Valdai Club

The EU is becoming the trendsetter for the global environmental agenda. It sees itself not only as a competitive economy but also as the leader of the green revolution. During the UN Climate Change Conference in Madrid in December 2019, President of the European Commission Ursula von der Leyen reaffirmed the EUs goal of becoming the first climate neutral continent by 2050 and invited the international community to join the European Green Deal.

So far, the EU is fighting this battle alone. Inspired by the spirit of the Paris climate agreement, it first formulated its goals and then environmental standards, which have taken shape in its environmental and trade policies. While the world watches US-Chinese trade wars and ceasefires, the European Commission is waging quiet green wars aimed at protecting European manufacturers. 

For example, there is ongoing debate on the revised Renewable Energy Directive (RED II) adopted in December 2018. It stipulates a new binding renewable energy target for the EU for 2030 at 32 percent and a ban on the use of palm oil in the production of biofuels, as well as a complete ban on biofuels in 2030. The share of crop biofuels, already very low, has been frozen at 2019 levels.

EU leadership believes that the planting of oil palms has engendered major environmental problems. A desire to meet the growing demand for palm oil in recent decades has led to the inconsiderate destruction of forests to clear space for oil palms. Ultimately, this is fraught with deforestation, threatens biodiversity and is aggravating the greenhouse effect.

Just few years ago, palm oil biofuels were seen as an instrument in the fight against climate change. The first Renewable Energy Directive adopted in 2009 (RED I) encouraged the use of biofuels and stipulated subsidies and incentives for palm oil producers. 

Indonesia and Malaysia were the first to suffer the effects of RED II. They are the worlds largest palm oil producers and exporters, together accounting for 85 percent of global palm oil exports. The EU, India and China were the largest importers of palm oil.

In response, Indonesia and Malaysia are considering restrictions on imports from the EU, including the replacement of European aircraft with Russian planes. A trade war with the EU would put Indonesia at a disadvantage. Although EU products account for only 1 percent of its imports, Indonesia, just as Malaysia, is among the ASEAN member states with which the EU is conducting bilateral free trade zone talks. The EUs ban on palm oil could hamper the talks with Indonesia, Malaysia and Thailand. In December 2019, Indonesia initiated a WTO dispute complaint against EU biofuels, arguing that a ban on biofuels made of palm oil is inconsistent with fair competition guidelines.

The EU measures against palm oil are unlikely to have a big environmental effect. But this will definitely toughen rivalry between the other vegetable oil (soy and rapeseed) producers on the EU market. These crops are less effective than palm oil and cultivation requires even more land, water and fertilizer. This European Commission decision has brought down palm oil prices, forcing palm oil producing countries to look for alternative markets, for example, China, and to increase production. This will ultimately endanger even larger forest masses in Southeast Asia, while the quality of arable soil in the EU will plummet because it will have to grow more alternative crops. An Oxfam report says that all actors of the biofuel value chain lined up 600 lobbyists and spent 14 million euros to influence the EUs new bioenergy sustainability policy during debates on RED II policy. 
Another issue currently being debated in the EU is the so-called meat tax, that is, additional levies on the producers of meat, dairy and egg products. The idea has received an additional push from a recent report commissioned by TAPP Coalition , which linked growing meat consumption to environmental issues and climate change. The report is now being actively discussed in the EU. 

The EU could be planning to use monetary approaches to changing its citizens tastes. A meat tax would increase meat prices by at least 20 percent, but the report claims that this would decrease EU beef consumption by 67 percent, pork by 57 percent and poultry meat by 30 percent by 2030. 

However, the EU is willing to eat cultured (synthetic, artificial or in-vitro) meat, but not imported meat. Startup companies producing synthetic meat, which are popping up in the EU, could market their products as soon as 2022. At the same time, meat products remain a matter of dispute at the EU-MERCOSUR talks on a free trade zone. A meat tax would protect European farmers from their South American rivals. 
A carbon border tax on polluting products/production is almost an accomplished fact for the EU. It will increase pressure mostly on steel and glass manufacturers and will almost rule out the imports of these products. 

In other words, by taking these ostensibly environmental measures the EU aims to protect European producers rather than the environment, although this trade policy could have an extremely adverse effect on other countries and regions. Moreover, the EU hopes that its regulatory initiatives would encourage other countries to emulate its policy of environmental standards and sustainable production.

So far, the environmental agenda has been formed in the West, and it calls for restraining industrial development. But such artificial restrictions on growth can also result in pitting the global North against the global South.