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India, China, the US: all the EU’s partners to achieve the Green Deal’s ambitions

The European Union is strengthening its bilateral relations in the areas of resource efficiency and circular economy.

Together with Indian Prime Minister Narendra Modi, European Commission President Ursula von der Leyen and European Council President Charles Michel adopted a Joint Declaration to establish an India-EU Resource Efficiency and Circular Economy Partnership.

“Our Strategic Partnership with India in the field of resource efficiency and circular economy is set to gain even further importance in this decade, as we address sectors and challenges that are high on our respective agendas and seek a green recovery from the coronavirus crisis,” said Virginijus Sinkevičius, European Commissioner for Environment, Oceans and Fisheries. “The transition to a resource-efficient and circular economy is essential for the sustainability of EU and India’s economic growth and requires working together for a global systemic shift.”

Rapid economic growth, rising income levels and high rates of urbanisation have led to a surge in material consumption in India. Material requirements are projected to grow to about 15 billion tonnes by 2030, nearly three times the demand in 2010. Additionally, the mining of materials has resulted in the destruction of forest lands, population displacement and loss of livelihoods in several parts of the country. High levels of material consumption have also given rise to challenges in the management of waste.

At the same time, the economy of the EU is dependent on a wide variety of raw materials for production, many of which face availability or supply risks, or are expensive to procure. Furthermore, the EU currently loses a large amount of materials that are discarded as waste, which could instead be recovered and reintroduced into the product supply chain. While recycling rates around the EU have been steadily improving, in 2016, only 12 per cent of material resources came from recycled products and recovered materials.

Therefore, resource efficiency and circular economy models can help in decoupling economic growth from resource use and its negative environmental externalities.

Europe cannot act alone

The declaration signed with India represents a further step towards the achievement of the ambitious Green Deal.

As Commissioner Sinkevičius said, “the environmental and economic ambition of the Green Deal will not be achieved by Europe acting alone.”

Indeed, as reminded by Douglas Hengel, Senior Fellow at the German Marshall Fund of the United States, the EU’s emissions account for only about 9 per cent of global emissions. Therefore Europe, by itself, can only make a relatively small contribution to putting the planet on a sustainable path toward climate neutrality.

Also, the EU commission recognised if the EU’s international partners do not share the same ambition there is a risk of carbon leakage, either because production is transferred from the EU to other countries with lower ambition for emission reduction, or because EU products are replaced by more carbon-intensive imports.

In this regard, a major role is played by large polluters like China and the United States.

Speaking at the Davos Forum in January, Germany’s chancellor Angela Merkel, underlined the importance of cooperation between the EU and China also concerning energy and climate change.

“For the very first time, we want to have an EU‑China Summit that includes all 27 member states and that will be held in September in Leipzig,” she said. “At this event, we want to focus on three main issues. […] We will talk about how we can jointly tackle climate change. This is a tremendous opportunity for us, because China, too, is introducing an emissions trading system – that is, market-based mechanisms. If we could interlink the European emissions trading system with that of China, we would have covered a very large part of the world, and this could serve as an example.”

While the coronavirus pandemic surely has delayed certain agreements, a cooperation with the United States, although very much desirable, might be complicated.

On one hand, speaking at the BusinessEurope summit, Commission’s president Mrs von der Leyen recalled the good meeting with US President Donald Trump during the Davos forum in January.

“There might be momentum for improving the EU’s relationship with the US,” she said quoted by Euractiv.

Also, Richard Morningstar, founding chairman of the Atlantic Council’s Global Energy Centre and former US ambassador to the EU, agreed that Washington should continue to help Europe “develop a competitive and transparent market,” especially in Central and Eastern Europe.

But the European Commission’s proposal to develop a carbon border adjustment (CBA) mechanism could be problematic. Carbon leakage occurs when companies transfer production to countries that are less strict about emissions. In such case, global emissions would not be reduced. Therefore, the proposed mechanism would counteract this risk by putting a carbon price on imports of certain goods from outside the EU. The CBA mechanism could impact US exports to the EU, although, as highlighted by Director General for Energy at the European Commission Ditte Juul Jørgensen, such “new measure is not likely until at least 2021.”

On the contrary, Mrs Juul Jørgensen is looking at the US as very important partners, considering that the EU will keep using gas as part of the energy transition and the United States can easily source liquefied natural gas (LNG).

In addition to gas, Europe is also looking to the US to help cooperate on new infrastructure and technology for the transition, including stronger cooperation on Carbon Capture and Storage (CCS) and energy efficiency technology.

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