Brussels has laid out the path to the EU becoming the world’s first economic bloc to hit net zero greenhouse gas emissions by 2050 in an attempt to limit global warming.
The EU’s approach to the mammoth task of ending the economic reliance on fossil fuels involves three big policy levers: tougher regulation and emissions standards for industry; carbon pricing and taxes on polluters; and rules to promote investment in low-emissions technology.
Brussels hopes the blitz of measures will ensure the 27-country bloc can reduce average emissions by 55 per cent by 2030, falling to net zero by 2050.
The EU has so far cut emissions by 24 per cent from 1990 levels, but will now take aim at some of the bigger sources, including power plants, factories, cars, planes, shipping and heating systems.
Here’s a breakdown of the new policies.
Carbon pricing
The centrepiece of the EU’s bid to sharply reduce emissions across the economy is a revamp of the bloc’s carbon market, known as the Emissions Trading System.
Set up in 2005, the ETS requires large industrial polluters such as steelmakers and power generators to buy carbon credits to cover the cost of their emissions. These credits are traded on financial markets and have helped drive the cost of polluting to a recent high of more than €55 per tonne of carbon.
The European Commission now proposes to extend the scheme to cover the shipping industry for the first time.
At the same time it will phase out the free credits that many sectors have long benefited from, including airlines that must pay for emissions on flights inside the EU.
The phaseout ends in 2036, with the ETS designed to reduce emissions in the system by 61 per cent over the next decade.
Among the most contentious proposals is a plan to extend the system to transport and buildings — a reform that some EU governments argue will drive up the heating and petrol bills of consumers who cannot readily afford to switch to greener alternatives. Brussels aims to cushion the blow with a pot of €72bn to alleviate energy poverty.
The EU is planning on becoming the first big economic power to impose a levy on imports based on their carbon footprint.
The so-called carbon border adjustment mechanism is part of an attempt to prevent “carbon leakage”, where companies can move their operations to other jurisdictions to avoid being subject to green regulations.
European industry has demanded the CBAM as a way to ensure foreign competitors face the same costs. But attempts to impose border levies have been beset by legal difficulties, including abiding by World Trade Organization agreements.
The tool will be initially limited to products such as steel, cement, aluminium and fertilisers, with Russian and Turkish exporters expected to be hit hardest.
Under the system companies will have to buy carbon credits that mirror the prices paid by European industry. The commission has said it will only apply the levy on foreign businesses that do not abide by equivalent carbon pricing as their European rivals.
Business sectors not covered by the EU’s carbon market include agriculture, waste and some parts of industry, and account for almost 60 per cent of total domestic EU emissions. These will now be subject to binding emissions goals, set out in what it calls the Effort Sharing Regulation.
The legislation sets national targets for the 27 member states that translate emissions goals to their domestic economy in these sectors.
National targets have been revised after the EU agreed to accelerate carbon emission reduction from a target of 40 per cent to 55 per cent by 2030.
Brussels has also tweaked the criteria that determine member states’ targets, which are based on their relative wealth. Poorer countries have had to do proportionally less than richer ones in the past, but western economies have called for a more equal distribution among the bloc. Poland, Lithuania, and Latvia will be among the countries with the greatest challenge.
Brussels aims to increase carbon taxes on dirty fuel by updating a 15-year-old rule book, known as the Energy Taxation Directive.
The commission wants to tax kerosene jet fuel used by airlines and polluting fuels in the shipping industry for the first time and close loopholes that have allowed EU governments to exempt fossil fuels.
Updating the directive will be the toughest political task set by the commission as taxation policy requires unanimous backing from all EU countries. Smaller states such as Greece, Cyprus and Malta are likely to resist taxing shipping, arguing they have been hit already by the pandemic and have fewer green alternative fuels to switch to.
Brussels wants to include carmakers in the ETS and set tougher emissions standards for new vehicles that are driven out of showrooms across Europe in order to cut 90 per cent of emissions from transport.
It proposes more stringent carbon emission standards for new passenger vehicles, setting a de facto date to ban the sale of new diesel and petrol in Europe from 2035. Automakers that cannot meet the standards, set every five years, will face fines.
EU clean car standards were first introduced in 2018 and the quick take-up of electric vehicles has emboldened Brussels to push for wider change. The end date for the combustion engine will be contested in the European Parliament, where there is a push for a date closer to 2030 at the same time as governments such as France want to give carmakers until 2040.
Brussels wants to assist industry to decarbonise by creating rules to promote the development of green fuels and accelerate the rollout of critical electric charging points.
It is aiming to ensure greater public access to charging points for cars by ensuring they are available within every 60km, and will require more hydrogen refuelling stations for vans and trucks.
Brussels also wants to encourage the development of sustainable fuels for planes and ships. The commission has proposed a blending target of 5 per cent for sustainable aviation fuels by 2030 — a relatively modest goal that reflects the difficulty in using green fuels to power long-haul flights.
Shippers will also have to begin reporting to the commission what type of vessels and fuels they use.
The commission wants to raise the bloc’s renewable energy target to 40 per cent of the total energy mix by 2030, compared with a current target of 30 per cent.
Nearly two-thirds of the EU’s current renewable energy derives from biomass, which includes pellets made from organic waste being burnt for energy. The commission has been under pressure from environmental groups to remove woody biomass from its renewable energy definitions, arguing that use of trees for power is detrimental to the planet.
The commission will introduce stricter sustainability rules for biomass, curb the circumstances in which subsidies can be given to the industry, and exclude biomass from primary forests from counting towards green targets.
Brussels is targeting natural carbon sinks, where soil and forests can absorb carbon dioxide from the atmosphere, to help meet its 2030 goals.
It proposes to expand the EU’s sequestration of carbon to 310m tonnes from a current target of 265m tonnes under its land use and forestry regulation.
But “offsetting” emissions by using the carbon sink is contested by scientists who argue it is difficult to accurately measure carbon removals and that the size of the EU’s sink is inherently unstable.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
