Climate and competitiveness on Sweden’s agenda

Many ambitions on climate and environment dossiers, but the planned “competitiveness agenda” might push in the other direction. That’s a brief summary of Sweden’s work program for the EU Presidency first half of 2023.

The 33-page document mentions all relevant green legislation that is mature for Council deliberations or conciliation (as far as I can see). This includes the regulation on nature restoration that Stockholm has been critical to before, where Sweden will “continue the work”, and the regulation of packaging that Business Europe has tried to stop.

On forest related issues (such as nature restoration), Swedish PM Ulf Kristersson today said in Parliament that it would be for like-minded countries to now push harder while Sweden as Presidency would try to bring together differing views.

The Swedish Permanent Representation in Brussels has many highly competent Counsellors for different parts of the EU Green Deal, and this is also true of the Government Offices in Stockholm. However, given the large amount of legislation to be negotiated, there will probably be a need for political choices on where to put the energy to achieve agreements in the final stretch. Swedish national priorities might play a certain role then, but that remains to be seen.

What is clear, however, is that competitiveness is high on the Swedish right-wing government’s agenda. “The EU has for a long time not prioritised competitiveness, instead developing complicated sets of regulations”, it was stated in an op-ed today, and the Prime Minister spoke about avoiding “excessive regulation” when presenting the Presidency in the Parliament.

Sweden will establish a long-term competitiveness agenda for the EU in connection with “the internal market at 30”, stated the government. The work program mentions inter alia promoting comprehensive impact assessments and reducing the regulatory burden, topics also recently highlighted by Business Europe in its Stockholm declaration with expectations for the Swedish Presidency.

Depending on how this competitiveness agenda is designed, it might slow down the ambitions of the Green Deal. For those interested in climate and environment issues, that will be a space to watch.

Finally, it is worth noting that climate and security as well as strenghtened EU climate diplomacy are mentioned as important issues for Foreign Ministers.

Why did the Sweden Democrats become such a big party?

When Swedes go to the elections booths today, much focus is on the result for the anti-immigration Sweden Democrats. Last time, in 2018, they got 17.5 percent of the vote, what will the result be now? And can Moderate party leader Ulf Kristersson form a government with the help of Jimmie Åkesson’s former paria party?

A more basic question is how a party with neo-nazi roots and only around 3 percent in opinion polls 2009 could grow so much. I have tried to address that topic many times the last 15 years or so. Maybe the texts linked here can give some guidance (there are many more in Swedish):

Rädslan för brott kan avgöra valet (“Fear of crime can be a decisive factor in the next election” Aftonbladet 2007)

Sweden’s changing (Open Democracy 2009)

Sweden’s Social Democrats – the test of failure (Open Democracy 2010)

Sweden after the election (Friedrich Ebert-Stiftung 2010)

Nordic numbers (Inside Story 2018)

Socialdemokraterna såg inte problemen med integrationen (“The Social Democrats did not understand integration problems” Aftonbladet 2018)

Effektiva strategier mot Sverigedemokraterna kräver nyanserad analys (“Efficient strategies against the Sweden Democrats require nuanced analysis”, Dagens Arena 2018)

Paths to a low-carbon and resource efficient European industry

How can the European Union support the transition to a low-carbon circular industry? On Friday 5 March, I participated in a webinar based on a new report from IEEP and the Ellen MacArthur Foundation (EMF). Carmen Valache from EMF did an excellent presentation of the part related to three specific sectors: the build environment, mobility and food. My introduction about horisontal policy levers can be found below (slightly edited with links and some clarifications):

“Our report describes how five horisontal policy areas can contribute to a low-carbon circular industry:

• Industrial policy
• Climate policy
• Next Generation EU and the national recovery plans
• The European Semester
• External relations and industry transitions

Starting with industry, the Commission is now updating the Industry strategy. One important point is to establish a ‘resource-efficiency first’-principle, as has been done in energy policy with the ‘energy-efficiency first’-principle. This would be wider, it would be to first consider solutions based on resource efficiency and circular economy, before for example investing in changed production methods even if that is also sometimes necessary. To make this happen, a mental shift is necessary by clearly stating the principle, but also to provide the tools as is presently being done with the energy efficiency first-principle, looking on obstacles and opportunities.

