22 April 2022 – Online conversation
COFOLA 2022
EU Green Policy – Law, Finance and Innovation
The section is organized by the Faculty of Law, Masaryk University, as part of the Central European Professors’ Network, coordinated by the University of Miskolc – Central European Academy
About COFOLA:
Since 2007, the Faculty of Law, Masaryk University has organized the conference „COFOLA = Conference for Young Lawyers” on an annual basis. The main aim of this conference is to give the floor to doctoral students and young scientists at the early stage of their career and enable them to present the results of their scientific activities.
Annotation of the section:
Discussions on long-term sustainability, environmental protection, and the reduction of net greenhouse gas emissions have gained in intensity and importance in the last decade. The European Union is positioning itself as a leader in this field and has already presented the so-called Green Deal for Europe at the end of 2019. Its framework was further specified in 2020 and 2021. The Green Deal for Europe is an ambitious project whose implementation will be substantially driven by key changes, adjustments, and new institutes’ introduction in many legal fields. Some concepts have already been proposed; others are in the pipeline, and others are still to take shape. The multidisciplinary section „EU Green Policy – Law, Finance and Innovation” welcomes legal and economic expert contributions dealing with green-related issues.
EU Green Policy – Law, Finance and Innovation
The European Commission states that climate change and environmental degradation are an existential threat not only to Europe but to the whole world. There is no doubt that the European Union is the leading institution worldwide fighting climate change, which also has severe impacts on the economy. However, environmental challenges seem to be a priority. On these priorities, the European Green Deal was prepared. It aims to transform the European Union into a modern, resource-efficient, and competitive economy, ensuring:
- no net emissions of greenhouse gases by 2050;
- economic growth decoupled from resource use;
- no person and no place left behind.[1]
The budget to finance the European Green Deal is generous: one-third of the 1.8 trillion euro investments from the NextGenerationEU Recovery Plan and the EU’s seven-year budget.[2]
The European Green Deal was presented in 2019 and approved in 2020. It is a set of policy initiatives with the overarching aim of making the European Union climate-neutral by 2050. In practice, the plan is to review each existing law on its climate merits. Based on these analyses, new legislation on the circular economy, building renovation, biodiversity, farming, and innovation will be introduced.
The main objective of the Green Deal for Europe is to make the EU the world’s first „climate neutral bloc” by 2050. The plan includes a potential carbon tariff across borders for countries that do not limit greenhouse gas pollution to the same extent. The mechanism to achieve this is called the Carbon Border Adjustment Mechanism (CBAM).
The Green Deal also includes:
- the Circular Economy Action Plan;
- a review and revision (if necessary) of all relevant climate-related policy instruments, including the European Emissions Trading Scheme;
- a Farm to Fork strategy, together with a shift in emphasis from compliance to performance (which will reward farmers for carbon management and sequestration, better nutrient management, emissions reduction, etc.);
- a revision of the Energy Taxation Directive, which looks more closely at fossil fuel subsidies and tax exemptions (aviation, shipping);
- the Sustainable and Smart Mobility Strategy,
- the EU Forestry Strategy.
One of the main objectives of the European Green Deal is to at least double or even triple the current renovation rate of around 1%. In addition to the renovation strategy, investment is also needed to build new efficient and environmentally friendly buildings.
The Green Deal also runs alongside the Horizon Europe program, which is expected to play a key role in attracting national public and private investment. Through partnerships with industry and EU Member States, it will support research and innovation in transport technologies, including batteries, clean hydrogen, low-carbon steel production, circular bio-based industries, and the built environment.
In July 2021, the European Commission published the „Fit for 55” legislative package, which contains important guidelines for the future of the automotive industry. Among other things, it stipulates that all new cars sold in the EU must have zero emissions from 2035.
As the European Commission states, the European Green Deal will improve the well-being and health of citizens and future generations by providing:
- trees, fresh air, clean water, healthy soil, and biodiversity;
- building renovations, energy-efficient buildings;
- vegetables, and healthy and affordable food;
- more public transport;
- cleaner energy and cutting-edge clean technological innovation;
- longer-lasting products that can be repaired, recycled, and re-used;
- future-proof jobs and skills training for the transition;
- globally competitive and resilient industry.[3]
Based on the strategies and plans mentioned above, the actions cover many areas: climate, energy, agriculture, industry, environment and oceans, transport, finance and regional development, and research and innovation. These areas are to be investigated by experts from many scientific fields. The Green Deal is truly a multidisciplinary issue. Moreover, seamless legal regulation will be crucial to achieving the set objectives.
