Today, we are focusing on a different kind of climate finance: Instead of the usual aid for climate action and adaptation, we look at a billionaire tax for the super-rich, for example. It has been discussed for a long time, and now the Brazilian G20 presidency has presented the first details – with some surprises. Equally uncertain is the future of the German carbon price for heating and transport and how it can be integrated into EU emissions trading. The plans for this should be available now, but they are not. Infringement proceedings are looming – and price shocks. We take a look at the consequences and possible solutions.
Money also rules the climate world elsewhere, more or less directly: Among other things, we report on a carbon tax on cows in Denmark, as well as on the German energy transition, which will require billions in investment if it is to meet its ambitious targets. And the dispute before Germany’s highest court about whether fruit gums can be advertised as “carbon-neutral” is not a matter of taste – it’s about the manufacturer’s bottom line and potentially misleading its customers.
At the G20, Brazil has proposed a global minimum tax for billionaires to mobilize more money for climate action and the fight against poverty. On behalf of the Brazilian G20 presidency, economist Gabriel Zucman drafted a “blueprint” for such a wealth tax on assets in the run-up to the G20 finance ministers’ meeting on July 25/26. The plan is a central element of Brazil’s G20 presidency and has now gained support from France, Spain and South Africa. German Development Minister Svenja Schulze also signaled her approval. Zucman, founder and director of the independent research institute EU Tax Observatory at the Paris School of Economics, is convinced: “Thanks to recent progress in international tax cooperation, a common taxation standard for billionaires has become technically possible.” However, it remains to be seen how big the climate benefit would be.
According to Zucman’s calculations, taxing the wealth of around 3,000 global billionaires at an annual minimum rate of two percent would generate between 200 and 250 billion US dollars in tax revenue. The French tax researcher says that the minimum tax would not be an additional levy, as the super-rich, who already pay taxes on more than two percent of their wealth, would not be burdened additionally.
Nevertheless, Zucman predicts 200 to 250 billion US dollars in additional revenue. This is because most countries’ current tax systems hardly tax the assets of the super-rich. They also often pay less income tax than normal earners, as they earn a large part of their income through company investments and find loopholes here to keep their taxable income low. According to the American economist Joseph Stiglitz and the Indian economist Jayati Ghosh, US billionaires, for example, pay the equivalent of just 0.5 percent tax per year on their wealth. “For the first time in the history of the United States, billionaires have a lower effective tax rate than working-class Americans,” the two economists deplore.
If people with assets of more than 100 million US dollars were also included in the minimum tax, this would result in additional tax revenue of 300 to almost 380 billion. With a three percent minimum tax and including people with assets of more than 100 million US dollars, the revenue would already be between 550 and 690 billion, as Zucman’s calculations show.
According to Zucman, there are several challenges in implementing the billionaires’ tax:
However, Zucman is convinced that all these problems can be overcome if enough “political will” is mustered.
However, how much money a global billionaire tax would raise for climate action remains unclear. Such a tax is “not so easy to translate into climate financing.” Since countries would have to levy this tax, “new distribution conflicts can be expected,” says David Ryfisch, climate finance expert at Germanwatch. US Treasury Secretary Janet Yellen, for example, has already spoken out against the international redistribution of revenue from a global billionaire tax. At the same time, US President Joe Biden presented a plan for a billionaire tax of 25 percent – albeit on income and not on assets. However, Zucman says that this plan is “more ambitious” overall than Brazil’s G20 proposal.
Jan Kowalzig, climate finance expert at Oxfam, considers the billionaire tax to be a “realistic instrument for mobilizing more money for climate financing and social issues.” The financing needs for global climate action will be very high in the coming decades, he said. That is why no funding source should be ruled out from the outset. “However, a global billionaire tax and other new sources of finance must not distract from Global North’s responsibility. Many developing and emerging countries that rely on support from the Global North also see it that way,” Kowalzig told Table.Briefings.
Moreover, most of the super-rich still live in the Global North, which means that their tax payments tend to flow into the richer developed countries. Although the distribution of billionaires has changed in recent years and more and more super-rich people are also living in developing and emerging countries, the tax revenue from a global billionaire tax would still be heavily concentrated in the Global North and rich emerging economies. However, Zucman’s report does not break down which countries would receive which share of the 250 billion in new revenue.
It is also unlikely that a global billionaire tax could be implemented quickly. Felipe Antunes de Oliveira from the Brazilian Ministry of Finance said at the presentation of Zucman’s report that lengthy negotiations between the countries could be expected. Brazil wants to push the idea at the G20 even after its presidency. According to Zucman, the negotiations on a global minimum tax on multinational corporations took nine years. However, it would be possible to build on this to achieve a billionaire tax more quickly, said Zucman.
On Thursday, a ruling from the German Federal Court of Justice is expected in the appeal proceedings regarding the term “carbon-neutral.” The hearing for this case took place in April. The lawsuit was filed against the confectionery manufacturer Katjes, which had advertised its “Grün-Ohr-Hasen” with the slogan: “Since 2021, Katjes has produced all products carbon-neutral.” The court will now announce whether this was permissible. Katjes no longer uses this label in its advertising.
There has long been a dispute about “carbon-neutral” labels on products. The accusation is that the labels mislead consumers and suggest that no emissions were generated during the production of the products. “Carbon neutrality seals are untenable,” Carsten Warnecke from the New Climate Institute think tank told Table.Briefings. He says that the seals do not provide any information about companies’ efforts to protect the climate because they say nothing about emissions reduction and residual emissions. Instead, companies should communicate their efforts in more detail and more transparently. Warnecke welcomes that Katjes now produces almost exclusively vegan fruit gums – unlike its competitors – but not the “climate-neutral” label. He believes that while the term makes sense for countries that can offset residual emissions through carbon sinks, it is unsuitable for products.
