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The EU got its wish when U.S. President Joe Biden issued an order to reenter the Paris Agreement — but now that America is back, Europe is worried about being outcompeted and outspent.
After years of standing up to Donald Trump’s onslaught on the Paris Agreement, Europe has no intention of being sidelined in diplomacy or losing the lead in clean tech.
Europe’s priority is to avoid a return to the days when climate geopolitics were driven by deals between Washington and Beijing; after years of careful relationship building with China, the EU wants to stay at climate’s top table. Pushing China to do more to cut its emissions at home is a key goal for the COP26 U.N. climate talks this November.
It’s not that the new White House team isn’t aware of the past four years — Former U.S. Secretary of State John Kerry, now Biden’s climate envoy, promised “humility” mixed with “ambition” at a business leaders conference on Thursday. He said he felt “pain and some embarrassment” over the U.S.’ behavior under Trump, and praised Europe for its perseverance.
European feelings remain bruised. Being a climate leader is also increasingly about capturing what Kerry called “an unprecedented wealth creation opportunity” on Thursday.
“Kerry will go around [to] everyone, [saying] we will give you money to buy American clean technology,” said a senior EU official, “and [he] will win the Nobel Prize.”
“Everyone is infatuated with John Kerry now … but actually the Europeans should win the Nobel prize,” they added.
Kerry spoke with Frans Timmermans, the EU executive vice president in charge of the Green Deal, on Thursday. The U.S. climate envoy met virtually with all 27 EU foreign ministers on Friday, before they finalize a set of climate and energy diplomacy priorities for the bloc.
The European Green Deal, which aims to slash greenhouse gas emissions to net zero by 2050, has given the EU a policy lead. Biden has promised to inject $2 trillion into clean energy during his four-year term, however, almost double the size of the EU budget for 2021-2027.
This raises EU worries that a Biden-led U.S., pouring vast resources into green energy and tech, will overshadow the bloc’s own efforts.
The U.S. return, said European Commission President Ursula von der Leyen on Wednesday, is “great news.” But, she added, it was “further reason for Europe to speed up its effort to get moving, and to keep the first-mover advantage. This is important.”
“I like competition,” she added. “It’s good competition. It’s positive competition when it comes to the green economy.”
Governments increasingly view acting on climate change in terms of an economic race. Where industrial interests are involved, according to Simone Tagliapietra, a research fellow at the Brussels-based Bruegel think tank, “competition will prevail over cooperation.”
On the Continent, renewable and other clean tech businesses are urging the EU to speed up its regulatory and investment efforts to boost their capacities.
“The EU is in a good position right now to be a leader, but it needs to wake up and innovate very quickly because we’re in a race now — the race to zero [emissions],” said Ursula Woodburn, of the European Corporate Leaders Group.
The European Investment Bank warned on Thursday that European investment in mitigating climate change was still ahead of the United States, but “well behind that of China.” And even though Europe registers more patents for green technologies than anywhere else, the gap between EU climate objectives and investment “is growing,” they said, adding that “Europe is losing ground.”
Woodburn said the EU should channel more investments into clean tech and industries such as green steel and cement, leveraging trade agreements and coming up with measures to support “the industries that are really pushing ahead on climate policies.”
The strongest hope for transatlantic collaboration, Tagliapietra said, are projects such as a carbon border tax — an idea favored by the EU and the new U.S. administration — as well as reforestation and carbon capture. Von der Leyen specified on Wednesday that the EU would want to “deepen partnership” on emissions trading and carbon pricing, as well as biodiversity loss.
Another area where cooperation might win out is in the regulation of emerging technologies, such as hydrogen, and the setting of standards to control pollution in old ones, such as methane emissions.
“Neither the U.S. nor the EU alone really has the market power to completely set global standards,” said Jennifer Tollman, a policy advisor at the E3G think tank. “But together, they’re such a significant market share that they actually start to have very strong influence over global markets.”