287. Savaresi, A., L. Perugini & M. V. Chiriacò (2020). Making sense of the LULUCF Regulation: much ado about nothing? Review of European, Comparative and International Environmental Law, 29 (2): 212–220. Siljander, R., T. Ekholm & T. Lindroos (2016). Flexibilities under the EU’s Effort Sharing Decision Towards 2030. VTT Technical Research Centre of Finland. https://​publications​.vtt​.fi/​julkaisut/​muut/​ 2016/​VTT​-R​-02315​-16​.pdf (Accessed: 26 November 2021). Taylor, K. (2021). EU’s proposed social climate fund comes under fire from all sides. Euractiv 21 December 2021. www​.euractiv​.com/​section/​energy​-environment/​news/​eu​-social​-climate​-fund​-comes​ -under​-fire​-from​-environment​-ministers/​ (Accessed: 20 June 2022). Transport & Environment (2018). From Effort Sharing Decision to Climate Action Regulation: the Good, the Bad and the Ugly. Brussels: Transport & Environment. Weishaar, S.E. (2020). EU emissions trading – its regulatory evolution and the role of the court, in M. Peeters & M. Eliantonio (Eds.), Research Handbook of European Environmental Law (pp. 443–457). Cheltenham & Northampton: Edward Elgar Publishing. Woerdman, E., M. Roggenkamp & M. Holwerda (2015). Essential EU Climate Law. Cheltenham & Northampton: Edward Elgar Publishing.

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16. Proactive prevention of carbon leakage? The EU Carbon Border Adjustment Mechanism Jørgen Wettestad

1. INTRODUCTION1 When the EU emissions trading system (EU ETS) started operating back in 2005 it was an international pioneer (see Vogler, Chapter 10 in this volume), meaning that companies based in the EU were facing policy requirements that their competitors elsewhere in the world were not (Wettestad and Jevnaker 2019). This made EU companies – and particularly energy-intensive ones less able to pass on regulatory costs to consumers – worry about ‘carbon leakage’, i.e. that production might be prompted to relocate to jurisdictions with more lax climate policy regulations. For a number of years, the main EU policy response to concerns about carbon leakage was to hand out generous amounts of free allowances to the most exposed, energy-intensive industries. On 1 December 2019, Ursula von der Leyen became the new President of the European Commission. Her statements on the proposed climate-policy initiatives under her leadership – with a new European Green Deal as the overall umbrella – gave significant emphasis to establishing an EU Carbon Border Adjustment Mechanism (CBAM) to replace free allowances as the central EU policy response to the threat of carbon leakage (Politico 2020). Actually, CBAM is far from a new idea, harkening back at least to 2007 (see e.g. Mehling et al. 2019). Multiple reasons have been given for not following this policy track – including practical challenges in calculation, the risk of disrupting global climate negotiations by upsetting key international partners, and worries that such a measure might contravene World Trade Organization (WTO) rules on promoting free trade (see Dobson, Chapter 25 in this volume). There are also complicated EU-internal policy interactions to be clarified, particularly regarding the EU ETS and the aforementioned free allowances handed out to counter possible ‘carbon leakage’ (see Wettestad 2009; Wettestad and Jevnaker 2016; Jordan and Moore 2020). Indeed, it has been claimed that replacing free allowances with an EU CBAM might mean a ‘revolution of the ETS’ (Politico 2019). However, a CBAM has also been hailed as a safety valve against carbon leakage in times of steadily increasing carbon prices, and the revenues it could raise are seen as one way to finance EU post-COVID recovery by the Commission, European Parliament (hereafter: Parliament), and the Member States in the Council. Thus, the CBAM should be viewed in the broader context of evolving EU decarbonization policy. The main objective of this chapter is as follows. After outlining what the proposed instrument entails, with particular reference to its relationship to the ETS, the key question to be asked is: why has this idea gained such prominence as a policy option, leading up to a formal proposal tabled in mid-2021? Are the main reasons to be found in an increasing ‘push’ from within the EU, at sub-national, national or supranational political levels? Or does the explanation lie in the increasing ‘pull’ from the external policy landscape – for instance, the lack of climate-policy action on the part of main competitors, or the increasingly protectionist 231 Jørgen Wettestad - 9781789906981 Downloaded from PubFactory at 08/15/2023 12:45:22AM via free access

232  Handbook on European Union climate change policy and politics US policies pursued by former President Trump? Furthermore, in light of some international reactions so far, the chapter concludes by reflecting on the prospects ahead.

2.

THE POLICY BACKGROUND: THE EU ETS

In the 1990s, the EU found itself struggling to agree on a forceful common climate policy instrument, and unable to adopt a carbon tax due to opposition not least from the UK and the need to adopt such instruments by unanimity (Wettestad 2000). As a flexible instrument, emissions trading was promoted on the global stage by the USA and some allies, but the EU was initially sceptical. After flexibility became an integral part of international climate policy in the Kyoto Protocol in 1997, however, a small group of policy entrepreneurs in the Commission managed to achieve a policy turnabout in the EU from 1998 (for details and references as to the initiation and evolution of the ETS, see e.g. Skjærseth and Wettestad 2008; Wettestad and Jevnaker 2016; 2019; Vogler, Chapter 10 in this volume). Until then, emissions trading in practice had been tried out nationally only in the USA and, moreover, in a different policy field (air pollution). Thus, by pioneering the ETS, the EU was entering uncharted regulatory territory – where rules and regulations would need to work in a setting consisting of many sovereign Member States with differing energy systems, regulatory cultures and material wealth. This diversity was further increased by the EU’s enlargement to include countries of Central and Eastern Europe in 2004 (see Wurzel et al., Chapter 3 in this volume). The description of the EU ETS as ‘the new grand policy experiment’ (Kruger and Pizer 2004) was indeed an apt one. When the initial Directive was adopted in 2003, the ETS was meant to be the cornerstone of EU climate and energy policy. By then, the EU also had adopted several other policy instruments, including a renewable energy Directive that set indicative national targets (see Knodt, Chapter 14 in this volume, Romppanen, Chapter 15 in this volume). Overall, however, EU-level climate policy was not particularly strong, and the policy mix around it was developing only gradually (Boasson and Wettestad 2013). As a ‘great experiment’, the first ETS trading period, 2005–2007, was set up as a pilot phase, and allowances were largely handed out for free. The second phase coincided with the first commitment period of the Kyoto Protocol, 2008–2012. During this phase, however, the financial crisis struck, resulting in lower emissions, a gradually increasing surplus of allowances and a sinking carbon price. By the time of the third phase, 2013–2020, the system had become far more harmonized, and more allowances were auctioned. As a response to the low carbon price, a Market Stability Reserve (MSR) was adopted in 2015, to function as an automatic market thermostat from 2019 (Wettestad and Jevnaker 2016, 2019). The stage was then set for the 2021–2030 phase, the main rules for which were adopted in 2018. This reform contributed significantly to increasing carbon prices, but also in 2019 the launching of a ‘European Green Deal’ and a more ambitious EU climate policy, and new ETS reforms as part of a ‘Fit for 55’ ‘super-package’ (European Commission 2021). So much for the context and background. Let us now turn to the main theme of this chapter: the emergence and evolution of the idea of a Carbon Border Adjustment Mechanism.

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The EU Carbon Border Adjustment Mechanism  233

3.

