Re-energising Europe’s global green reach Bruegel

Transcript:Re-energising Europe’s global green reach Bruegel:
Re-energising Europe’s global green reach Bruegel Event Giovanni Sgaravatti, Simone Tagliapietra, Cecilia Trasi 27/06/2024 Agenda Why the EU needs a clear global reach strategy Shifting drivers of EU green external action The current toolkit Main shortcomings of the current toolkit Way forward: policy recommendations The time for EU green external action is now Shrinking Remaining Carbon Budget: 200 Gt CO2 in 2024 vs. 500 Gt in 2020 (Forster et al, 2024) EU’s annual emissions: 7% of global total, leading by example is not enough. Timing of COP30 and NDCs update Source: Bruegel based on Our World in Data, Global Carbon Budget and IPCC. The EU unavoidably has a large influence The EU’s large share of global trade is also important leverage that can be used to promote green growth domestically and in partner countries. Source: Bruegel based on Global Carbon Budget, World Bank, WTO. The shifting drivers of EU green external action Source: : Bruegel based on CBAM regulation and CEPII’s dataset BACI. EU energy transition changes supply trends Source: : Bruegel based on EIA and BP’s Statistical Review of World Energy 2022. Source: Bruegel on IEA World Energy Outlook 2023. Increasing demand for new resources Source: : Bruegel on Carrara et al (2023). EU demand for some of the most used raw materials, including copper, silicon metal, nickel, manganese and lithium, is expected to increase elevenfold by 2050 The main question will be how to prioritise collaboration with which countries Plus, competitiveness and strategic autonomy The EU could set a strategy to import more intermediate energy-intensive products while focusing on higher value-added goods Reduce costs of energy-intensive goods Offer an industrialisation pathway for EMDEs seeking to move up the supply chain Reduce the green premium fostering sales Source: : Chief Economist Team/DG ENER/European Commission. Industrial retail electricity prices (€/MWh, quarterly averages, 2015-2023) The current EU green global reach toolkit International commitments, e.g. The Paris Agreement Bilateral partnerships, e.g. energy, green and critical raw materials partnerships Climate finance €28.4 billion allocated, €11.9 billion mobilised from the private sector. Source: : Bruegel based on European Environment Agency. Main shortcomings of the current toolkit Fragmentation of the current architecture Multiple DGs with coordination difficulties A compartmentalized approach TEIs Implementation deficiencies Skepticism and resistance in third countries Backlash to EU green policies in third countries Actual impact of EU financial flows for climate adaptation and mitigation has yet to be assessed Way forward: