2024 hasn’t even started and it’s already clear it will be one for the history books. It’s not just about the EU elections or Trump vs Biden though. What are the 8 things to watch out for?
The other Euro Championship
BYD is on a roll. It has just dethroned Tesla as the world’s biggest EV maker and has now set its sights on Europe. In a hugely symbolic move the Chinese brand has become the lead sponsor of the European football championship, hosted by Germany. But BYD’s European offensive may really take off. The EU Commission is investigating whether to slap tariffs on cars produced in China. Surprisingly, the CEO of Tesla is all but cheering Europe on, claiming Chinese carmakers will “demolish” the competition without tariffs. So will it or won’t it? And will that be the beginning of a damaging tit-for-tat trade war or would it simply lead to Chinese (and western) carmakers localising their production in Europe? We hope for the latter as this would combine jobs and manufacturing in Europe with much needed competition in the affordable EV segment.
Will the EU make a move on corporate fleets?
Belgium is the new Norway. EV sales are growing fast and by 2026-27 could account for two thirds of new sales. Why? There’s just one reason: Belgium chose to end subsidies (tax deductibility) for fossil company cars and keep it for electric cars. The system isn’t perfect. It is still too generous and favours premium, not affordable EVs. But it does hold a clue for the rest of the EU: if you want to electrify fast, electrify corporate fleets. The EU Commission understands this and will launch a consultation on whether and how to take action in February. This is is a key initiative for the EU. Obstructing affordable EVs made in China and allowing domestic carmakers to continue focusing on petrol cars would make Europe less competitive, not more.
EU2040 – On the way to -90%?
The EU has an ambitious 2030 climate strategy. It also has an aspiration to become carbon neutral by 2050. What’s missing is a path towards carbon neutrality that spells out what needs to happen between 2030 and 2050. Taking a 2040 perspective will force us all to think differently. By 2030 transport will account for 44% of EU carbon emissions. Hitting net -90% by 2040 is a big lift. It means we cannot question EU plans to go to 100% clean technology (EV) sales. But we’ll have to do more. We’ll also have to retire fossil assets – e.g. boilers, petrol cars and stop growing polluting activities (e.g. airport, road expansion). As farmers descend on Brussels to protest against green policies, the question is not just whether the strategy will be issued, but also how it will land.
Trucks. Will the EU sign a near phase out of polluting diesel trucks into law?
The year started with excellent news. The Belgian presidency got off to a lightning start and struck a deal with Parliament negotiators to cut new truck emissions by -45, -65 and -90% by 2030, 2035 and 2040 respectively. It’s a fairly ambitious rule that was adopted quickly and rather consensually. The deal does not include a carve out for e-fuels and biofuels. All of this is good. Now the deal has to get a final nod from Parliament and Council.
Shipping. Beginning of ETS and can the IMO get its act together on climate? MEPC etc
2024 is the first year ships will have to pay fortheir emissions as part of the newly introduced shipping ETS. If the world’s two other major economies – the US and China – followed Europe’s example the vast majority of ships in the world would be covered in a global carbon market. Some shipping companies and Southern European ports are pushing back, trying to ‘pause’ the system. The EU must resist the urge to carve out exemptions and ensure polluters are made to pay.
But shipping is a global business. What will the IMO, the UN agency captured by the industry interests, do to contribute to shipping’s decarbonisation efforts? The world’s most climate vulnerable nations in the South Pacific want the IMO to impose a $150 per tonne CO2 levy on dirty shipping. Europe for its part is championing green fuel mandates. We need both! But European leaders should not lose sight of Europe’s sovereignty and responsibility before its citizens to clean up its own backyard. Thinking globally is a common agenda, but real action always starts at home.
Palm and soy biodiesel on the fast lane out?
The dumbest thing the EU ever did in the name of the climate was import palm oil from SouthEast Asia, burn it in cars and then pretend this would have a wonderful impact on the planet and energy security. The EU Commission promised it would accelerate the palm oil phase out and include soy biodiesel in the category of deforestation causing biofuels produced far away. A no brainer one would imagine, especially with farmers taking the streets in Germany and France. And yet, the Commission is now trying to delay the decision beyond the EU election, possibly to facilitate a Mercosur deal with big soybean biodiesel exporter Argentina. The EU should not be sacrificing the climate and European farmers in the name of free trade.
What car e-fuels are ‘carbon neutral’?
As part of the EU cars law, Germany’s libertarian FDP party secured an exemption from the combustion engine phase out for cars running exclusively on carbon neutral fuels. But the EU now has to decide what fuels qualify as carbon neutral. The e-fuel lobby argues 100% clean e-fuels are not (yet) possible. Italy wants dirty biofuels to be considered carbon neutral. The Commission follows the science and has proposed to only allow vehicles that run 100% on fuels made of 100% green electricity. The final decision lies with EU member states. A decision is expected in March but might drag on until after the elections.
Elections, elections, elections
The fate of democracy, climate action and the Atlantic alliance all hang in the balance as hundreds of millions of Europeans and Americans go to the polls. The US elections get a lot of media attention, even in Europe. Rightly so. And yet, our fate is decided here. Will Europeans elect politicians that look to the future, that try and solve problems, rather than create them, or do they give the keys of power to far right extremists that want to destroy democracy, civil society and environmental protection? For better or worse, the people of Europe will decide.
