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A Furious Hungary Threatens To Veto Europe's Green New Deal

Tyler Durden's Photo
by Tyler Durden
Friday, Jul 16, 2021 - 05:00 AM

Yesterday, to much fanfare the EU unveiled an absurd set of climate change and emissions targets for 2030 which will transform every corner of its economy. As part of the plan, every industry would be forced to accelerate its shift away from fossil fuels in order to cut pollution by at least 55% from 1990 levels by 2030. To achieve that, the bloc will bring new industries such as shipping into what’s already the world’s largest carbon market; ban all new combustion-engine cars by 2035; impose new costs on dirty home heating; and force the aviation industry to emit less and pay more.

At least the EU was honest: “Nothing we presented today is going to be easy. It’s going to be bloody hard,” European Commission climate chief Frans Timmermans said.

Of course, Europe's "green new deal" won't come cheap.

Just the planned emissions-trading program for heating and road transport fuels may cost European households as much as 1.1 trillion euros in by 2040, the Polish Economic Institute said on Thursday. Add this to all the other mandatory spending and the price bill rapidly jumps into the trillions much of which will likely come from new taxes, not to mention gutting existing infrastructure. Anticipating pushback from a population that is nowhere near as rich (or pretend virtuous) as its unelected leaders, Timmermans admitted that "we're going to ask a lot of our citizens," adding that "we're also going to ask a lot of our industries, but we do it for a good cause. We do it to give humanity a fighting chance."

Sure you are.

But in an unexpected twist, EU's plans to restructure the European economy - which is already the greenest in the world while completely ignoring the coal-covered elephant in China - may be dead on arrival, because one of its member states has already threatened to veto the unprecedented overhaul when the government of Hungarian Prime Minister Viktor Orban’s - already embroiled in a standoff with Brussels over an LGBTQ crackdown - blasted the plan, saying it threatened to undo its signature utility price cuts.

“The European Commission’s choice of tools is untenable and unacceptable because it would lead to taxes on real estate and cars instead of making polluters pay,” Hungarian Cabinet Minister Gergely Gulyas told reporters in Budapest on Thursday

“This would also destroy the results of utility price-cuts (in Hungary). Therefore this proposal is unacceptable for Hungary in the current shape and since unanimity is required the EU can’t implement this proposal,” he said after the government discussed the Commission’s Fit for 55 package.

It's not just Hungary that will prove to be a tough nut to crack. As part of the new plan, the EU wants to introduce a levy on certain imports from countries with less strict climate rules, like China. With its long phase-in period, many experts see it as an attempt by the EU to force others to change.

“Implementation could prove to be a logistical nightmare,” said James Whiteside, global head of multi-commodity research at Wood Mackenzie.

Carbon prices - or the price of polluting - initially surged on Wednesday as the measures were rolled out, with more industries set to join the emissions-trading system. The price surged to records this year as financial investors piled in, leading to concerns that consumers will have to bear the cost. The rapid price increases in the current ETS have already led to complaints -- mostly from eastern European countries -- that the soaring costs will undermine their ability to invest in clean technologies.

“The proposal today is just the first chapter of the story,” Tagliapietra said.

“We will see a lot of friction and tension over the next two to three years. Europe is set to become a global laboratory for deep decarbonization and the world will have an opportunity to learn how to achieve climate targets.”

Well, if there is one thing Europe has demonstrated it can easily overcome it is "tensions" among its poorer members. Because, well, "whatever it takes" to make the rich even richer which, at its core, is what this noble green revolution is all about.

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