Within the legal sphere, several different branches of law must investigate the Green Deal. Environmental law plays a key role, but there are many administrative and financial law issues as well. We cannot forget European Union law and international law. To certain limits, civil law and criminal law experts will have to add their specialization. All these contributions were most welcomed in section EU Green Policy – Law, Finance and Innovation.
The section took place on Friday 22 April 2022. From several applications, six participants were chosen to present their contributions. However, Davorin Žnidarič was not able to participate. The section started with the opening note by Michal Radvan.
The first presenter Gabor Hulkó from Széchenyi István University talked about the future and prospects of the state of the Energy Union. Last year marked a shift from setting out a comprehensive vision for the transition to climate neutrality, and its supporting sectoral strategies, to proposing and implementing the resulting initiatives. Key moments in this regard were the adoption of the Climate Law and the presentation of the European Green Deal. Even though these documents represent relevant milestones in Europe’s energy policies, they cannot be accepted without any critique. Their implementation at the member state level represents a significant – if at all feasible – challenge. This initial situation has been particularly aggravated by the current war conflict, which adds to the already rapid increase in energy prices and highlights the EU’s energy vulnerability. It is clear that this situation calls for a reassessment of the public policies pursued in light of the new socio-economic challenges.
Anna Vartašová representing P. J. Sararik University presented her topic on green policy at the local level of the City of Košice. She stated that an important related issue is funding the measures and projects aimed at environmental protection and sustainability. She focuses on the green policy implemented at the municipal level on the example of the city of Košice, from the viewpoint of its determined budgetary expenditures and the revenues with an environmental aspect. Based on the analysis and comparison over time, Anna evaluates the financial aspect of its implementation, also using the methods of descriptive statistics.
Tereza Čejková from Masaryk University in her contribution called Green Transformation as a Tool of Tax Optimalisation analyzed the tools of EU green policy in the field of corporate finance in connection with corporate tax obligations. Green transition across industries brings many opportunities for investments in research and innovation, which is widely supported by the EU Green Deal. The initiatives under the Green Deal constitute a number of funding programmes, including promotion of motivational packages provided by the Member States, i. e. in a form of tax reliefs. The result of the research is to find out whether the Green Transformation and Innovation funding programmes under the Green Deal can open up space for aggressive tax planning on the side of corporations as receivers of incentives. Based on an analysis of the principles of such programmes and their position in relation to corporate taxation, and if such risks exist, Tereza evaluates their impact on the objectives of green policy using a proportional formula and proposes a solution de lege ferenda.
Ádam Pál from University of Miskolc compared charges for waste management in Hungary, Czechia and Slovakia. According to Adam, well-handled waste management is the key pillar of proper environmental protection. In order to work properly, the waste management system needs sufficient and well-elaborated funding. To achieve this goal, countries of our region implemented various solutions with the involvement of different actors authorized to establish a waste management system that meets the required standards but minimizes the financial burden placed on the residents at the same time. In the presentation, Adam intends to provide a comparative insight into the system of charges for communal waste in three Central European countries, namely Slovakia, Czechia and Hungary. While the first two countries rely on self-governments as the entities responsible for financing the waste management system, Hungary has chosen a more centralized system involving nationwide actors. In the presentation, Adam demonstrates the differences between these systems, identifies their advantages and shortcomings, and suggests possible solutions for their improvement.
Michael Feldek representing Masaryk University has chosen the topic Legal consequences of illegal taxation of greenhouse gas emission allowances. Relatively recently, several legal disputes concerning interest on the unauthorized conduct of the tax administration have been resolved by administrative courts in the Czech Republic. Said disputes were a direct consequence of taxation of the greenhouse gas emission allowances allocated by the Czech Republic in 2011 and 2012 in the energy sector, which proved to be in breach of the European Union’s regulation of the emission trading system. The contribution aims to analyze the origin of these disputes and evaluate their outcome in terms of applicable law by using methods of description, analysis, and synthesis.
[1] European Commission. A European Green Deal [Online]. Available at: https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal_en (Accessed: 1 March 2022).
[2] Ibid.
[3] Ibid.
