Just days before the start of COP30, the European Union reached a climate deal: to reduce emissions by 90% by 2040 compared to 1990 levels. An important agreement, but one with many weaknesses. Emission reduction targets may be revised, the implementation framework remains highly flexible, and the launch of ETS2 – the system that will make buildings and road transport pay for their emissions – has been postponed until 2028. In short, the goal is clear, but the path to achieving it remains uncertain.
CO₂ Taxation
The most effective lever for cutting emissions remains CO₂ taxation. The principle is simple and globally recognized: the polluter pays. Today, more than 60 countries around the world have already introduced a price on carbon. Yet the European Union, which has built the most extensive carbon pricing system in the world, now seems to be slowing down at a decisive moment. The reason is clear: as the cost of CO₂ rises, so do production costs — and with them, the prices of energy, food, and materials. European companies are therefore facing increasing expenses. The CBAM mechanism, which taxes carbon-intensive products imported from non-EU countries, may partly protect competitiveness. But it will not prevent the rise in final prices. And, as often happens, the heaviest burden will fall on citizens — especially those with lower incomes — who will see their purchasing power shrink.
Tax and Redistribute (Cap & Share)
Yet this new taxation system has already begun to generate significant revenue. In 2023 alone, carbon pricing brought more than €43 billion into the EU’s coffers. If we don’t want the fight against climate change to turn into a driver of poverty, these resources must return to the most vulnerable citizens. In practice: tax emissions and redistribute the proceeds among the population. With the Social Climate Fund, the EU has shown it understands this approach. Now it must find the courage to put it into action.
A letter to the United Nations
The climate crisis, however, is not Europe’s issue alone. Reducing global fossil fuel consumption must remain the goal — and to achieve it, an initiative led by the United Nations is essential. For this reason, with this letter we are asking United Nations to establish a convention that clearly leads to the creation of a common global carbon taxation agreement (Climate Club), based on Cap&Share principle. According to this agreement, the revenue generated from Carbon pricing will be redistributed to citizens to offset the resulting increase in consumer goods prices. The redistribution of economic revenue must follow a scheme that favours lower incomes, so that the ecological transition does not become a new source of inequality.