Large-scale demonstration of circular economy solutions that can lower carbon emissions is another crucial area. Most applications to the EU Innovation Fund are for support to projects on the production side. Here, it is necessary to look both on how to better create platforms along the value chains, and on the legal language on the innovation fund, in the upcoming revision of the regulation on the emission trading system (ETS).  There are good efforts within Horizon Europe, but they do not and cannot legally go far enough.

This is linked to the state aid and competition frameworks, allowing more state aid for innovative solutions, and allowing more cooperation along the value chains. In a recent speech, Commission Vestager indicated a move in this direction, but it has to go far enough.

Government support for green transitions needs to be combined with more stringent regulation. The current revision of the Industrial Emissions Directive (IED) provides an opportunity to integrate resource efficience better both in horisontal requirements and in specific standards on best available solutions (BREFs).

Finally, on industrial policy, the move to an ecosystem approach can have advantages as shown for example by the Battery Alliance. But is also important to keep the transversal perspective, both regarding the measures, and when it comes to the governance of this approach. For example, if DG GROW is reorganised according to the ecosystem approach, it is crucial to also have a strong horizontal unit dealing with for example circular economy across sectors. There are many possibilities in better coordination of policies on heavy industry, construction and services, just to take one example.

Regarding climate action in general, the level of ambition in the climate law will be important. The Commission will present proposals based on the climate law agreement before summer. For example, circular economy can be better integrated in the energy efficiency directive. Sector-specific actions on better resource efficiency need to be integrated in this endeavour, for example regarding the built environment, mobility and food. The report provides a number of such examples.

We know that Member States do not take circular economy well enough in account in their National Energy and Climate Plans (NECPs). There is a need both to give this a higher political priority, and to develop a ‘tool-box’ based on good examples how this can be done.  For example, the Netherlands can provide inspiration, as well as countries outside the EU such as South Korea.

There is also a need to further develop carbon footprint methodologies, not only for products but also on system-wide issues.

On Next Generation EU and the national recovery plans, there is good language in the Commission guidelines on addressing circular economy, but this has to be prioritised in the dialogue with Member States regarding the draft plans.

One example where much can be done now when funding is available is to promote synergies between digitalisation and green transitions. It is possible to find good examples in for example Germany, but much more can be done. The new climate plan in South Korea is interesting in this regard.

Improving the framework on green procurement would facilitate Member State. Facilitating access to funding for SMEs, and the final design of the EU Taxonomy, are other important elements.

The European Semester is currently linked to the recovery plans, but there is also a discussion on the future of this process. For example, encouraging green tax reform in the country recommendations can help create markets for circular economy solutions. The next few years could be a ‘window of opportunity’ in this regard since there will probably be a tendency towards fiscal consolidation in Member States after the present crisis, with a need for new sources of income.

To finally find agreement on the revision of the VAT Directive can facilitate circular economy solutions.

Including knowledge for low-carbon, circular economy solutions in the revised Skills Agenda is also important to give good guidance to Member States in the Semester process. New skills for workers in a changing labour market is a crucial part of a just transition.

External aspects of the industrial policy is a crucial issue. IEEP has published other studies on the links between trade and circular economy. It is encouraging that foreign ministers are engaging in climate diplomacy, but there has to be more priority to circular economy. For example, the recently launched Global Alliance on Resource Efficiency and Circular Economy is a very positive step, but it also has to be a real priority for the External Action Service.

Carbon border adjustment mechanisms (CBAM) have to be analysed from a circular economy perspective. IEEP has written about this as well.

