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Carbon pricing for a European sustainable recovery

To face the covid crisis, there is a wide political consensus to attribute “own resources” to the EU. To face the climate crisis, there is a wide scientific consensus to put a minimum price to CO2 emissions. The need for knotting the dots is evident and urgent. A unique opportunity for doing so is the European Citizens Initiative, that proposes a European “carbon pricing”.

After the recent Karlsruhe Court’s ruling against European Central Bank activism, in a context of skepticism from “northern” countries towards a common EU debt, and the opposition from southern countries to worsen national debts, the “own resources” solution could impose itself if the “Next generation Eu” proposal from the European Commissione will not be watered down,

To decide where the money should come from, the EU should look at its own priorities. On the top of her pre-coronavirus agenda there was climate change and President von der Leyen’s plan for a “European Green Deal”. Climate change is, unfortunately, here to stay, with long term effects possibly worse than Covid-19’s, there are therefore several arguments to stick to that political commitment.

Twenty-seven Nobel Laureates have suggested to set a minimum price for carbon emissions. In order to be effective and politically sustainable, the intervention should be as global as possible, and accompanied by social offsetting measures. National governments outside Europe are reluctant, especially some of the major players: United States, China, and Russia. This is why Europe as a whole should take the lead, resistances from some governments -i.e. Poland- that are posing a problem should be addressed and faced involving citizens from all over the Union.

This is exactly where civic action can be decisive. If one million Europeans from at least seven countries will sign online the “carbon pricing” proposal on  5 June, World Environment Day, the European Commission will be formally asked to take a decision on whether or not to fix a minimum carbon price of 50 Euros per ton, to be raised to 100 by 2025, with an estimated revenue of 180 billion per year.

The European Citizens Initiative – a participatory democracy tool included in the Treaties – cannot impose an action, but simply a clear answer. In this case, there is a chance that the Commission, but also some Member States, could take such civic mobilization  as a help more than a problem. 

The proposal includes a border carbon adjustment to address competitiveness concerns, carbon leakage and to prevent dumping from countries with no minimum carbon pricing, an idea already supported by the Commission that could lead to an increase of CO2 emissions costs around the world. Two actions are needed  to reach a minimum carbon pricing within the EU: reinforcing the current Emission Trading System,both extending it to sectors so far excluded and raising the emission prices, and creating a European carbon tax. Easier said than done, but technically feasible. The most delicate part is what the money will be used for.

Here comes the link between climate change and the recovery from the coronavirus  pandemic: 180 billion per year could be used to promote that “more just, green and digital growth” that almost everybody is invoking now, furthermore cutting taxes for lower incomes, especially in the areas and sectors most hit by the crisis, and investing in scientific research and technological applications, especially for energy saving could also benefit greatly.

Thousands of billions of Euros of public money will be spent by the EU and its Member States which, combined with record-low oil prices, put Europeans before a clear alternative for the future: either a fossil fuel-based short term recovery funded by a mix of EU and national debt, or a long-term sustainable development funded by EU own resources. In the first case scenario, financially weakest European States will become even more dependent on non-EU actors. In the second, Europe could take the lead of a new wave of transnational cooperation and not only on the environment. A leadership  , by the way, is exactly what the world needs now to cope with the “other” crisis, as the US-China confrontation  on the World Health Organization and the future the vaccine testifies.