For example, the German consumer protection association “Vebraucherzentrale” examined climate claims on 87 products in late 2023. They found many different seals and formulations and concluded that it is currently almost impossible for consumers to “reliably assess the validity” and reliability of climate claims. “We need to move away from the naive assumption that voluntary self-regulation initiatives will ensure climate action,” says Warnecke. “Instead, we need government regulation.”
However, even before the decision in the Katjes case, clarity had already been established at the EU level: At the end of March 2024, a law against greenwashing came into force, banning advertising making misleading environmental claims. Products that offset emissions through compensation can no longer be labeled as “carbon neutral,” “certified CO2-neutral,” or “CO2-positive,” for example. Countries now have two years to translate this regulation into national law. “The carbon neutral claim will then probably no longer be used on products,” Johanna Wurbs from the German Environment Agency told Table.Briefings.
The EU’s Green Claims Regulation is also intended to make advertising claims more comparable and reliable; it will soon be discussed in the EU Parliament. Agnes Sauter from Environmental Action Germany (DUH) hopes that an ambitious version of the green claims regulation will be adopted. She believes it is particularly important that the ex-ante verification of such claims is implemented. In other words, claims must be verified by independent testing bodies before publication.
At the same time, the term carbon neutral is to be linked to robust standards. To this end, the ISO 14068-1 standard on carbon neutrality was published at the end of 2023. “It’s an important guideline,” says Wurbs. “For the first time, carbon neutral is defined as a global standard.” Although the discussion within the EU is largely over at the product level, it continues at the company level.
However, the German Environment Agency also sees flaws in the standard. In a factsheet, for example, it writes that “companies with high GHG emissions and companies with a business model based on fossil energy use could theoretically also meet the standard.”
Unlike the EU, German legislators avoid taking an active role in combating these grievances, says Warnecke. He believes that this gives the impression that the consumer protection ministries are leaving it to associations such as Environmental Action Germany (DUH) to spend considerable time and resources pursuing legal action against companies.ch.
However, in the current case, DUH did not file the lawsuit against Katjes, but the competition watchdog association “Wettbewerbszentrale.” Although the new legal regulations are now in place, Wettbewerbszentrale lodged an appeal with the BGH in the Katjes case. “We want to create more legal certainty for environmental advertising,” explained Ulrike Gillner from the “Wettbewerbszentrale” in an interview with Table.Briefings. The association argues that carbon neutrality is a vague term that does not clarify whether companies are actually saving greenhouse gases themselves or merely buying credits. For this reason, “Wettbewerbszentrale” now has the appeal to examine whether the term “carbon-neutral” violates the prohibition of misleading statements.
So far, there has been no such certainty. German courts have ruled differently on the use of the “carbon-neutral” seal in the past. For example, the Karlsruhe Regional Court ruled in July 2023 that the drugstore chain “dm” was not allowed to advertise certain soaps with the label. In the same month, however, the Düsseldorf Higher Regional Court allowed Katjes to continue advertising its products with the “carbon-neutral” label.
However, the cases are different: Katjes had not only named the certifier Climate Partner, but also referred to its website, where the certification criteria can be found. Because dm did not provide this information, the court ruled it to be “misleading by omission.” Furthermore, in the dm dispute, the Karlsruhe Regional Court also investigated where the money for compensation was invested, including a controversial forest conservation project in Peru. This also contradicted the label: The court argued that carbon neutrality is not compatible with carbon credits from forest conservation – because greenhouse gases are only temporarily bound as long as the forest is standing.
During the ongoing proceedings, dm already drew consequences and stated that it would no longer advertise its products in this way. And despite the ruling in favor of Katjes, the company has now also refrained from advertising its products as carbon-neutral. Katjes’ legal advisor, therefore, told Lebensmittelzeitung that the proceeding was “no longer relevant” to the company. In early 2023, the drugstore chain Rossmann also decided to stop advertising with the term carbon-neutral. “The label is basically dead,” Managing Director Raoul Rossmann told the newspaper Die Zeit at the time. Even the certifier Climate Partner seems to see it that way: It has since replaced the term “carbon-neutral” with the label “financial climate contribution.”
On July 1, Germany must notify the EU of how the merging of Germany’s emissions trading system and ETS II will proceed in 2027. However, right before the deadline, it is entirely unclear how the German government will behave in this regard; it will probably not provide the necessary information by the deadline. As a result, Germany risks EU infringement proceedings. In the medium term, experts are also warning of a price hike for consumers.
The ETS II will replace Germany’s Fuel Emissions Trading Act (BEHG) in 2027. According to the ETS Directive, the German government must pass the legislation to manage the transition from national emissions trading to ETS II by the end of June 2024. This will be decided in an amendment to the Greenhouse Gas Emissions Trading Act (TEHG). However, according to the German Federal Ministry for Economic Affairs and Climate Action (BMWK), the government still has to vote on this. The BMWK could not provide an exact timetable for the adoption and presentation of the amendment.
Germany is already behind schedule in implementing the new ETS regulations. In January 2024, a deadline expired by which the new rules of ETS I had to be transposed into national law. Infringement proceedings are already underway as a result. This also threatens to happen with ETS II. “Time is pressing – there are only two and a half years left until the start of ETS II,” says Lea Nesselhauf, Project Manager for German and European Climate Law at Agora Energiewende.
