- The European Union is at risk of missing its 2030 climate targets, with Germany and Italy falling behind.
- The two countries may need to spend €15 billion on carbon credits to comply with climate law.
- A shortage of carbon credits could lead to costly bidding wars and legal challenges for EU countries.
The European Union is at risk of failing to meet its ambitious climate targets for 2030, and Germany and Italy are largely to blame.
The two countries are well off track in reducing greenhouse gas emissions in industries such as transport and construction and could be forced to spend more than $16.1 billion (15 billion euros) on carbon credits to comply with EU law, research firm European Economics said. T&E, a nonprofit that promotes cleaner transportation.
There’s just one problem: Germany and Italy could eat up most of the credits available across the EU, setting off a costly bidding war with other countries that are similarly unable to meet their climate targets.
“Germany and Italy are eating up all the carbon credits they can get from their neighbors, putting both countries in a bind and exposing them to the risk of litigation,” Sophie Defour, climate director at T&E, said in a statement. “The German government will face further demands from its citizens to make up for its weak policies and an even deeper fiscal crisis.”
The EU’s climate law, known as effort sharing, sets binding emissions-reduction targets for each of the EU’s 27 member states. The overall aim is to cut emissions 40% below 2005 levels by 2030. The law applies to industries such as transport, construction and agriculture, which account for just under two-thirds of the EU’s emissions.
Countries that fail to meet their climate targets can buy credits from neighbouring countries that exceed their targets.
Spain is expected to post the largest surplus, followed by Greece and Poland, according to the T&E study, but at least 12 countries are expected to miss their national climate targets.
Attempts by countries including Germany, Italy and France to cut emissions from agriculture and transport have sparked protests from farmers and citizens who fear rising costs and making EU products more expensive than imports.
The backlash helped the far-right win seats in the European Parliament after elections this month.
Defoe said countries were faced with a choice: pay billions of dollars to their neighbors in carbon debt or implement stronger climate policies, such as insulating homes and making them more energy efficient.
