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Explainer: The European Climate Law and Climate Pact

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Why do we need a European Climate Law?

The atmosphere is warming, with serious consequences already now for our environment and societies. The Intergovernmental Panel on Climate Change estimates that to keep global temperature rise to 1.5°C compared to pre-industrial times and limit the negative impacts of climate change, the world needs to rapidly cut its emissions of climate-warming greenhouse gases (GHG) to achieve net-zero emissions of CO2 by 2050 and all other greenhouse gases somewhat later in the century.

The EU has already put in place some of the toughest and most ambitious climate legislation in the world and started to modernise and transform its economy in line with its climate goals. Between 1990 and 2018, it reduced greenhouse gas emissions by 23%, while the economy grew by 61%. The EU’s comprehensive climate and energy framework for 2030 will bring about further emission reductions across the economy.

However, current policies are expected to only reduce greenhouse gas emissions by 60% by 2050 compared to 1990 levels, meaning that much more remains to be done. In light of the scientific evidence, the increasingly obvious and severe negative effects of climate change, and citizens’ demands for more action, additional measures needs to be taken urgently. Against this background, the European Climate Law sets the ambitious target to reach net-zero greenhouse gas emissions in the EU by 2050 and a framework for achieving this climate-neutrality objective.

What are the key elements of the Commission’s proposal?

The European Climate Law aims to complement the existing EU policy framework by setting the long-term direction of travel for EU climate policies, providing predictability for investors and businesses on the EU’s commitment, and ensuring transparency and accountability.

The Law sets in legislation the EU’s objective to become climate-neutral by 2050, by cutting emissions and increasing the removals of greenhouse gases from the atmosphere to reach net-zero emissions.

The Law also aims to enhance efforts on adaptation to climate change. In spite of action to reduce greenhouse gas emissions, Europe will continue to face the negative effects of climate change. The upcoming EU Adaptation Strategy and Member States’ adaptation strategies and plans will be essential to address these challenges.

What does the Climate Law mean for existing policies and the EU’s greenhouse gas emission reduction target for 2030?

The proposal tasks the Commission to review existing policies and legislation in view of their consistency with the climate-neutrality objective and the trajectory identified.

As part of a two-step approach, the Commission will first assess and make proposals for increasing the EU’s greenhouse gas emission reduction target for 2030 to ensure its consistency with the 2050 objective. By September 2020, the Commission will present an impact assessed plan to increase the 2030 target to at least 50% and towards 55% compared to 1990 levels in a responsible way, and will propose to amend the climate law accordingly.

To achieve the revised, more ambitious 2030 target, by June 2021 the Commission will then propose reviews of the:

  • European Emissions Trading System (EU-ETS) Directive;
  • Effort Sharing Regulation;
  • Land use, land use change and forestry (LULUCF) Regulation;
  • Energy Efficiency Directive;
  • Renewable Energy Directive;
  • CO2 emissions performance standards for cars and vans;

Several other initiatives in preparation under the European Green Deal will also help achieve the objectives of the Climate Law, including making a proposal for a “carbon border adjustment mechanism” for selected sectors, launching a new EU Adaptation Strategy and the European Climate Pact.

 The Commission will support these policy goals with appropriate funding and financing tools:

The European Green Deal Investment Plan, proposed at the start of 2020 will unlock at least €1 trillion of sustainable investments over the next decade to help finance the climate transition. The InvestEU guarantee will support this by de-risking private funds,

a Renewed Sustainable Finance Strategy will aim at redirecting private capital flows to green investments, ensuring that sustainable investments are mainstreamed across our financial system,

The Just Transition Mechanism, and its accompanying Just Transition Fund, proposed in early 2020 will support the most affected regions and sectors ensuring the transition is fair and leaves no one behind. It will help them to modernise and diversify their economies and alleviate the social and economic costs of the transition.

How will the greenhouse gas emission reduction trajectory from 2030 to 2050 be set?

The Commission’s proposal outlines a process for setting out a trajectory from 2030 for net greenhouse gas emissions and removals at EU level to achieve over time the 2050 climate-neutrality objective. The trajectory will inter alia be based on latest scientific evidence and best available technologies. It will take into account cost-effectiveness and economic efficiency, fairness and solidarity across and within Member States and the necessity to ensure that the transition is just and socially fair.

