It’s being touted as one of the most ambitious plans to green the economy globally, and this week we will find out exactly how the EU intends to become carbon neutral by the middle of the decade. The bloc will mark the start of the swansong for fossil fuels with a bid to lower emissions by 55% from their 1990 levels by 2030. One key aim is to phase out the combustion engine by requiring emissions from new cars and vans to fall by 65% from 2030 and drop to zero by 2035, according to a draft EU document. More broadly, expect a raft of proposed legislation, including an expansion of the EU’s carbon market, rules to force airlines to cut pollution as well as proposals to slap an emissions levy on key construction imports from outside the bloc. Lobbies and NGOs will waste no time in parsing the fine print to see what the true cost will be and whether it really does live up to all the hype. We walk you through the main action points below.

Climate Highlights
Capping Carbon | A key cornerstone of the drive to lower emissions is an expansion of the EU’s carbon market — already the world’s biggest — which puts a price on pollution that can be traded in the financial markets. The Commission plans to phase maritime transport into the EU Emissions Trading System from 2023 and improve a mechanism to control the supply of carbon permits, as part of the biggest overhaul of the market to date. Find out more.

Greener Travel | Airlines will eventually have to pay for all the pollution from their planes and there will be stricter demands on companies in the transport sector to use cleaner fuel. Still, there are a couple of controversial exemptions from the tougher rules, such as private jets and cargo including Amazon packages.

Social Fund | There are worries that all the new regulations could harm the most vulnerable households. To combat that, the Commission wants to set up a Climate Action Social Facility, financed with revenues from the new carbon market. It aims to provide funding to national governments to support citizens most at risk of energy or mobility poverty.

Border Levy | Watch out too for plans to introduce an import levy on steel, cement and aluminum produced in countries with lower environmental standards in an effort to avoid harming domestic producers. It’s a world first, but there are likely to be long debates within the bloc about potential diplomatic rifts with China and India.

Nuclear Question | All this follows the launch of the bloc’s taxonomy and green bond standard that aims to bring finance on board with funding the estimated 350 billion euros needed per year to fund the transition. One of the key sticking points is whether nuclear power will be accepted as a green technology. Eighty lawmakers in the European Parliament are in favor.

G-20 Balks | The Group of 20 isn’t ready to go as far on some of the big climate pledges as the EU. G-20 finance ministers meeting in Italy failed to agree on a climate pledge to achieve net zero greenhouse gas emissions by 2050 after an effort to include such language in the final communique was thwarted by several countries that are more reliant on fossil fuels.

Company Views | Leaders from BASF, Allianz, Volvo, ThyssenKrupp, Siemens and 17 other companies joined several European lawmakers in calling on the bloc’s top officials to ensure that a planned green overhaul speeds up the deployment of renewables and helps the region’s producers in the shift to climate neutrality.

Greener Lending | U.S. Treasury Secretary Janet Yellen signaled she’ll prod multilateral development banks to rein in their lending for fossil fuels, part of a global effort to make the financial system greener.

What Else is Happening
Recovery Focus | Finance ministers are looking forward to exchanging views with Yellen at today’s Eurogroup meeting, according to a senior EU official. The focus will be on how to speed up the economic recovery, banking and financial issues, as well as maintaining transatlantic ties, but Yellen will press EU officials to reconsider their plans for a digital levy.

G-20 Backing | German Finance Minister Olaf Scholz said he believes European holdouts to a global tax deal — Ireland, Hungary and Estonia — will be brought on board. Scholz and French Finance Minister Bruno Le Maire hailed a deal aimed at stifling competition among countries that have sought to attract corporations with ever-lower taxes.

ECB Tools | European Central Bank President Christine Lagarde told investors to prepare for new guidance on monetary stimulus in 10 days, and signaled that fresh measures might be brought in next year to support the euro-area economy after the current emergency bond program ends. Speaking to Bloomberg Television yesterday, Lagarde said the July 22 Governing Council session — previously expected to be relatively uneventful — will now have “some interesting variations and changes.”

LGBTQ Fight | This week could be when the EU unveils legal proceedings against Hungary over its crackdown on LGBTQ rights. The Commission is planning to send Hungary a so-called letter of formal notice, a last step before a suit at the EU’s Court of Justice, according to people familiar with the matter.

In Case You Missed It
Upstart victory | An anti-establishment party led by a pop-star talk-show host narrowly won Bulgaria’s do-over elections, ending a decade of political dominance by three-time Prime Minister Boyko Borissov. Still, the tight victory by Stanislav Trifonov’s There is Such a People party may produce a hung parliament and extend a political crisis that has hampered the country’s efforts to improve the EU’s lowest living standards and tackle its worst corruption. The Black Sea nation is also struggling to catch up vaccinating against Covid-19, where it ranks last in the bloc.

Beer Boycott | Heineken became the target of a boycott effort after it ran a minute-long ad on social media showing senior citizens dancing in a nightclub with the message: “The night belongs to the vaccinated. Time to join them.” Some threatened to #BoycottHeineken as they posted videos of themselves pouring the beer down their sinks.

Brexit Bill | The U.K. said it doesn’t accept the EU’s assessment that London owes the bloc 47.5 billion euros as part of the Brexit settlement, a higher figure than the U.K. had originally estimated.

Chart of the Day

Europe aims to become the world’s first net-zero emissions continent by 2050, but that’s a daunting goal given its reliance on fossil fuels. Nations will have overhaul every corner of their economies, with transport and industry being the biggest challenges. “There’s no way around it, reaching net zero by 2050 means phasing out combustion vehicle sales by 2035 at the latest,” said Colin McKerracher, head of transport research for BloombergNEF.​​​​​​

Today’s Agenda
Times in CET

• 9:30 a.m. EU foreign ministers meet in Brussels and are joined by Israeli Foreign Minister Lapid
• 12:30 p.m. European Parliament holds session on Lithuania-Belarus border situation
• 1 p.m. Euro-area finance ministers meet in Brussels with U.S. Treasury Secretary Yellen attending, followed by news conference with Eurogroup President Donohoe, EU Commissioner Gentiloni and European Stability Mechanism Managing Director Regling
• 7 p.m. German Chancellor Merkel statement with Ukraine’s Zelenskiy before talks in Berlin
• Commission President von der Leyen and European Central Bank President Lagarde lunch with Yellen