THE EMERGENCE AND EVOLUTION OF THE CBAM OPTION IN THE EU

3.1

The Initial Launching – and Rejection – of the Idea

The idea of a Carbon Border Adjustment Mechanism (CBAM) has been debated internationally for more than a decade. In the EU, the energy-intensive industries in particular have long been concerned about an uneven international economic playing field (Skjærseth and Wettestad 2008). As noted already, the initial policy response was to distribute a generous number of free allowances to these industries. For this reason, a specific border measure was not on the agenda in the years leading up to the launching of the EU ETS in 2005. In 2006, the process of putting in place revised rules for the third phase of the EU ETS, 2013–2020, started (Skjærseth and Wettestad 2010). Here the relationship to other countries was discussed, but only in connection to possible linkage to other trading schemes and links via the UN’s Clean Development Mechanism (CDM). The issue/option of carbon border adjustment did not feature in discussions (see e.g. European Commission 2006). However, as noted by Mehling et al. (2017), the issue did come up in connection with this process. In 2007 the Commission produced an internal ETS draft Directive which included the possibility to introduce a border tax mechanism in Article 29, addressing carbon leakage and international competitiveness effects: the ‘Future Allowance Import Requirement’ (FAIR) proposal. This would have applied to products exposed to risks of carbon leakage or unfair international competition until such time as trade partners agreed to ‘binding and verifiable action to reduce greenhouse gas emissions comparable to the action taken by the Community’ (Art. 29, 1). However, the FAIR option was not included in the formal Directive proposal in 2008, nor in the subsequent decision-making process (Mehling et al. 2017: 27), although the issue was heavily debated in the USA at the time (van Asselt and Brewer 2010). There was also discussion of such a measure among EU Member States. The French government floated a ‘non-paper’, sketching a ‘carbon inclusion mechanism’ for imports in sectors at risk of carbon leakage – requiring countries outside the EU with no, or less-ambitious, climate policies in place to buy allowances for imports. The paper referred several times to the need for such a mechanism to be WTO-compatible. However, concerns about the potentially disruptive effects on the negotiations on a post-Kyoto global climate treaty contributed to the scrapping of the proposal (Mehling et al. 2017: 27). In mid-2008 came a first extension of the scope of the ETS: it was decided that the aviation sector was to be included in the ETS from 2012. The initial intention was to include flights into the EU, as well as domestic trips between Member States (Anger and Köhler 2010; Vogler, Chapter 10 in this volume). 3.2

Failure in Copenhagen – Not Bolstering the Case for a CBAM

The 2009 Conference of Parties in Copenhagen was a fiasco, failing in its ambition to deliver a new international climate treaty committing countries to binding emission reductions (Dimitrov 2010). In theory, this should have strengthened the case for a carbon border adjustment measure, because the failure meant greater uncertainty as regards prospects for levelling the international regulatory playing field. However, this strengthening did not occur. Although Germany had initially backed the idea of a CBAM, it had steadily become more hesitant,

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234  Handbook on European Union climate change policy and politics fearing such a measure would damage its export-dependent economy by provoking retaliation from trading partners. One German minister even likened the idea to ‘eco-imperialism’ (Reuters 2009; Euractiv 2018).2 The broader explanatory picture will be discussed in further detail later. First, however, let us examine the carbon leakage debate at several key decision-making milestones after the Copenhagen summit. The first such milestone in the development of EU climate and energy policy was the debate that began in 2010 on carbon leakage prospects and setting the stage for 2050. Specifically, in May 2010, the Commission presented an analysis of options for moving beyond the already adopted 20 per cent GHG reductions by 2020, with an assessment of the risk of carbon leakage (European Commission 2010). Concerning carbon leakage, the Communication noted that the carbon price had become lower than originally foreseen. This meant that energy-intensive sectors would probably end up with a ‘very considerable’ number of unused, freely allocated allowances to be carried over into phase three of the ETS (2013–2020). That would put these sectors in a comparatively better position in the face of international competition compared with 2008 estimates. Hence, the Communication concluded: ‘the measures already agreed to help energy-intensive industries – free allocation and access to international credits – remain justified at present’ (ibid.: 10). The issue of an import-focused carbon border mechanism was also discussed, with allowances to be bought to cover the emissions of certain imported goods. However, it was noted that this would give rise to broader trade/WTO policy issues, as ‘a number of emerging economies have already signalled their concerns related to this issue’ (European Commission 2010: 12). Several administrative challenges related to such a mechanism were also noted, including verification and monitoring challenges and accounting for embodied carbon in imported goods. The Communication ended up discussing other options to protect energy-intensive industries – like a more targeted approach to the nature and recognition of international credits in the ETS. Such a targeted approach would protect EU industries by banning credits emanating from projects in sectors such as steel, cement and aluminium from countries other than the least developed ones. This approach to the nature and recognition of international credits was followed up in 2011. It was decided that, from 2013, only CDM credits from least developed countries would be allowed for use. This was accompanied by discussions on a 2050 ‘roadmap’ for EU climate and energy policy. A key document was the 2011 Communication from the Commission ‘for a competitive low carbon economy in 2050’ (European Commission 2011). The Communication confirmed earlier findings that existing measures provided ‘adequate safeguards’, but also ‘noted the findings on options for addressing carbon leakage in the Communication of May 2010, including on the inclusion of imports into the ETS’ (ibid.: 9). Thus, the carbon border adjustment issue remained on the agenda, but rather low down. The financial crisis that hit the world in late 2008 resulted in a gradual lowering of emissions and, as a consequence, demand for allowances. This also meant a declining carbon price from 2010 and increasing frustration among those Member States that preferred a reasonably high price, such as the UK, the Netherlands and Sweden. In response, the Commission launched a carbon market reform process in 2012, which came to dominate the EU climate policy agenda in the years up to 2015 (Wettestad and Jevnaker 2016).

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The EU Carbon Border Adjustment Mechanism  235 3.3

France Tries Again – But Fails

The focus on low carbon prices and carbon market reform did not deter France from raising the CBAM issue again in 2012; this time under the François Hollande administration (Euractiv 2012). However, the initiative did not receive much support from other Member States, with the exception of Italy. In 2012, the EU also allowed countries to establish nationally specific CO2 compensation mechanisms, in order to strengthen its ‘carbon leakage regime’ further. Several countries followed up on this, including Germany, Finland, Norway and the UK. Together with a rather low carbon price in those years (around €5), this arguably reduced interest in establishing complicated mechanisms such as a CBAM. In 2013, the process of developing a more specific EU climate and energy roadmap for 2030 was started. This focused generally on how to handle the malfunctioning of the EU ETS, under which a significant surplus had accumulated, accompanied by a rather low carbon price (Wettestad 2014). Regarding carbon leakage, the focus remained on the provision of free allowances. This was reflected in the outcome of the EU Council summit in October 2014, stating that: free allocation will not expire; existing measures will continue after 2020 to prevent the risk of carbon leakage due to climate policy, as long as no comparable measures are undertaken in other major economies, with the objective of providing appropriate levels of support for sectors at risk of losing international competitiveness (European Council 2014: Conclusions, section 2.4.).