Every five years, the Commission will consider the latest international and scientific developments as well as existing EU policies, legislation and progress made towards the 2050 objectives, to assess whether the trajectory is still adequate or needs to be updated. This process is aligned with the timelines of the ‘global stocktake’ under the Paris Agreement, under which Parties periodically take stock of the implementation of the agreement and collective progress towards its goals.

How can the EU achieve the objective of climate-neutrality by 2050?

The European Commission set out its vision for a climate-neutral EU by 2050 in its communication ‘A Clean Planet for all‘ in November 2018. The in-depth analysis underlying the vision looked at all the key sectors and explored several pathways for the transition. It showed that it is possible for the EU to move to net-zero greenhouse gas emissions by 2050, using existing and emerging technological solutions, empowering citizens and aligning action in key areas such as industrial policy, finance or research, while ensuring social fairness for a just transition.

The transition to climate-neutrality will require action in all sectors, from changing how we generate energy and produce food to how we consume goods and services, to the jobs we hold and the way we travel. Ambitious action will help both protect our planet and improve our quality of life, through benefits such as cleaner air, water and soil; healthier food; more energy-efficient housing; better transport alternatives; and new opportunities for European businesses to take the lead in developing clean products and technologies.

This transition will require significant investments. To this end, the Commission put forward in January 2020 a European Green Deal Investment Plan to mobilise at least €1 trillion of sustainable investments over the next decade, as well as a Just Transition Mechanism to ensure that the transition towards a climate-neutral economy happens in a fair way, with targeted support for the most affected regions.

Modernising and decarbonising the EU’s economy will stimulate significant additional investment. Today around 2% of GDP is invested in our energy system and related infrastructure. This would have to increase to 2.8% in order to achieve a net-zero greenhouse gas economy. This means considerable additional investments compared to the baseline, in the range of €175-290 billion a year.

This may seem substantial but it is achievable and much better value to society than the cost of inaction which will see climate related damage and health effects take a huge cost on our society. Moreover, inaction leaves us at a competitive disadvantage as neighbouring countries innovate and develop the sustainable technologies of the future.

How are citizens and stakeholders involved?

EU citizens are concerned about climate change and support national and EU action. In the latest Special Eurobarometer on climate change (September 2019), 93% of EU citizens considered climate change a serious problem and 92% agreed that we must make our economy climate-neutral by 2050.

As all parts of society have a part to play in the transition to climate-neutrality, an inclusive and accessible process to exchange best practice and identify actions that contribute to the 2050 objective is an important element of the Climate Law. We all have a duty to act and Europeans have shown their strong will to be part of the change. The European Climate Pact will bring together all of these efforts, involving regions, local communities, civil society, schools, industry and individuals. Today, the Commission has also launched a public consultation on this European Climate Pact, again giving citizens the opportunity to participate in shaping how the Pact will work in practice.

 How will the Climate Pact be developed?

The involvement and commitment of stakeholders and the public at large will be crucial for the success of the European Green Deal. The Climate Pact intends to harness exemplary action on the ground and encourage change in the areas where it is so crucial, such as mobility, buildings’ renovation, energy production and consumption, greening of public and private spaces, as well as in our individual and collective choices and behaviour. It aims at offering both the opportunities and the platforms for valuable initiatives to develop and thrive and will be a key part of the just transition for all. This is an unprecedented exercise and we will need everybody to rally behind and bring ideas to the Pact.

The Pact does not start from scratch. There are many existing examples of efforts from civil society to tackle climate change. The Climate Pact will build on this, and encourage an integrated, structured and more proactive approach to awareness raising and stakeholder action at the European level.

Alongside government policies and regulation, there is a role to play for citizens, communities and organisations in all sectors of our society and economy. The Commission has launched an open public consultation on the Pact to give citizens and stakeholders a role in designing new climate actions, sharing information, launching grassroots activities and showcasing solutions that others can follow. The inputs from this public consultation will be instrumental to shape the Climate Pact before its launch later in 2020.

