The European Union’s climate policy faces the dual challenge of delivering effective emissions reductions while strengthening geopolitical resilience in an increasingly unstable world order. The EU Emissions Trading System remains the most efficient tool for cutting emissions, yet it also creates visible costs for industry and households. Aligning carbon pricing internationally therefore becomes essential – not only to safeguard competitiveness, but as a strategic approach to enhance Europe’s geo‑economic resilience.
At a time when global governance structures are eroding, the EU holds a unique geopolitical opportunity. By leveraging the Carbon Border Adjustment Mechanism (CBAM) to form climate clubs with common minimum standards, and by using Article 6 of the Paris Agreement to build targeted climate partnerships – particularly with countries in the Global South – Europe can anchor a network of compatible markets. Such a framework strengthens the EU’s position rather than exposing it to the risks of a fragmented global economy.
This external leverage, however, depends on strong internal legitimacy. A fair, transparent, and visible redistribution of revenues from carbon pricing is crucial to maintain public trust and prevent the ETS from being perceived as an additional burden. At the same time, Europe must ensure regulatory clarity: the emissions trading system should stand firmly at the center of climate policy, while overlapping national taxes and parallel regulatory regimes are reduced.
If designed well, this approach provides strategic benefits. It gives planning certainty for businesses, enhances Europe’s international leverage, and increases the Union’s resilience to global economic and political shocks. In doing so, EU climate policy becomes more than an instrument for emissions reduction – it evolves into a cornerstone of Europe’s geopolitical and geo‑economic resilience.
Read the entire monitor: ‘EU-Klimapolitik in einer unsicheren Welt’ here as a PDF. Please note, to date this publication is only available in German.
