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CCTV Script 15/07/21

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— This is the script of CNBC's news report for China's CCTV on July 15, 2021, Thursday.

The European Union's climate package is seen as being very ambitious. In 2019, the bloc's carbon emission was already 24% lower than the level of 1990, and efforts such as reducing reliance on coal-generated power were already underway. In order to reach the targets set in the new plan and achieve carbon neutrality by 2050, the commission has to take an even more aggressive approach and make broader changes in the next decade.

The primary market tool is to widen the carbon emission trading program. At the start of 2021, the EU carbon trading price was around 30 euros per ton. Now it has risen to more than 50 euros per ton.

Lawson Steele

Joint Head of Carbon And Utilities Research, Berenberg 

"I certainly have a year-round price target of 110, which is obviously double where we are today."

Funds collected from the carbon trading program will be used to support the implementation of the new plan. Meanwhile, the EU said at least 30% of its 1.8 trillion euros long-term budget will be set aside for climate-related spending. 

The EU's climate package will bring changes to various industries ranging from energy to agriculture. And transportation is one of the most affected sectors. With a goal to reduce 90% of carbon emission in this sector by 2030, the commission wants to phase out free emission allowances for the aviation industry and to include shipping for the first time. In addition, the regulators also plan to ban sales of new petrol and diesel cars by 2035. These potential policy changes would benefit electric vehicles and related businesses, such as battery technology and charging stations infrastructure. However, aviation and shipping companies will need to increase spending to adjust to the new rules. Therefore, this plan has received an objection from BIMCO, the largest global shipping association. Lars Robert Pedersen, deputy secretary-general of BIMCO, told CNBC that he thinks the proposal is merely taxation, taking money from the industry but failing to reduce the region's carbon emissions.

The EU also plans to change its tax policies, introducing the world's first carbon border tax, a kind of levy on import goods based on the amount of greenhouse gas emission generated during production. However, the UNCTAD warned on July 14 that the EU's carbon border adjustment mechanism (CBAM) could change trade patterns in favor of countries where production is relatively carbon-efficient but do little to mitigate climate change. It could also hurt exports of developing countries, according to UNCTAD.

Now, many parts of the world are suffering from abnormal weather conditions. The EU's emission reduction plan is a big step forward, but some details are controversial. We shall see how the plan will be executed. 

​​Christian Bruch  

CEO, Siemens Energy 

Founding Member, CNBC ESG Council

"We need to get into action, speed, speed, speed, and also to understand, what are we going to do really, right, we can discuss forever about targets if you don't get to actually implement that it's difficult. And in this regard, I think also the private sector has to play the role to bring plans to reality, at the end, I think however we see it, the question is, how do we turn a challenge into an opportunity."

In addition to the European Union, the UK, a former member of the EU, and many other economies in Asia are also moving forward with their own carbon reduction plans. For companies, especially publicly listed ones with international footprints, there is a greater need for them to pay more attention to ESG issues, improve climate-related disclosure and be vigilant to potential policy risks.