Financial Aspects of the European Green Deal
© Marina V. STREZHNEVA, 2021
The climate policy of the European Union became the key priority for the European Commission, headed by Ursula von der Leyen. This article analyses both its internal and external dimensions, while concentrating on the finances of the European Green Deal, the multiyear strategy for the EU socio-economic development. The methods are demonstrated which the EC employs to mobilize public and private capital for the realization of the green transit, including the financial instruments designed to assist businesses when investing in clean energy and industry. The notion of ‘sustainable’ investment is specified that Brussels is guided by when working out its financial decisions. The EU taxonomy, a green classification system that translates the EU's climate and environmental objectives into criteria for specific economic activities for investment purposes, is presented.
The research reveals how the market and regulatory powers of the EU are brought to bear in rolling out its controversial Carbon Border Adjustment Mechanism. By means of this transnational taxation Brussels hopes to avoid carbon leakage: the situation that allegedly may occur if European carbon-intensive businesses were to transfer production to other jurisdictions with laxer emission constraints. Yet a lack of flexibility in applying the CBAM is causing concern in many countries of the world, including the USA, Brazil, South Africa and China. In EU-Russia relations in particular, it risks increasing political tensions and/or causing trade retaliation due to low levels of mutual trust. Russia developing energy transition plans of her own, her efforts in this respect are now visibly stimulated by the declared EU intention to externalize its regulatory practices. At the same time, Moscow perceives this externalization as an imposition which is most unwelcome and hurts Russia disproportionally. Presumably, the European Union could put more effort in negotiating and developing this latest European initiative with international partners to win new willing ears for it.
Strezhneva M. Financial Aspects of the European Green Deal. Analysis & Forecasting. Journal of IMEMO, 2021, no 4, pp. 13-23. https://doi.org/10.20542/afij-2021-4-13-23