Introducing carbon border adjustments might create tensions with other parts of the world. This is one of several reasons to promote cooperation with other parts of the world: on the early stages of innovation, on standards, and so on. And to give special attention to the Global South, both on the effects of CBAMs, and on not preventing them from using new innovation low-carbon solutions because of very stringent application of intellectual property rights.”

Mainstreaming environment in economic policy key to Green Deal success

A historical moment. When Ursula von der Leyen took the floor in the European Parliament, she described how the environment is at the core of the proposed Recovery Plan and the revised EU budget. This would not have happened with the Juncker Commission.

Negotiations in the Council and views from the European Parliament will be decisive for how green the recovery measures will finally be. Clearly, the Commission is sticking to its ambitions regarding the Green Deal. In the revised work program for 2020, also presented yesterday, there are minor adjustments to the timetables for legislative proposals, but no major changes in the level of ambition.

There will be many reasons to discuss the content of future environmental proposals. However, the success of the Green Deal depends to a large extent on how environment is mainstreamed in all policy areas, including the massive financial measures proposed yesterday. Will for example finance ministers in ECOFIN respect the Treaty provisions of integrating environment in their decisions (article 11 TFEU)?

“Support should be consistent with the Union´s climate and environmental objectives”, states the Commission in its Communication on the EU budget. This is to some extent specified in the Communication on the Recovery Plan. For example, the Commission states that “Public investments in the recovery should respect the green oath to ´do no harm´.” It is positive that the need for mainstreaming has been clearly recognised. However, the devil is as usual in the details. 

Money from the Recovery and Resilience Facility will be closely linked to the European Semester recommendations. Designing the “pre-defined benchmarks” for such support mentioned by the Commission will be crucial. There is a need for swift analysis how such benchmarks best can promote green transitions. Earlier studies on greening the Semester are relevant in this regard, including this one from IEEP. In addition to the Commission, ECOFIN deliberations on the benchmarks and recommendations will be of great importance. So far, finance ministers have not been very keen on a stronger role for environment in the Semester process. This would have to change. (A positive sign is that the statement from France and Germany last week included a requirement that all sectors develop roadmaps for green recovery).

The Solvency Support Instrument is a radical new proposal. If the EU subsidies private capital buying shares in companies, this should come with environmental requirements and not be “targeted solely and strictly at addressing the economic impact of the pandemic” as stated in the Communication on the EU budget. In the other Communication, there is a sentence saying that the investment guidelines for this new instrument “will also reflect the need to prioritise green investments”. This is good, but there is a need to be more concrete, and in particular to mainstream environmental aspects in all actions under the Solvency Support Instrument. This is also important regarding the new Strategic Investment Facility, supporting strategic value chains across the EU.

Strict environmental criteria are needed for increased expenditure on cohesion, agriculture and fisheries. As pointed out by others, there also needs to be environmental conditionality in state-aid decisions on national recovery measures.

In addition, it is important that the requirement for at least 25% of MFF spending to contribute to climate action is not undermined when total expenditure increases, for example through weakened definitions. On the contrary, the percentage could be higher and criteria need to be strict. Similarly, the EIB needs to keep its promises even if co-financing of green projects from member states becomes more difficult. 

Finally, it should be repeated that the Commission has taken a number of positive steps. Now is the time for progressive governments to elaborate on the environmental aspects in Council negotiations, and for the European Parliament to add its weight to the discussion. Green benchmarks and conditionalities should not be weakened, on the contrary they need to become stronger.

The Green Deal is alive and can be strengthened in light of Covid-19

On Thursday 23 April, the European Council will discuss the recovery from the pandemic crisis. Much attention will be on how to finance the necessary investments to restart the economy. In parallell, a more detailed Recovery Action Plan is being developed. Commission President Ursula von der Leyen and a number of national governments have made clear that the Green Deal should be a key part of the European response to the crisis.