No mention was made of a border adjustment mechanism. 3.4

The Paris Agreement, Continued French Campaigning and Increasing Parliamentary Activism

By 2015, the EU’s focus was turning to the critical twenty-first United Nations Conference of Parties (COP21), due to be held in Paris in December, with a new global climate policy framework in the making. As regards the EU ETS, negotiations on a Market Stability Reserve completed the final stages: the MSR was adopted in May 2015, with operation beginning in January 2019 (Wettestad and Jevnaker 2016). In the wake of the Paris Agreement, whose decentralized approach offered no substantial means to address carbon leakage concerns, France again began pressing for a CBAM, circulating another ‘non-paper’ on a ‘carbon inclusion mechanism’ in February 2016. The mechanism would apply to imported products in the ETS, meeting criteria such as a high carbon intensity and a significant share of total GHG emissions in Europe. It was also proposed to test the mechanism in the cement sector (Mehling et al. 2019: 28; Carbon Pulse, 13 March 2016). The French proposal was picked up by the European Parliament, which had started discussing the revision of the ETS for the fourth trading period (2021–2030). Parliament’s Environment Committee (ENVI) took up the proposal and included it in its overall ETS reform package. However, although important parts of the package were endorsed by the plenary in February 2016, including a doubling of the MSR intake in the period 2019–2022, the border mechanism part of the package was voted down (ICAP 2016). However, France did not cease campaigning for a border mechanism. Discussions in Parliament continued through the spring of 2016, although they did not top the agenda. Rapporteur Ian Duncan’s report (May 2016)

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236  Handbook on European Union climate change policy and politics made no mention of a border tax mechanism; regarding carbon leakage protection, it proposed a ‘tiered approach’. The process continued in the autumn of 2016. In October, the Parliament’s Industry Committee (ITRE) put forward main positions, with several proposed free allocation changes – but no border measure (Carbon Pulse, 13 October 2016). However, a border mechanism for the cement sector was included in the long list of amendments voted on by the Environment Committee in December 2016. The final text adopted included a proposal to establish a border measure for sectors with a trade intensity less than 10 per cent over the period 2009–2013, which effectively ruled out any free allocations to cement, lime, brick and tile producers, but required importers of those products to buy allowances. The European cement association CEMBUREAU reacted negatively, stating that ‘a border adjustment mechanism that does not apply to all sectors alike is discriminatory and legally flawed’; and deemed it ‘appalling’ that the sector had not been properly consulted (Carbon Pulse, 15 and 16 December 2016). Prior to the plenary vote on ETS reform in the Parliament in February 2017 it was reported that the cement sector lobbied heavily against being excluded from the carbon leakage list (ENDS Europe, 7 February 2017). In a debate ahead of the vote, the border mechanism issue stood out as the most controversial one, with significant opposition to this part of the ENVI package of measures. The Greens supported such a mechanism; large entities like the European People’s Party (EPP) seemed split on the issue, whereas smaller groupings such as the centre-right European Conservatives and Reformists Party (ECR), the far-right Europe of Nations and Freedom (ENF), and the Eurosceptic Europe of Freedom and Direct Democracy (EFDD) were all opposed (Carbon Pulse, 13 February 2017). Following the plenary vote on 15 February, most of the ENVI proposal was adopted – but not the border measure proposal. Altogether 424 MEPs had voted against, 248 for, with 20 abstentions. The cement sector would remain on the carbon leakage list (Carbon Pulse, 15 February 2017). The ball was then passed to the Council and the Member States, forging a Common Position. Agreement was reached in late February – again, with no mention of a border mechanism. Germany was reported as pushing for continued free allowances to energy-intensive industries (EU Observer, 1 March 2017). In May 2017, Emmanuel Macron was elected French President, ‘continuing a long-running preference among French leaders for border adjustments’, according to Carbon Pulse analysts (Carbon Pulse, 8 May 2017). The trialogue meetings of final policymaking negotiations (the Commission, Parliament and Council) and the process then developed throughout the autumn of 2017, with rules for free allowances and carbon leakage in the 2021–2030 phase among the key issues (ENDS Report, 28 June 2017). But, due to the outcome in the Parliament plenary that spring, the border mechanism option was not included at this point. Donald Trump had been elected US President in 2016 and declared in June 2017 that the USA would withdraw from the Paris Agreement. In response, some leaders began advocating the imposition of carbon taxes on US exports to the EU (VOA News 2017). The spring of 2018 then saw a gradual increase in the carbon price, in February 2018 climbing above €10 for the first time since 2011. In March it was reported that the French government would (continue to) push for a border adjustment mechanism, aimed at countries that had not signed the Paris Agreement (Euractiv 2018). In July 2018, the carbon price hit a high of €17 (Carbon Pulse, 19 July 2018). In November, the Commission presented its strategy for a climate-neutral Europe (European Commission 2018). Its Communication noted that ‘[t]he EU will use its … trade policy to

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The EU Carbon Border Adjustment Mechanism  237 support global transition to low-carbon development pathways’ and ‘proactive and corrective policies may be needed to ensure a fully and competitive playing field’ (pp. 21–22). This highlights an interesting departure in the framing of its climate policies, in the sense that its links to trade and foreign policy make CBAM as much an instrument of international diplomacy, designed to bring international partners into line with the EU’s emission reduction ambitions, as anything (see also Youngs and Lazard, Chapter 11 in this volume, Dobson, Chapter 25 in this volume). However, no specific, explicit new measures for protection against carbon leakage were presented. 3.5

The European Green Deal and the Renewed Push for CBAM

The new European Parliament elected in May 2019 featured an increased number of seats for the Greens (up to from 51 to 70 seats) (The Guardian 2019). As noted above, getting an EU CBAM adopted had always been a central priority for the Greens. The 2019 Parliament election was accompanied by the process of approving a new Commission and Commission President. In hearings held in July, German nominee Ursula von der Leyen spoke of the need to consider introducing a CBAM, noting that ‘this is not an easy point, but one we have to take on’ (EU Observer 2019; Carbon Pulse, 10 July 2019). Her manifesto reflected this (Political Guidelines 2019). Observers saw this as a move deliberately intended to placate the important Green votes in the approval process (interviews 2020). The border mechanism discussion picked up speed in the autumn of 2019. In early October, Commission representatives pledged ‘swift work’ on carbon border measures as a response to Trump administration decision to impose tariffs on EU-made planes (10 per cent) and French wine (25 per cent). However, WTO head Roberto Azevedo warned that such an EU measure could be construed as protectionist, and advised caution (Carbon Pulse, 3 October 2019). Cautious signals also came from German Chancellor Merkel at an EU summit in December, where she warned that a carbon border measure would risk exposing European companies to tit-for-tat protectionism from abroad (Politico 2020). Newly confirmed Commission President von der Leyen then continued to highlight a carbon border mechanism as a central part of the new ‘Green Deal’ drive (European Commission 2019). A proposal was to be put forward in 2021. However, she also praised the development of carbon pricing policies in China and California, indicating that such developments might mean that no border measures would ultimately be necessary (Politico 2020; Carbon Pulse, 22 January 2020). In late February 2020, just before the COVID-19 crisis hit the world, the border-measure idea received significant support from Member States at a Council meeting. As reported in Carbon Pulse (27 February 2020), the Spanish Minister for Industry, Trade and Tourism noted that ‘the competitiveness of our industry is at stake due to the risk of carbon leakage, so we need to start working on [the measure] in the second half of this year’. According to Luxembourg’s minister attending the meeting, several other Member States – among them France, Germany and Italy – were ‘impatiently waiting’ for the Commission’s proposals on border measures. Further, France indicated that the process could be accelerated by starting with a limited number of industries, such as cement and steel. However, the German position was somewhat ambiguous. German State Secretary Doerr-Voss called for the system of free allowances to be maintained even if a border measure were introduced. This was vehemently opposed by environmental NGOs, keen to reduce or abolish the free allowance regime (Carbon Pulse, 27 February 2020). By March,

