Module 8: Looking out: The external dimension of the European Green Deal

Looking out: The external dimension of the European Green Deal

To close off this MOOC, this module looks at the external dimension of the EU’s climate and energy policy. It focuses first on the geopolitical shifts affecting the EU’s international leadership on climate and energy policy, and second on how EU climate policies, such as the Carbon Border Adjustment Mechanism (CBAM), may affect climate policies in other countries.

Module outline

  • Reading exercise: "Assessing the EU’s International Leadership on Climate Change through Turbulent Times” by Claire Dupont & Sebastian Oberthür.
  • A quiz on the article.
  • Reading exercise: "The EU’s CBAM and Its ‘Significant Others’: Three Perspectives on the Political Fallout from Europe’s Unilateral Climate Policy Initiative" by Ida Dokk Smith, Indra Overland and Kacper Szulecki
  • A reflection exercise on the article.
  • Further supporting materials (optional).

Concepts relevant to Module 8: 

Carbon Border Adjustment Mechanism (CBAM), Carbon Leakage, Climate Leadership, Diplomatic Leadership, EU ETS, Exemplary Leadership, Grand Strategy, Leadiatorship, Polycentricity

The European Union’s international climate leadership

READING EXERCISE

To kick off module 8, we invite you to read the article ‘The European Union’s international climate leadership: towards a grand climate strategy?’ by Sebastian Oberthür and Claire Dupont, which offers a comprehensive evaluation of the EU’s international leadership record on climate change policy.

By discussing both the domestic (‘exemplary’) and external (‘diplomatic’) leadership dimensions of the EU, the article examines particularly how EU leadership on climate has been evolving against an array of growing contemporary internal and external challenges. In addition, it assesses the extent to which the EU has been able to mobilise its climate leadership capabilities to create a broader ‘grand climate strategy’ and to adapt its exemplary and diplomatic leadership in a turbulent international context. 

When reading the article, please pay particular attention to how the authors frame the role of the EU as a leader on climate policy amidst current international challenges and what they suggest the EU should do to further reinforce its strategy in the face of intensified climate geopolitics. 

Read the article

Quiz

This quiz is based on the text you've  just read. Write down the answer(s) you think is/are correct. The results can be found at the bottom of this webpage. 

1. How is the EU’s climate and energy leadership assessed in the article?

  • A) On the basis of the EU’s goal achievements 
  • B) On the basis of the EU’s impact on international policy outputs and outcomes.
  • C) On the basis of the EU’s input in and contribution to international climate policy

2. What are the three key aspects of the EU’s ‘exemplary’ leadership? (multiple answers are possible)

  • A) Adaptation to the international context. 
  • B) International credibility. 
  • C) Market and regulatory power. 
  • D) Coherence/unity.
  • E) Policy learning and diffusion.

3. What are the key trends in international climate policy that have transformed the opportunity for EU to exert climate leadership? (multiple answers are possible)

  • A) Rise of China and other emerging economies. 
  • B) Increasing polycentricity of international climate governance. 
  • C) Dominance of the US in international climate policy 
  • D) Climate change has increasingly become a geopolitical issue

4. What defines the EU’s role of ‘leadiator’ in international climate policy?

  • A) Stronger emphasis on domestic interests. 
  • B) The capacity of the EU to exert hegemonic power. 
  • C) More moderate policy objectives. 
  • D) Engagement with multiple international and transnational fora.
  • E) Emphasis on coalition and bridge-building.

5. Which one of the following remains a major challenge for the EU’s international climate leadership?

  • A) To adopt a diversified set of market-based, regulatory and procedural instruments.
  • B) To enhance strategic capabilities across EU institutions and EU member states.
  • C) To inspire other actors to adopt similar climate and energy policies.
  • D) To pursue ambitious climate policy objectives. 
  • E) To gain credibility at the international level.

Externalising EU Climate Policy under CBAM

READING EXERCISE

Finally, we explore how EU climate policies can impact other countries by taking a closer look at the EU’s Carbon Border Adjustment Mechanism (CBAM) and its effects beyond the EU’s borders.

The EU CBAM

The CBAM was adopted in 2023 as a central element of the European Green Deal and Fit for 55 Package and will put a price on the embedded emissions of carbon intensive goods that are imported into the EU, including iron and steel, cement, aluminium, fertilisers, electricity and hydrogen. From 2026 onwards EU importers will have to buy CBAM certificates that will mirror the carbon price under the EU ETS, to cover the emissions that occurred during the production of the respective goods. To ease the transition and not overburden producers the CBAM will, in the beginning, only apply to a small share of emissions and gradually increase until covering all emissions by 2034.

Politically, the CBAM serves mainly two purposes: (1) increasing domestic climate ambition while avoiding carbon leakage and (2) incentivising the uptake of climate action outside the EU. First, carbon leakage occurs when companies located in countries with stringent climate policies relocate to countries with less-stringent climate policies to avoid costly emission reduction measures. By pricing the emissions of imports – not just those produced in the EU – it becomes less attractive for companies to move to third countries. This will help advance the decarbonisation of EU-based emission-intensive industries, as it allows for the phase-out of free allowances.

Second, the CBAM will incentivise uptake of climate action outside the EU for producers and governments alike. The lower the emissions that are embedded in a product, the lower the amount of CBAM certificates a producer has to buy, incentivising them to green their production process. Additionally, if a carbon price has already been paid in the country of origin, importers will only have to pay the difference to the CBAM price. This might incentivise countries to adopt domestic carbon pricing policies in order to receive the revenues from the scheme themselves.

