Investigators have seized €1.5 million in the corruption scandal surrounding Eva Kaili – and are now looking into possible related quid pro quo agreements entered by the ex-vice president of the European Parliament. All legislative decisions in which she was involved are to come under scrutiny. Attention also turns to Kaili’s involvement with the controversial SME Connect and Allied for Startups associations. Markus Grabitz, Till Hoppe and Charlotte Wirth report on the latest developments.
According to an internal paper, the BMWK puts the capacity of the ten planned floating LNG terminals on the German North Sea and Baltic Sea coasts, which are scheduled to come on stream this winter and next, at 53 to 68 billion cubic meters of gas per year. By comparison, 54 billion cubic meters were imported from Russia in 2021. And more terminals are planned onshore. Now the BMWK admits that there will be overcapacity with these plans. The ministry apparently no longer believes in the terminal in Hamburg, as Malte Kreutzfeldt writes.
The Czech Republic’s presidency is coming to an end, and Sweden will take over in January. Security, resilience, prosperity, democratic values and the rule of law – the country has set these four priorities for its presidency. Yesterday, Prime Minister Ulf Kristersson presented Sweden’s work program. Corinna Visser summarizes the most important points in the News.
The deposed Vice-President of the European Parliament, Eva Kaili, remains in custody. A scheduled date before the detention judge in Brussels could not take place because of a strike by prison staff. The next date is Dec. 22. From circles of the investigators, it became known that a part of the large sums of cash came from ATMs in Belgium. Through this, the investigators hope to get information about the bank involved, as well as the owner of a bank account.
Kaili, who was expelled from the S&D group in the European Parliament and from PASOK in Greece, is at the center of a corruption scandal in which €1.5 million were seized. She denies allegations of influencing political decisions on behalf of World Cup host Qatar. Morocco is being discussed as a possible client.
Kaili herself claims that the large amount of cash in her Brussels apartment did not belong to her or her partner but to a third party. One of her lawyers told Greek TV station Skai on Wednesday evening. “Ms. Kaili asked her partner what kind of funds they were,” the lawyer said. The partner replied that the money belonged to someone else, he said. “In response, Ms. Kaili said she did not allow funds that belonged to someone else to be kept in the joint apartment.” Kaili reportedly intends to plead not guilty.
In the European Parliament, the search continues to determine what consideration Kaili might have provided. All legislative decisions in which she was involved are to be examined. The head of the transport committee, Karima Delli (Greens), also wants to examine possible external influence on the air transport agreement with Qatar, which is currently being ratified.
As one of 14 vice presidents, Kaili was primarily responsible for technology issues such as artificial intelligence and blockchain. Critics accuse her of allowing the 44-year-old to be hijacked by the big digital corporations in the process. “She got involved in two SME and start-up associations funded by Big Tech, SME Connect and Allied for Startups,” Max Bank of Lobbycontrol tells Europe.Table.
The associations had only pretended to represent the interests of start-ups. Last fall, several MEPs had already denounced the fact that the companies were using such front organizations to try to influence ongoing legislative projects such as the Digital Services Act. Kaili sat on the board of both associations until the end – as did several other MEPs.
The scandal is only known in outline. Outside the parliament, NGOs like Fight Impunity obviously play a role. Fight Impunity was founded by former MEP Pier Antonio Panzeri. Other NGOs focusing on human rights, registered at the same Brussels address and also founded by Panzeri, are also mentioned. Searches were conducted in Parliament on staff working in the Subcommittee on Human Rights.
Now the human rights resolutions (“urgency resolutions”), which were always voted on Thursday during the session week in Strasbourg, come into focus. For a conspicuously long time, no resolution criticizing the occupation of the Western Sahara by Morocco was voted on. The EPP Group has decided to stop participating in resolutions on human rights. “Until we can exclude any outside influence on the resolutions, we should stop passing any more resolutions,” the EPP said.
Today the European Parliament votes a resolution to draw the first consequences from the affair. The resolution, agreed upon between the political groups, is available to Europe.Table. The main points are:
The deputies could not agree on more control of NGOs.
