Wopke Hoekstra, the European Union’s freshly reappointed Commissioner for Climate Action, stopped by CBS during Climate Week for a conversation about the solutions—and formidable challenges—at the top of his agenda as he begins a new five-year term.
Hoekstra acknowledged the urgency of the current moment at the event—which was co-sponsored by the Columbia Climate School and CBS’s Green Business Club—and included remarks from Hoekstra followed by a conversation with CBS Senior Lecturer and climate economist Gernot Wagner.
Only a few weeks earlier, the European Commission and other observers had eagerly greeted the release of a highly anticipated report, The Future of European Competitiveness, written by economist Mario Draghi, the former president of the European Central Bank and Italian prime minister. The “Draghi report,” as it’s known, stressed the need for new solutions to address Europe’s lagging economic competitiveness—while also emphasizing that the only economic solutions worth considering are those that embrace a pivot away from fossil fuels and toward a clean economy.
The report is intended to contribute to the European Commission’s development of a new Clean Industrial Deal for the continent, which the body has promised to roll out within the first hundred days of its new term. As Hoekstra himself has stated, this deal will need to promote cleaner sources of energy while also decreasing energy prices in Europe, which are currently much higher than those in the U.S.
At the CBS event, Hoekstra noted that not too long ago, climate advocates thought it sufficient to amplify news of the damage climate change was causing. Now, however, he believes that in order to mobilize citizens and businesses to act, that’s no longer enough. Instead, he said, specific and targeted action is needed, combining four elements: relentless climate action; just-transition goals; support for companies aligned with high climate standards (so that those operating with lower environmental standards elsewhere don’t take on a disproportionate share of production); and global diplomacy to encourage climate collaboration.
“The EU and U.S. can’t just be waiting for others to fix this,” Hoekstra said. “We need to lead.”
Hoekstra emphasized the need for better alignment between the EU and U.S. multiple times during the event, along with two other key takeaways.
1. Concerted Collaboration Between the EU and U.S. Will Be Critical in Warding Off Climate Catastrophe
Hoekstra expressed pride in the EU’s leadership on climate policy. The EU has set a goal to achieve carbon neutrality by 2050 and to reduce greenhouse gas emissions by 55 percent by 2030. As of 2023, the bloc had already drawn down emissions by 30 percent compared with 1990 levels.
By contrast, the U.S. has reduced its emissions by about 20 percent relative to 2005—although it shares the same net-zero-by-2050 goal as Europe.
“I’m hopeful that the U.S. will improve going forward,” Hoekstra said. And it needs to, he added: while Europe currently accounts for 7 percent of the world’s emissions, the U.S. is responsible for 13 percent. “Europe’s work driving down our own emissions won’t save the planet—nor Europe. Emissions know no borders,” Hoekstra said.
For the benefit of both of these powerful, prosperous regions, Hoekstra said, the solution should be better teamwork—in agreeing on climate goals and actions, contributing financial resources, and establishing trade agreements.
“The more the EU and U.S. align, the better the outcome will be for climate action,” Hoekstra said. “So, I say, let’s team up.”
As an example, he pointed to the pool of resources devoted to those most in need—small island developing states, who bear no responsibility for climate change and yet face the greatest threats from a changing climate. The base of contributors funneling resources to help these nations adapt must expand, Hoekstra said—yet the U.S. is still contributing less than half of what its European allies are.
Hoekstra added that, in more direct ways, the EU and U.S. could also become closer economic partners. This is especially important, he said, in light of what he called unfair competition in cleantech from China, which is subsidizing technologies like electric cars and solar panels and selling them at such low prices in European and American markets that they crowd out local businesses.
“Let’s make sure that competition is truly fair,” Hoekstra said. “The reality is, it’s simply not. Both the EU and U.S. face the fire of unfair competition, especially from China.” He added: “Europe and the U.S. can and will be economic partners, and at the same time compete in this domain. Competition is speeding up positive change, at better prices for our consumers.”
2. More Internal Collaboration and Alignment Is Needed Within the EU
“The beauty of the European Union—and sometimes also its complexity—is its huge diversity in member states,” Hoekstra said. This diversity applies to their histories, geographies, and economic strengths and weaknesses.
The EU’s 27 member states also have distinct rules and regulations, which presents a significant challenge for the Commission when formulating climate policies with the boldness and speed of delivery seen, for example, in the Inflation Reduction Act in the U.S. Hoekstra noted that he envies the U.S. for its ability to pass strong and streamlined action, like the IRA.
This lack of “smoothness” across EU member states can also hamper the progress of clean-tech startups born in Europe, Hoekstra said. Whereas a U.S. startup with a compelling product can immediately reach an audience of roughly 340 million within its own country, extending beyond national borders in Europe can be difficult, significantly constraining the potential customer base. Another key task: creating a capital markets union to broaden and deepen financial markets to help finance the EU’s clean-energy transition.
3. Putting a Price on Carbon Is Europe’s Most Effective Tool Against Emissions—and More Countries Should Follow Suit
“No matter how many laws we enact or how much money we put aside, smart rules that let markets work for climate are by far the superior pathway,” Hoekstra said. “And in Europe, the tool that has proven to be the most effective thing we have done in the whole realm of climate action is putting a price on carbon.”
Doing so forces companies to innovate to reduce their emissions while generating revenues that can be reinvested to green the economy.
“But if we only do this in Europe, it’ll lead to unfair competition,” Hoekstra added. “If we do this together with the U.S. and others across the globe, it’ll drive more innovation.”
Hoekstra said his only regret about Europe’s carbon trading system, the ETS, is that it didn’t begin decades earlier. By now, it’s clear that the ETS is “the smartest policy tool we have in the EU, full stop”—and the current goal is to export the system to other parts of the world.
This led Hoekstra to the topic of Europe’s Carbon Border Adjustment Mechanism, or CBAM, which he explained was “born out of the logic that if you have an ETS system, you need some system that makes it fair for companies who operate in the EU.”
As countries outside the EU green their production processes to reduce carbon, CBAM will generate less money for the EU—and that’s the goal, Hoekstra said. “We would like to see CBAM stop making money—that would tell us that the stuff we import into the EU is okay, in terms of carbon,” he added.
And in the long term, that’s also the goal with carbon taxation, he said: “At some point in time, and ideally sooner rather than later, we won’t make any money from it, because we will no longer be pumping carbon into the air.”