The new European Emissions Trading System (ETS II) will reduce emissions in the transport and building sectors. Success is needed here if the German and European climate targets are to be achieved. The German government has summarized the relevant legal and administrative regulations in the TEHG amendment. This will also clarify the details of the transition of the national carbon price to ETS II.
However, there is a problem here: The transition from the German BEHG to the ETS II could lead to a price surge. The national price for one ton of CO2 is currently 45 euros and is set to rise to a maximum of 65 euros by the end of 2026. Significantly higher prices are expected in the European system. Experts from Agora Energewende and the Institute for Applied Ecology warn of a price shock. A price range of 48 to 300 euros per ton of CO2 is considered realistic.
According to Agora Energiewende, at an average value of 200 euros per ton of CO2, this could lead to an increase of 38 cents per liter of gasoline – a heavy burden for low-income households. “We need a concept for the transition from national to European emissions trading as quickly as possible in order to avoid soaring prices for heating and at the gas station,” says Nesselhauf.
In response to a question, the BMWK also stated that it was assuming an uncertain price level for the start of ETS II and measures are already in place to prevent a price shock:
According to Agora Energiewende, these measures could delay the problem, but not solve it. “According to our analysis, the trigger mechanisms for the distribution of additional credits are set in such a way that only a fraction of these credits would even reach the market,” says Lea Nesselhauf. That is why Agora Energiewende proposes a price corridor: The carbon price could be set between 60 and 80 euros per ton from around 2025 and between 90 and 110 euros in 2026. However, this would increase the prices for heating and transport, which would be difficult to sell to voters without social compensation.
It has been a difficult few weeks for those of us committed to achieving a greener, more progressive Europe. In the European Parliament election, far-right parties won some 20 percent of the vote and secured nearly one-fifth of all seats. In my own country, France, National Rally finished in first place, and may soon be able to form a far-right government, should it manage to repeat the performance in the upcoming snap election.
While far-right parties’ positions on immigration and cost-of-living issues account for most of their gains, many also are openly hostile to climate policies. Yet fatalism would be the worst possible response. The election results were not a repudiation of ambitious green policies, and it would be a historic mistake for our leaders to interpret them that way. Opinion polls consistently show that Europeans support stronger action on climate change, with a vast majority (77 percent) regarding it as a very serious problem.
Contrary to some headlines, pro-EU parties held their ground in the overall composition of the European Parliament. The center-right European People’s Party (EPP) remains the largest grouping and will be at the heart of any coalition that is formed. In its 2024 campaign program, it committed to continuing and further developing the European Union’s landmark Green Deal.
Nor was the far-right “wave” felt across Europe. In Slovakia, the centrist Progressive Slovakia party beat the populist incumbent party on the back of record voter turnout. In the Nordic countries, progressive pro-climate parties made advances, and far-right populist parties actually lost support. The rest of Europe could learn a lot from Finland, where a serious, multi-pronged strategy of countering misinformation has made it less susceptible than any other EU country to fake news.
That said, there is no denying that far-right gains will have negative implications for progressive policy goals. Ambitious climate action will not have the same full-throated support that it did over the past five years, when there was a broad consensus for it. Issues like security, competitiveness, and migration featured heavily in the election campaign and will surely take priority over reducing emissions. Policymaking will be more transactional, with political horse-trading leading to a less ideologically consistent climate program.
How should those of us who want the EU to maintain its climate leadership respond to these new realities? In part, we face a communications challenge. We must demonstrate the wider benefits of the green transition: How it will help people lead healthier, safer, more prosperous and dignified lives. It is not enough to complain that the right has cynically exploited voters’ grievances and worries. We need to offer a more appealing, positive vision of the alternative. Political polarization can be addressed only with fairer policies and by listening to citizens – many of whom feel ignored and marginalized.
Green campaigners must also convince a more rightward-leaning EU leadership that Europe’s problems are interlinked and cannot be addressed in isolation. Since climate change contributes to other challenges like geopolitical instability and migration, climate action must be an integral part of Europe’s approach to security.
These election results further confirm that we need to emphasize the social dimension of policymaking, both at the EU and the national level. We must get serious about addressing major inequalities in wealth and emissions, together with regional disparities. These have increasingly come to define European society, creating ripe conditions for the far right and the broader backlash against climate policies.
Consider that, in both the United States and the EU, the wealthiest decile emits 3-5 times more than the median individual, and around 16 times more than the poorest decile. This injustice is not lost on voters. In France, 76 percent of people agree that “energy sobriety is imposed only on the people, but not on the elites,” and 79 percent agree that “it is the poorest who pay for the climate and energy crisis while it is the richest who are responsible for it.”
The public’s justified sense of unfairness will be a persistent obstacle to climate progress for as long as these disparities are left unaddressed. We need a radical change of approach to put social justice and equity at the center of policymaking, and to defend and improve democracy itself. In many European countries, progressive campaigners and NGOs are under growing pressure and facing new legal restrictions as part of a wider rollback of democratic freedoms. In some cases, we are witnessing a brazen effort to squeeze civil society.
The European election results ought to remind us that the European Green Deal and European democracy are preconditions for climate action and any other progressive causes. Let’s not give up. I have spent enough of my life campaigning on climate change to know that progress is not linear. The onus is on us to regroup and renew our commitment to a fairer, greener future.
Laurence Tubiana, a former French ambassador to the United Nations Framework Convention on Climate Change, is CEO of the European Climate Foundation and a professor at Sciences Po, Paris.
