Going to ‘net-zero’ has been a given since the European Commission’s decision in December. And Europe is not alone in this. The United States has also committed itself to this goal and China expects to be there by 2060. The financial markets are moving along: BlackRock, the largest asset manager, wants its asset under management to be emission-free. And at the World Economic Forum, the kick-off shot recently sounded for a global carbon market in which huge sums of money are being transferred to players who enable emission reduction.
Now that we know for sure that ‘net-zero' is our destination in 2050, there is less focus on who retains the remaining emission rights, but more on how we become emission neutral. Commissioner Frans Timmermans took the first step for this, by stating that Europe must achieve a 55% reduction (compared to 1990) as a ‘pit stop’ in 2030, in order to reach zero in 2050. He has already roughly translated this into reduction targets for sectors. The Van Geest committee, chaired by Laura van Geest (chairman of the board of the Financial Markets Authority), recently published a useful report with the measures required for those reduction targets. The report gives three options to reach the Paris Climate Agreement goals: the ‘slow train’, ‘express train’ and the ‘High-Speed Rail Link’.
These options are discussed by Sandra Phlippen, Professor of Applied Economics at Erasmus School of Economics and Chief Economist at ABN AMRO bank. She argues that there are many good reasons to do more than Europe asks of us. First, achieving the maximum reduction is the cheapest option. Second, the intermediate goals are changeable. Third, we should keep the room for setbacks as large as possible for when we get to the last and most difficult steps. Fourth, our human nature: it is difficult for us to start moving, but once we walk, we go up a gear more easily.
But most importantly, reduction-oriented policy helps Dutch businesses to remain competitive in the world of tomorrow. Policymakers, sector organisations and knowledge institutes work together excellently when necessary. If we have a clear picture of the decarbonization options for each sub-sector and the incentive from regulation and pricing are properly established, Dutch companies will soon be able to compete with a CO2-neutral license to operate in markets that are no longer accessible to polluters.
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