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238  Handbook on European Union climate change policy and politics the COVID-19 crisis hit Europe, affecting Italy and Spain in particular. The Commission rejected calls for a speedier process, indicating the spring of 2021 as the launching date for the proposal, preceded by a public consultation in the third quarter of 2020. A first round of consultations, linked to the ‘inception’ impact assessment, had taken place in the spring. Over 160 submissions were recorded, making it clear that the future of free allocation in the ETS would be a crucial issue in the subsequent policy process. As before, the cement association CEMBUREAU was at the forefront of those favouring a continuation of the (shrinking) free allocation system, and strongly opposed replacing this system with a border measure. Russian steel and aluminium producers, in line to be particularly affected by the instrument, expressed worries as well; a CBAM could be ‘counterproductive for both the climate change and competitiveness of EU industries’ (Carbon Pulse, 24 July 2020). In late May 2020, the Commission put forward a proposed revised 2021–2027 budget and a short-term coronavirus recovery plan, the latter amounting to €750 billion. This was to be financed by grants (€500 billion) and loans (€50 billion). As part of the revenue foundation, the Commission indicated possible CBAM revenues of some €5–14 billion, ‘depending on the scope and design’ (European Commission 2020, 27 May Communication; Carbon Pulse, 27 May 2020). In early June 2020, the Commission confirmed its intentions of putting forward a CBAM proposal in the spring of 2021. Speaking at a think-tank webinar, Sabine Weyand, Director-General of the Commission’s trade department, stated that a CBAM could not be combined with continued free allowances for ‘affected sectors’, noting that ‘you cannot have a double whammy for [such] sectors’ (Carbon Pulse, 3 June 2020). At this stage, new negative reactions to a possible EU CBAM appeared in the EU-external environment. Speaking to reporters after a BRICS (Brazil, Russia, India, China and South Africa) summit in July 2020, Maxim Reshetnikov, Russian Minister for Economic Development, stated that Russia was ‘extremely concerned’ about the EU plan which was seen as contravening WTO rules. The EU was allegedly ‘using its climate agenda to create new barriers’. A KPMG analysis indicated that a strict CBAM regime could cost Russia around €3 billion between 2025 and 2030 (Carbon Pulse, 24 July 2020). A second round of EU consultations began in summer 2020, to gather views from stakeholders and trade partners on what a CBAM might look like; this was to run until October 2020. Ministers at the Council had begun to exchange views on the measure, with several governments (including Austria, France and Spain) expressing support. A general call for the Commission to conduct a thorough study on the consequences of a CBAM and possible alternatives to prevent carbon leakage was also issued (Carbon Pulse, 24 July 2020). Further cautionary reflections from a senior Commission official in late September showed the delicate balancing involved. Gerassimos Thomas, Director-General of the Commission’s Taxation and Customs Union, stated that the CBAM was ‘no silver bullet’: it was part of a more comprehensive package that included the ETS Directive and the Energy Taxation Directive. He also emphasized that a CBAM would have to be WTO-compatible. Adding that the CBAM would generally support a package of measures contributing to an increasing carbon price, he also indicated that all CBAM revenues would serve to finance the NextGeneration EU programme (the €750 billion recovery package) (Carbon Pulse, 30 September 2020; for more on the recovery package, see Quitzow et al, Chapter 24 in this volume). Incoming Trade Commissioner Valdis Dombrovskis followed up by emphasizing that the introduction of a CBAM should mean the gradual phase-out of free allowances. But

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The EU Carbon Border Adjustment Mechanism  239 the Commission would have to be ‘very careful in assessing the design of the CBAM and how these two systems fit together’ and ensure that the measure would be compliant with WTO rules. This gradual phase-out of free allowances combined with the introduction of a CBAM was further confirmed by Diederik Samsom, head of cabinet for DG CLIMA chief (and Executive Vice President with responsibility for the European Green Deal) Frans Timmermans, in October 2020. Power production was a core initial sector, along with cement and steel. Subsequent candidates were aluminium, fertilizers, and chemicals (Carbon Pulse 2 and 13 October 2020). The leading MEP in the Parliament (the rapporteur) on the CBAM issue was the French Green, Yannick Jadot. In a draft report, Jadot supported the idea that a CBAM would raise revenues for the EU budget and the recovery programme. However, he emphasized that ‘the main objective should be industrial decarbonization, while protecting our industry’ (Carbon Pulse, 22 October 2020). When the Parliament’s ENVI Committee discussed Rapporteur Jadot’s report in late October, a clear majority supported phasing out free allowances in connection with the introduction of a CBAM. The Parliament’s largest grouping, the EPP, was the only voice in the Committee to favour the continuation of free allowances, even after the establishment of a CBAM (Carbon Pulse, 28 October 2020). DG CLIMA chief Frans Timmermans further expressed a cautious attitude in November. Recent carbon neutrality and net zero pledges by certain key economic competitors (such as China, Japan, South Korea and South Africa) could render an EU CBAM ‘less necessary’. These pledges could therefore lessen the impact of, or even shield these countries, from a CBAM. Speaking at an EU–Russia climate conference, acting director Benjamin Angel in the Commission’s tax department (leading the CBAM dossier), further clarified that two main CBAM design options were being considered: either the implementation of a tax at the border, or forcing exporting countries to buy carbon allowances. Russian representatives reiterated their earlier negative stance, considering a CBAM as ‘very negative’ and calling for harmonized actions (Carbon Pulse, 16 November; 3 December 2020). The policymaking ball then passed to the Parliament’s Industry Committee (ITRE) in December. By a slim margin (37 votes to 32, including all EPP MEPs), its opinion stated that free allocation should be phased out if the EU were to proceed to adopt a CBAM. The final text called on the Commission to ‘analyse the possibility to start the implementation of the mechanism with a gradual phasing out of free allowances’. The ITRE opinion was then passed on to ENVI’s Rapporteur, Jadot (Carbon Pulse, 19 December 2020). Meanwhile, in a policy brief issued in December, two former EU senior climate policy officials, Jos Delbeke and Peter Vis – who had experienced first hand the international opposition to including foreign airlines in the ETS – argued against using CBAM revenues for Member States and as ‘EU own resources’ to fund the pandemic recovery package on the grounds that it might well anger other countries. They argued that the revenues should instead be used to support developing countries, especially least developed countries and small island states. Further, they deemed it ‘difficult’ for a CBAM and free allocation to coexist; and held also that compensation schemes for indirect carbon pricing costs should be discontinued (Delbeke and Vis 2020). In early January 2021, the Commission then published a summary of over 600 responses to the second, public consultation on the proposal (European Commission 2021). Over half of the responses came from business associations and companies. This summary showed that a tax

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240  Handbook on European Union climate change policy and politics applied on imports at the EU border was considered the ‘most appropriate’ option by a narrow margin, followed by setting a tax at consumption level on a selection of products. More politically feasible options, such as a scope extension of the ETS or purchasing allowances outside the ETS, were considered ‘somewhat relevant’. The Commission also confirmed its intention to make a CBAM ‘an alternative’ to the existing carbon leakage protection measures. In February 2021, Valdis Dombrovskis, European Commission Executive Vice-President responsible for trade, stated that the CBAM would probably take the shape of a ‘notional’ emissions market. That would force importers to buy allowances from a separate pool at prices mirroring the value of EU allowances, although these units would not be tradable (Carbon Pulse, 18 February 2021). The ENVI Committee also adopted its position in February. A compromise text calling for the ‘parallel, gradual, rapid, and eventual complete’ phase-out of free allowances was adopted by a large majority, spanning the S&D, liberals at Renew Europe, the Greens/EFA, and centre-right EPP. The full Parliament then adopted its non-binding report in early March. The introduction of a CBAM from 2023 on was adopted by 444 votes to 70, but only after a narrow majority had supported deleting text calling for the complete phase-out of free allowances when a CBAM was introduced. This deletion led as many as 181 MEPs to abstain, among them the Greens (Carbon Pulse, 10 March 2021). These developments highlight how, although the Parliament has been a central driving force for the introduction of a CBAM, there is significant internal disagreement as to the exact manner in which to do so, and particularly on the relationship between a CBAM and the role of free allowances. The Commission’s formal proposal for a CBAM was eventually put forward on 14 July, as part of the ‘Fit for 55’ package, with the following key elements: ● It is to be launched in 2023 with a three-year transition period during which importers will have to monitor emissions but not surrender any allowances. ● The sectors covered will include iron and steel, aluminium, cement, chemicals, electricity, fertilizers and refineries. ● The system will take the form of a ‘notional’ ETS in which importers will purchase ‘CBAM allowances’ at a price mirroring the average closing prices of ETS allowances each calendar week. ● Importers will need to submit a ‘CBAM declaration’ to national registries, possibly aided by an EU-wide CBAM authority. ● Free ETS allowances will be gradually phased out – by 10 per cent annually – starting in 2026, with full phase-out by 2035. ● Such a designed mechanism is in line with WTO rules (European Commission 2021).

