Sitra’s statement on the European Climate Law

Sitra’s statement to the Commerce Committee of the Finnish Parliament on the European Commission’s Proposal for a Regulation of the European Parliament and of the Council establishing the framework for achieving climate neutrality and amending Regulation (EU) 2018/1999 (U 11/2020 vp).

Key observations

Sitra is grateful for the opportunity to issue a statement on the European Commission’s proposal concerning the European Climate Law. The key observations of Sitra’s statement are as follows:

• The European Climate Law is a significant initiative by the Commission. It supports the ecological reconstruction of the European Union and shifting the economy to a more sustainable track.
• Sitra is in favour of several elements of the Commission’s proposal, including the European Climate Act being legally binding, aligning all EU legislative proposals with climate neutrality and the regular science-based updating of climate targets.
• Sitra concurs with the Finnish Government’s view that the EU’s net emissions should be negative after 2050. Climate neutrality should be pursued even before 2050.
• The most significant deficiency in the proposal concerns the emission reduction target for 2030. The EU’s current target is inadequate and it should be updated without delay.
• The European Climate Act should set an emission reduction target for 2040 as well as a target level for the Union’s carbon sinks.
• Sitra is in favour of pursuing climate neutrality through the Union’s internal measures and has reservations regarding the use of international flexibility to achieve climate neutrality.

Sitra’s statement

Europe and the world are battling a global health crisis. At the same time, the climate is warming at a worrying rate.[1] While the immediate focus is on addressing the pandemic, the chronic ecological sustainability crisis has not gone anywhere.

The pandemic is not a reason to relax climate policy and the related regulations. With this in mind, the Commission’s proposal represents a successful initiative that is complemented by sustainable recovery measures[2] in Finland and Europe. The European Green Deal must serve as the foundation for the EU’s stimulus measures.

The European Climate Act strengthens the EU’s climate efforts

Sitra considers it important that the EU’s 2050 climate neutrality objective, which was agreed on by the European Council in December 2019, be incorporated in EU legislation as a legally binding goal. Sitra supports the Finnish Government’s view that the EU’s net emissions should be negative after 2050. Carbon neutrality should be achieved even before 2050; for example, by 2040.

The Commission’s proposal for the European Climate Act would strengthen the EU’s climate efforts in numerous ways. One of the significant initiatives is that the Commission commits to evaluating all EU legislative proposals against the carbon neutrality objective. This is aimed at ensuring that the Union’s policy is coherent across the board.

Climate neutrality must be clearly defined in the Regulation and it needs to be achieved through the EU’s internal action. Sitra has reservations regarding the use of international flexibility mechanisms. Flexibility mechanisms should only be employed if they are proven to lead to an overall mitigation in global emissions (OMGE). The Regulation should also set an emission reduction target for 2040 and a target level for the Union’s carbon sinks.

The proposal falls short when it comes to actions during the current decade

Sitra notes that the policies outlined in the proposal regarding the emission target for 2030 are too unambitious. The proposal reiterates the Commission’s earlier promise of updating the emission reduction target from the current level of 40 per cent to 50–55 per cent. However, it is important to remember that, to do its fair share of solving the climate crisis, the Union should reduce emissions even faster and more drastically.[3] The EU’s emission reduction target for 2030 is inadequate and it should be updated without delay.

The Commission’s proposal promises that the EU’s opinion on updating the 2030 target will be issued by September. It is positive that the Finnish Government has called for urgency regarding the Commission’s impact assessment and plans to increase the 2030 target. The sooner the proposal can be discussed, the more useful it may be in persuading other significant polluters to take additional action.

The second significant deficiency concerns the European Climate Law providing the opportunity to evaluate and review the emissions path only in the post-2030 period. In other words, the European Climate Law does not make it possible to confirm the 2030 emission target during this decade. At the Paris climate summit, the participating countries agreed to update the emission commitments within the year 2020. Reviewing the emissions path should be possible already in the 2020s.

Updating the emissions path will lead to alignment with the Paris Agreement

The European Climate Law will give the Commission the power to define the emissions path towards climate neutrality. When setting the emissions path, the Commission must, according to the proposal, take technological and economic issues into consideration, amongst other things. Sitra emphasises that the best available information and latest scientific knowledge must play a key role, including the latest reports by the Intergovernmental Panel on Climate Change (IPCC).

The emissions path, the EU’s progress and the actions taken will be evaluated in five-year intervals. If necessary, the emission reductions will be accelerated. If deficiencies are observed in the actions taken by the Member States, the Commission can recommend improvements. Sitra supports the Commission’s proposal and notes that the system is aligned with the ambition mechanism outlined in the Paris Agreement.

Transitioning to a carbon-neutral circular economy would enable the EU to accelerate emission reductions already in the current decade. Both Finland and the European Union must take full advantage of the potential presented by the circular economy. This simultaneously supports the achievement of the objectives of the European Climate Law as well as the economy and competitiveness.

[1] IPCC (2018): Global Warming of 1.5°C. Summary for Policymakers.
[2] Sitra (2020): Sustainable recovery measures for the coronashock.
[3] Sitra (2016): Finland won’t achieve Paris targets with current emissions commitments; Climate Analytics (2016): What does the Paris Agreement mean for Finland and the European Union?