{"id":5962,"date":"2024-12-19T17:51:17","date_gmt":"2024-12-19T16:51:17","guid":{"rendered":"https:\/\/www.rivistaeco.com\/?p=5962"},"modified":"2024-12-19T17:51:17","modified_gmt":"2024-12-19T16:51:17","slug":"on-the-energy-transition-europe-must-follow-draghis-lead","status":"publish","type":"post","link":"https:\/\/www.rivistaeco.com\/en\/2024\/12\/19\/on-the-energy-transition-europe-must-follow-draghis-lead\/","title":{"rendered":"On the Energy Transition, Europe Must Follow Draghi’s Lead"},"content":{"rendered":"

Europe cannot retreat from its established climate goals. The costs of doing so would be unacceptably high on multiple levels. However, it also cannot allow the green transition to lead to the deindustrialization of the continent, as this would endanger its socio-economic model. The solution lies in aligning decarbonization with competitiveness, starting with the Draghi Report.<\/span><\/i><\/p>\n

The Green Deal is an ambitious project that positions Europe as a global leader in the fight against climate change. It represents a critical challenge for both the continent and the world, particularly as the effects of climate change become increasingly visible and costly. Heatwaves, wildfires, floods, and severe storms are just some of the escalating phenomena that underscore the urgency of accelerating global decarbonization efforts. The energy crisis triggered by Russia’s brutal invasion of Ukraine has added another layer of complexity: reliance on fossil fuels is now recognized as a strategic vulnerability for Europe. It has become clear that the EU’s only sustainable path is to accelerate the green transition, ensuring energy security while reducing the high costs associated with importing fossil fuels.<\/span><\/p>\n

The Evolving Green Deal Must Stay on Course<\/b><\/h3>\n

Initially conceived to address the climate and environmental crisis, the Green Deal has grown into a comprehensive framework encompassing economic competitiveness and security. Through its initiatives, Europe seeks to transform its economy into one that is not only more sustainable but also more competitive on a global scale, while enhancing energy independence. Promoting competitiveness and security alongside decarbonization will remain central to European policies over the next five years.<\/span><\/p>\n

A core objective of the Green Deal is to reduce greenhouse gas emissions by 55% from 1990 levels by 2030. Achieving this target requires steadfast commitment to climate policies. Any backtracking would not only extend Europe\u2019s reliance on fossil fuels, with associated economic and security costs, but also disrupt the industrial transformation process. The private sector depends on a stable regulatory framework to make long-term investments.<\/span><\/p>\n

Internationally, weakening climate policies would damage the EU’s credibility, reducing its influence in guiding other nations toward a green transition.<\/span><\/p>\n

Internal and International Challenges<\/b><\/h3>\n

The journey to climate neutrality presents significant challenges. Domestically, the primary issue will be social equity\u2014determining how the costs of the transition are shared. Sectors such as construction, transportation, and agriculture will need to address who shoulders these costs. Mechanisms for compensation and targeted support must ensure that vulnerable citizens and sectors are not disproportionately burdened, maintaining social consensus for the transition.<\/span><\/p>\n

Internationally, Europe must contend with competition from countries not pursuing decarbonization as aggressively. The question is how European industries can avoid being disadvantaged by competitors operating under less stringent climate standards.<\/span><\/p>\n

The solution lies in an integrated approach to the energy transition that balances three key objectives: decarbonization, competitiveness, and security. Europe must demonstrate that phasing out fossil fuels can coincide with sustainable and inclusive economic growth, ensuring the social and political support needed for the transition\u2019s long-term success.<\/span><\/p>\n

This delicate balance forms the foundation of the “Clean Industrial Deal,” a new initiative proposed by European Commission President Ursula von der Leyen. This plan aims to align decarbonization with industrial development, fostering reduced emissions while creating new economic opportunities and jobs.<\/span><\/p>\n

From the Draghi Report to the Clean Industrial Deal<\/b><\/h3>\n

The new initiative is necessary because the Commission has struggled to develop a robust green industrial policy in recent years. Legislative measures such as the “Critical Raw Materials Act” and the “Net Zero Industry Act” are partial responses but pale in comparison to the U.S. Inflation Reduction Act.<\/span><\/p>\n