According to the transparency rules of the European Parliament, MEPs must hand over gifts worth more than €150 that they received during delegation trips. In this parliamentary term, seven MEPs have handed over gifts (the list can be found here). Except for one MEP, all of them were German MEPs. Only in one case, the value was declared to be more than €150: A Samsung tablet that the head of the Foreign Affairs Committee, David McAllister (CDU), received and handed over during a visit to Bahrain. with Till Hoppe, Charlotte Wirth, dpa
The German Federal Ministry for Economic Affairs and Climate Action (BMWK) expects significant overcapacity regarding the planning and construction of LNG terminals on the German North Sea and Baltic Sea coasts. According to a confidential preparatory paper for a meeting this week at the Chancellor’s Office, the ministry puts the capacity of the ten planned floating terminals due to come on stream this winter and next at 53 to 68 billion cubic meters of gas per year. That alone would be more than the 54 billion cubic meters imported from Russia in 2021.
In addition, three fixed terminals on land will come on stream in 2025 and 2026, with a capacity of up to 53 billion cubic meters. Although the report states that these are to replace the floating terminals at the same location – this is contradicted by the fact that the minimum lease term for the federally operated terminals is ten years. At least part of the capacity would be available at the same time from 2026 onwards – and thus far more in total than has so far come by pipeline from Russia.
So far, it has mainly been players from academia and civil society, including Environmental Action Germany and the New Climate Institute, who have criticized the German government’s LNG plans and held out the prospect of significant overcapacity. The German government, on the other hand, has not yet provided any figures to support its plans.
Now it is being forced into action: After the Budget Committee of the Bundestag had called on the government at the beginning of November to present an overall concept for the LNG plans by Feb. 15, 2023, at the latest, the committee decided at its clean-up meeting in November, according to information from Berlin.Table, to block the funds requested by the Ministry of Finance for a sixth floating terminal in order to lend weight to this demand.
The internal report confirms the foreseeable overcapacity but comments on the figures cautiously: Overall, the “capacity of existing FSRUs, as well as land-based terminals, would exceed the level of 2021 gas import volumes from Russia,” it says.
In fact, the overcapacity would be much greater than the figures for the German LNG terminals alone indicate. This is because in the current year, around 120 billion cubic meters more gas has been imported via the terminals in France, Belgium, the Netherlands and Spain, which have hardly been utilized in the past, than in 2021 – which explains why the complete loss of supplies from Russia has not led to bottlenecks so far, even without additional terminals.
But that’s not all: In addition, new floating terminals with a capacity of around 50 billion cubic meters per year are supposed to be built in other EU countries by 2025, according to the report. At the same time, gas consumption fell by 25 percent in 2022 in German industry alone, and the BMWK assumes that this saving, achieved primarily through process conversion, will remain permanent.
The overcapacity is likely to be even greater if future gas consumption is taken into account. The Ministry for Economic Affairs estimates that this will fall from around 90 billion cubic meters per year, most recently to a maximum of 70 billion cubic meters by 2030 and 20 billion cubic meters by 2040.
The report does not discuss the obvious conclusion of limiting the number of floating terminals and completely abandoning the fixed ones. However, certain cutbacks are apparent: For the sixth terminal with state participation, which was planned in Hamburg, there is “currently no realistic option for commissioning”, it says – officially “due to line bottlenecks”. For the permanent onshore terminals, the report notes that in no case has a “final investment decision been made”, but that there are “realization risks”.
When asked by Table.Media, the ministry would not comment on the confidential report. However, a spokeswoman explained in general terms that there are also LNG projects “in the planning phase, but whose chances of realization are still fraught with uncertainty”. For this reason, she said, a “safety buffer has been factored into the plans.” In addition, the German plans must also take into account the situation in neighboring countries.
The UN Biodiversity Conference (CBD COP15) in Montréal enters the decisive phase. Officially until Dec. 19, the Parties to the Convention on Biological Diversity are negotiating a new global agreement on the protection of ecological diversity.
The so-called high-level segment begins today: Environment ministers of the participating countries have a mountain of tasks to solve. The negotiations, which have been deadlocked for a long time, have recently gained some momentum. But there has been little progress on key issues so far, which is why an extension is considered a certainty.
