Dear reader,
As Republicans in the US put forward plans that would end renewable energy subsidies and scrap tax breaks for electric vehicle purchases, clean energy campaigners in the EU are calling for a European competitiveness fund to fill investment gaps.
The House ways and means committee will today discuss “the one, big, beautiful bill”, which Republicans claim will deliver on President Trump’s economic agenda and support pro-family, pro-worker tax provisions.
“Under the economic policies of President Biden and Washington Democrats, the wealthy and well-connected benefited from taxpayer handouts. The ways and means Republican tax bill ends special interest giveaways and will hold the woke elite and entities that benefit from the tax code accountable. It will halt the flow of taxpayer dollars to illegal immigrants and China,” says ways and means committee chair Jason Smith.
Under the section of the bill headed “make America win again” and “working families over elites”, it proposes terminating support for a host of clean energy technologies and actions, including EVs, home energy efficiency improvements, clean electricity, clean fuels, green hydrogen and hydrogen storage.
How to create an EU competitiveness fund for clean tech
Meanwhile, in Brussels, 16 clean tech organisations have written to the European Commission and parliament, backing the creation of a European competitiveness fund.
They highlight four steps they believe can ensure the fund works and keeps the EU on track with its climate action. These include preserving the scope of existing EU programmes for strategic climate and energy investments and increasing the climate mainstreaming target from 30 per cent to 50 per cent under the next multiannual EU budget.
The organisations also underline the importance of simplifying access for small and medium-sized enterprises, co-operatives and households to EU finance and of integrating the efficiency-first principle in investment planning. They likewise warn against reinventing the wheel and advise instead that the EU channels more funding to existing successful programmes like Horizon Europe, the Innovation Fund and InvestEU.
“A more ambitious green industrial policy demands harmonised, targeted EU public funding, which the competitiveness fund promises to provide. But the EU should proceed with caution. If this new architecture comes at the expense of climate action or research excellence, we will be putting our long-term competitiveness at risk,” says Institute for Climate Economics research fellow Ciarán Humphreys.
Reason to stick with biodiversity net gain
Also along the lines of not stopping something that is working, David Hill, former deputy chair of Natural England, urges the UK government not to change the rules on biodiversity net gain, or even scrap the law as some rumours suggest.
Hill says the initiative is beginning to work well. He warns the public purse will never be able to raise the amounts of money needed to protect and restore the UK’s damaged biodiversity. Further, pulling the rug out from the initiative would send the wrong message to investors domestically and abroad, given the high regard in which BNG is held as the first global compliance market for biodiversity, he says.
“If we want markets to work for nature, leveraging far larger amounts of money than a government-run scheme could achieve, we must stop making investors nervous. The government needs to listen,” writes Hill.
ISSB reporting change: ‘a technical cherry on top of a technical cake’
Elizabeth, meanwhile, examines how the proposal by the International Sustainability Standards Board to exclude certain financial sector emissions from Scope 3 reporting has sparked a debate about the extent to which insurers can be held accountable for their indirect emissions.
Ashurst lawyer Becky Clissmann says the ISSB’s move is not a rollback and not analogous to what the EU is trying to achieve with its omnibus proposal. “This is much more nuanced — it’s a technical cherry on top of a very technical cake,” she tells Elizabeth. “The world is definitely realising how difficult it is to do sustainability reporting well, but in that sense it’s very sensible to make sure that what comes out of reporting is decision-useful for investors.”
Ways to rewrite the economy
Finally, today, we dive into the latest report from the Cambridge Institute for Sustainability Leadership, Rewiring Finance — a New Approach to Financing a Sustainable Economy, which argues that attempts to scale up sustainable finance have failed to deliver the necessary change required to transition to a more environmentally and socially just economy.
The authors make three proposals they believe could alter this dynamic.
First, ensuring industrial and financial policies set out transition pathways for all economic sectors, with incentives for the financial system to deliver on them. Second, a mindset shift that moves the financial sector from compliance to value creation by actively engaging with the risks and opportunities the transition poses.
And third, the report urges the financial sector to embed sustainability into financial values by pricing in the financial materiality of climate change, biodiversity loss and inequalities.
Until tomorrow,
Philippa
Philippa Nuttall is the editor of Sustainable Views