Copyright: Project Syndicate, 2024.
www.project-syndicate.org
Niklas Höhne – climate scientist, co-founder, New Climate Institute
With the New Climate Institute, Niklas Höhne provides the data that helps assess how dedicated countries and companies are to cutting their greenhouse gas emissions. He founded the “Climate Action Tracker,” which indicates how much is still needed to comply with the Paris Climate Agreement. His paper on five reasons that give hope for a just climate transition was a surprise success in 2023. Höhne relentlessly promotes his most important message in the media: Global emissions must be reduced to zero as quickly and decisively as possible. The physicist and professor at Wageningen University has been contributing to the IPCC reports for years – in the Netherlands, one of his charts helped the groundbreaking Urgenda climate lawsuit from 2013 succeed.
Brigitte Knopf – Climate scientist, founder and director, “Zukunft KlimaSozial” ZKS
Brigitte Knopf is actually a physicist: She earned her PhD 18 years ago on uncertainties in earth system modeling. However, she subsequently dedicated her work to finding strategies for solving the climate crisis and communicating these to the public and politicians. As deputy chair of the Council of Experts on Climate Change, she regularly evaluates the German government’s climate policy. She campaigns for a carbon price and debates the social impact of climate money on social media – never polemically, always in a differentiated way. Until the end of 2023, she was Secretary General of the Mercator Research Institute on Global Commons and Climate Change (MCC) in Berlin. Recently, she and the think tank she founded, “Zukunft KlimaSozial,” have focused entirely on combining social and climate policy.
Bill Hare – CEO, Climate Analytics
Bill Hare has been an expert, companion and advisor to the UN climate process and international climate policy since 1989. He studied physics at the University of Western Australia and has long advised governments, particularly from small island states, on scientific issues and adaptation to climate change. He contributed to the United Nations Framework Convention on Climate Change (UNFCCC), the Kyoto Protocol, the Paris Agreement and the 4th IPCC report, for which the panel was awarded the Nobel Prize. Hare has been instrumental in increasing the transparency of the UN system and climate change science and informing the public and media. Since 2022, he has been a member of the UN Secretary-General’s Expert Group, which assesses the climate targets of companies and other non-state actors. As head of the consulting firm Climate Analytics, he is involved in the “Climate Action Tracker,” an independent assessment of the climate action policies of key countries.
Yan Qin – Senior Analyst Carbon Markets, London Stock Exchange Group plc
As Lead Carbon Analyst at the London Stock Exchange Group, Yan Qin is one of the most experienced experts on China’s emissions trading system (ETS). She monitors the development of the ETS and its flaws and analyzes the interaction between the ETS and the EU Carbon Border Adjustment Mechanism. She writes forecasts for clients from the energy sector on the development of carbon prices, the supply and demand for carbon credits and energy policy developments. She regularly provides assessments of energy and climate policy developments in China on “X.”
Li Shuo – Director China Climate Hub, Asia Society
Li Shuo is one of the most knowledgeable analysts of Chinese and international climate policy. Prior to his current position at the Asia Society in Washington, DC, he was responsible for climate policy, biodiversity and oceans at Greenpeace East Asia in Beijing for 13 years. He has a background in international relations and maintains contacts with key decision-makers in the UN system, China, the US and the EU, and in the NGO scene. In 2015, he spent a year studying in Germany as an Alexander von Humboldt Fellow and is therefore familiar with the German energy transition and climate action debate.
Jan Christoph Steckel – Head of Working Group Climate and Development, Mercator Research Institute on Global Commons and Climate Change
At the Mercator Research Institute on Global Commons and Climate Change, Jan Christoph Steckel heads the Climate and Development working group. Steckel’s research has focused on emissions reduction in developing countries, the distributional effects of climate measures, the political economy, and the resulting structural change. He is also a professor of climate and development economics at BTU Cottbus, an author of three IPCC reports, and the lead author on the topic of coal phase-out in the UNEP GAP Report 2017.
Lauri Myllyvirta – Lead Analyst, Centre for Research on Energy and Clean Air
Lauri Myllyvirta monitors and analyzes the Chinese energy transition and climate policy like no other. As co-founder and analyst of the Centre for Research on Energy and Clean Air (CREA), he analyzes the People’s Republic’s dependence on coal, its emissions data and the decarbonization of industry in great detail. Myllyvirta uses economic, energy and emissions data to track China’s emissions path. His analyses suggest that the world’s largest emitter could have reached its emissions peak as early as 2023.
Matthias Buck – Director Europe, Agora Think Tanks
Long before the German government decided to phase out coal by 2030, Matthias Buck tried to convince European decision-makers that it was possible. He was right – now hardly anyone doubts the effectiveness of EU emissions trading in reducing the use of fossil fuels. A lawyer by trade, he has been working on European climate policy since 2005, initially in the EU Commission and since 2015 as Director of European Energy Policy at Agora Energiewende. He and his team’s assessments help decision-makers find the most efficient and cost-effective way to make the energy transition.
Linda Kalcher – General Manager and Founder, Strategic Perspectives
Linda Kalcher is an Europe expert with a clear climate focus. She has lived in Brussels for 13 years, initially working in the office of SPD environmental politician Jo Leinen before moving to the European Climate Foundation. As a climate action advisor to UN Secretary-General António Guterres, she became familiar with the UN climate negotiations. As director of her think tank Strategic Perspectives, she accompanies and analyzes the climate negotiations at COPs and the progress of the EU Green Deal.
Felix Christian Matthes – Research Coordinator Energy and Climate Policy
Felix Christian Matthes has worked at the Institute for Applied Ecology for almost 30 years. Matthes is best known for his work on energy policy issues. An engineer by training, he has also held many positions advising on energy policy at the German and European levels. For example, he was involved in the European Commission’s “Energy Roadmap 2050”.