Financing remains the central point of the negotiations. Particularly when it comes to the mobilization and equitable distribution of public resources, the positions are sometimes far apart. In Montréal, Florika Fink-Hooijer from DG ENVI of the European Commission expressed understanding for the developing countries’ demand for greater financial support. She stressed that the EU is a reliable partner in this regard. Nevertheless, the countries of the global South have so far waited in vain for concrete commitments. According to reports from observers, they left the negotiating room in frustration on Wednesday night.
Climate protection is also making no headway in reducing environmentally harmful subsidies. At present, around $1.8 trillion of taxpayers’ money is invested annually worldwide in environmentally harmful activities, most of it in fossil energies.
But the original goal of eliminating $500 billion in harmful subsidies annually has apparently already been significantly watered down in the negotiations so far. The specific amount is unlikely to make it into the text, and a group of countries, including Brazil, Argentina, Indonesia, Japan and India, are vehemently opposed to the phrase “abolish”.
Meanwhile, Canada’s Environment Minister and COP host Steven Guilbeault stressed the important role of the private sector. There is no way that public funding alone can meet the challenges. The destruction of nature can only be halted and reversed if the private sector is also geared towards biodiversity.
Goal 15 of the draft text provides for reporting obligations for large companies to disclose their impacts on biodiversity. In addition, negative impacts are supposed to be reduced by at least half and positive impacts increased. However, this goal is also highly controversial. After all, a corresponding agreement would entail enormous efforts at national level to ensure the appropriate legal framework.
“A transformation of the market will, of course, take time,” WWF financial expert Florian Tietze tells Europe.Table. “We can hardly ask the private sector to provide a certain amount of money. But we can create the appropriate framework. That’s why it’s important that we get something done here like in the Paris climate agreement, which provides for the alignment of financial flows and the economy with the 1.5-degree path.”
Support is coming from the private sector itself: “Make it mandatory” is the name of the campaign launched by the Business before Nature initiative, which has been joined by around 400 companies and financial institutions. They are calling for mandatory reporting.
“Making disclosure mandatory is important to level the playing field,” says Maelle Pelisson, advocacy director at Business for Nature. “Quite a few companies already measure their impacts on a voluntary basis, but they shouldn’t be penalized for doing so and put at a competitive disadvantage by the way the market works.”
Comparable reporting requirements would also simplify the monitoring of the company’s own value chain. Finally, in order to measure and improve the impact of one’s own products on biodiversity, data from the supply chain must also be collected. Without disclosure requirements, this could take several years or fail altogether.
Finally, reporting requirements are seen as a prerequisite for redirecting subsidies and aligning public and private financial flows with biodiversity goals. After all, investments in environmentally friendly corporate activities could only be made if there were comparable representations, Pelisson said.
The agreement being negotiated in Montréal is not directly binding. But it does provide a guideline for all countries, which must develop national strategic plans for implementation and financing by the next CBD COP in two years in Turkey. “We can’t negotiate pages and pages of reporting requirements here. But we have to manage to be concrete enough to identify areas for action and measures,” says Florian Tietze of WWF.
After that, the countries could learn from each other in a best-practice sense. The best example, he said, is the EU’s new regulation for deforestation-free supply chains. Conversion of forest land to agricultural production land is among the biggest drivers of biodiversity loss, and yet it represents only part of it. While climate reporting is mainly based on the representation of greenhouse gas emissions, the disclosure of corporate impacts on biodiversity is infinitely more complicated.
“Nature is complex, but we can break it down, and by now we know the five main drivers of nature loss,” says Nadine McCormick, conservation expert at the World Business Council for Sustainable Development. The main drivers, she says, are:
Guidelines for reporting in the respective areas are drawn up by working groups such as the Taskforce on Nature-related Financial Disclosures (TNFD). Environment Minister Steffi Lemke (Greens) announced a €29 million funding program immediately after her arrival in Montreal yesterday. The program, which will run for six years, is intended to promote nature-related reporting and support the work of the TNFD.
According to a study by the Swiss Re Institute, 55 percent of global economic output depends on functioning ecosystems. At the same time, according to the World Biodiversity Council, around one million of an estimated eight million species are threatened with extinction. Scientists are talking about the sixth major mass extinction in history. The difference this time: It is man-made.
