{"id":3137,"date":"2024-06-26T18:03:26","date_gmt":"2024-06-26T16:03:26","guid":{"rendered":"https:\/\/www.rivistaeco.com\/?p=3137"},"modified":"2024-06-26T18:03:26","modified_gmt":"2024-06-26T16:03:26","slug":"what-will-remain-of-the-european-green-deal","status":"publish","type":"post","link":"https:\/\/www.rivistaeco.com\/en\/2024\/06\/26\/what-will-remain-of-the-european-green-deal\/","title":{"rendered":"What will remain of the European Green Deal?"},"content":{"rendered":"

The European Union has always been one of the leaders in the fight against climate change. The Green Deal, with its ambitious goals, is proof of this. However, to continue along the path of decarbonisation, the new Commission will also need to pay attention to the economic and social fallout.<\/span><\/i><\/p>\n

Decarbonising economies is necessary: this has been known for some 50 years and has been officially recognised at least since the early 1990s. However, it is only in recent years that climate change and energy transition issues have consistently been included on the political agenda of governments and in daily communication.<\/span><\/p>\n

The Union at the forefront of decarbonisation<\/b><\/h3>\n

Europe has always been at the forefront of the fight against climate change, from the Kyoto Protocol to the Paris Agreements. To achieve the decarbonisation goal, at the beginning of her term in December 2019, Commission President Ursula von der Leyen presented the European Green Deal, described as a tool to make Europe more competitive and innovative, not just more sustainable.\u00a0<\/span><\/p>\n

It is not yet clear which majority will support the new European Commission. However, especially in the right-wing parties\u2019 election campaigns, intentions to make Europe more cautious on the decarbonisation front have become explicit. This raises the legitimate question of whether the European Green Deal should be relaunched, revised or even abandoned.<\/span><\/p>\n

The Green Deal: from enthusiasm to doubts<\/b><\/h3>\n

To get an idea of the scope of the Green Deal, it is enough to recall that it includes the fight against climate change, the supply of clean, safe and affordable energy, efficient use of resources, the circular economy, the reduction of pollutants including local ones, the protection of ecosystems and biodiversity, a healthy and environmentally friendly agri-food system and sustainable mobility. Its implementation has entailed a long series of measures, new directives, and revisions of existing ones, regulations, developed along a five-year roadmap that also encompasses industry, finance, research and innovation, businesses, soils and cities. At the heart of it all is the law that came into force in July 2021 on climate neutrality to be achieved by 2050.<\/span><\/p>\n

Structure and objectives of the Green Deal<\/b><\/p>\n

\"\"
Source: European Commission.<\/figcaption><\/figure>\n

\u00a0<\/span>The European Green Deal has been appreciated and supported by the entire political spectrum. And the results are evident: European emissions were reduced by 15.5 % in 2023 and may decrease even more in 2024, a potential record year for renewables; the emission reduction target of 55 % by 2030 is within reach, and projections show an 88 % reduction by 2040. As the International Energy Agency recently documented, the EU is the only region in the world where, despite a 66% increase in GDP, CO2 emissions have decreased by 30% compared to 1990. In the other countries, emissions have not fallen below the level of that period; on the contrary, in some they have continued to increase. It is therefore difficult to argue that Europe\u2019s climate policies have not been effective.<\/span><\/p>\n

GDP and GHG (Greenhouse Gas) emission trends in the European Union between 1990 and 2050<\/b><\/p>\n

\"\"
Source: ResearchGate.\u00a0<\/figcaption><\/figure>\n

Despite the support of political forces at the European and national level and the trust it received from the public, the Green Deal has faced two major shocks: the Covid-19 pandemic and Russia\u2019s invasion of Ukraine. Apart from the effects on energy prices and on household and corporate budgets, the war suddenly brought the issue of energy security and thus that of dependence on Russian gas back into the spotlight, with the need, especially for countries like Italy, to geographically diversify supplies.<\/span><\/p>\n

The European Commission responded to both events by, on the one hand, accelerating the implementation of the Green Deal through the presentation of the Fit for 55 package in July 2021 and, on the other, addressing the issue of energy security and dependence on Russia with the RePowerEU plan of May 2022.<\/span><\/p>\n

Fit for 55 is characterised by an ambitious scope, raising the emission reduction target from 40% to 55% by 2030. Among the key measures are the revision of the ETS (Emission Trading System), the introduction of the ETS2 (operational from 2027) to manage emissions from buildings and road transport, and the Carbon Border Adjustment Mechanism (CBAM) to prevent efforts to reduce domestic emissions from being offset by an increase in emissions outside the EU (currently in the transitional phase and operational from 2026).<\/span><\/p>\n

Emission Trading System<\/b><\/p>\n

The European Union Emissions Trading System was adopted by the European Union to achieve CO2 reduction targets in major industrial sectors and aviation. The mechanism sets an overall cap on emissions allowed on European territory in the sectors concerned, corresponding to an equivalent number of \u201callowances\u201d that can be bought\/sold in a specific market. Each industrial\/aircraft operator active in the sectors covered by the system must \u201coffset\u201d its actual emissions (verified by an independent third party) on an annual basis with a corresponding amount of allowances.<\/span><\/p>\n

Carbon Border Adjustment Mechanism<\/i><\/b><\/p>\n

The <\/span>Carbon Border Adjustment Mechanism<\/span><\/i> is a carbon tax imposed on goods imported from countries outside the EU with less stringent climate regulations. It ensures that imported goods account for embedded CO2 emissions.<\/span><\/p>\n