This brief video from the European Commission further summarises the main reasons for the introduction of the CBAM.

However, the adoption of the CBAM by the EU was not well received by the EU’s international partners and has sparked a fierce international debate. While major economies like India have criticised the CBAM as being protectionist and not compliant with international trade law, several industrialised countries including the US, Canada or the United Kingdom are now considering similar measures. Emerging and developing countries, in contrast, are concerned that CBAM-like measures will overburden their domestic industries and are not in line with the concept of common but differentiated responsibilities and different capabilities.

To reflect in more detail on the role and appropriateness of the externalisation of EU climate policy, we invite you to read the article ‘The EU’s CBAM and Its ‘Significant Others’: Three Perspectives on the Political Fallout from Europe’s Unilateral Climate Policy Initiative’ by Ida Dokk Smith, Indra Overland and Kacper Szulecki.  

By taking a closer look at the ‘significant others’ of the CBAM, the article develops three different perspectives on non-EU countries that are important for the success of the CBAM: an economic power perspective, a trade perspective, and a justice perspective. The different perspectives can help us to better assess the political challenges that arise through the CBAM and may help to avoid contradictory policy analyses and confused climate diplomacy. When reading the article, pay particular attention to the three different concepts of 'significant others' and how they might be affected differently by the CBAM. The text will be followed by a reflection exercise.  

Read the article

Source: Smith, I. D., Overland, I., & Szulecki, K. (2023). The EU’s CBAM and Its ‘Significant Others’: Three Perspectives on the Political Fallout from Europe’s Unilateral Climate Policy Initiative. JCMS: Journal of Common Market Studies. https://doi.org/10.1111/jcms.13512

Reflections

Take some time to reflect after reading the articles. Consider the EU’s role in shaping international climate policy and in climate action taken beyond its borders.

Choose two of the questions below and write down your thoughts on them:

  • How would you assess the potential to drive global climate action of a unilateral climate policy like the CBAM? What challenges can you see arising from its adoption?
  • Applying the three different perspectives on 'significant others' by Smith et al. (2023), how can the EU address arising problems in or opposition from non-EU countries?
  • How does the CBAM relate to and affect the international climate leadership of the EU? Relate your reflections also to the proviso article by Oberthür & Dupont (2021).
  • While action on all levels is necessary to tackle root causes of global crises such as climate change, which level (global, international, EU, national, local, individual) do you think is most likely to make a difference and how?

Further material

This Module has focused on the external dimension of climate and energy policy development in a complex world where many other threats as well as political interests are at play. We have looked at the role of Europe as a climate leader and what that means today. Here we highlight supplementary materials that are particularly linked with the subject covered in this Module. 

1. Blog on need for Europe to boost international climate finance 

To truly lead on climate change, the EU must step up its game on climate finance by Frederik De Roeck, postdoctoral researcher at the Department for Public Governance and Management, Ghent University.

"With COP25 ending in deadlock and disappointment, pressure is expected to grow in 2020 for countries to increase their climate ambition in order to align with the objectives of the Paris Agreement. The new European Commission, keen to reconfirm the EU’s leadership role on the international stage, has pledged to transform Europe into the first climate-neutral continent by 2050. As a first step on the road to climate neutrality, its so-called ‘Green Deal’ should generate renewed policy momentum in a range of EU policies. Among others, progress is anticipated in turning the 2050 net-zero objective into EU law, establishing a circular economy and kick-starting a just transition that responds to concerns voiced by some Central and Eastern European member states. 
However, apart from increasing mitigation ambitions, there is also a dire need for progress in the field of financial support for developing countries." 

read the full blog here

2. Further reading

on geopolitics and EU climate policy; 

  • Kuzemko, C., Blondeel, M., Dupont, C.& Brisbois, M.C. (2022). Russia's war on Ukraine, European energy policy responses & implications for sustainable transformations. Energy Research & Social Science, 93, 102842. https://doi.org/10.1016/j.erss.2022.102842
  • Giuli, M., & Oberthür, S. (2023). Third time lucky? Reconciling EU climate and external energy policy during energy security crises. Journal of European Integration, 45(3), 395-412. 10.1080/07036337.2023.2190588
  • Giuli, M., & Oberthür, S. (2023). Assessing the EU’s Evolving Position in Energy Geopolitics under Decarbonisation. The International Spectator, 58(3), 152-170. 10.1080/03932729.2023.2199648
  • Żuk, P., Buzogány, A., Mišík, M., Osička, J., & Szulecki, K. (2023). Semi-peripheries in the world-system? The Visegrad group countries in the geopolitical order of energy and raw materials after the war in Ukraine. Resources Policy, 85 (B). https://doi.org/10.1016/j.resourpol.2023.104046

on CBAM

3. Other materials that were produced during the GreenDeal-NET project and after the launch of the MOOC 

Answer key to the quiz

1C, 2A-B-D, 3A-B-D, 4C-D-E, 5B

 

Back to module 7

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Co-funded by the European Union

Co-funded by the European Union. Views and opinions expressed are however those of the author(s) only and do not necessarily reflect those of the European Union or the European Education and Culture Executive Agency (EACEA). Neither the European Union nor EACEA can be held responsible for them. 

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