The idea of a climate club to complement the international regime of the United Nations Framework Convention on Climate Change (UNFCCC) has been discussed in economics for over a decade. In 2015, Nobel economics laureate William Nordhaus proposed that members of such a club should coordinate their emissions trading systems or CO2 taxes among themselves. In addition, they should jointly levy external tariffs on emissions-intensive products from countries that do not use CO2 pricing instruments in order to compensate for any competitive disadvantages for domestic industry.
Olaf Scholz, then German finance minister, introduced the idea into the political debate in 2021. However, it became apparent that the concept of a climate club based on Nordhaus’ model, which sounds so elegant in economic theory, can hardly be implemented in political practice. True, the EU is pressing ahead with its plans for an external CO2 tariff.
But reality has shown how complex it is to coordinate various CO2 pricing instruments across the borders of states or alliances of states. For example, the bilateral negotiations between the EU and Switzerland alone to link their emissions trading systems took almost ten years. The linking agreement has now been in force since 2020.
The main difficulty, however, was that Nordhaus’s idea of a climate club met with little political response from the G7 partner countries and beyond. It already played a minor role in the final declaration of the G7 summit held at Schloss Elmau in June. With the Terms of Reference now published, the statutes for the G7 climate club, Nordhaus’ concept finally fell into practical irrelevance.
The document now only states that the members of the Climate Club will “explore and discuss possible measures to improve the measurement and reporting of emissions.” There is no longer any mention of coordinating and harmonizing CO2 pricing.
However, this does not mean that the Climate Club failed – on the contrary. The Climate Club statutes that have now been adopted are not a breakthrough. But it does open up the possibility of developing the idea further in a constructive way – towards an instrument that can be used to provide very concrete support for the transformation of heavy industry to climate-friendly production.
The focus makes sense for several reasons. Just a few years ago, the cement, steel and basic chemical industries were considered “hard to abate,” industries whose emissions could only be brought to zero with great difficulty. In recent years, however, the industry has already moved a long way, for example, in the steel industry, where a whole series of major corporations have set their own climate protection targets and announced investments in new climate-friendly steel mills.
But to put their plans into practice, they need government support, for example by building the necessary hydrogen infrastructure. After all, according to the current state of the art, hydrogen is virtually indispensable for the production of green steel.
Another challenge is that green steel, for example, will be more expensive than conventionally produced steel for the foreseeable future. To invest in climate-friendly production, the industry needs a certain degree of certainty that it will also find customers at higher prices.
If countries now make a joint commitment to invest in a market for climate-friendly products and the necessary infrastructure, this reduces uncertainty for industry and makes it easier for companies to decide to invest in green production facilities for their part. International agreements such as the Climate Club increase the credibility of the promises.
There are already a number of international initiatives working in this direction. What is missing, however, is a central institution to help coordinate these initiatives. The statute defines exactly that as a function of the G7 Climate Club. It serves as an “enabling framework for enhanced cooperation, better coordination and possible joint action.”
The Terms of Reference now adopted are an important step towards further operationalizing the Climate Club. They prevent the initiative from simply fizzling out after the end of Germany’s G7 presidency. For example, they stipulate that the IEA and the OECD should set up an interim secretariat for the Climate Club. A working group will manage the further details under the leadership of Germany.
However, for the Climate Club to actually be a success, the German government must promote it much more concretely and state its added value even more clearly: It can provide a framework at the international level that helps all stakeholders to jointly exploit the opportunities of the transformation – provided that a critical mass of countries join it and its rules achieve a sufficient degree of binding force.
In the past, the focus of international climate policy has often been on sharing the burden of climate protection fairly. The original idea of the climate club, as outlined by William Nordhaus, also follows this approach. Most recently, however, it has become increasingly clear that the question of how to distribute the transformation opportunities also offers great potential for conflict. China is already the technology leader in a whole range of key industries. With the Inflation Reduction Act, the USA has also created an instrument to build up green industries in its own country.
If everyone is now to be given a chance to benefit from the transformation together with the help of a climate club, this must not only be about the opportunities for the industrialized countries. Emerging and developing countries must also be included.
This is perhaps the biggest weakness in the statutes of the G7 climate club: Contrary to what was originally announced, it has obviously not been possible to get other partner countries beyond the G7 on board. This has to change. Because as a pure G7 initiative, the club has no chance of survival.