Today, we are focusing on a different kind of climate finance: Instead of the usual aid for climate action and adaptation, we look at a billionaire tax for the super-rich, for example. It has been discussed for a long time, and now the Brazilian G20 presidency has presented the first details – with some surprises. Equally uncertain is the future of the German carbon price for heating and transport and how it can be integrated into EU emissions trading. The plans for this should be available now, but they are not. Infringement proceedings are looming – and price shocks. We take a look at the consequences and possible solutions.
Money also rules the climate world elsewhere, more or less directly: Among other things, we report on a carbon tax on cows in Denmark, as well as on the German energy transition, which will require billions in investment if it is to meet its ambitious targets. And the dispute before Germany’s highest court about whether fruit gums can be advertised as “carbon-neutral” is not a matter of taste – it’s about the manufacturer’s bottom line and potentially misleading its customers.
At the G20, Brazil has proposed a global minimum tax for billionaires to mobilize more money for climate action and the fight against poverty. On behalf of the Brazilian G20 presidency, economist Gabriel Zucman drafted a “blueprint” for such a wealth tax on assets in the run-up to the G20 finance ministers’ meeting on July 25/26. The plan is a central element of Brazil’s G20 presidency and has now gained support from France, Spain and South Africa. German Development Minister Svenja Schulze also signaled her approval. Zucman, founder and director of the independent research institute EU Tax Observatory at the Paris School of Economics, is convinced: “Thanks to recent progress in international tax cooperation, a common taxation standard for billionaires has become technically possible.” However, it remains to be seen how big the climate benefit would be.
According to Zucman’s calculations, taxing the wealth of around 3,000 global billionaires at an annual minimum rate of two percent would generate between 200 and 250 billion US dollars in tax revenue. The French tax researcher says that the minimum tax would not be an additional levy, as the super-rich, who already pay taxes on more than two percent of their wealth, would not be burdened additionally.
Nevertheless, Zucman predicts 200 to 250 billion US dollars in additional revenue. This is because most countries’ current tax systems hardly tax the assets of the super-rich. They also often pay less income tax than normal earners, as they earn a large part of their income through company investments and find loopholes here to keep their taxable income low. According to the American economist Joseph Stiglitz and the Indian economist Jayati Ghosh, US billionaires, for example, pay the equivalent of just 0.5 percent tax per year on their wealth. “For the first time in the history of the United States, billionaires have a lower effective tax rate than working-class Americans,” the two economists deplore.
If people with assets of more than 100 million US dollars were also included in the minimum tax, this would result in additional tax revenue of 300 to almost 380 billion. With a three percent minimum tax and including people with assets of more than 100 million US dollars, the revenue would already be between 550 and 690 billion, as Zucman’s calculations show.
According to Zucman, there are several challenges in implementing the billionaires’ tax:
However, Zucman is convinced that all these problems can be overcome if enough “political will” is mustered.
However, how much money a global billionaire tax would raise for climate action remains unclear. Such a tax is “not so easy to translate into climate financing.” Since countries would have to levy this tax, “new distribution conflicts can be expected,” says David Ryfisch, climate finance expert at Germanwatch. US Treasury Secretary Janet Yellen, for example, has already spoken out against the international redistribution of revenue from a global billionaire tax. At the same time, US President Joe Biden presented a plan for a billionaire tax of 25 percent – albeit on income and not on assets. However, Zucman says that this plan is “more ambitious” overall than Brazil’s G20 proposal.
Jan Kowalzig, climate finance expert at Oxfam, considers the billionaire tax to be a “realistic instrument for mobilizing more money for climate financing and social issues.” The financing needs for global climate action will be very high in the coming decades, he said. That is why no funding source should be ruled out from the outset. “However, a global billionaire tax and other new sources of finance must not distract from Global North’s responsibility. Many developing and emerging countries that rely on support from the Global North also see it that way,” Kowalzig told Table.Briefings.
Moreover, most of the super-rich still live in the Global North, which means that their tax payments tend to flow into the richer developed countries. Although the distribution of billionaires has changed in recent years and more and more super-rich people are also living in developing and emerging countries, the tax revenue from a global billionaire tax would still be heavily concentrated in the Global North and rich emerging economies. However, Zucman’s report does not break down which countries would receive which share of the 250 billion in new revenue.
It is also unlikely that a global billionaire tax could be implemented quickly. Felipe Antunes de Oliveira from the Brazilian Ministry of Finance said at the presentation of Zucman’s report that lengthy negotiations between the countries could be expected. Brazil wants to push the idea at the G20 even after its presidency. According to Zucman, the negotiations on a global minimum tax on multinational corporations took nine years. However, it would be possible to build on this to achieve a billionaire tax more quickly, said Zucman.
On Thursday, a ruling from the German Federal Court of Justice is expected in the appeal proceedings regarding the term “carbon-neutral.” The hearing for this case took place in April. The lawsuit was filed against the confectionery manufacturer Katjes, which had advertised its “Grün-Ohr-Hasen” with the slogan: “Since 2021, Katjes has produced all products carbon-neutral.” The court will now announce whether this was permissible. Katjes no longer uses this label in its advertising.
There has long been a dispute about “carbon-neutral” labels on products. The accusation is that the labels mislead consumers and suggest that no emissions were generated during the production of the products. “Carbon neutrality seals are untenable,” Carsten Warnecke from the New Climate Institute think tank told Table.Briefings. He says that the seals do not provide any information about companies’ efforts to protect the climate because they say nothing about emissions reduction and residual emissions. Instead, companies should communicate their efforts in more detail and more transparently. Warnecke welcomes that Katjes now produces almost exclusively vegan fruit gums – unlike its competitors – but not the “climate-neutral” label. He believes that while the term makes sense for countries that can offset residual emissions through carbon sinks, it is unsuitable for products.