4.

CONCLUDING COMMENTS

Why did the idea of an EU-wide Carbon Border Adjustment Mechanism come to gain prominence as a viable policy option? Firstly, France, as a country generally open to protectionist ideas, has certainly been a consistent advocate. Moreover, an EU CBAM had the potential to complement a similar French domestic initiative. For most of the period up to 2018/19, Italy was also positive. Initially, in the ETS pilot phase, Germany was also open to the idea. Then it turned lukewarm – probably to a large degree because the country’s big energy-intensive

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The EU Carbon Border Adjustment Mechanism  241 industries have been satisfied with the carbon leakage regime based on free allowances, and have feared alienating trade partners; in addition came the long period of rather low carbon prices. The Commission was also open to the idea from an early stage. Later, however, pressured by significant lobbying, it found free allowances to be a more feasible option; the Commission also got ‘burnt’ in 2012 by opposition from major trade partners to the inclusion of international flights in the ETS (see Vogler, Chapter 10 in this volume). When von der Leyen assumed the Commission Presidency in autumn 2019, it led to a new high-level drive for a CBAM, which eventually appeared as part of the European Green Deal. Thus we see that, prior to 2019, the Parliament and particularly the ENVI Committee stand out as central CBAM policy entrepreneurs in the EU system, along with France. True, the Parliament has been internally divided on the issue – but its leadership is analytically interesting, and nuances the picture of the Commission as the Green Deal entrepreneur (Dupont et al. 2020). The appointment of the von der Leyen-led Commission and the advent of the European Green Deal must be seen as turning points; however, her support of the CBAM idea appears initially to a large degree a response to pressure from Parliament. In explaining why the concept gained wider support among Member States and industries, a first important background factor is the rising carbon price after 2018, with projected further increases towards 2030. There have been worries that the decreasing proportion of free allowances will not adequately protect industries if the carbon price approaches €100. Second, the EU has placed climate policy and the European Green Deal at the heart of its COVID-19 recovery package – and a CBAM could contribute sorely needed cash to finance this giant package. Third, President Trump’s withdrawal from the Paris Agreement served to increase EU politicians’ interest in more ‘proactive’ carbon border taxation. What, then, are the prospects for the proposal? With projected substantially higher carbon prices, a CBAM may be deemed essential to prevent carbon leakage as free allowances are gradually phased out. The proposed longer phase-out period of such allowances helps to soften internal opposition. As to the external political environment, two interesting developments could be noted in the autumn of 2021: first, the CBAM proposal appeared already to have had some of its intended international effects, as countries such as Russia started to explore carbon pricing, making explicit reference to the EU proposal in doing so. This led Commission Vice President Frans Timmermans, to declare that the ‘CBAM is already working even before its formal adoption’ (Carbon Pulse November 10, 2021). However, and as a second point, a degree of scepticism and opposition remained on the part of some of the EU’s key trading partners. At the COP26 climate summit in Glasgow in November 2021, the BASIC countries (i.e. Brazil, South Africa, India, and China) voiced their opposition (Carbon Pulse November 10, 2021). EU policymakers have been sensitive to such reactions, and it is likely that this will be reflected in some way in the final CBAM design. In 2022, the CBAM dossier continued to move forward in the EU institutions, with active entrepreneurship from the French EU Presidency in the first half of the year. An important move by France, intended to make quicker progress, was to de-couple the discussion of two contentious elements of the proposal: the phase-out of free allowances and the issue of export rebates. France argued that those two issues primarily fell under the competences of the ETS review and should be discussed in that context by environment ministers, while the rest of the file should be taken forward by finance ministers. Several stakeholders were reported to have

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242  Handbook on European Union climate change policy and politics seen this critically, as a French Presidency failure to craft an early general agreement (Carbon Pulse 7 March 2022). Finally, although much remains uncertain at the time of writing (in the spring of 2022), the Russian invasion of Ukraine in February 2022 marked a significant shift in the geopolitics of climate change, with potential implications for the CBAM proposal. Certainly, the vision propounded by some, such as incoming German Chancellor Scholz, of an EU-led climate club averting the need to activate border adjustments, encompassing the likes of China and India, as well as Russia (along with the United States), was rendered a much less likely prospect (Euractiv 2022). While the invasion may bring the EU and other Western countries closer together, including in their efforts to decarbonize their energy systems, the war and its economic consequences could equally push climate change, including carbon pricing, down on the political agenda, if not in the EU then in certain foreign governments that the CBAM proposal was intended to influence.

NOTES 1. I would like to thank Andy Jordan, Michael Mehling, Tim Rayner, Kacper Szulecki and Harro van Asselt for very helpful comments to earlier versions of this manuscript. My thanks also to Susan Høivik for language polishing. 2. For more on controversies over external effects on EU policy instrument choices, see Dobson, Chapter 25 in this volume.

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17. Climate policy integration and climate mainstreaming in the EU budget Katharina Rietig and Claire Dupont

INTRODUCTION The European Union has championed the integration of climate change objectives into other policy areas through Climate Policy Integration (CPI), but has had varying degrees of success in implementing CPI across policies, programmes and sectors (Dupont & Jordan, 2021; Jordan & Lenschow, 2010). CPI emerged in the 2000s especially in the areas of energy, agriculture and transport policy as well as in the form of climate mainstreaming into the EU budget from 2014 onwards (Rietig, 2021). It is conceptually embedded within broader ideas of policy integration and environmental policy integration (EPI), which, for decades, were rather more conceptual exercises than efforts towards a practical policy reform agenda. CPI gained traction with policymakers in the EU in the 2000s with attempts to make integrated and coherent policies across several sectors. With the publication of the European Green Deal in 2019, which highlights that all projects and policies must contribute to its overarching objective of achieving climate neutrality by 2050 and of building climate resilience, there is some potential to advance CPI in practice even further (Dupont, Oberthür & von Homeyer, 2020; European Commission, 2019). In this chapter, we first discuss the conceptual development of CPI, including how it can be operationalized. Second, we highlight factors that can influence the success or failure of CPI in practice, drawing on previous literature. Third, we discuss an illustrative case study of CPI in the EU budget, incorporating research interview data. Finally, we conclude with some reflections on the evolution of CPI in the EU in general, and prospects for continued/advanced CPI in EU budgetary processes and outcomes.

WHAT IS CLIMATE POLICY INTEGRATION? CPI has its conceptual origins in broader literature on policy integration (Underdal, 1980), but it most closely builds upon literature on Environmental Policy Integration (EPI). EPI brought attention to the environmental dimension of sustainable development, with a clear objective to ensure that environmental objectives were (at least) taken into account in policy decisions in other policy fields (Jordan & Lenschow, 2010; Persson, 2007). The push for EPI stemmed from the observation that environmental objectives tended to be downgraded or sidelined in policymaking in favour of economic objectives (Lafferty & Hovden, 2003). A body of literature on the theory and practice of EPI bloomed. However, there has been little agreement among scholars or policymakers on what EPI precisely means or on how it should be recognized and assessed. Policy integration also connects to many related concepts, such as mainstreaming, policy coherence and policy coordination, adding to the conceptual 246 Katharina Rietig and Claire Dupont - 9781789906981 Downloaded from PubFactory at 08/15/2023 12:45:22AM via free access