Investigators have seized €1.5 million in the corruption scandal surrounding Eva Kaili – and are now looking into possible related quid pro quo agreements entered by the ex-vice president of the European Parliament. All legislative decisions in which she was involved are to come under scrutiny. Attention also turns to Kaili’s involvement with the controversial SME Connect and Allied for Startups associations. Markus Grabitz, Till Hoppe and Charlotte Wirth report on the latest developments.
According to an internal paper, the BMWK puts the capacity of the ten planned floating LNG terminals on the German North Sea and Baltic Sea coasts, which are scheduled to come on stream this winter and next, at 53 to 68 billion cubic meters of gas per year. By comparison, 54 billion cubic meters were imported from Russia in 2021. And more terminals are planned onshore. Now the BMWK admits that there will be overcapacity with these plans. The ministry apparently no longer believes in the terminal in Hamburg, as Malte Kreutzfeldt writes.
The Czech Republic’s presidency is coming to an end, and Sweden will take over in January. Security, resilience, prosperity, democratic values and the rule of law – the country has set these four priorities for its presidency. Yesterday, Prime Minister Ulf Kristersson presented Sweden’s work program. Corinna Visser summarizes the most important points in the News.
The deposed Vice-President of the European Parliament, Eva Kaili, remains in custody. A scheduled date before the detention judge in Brussels could not take place because of a strike by prison staff. The next date is Dec. 22. From circles of the investigators, it became known that a part of the large sums of cash came from ATMs in Belgium. Through this, the investigators hope to get information about the bank involved, as well as the owner of a bank account.
Kaili, who was expelled from the S&D group in the European Parliament and from PASOK in Greece, is at the center of a corruption scandal in which €1.5 million were seized. She denies allegations of influencing political decisions on behalf of World Cup host Qatar. Morocco is being discussed as a possible client.
Kaili herself claims that the large amount of cash in her Brussels apartment did not belong to her or her partner but to a third party. One of her lawyers told Greek TV station Skai on Wednesday evening. “Ms. Kaili asked her partner what kind of funds they were,” the lawyer said. The partner replied that the money belonged to someone else, he said. “In response, Ms. Kaili said she did not allow funds that belonged to someone else to be kept in the joint apartment.” Kaili reportedly intends to plead not guilty.
In the European Parliament, the search continues to determine what consideration Kaili might have provided. All legislative decisions in which she was involved are to be examined. The head of the transport committee, Karima Delli (Greens), also wants to examine possible external influence on the air transport agreement with Qatar, which is currently being ratified.
As one of 14 vice presidents, Kaili was primarily responsible for technology issues such as artificial intelligence and blockchain. Critics accuse her of allowing the 44-year-old to be hijacked by the big digital corporations in the process. “She got involved in two SME and start-up associations funded by Big Tech, SME Connect and Allied for Startups,” Max Bank of Lobbycontrol tells Europe.Table.
The associations had only pretended to represent the interests of start-ups. Last fall, several MEPs had already denounced the fact that the companies were using such front organizations to try to influence ongoing legislative projects such as the Digital Services Act. Kaili sat on the board of both associations until the end – as did several other MEPs.
The scandal is only known in outline. Outside the parliament, NGOs like Fight Impunity obviously play a role. Fight Impunity was founded by former MEP Pier Antonio Panzeri. Other NGOs focusing on human rights, registered at the same Brussels address and also founded by Panzeri, are also mentioned. Searches were conducted in Parliament on staff working in the Subcommittee on Human Rights.
Now the human rights resolutions (“urgency resolutions”), which were always voted on Thursday during the session week in Strasbourg, come into focus. For a conspicuously long time, no resolution criticizing the occupation of the Western Sahara by Morocco was voted on. The EPP Group has decided to stop participating in resolutions on human rights. “Until we can exclude any outside influence on the resolutions, we should stop passing any more resolutions,” the EPP said.
Today the European Parliament votes a resolution to draw the first consequences from the affair. The resolution, agreed upon between the political groups, is available to Europe.Table. The main points are:
The deputies could not agree on more control of NGOs.