Earlier, I have outlined some elements to consider in this context.  Many parts of the Green Deal Communication and other policy documents are still valid. Here, I would like to highlight five points that could complement or strengthen earlier proposals in light of the current situation.

1. Contribute to synergies between better health and environmental sustainability. Ursula von der Leyen has mentioned the need to have both a Green Deal and a White Deal (for health). There is a link between ecosystem degradation and the risk for pandemics, and some evidence that air pollution increases the sensitivity for Covid-19. While it is important to keep the Green Deal as a key initiative in its own right, earlier work on a health and environment strategy could be revived. Some possible elements are: reducing air pollution, proposing an ambitious chemicals strategy, and putting more value on the role of nature for mental and physical well-being.
2. Increase the focus on green jobs and skills. Unemployment is rising rapidly across Europe. In the draft revised Commission work program for 2020, the importance of the proposed Renovation Wave is rightly highlighted. In addition, rapid adoption of the proposals in the Circular Economy Action Plan can contribute to more jobs. Other measures against unemployment include higher ambitions for biodiversity (including agro-environmental measures and management plans for Natura 2000-areas), better implementation of already decided EU environmental legislation, and tougher measures against noise from roads. Green skills should be emphasised in labour market programs. Investment in decarbonisation of the European economy will contribute to competitiveness and jobs. This is urgent, given the difficult situation in for example the car industry and the metal sector. The EIB should have stronger muscles to support this, perhaps through more green bonds issued by the EIB and then bought by the ECB.
3. Promote sustainable mobility. This is a defining moment for the future of transport. Innovative digital solutions now show the potential for reducing the environmental footprint of mobility. This should be reflected in the upcoming strategy on sustainable and smart mobility, which could be brought forward to early autumn. Investments in railways and urban transport ought to be an important part of the envisaged Recovery Fund (there are already worrying signs that some investments in railways are being put on the shelf because of the crisis, and that the EIB might not get enough green national projects to fund without more direct EU support). Green conditionality should be part of rescue programs for airlines. Smart and sustainable cities is already a priority in Horizon 2020, but Europe is lacking behind countries such as South Korea when it comes to intelligent transport systems. Now public transport companies are facing financial problems because of the lockdowns, making a green leap even more urgent. There is a need for a wider alliance between the EU, Member States and cities to make Europe a leader in green and smart mobility.
4. Encourage green tax reform as part of financing of the recovery. Oil prices are low. This is a moment to reduce subsidies, and to promote environmental taxes when the time comes for financial consolidation. Carbon taxes and other measures are politically easier to implement as part of broader policy packages, including for example investments in health. This could be promoted as part of the Green Deal and in the reformed European Semester.  In the medium term, Member States that consider tax reductions to stimulate consumption could be encouraged to prioritise areas contributing to sustainability, for example lower VAT on fruits and vegetables compared to red meat. In addition, new proposals could be made for environmental own resources to the EU budget, for example related to the carbon content of heating fuel.
5. Cooperate on resilient and sustainable supply chains. There are now voices for reshoring of production back to Europe from other parts of the world. Some such measures will be necessary to increase preparedness for the next crisis. However, this should not come at the expense of the Global South or increase political tensions with strategic partners for the EU. In contrast, this is the time for Green Diplomacy to included cooperation on sustainable supply chains, for example on better information systems and enhanced producer responsibility

There are many other valuable contributions to this debate. It is comforting that support for environmental protection is still strong in Europe. But there are also economic and administrative hurdles to overcome. The European Commission is showing leadership in sticking to the Green Deal during the crisis. Now it is up to the European Council to demonstrate its commitment to sustainability.

Greening the Industrial Strategy

Ursula von der Leyen and her Commission have taken important steps to green the European economy and simultaneously promote competitiveness. The industrial strategy due to be adopted on March 10 will be one more significant policy initiative, following inter alia the Communication on the European Green Deal in December last year.

Still, some aspects are lacking in the draft industrial strategy leaked in January.