Climate policy integration and climate mainstreaming in the EU budget  247 complexity. At its most basic, EPI requires that environmental objectives are at least taken into account in the policy design and policymaking processes (e.g. through policy coordination processes) and in the policy output (i.e. resulting in coherent policies). This amounts to ‘weak’ EPI. ‘Strong’ EPI requires that environmental objectives are central or even take precedence, or priority, in the development of policies in other domains (Dupont, 2016; Dupont & Jordan, 2021; Jordan & Lenschow, 2010; Lafferty & Hovden, 2003). The EU has long supported EPI in principle, and much empirical research on EPI has focused on developments within the EU (Jordan, 2002; Jordan & Lenschow, 2010; Lenschow, 2002). The idea of EPI was embedded in the EU’s first Environmental Action Programme in 1972, and was later written into Article 130r(2) of the Single European Act (1986) and all future Treaty reforms. In Article 11 of the Treaty on the Functioning of the EU (the Lisbon Treaty), which entered into force in 2009, it is written that ‘environmental protection requirements must be integrated into the definition and implementation of the Union’s policies and activities’. But, although the EU established EPI as a principle in its founding Treaties, it remained a challenge to implement in practice (Dupont & Jordan, 2021), partly because of differing interpretations of what EPI is or should be. How could EPI be defined and operationalized; how could EPI be recognized in practice? EPI has been defined variously as an overarching principle of good policymaking; or as a legal requirement for programmes and policies; or as process of making policy; or as a desired policy outcome, i.e., an improvement in the quality of the environment from policy decisions taken even outside the environmental policy field (Persson, 2007). Whether the aim in practice is to implement EPI so that an environmental objective is simply taken into account in policymaking (weak EPI), or so that a policy field is reoriented to make environmental protection the priority (strong EPI) is often unclear. Evaluating the policy efforts towards EPI therefore requires an understanding of whether policymakers view weak or strong interpretations of EPI as their reference points. Finally, evaluating the efforts to implement EPI based on outcomes is particularly challenging – connecting a change in the quality of the environment to a specific effort to implement EPI in a specific way is methodologically challenging, also since the ‘environment’ encompasses myriad data points along multiple ecosystems (Dupont, 2016; Persson, 2007). The EU has implemented several tools or instruments of policy integration, which can be categorized as: (1) administrative instruments; (2) budget and financing instruments; and (3) assessments and evaluations (Dupont & Jordan, 2021). Administrative instruments are particularly useful in the policy process, and in coordination efforts. Inter-service consultations in the European Commission, for example, serve such a purpose, and have been strengthened over time (Candel, Princen & Biesbroeck, 2021; Rietig & Dupont, 2021). Budget and financing instruments aim to earmark funds for environmental objectives, and have become ever-more important instruments for EPI and CPI in the EU (Dupont, Oberthür & von Homeyer, 2020; Rietig & Perkins, 2018; Rietig, 2021, see below). Both ex ante and ex post assessments and evaluations are useful for EPI: through an impact assessment procedure, policy proposals are checked for potential environmental impacts, and policy evaluations can highlight the degree of success of mitigating efforts (Dupont & Jordan, 2021). Even with all of these instruments being deployed in the EU context, EPI has still remained challenging to implement. Studies of CPI build on this rich scholarship on EPI, both conceptually and empirically. Methodologically, the majority of research has been either conceptual with illustrative examples (e.g. Adelle & Russel, 2013), or qualitative with a focus on in-depth case studies mostly

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248  Handbook on European Union climate change policy and politics on the EU and/or countries in Europe or the OECD (e.g. Dupont, 2016; Nilsson & Eckerberg, 2007; Rietig, 2021a). This approach has allowed researchers to identify several factors and framework conditions that facilitate successful CPI or hinder CPI (see next section). At the same time, the overwhelming majority of CPI research and practice has focused on integrating climate mitigation objectives across other policy domains. While several studies have lamented the lack of attention to climate adaptation, we continue in this chapter with a focus on mitigation, recognizing the need for further work in theory and practice on how to implement climate adaptation integration (see, for example, Rayner & Jordan, 2013; Runhaar et al., 2018). CPI for climate mitigation has been easier to identify, implement and assess in theory and in practice than EPI, mostly because of the clear mitigation-reduction benchmark that makes assessing the degree of CPI far more straightforward: if climate objectives were considered in the policymaking process and if this led to policy outcomes that reduced emissions of greenhouse gases, then CPI is likely to have been successfully implemented. The degree of CPI (or whether climate objectives were given priority) can be assessed based on the depth of policy change and the scale of emissions reductions achieved, compared to what is scientifically required and achievable in that sector (Adelle & Russel, 2013; Dupont, 2016; Dupont & Oberthür, 2012). In practice, CPI can be measured along a scale identifying no evidence of CPI through various levels to high CPI. At the same time, by analyzing the strength of CPI, we can identify whether or not policies are being tweaked to account for climate objectives or whether they are being fundamentally reoriented to achieve climate neutrality and long-term objectives for sustainable transformation (Dupont & Oberthür, 2012). The more policymakers implement CPI in a way that recognizes the long-term impacts of climate change, i.e., implementing the equivalent of ‘strong’ CPI, including building resilience and integrating adaptation objectives across domains, the more likely that policy outcomes will prove transformative for achieving sustainability.

UNDERSTANDING OR EXPLAINING LEVELS OF CPI: FACTORS INFLUENCING THE SUCCESS OF CPI Much like the development of literature on how to recognize and assess CPI, scholarship identifying explanatory factors for understanding the levels or strength of CPI found in empirical studies builds on EPI scholarship. With longstanding support for EPI and CPI, and steps taken to formalize EPI in the EU Treaties, understanding or explaining the historically poor record of the EU on implementing EPI in practice forms the basis of several studies. These studies have identified institutional, political, policy and legal constraints and opportunities for EPI and have drawn on insights from theories of European integration, policy studies, public administration, political science and legal analysis. Research explaining empirical practice on EPI has highlighted the role of institutional capacity, policy framing, political commitment, institutional structure, path dependency, policy learning, and more (Domorenok, Graziano & Polverari, 2021; Dupont & Oberthür, 2012; Gabler, 2010; Nilsson, 2007; Nilsson et al., 2007; Rietig & Dupont, 2021; Schout & Jordan, 2008). Building on these explanatory insights, we find several categories of explanatory factors that are relevant for understanding CPI. These include knowledge-related, administrative, policy and political aspects, and can be summarized as follows: (1) political commitment to