For example, the German consumer protection association “Vebraucherzentrale” examined climate claims on 87 products in late 2023. They found many different seals and formulations and concluded that it is currently almost impossible for consumers to “reliably assess the validity” and reliability of climate claims. “We need to move away from the naive assumption that voluntary self-regulation initiatives will ensure climate action,” says Warnecke. “Instead, we need government regulation.”
However, even before the decision in the Katjes case, clarity had already been established at the EU level: At the end of March 2024, a law against greenwashing came into force, banning advertising making misleading environmental claims. Products that offset emissions through compensation can no longer be labeled as “carbon neutral,” “certified CO2-neutral,” or “CO2-positive,” for example. Countries now have two years to translate this regulation into national law. “The carbon neutral claim will then probably no longer be used on products,” Johanna Wurbs from the German Environment Agency told Table.Briefings.
The EU’s Green Claims Regulation is also intended to make advertising claims more comparable and reliable; it will soon be discussed in the EU Parliament. Agnes Sauter from Environmental Action Germany (DUH) hopes that an ambitious version of the green claims regulation will be adopted. She believes it is particularly important that the ex-ante verification of such claims is implemented. In other words, claims must be verified by independent testing bodies before publication.
At the same time, the term carbon neutral is to be linked to robust standards. To this end, the ISO 14068-1 standard on carbon neutrality was published at the end of 2023. “It’s an important guideline,” says Wurbs. “For the first time, carbon neutral is defined as a global standard.” Although the discussion within the EU is largely over at the product level, it continues at the company level.
However, the German Environment Agency also sees flaws in the standard. In a factsheet, for example, it writes that “companies with high GHG emissions and companies with a business model based on fossil energy use could theoretically also meet the standard.”
Unlike the EU, German legislators avoid taking an active role in combating these grievances, says Warnecke. He believes that this gives the impression that the consumer protection ministries are leaving it to associations such as Environmental Action Germany (DUH) to spend considerable time and resources pursuing legal action against companies.ch.
However, in the current case, DUH did not file the lawsuit against Katjes, but the competition watchdog association “Wettbewerbszentrale.” Although the new legal regulations are now in place, Wettbewerbszentrale lodged an appeal with the BGH in the Katjes case. “We want to create more legal certainty for environmental advertising,” explained Ulrike Gillner from the “Wettbewerbszentrale” in an interview with Table.Briefings. The association argues that carbon neutrality is a vague term that does not clarify whether companies are actually saving greenhouse gases themselves or merely buying credits. For this reason, “Wettbewerbszentrale” now has the appeal to examine whether the term “carbon-neutral” violates the prohibition of misleading statements.
So far, there has been no such certainty. German courts have ruled differently on the use of the “carbon-neutral” seal in the past. For example, the Karlsruhe Regional Court ruled in July 2023 that the drugstore chain “dm” was not allowed to advertise certain soaps with the label. In the same month, however, the Düsseldorf Higher Regional Court allowed Katjes to continue advertising its products with the “carbon-neutral” label.
However, the cases are different: Katjes had not only named the certifier Climate Partner, but also referred to its website, where the certification criteria can be found. Because dm did not provide this information, the court ruled it to be “misleading by omission.” Furthermore, in the dm dispute, the Karlsruhe Regional Court also investigated where the money for compensation was invested, including a controversial forest conservation project in Peru. This also contradicted the label: The court argued that carbon neutrality is not compatible with carbon credits from forest conservation – because greenhouse gases are only temporarily bound as long as the forest is standing.
During the ongoing proceedings, dm already drew consequences and stated that it would no longer advertise its products in this way. And despite the ruling in favor of Katjes, the company has now also refrained from advertising its products as carbon-neutral. Katjes’ legal advisor, therefore, told Lebensmittelzeitung that the proceeding was “no longer relevant” to the company. In early 2023, the drugstore chain Rossmann also decided to stop advertising with the term carbon-neutral. “The label is basically dead,” Managing Director Raoul Rossmann told the newspaper Die Zeit at the time. Even the certifier Climate Partner seems to see it that way: It has since replaced the term “carbon-neutral” with the label “financial climate contribution.”
On July 1, Germany must notify the EU of how the merging of Germany’s emissions trading system and ETS II will proceed in 2027. However, right before the deadline, it is entirely unclear how the German government will behave in this regard; it will probably not provide the necessary information by the deadline. As a result, Germany risks EU infringement proceedings. In the medium term, experts are also warning of a price hike for consumers.
The ETS II will replace Germany’s Fuel Emissions Trading Act (BEHG) in 2027. According to the ETS Directive, the German government must pass the legislation to manage the transition from national emissions trading to ETS II by the end of June 2024. This will be decided in an amendment to the Greenhouse Gas Emissions Trading Act (TEHG). However, according to the German Federal Ministry for Economic Affairs and Climate Action (BMWK), the government still has to vote on this. The BMWK could not provide an exact timetable for the adoption and presentation of the amendment.
Germany is already behind schedule in implementing the new ETS regulations. In January 2024, a deadline expired by which the new rules of ETS I had to be transposed into national law. Infringement proceedings are already underway as a result. This also threatens to happen with ETS II. “Time is pressing – there are only two and a half years left until the start of ETS II,” says Lea Nesselhauf, Project Manager for German and European Climate Law at Agora Energiewende.
