INSTITUTIONALIZATION OF CLIMATE CHANGE COMBAT IN THE EU AND SOCIO-ECONOMIC EFFECTS OF INDUSTRY DECARBONIZATION

Abstract

The purpose of the article is to determine the specifics of the process of institutionalization of the fight against climate change in the EU and generalize the potential socio-economic effects of industrial greening with an emphasis on the inevitability of changes in the taxation system. It is argued that the rhetoric in many European countries is changing, from perceiving the climate as a burden, challenge and danger to promoting the idea of the benefits that can be gained by gaining the status of a "leader of the green transition". It was concluded that in order to implement ambitious plans for industrial greening, it is necessary to use the potential of macroeconomic regulation with a combination of monetary and tax-budgetary policy instruments, to review the "ceiling" of the permissible budget deficit and to determine priority areas for capital investments. At the same time, the reduction of intra-European competition will be facilitated by the coordination of industrial development strategies of the EU member states, and, therefore, the volumes of state aid and subsidies related to the functioning of ETS1 and ETS2. Such large-scale government interventions at the national and supranational levels of the EU will enable the green transition, because no one will succeed in creating a "new green reality" relying on the market. The existing economic approach, according to which private investments determine the directions of development, without interfering with what, how and why companies actually produce, is losing its relevance. And that is why the states will have to formulate and consolidate with relevant legal acts a clear and comprehensive understanding of sectoral climate goals with the subsequent inclusion of these goals in the process of economic decision-making. After all, the creation of new markets while gradually closing existing ones implies the creation of transparent rules of the game. This involves approving requirements for subsidizing instruments, taxation, permitting procedures, providing grants for R&D, as well as developing new infrastructure solutions and state funding mechanisms. Therefore, governments, and not "spontaneous" markets, will have to take on the authority to coordinate pricing mechanisms, as well as develop principles for attracting investments and applying uniform rules for regulating economic activity. The declared "green transition", if it is also "just", will require deeper structural changes, for example, thanks to the increase in the amount of "green" investments for low-income or low-income families.