Turkish Tax News
Serhat AKTAŞ
29 November 2021Serhat AKTAŞ
620READS

The Green Deal from a Global Perspective

With its activities under the Green Deal, Europe seeks to achieve a carbon-neutral planet by 2050. Governments and international organizations have failed to take advantage of previous possibilities to mitigate global climate change's effects. The world is now anticipating a time when significant steps must be taken quickly. What impact will the Green Deal have on countries' economic and social structures? Let's begin with the European countries.

Even though Europe still gets the majority of its energy from fossil fuels, renewables will be expanded in the following years. Governments will enact applications in environmental and human rights legislation for the EU. The implementation of Carbon Border Adjustment Mechanism will take place. Diesel and gasoline vehicles will be outlawed shortly, which is an essential and natural step. It is planned to phase out the production of fossil-fuel-powered cars in European countries by 2035.

In terms of global carbon dioxide emissions, European countries have a share of 9.1 percent. This rate is 30 percent for China and 14 percent for the USA. Therefore, it is not enough for Europe to fully implement the Green Deal within its borders. Because the global economy consists of intertwined structures and countries are connected through trade networks. The attitude of other countries that shape the global economy will show whether the green transformation can be carried out successfully.

China has the most significant carbon emissions of any country on the planet

China is the crucial player in the Green Deal. Because China's annual greenhouse gas emissions equal Europe, the United States, and Canada altogether. China now has the most significant carbon emissions in the world due to its rapid growth. The country's coal-based economy is booming, and the Chinese have been fighting air pollution for years. They understand that they must keep up with the green transition to remain competitive in the global market and mitigate US demands. In this context, Chinese President Xi Jinping stated that his country's goal is to be carbon neutral by 2060. China's efforts to support transformation are critical to lowering global carbon emissions.

Trump, on the other hand, was not in favor of environmentally friendly production. The decision to withdraw from the Paris Climate Agreement looked to be a reflection of this approach. However, new Vice President Joe Biden is concerned about the Green Deal. Without wasting time, Biden began taking steps to reduce the harmful effects of climate change. As a result, the United States has re-entered the Paris Climate Agreement. He stated that they would change the government's vehicle fleet to speed up the adoption of electric vehicles. However, if global efforts succeed, the United States must maintain a more robust climate policy.

India is another important country in the green transformation. After China and the United States, we're talking about the country with the most significant carbon emissions in the world. India is responsible for 7% of world carbon emissions. The government is rapidly expanding, and its population will soon surpass that of China. Half of the country's resources are used to generate electricity from coal. As a result, doubts regarding India's ability to keep up with the green transition arise. Unfortunately, despite increased solar energy output, it does not appear that carbon emissions can be reduced to the desired level. It would be interesting to see what actions the country, which has suffered a significant economic difficulty during the Covid-19 period, will take in the future.

Which industries will be most affected by the European Green Deal?

The EU primarily plans to impose taxes on steel, cement, fertilizer, and aluminium. Cement shipped from Turkey ranks first on the list of products most affected by the "Carbon Border Adjustment Mechanism" (CBAM) according to data from the European Commission. The EU will reduce the competitiveness of products with a high carbon intensity using this strategy. It's important to note that we're Europe's largest cement exporter. As a result, it is critical not to miss the deadline for implementing the Green Deal. Otherwise, industries like iron and steel, textiles, and major appliances, which contribute significantly to our exports, will be severely harmed.

We can observe that fertilizer exported from Russia is ranked second. In 2020, Russia will account for 20% of the 12 billion dollars in coal exports to EU countries, and it will also be a leader in carbon-intensive aluminum, plastic, and rubber manufacture. As a result, it is a country that faces challenges in terms of structural adaptation. If the Paris Climate Agreement is implemented entirely, Russia's energy exports will decline by 20%.

Turkey is the world's largest industrial country, crossing from Germany to India. In terms of total imports, we are ranked sixth in the European Union. According to data released by the Ministry of Commerce in August 2021, European countries account for 41.3 percent of our exports. It is worth a total of 69 billion dollars. In this regard, it is critical for both the public and private sectors to adapt to the shift before it is too late to achieve a future in which fossil power vehicles are phased out and environmentally, and human-friendly production becomes commonplace. The cost of not addressing climate change will be greater than the current cost of transformation.

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