The new European Emissions Trading System (ETS II) will reduce emissions in the transport and building sectors. Success is needed here if the German and European climate targets are to be achieved. The German government has summarized the relevant legal and administrative regulations in the TEHG amendment. This will also clarify the details of the transition of the national carbon price to ETS II.
However, there is a problem here: The transition from the German BEHG to the ETS II could lead to a price surge. The national price for one ton of CO2 is currently 45 euros and is set to rise to a maximum of 65 euros by the end of 2026. Significantly higher prices are expected in the European system. Experts from Agora Energewende and the Institute for Applied Ecology warn of a price shock. A price range of 48 to 300 euros per ton of CO2 is considered realistic.
According to Agora Energiewende, at an average value of 200 euros per ton of CO2, this could lead to an increase of 38 cents per liter of gasoline – a heavy burden for low-income households. “We need a concept for the transition from national to European emissions trading as quickly as possible in order to avoid soaring prices for heating and at the gas station,” says Nesselhauf.
In response to a question, the BMWK also stated that it was assuming an uncertain price level for the start of ETS II and measures are already in place to prevent a price shock:
According to Agora Energiewende, these measures could delay the problem, but not solve it. “According to our analysis, the trigger mechanisms for the distribution of additional credits are set in such a way that only a fraction of these credits would even reach the market,” says Lea Nesselhauf. That is why Agora Energiewende proposes a price corridor: The carbon price could be set between 60 and 80 euros per ton from around 2025 and between 90 and 110 euros in 2026. However, this would increase the prices for heating and transport, which would be difficult to sell to voters without social compensation.
It has been a difficult few weeks for those of us committed to achieving a greener, more progressive Europe. In the European Parliament election, far-right parties won some 20 percent of the vote and secured nearly one-fifth of all seats. In my own country, France, National Rally finished in first place, and may soon be able to form a far-right government, should it manage to repeat the performance in the upcoming snap election.
While far-right parties’ positions on immigration and cost-of-living issues account for most of their gains, many also are openly hostile to climate policies. Yet fatalism would be the worst possible response. The election results were not a repudiation of ambitious green policies, and it would be a historic mistake for our leaders to interpret them that way. Opinion polls consistently show that Europeans support stronger action on climate change, with a vast majority (77 percent) regarding it as a very serious problem.
Contrary to some headlines, pro-EU parties held their ground in the overall composition of the European Parliament. The center-right European People’s Party (EPP) remains the largest grouping and will be at the heart of any coalition that is formed. In its 2024 campaign program, it committed to continuing and further developing the European Union’s landmark Green Deal.
Nor was the far-right “wave” felt across Europe. In Slovakia, the centrist Progressive Slovakia party beat the populist incumbent party on the back of record voter turnout. In the Nordic countries, progressive pro-climate parties made advances, and far-right populist parties actually lost support. The rest of Europe could learn a lot from Finland, where a serious, multi-pronged strategy of countering misinformation has made it less susceptible than any other EU country to fake news.
That said, there is no denying that far-right gains will have negative implications for progressive policy goals. Ambitious climate action will not have the same full-throated support that it did over the past five years, when there was a broad consensus for it. Issues like security, competitiveness, and migration featured heavily in the election campaign and will surely take priority over reducing emissions. Policymaking will be more transactional, with political horse-trading leading to a less ideologically consistent climate program.
How should those of us who want the EU to maintain its climate leadership respond to these new realities? In part, we face a communications challenge. We must demonstrate the wider benefits of the green transition: How it will help people lead healthier, safer, more prosperous and dignified lives. It is not enough to complain that the right has cynically exploited voters’ grievances and worries. We need to offer a more appealing, positive vision of the alternative. Political polarization can be addressed only with fairer policies and by listening to citizens – many of whom feel ignored and marginalized.
Green campaigners must also convince a more rightward-leaning EU leadership that Europe’s problems are interlinked and cannot be addressed in isolation. Since climate change contributes to other challenges like geopolitical instability and migration, climate action must be an integral part of Europe’s approach to security.
These election results further confirm that we need to emphasize the social dimension of policymaking, both at the EU and the national level. We must get serious about addressing major inequalities in wealth and emissions, together with regional disparities. These have increasingly come to define European society, creating ripe conditions for the far right and the broader backlash against climate policies.
Consider that, in both the United States and the EU, the wealthiest decile emits 3-5 times more than the median individual, and around 16 times more than the poorest decile. This injustice is not lost on voters. In France, 76 percent of people agree that “energy sobriety is imposed only on the people, but not on the elites,” and 79 percent agree that “it is the poorest who pay for the climate and energy crisis while it is the richest who are responsible for it.”
The public’s justified sense of unfairness will be a persistent obstacle to climate progress for as long as these disparities are left unaddressed. We need a radical change of approach to put social justice and equity at the center of policymaking, and to defend and improve democracy itself. In many European countries, progressive campaigners and NGOs are under growing pressure and facing new legal restrictions as part of a wider rollback of democratic freedoms. In some cases, we are witnessing a brazen effort to squeeze civil society.
The European election results ought to remind us that the European Green Deal and European democracy are preconditions for climate action and any other progressive causes. Let’s not give up. I have spent enough of my life campaigning on climate change to know that progress is not linear. The onus is on us to regroup and renew our commitment to a fairer, greener future.
Laurence Tubiana, a former French ambassador to the United Nations Framework Convention on Climate Change, is CEO of the European Climate Foundation and a professor at Sciences Po, Paris.