Helping bridge the gap between innovation and commercialisation of new green technologies is an important task for the EU. Co-funding large scale demonstration plants could be done to a larger extent also outside the sector covered by the Innovation Fund, finding inspiration in member state initiatives such as the Danish eco-innovation program MUDP and the German Umweltinnovationsprogramm. Supporting technologies for better recovery of critical metals is one of many possible such examples where EU coordination and financial support would provide benefits.

To facilitate large-scale demonstration, the envisaged changes in the environment and energy guidelines for state aid approval need to be implemented quickly. Chances of success in the transition to for example low-carbon steel production are higher with a “let many flowers bloom” strategy similar to how sea-based wind power has been encouraged through general EU guidelines for state aid, than by only supporting first-of-a-kind projects. This could be underlined in the text of the industrial strategy communication.

Improving resource efficiency can reduce negative environmental impact and increase productivity. The Commission could find inspiration for example in the German ProgRess strategies to improve resource efficiency. Industrial organisations´claims about gigantic future energy demand should be analysed critically. Yes, more renewable electricity will be needed for transport and industrial processes, but no energy source is without environmental impact.

Digitalisation and artificial intelligence can help reduce energy demand. The industrial strategy could better describe such links, for example in using digitalisation and machine learning to make energy intense industrial processes more efficient. Here, the European Union can play an important role by increasing funding for research and development, as well as in providing standards and incentives for harmonised databases. In addition, the environmental footprint of digitalisation and machine learning itself could be addressed, in a similar way as in the recent Communication on a Digital Europe and in the White Paper on AI. Data and knowledge based on EU initiatives such as the Reach legislation on chemicals could be better used to promote new business areas such as green chemistry, of course respecting commercial secrecy provisions.

Reducing consumption of energy-intensive materials (or in some cases slowing growth of consumption) should not be taboo. Such materials are of key importance for the economy and for our welfare, and can provide environmental benefits (better steel in cars can for example reduce fuel consumption), but in some cases the consumption can be reduced without welfare losses, providing environmental benefits. The over-use of concrete in construction is such an example. Substitution of fossil-based materials such as plastics with alternatives based on sustainable biomass is another important area that could be mentioned in the industrial strategy. Consumption also need to be addressed more broadly, a topic well highlighted by IEEP.

The Green Deal and the Sustainable Investment Plan will facilitate investments by the private sector in low-carbon transition. However, such financial support should not come without strings attached. That would be contrary to the well-established polluter pays principle. As argued in a recent paper by E3G, support to industry should be combined with a policy framework providing real incentives for industry to move and with product standards.

It is important to underline the role of small and medium-sized companies in the green transition. The Commission will publish a specific strategy on SME:s, but their role could also be more thoroughly described in the text of the industrial strategy. For example, suppliers to the car industry have a crucial role and a vision for the future should address their situation when electrification of transport will provide fundamental changes. The positive aspects of the envisaged “renovation wave” for SMEs in countries like Poland could also be highlighted and the link to the New Skills Agenda be underlined.

Finally, the external dimension of the industrial strategy is a key issue. Increasing European competitiveness is a key objective for the initiative. However, this does not excluded co-operation on for example innovation in the pre-commercial phase or joint large scale demonstration projects in some cases. For example, the European Union, Japan and South Korea have similar objectives when it comes to the circular economy and to de-carbonisation. A joint analysis of possible intensified cooperation does not need to be in conflict with European competitiveness, in particular when the complex global supply chains are taken into account. In addition, more attention should be put on international guidelines and agreements on reduced greenhouse gas emissions from energy intensive sectors.

A test for the Green Group´s bargaining skills

The Green Group in the European Parliament has a strong position in negotiations about a new Commission President. Ursula von der Leyen needs their votes to be sure she has a majority in the upcoming vote next week.

How will the Greens use this power? Influencing the policy agenda for the next five years is a key part. Judging from Ska Keller´s press conference today, climate change and rescue at sea are of particular importance to her group.

