Environmental review: What are the implications of the EU's ban on "carbon neutral" labeling?
Products labeled as "carbon neutral" may be rejected by the EU market in the future. The Directive on Granting Consumers the Right to Green Transformation passed by the European Parliament prohibits the use of a series of green labels such as "green-friendly" and "carbon neutrality" based on greenhouse gas emission offsets without sufficient evidence. The directive applies to companies selling products or services to EU consumers and will be implemented in EU member states in 2026.
Given that the EU is in a leading position in global carbon management, we can see the trend of international carbon management from this directive to a certain extent, and bring the following enlightenment to the establishment of my country's carbon labeling system.
First, general green labels that are not recognized for excellent environmental performance will not be recognized. At the operational level of enterprises, the EU prohibits companies from making statements that "achieve carbon neutrality or climate neutrality before a specific date" without a clear and objective implementation plan and necessary budget and technical support. At the product level, the European Union has banned "carbon neutrality" labels based on greenhouse gas emission offsets, encouraging companies to get rid of excessive dependence on voluntarily certified emission reduction products, cracking down on "greenwashing" and "greenwashing" behaviors, and forcing companies to adopt low-carbon technology to reduce carbon emissions in production and operation processes. These measures will influence companies 'climate action strategies from the top down, allowing companies to devote more resources to carbon emission management in their supply chains and operational processes. In recent years, more and more companies in my country have announced carbon neutrality goals. Currently, some new energy companies have obtained international carbon neutrality certificates and become "zero-carbon" factories; such carbon neutrality statements may not be recognized within the EU due to the use of a carbon credit offset mechanism.
Second, the development of the carbon credit market is restricted. The EU Carbon Emissions Allowance Trading Market (EU-ETS) is in its fourth phase (2020-2030), and key emission companies explicitly included in trading management will not accept any form of carbon credit offset. This time, the EU prohibits companies from using "carbon neutral" labels based on carbon credit offsets, which further restricts the development of the carbon credit market from the perspective of non-managed companies. From the perspective of the international carbon credit market, future market demand will focus on high-quality carbon credit projects with substantial environmental benefits of emission reduction.
Third, this EU directive has set up green trade barriers in disguise. From the demand side, the EU carbon price in 2023 will reach 80 euros/ton to 100 euros/ton, far exceeding my country's carbon price level. The EU sets carbon prices on imported products through the carbon boundary adjustment mechanism, which in disguise increases the cost of imported products. From a supply-side perspective, my country's product carbon footprint system still has challenges and shortcomings in terms of standardization standards, certification mechanisms, infrastructure, and international connectivity. By banning the "carbon neutral" label, the EU uses this as an excuse. It hopes to give full play to the EU's own leading advantages in carbon management and carbon footprint, cultivate and expand high-end green manufacturing industries, and enhance competitiveness in global trade.
With the release of my country's "Implementation Plan on Establishing a Carbon Footprint Management System", the construction of my country's product carbon footprint management system has entered a new stage of construction and implementation from top-level design. Different from the EU's stage of economic development and carbon neutrality, the author believes that in responding to the EU's carbon-related trade barriers, my country should adopt the principle of distinguishing between internal and external, seeking advantages and avoiding disadvantages, focusing on technological emission reduction methods and high-quality carbon credit offset is supplemented by forward-looking layout industrial carbon management work, and use the low-carbon advantages of the industrial chain to enhance its comparative advantages in foreign trade.
The first is to achieve substantial emission reductions through technical emission reduction plans. It is recommended to introduce relevant policies to promote the research and demonstration application of key technologies for deep decarbonization such as carbon dioxide capture, utilization and storage (CCUS) technology, direct air carbon capture and biomass carbon capture and storage, and cultivate and form relevant new productivity. Formulate carbon management roadmaps for petrochemicals, natural gas, cement, steel and other industries, explore the first to carry out carbon dioxide pipe network infrastructure construction evaluation in areas with good gas reservoir conditions, innovate carbon dioxide resource utilization scenarios, and form CCUS demonstration projects with commercial value in industrial and waste management and heat treatment processes., gas power generation and biomass energy and other application fields.
Second, the development of carbon credit markets should shift to high-quality carbon removal projects. Carbon credit markets at all levels can focus on the development and reserve of carbon reduction and negative carbon projects such as forests, grasslands, farmland, and wetlands, energy conservation and efficiency improvement, and CCUS technology to ensure clear emission reduction mechanisms, guaranteed data quality, and social and ecological benefits., establishing internationally recognized high-quality carbon credits. Based on the National Carbon Emissions Market Monitoring, Accounting and Reporting System (MRV), establish a complete carbon credit MRV system. Use new information technologies such as big data, blockchain, and artificial intelligence to improve the accuracy of monitoring results and the reliability of data quality.
The third is to accelerate the establishment of a carbon footprint management system. In line with international standards, we will formulate carbon footprint accounting standards for key foreign trade products such as electronic information, batteries, new energy vehicles, and photovoltaics as soon as possible, establish an accounting factor database, and carry out power carbon footprint accounting first. Standardize carbon-related labeling, strengthen guidance on carbon neutrality behaviors by improving standards and specifications, and encourage carbon offset behaviors based on energy conservation and carbon reduction. At the same time, the identification of carbon-related labels encourages the use of traceability indicators such as the proportion of renewable energy and the recovery rate of key materials to combat "greenwashing" and "greenwashing" behaviors.
Author's unit: Sichuan Province Environmental Policy Research and Planning Institute (Sichuan Province Research Think Tank on Ecological Barrier Construction in the Upper Reaches of the Yangtze and Yellow Rivers)