The “Clean Industrial Deal” seeks to become a cornerstone of the new European political agenda, drawing inspiration from the Draghi Report. This report outlines a “Joint Plan for Decarbonization and Competitiveness,” providing a roadmap for a new European industrial strategy. Mario Draghi\u2019s report emphasizes that for the green transition to be politically sustainable, it must not lead to deindustrialization. Instead, the strategy should focus on creating jobs.<\/span><\/p>\n

Draghi’s plan combines horizontal and vertical actions. <\/span>Horizontal actions<\/b> aim to establish the necessary framework conditions to foster investment in clean technologies, while <\/span>vertical actions<\/b> target the specific challenges faced by individual sectors.<\/span><\/p>\n

Horizontal measures include the full implementation of the European single market, better coordination of industrial, competition, and trade policies, mobilization of significant investments through new European financing instruments, and enhanced coordination of industrial policy at the EU level to address the fragmented approach that has so far hindered economies of scale.<\/span><\/p>\n

Vertical actions concentrate on critical sectors such as renewable energy, steel, cement, chemicals, and automotive. The report emphasizes the importance of addressing the delicate balance between decarbonization and competitiveness on a sector-by-sector and technology-specific basis. For example, Chinese solar panels and electric vehicles are crucial for Europe’s decarbonization efforts but present challenges to its competitiveness and economic security. Draghi proposes avoiding drastic actions, such as barring Chinese green technologies from the European market (as the U.S. has done). Instead, the adoption of targeted and strategic green industrial policies tailored to each sector is recommended. In the solar panel industry, where Europe lacks competitive manufacturing capacity, Draghi advocates keeping the European market open to low-cost Chinese imports, enabling faster adoption of renewable energy and lower energy costs. Conversely, for sectors like wind turbines and automotive\u2014where Europe possesses competitive industries\u2014Draghi suggests enhancing support for European companies, including the introduction of minimum quotas for European products in public procurement.<\/span><\/p>\n

According to the Draghi Report, to establish a level playing field and protect nascent European industries, the EU must not hesitate to employ trade policy tools, such as tariffs, when appropriate. This approach aligns with the EU’s October decision to impose steep tariffs on Chinese electric car imports.<\/span><\/p>\n

The international dimension of the “Clean Industrial Deal” must not be overlooked. Achieving the triple goal of decarbonization, competitiveness, and security requires better integration of internal and external policies than what was achieved under the Green Deal. The international implications of European climate policies are exemplified by the controversies surrounding two measures: the EU Carbon Border Adjustment Mechanism (CBAM), which entered its pilot phase in October 2023, and the EU deforestation regulation, whose implementation has been delayed by the Commission for one year. Meanwhile, geopolitical tensions and the global “race” for clean technologies underscore the risks of reliance on supplier countries with dominant positions in critical materials and components, such as China.<\/span><\/p>\n

Additionally, several European Commission directorates are already involved in collaborations with third countries through initiatives like Energy Partnerships, Green Partnerships, Strategic Partnerships for Critical Raw Materials, and the Global Gateway. However, these projects suffer from isolated management and a lack of an integrated approach spanning the entire value chain of clean technologies. A more comprehensive and effective framework for green industrial collaboration with non-EU countries could stem from the new “Clean Trade and Investment Partnerships” outlined in the 2024\u20132029 policy guidelines by President von der Leyen. These partnerships could unlock private sector investments in new supply chains, bolstered by public financial guarantees, technical assistance, updated public procurement rules, and innovative measures such as guaranteed purchase agreements. However, the success of this initiative hinges on clear governance to prevent duplication and fragmentation. It must serve as a fully-fledged external arm of the “Clean Industrial Deal.” Whether this vision will materialize remains uncertain.<\/span><\/p>\n

The Draghi Report’s recommendations offer the Commission a credible foundation for advancing the “Clean Industrial Deal.” This is a promising development, as far more decisive actions will be required in the coming years to enable the EU to effectively merge decarbonization with competitiveness, both at home and on the global stage. The future of Europe\u2019s green transition\u2014and the sustainability of its socio-economic model\u2014depends on the success of this challenge.<\/span><\/p>\n

Simone Tagliapietra is a senior fellow at the Bruegel Institute in Brussels and a professor at the School of Transnational Governance at the European University Institute in Florence.<\/span><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

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