BOX 1: RECOMMENDATIONS FOR A TRANSATLANTIC CLIMATE AGENDA

BOX 1: RECOMMENDATIONS FOR A TRANSATLANTIC CLIMATE AGENDA

  • Jointly shape more ambitious global climate targets: With Biden pledging to rejoin the Paris Climate Agreement, there is ample opportunity for the EU and the United States to work together in international climate diplomacy. An immediate priority must be for them to coordinate their positions as they negotiate ambitious new emissions targets ahead of the upcoming United Nations Climate Change Conference (COP26) summit in Glasgow in November 2021. As an important part of the global community’s efforts to fight climate change, the United States must rejoin the Green Climate Fund and fulfill its responsibilities when it comes to providing climate finance. Moreover, given that Washington disengaged from climate discussions in the G7 and G20 contexts under Trump, the G7 summit that will be hosted by the United Kingdom and the G20 summit that will be hosted by Italy in 2021 should both include a clear commitment to combating climate change in the joint communiqué. Another opportunity for more EU-U.S. climate diplomacy is how to make better use of the annual Ministerial on Climate Action or the Clean Energy Ministerial.

  • Adopt a common approach to a carbon border adjustment tax: The EU’s idea to implement a carbon border adjustment tax by 2023 as part of the European Green Deal and to avoid climate leakage could have wide-ranging implications inside and outside of Europe. The U.S. response has so far been critical, but there may be more transatlantic synergy on this evolving issue with the Biden administration. If the transatlantic partners can agree among themselves and then bring others into a “carbon free trade zone,” a considerable part of the global economy could become subject to such new trade rules fostering a low-carbon economy. However, much depends on whether Congress would be supportive and how the World Trade Organization as the ultimate decider would respond.

  • Jointly engage China and India: Global progress on climate change is only possible with two of the current major emitters, China and India, on board. Engaging them should therefore be a key focus for the transatlantic partners. Biden has expressed interest in reengaging China on climate issues, something that Trump took off the agenda. Washington and the EU should now jointly engage China as part of a trilateral climate dialogue ahead of COP26. With China’s recent announcement that it will aim for a carbon-neutral economy by 2060, there is potential for joint climate action while at the same time setting out clear redlines and not shying away from criticizing Beijing on issues like its investment in new coal power plants. A related issue will be to push for reform of the World Trade Organization to ensure that its legal framework better takes into account environmental and social standards for global trade. Finally, the United States and the EU should engage with China to ensure that its Belt and Road Initiative promotes sustainable connectivity that respects environmental standards while also being willing to present more high-standard alternatives to third countries as part of a new joint EU-U.S. connectivity initiative.

  • Better utilize the U.S.-EU Energy Council: The EU-U.S. Energy Council is an important platform that has been underutilized in recent years. Its mandate is to strengthen cooperation on energy security, expand efficient and sustainable energy use, and mobilize joint research and development on energy-efficient technologies. A reenergized U.S.-EU Energy Council should convene early in 2021 to hammer out a more ambitious work agenda for the coming years. It could review the output of its three working groups and decide whether a more frequent sub-cabinet-level meeting would better serve U.S. and EU interests. Topics especially conducive to enhanced transatlantic dialogue include liquefied natural gas, offshore wind energy, battery technologies, and cybersecurity in the energy sector. The Energy Council could also address the European Green Deal and its implications and opportunities for expanded U.S.-EU cooperation on sustainable and renewable energy, creating a clean-energy industry and trade relationship. The two sides should also continue to explore how to best integrate the private sector more effectively in joint energy work, including by convening more business-to-business EU-U.S. energy dialogues.

  • Shape joint standards for green tech and renewables. The EU and the United States should intensify efforts to shape joint standards around green technology and renewables. In this regard, areas such as agriculture and low-carbon fertilizers are conducive to setting new clean-energy standards. If the EU and the United States can manage to agree on shared standards, this could create the opportunity for them to become the global standard setter given the size of the transatlantic economy.

  • Joint investments in green transition. Even though a Biden administration does not mean that competition between the EU and the United States on energy technology will vanish, there is opportunity to strengthen transatlantic cooperation on green transition. This includes investing in offshore wind and hydrogen power as an area of commercial development and deployment. Other key issues where stronger joint leadership is possible include efficiency in the building sector (which can in turn help aid economic recovery and jobs creation), methane emissions (though the EU is concerned about the current U.S. approach to methane leakage), digitization of the energy sector (including grid protection and cyber), and battery technologies. As proposed by Franziska Brantner, a member of Germany’s parliament, the European Commission should adopt a separate funding instrument to enable grant-making partnerships between the EU and the United States to advance a Transatlantic Green New Deal, perhaps as part of a new U.S.-EU Clean Energy Bank. This would provide funding to increase public awareness of climate change and cooperation between cities and industrial actors to align climate goals and share best practices. It could help address the risk that the new green agendas on each side of the Atlantic end up being protectionist and creating a source of new transatlantic tensions. The EU and the United States should also explore sustainable finance such as green bonds, sustainable finance coalitions, and collaboration between international development finance institutions to assist developing countries in their green transition. Finally, they should seek to shape regulatory cooperation in the financial sector, such as setting ESG standards in mining industry, energy storage, green finance, green energy patents, maritime transport, and other potential issues.

  • Cooperate on supply-chain issues. On both sides of the Atlantic, there is growing concern about dependencies on foreign supplies for critical materials. The coronavirus pandemic has further raised concerns about critical dependencies on China. The EU and the United States have already announced or are thinking about new critical-mineral security strategies. This should be an area of transatlantic cooperation. Whereas the current trend is to go it alone, the EU and the United States should discuss this in the context of a transatlantic dialogue on China. In this regard, synergies could be explored between the EU’s new Battery Alliance and Critical Raw Materials Action Plan and similar U.S. initiatives like the Carbon Ore, Rare Earth, and Critical Minerals (CORE-CM) Initiative. The EU and the United States should also coordinate their approaches to reducing reliance on certain Chinese-made renewable energy solutions and critical minerals and align their investment security mechanisms.

  • Continue subnational climate cooperation: Cooperation between U.S. and EU subnational climate initiatives has expanded in recent years. Their relevance will continue during a Biden administration that is more active on the climate agenda. The United States and the EU should provide additional incentives to strengthen climate-diplomacy efforts between U.S. and European cities and regions—such as facilitating exchanges, sharing best practices, and promoting new initiatives and partnerships—and work to bring these networks into more formal policy processes.