According to the transparency rules of the European Parliament, MEPs must hand over gifts worth more than €150 that they received during delegation trips. In this parliamentary term, seven MEPs have handed over gifts (the list can be found here). Except for one MEP, all of them were German MEPs. Only in one case, the value was declared to be more than €150: A Samsung tablet that the head of the Foreign Affairs Committee, David McAllister (CDU), received and handed over during a visit to Bahrain. with Till Hoppe, Charlotte Wirth, dpa
The German Federal Ministry for Economic Affairs and Climate Action (BMWK) expects significant overcapacity regarding the planning and construction of LNG terminals on the German North Sea and Baltic Sea coasts. According to a confidential preparatory paper for a meeting this week at the Chancellor’s Office, the ministry puts the capacity of the ten planned floating terminals due to come on stream this winter and next at 53 to 68 billion cubic meters of gas per year. That alone would be more than the 54 billion cubic meters imported from Russia in 2021.
In addition, three fixed terminals on land will come on stream in 2025 and 2026, with a capacity of up to 53 billion cubic meters. Although the report states that these are to replace the floating terminals at the same location – this is contradicted by the fact that the minimum lease term for the federally operated terminals is ten years. At least part of the capacity would be available at the same time from 2026 onwards – and thus far more in total than has so far come by pipeline from Russia.
So far, it has mainly been players from academia and civil society, including Environmental Action Germany and the New Climate Institute, who have criticized the German government’s LNG plans and held out the prospect of significant overcapacity. The German government, on the other hand, has not yet provided any figures to support its plans.
Now it is being forced into action: After the Budget Committee of the Bundestag had called on the government at the beginning of November to present an overall concept for the LNG plans by Feb. 15, 2023, at the latest, the committee decided at its clean-up meeting in November, according to information from Berlin.Table, to block the funds requested by the Ministry of Finance for a sixth floating terminal in order to lend weight to this demand.
The internal report confirms the foreseeable overcapacity but comments on the figures cautiously: Overall, the “capacity of existing FSRUs, as well as land-based terminals, would exceed the level of 2021 gas import volumes from Russia,” it says.
In fact, the overcapacity would be much greater than the figures for the German LNG terminals alone indicate. This is because in the current year, around 120 billion cubic meters more gas has been imported via the terminals in France, Belgium, the Netherlands and Spain, which have hardly been utilized in the past, than in 2021 – which explains why the complete loss of supplies from Russia has not led to bottlenecks so far, even without additional terminals.
But that’s not all: In addition, new floating terminals with a capacity of around 50 billion cubic meters per year are supposed to be built in other EU countries by 2025, according to the report. At the same time, gas consumption fell by 25 percent in 2022 in German industry alone, and the BMWK assumes that this saving, achieved primarily through process conversion, will remain permanent.
The overcapacity is likely to be even greater if future gas consumption is taken into account. The Ministry for Economic Affairs estimates that this will fall from around 90 billion cubic meters per year, most recently to a maximum of 70 billion cubic meters by 2030 and 20 billion cubic meters by 2040.
The report does not discuss the obvious conclusion of limiting the number of floating terminals and completely abandoning the fixed ones. However, certain cutbacks are apparent: For the sixth terminal with state participation, which was planned in Hamburg, there is “currently no realistic option for commissioning”, it says – officially “due to line bottlenecks”. For the permanent onshore terminals, the report notes that in no case has a “final investment decision been made”, but that there are “realization risks”.
When asked by Table.Media, the ministry would not comment on the confidential report. However, a spokeswoman explained in general terms that there are also LNG projects “in the planning phase, but whose chances of realization are still fraught with uncertainty”. For this reason, she said, a “safety buffer has been factored into the plans.” In addition, the German plans must also take into account the situation in neighboring countries.
The UN Biodiversity Conference (CBD COP15) in Montréal enters the decisive phase. Officially until Dec. 19, the Parties to the Convention on Biological Diversity are negotiating a new global agreement on the protection of ecological diversity.
The so-called high-level segment begins today: Environment ministers of the participating countries have a mountain of tasks to solve. The negotiations, which have been deadlocked for a long time, have recently gained some momentum. But there has been little progress on key issues so far, which is why an extension is considered a certainty.