These are two important issues, but it would be strange if the Greens are not also able to influence other environmental issues than climate change. The Juncker Commission did a reasonably good job on climate change, but progress in many other areas has been slow.  Jean-Claude Juncker did not include chemicals, air and water pollution, or biodiversity among his ten priorities. It would be a failure if Ursula von der Leyen´s program did not have a broader scope when it comes to the environment.

The Green Group´s ability will be judged not only by progress on climate change and migrant policy, but also on what promises it can achieve in areas such as:

• Chemicals – the Juncker Commission has not put forward a strategy for a non-toxic environment, even though it is a commitment in the 7th Environmental Action Program.
• Biodiversity – will there be an ambitious strategy before the next COP of the biodiversity convention in 2020?
• Integration of environmental issues in the economic and growth strategies of the European Union – clear commitments in accordance with the Treaty requirements on sectoral responsibilities (revival of the Cardiff Strategy)

A particular good source of inspiration is the THINK 2030 action plan, coordinated by the IEEP.  Organisations such as WWF and EEB have put forward a number of possible measures. Of course, the Greens also have many proposals in their election manifesto.

It would be a disappointment if the Commission´s agenda for the coming five years did not include more environmental initiatives than on climate change. Particularly since the Greens now have such a good negotiating position.

Future regulatory cooperation EU-UK should aim for higher standards

The political declaration on future relations between the EU and the United Kingdom will be of great importance for environment, health, consumer protection and many other areas important to citizens. However, such aspects have not been much discussed since a draft text was published last weekend.

It now seems no new version will be published until the European Council on Sunday, when the declaration is supposed to be adopted. This is problematic both from a democratic viewpoint and when it comes to the quality of the agreement. Without public scrutiny, important aspects might be forgotten.

Take environment. It is difficult to understand why “environment” or “sustainable development” is not mentioned in the initial principles, since such wording is included among the general principles of the EU Treaties and should not be controversial.

Even more concerning is the commitment to future “deep regulatory cooperation” without mentioning high environmental ambitions. This implies a clear risk for slowing down decision-making on future EU environmental policy. Not because the UK will have formal influence on decision-making, but because regulatory cooperation as it is now being implemented in other trade agreements includes biased impact assessment processes and a shift of power from environmental ministries to trade and competition experts. The situation is similar when it comes to consumer protection, health and safety at work, and so on. Warnings from for example Umweltsbundesamt in Germany about regulatory cooperation in mega-regional trade agreements are valid also for EU-UK relations after Brexit.

There is still time to make changes to the political declaration. In addition to demands from some EU member states for UK commitments to future higher environmental ambitions, the Initial principles should include a high level of environmental protection, and regulatory cooperation should be linked to progressive higher ambitions in order to reach sustainable development.

High environmental ambitions can strengthen the European Union

Europe is facing major changes next year. Of course, Brexit looms large, but in 2019 there will also be elections to the European Parliament, a new European Commission and probably a new President of the European Council. Negotiations on the multi-annual financial framework will enter a decisive phase.

What will the consequences be for environmental policies? It depends to a large extent on how proposals for higher ambitions are framed within a broader policy agenda.

There are many good green arguments for protecting biodiversity, reducing air and water pollution, and combating climate change – just to mention some issues.  Climate change is already high on the agenda for European policy-makers and likely to remain so. The recent strategy on plastics shows that ambitious proposals are still possible, including banning unsustainable products.

Delivering on issues important to citizens is important for the legitimacy of the European Union and for countering populism. Environment is such an area, as made clear by Eurobarometer surveys and by recent elections. However, during the Juncker Commission, progress has been slow on a number of issues, and perceived competitiveness concerns have stood in the way for reform.  Well-designed policy proposals can help change such mind-sets. The Think2030 process, co-ordinated by the IEEP, is an excellent such example.

