Europe’s Green Deal: a dream or a goal?

24 January 2022 /

10 min

The consequences of climate change are becoming more and more clear and present in our daily lives: the glaciers’ melting, deforestation, mass extinction of species and extreme weather conditions are mostly derived from human activity. Under the pressure of the several protests and popular demonstrations, the EU has responded with the European Green Deal. Yet, this ambitious project raises some questions. This article has the objective to analyse the architecture of the European Green Deal and to put in question some of its aspects, namely the question of finance and the role that gas and nuclear energy have to play.

The first steps

The beginning of the Industrial Revolution in the 18th century brought what would be a long perpetual fight between mankind and climate change. While many averted the consequences of using non-renewable energies such as coal and oil it took several decades before governments looked into the matter seriously, with the first political parties in the world emerging only in the early 70’s, in Switzerland, the United Kingdom and Australia. It was also at that time in Stockholm that the ‘United Nations Conference on the Human Environment’, the first ever global political summit on the environment, was held. Several initiatives were born from this event, most notoriously the United Nations Environment Programme (UNEP).

Another major step was taken with the Kyoto Climate Change Conference, in 1997. As a result of this Conference, the Kyoto Protocol established that the most developed countries (at the time, the US, Canada, the European Union, Russia, Japan and Australia), ought to lower their carbon emissions the most, since they were responsible for most of the global production of CO2. Out of the biggest polluters, only the EU fulfilled these conditions, lowering its CO2 emissions by more than 20% between 1990 and 2019. Despite the efforts of the international community, the Kyoto protocol did not achieve the desired targets, mostly due to several institutional design failures such as a very short period for action and a fixation on short-term and small-scale policies. The next attainment took place at the end of 2015 with the United Nations Climate Change Conference, where the Paris Agreement was struck. Its main objective was lowering the limit of global warming to below 1.5 degrees Celsius compared to pre-industrial levels. However, this Agreement was non binding, meaning that the world’s biggest producers were simply expected to cut back on emissions voluntarily. This resulted in some public contestation, notably in activists’ protests, who claimed that the governmental efforts were not enough to mitigate the environmental damage. Among these, one of the highlights was the emergence of the young Swedish activist Greta Thunberg, known for her bold way of criticizing governments for not doing enough. Her harsh speeches brought worldwide attention to this problem, attracting mostly youngsters to the cause.

The European Green Deal: Europe’s ‘man on the moon’

On the 11th December of 2019, the European Green Deal was unveiled by the European Commission. The initiative consists of a series of policies which ultimately aim  to make the EU climate-neutral by 2050. This means that the EU will cut its CO2 emission in order to leave no ecological footprint derived from industry, transport, energy and agriculture. Ursula von der Leyen went as far to describe the Green Deal as “Europe’s man on the moon”.

This project foresees an investment of one trillion euros in a more circular economy powered by renewable energy, in decarbonizing  and, at the same time, in digitalizing the European economy. Simultaneously, it projects a carbon border adjustment tax on imports derived from polluting countries in order to prevent the bypass of Member States to import non-renewable energy from third countries. Furthermore, through the Just Transition Mechanism (JTM), the project will provide funds to regions whose economies are dependent on the extraction of non-renewable energies such as coal or petroleum, so that those regions do not suffer the effects of a harsh economic transition (such as mass unemployment) and have strong economic incentives to stop extracting and selling fossil energies, thus making sure that “no one is left behind”.

Additionally, the EU has also created the “Modernisation Fund”, which has the objective to provide between 65€ and 75€ billion, in a period between 2021-2027, to the ten Member States with the lowest income of the block. It aims to help them meet the 2030 energy targets by modernising their energy systems so that the whole continent can transform its industry to a more clean energy-based one at a closer rate. Moreover, in order to guarantee a “green” recovery from the recent coronavirus pandemic, the European Commission approved in 2020 a stimulus package to help rebuild the economies that were most affected by the health crisis. All of these measures demonstrate the EU’s determination in dealing with climate change, yet these instruments are not free of fault, since some of their aspects need further and careful consideration.

The consequences of private investment: A gas and nuclear trojan horse?

The Green Deal represents a continuity of the several EU’s steps in becoming the first green continent on the planet. Yet, there are several major obstacles for its efficient application. Namely, the program called “Green Finance Strategy”, which has the objective to channel private financial flows into sustainable economic sectors. This is vital, since most of the budget for the European Green Deal will come from private investments. This can be better seen with an example: when a company wishes to invest in projects like building a charger station for the electric cars of its employees, it usually does not have the money forefront. It can then take in debts from their investors in the form of bonds (in this case, Green bonds), or it can sell part of the company, which is called a share. Thus, the private investors contribute to the promotion of green business while making money. The problem in relying on private investors is the big lobbying campaigns that influence the definition of what is a green sector, as a way to circumvent the EU’s criteria of what can be labelled as ‘sustainable’. This could potentially result in millions of euros supplied to companies that are not truly green, which is commonly known as “Greenwashing”. In fact, the European Commissioner in charge of the Green Deal, Frans Timmermans, was accused of lack of transparency in his meetings with lobbyists. In the first 100 days of shaping the Green Deal he had a total of 151 reunions, generally unrecorded, with leaders of the fossil fuel industry, such as Shell, Eurogas, PGE, Cefic, Eni or Gas Infrastructure Europe. This could potentially allow an opening for the Gas sector to fill the inevitable void that will be left in the market by fossil companies.