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In Latin America, farmers use microfinance to fight climate change

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María Fernanda Masís and her family are the owners of the hot sauces brand Xoloitzcuintle, named after their farm. Photo: UNEP

Sonia Gómez has spent her entire life around agriculture. She grew up on her parents’ plantation in the fertile mountains of Costa Rica before opening her own organic farm several years ago. But that experience did little to prepare her for what has become a dire threat to her business: climate change.

Increasingly severe cycles of drought and flooding – which are being driven by global warming – have wreaked havoc on her crops of chilis, tomatoes and carrots.

“We don’t know when it will rain or when it will be sunny,” says Gómez, whose farm is in the foothills of Costa Rica’s tallest volcano, Irazú. “It is difficult for us, as farmers, to work like this.”

Globally, more than 1.5 billion people live or work on small farms, like Gomez’s. They often cannot afford the advanced technology that could help them contend with the fallout from climate change.

The United Nations Environment Programme (UNEP) and Gomez are hoping to change that. In late November, Gomez’s farm became an official test bed for low-cost, environmentally friendly technology designed to help farmers adapt to a changing climate. It now features everything from a seed bank to a high-tech irrigation system.

The effort is part of the Microfinance for Ecosystem-based Adaptation (MEbA) project, spearheaded by UNEP and implemented in Costa Rica along with Fundecooperación, a non-profit group and microfinance bank. Along with supporting the creation of 11 test farms, the initiative has worked with micro-lenders across Latin America to provide 17,000 loans to small-hold farmers looking to invest in eco-friendly solutions.

Seeds of change

“Helping small-scale farmers to adapt to climate change is crucial to fighting poverty, ensuring food security and preserving the biodiversity that provides us with vital resources,” says Leo Heileman, UNEP Regional Director in Latin America and the Caribbean. “This move towards more sustainable and resilient agriculture requires the full support of financial institutions.”

While it produces relatively little carbon dioxide itself, Latin America and the Caribbean is vulnerable to extreme weather induced by a changing climate. This is especially true in the so-called Dry Corridor of Central America, which includes El Salvador, Honduras and Nicaragua. More than 2 million people there depend on subsistence farming and by the end of the century, temperatures could rise up to 7 °C, according to some projections. That, say experts, would drastically alter weather patterns.

Since 2012, MEbA has provided technical assistance to financial institutions, helping them disburse more than US$ 29 million in loans to small-scale farmers in Colombia, Costa Rica, Ecuador, El Salvador, Peru and the Dominican Republic.

The project has helped farmers finance more than 30 strategies for adapting to climate change, from beekeeping to agroforestry. In late November, Fundecooperación also launched two new loan types that promote climate-smart agriculture and livestock farming.

Capital improvements

That financing has allowed farmers to re-invest in their land. Gomez’s farm, which she calls La Sanita, Spanish for “healthy”, features several innovations designed to safeguard against extreme weather. Those include a rainwater collection system built atop a greenhouse Gomez previously erected through a microloan from Fundecooperación. It funnels water directly to the roots of her plants through drip irrigation, reducing water loss through evaporation.

The farm, located in the province of Cartago, also has an organic fertilizer laboratory to improve soil productivity and a bank to preserve organic-grade seeds. As well, Gomez planted fruit trees and perennial herbs in the steepest areas of her farm to reduce soil erosion.

After months of restrictions due to the COVID-19 pandemic, the farm was formally inaugurated on 25 November during an online event. It wasn’t the only ‘demonstration plot’ – another one, the Xoloitzcuintle farm, which grows vegetables for the country’s famed hot sauces, joined La Sanita in proving the MEbA project’s success in Cartago province.

The Xoloitzcuintle farm, led by María Fernanda Masís, is recovering the quality of its soil to cope with extreme weather events. Years of mechanical tillage and agrochemicals resulted in compacted soil, with little organic matter, that erodes easily when heavy rains arrive.

With support from the project, the farm is finding solutions for water management. Some are straightforward, like digging trenches to infiltrate water output, others more complex, like drip irrigation systems. Masís has also turned to organic fertilizers and put in place a silvo-agricultural system that taps into the farm’s timber and fruit trees.

“Teaching by example is our best option,” said Marianella Feoli, Executive Director of Fundecooperación. “Demonstration farms [like La Sanita and Xoloitzcuintle] facilitate exchanges between producers and help them learn from each other’s experiences and invest in similar solutions through specialized credit products.”

