New Climate Change Plans from the EU and China

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The European Union and China have both announced new plans this week to dramatically reduce greenhouse gas emissions to slow the pace of climate change. Many scientists say the warming climate is creating more hurricanes, floods, forest fires, and other events that threaten millions of people and the global economy. The EU and China represent two of the world’s biggest economic areas and largest emitters of greenhouse gas.

Investopedia states that “their plans, announced July 14, have been under discussion for a long time and are expected to take years before they are fully implemented. But they are considered by many policymakers to be important steps to fight climate change, although some environmentalists say the proposals don’t go far enough.

The plans demonstrate the desire by European and Chinese leaders to be at the forefront of the fight against climate change just months before the next global climate change conference in Scotland in November. Investopedia go on to say how “that progress contrasts starkly with the U.S., where President Biden’s own ambitious climate plan faces stiff opposition, mostly from Republicans, in a divided Congress.”

The EU’s plan is dubbed the European Green Deal. It drastically limits the bloc’s reliance on fossil fuels and imposes taxes on imports from countries that emit high levels of greenhouse gases.

China’s climate plan focuses on the launch of an emissions-trading system for Chinese companies, which would create the largest carbon market in the world and sharply increase the country’s share of global emissions covered under similar types of programs.

Both of these plans will have huge impacts on global industries and the companies that operate within them, and particularly for investors.

Fossil fuel companies and producers of carbon are likely to be poorly affected, as are exporters from high-emitting industries or countries. However, alternative energy companies, including wind, solar, and hydro, are likely to benefit from these new initiatives, as well as companies producing energy efficient products.

These new implementations are sure to be of high interest for Fund Selectors when considering their ESG fund criteria as we move into 2022.

Source: Investopedia

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