The Europe-wide shutdown is reducing both energy consumption and carbon dioxide emissions. At first glance, this might seem like good news. But it has also caused CO2 certificates traded under the European Union Emissions Trading System to lose a third of their value since March. Economic activity is expected to be significantly depressed over the coming weeks and months and production capacities underused.
This reduction in economic activity will have a knock-on effect on the price of CO2, which was established with the aim of encouraging investments in renewables and sustainability. The pandemic is piling pressure on a central instrument of European climate policy and calls into question the future of the proposed carbon border tax mechanism, which was to target carbon-intensive imports.
If we are to achieve our climate goals, the European Commission will have to stick to its guns and rigorously implement the European Green Deal once the Corona Crisis has passed. This will be a politically fraught debate. Czech politicians have called for the Green Deal to be scrapped, and Poland is weighing the possibility of withdrawing from emissions trading.
It is vital that efforts to kickstart the European economy prioritize sustainable development and that we use the European Green Deal as a kind of Marshall Plan for a broad transformation towards sustainability.
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