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Climate policy integration and climate mainstreaming in the EU budget  249 overarching climate objectives and to the necessity of implementing CPI; (2) recognition of functional overlaps between policy objectives and compatible beliefs for implementing CPI among policymakers; (3) an opportunity and institutional structure for innovative policy development and policy entrepreneurship based on learning (e.g. through evaluation) among key actors; (4) meaningful coordination and consultation mechanisms; and (5) interactions among interests and path dependency of past institutional/policy developments that push or constrain further CPI (Capoccia, 2016; Dupont, 2016; Dupont & Oberthür, 2012; Gabler, 2010; Nilsson et al. 2007; Mintrom & Norman, 2009; Rietig, 2019; Rietig & Dupont, 2021; Runhaar et al., 2018; Steinebach & Knill, 2017; Svensson, 2019). All of these explanatory variables interact with each other in efforts to understand or explain the strength of CPI. Political commitment to climate action and to CPI is regularly considered a necessary, but insufficient, basis for CPI to be implemented in practice. Evidence for such commitment is sought in the highest political level of decision making, but must also be translated into commitment at the policymaking and organizational level. Such political commitment is highly dependent upon external framework conditions such as the policy environment, public opinion, and external pressures to react, such as crises. International pressure from other countries and the need to ‘save face’ based on commitments made in international negotiations can be a powerful driver for countries to advance their domestic policies. Crises, in particular, can crowd out CPI from the political agenda and leave policymakers with the impression that they need to safeguard economic and social interests at the expense of environmental and climate change objectives (Burns & Tobin, 2018). This in turn can result in innovative and unconventional approaches pursued by those tasked with strengthening climate action (Rietig, 2021). The empirical case study in the next section on integrating climate objectives into the EU budget offers an illustrative case of how reacting to external crises can result in policy innovation and facilitate learning among policymakers despite difficult framework conditions. Path-dependency is an important factor (Duit, 2007) that helps to explain how certain policies can be strengthened over time despite starting from a relatively low level of ambition. Once a policy exists with a target to be achieved, there is an opportunity for policymakers to further strengthen the target in subsequent negotiations or policy reform processes by making use of a window of opportunity when public opinion and political support are favourable (Bernstein & Cashore, 2012; Carter & Jacobs, 2014; Levin et al., 2012; Rietig, 2021b). In addition, the recognition of the overlaps among policy fields, and the compatibility of beliefs on the importance of CPI in a policy field are highly relevant for CPI in practice. Without an opportunity structure and institutional set-up that emphasizes policy learning and provides room for policy entrepreneurship to implement CPI, its practice is likely to remain patchy, even with high political commitment to its implementation. Through meaningful coordination and consultation mechanisms, the strength of CPI can be increased, if overlapping favourably with the opportunity structure, recognition of overlaps, compatibility of beliefs and high level of political commitment. Finally, all these explanations interact with the constraints placed upon policymakers that come from established political interests and any constraints that exist as a result of past decisions (Dupont, 2016; Rietig, 2021; Rietig & Dupont, 2021). At the same time, the usefulness of the different theoretical perspectives or explanatory factors can depend on the focus of study. For example, studies on the extent of CPI into energy policy reveal a relatively high degree of political commitment to the integration of climate and energy policies, and focus more on the explanatory value of other factors (Dupont, 2016). Research on the integration of environmental and climate priorities into agricultural policy

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250  Handbook on European Union climate change policy and politics show how interests and path dependency, for example, are actually major barriers to increasing the strength of CPI since the political commitment in these fields to overcome them is lower (Alons, 2017; Gravey & Jordan, 2020; see also Matthews, Chapter 19 in this volume). In the next section, we discuss the case of CPI into the EU budget, which also clearly shows the interactions among explanatory variables and how the usefulness of these factors in understanding CPI can vary depending on the context.

CASE STUDY ON INTEGRATING CLIMATE OBJECTIVES INTO THE EU BUDGET The EU budget has evolved, in both its process and output, since the 2000s to advance CPI to various degrees. The case is an illustrative example of how policy entrepreneurship, policy innovation and also path dependency can usefully explain advances of CPI in practice. The climate policy of the EU in the late 2000s was characterized by the 2009 Climate and Energy Package with the objective of reducing greenhouse gas emissions by 20 per cent (compared to the baseline of 1990), increasing the share of renewable energies in final energy consumption to 20 per cent and improving energy efficiency by 20 per cent by 2020, compared to business-as-usual scenarios (EU 2009), with the flagship policy of the European Emission Trading Scheme (Braun, 2009; Skærseth & Wettestad, 2009). Given the then upcoming 2009 climate change summit of the United Nations Framework Convention on Climate Change (UNFCCC) in Copenhagen, the EU was under political pressure to demonstrate ambitious climate policies. This also increased the political willingness of the EU Member States to agree to the Climate and Energy Package. In combination with the overall positive economic climate, there was ‘incredible political momentum … [making it] part of a bigger vehicle that was very hard to stop’ (Interview European Commission Directorate General for Climate Action no. 1 [EC Clima 1]). By 2010/11, the political environment had changed dramatically. In the depths of the financial crisis and economic crisis, with a corresponding preoccupation of the European institutions and the EU Member States with economic and financial priorities, a crowding out of climate change concerns from the political agenda occurred (Rietig, 2021b). This meant that the window of opportunity for ambitious climate policies, from which the 2009 Climate and Energy Package had benefited, was closed (Carter & Jacobs, 2014). The financial and economic crises affected the climate action approach within the European Commission and especially the strategy of the Directorate General (DG)/Cabinet Climate Action, as it was seen as reducing the willingness of Member States to agree on ambitious climate policies: It is less evident that the way forward now is a binding target [for the 2030 share of renewables]; there are many different views about it, while back in 2007, there were still many people who were not entirely happy about it, but the vast majority of people were very happy to go with a binding target by 2020. Today it is slightly more tricky (Interview EC Clima 2).

Consequently, the European Commission and especially DG/Cabinet Climate Action adopted a policy entrepreneurial strategy (Mintrom, 2013) in support of CPI especially into transport, economic competitiveness, agriculture and energy policy as the most promising approach. CPI was seen as ‘being extremely useful and we are trying to mainstream [i.e., advance CPI] everywhere’ (EC Clima 3).

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Climate policy integration and climate mainstreaming in the EU budget  251 The CPI approach in this case was thus a policy innovation that emerged as a direct reaction to the EU’s multiple crises, out of the perceived necessity of continuing to pursue DG/ Cabinet Climate Actions’ primary mission of developing ambitious policy proposals that address climate change despite low political commitment. In 2012/13 there were increasing worries that the Eurozone crisis was not only impacting policy ambition, but was also reducing Member States’ willingness to support CPI. This lowered the expectations of central actors in the European Commission who were pursuing the approach of CPI in the EU budget to the point that they expected several Member States to resist the proposal of earmarking, as it would limit their leeway in deciding how the EU funds would be used and ultimately that ‘the Commission’s proposal will be adopted as we proposed it’ (Interview EC Clima 1). Environmental NGOs shared this assessment of limited climate ambition among the Member States, also with regard to the negotiations on greening the Common Agricultural Policy, which remained one of the EU’s major expenditures. They pointed out the lack of financial capabilities among Member States given that they were ‘in the middle of the budget crisis but also it’s a feeling that the EU is going to fall apart because of this. They wonder will greening be staying, will greening not be staying in the budget proposal’ (ENGO 2). A central issue around CPI in the EU budget was the suspicion of ‘window dressing’ or ‘greenwashing’ with regard to the additionality of the proposed measures. In particular, the ‘ex-post’ accounting method used in both the 2014–2020 and the 2021–2027 EU budgets to track climate-related expenditures was considered problematic as it only identified existing climate mainstreaming as opposed to increasing incentives and offering steering mechanisms for more ambitious climate mainstreaming (ENGO 1). Overall, the policy innovation of dedicating 20 per cent of the EU’s 2014–2020 Multiannual Financial Framework (MFF) to co-benefit climate action can be understood as a direct reaction to the various crises facing the EU. DG/Cabinet Climate Action identified CPI in the form of mainstreaming climate objectives into the EU budget as an additional policy strategy to further their mission of addressing climate change via ambitious policies. The high degree of autonomy enjoyed by the European Commission when making proposals for the EU budget and its ability to further exert influence on the negotiations between the European Parliament and Council once the proposal was published (Goetz & Patz, 2016) contributed to the adoption of CPI in the EU budget. Policy Innovation by Policy Entrepreneurs and Learning in 2014–2020 EU MFF The influence of strong policy entrepreneurs was a determining factor that allowed the addition of CPI in the EU budget. This meant overcoming veto points in the College of Commissioners and the trilogue negotiations between the Council, the European Parliament and the European Commission (Rietig, 2021b). Learning also played a role in the process, albeit to a lesser extent (Rietig & Perkins, 2018). There was a strong policy entrepreneurial drive in Cabinet/DG Climate to make use of the opportunity presented by the MFF for increasing climate action beyond single purpose policies and to counter the possibility that climate action was crowded out from the political agenda due to Member States’ preoccupation with crisis-related problems that were perceived as more pressing. A central policy entrepreneur who succeeded in gathering the political support for the new 20 per cent CPI target in the EU budget was Connie Hedegaard in her role as European Commissioner on Climate Action. This was based on the work of a policy officer in