Copyright: Project Syndicate, 2024.
www.project-syndicate.org
Niklas Höhne – climate scientist, co-founder, New Climate Institute
With the New Climate Institute, Niklas Höhne provides the data that helps assess how dedicated countries and companies are to cutting their greenhouse gas emissions. He founded the “Climate Action Tracker,” which indicates how much is still needed to comply with the Paris Climate Agreement. His paper on five reasons that give hope for a just climate transition was a surprise success in 2023. Höhne relentlessly promotes his most important message in the media: Global emissions must be reduced to zero as quickly and decisively as possible. The physicist and professor at Wageningen University has been contributing to the IPCC reports for years – in the Netherlands, one of his charts helped the groundbreaking Urgenda climate lawsuit from 2013 succeed.
Brigitte Knopf – Climate scientist, founder and director, “Zukunft KlimaSozial” ZKS
Brigitte Knopf is actually a physicist: She earned her PhD 18 years ago on uncertainties in earth system modeling. However, she subsequently dedicated her work to finding strategies for solving the climate crisis and communicating these to the public and politicians. As deputy chair of the Council of Experts on Climate Change, she regularly evaluates the German government’s climate policy. She campaigns for a carbon price and debates the social impact of climate money on social media – never polemically, always in a differentiated way. Until the end of 2023, she was Secretary General of the Mercator Research Institute on Global Commons and Climate Change (MCC) in Berlin. Recently, she and the think tank she founded, “Zukunft KlimaSozial,” have focused entirely on combining social and climate policy.
Bill Hare – CEO, Climate Analytics
Bill Hare has been an expert, companion and advisor to the UN climate process and international climate policy since 1989. He studied physics at the University of Western Australia and has long advised governments, particularly from small island states, on scientific issues and adaptation to climate change. He contributed to the United Nations Framework Convention on Climate Change (UNFCCC), the Kyoto Protocol, the Paris Agreement and the 4th IPCC report, for which the panel was awarded the Nobel Prize. Hare has been instrumental in increasing the transparency of the UN system and climate change science and informing the public and media. Since 2022, he has been a member of the UN Secretary-General’s Expert Group, which assesses the climate targets of companies and other non-state actors. As head of the consulting firm Climate Analytics, he is involved in the “Climate Action Tracker,” an independent assessment of the climate action policies of key countries.
Yan Qin – Senior Analyst Carbon Markets, London Stock Exchange Group plc
As Lead Carbon Analyst at the London Stock Exchange Group, Yan Qin is one of the most experienced experts on China’s emissions trading system (ETS). She monitors the development of the ETS and its flaws and analyzes the interaction between the ETS and the EU Carbon Border Adjustment Mechanism. She writes forecasts for clients from the energy sector on the development of carbon prices, the supply and demand for carbon credits and energy policy developments. She regularly provides assessments of energy and climate policy developments in China on “X.”
Li Shuo – Director China Climate Hub, Asia Society
Li Shuo is one of the most knowledgeable analysts of Chinese and international climate policy. Prior to his current position at the Asia Society in Washington, DC, he was responsible for climate policy, biodiversity and oceans at Greenpeace East Asia in Beijing for 13 years. He has a background in international relations and maintains contacts with key decision-makers in the UN system, China, the US and the EU, and in the NGO scene. In 2015, he spent a year studying in Germany as an Alexander von Humboldt Fellow and is therefore familiar with the German energy transition and climate action debate.
Jan Christoph Steckel – Head of Working Group Climate and Development, Mercator Research Institute on Global Commons and Climate Change
At the Mercator Research Institute on Global Commons and Climate Change, Jan Christoph Steckel heads the Climate and Development working group. Steckel’s research has focused on emissions reduction in developing countries, the distributional effects of climate measures, the political economy, and the resulting structural change. He is also a professor of climate and development economics at BTU Cottbus, an author of three IPCC reports, and the lead author on the topic of coal phase-out in the UNEP GAP Report 2017.
Lauri Myllyvirta – Lead Analyst, Centre for Research on Energy and Clean Air
Lauri Myllyvirta monitors and analyzes the Chinese energy transition and climate policy like no other. As co-founder and analyst of the Centre for Research on Energy and Clean Air (CREA), he analyzes the People’s Republic’s dependence on coal, its emissions data and the decarbonization of industry in great detail. Myllyvirta uses economic, energy and emissions data to track China’s emissions path. His analyses suggest that the world’s largest emitter could have reached its emissions peak as early as 2023.
Matthias Buck – Director Europe, Agora Think Tanks
Long before the German government decided to phase out coal by 2030, Matthias Buck tried to convince European decision-makers that it was possible. He was right – now hardly anyone doubts the effectiveness of EU emissions trading in reducing the use of fossil fuels. A lawyer by trade, he has been working on European climate policy since 2005, initially in the EU Commission and since 2015 as Director of European Energy Policy at Agora Energiewende. He and his team’s assessments help decision-makers find the most efficient and cost-effective way to make the energy transition.
Linda Kalcher – General Manager and Founder, Strategic Perspectives
Linda Kalcher is an Europe expert with a clear climate focus. She has lived in Brussels for 13 years, initially working in the office of SPD environmental politician Jo Leinen before moving to the European Climate Foundation. As a climate action advisor to UN Secretary-General António Guterres, she became familiar with the UN climate negotiations. As director of her think tank Strategic Perspectives, she accompanies and analyzes the climate negotiations at COPs and the progress of the EU Green Deal.
Felix Christian Matthes – Research Coordinator Energy and Climate Policy
Felix Christian Matthes has worked at the Institute for Applied Ecology for almost 30 years. Matthes is best known for his work on energy policy issues. An engineer by training, he has also held many positions advising on energy policy at the German and European levels. For example, he was involved in the European Commission’s “Energy Roadmap 2050”.