Geopolitics is changing. Europe´s role in the world is high on the agenda for policymakers, as shown for example by European Commission president Jean-Claude Juncker in his 2018 State of the Union speech. By using its large internal market, the EU can set global standards and thus increase its influence. Juncker took big data and artificial intelligence as examples, but there are also many cases from environmental policy where Europe has the lead (such as climate, chemicals and air pollution).

For example, the REACH regulation on chemicals is now a global standard for multinational companies, observes professor Anu Bradford at Columbia Law School in her influential 2012 article The Brussels Effect. A similar development has taken place regarding electronic products, through the RoHS and WEEE Directives.

But if the EU is slow to act, for example for “competitiveness reasons”, these kinds of standards will in the future be set in other parts of the world. Look for example at the quotas for low-emission (mainly electric) vehicles in China, a method pioneered by California but not adopted by the European Union. China is now rapidly becoming the world leader in electrification of road transport. This can be detrimental to European manufacturers, for example when China and Japan now jointly develop standards for next generation charging of electric vehicles.

Helping create jobs is still fundamental for public trust in politicians. The European economy is recovering after the financial crisis, but there are still dark clouds on the horizon, such as high levels of debt in some member countries and an unstable financial sector, for example in Italy. Ambitious and well-designed environmental policies can contribute to innovation and competitiveness on a growing world market for green products and services. Such perspectives can be further developed and integrated in EU economic policies, such as guidelines and recommendations in the European Semester. The initiative for a stronger social pillar in the EU has contributed to more focus on social issues in the European Semester. In a similar way, it should be possible to strengthen the green dimension.

Many leaders in traditional political parties fear the rise of populism, and rightly so. But the answer is not weaker European cooperation, reducing the EU to only an internal market. Ambitious environmental policies can show citizens that the EU delivers on issues important to them, and at the same time contribute to a stronger European role in the world. Such visions should form part of the upcoming election campaigns, and policies for the coming years.

 

Japan has much to gain by more ambitious climate policies

A heat wave is torching Japan with temperatures around 40 degrees C. Earlier this summer, torrential rain killed more than 200 people. As in other parts of the world, climate change models seem to be right in predicting more extreme weather.

However, on policy level Japan is still far from living up to the commitments of the Paris agreement. The recent revision of the Basic Energy Plan includes coal power providing 26 per cent of electricity production in the year 2030. So far, the government has not presented its long-term strategy for 2050. With investments in new coal plants, it seems unlikely that Japan can reduce emissions of greenhouse gases with 80-95 per cent to 2050, in the spirit of the Paris agreement.

As many have observed, the Ministry of Environment (MOE) is relatively weak in comparison with the powerful Ministry of Economy, Trade and Industry (METI). There are also strong links between the ruling LDP party and industry. However, the ambitious leadership of MOE and the skills in the climate department of the Foreign Ministry should not be underestimated.

One interesting initiative from MOE is the high-level group looking at finance and climate. Extreme weather events are for example causing large costs to insurance companies. The powerful Japanese banks have a large influence on energy investments. If they recognise the financial risks with investments in new coal power plants, climate policy would be facilitated. It is a hopeful sign of change in the financial sector that Nippon Life Insurance Co recently decided not to invest in new coal power plants, at home and abroad. Major bank group Sumitomo Mitsui is also adopting a more restrictive policy towards coal investments.

Another positive development is the Japan Climate Initiative, launched early this month. Over 100 companies, organisations and local governments participate and promise to reduce their impact on the climate in accordance with the Paris agreement. Among them are some of the largest Japanese multinationals.

Japan has a strong technological base and an ability to reach ambitious targets through common efforts. Other parts of the world (notably the European Union), are now drafting far-reaching plans for 2050, and China is using its large market to be an innovation leader. The government of Shinzo Abe has much to gain by more ambitious policies for long-term reduction of greenhouse gas emissions. Recent extreme weather events makes this even more clear.