Why this is important to Wisconsin businesses: The UK and EU policies are aligned with one another, but will require some changes on the part of U.S. exporters selling into these markets (e.g., motor vehicle manufacturers).

All around the world, environmental issues are becoming a key item on the political agenda. “Green Deals” in the U.S., UK and EU share common themes that are likely to affect how goods are manufactured, traded and consumed in the future.

The EU has pledged to go carbon-neutral by 2050, and the Green Deal initiative is a plan to make the 27 member states economically sustainable and at the same time transform the bloc into a modern, resource-efficient and competitive economy. The framework of regulation and legislation has clear overarching targets at the core, a bloc-wide goal of net zero carbon emissions by 2050, and goal of cutting emissions by 50-55% by 2030. In June 2021, legislation will be presented to support meeting this 2030 target.

The EU Green Deal seeks to improve efficiency in use of resources, minimize waste and cut net greenhouse gas emissions to zero. Nearly all major aspects of the European economy will have to be overhauled, including energy generation, food consumption, transportation, manufacturing and construction. Job creation is expected in new high-tech industries such as renewable energy, electric vehicle manufacturing and sustainable building. Agricultural measures include supporting biodiversity, reducing the use of harmful chemicals, improving food processing, and decreasing packaging and waste. New regulations and strategies for hydrogen, offshore wind, methane pollution and sustainable investment are also under discussion.

The Green Deal Investment Plan’s main objectives include increasing funding for the transition and mobilizing €1 trillion to support sustainable investments in projects and developments over the next decade to achieve targets. These sweeping structural changes will alter European trade and investment patterns. For example, the European Green Deal implies stricter emissions standards for U.S.-made automobiles than the U.S. has in place. As the U.S. exports more than $5.5 billion worth of passenger cars to Europe each year (as of 2018), this could have a large impact on a politically sensitive industry. Similarly, the Green Deal may include stricter agricultural policies based on sustainable practices, which could affect the 13% of U.S. agricultural exports that go to the EU.  However, it is the carbon border adjustment mechanism proposal that generates the most concern in the U.S. A carbon tariff could have a dramatic impact on U.S. exports of coal, natural gas and many manufactured products.

On the climate crisis, the UK is aligned with the EU. Last summer, a target of reaching net zero carbon emissions by 2050 was enshrined in UK law and all major parties are pledged to uphold it. However, as in the EU, a clear plan of action to meet the net zero goal is still developing. The UK’s renewable energy projects could inject £20 billion of private investment into the economy and support more than 12,000 jobs. Ramping up onshore and offshore wind alongside hydrogen and other renewables is seen as the strategy for achieving a rapid, low-cost transformation of the energy sector.