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“Fit for 55” the Green Deal is accelerating... in order to reduce by more than 20% the purchasing power of your salary

2021-07-16 | EU

The European Commission presented this week "Fit for 55", a package of measures aimed at developing the European Climate Law. The stated aim is to reduce by 2030 emissions in the EU countries as a whole to 55% of what they were in 1990. The media linger on the end of cheap flights and the ban on the sale of cars with combustion engines by 2035. But first and foremost it is a way to inflate the speculative emissions market at the cost of higher fuel, heating, transport, food and construction prices.

What "Fit for 55"

"Fit for 55" is actually a set of directives - rules to be adapted by each country - and regulations - laws of direct application in all member countries - presented by the Commission last Wednesday in the form of a package. This means that in the coming negotiation no overall changes are to be expected: what it gives up on one thing it will take back on another so that the overall effect, not only on emissions but also on the incomes of European workers, will be more or less what we can currently estimate.

What is the main focus of "Fit for 55"

European Emissions Trading System (ETS) forward pricing. The "Fit for 55" package will increase demand by making it mandatory to buy allowances from more sectors.

European Emissions Trading System (ETS) forward pricing. The "Fit for 55" package will increase demand by making it mandatory to buy allowances from more sectors.

The central element is, once again, the regulation of the CO2 emissions market. This regulation, which followed the Paris Agreement, has created a speculative market on emission rights which, thanks to the Green Deal, is experiencing a speculative boom. In May it doubled the price per tonne from six months earlier and reached €50. Since then it has not come down from there and we have already seen the effect that this has had on the electricity bill.

"Fit for 55" revolves around this market, for which it will multiply demand by forcing new sectors to buy allowances according to their output. In addition, the European Commission is proposing today to further lower the global emissions cap and increase its annual rate of reduction, i.e. progressively reducing allowance supply.

Which products will go up in price with "Fit for 55?"

Housing, transportation, basic consumables, fresh products and of course meat and dairy will see their prices go up because of "Fit for 55"

Housing, transportation, basic consumables, fresh products and of course meat and dairy will see their prices go up because of "Fit for 55"

In addition, "Fit for 55" includes the reform of the natural gas market, the energy performance of buildings and dwellings directive and new limits on car and van emissions that will force you to change cars sooner and pay more to use them in big cities. It couldn't miss new green taxes that were already announced yesterday and the new land use regulations that will increase the price of meat and dairy

But there is also a fund to prevent energy poverty, isn't there

Energy poverty will inevitably grow with "fit for 55" package.

Energy poverty will inevitably grow with "fit for 55" package.

No, the Social Climate Fund included in "Fit for 55" will at most serve to sustain the member states' current assistance policies in extreme cases of energy poverty, nothing more.

Let's add the new electricity costs, the foreseeable hike in heating, the general rise in prices of all imported goods due to higher freight rates and - see carbon borders below, the rise in costs associated with commuting to and from work every day, the rise in prices of refrigerated and fresh produce due to their higher energy and transportation costs, the rise in meat, dairy and other food staples....

The total impact of "Fit for 55" on a worker's most ordinary wage will hardly be less than 20% of their current income in many regions of Europe well before 2030... and then we will be asked to make a final effort to get to zero emissions by 2050. Now let's compare that to the new Social Climate Fund.

The new Social Climate Fund will be financed from the EU budget, using an amount equivalent to 25% of the expected revenues from emissions trading for construction and road transport fuels. It will provide €72.2 billion in funding to Member States for the period 2025-2032

European Green Deal: Commission proposes to transform EU economy and society to achieve climate goals. European Commission Press Release.

72 billion for 27 states over 7 years... it is obvious that this is really just a supplement to the energy poverty assistance funds that already exist today in almost all countries in view of the fact that... there will be much more energy poverty and many more extreme situations to deal with in order to prevent the worst cases from serving as a trigger for a social explosion.

But if the situation is so serious... why aren't they afraid of a social and workers' response?

First demonstrations of the "yellow vests" against Macron's "ecological transition" fuel hike.

First demonstrations of the "yellow vests" against Macron's "ecological transition" fuel hike.

