Transforming a Continent
By: Marcus Arcanjo
Tags: Politics, Economics, News, Climate Change, Environment

In 2019, The European Commission announced a Green Deal — a plan to be the first carbon neutral continent that accelerates climate action while creating jobs and facilitating an environment for Sustainable Development. The President of the European Commission, Ursula von der Leyen, called the plan “Europe’s man on the moon moment”. The plan requires widespread changes across nearly every element of the economy, from restoring forests and enhancing transport to promoting renewable energy and revitalising farming.

The deal continues to evolve with new industry-specific plans and short-term strategies regularly presented. In 2020 alone, a proposal to cut GHG emissions by at least 55% by 2030 — which included the stimulation of green jobs that focuses on pandemic recovery and sustainable economic growth — was presented, alongside strategies to tackle biodiversity, enhance food systems resilience and promote a circular economy for sustainable resource use. Action in these areas include:

Investing in new, innovative and environmentally friendly technologies — with a proposed budget of 100 billion

Promoting energy efficiency in buildings

Ramping up electric vehicles, with the goal of deploying 1 million public charging points in Europe by 2025

Transitioning to sustainable fuels for aviation, shipping and heavy road transport

International diplomacy with partners to improve environmental standards

The heart of this deal will lead to changes that cause a “new and better balance of nature, food systems and biodiversity; to protect our people’s health and well-being, and at the same time to increase the EU’s competitiveness and resilience.”

Pushing through such plans, however, requires cooperation between 27 countries and changes to regulations, policies and legislation that are each streamlined to a singular goal. The European Climate Law at the centre of the deal is a proposal seeking to write these goals into law, joining countries like the UK in doing so, and transforming political commitments into action and obligation.

Naturally, one of the key questions surrounds cost. When proposing a total overhaul of the economy, large costs are involved. The European Commission promises 1 trillion euros will flow into the deal until 2030 but “around 3 trillion will be necessary to meet ambitious emission reduction targets,” with other estimates even placing the figure at 4.6 trillion between 2031 and 2050.

This number looks scary but pales in comparison to the costs of inaction on climate change in Europe, estimated at 135 billion per year by the 2050s and up to 450 billion by the 2080s for sea-level rise alone. Breaking the cost of the deal down into annual increments makes it far more doable, especially when considering that the ECB announced a 750-billion-euro emergency bond-buying programme earlier this year to keep financial markets afloat.

To ensure inclusivity and, as the commission states, “leave no one behind”, a ‘Just Transition Mechanism’ is proposed. This focuses on the social and economic effects and the regions, industries and workers facing the largest challenges. It aims to mobilise at least 150 billion euros between 2021–2027 via three pillars:

1. A Just Transition Fund of 40 billion (generating) 87–107 billion

2. An InvestEU Just Transition scheme of 30 billion;

3. Public sector loan facility of 10 billion (backed by 1.5 billion of the budget and mobilising up to 30 billion in investments.)

Challenges Ahead

While the plan looks both impressive and feasible on paper, it's far more difficult to introduce in practice. Firstly, working with 27 countries to create a single plan that suits everyone’s needs is tough. Countries have different characteristics and varying industries that thrive, so negotiations over the next thirty years to achieve optimal solutions will be hugely challenging.

Some have also criticised the true environmental impact of the deal. In October, an article in Nature highlighted the EU’s role in degradation, notably due to importation of food from around the world. With the EU being a major importer, the point has been made that environmental harm is simply being done elsewhere as “EU member states are outsourcing environmental damage to other countries while taking the credit for green policies at home.” Such outcomes must be avoided to ensure that emissions are not simply being shifted elsewhere.

Equally, 2020 has been a challenging year for many countries. An unforeseeable global pandemic requires flexibility in response when countering enduring economic hardship. With emissions dropping significantly, especially during initial lockdowns, economies have been (and should be) allowed room for manoeuvre that typically falls outside the scope of such a plan, but lax climate measures must not be a long-term decision.

Lastly, costs have, unsurprisingly, been criticised. The financial allocation, some say, is inadequate. The trillion-euro price tag largely comes from the EU budget via reshuffling existing money and from investments from the private sector. But there are worries that cost will inflate significantly. The financial mechanisms available also pose questions.

Large wealthy economies, like Germany, stand to be some of the largest recipients of funding while others with limited financial resources receive less. Large economies have much greater costs of transition but are in a better position to field those costs, meaning a better balance must be struck in determining how funding is distributed. The same can be said for financing innovation. Often companies and their products masquerade as environmentally friendly but aren’t, extra vigilance and due diligence are required to avoid falling for this greenwashing.

The European Green Deal is incredibly ambitious. Creating green jobs, facilitating an environment for innovation and technology, ramping up renewables and improving energy efficiency all while reducing carbon emissions would provide enormous opportunities for sustainable growth in the EU and investments — both public and private — in these emerging areas. Its importance could also signal change elsewhere.

The US has seen increasing bipartisan support for their own Green New Deal, and with a new pro-climate action administration entering the fray in 2021, that could follow in the coming years. But there should be no illusion as to the difficulty of achieving this. Struggles with diplomacy and negotiations, policy and legislation, and investments will need to be overcome if the Green Deal is to succeed.

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