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The EU and the US join forces on the environment

The EU plans a green revolution allied with the new administration in Washington. This is good news for renewables, electric everything and for online replacements for older ways of doing things.

The EU plans a green revolution allied with the new administration in Washington. This is good news for renewables, electric everything and for online replacements for older ways of doing things.

by
Charles Stanley

in Features

11.12.2020

The European Union Council this week has progressed the budgets and introduced a modest EU-led stimulus into the zone’s economy. More importantly, the European Central Bank lengthened its quantitative easing and bank financing commitments to underpin commercial bank lending and to keep bond rates down. The Council considered additional sanctions against Turkey, as they are worried by Turkish drilling activities and naval presence in the Eastern Mediterranean.

The Council also set out its objectives for an improved relationship between the EU and the USA. They had a poor relationship with President Trump, with EU leaders often condemning in public the statements and actions of the US leader. Today, they look forward to working with Joe Biden who they think will reflect their priorities and attitudes. The EU seeks a "strong mutually beneficial long-term strategic partnership with the US, in a strengthened multilateral order". They wish to work together to tackle the twin great challenges " to safeguard the health and wellbeing of our people and our planet".

On the same page

They wish "to fight the pandemic together, fully implement the UN 2030 Agenda for Sustainable development, to ensure a green economic recovery and to expedite the green and digital transitions". They now share the language of Build Back Better with the President-elect of the US, and their main preoccupation is to come up with a new package of measures and tougher targets to make more progress to zero carbon. They do go on to say they wish to tackle unfair trade practices and do more to improve defences against cyberattacks. With no sense of irony, they also say they wish to maintain their technological edge, at a time when the world is having to choose between accepting digital services from the US giants or from the Chinese system.

The current EU Council or summit needs to settle the new 2030 target for the reduction of emissions of carbon dioxide. Previously fixed at 40%, many want it to go to 55%, whilst the Parliament has voted for it to be set at even more stretching 60%.

These targets are deep into territory which require significant numbers of consumers to replace their gas boilers with heat pumps and to scrap their diesel or petrol cars. In the run-up to the next Climate Summit in Glasgow at the end of next year, there is going to be pressure on the EU and on the US to demonstrate how serious they are, both by setting the higher targets and by showing more progress to hit them. Mr Biden has promised to bring the USA back into the Paris Climate Change Treaty framework and to be a new leader of this move after some years of EU leadership.

Meanwhile, the Council also has to review progress with taming the virus. Numerous European countries have been forced into tougher lockdowns and more social distancing as the pandemic rises from the summer lull.

Asia recovers as the west suffers

Belgium continues to lead the grisly world table for deaths per million people, now at 1,516, compared to Peru at 1,099, Italy at 1,022 and Spain at 1,005. These are the four worst amongst the larger countries, reflecting the European tilt in the incidence of the disease. The Americas are also towards the high end. Asia, excepting India, is much lower than the European experience.

As a result, parts of Asia are well into recovery whilst Europe struggles with a bad winter. The EU has left a lot of the work to member states in combatting Covid-19 but has co-ordinated responses, undertaken some common procurement and tried to keep borders open for traffic despite the wish of some states to close frontiers for security against the spread.

The US too has been suffering badly in recent weeks. There has also been a second surge in cases. California has locked down much of the state as it is worried about the low numbers of intensive care beds still available. Case numbers have exceeded last spring. New York too has seen a sharp rise in new cases, almost back to April levels. These two large Democrat states have always carried out World Health Organisation advice, have taken the virus seriously and need to go through the miserable process again. The fact that both the Governor of California and the Mayor of San Francisco went to dine in an expensive restaurant, against their own advice or rules, has not helped their authority in selling the controls to everyone else.

It is not clear how the US and the EU can co-operate over virus matters more than they do today through the usual scientific and medical networks. Mr Biden will get the US to re-join the World Health Organisation in due course – and will take their advice with less question than President Trump. The EU and its member states will have to negotiate access to US vaccine products, assuming their regulator gives them approval as seems likely.

The investment messages from this are clear. The EU will not stand in Mr Biden's way of taking a tough line about Chinese trade and technology practises, and they will seek to be more loyal allies than they were of President Trump. Both unions will centre their economic and other policies around a much more concentrated and energetic drive to get to zero carbon. Build back better is continuing good news for renewables, electric everything and for online replacements for older ways of doing things.

It is also bad news for oil and gas, oil service, diesel and patrol car makers, parts of the travel industry. There are many closures and write-offs to come as these two giants power their way from wind and solar energy, swinging a wrecking ball at the extensive carbon economy. Meanwhile, both unions face more months of damage to large parts of their service sectors from policy responses to the pandemic, whilst they await eventual relief from sufficient vaccination rollout.

Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.

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