Despite the Commission\u2019s activism, the pandemic and the war have had major consequences. Starting with a slowdown on globalisation, manifested by a gradual loss of competitiveness in certain sectors and sometimes in outright deindustrialisation. The Russian invasion and the tensions with China have exacerbated this context, triggering processes of localised globalisation, re-industrialisation and protectionist measures, examples of which are the Net Zero Industry Act and the Critical Raw Materials Act (discussed in the second issue of <\/span>eco<\/span><\/i>, editor\u2019s note).\u00a0<\/span><\/p>\n

The radical transformations that the Green Deal entails have clearly raised the issue of who will bear the cost of climate policies, both among member states and within each country.\u00a0<\/span><\/p>\n

The most controversial measures<\/b><\/h3>\n

Meanwhile, with the election deadline approaching, the European Commission stepped up its efforts by approving various measures. But concerns about the social costs have also grown, resulting in criticism and scepticism from centre-right parties and discontent or street protests from civil society.<\/span><\/p>\n

Among the most controversial decisions is the ban on the sale of new cars with endothermic engines from 2035, which together with the ETS2 affects both the automobile industry and motorists themselves. At the same time, the \u201cgreen homes\u201d directive with its articulated and stringent energy efficiency regulations for buildings (reduction of residential buildings energy consumption by 16% by 2030 and 20-22% by 2035; 55% of this reduction is to be achieved by renovating 43% of the worst performing buildings) has been targeted because of the costs that owners of older homes are likely to incur and those associated with eliminating gas boilers. Farmers have also taken to the streets against measures designed to make the sector sustainable (from the requirement to leave 4% of agricultural land fallow or unproductive to the regulation on the reduction of pesticides, which should halve their use by 2030).<\/span><\/p>\n

As a result, the Commission had to partially backtrack on these measures: an exception was made for synthetic fuels, as Germany wanted, but curiously not for biofuels as Italy requested. The building regulation is more flexible than earlier versions, and discussions continue. The implementation of the measures on fallow agricultural land and pesticides has been postponed.\u00a0<\/span><\/p>\n

These measures had noble aims, but the disappointment they caused is an indication of a growing unease with Brussels.<\/span><\/p>\n

Towards a new approach<\/b><\/h3>\n

The mood has therefore changed compared to the initial momentum. But since decarbonisation is an undisputed goal and the energy transition cannot and will not stop, the Green Deal will have to be reaffirmed and relaunched in a form that still puts growth at the centre, while adopting a more flexible and inclusive approach that is aware of the demands of civil society. The same awareness needs to apply to the demands of the industrial and agricultural sectors, exposed to issues such as competitiveness and the fate of traditional industries, and which must contend with higher energy and labour costs and more stringent environmental standards.\u00a0<\/span><\/p>\n

Hence the call for a less dirigiste approach than that taken so far, which at times seemed to border on dogmatism. In implementing the measures, operators must be given time to familiarise themselves with the new rules and adapt, possibly by using incentive-based mechanisms. In the case of road transport, for example, there is already a trend towards decarbonisation, with the aggressive penetration policy of American and Chinese electric cars, likely making the ban on selling cars with internal combustion engines unnecessary. What is more, the measure does not address emissions from the existing fleet, for which incentive and disincentive measures would be more effective. And it seems to deny European car manufacturers the necessary time to adapt to the new standards.<\/span><\/p>\n

A significant part of the industry is calling for a new Green Industrial Deal for competitiveness and the relaunch of the single market, with a decisive strengthening of the areas where Europe has a solid comparative advantage. A crucial role in this perspective is played by finance, as many Green Deal and Fit for 55 targets do not appear to be supported by adequate funding, despite the Just Transition Fund and the Social Climate Fund – both instruments aimed at providing support to the most vulnerable territories and groups in the new system -, which will need solid legs to stand on.<\/span><\/p>\n

It is also necessary to focus on the \u201cjust transition\u201d, on the inclusiveness of the decarbonisation actions, on the technological, employment, industrial and social spin-offs of the measures. In a word, the goals must certainly be confirmed, but the means must be partly revised or at least more carefully assessed.\u00a0<\/span><\/p>\n

It is possible that this is primarily a communication problem. But even if that were the case, the new Commission will have to work hard. If over 70 % of European citizens believe that the risks of climate change are high, the weight of parties promoting climate scepticism or slowing down the transition should not increase. The message of the cost of policies should not reach the public before the benefits do. As the damage from extreme events becomes more apparent, the economic and social benefits of innovation, the potential of new industrial sectors, and the broader job opportunities they create should be more strongly emphasised.\u00a0<\/span><\/p>\n

It must be communicated more effectively that, as the data show, decarbonisation can be achieved while maintaining growth and prosperity.<\/span><\/p>\n

The European Green Deal must therefore be fully reaffirmed, but with an eye to the economic and social fallout, the implications for industry and employment, and an awareness of risks that until yesterday we considered non-existent or unlikely.<\/span><\/p>\n

Even on the international front something needs to be revised. European emissions account for 7-8% of global emissions, a small fraction. Far more important are those of countries that today have only one aspiration: to grow and then grow again to lift themselves out of poverty and improve their citizens\u2019 standard of living. They cannot do this without energy, and today\u2019s energy is still fossil-based. To transition them to the energy of tomorrow, they need help, and the way to do that is called finance. The EU should then champion a broader programme of more substantial financial aid involving all major countries and starting to deliver on climate commitments, beginning with the Green Climate Fund, established to assist developing countries in responding to climate change. It is a programme that would bring growth, prosperity and stability for all.<\/span><\/p>\n

 <\/p>\n

Bio<\/em><\/p>\n

Marzio Galeotti<\/strong> is a full professor of political economy at the University of Milan. He is the director of scientific research at the Fondazione Eni Enrico Mattei.<\/span><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

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