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252  Handbook on European Union climate change policy and politics DG Climate Action, who had pioneered the idea that the EU budget offered the opportunity to advance CPI, and convinced the European Commissioner as well as continuing to play a role in the background throughout the negotiations (Rietig, 2021b). Following initial opposition in a meeting among the Heads of Cabinets of EU Commissioners, Hedegaard was successful in getting the proposal adopted as an official European Commission proposal due to her convincing arguments and personal capacity to persuade her colleagues (Rietig & Perkins, 2018): I suspect that every time there has been an MFF, there has been some attempt to grab some money or influence … but what I think perhaps has made the difference this time is that the Commissioner herself [Connie Hedegaard] has been so persistent and she pushed … It was not that the DG [Climate Action] has prioritised it a lot … they were [actually] ignoring the issue until very late, and then the Commissioner [for Climate Action] really insisted and kept asking for things, and then they had to gear up … [The Policy Officer in charge of the proposal and who initially developed it based on environmental policy integration] still was basically alone on this, although it was a very big issue, a very big priority that the Commissioner put on. (EC Clima 1)

Learning among central actors also mattered, but to a lesser extent. The 20 per cent CPI target was hardly discussed in the trilogue negotiations, which would have offered an opportunity for reflection and learning about this policy innovation. However, reflection on the failure of the COP-15 climate summit in Copenhagen 2009, which was chaired by Hedegaard in her role as Danish Presidency (Monheim, 2014), is widely considered as an important factor for her policy entrepreneurial drive and dedication in her subsequent role as European Commissioner (Rietig, 2021b; Rietig & Perkins, 2018). Therefore, the policy entrepreneurial activities of Hedegaard and several other individuals within the European Commission and in the trilogue negotiations were crucial to getting the CPI target into the 2014–2020 EU budget. Those involved within the European Commission considered it to be a stepping-stone towards increasing ambitions in the subsequent 2021–2027 EU budget negotiations. Path Dependency in the EU Budget Proposal for 2021–2027 The European Commission built upon the success of the 20 per cent CPI target when proposing a new target for the 2021–2027 EU budget. The prevalence of external and internal crises to the EU had continued in the years between 2012 and 2018 with the Eurozone crisis, the migration crisis and ongoing negotiations around the form and shape of the exit of the United Kingdom from the EU (see Moore, Chapter 23 in this volume), and an overall rise in populism across several Member States (Von Homeyer, Oberthür & Jordan, 2021). This combination of factors resulted in a reduced willingness of EU Member States to support ambitious climate action and its implementation (Burns, Eckersley & Tobin, 2019). In 2018, this meant a preoccupation with these multiple crises and recognition of the importance of addressing climate change in combination with external pressure to implement ambitious commitments under the 2015 Paris Agreement. Climate action subsequently still played an important role, but had been somewhat crowded out by the more pressing and immediate economic and political crises (Rietig, 2021b). There was a lack of policy entrepreneurship in support of strong climate action at the top level of the European Commission. At the same time, the strong policy entrepreneurial activity on the lower levels within the European Commission such as by policy officers or heads of units in DG Climate Action was blocked by an administrative reform of the Juncker Commission that introduced powerful Vice Presidents

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Climate policy integration and climate mainstreaming in the EU budget  253 with a top-down administrative leadership style (Bürgin, 2015; Bürgin, 2019; Bürgin, Chapter 2 in this volume; Rietig & Dupont, 2021). The implementation of the 20 per cent CPI target in the 2014–2020 EU budget was successful through the development of indicators that allowed tracking of the climate-related and co-beneficial expenditures. Some €206 billion or 19.3 per cent of the 2014–2020 EU budget was spent on measures that were considered to be co-beneficial for climate action (EC 2018a), especially in the areas of transport (Connecting Europe Facility), greening agriculture (Common Agricultural Policy) and economic development (Cohesion Funds) (EC 2018b). The ‘ex-post’ accounting method allowed for the identification of CPI and opened up the opportunity for future ‘ex-ante programming’ in the form of actively directing budget to expenditures that are relevant for addressing climate change: It’s a play of numbers and the use is very limited actually when you look at it in terms of result and this was also I think a criticism of the court of auditors anyway that they think too much expenditure-based and less result-based. That’s why the real revolution of the CAP reform might be totally invisible. It’s the indicators. Measuring the CAP’s success by indicators, which mean we have to look for certain results … The new thing is that not only the Second Pillar [of the EU Common Agricultural Policy] is now measured in indicators but the First Pillar too and we have some climate-related indicators there too and maybe these indicators will play a much bigger role than just expenditure targets, which is just part of the whole puzzle, so it’s a good tool. (DG Clima 5)

It is important to recognize that the European Commission did not drop CPI in the 2018 proposal for the 2021–2027 EU budget despite its preoccupation with numerous crises and the lack of strong policy entrepreneurship in favour of climate action at the top level of the European Commission. A central explanation is that it was locked in to a certain degree of policy path-dependency based on the 2014–2020 EU budget, which contained the 20 per cent CPI target. In addition, there was some pressure to save face and maintain its leading role in international climate action based on the leadership ambitions of the late 2000s as well as the need to implement the Paris Agreement on climate change. Consequently, the options were limited to a minimum of maintaining a 20 per cent target of CPI in the 2021–2027 EU budget proposal and increasing the target in line with the approach of mirroring targets with years such as the 20-20-20 target by 2020 from the 2009 EU Climate and Energy Package. Thus, the European Commission proposed a 25 per cent target for CPI worth €320 billion (EC 2018c). In the underpinning commissioned analysis of the climate mainstreaming/CPI approach, DG Climate Action acknowledged that there were a number of areas that would benefit from improvement such as a differentiation between mitigation and adaptation. It also pointed out that the ex-post tracking of climate-relevant expenditures contained the risk that the targets were not being met and that having achieved 20 per cent of climate mainstreaming/CPI in one area meant, perversely, that efforts to go beyond the target are discouraged in that area given that the minimum requirements have already been fulfilled – which could in turn encourage emission-increasing expenditures with the remaining 80 per cent of funds (Forster et al., 2017: 12). The scope for higher ambition than 25 per cent was illustrated by the call from the European Parliament to increase the share of climate mainstreaming/CPI to 30 per cent and the calls of environmental NGOs, especially the Climate Action Network, to increase the share to 40 per cent (CAN, 2018). The initial proposal of 25 per cent climate mainstreaming indeed reflected low ambition.

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254  Handbook on European Union climate change policy and politics Following the increasingly strong public pressure from Fridays for Future and other protest movements (see Parks et al. Chapter 7 in this volume), climate action rose to the top of the Commission’s agenda in between 2018 and 2019. This also coincided with a new Presidency of the European Commission in 2019 and an overall strong recognition that the EU’s climate ambition needs to be increased in line with the objective of achieving net-zero emissions by 2050. The Von der Leyen Commission initiated a review of the 2030 targets in 2019. The public pressure and increasing occurrence of climate disasters forced the issue of climate change back to the top of the political agenda in 2018 and 2019, which resulted in a revision of the original climate targets for 2050. Instead of aiming for an 80–95 per cent decrease in greenhouse gas emissions, the new target shifted towards carbon neutrality by 2050. Consequently, the interim targets for 2030 required revision towards an increase in ambition, which in turn allowed for adapting the CPI approach with its 25 per cent target via increasing the percentage target in line with the more ambitious goals of the European Green Deal. Subsequently, the European Commission revised its proposal to ‘at least’ 25 per cent climate mainstreaming/ CPI; eventually, in finalizing the terms of the MFF 2021–2027, negotiators for the European Parliament, Council and Commission agreed to a 30 per cent target, mirroring the European Parliament’s proposal and the earlier strategy of aligning targets of policies with the overall strategy and its target year, in this case 2030.

DISCUSSION AND CONCLUSION The European Green Deal,