Furthermore, many centrist and conservative Members of the European Parliament (MEPs) are also arguing for a ‘Nuclear Renaissance’. They claim that it is impossible to fulfil all the Member States’ energy demands by relying only on renewable energy. Another of their arguments is that nuclear energy is cheaper than wind and solar power, and as such, it should be considered as a valid option on the table alongside renewables energies. In response, the European Commission said that it will not oppose countries that wish to build new nuclear plants, yet it still has not decided whether to consider nuclear energy as an ally of renewable energies.

Furthermore, in the agricultural sector, the EU is still a big importer of crops and meat from third countries whose environmental laws are less strict than those of Europe, allowing for the EU to use less intensive farming methods on its territory. This results in the Member States allocating the environmental damage to other countries, while receiving the laurels for practicing green policies in European territory.

From an economic standpoint, many critics say that the money guaranteed for the green transition is not enough. According to the European Commission itself, the whole of Europe needs an investment of €260 billion annually to achieve its 2030 energy targets, which is double the current €100 billion investment per year. The Just Transition Fund suffers from the same problem: although €4.8 billion over a period of seven years sounds substantial, it is merely 0.3% of the EU’s multi-year budget, or just 1% of the EU GDP.

The budget of the Green Deal has been debated among critics, academics and politicians, each defending why it is (not) enough. From this evidence, it is possible to state that, indeed, the EU can allocate more funds to the Green Deal as well as to other environmental-related projects. One can assume that a more bold funding of green projects doesn’t occur because, although the environmental problematic is growing in importance to the public eye, it is still not enough for the EU to be confident that the general public will welcome such fundings.

‘Green Europe at two speeds’

If the United Kingdom is heavily associated with the 1st Industrial Revolution, then the EU can be seen, or at least it is trying to, as the champion of the ‘Green Revolution’. It has paved the way for the most industrialized countries to fight against climate change, yet, while it has done so with great effort, many critics say it is not enough.

What conditions the EU’s answer speed is the fact that it does not have the power to assertively and coercively instruct its Member States to follow thoroughly the bloc’s directives. Each Member State, through its own national procedures, must adapt the EU rules through a process that demands time and compromise. With 27 different States that have different agendas and face distinct geopolitical scenarios, this is not an easy task. For example, Southern European countries such as Portugal, Italy and Greece are still dealing with their ‘economic scars’ from the Sovereign Debt Crisis, and face major economic challenges such as youth unemployment and a low economic growth. Concerning Eastern Europe, the ex-soviet countries are still trying to close the economic and industrial gap with the West, a process that requires a heavy investment on coal and oil industries. With so many resources allocated to this sector, making a radical change towards a ‘Green Industry’ is much more complicated for the eastern countries than for their western counterparts, both due to economic and political reasons. Consequently, compared with northern Member States such as Germany and the Netherlands, eastern Europeans governments cannot put environment policies high on their national agendas. Hence, the European Commission must find a balance that meets all of the 27 Member States’ interests.

Europe’s answer to the Green Call

While it is no question that environmental policies are moving higher on the agenda at the European Parliament, we can also observe a ‘green swipe’ at Member States’ national elections, with green parties obtaining more popular support and consequently, more seats in national parliaments. We can look for example to the recent 2020 federal elections in Germany, where the Greens are the third largest party in the country, occupying 118 seats in the Bundestag, or to the 2020 French local election, where the Europe Ecology-The Greens won in big cities such as Lyon, Marseille, Bordeaux and Strasbourg. Most of the votes tend to come from younger generations, or from cities with a high student population.

The European Green Deal, although it has its flaws, is a step taken in the right direction. It will not single-handedly change the current scenario of global warming, but it is to date one of the boldest steps taken by a political entity in order to mitigate the human eco-print. Projects like the Green Deal needed more funding, preferentially from the public sector to safeguard its objectives. It also needs to find a balance between realistic and lacklustre goals in order to avoid outcomes like those of the Kyoto Protocol. The question of environmental offshores, particularly in  the agricultural field, must be addressed in order to stop developed countries from ‘cheating out’ on their CO2 target emissions. In brief, the European Green Deal is neither a failed project or a game changer, but it is one of the bravest actions in Europe’s fight against climate change.

[This article was first published in the issue 35 of the magazine]

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