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Climate Action: It’s time to make peace with nature

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The UN Secretary-General, António Guterres, has described the fight against the climate crisis as the top priority for the 21st Century, in a passionate, uncompromising speech delivered on Wednesday at Columbia University in New York.

The landmark address marks the beginning of a month of UN-led climate action, which includes the release of major reports on the global climate and fossil fuel production, culminating in a climate summit on 12 December, the fifth anniversary of the 2015 Paris Climate Agreement.

Nature always strikes back

Mr. Guterres began with a litany of the many ways in which nature is reacting, with “growing force and fury”, to humanity’s mishandling of the environment, which has seen a collapse in biodiversity, spreading deserts, and oceans reaching record temperatures.

The link between COVID-19 and man-made climate change was also made plain by the UN chief, who noted that the continued encroachment of people and livestock into animal habitats, risks exposing us to more deadly diseases.

And, whilst the economic slowdown resulting from the pandemic has temporarily slowed emissions of harmful greenhouse gases, levels of carbon dioxide, nitrous oxide and methane are still rising, with the amount of CO2 in the atmosphere at a record high. Despite this worrying trend, fossil fuel production – responsible for a significant proportion of greenhouse gases – is predicted to continue on an upward path.

‘Time to flick the green switch’

The appropriate global response, said the Secretary-General, is a transformation of the world economy, flicking the “green switch” and building a sustainable system driven by renewable energy, green jobs and a resilient future.

One way to achieve this vision, is by achieving net zero emissions (read our feature story on net zero for a full explanation, and why it is so important). There are encouraging signs on this front, with several developed countries, including the UK, Japan and China, committing to the goal over the next few decades.

Mr. Guterres called on all countries, cities and businesses to target 2050 as the date by which they achieve carbon neutrality – to at least halt national increases in emissions – and for all individuals to do their part.

With the cost of renewable energy continuing to fall, this transition makes economic sense, and will lead to a net creation of 18 million jobs over the next 10 years. Nevertheless, the UN chief pointed out, the G20, the world’s largest economies, are planning to spend 50 per cent more on sectors linked to fossil fuel production and consumption, than on low-carbon energy.

Put a price on carbon

For years, many climate experts and activists have called for the cost of carbon-based pollution to be factored into the price of fossil fuels, a step that Mr. Guterres said would provide certainty and confidence for the private and financial sectors.

Companies, he declared, need to adjust their business models, ensuring that finance is directed to the green economy, and pension funds, which manage some $32 trillion in assets, need to step and invest in carbon-free portfolios.

Far more money, continued the Secretary-General, needs to be invested in adapting to the changing climate, which is hindering the UN’s work on disaster risk reduction. The international community, he said, has “both a moral imperative and a clear economic case, for supporting developing countries to adapt and build resilience to current and future climate impacts”.

Everything is interlinked

The COVID-19 pandemic put paid to many plans, including the UN’s ambitious plan to make 2020 the “super year” for buttressing the natural world. That ambition has now been shifted to 2021, and will involve a number of major climate-related international commitments.

These include the development of a plan to halt the biodiversity crisis; an Oceans Conference to protect marine environments; a global sustainable transport conference; and the first Food Systems Summit, aimed at transforming global food production and consumption.

Mr. Guterres ended his speech on a note of hope, amid the prospect of a new, more sustainable world in which mindsets are shifting, to take into account the importance of reducing each individual’s carbon footprint.

Far from looking to return to “normal”, a world of inequality, injustice and “heedless dominion over the Earth”, the next step, said the Secretary-General, should be towards a safer, more sustainable and equitable path, and for mankind to rethink our relationship with the natural world – and with each other.

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The race to zero emissions, and why the world depends on it

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A host of countries have recently announced major commitments to significantly cut their carbon emissions, promising to reach “net zero” in the coming years. The term is becoming a global rallying cry, frequently cited as a necessary step to successfully beat back climate change, and the devastation it is causing.

What is net zero and why is it important?

Put simply, net zero means we are not adding new emissions to the atmosphere. Emissions will continue, but will be balanced by absorbing an equivalent amount from the atmosphere.