Financing remains the central point of the negotiations. Particularly when it comes to the mobilization and equitable distribution of public resources, the positions are sometimes far apart. In Montréal, Florika Fink-Hooijer from DG ENVI of the European Commission expressed understanding for the developing countries’ demand for greater financial support. She stressed that the EU is a reliable partner in this regard. Nevertheless, the countries of the global South have so far waited in vain for concrete commitments. According to reports from observers, they left the negotiating room in frustration on Wednesday night.
Climate protection is also making no headway in reducing environmentally harmful subsidies. At present, around $1.8 trillion of taxpayers’ money is invested annually worldwide in environmentally harmful activities, most of it in fossil energies.
But the original goal of eliminating $500 billion in harmful subsidies annually has apparently already been significantly watered down in the negotiations so far. The specific amount is unlikely to make it into the text, and a group of countries, including Brazil, Argentina, Indonesia, Japan and India, are vehemently opposed to the phrase “abolish”.
Meanwhile, Canada’s Environment Minister and COP host Steven Guilbeault stressed the important role of the private sector. There is no way that public funding alone can meet the challenges. The destruction of nature can only be halted and reversed if the private sector is also geared towards biodiversity.
Goal 15 of the draft text provides for reporting obligations for large companies to disclose their impacts on biodiversity. In addition, negative impacts are supposed to be reduced by at least half and positive impacts increased. However, this goal is also highly controversial. After all, a corresponding agreement would entail enormous efforts at national level to ensure the appropriate legal framework.
“A transformation of the market will, of course, take time,” WWF financial expert Florian Tietze tells Europe.Table. “We can hardly ask the private sector to provide a certain amount of money. But we can create the appropriate framework. That’s why it’s important that we get something done here like in the Paris climate agreement, which provides for the alignment of financial flows and the economy with the 1.5-degree path.”
Support is coming from the private sector itself: “Make it mandatory” is the name of the campaign launched by the Business before Nature initiative, which has been joined by around 400 companies and financial institutions. They are calling for mandatory reporting.
“Making disclosure mandatory is important to level the playing field,” says Maelle Pelisson, advocacy director at Business for Nature. “Quite a few companies already measure their impacts on a voluntary basis, but they shouldn’t be penalized for doing so and put at a competitive disadvantage by the way the market works.”
Comparable reporting requirements would also simplify the monitoring of the company’s own value chain. Finally, in order to measure and improve the impact of one’s own products on biodiversity, data from the supply chain must also be collected. Without disclosure requirements, this could take several years or fail altogether.
Finally, reporting requirements are seen as a prerequisite for redirecting subsidies and aligning public and private financial flows with biodiversity goals. After all, investments in environmentally friendly corporate activities could only be made if there were comparable representations, Pelisson said.
The agreement being negotiated in Montréal is not directly binding. But it does provide a guideline for all countries, which must develop national strategic plans for implementation and financing by the next CBD COP in two years in Turkey. “We can’t negotiate pages and pages of reporting requirements here. But we have to manage to be concrete enough to identify areas for action and measures,” says Florian Tietze of WWF.
After that, the countries could learn from each other in a best-practice sense. The best example, he said, is the EU’s new regulation for deforestation-free supply chains. Conversion of forest land to agricultural production land is among the biggest drivers of biodiversity loss, and yet it represents only part of it. While climate reporting is mainly based on the representation of greenhouse gas emissions, the disclosure of corporate impacts on biodiversity is infinitely more complicated.
“Nature is complex, but we can break it down, and by now we know the five main drivers of nature loss,” says Nadine McCormick, conservation expert at the World Business Council for Sustainable Development. The main drivers, she says, are:
Guidelines for reporting in the respective areas are drawn up by working groups such as the Taskforce on Nature-related Financial Disclosures (TNFD). Environment Minister Steffi Lemke (Greens) announced a €29 million funding program immediately after her arrival in Montreal yesterday. The program, which will run for six years, is intended to promote nature-related reporting and support the work of the TNFD.
According to a study by the Swiss Re Institute, 55 percent of global economic output depends on functioning ecosystems. At the same time, according to the World Biodiversity Council, around one million of an estimated eight million species are threatened with extinction. Scientists are talking about the sixth major mass extinction in history. The difference this time: It is man-made.
