Saturday, July 13, 2024

EU’s The “Green New Deal”


Back in early 2016, although the outlook for the European Union was uncertain, there was a moment when, some hoped, if things went well, the UK would vote to stay in the EU and Hillary Clinton would win the United States presidential election, followed by Marine le Pen losing the French presidential ballot in 2017. With ‘Brexit’ and Donald Trump, however, only Emmanuel Macron remained a candle in the dark by the autumn of that year.
Three years later, as the EU looks forward to a new five-year term, it’s still possible, despite, or even because of, Boris Johnson taking over as UK prime minister, that Brexit could yet be defeated in a second referendum. And Trump might lose next year. Yet, equally, UK politics may carry on imploding, driven by the chaotic development of English nationalism. President Trump’s destabilising of geopolitics and geo-economics may continue.
Meanwhile, the EU’s other big challenges, from the rule of law and populism to climate change, tackling migration, lack of solidarity, inequality, reform of the eurozone and more, will doubtless remain for much or all of the coming half-decade.
Yet there are causes for hope too. And, despite Ursula von der Leyen’s weak mandate from the European Parliament as incoming President of the European Commission, the Commission, the European Council and the European Parliament now have the chance to develop an overarching new strategy to drive the EU forward in the face of these challenges. Climate change has moved rapidly up the agenda and growing political support for green parties across many EU member states, not least in Germany, is already shifting public and policy debate and concerns.
As part of her impassioned pitch to Members of European Parliament, Ursula von der Leyen established climate change as the priority for her prospective European Commission, promising to deliver a European Green Deal – in her first 100 days – able to make Europe the first climate-neutral continent by 2050. According to Ursula von der Leyen, the deal is good for Europe, and for the world.
It is good for Europe because deep decarbonisation represents a historical occasion to modernise its economy, revitalise its industry and ensure long-term growth and jobs. It is good for the world, because it shows that pursuing climate neutrality by 2050 is not only technically and economically possible, but also politically rewarding. And this is of paramount importance, as scientists have shown that achieving climate neutrality within that time frame is the only sensible way to limit global warming to 1.5 degrees Celsius, and therefore to protect the world from the more dramatic impacts of climate change.
Von der Leyen’s plan does not lack ambition. It already contains about 20 different policy proposals, spanning from the creation of a Sustainable Europe Investment Plan, to the introduction of a carbon border tax as well as the partial transformation of the European Investment Bank into a climate bank and the adoption of a new industrial policy for Europe.
Kirsty Hughes, Director of the Scottish Centre on European Relations, argues that a Green New Deal can gel the domestic and neighbourhood policies of the union. She noted that support for a Green New Deal is growing in the EU and in the US. The challenge for the EU is to take this on board and make it the centrepiece of its strategy for the coming five years. The risk is that the union will move too little, holding on to its old, cautious approach to industrial strategy and sustainable development.
It is true that taxing carbon is probably the most effective way of curbing greenhouse gases that cause climate change. But because taxing carbon emissions will raise gasoline and other energy costs for households and industry, it may be the most politically treacherous step any government can take. Undaunted, Europe should forge ahead with an ambitious plan to make the cost of using fossil fuels effectively exorbitant. The economic impact on Europe would be enormous. But Europe’s actions could also have a significant impact on the United States.
Several United States Democratic Presidential Candidates recently endorsed some form of carbon tax at a town hall meeting. But one couldn’t find much about carbon taxes in the various “Green New Deal” plans called for by candidates or members of United States Congress. Instead, most Green New Deal plans unveiled so far have morphed into vehicles to address social and economic inequity issues.
Europe’s greener focus is therefore bold and instructive. It was enunciated recently by the incoming president of the European Commission, Ursula von der Leyen, who when addressing her new team of EU Commissioners said: “I want the European Green Deal to become Europe’s hallmark. At the heart of it is our commitment to becoming the world’s first climate-neutral continent…. I want Europe to be the exporter of knowledge, technologies and best practice”.
Reaching her grand goals will require fundamental changes to the European economy and indeed to Europeans’ way of life. But the price of carbon is already rising again, thanks to the recovering economy and recent reforms in the European Union’s emissions and trading system, the world’s first major carbon market. These reforms reduced the amount of free carbon credits available, propelling the price on carbon up again to €25 to €30 per ton. These increases improve Europe’s chance to fulfil its climate goals.
Jacob Funk Kirkegaard, a Research Associate at the Institute for International Economics strongly argued that for Europe to have a realistic chance of reaching carbon neutrality and for an EU Green New Deal to be anything other than a political fig leaf, a far higher price on carbon will be required in the years ahead.

To be continued..

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