In fact, they do fear it. The European Parliament's Green star, Pascal Canfin, declared in parliamentary debates with Timmermans and von der Leyen that "Fit for 55" is politically suicidal. No, make no mistake, Canfin is all for it - par for the course for a macronite - but he is well aware that the Yellow Vests outburst was caused by an attempt to raise fuel prices by less than what "Fit for 55" will impose.

Union and ILO sources have also been quoted in various specialized media as saying that

The European Commission's decisions on climate protection are taking a risky course because they affect the poorest people and there is a risk that the popular reaction to decarbonization could derail the process

And the fact is that this process is the hope of European capital, it is pretty uncommon for transfers of income from labor to capital of this volume to be approved.

Won't emission rights work against European companies by making them less competitive than Chinese, Russian or American companies?

China, Russia and Iran stand out in the CO2 maps associated with exports with which "Fit for 55" justifies the imposition of a protectionist tax on imports

China, Russia and Iran stand out in the CO2 maps associated with exports with which "Fit for 55" justifies the imposition of a protectionist tax on imports

Not really. In addition to making ocean freight -- through which most imports enter -- more expensive, "Fit for 55" establishes so-called Carbon Borders, fees that will tax at the border steel, aluminum, energy, cement and fertilizer from countries the EU deems not doing enough under the Paris agreement. And the list of goods taxed may be expanded in the future.

This is a protectionist mechanism that seeks to prevent European production of energy-intensive heavy industry from losing price competitiveness. But in reality, it is part of a broader approach: first of all it accelerates the re-Europeanization of industrial production that is becoming Macron's flagship, who promises to turn it -- along with a new pension reform -- into the pivot of the political year starting in September. Candidates in the German elections are making a similar pitch.

Could the "carbon borders" set by "Fit for 55" be the start of a new "green" trade war?

Kerry and Lavrov this week in Moscow

Kerry and Lavrov this week in Moscow

The arbitrary character that the carbon borders have in "fit for 55" is inseparable from their undeniable imperialist intent. But the main trade war fears in Europe are focused on the US. And in the face of the U.S., the carbon borders are not going to stand up.

Also, by taxing Russian gas it offers an honorable way out for Germany against the US in the Nord Stream 2 dispute, which, it seems, will finally be closed with Merkel's visit to Biden.

On the other hand, it allows the US and the EU to coordinate their protectionist policies and trade attacks on third parties under the guise of a sacred commitment against climate change. In the end it is a discretionary tool to jointly punish China, Russia and whoever else is needed at will. That's why the US has just announced that it will also adopt the carbon border system: it may be one of the bases of the much touted new relationship with the EU.

A different matter is the response from Russia and China. It appears that the US is using the announcement of this measure as part of its containment policy towards the Putin government. Kerry's visit to Moscow this week seems to be going that way. The US could join the German policy of offering aid and investment to Russia so that it can become a supplier of energy and green industrial production... eliminating the EU's current strategic dependence on Russian natural gas.

China, which despite having its own Green Deal, sees itself - and thus protests to the EU - as the first candidate to meet the new tariff barrier in the face of the explicit pressure from European heavy and automotive industries.

"Fit for 55": a harsh punishment for workers which spurs both imperialist tensions and the trade war

Workers are the main funders of "Fit for 55"

Workers are the main funders of "Fit for 55"

"Fit for 55" is going to represent a harsh punishment for European workers.

The impact will be uneven across regions and over time. To the Polish worker the brunt of the blow will surely come with the rise in heating fuel. To the precarious person in rural France in the cost of fuel for the car he needs to get from one job to another. To the Greek, the German or the Irishman the main hit will come in the supermarket bill and to the Spaniard or the Portuguese in the costs of house maintenance and transport.

It doesn't matter where the emphasis lies in each place and how states negotiate the timing of implementation to dose the first blow. The Green Deal materializes in a brutal attack on the purchasing power of wages.

Kerry is right when he tells governments and big funds that the Green Deal is the biggest market ever known and Sánchez is also right when he says that it opens up extraordinary opportunities for the economy (=accumulation). Never since the last world war has a transfer of income on such a scale been articulated from workers to capital.

They are understandably happy and eager to get started as soon as possible. In the real climate change they have found the perfect excuse to articulate a way out at our expense of the profitability crisis that capital has been dragging along for years. And if that weren't enough, "Fit for 55" whips up imperialist tensions by positing a de facto trade war.