The idea of a climate club to complement the international regime of the United Nations Framework Convention on Climate Change (UNFCCC) has been discussed in economics for over a decade. In 2015, Nobel economics laureate William Nordhaus proposed that members of such a club should coordinate their emissions trading systems or CO2 taxes among themselves. In addition, they should jointly levy external tariffs on emissions-intensive products from countries that do not use CO2 pricing instruments in order to compensate for any competitive disadvantages for domestic industry.
Olaf Scholz, then German finance minister, introduced the idea into the political debate in 2021. However, it became apparent that the concept of a climate club based on Nordhaus’ model, which sounds so elegant in economic theory, can hardly be implemented in political practice. True, the EU is pressing ahead with its plans for an external CO2 tariff.
But reality has shown how complex it is to coordinate various CO2 pricing instruments across the borders of states or alliances of states. For example, the bilateral negotiations between the EU and Switzerland alone to link their emissions trading systems took almost ten years. The linking agreement has now been in force since 2020.
The main difficulty, however, was that Nordhaus’s idea of a climate club met with little political response from the G7 partner countries and beyond. It already played a minor role in the final declaration of the G7 summit held at Schloss Elmau in June. With the Terms of Reference now published, the statutes for the G7 climate club, Nordhaus’ concept finally fell into practical irrelevance.
The document now only states that the members of the Climate Club will “explore and discuss possible measures to improve the measurement and reporting of emissions.” There is no longer any mention of coordinating and harmonizing CO2 pricing.
However, this does not mean that the Climate Club failed – on the contrary. The Climate Club statutes that have now been adopted are not a breakthrough. But it does open up the possibility of developing the idea further in a constructive way – towards an instrument that can be used to provide very concrete support for the transformation of heavy industry to climate-friendly production.
The focus makes sense for several reasons. Just a few years ago, the cement, steel and basic chemical industries were considered “hard to abate,” industries whose emissions could only be brought to zero with great difficulty. In recent years, however, the industry has already moved a long way, for example, in the steel industry, where a whole series of major corporations have set their own climate protection targets and announced investments in new climate-friendly steel mills.
But to put their plans into practice, they need government support, for example by building the necessary hydrogen infrastructure. After all, according to the current state of the art, hydrogen is virtually indispensable for the production of green steel.
Another challenge is that green steel, for example, will be more expensive than conventionally produced steel for the foreseeable future. To invest in climate-friendly production, the industry needs a certain degree of certainty that it will also find customers at higher prices.
If countries now make a joint commitment to invest in a market for climate-friendly products and the necessary infrastructure, this reduces uncertainty for industry and makes it easier for companies to decide to invest in green production facilities for their part. International agreements such as the Climate Club increase the credibility of the promises.
There are already a number of international initiatives working in this direction. What is missing, however, is a central institution to help coordinate these initiatives. The statute defines exactly that as a function of the G7 Climate Club. It serves as an “enabling framework for enhanced cooperation, better coordination and possible joint action.”
The Terms of Reference now adopted are an important step towards further operationalizing the Climate Club. They prevent the initiative from simply fizzling out after the end of Germany’s G7 presidency. For example, they stipulate that the IEA and the OECD should set up an interim secretariat for the Climate Club. A working group will manage the further details under the leadership of Germany.
However, for the Climate Club to actually be a success, the German government must promote it much more concretely and state its added value even more clearly: It can provide a framework at the international level that helps all stakeholders to jointly exploit the opportunities of the transformation – provided that a critical mass of countries join it and its rules achieve a sufficient degree of binding force.
In the past, the focus of international climate policy has often been on sharing the burden of climate protection fairly. The original idea of the climate club, as outlined by William Nordhaus, also follows this approach. Most recently, however, it has become increasingly clear that the question of how to distribute the transformation opportunities also offers great potential for conflict. China is already the technology leader in a whole range of key industries. With the Inflation Reduction Act, the USA has also created an instrument to build up green industries in its own country.
If everyone is now to be given a chance to benefit from the transformation together with the help of a climate club, this must not only be about the opportunities for the industrialized countries. Emerging and developing countries must also be included.
This is perhaps the biggest weakness in the statutes of the G7 climate club: Contrary to what was originally announced, it has obviously not been possible to get other partner countries beyond the G7 on board. This has to change. Because as a pure G7 initiative, the club has no chance of survival.
