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The closing final hours of COP27 were perhaps the busiest. The final version of the text included language on the acceptability of ”low emissions energy”, leaving those countries that had backed India’s proposal to phase out all fossil fuel use with a bitter taste.
But there was also a major shift in the last days that brought some success to the conference: the loss and damage fund. Just as COP27 faced ending with an impasse on the vexed question of a reparations fund for global south states most affected by climate change, a plan was dropped on the table.
The EU proposed that, if there was a worldwide commitment to emissions peaking by 2025, they would support a new global fund to finance the response to climate disasters in the world’s most vulnerable countries.
Until this point, the EU had aligned with the US in blocking ideas put forward by less developed countries. Now, at the 11th hour, the EU left the US isolated in opposition.
Since the US re-joined the Paris agreement on climate, the EU and the US have pursued different styles of climate leadership. The US approach – typified in the Inflation Reduction Act, which came into law in August 2022 – has been focused on delivering the US’ contribution to the Paris goals through state aid for businesses willing to invest in clean energy, to keep them competitive.
The EU on the other hand has aspired to lead by example through the European Green Deal, the first attempt by any global power to transform its economies through decarbonisation, ahead of all other players.
Key aspects of the Green Deal, such as the Carbon Border Adjustment Mechanism, will make it harder for businesses in neighbouring countries to compete with European companies unless they also decarbonise. But the philosophy of the European Green Deal was to make the tough choices first, using regulation to push businesses to change, showing more reluctant countries that the journey to net zero was navigable.
The EU’s brand of climate power hit a credibility problem in 2022 with Russia’s war of aggression on Ukraine. In the resulting energy crisis, EU member states have been rapidly trying to replace fossil fuel supplies from Russia with like-for-like – in so doing undercutting other countries’ supplies and pushing up global gas prices.
When ahead of COP27, EU leaders pushed other countries to fulfil and deepen their targets under the Paris agreement, while backtracking on their own, they faced charges of hypocrisy: they ignored their own decarbonisation promises when their energy security was under threat.
As a new energy deal tracker launched by ECFR this month shows, there is some truth to this charge. Of the new energy supply deals that the EU has agreed in 2022, only half have any clean energy element. And these vary in depth – ranging from a commitment to explore renewable energy sources with non-EU countries to the development of appropriate infrastructure, to direct imports of clean energy.
Sharm El Sheikh demonstrated how fragile the global consensus to cooperate around climate is, given the yawning trust gap over climate financing, debt financing and vaccine nationalism. And – given the lack of progress towards ending the use of fossil fuels at this year’s COP – European commitments on climate action of course are needed more than ever.
It is far from clear that the US president after the 2024 elections will be as favourable to the climate agenda as Biden. If Europe steps back from the leadership role that it has played in recent years, the road to global decarbonisation moves from a rocky one to an impossible one.
Against this backdrop, the EU’s late conversion to the cause of increasing climate financing to the most vulnerable countries is welcome, but not sufficient for it to continue to exercise climate power in the coming months and years. The EU also needs to refuel its climate leadership by example, demonstrating that climate action is compatible with – and indeed a key part of – sustainable energy security, for Europe as with all other parts of the world.
The EU needs a plan to rapidly invest in and scale up clean energy, demonstrating that climate-friendly investment choices will pay off. Investment in a robust and sustainable industrial transformation within the EU will put it in a better position to compete with the US as the Inflation Reduction Act starts to impact.
By borrowing from the US example, the EU can exercise its own brand of climate power that allows it to be both competitive – maintaining a healthy rivalry with US businesses – and supportive to more vulnerable economies.
A successful European combination of investment and regulation may even convince the US to do more on the regulatory side too. Two global regions operating with similar decarbonisation approaches are stronger than one in competing with the Chinese carbon fuelled model.
But European leaders need to act now, to put in place the investment and incentives for clean energy at the necessary scale, to shape the post-COP27 landscape, and push others towards implementation.
Europeans’ “can do” message in Sharm el Sheikh needs to be followed up by the EU demonstrating in practice that it can do it at home.
Susi Dennison is the director of the “European Power” programme of the European Council on Foreign Relations (ECFR).