Practically every country has joined the Paris Agreement on climate change, which calls for keeping the global temperature to 1.5°C above pre-industrial era levels. If we continue to pump out the emissions that cause climate change, however, temperatures will continue to rise well beyond 1.5, to levels that threaten the lives and livelihoods of people everywhere.

This is why a growing number of countries are making commitments to achieve carbon neutrality, or “net zero” emissions within the next few decades. It’s a big task, requiring ambitious actions starting right now.

Net zero by 2050 is the goal. But countries also need to demonstrate how they will get there. Efforts to reach net-zero must be complemented with adaptation and resilience measures, and the mobilization of climate financing for developing countries.

So how can the world move toward net zero?

The good news is that the technology exists to reach net zero – and it is affordable.

A key element is powering economies with clean energy, replacing polluting coal – and gas and oil-fired power stations – with renewable energy sources, such as wind or solar farms. This would dramatically reduce carbon emissions. Plus, renewable energy is now not only cleaner, but often cheaper than fossil fuels.

A wholesale switch to electric transport, powered by renewable energy, would also play a huge role in lowering emissions, with the added bonus of slashing air pollution in the world’s major cities. Electric vehicles are rapidly becoming cheaper and more efficient, and many countries, including those committed to net zero, have proposed plans to phase out the sale of fossil-fuel powered cars.

Other harmful emissions come from agriculture (livestock produce significant levels of methane, a greenhouse gas). These could be reduced drastically if we eat less meat and more plant-based foods. Here again, the signs are promising, such as the rising popularity of “plant-based meats” now being sold in major international fast-food chains.

What will happen to remaining emissions?

Reducing emissions is extremely important. To get to net zero, we also need to find ways to remove carbon from the atmosphere. Here again, solutions are at hand. The most important have existed in nature for thousands of years.

 These “nature-based solutions” include forests, peatbogs, mangroves, soil and even underground seaweed forests, which are all highly efficient at absorbing carbon. This is why huge efforts are being made around the world to save forests, plant trees, and rehabilitate peat and mangrove areas, as well as to improve farming techniques.

Who is responsible for getting to net zero?

We are all responsible as individuals, in terms of changing our habits and living in a way which is more sustainable, and which does less harm to the planet, making the kind of lifestyle changes which are highlighted in the UN’s Act Now campaign.

The private sector also needs to get in on the act and it is doing so through the UN Global Compact, which helps businesses to align with the UN’s environmental and societal goals.

It’s clear, however, that the main driving force for change will be made at a national government level, such as through legislation and regulations to reduce emissions.

Many governments are now moving in the right direction. By early 2021, countries representing more than 65 per cent of global carbon dioxide emissions and more than 70 per cent of the world economy, will have made ambitious commitments to carbon neutrality. 

The European Union, Japan and the Republic of Korea, together with more than 110 other countries, have pledged carbon neutrality by 2050; China says it will do so before 2060.

Are these commitments any more than just political statements?

These commitments are important signals of good intentions to reach the goal, but must be backed by rapid and ambitious action. One important step is to provide detailed plans for action in nationally determined contributions or NDCs. These define targets and actions to reduce emissions within the next 5 to 10 years. They are critical to guide the right investments and attract enough finance.

So far, 186 parties to the Paris Agreement have developed NDCs. This year, they are expected to submit new or updated plans demonstrating higher ambition and action. Click here to see the NDC registry.

Is net zero realistic?

Yes! Especially if every country, city, financial institution and company adopts realistic plans for transitioning to net zero emissions by 2050.

The COVID-19 pandemic recovery could be an important and positive turning point. When economic stimulus packages kick in, there will be a genuine opportunity to promote renewable energy investments, smart buildings, green and public transport, and a whole range of other interventions that will help to slow climate change.

But not all countries are in the same position to affect change, are they?

That’s absolutely true. Major emitters, such as the G20 countries, which generate 80 per cent of carbon emissions, in particular, need to significantly increase their present levels of ambition and action.

Also, keep in mind that far greater efforts are needed to build resilience in vulnerable countries and for the most vulnerable people; they do the least to cause

climate change but bear the worst impacts. Resilience and adaptation action do not get the funding they need, however.

Even as they pursue net zero, developed countries must deliver on their commitment to provide $100 billion dollars a year for mitigation, adaptation and resilience in developing countries.

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