PARIS – After doing so much to elevate the global climate debate to the highest diplomatic levels, the European Union and the main governments of the Member States will soon be faced with a fundamental paradox. The world’s leading player and author of climate change standards are heading into a year of murderous and protracted political struggle to achieve its own climate ambitions.
On July 14, with fanfare, the European Commission unveiled one of the most important climate policy responses since the signing of the Paris Agreement in 2015. The Commission’s Fit for 55 plan proposes a bold plan to reduce greenhouse gas emissions by 55%. by 2030, on track to achieve net zero emissions by 2050. With a precise set of policy proposals tailored to different geographies, social systems, energy mixes and wealth levels, the plan is truly impressive, clearly demonstrating how the EU Green Agreement will work in practice.
Unlike its American counterpart, the European Green Deal was not born out of popular activism. Although this is a response to the demands supported by voters in the last European elections, it is an initiative based on the EU executive. To its credit, the committee has succeeded in mobilizing the necessary technocratic and legislative expertise faster than any other institution in the world. And because the EU’s Green Agreement will define economic policy in the world’s largest single market, it has the potential to set new standards globally, shaping the contours of the future net zero economy.
The EU has been exercising this kind of soft power for years in areas such as vehicle emissions, device efficiency and many other critical areas. As the EU’s green deal continues to take shape, this ‘Brussels effect’ could plausibly extend to other technical issues such as electric vehicle standards, thus accelerating the move away from the combustion engine. internal (ICE) in the world, in conjunction with Europe’s 2035 target. phasing out of ICE vehicles.
The Fit for 55 package is both concrete and already funded, at least in its early stages. Together with the EU’s target of achieving 40% renewable energy in its energy mix by 2030, the plan’s emissions targets send a clear signal to other advanced economies: they too must see bigger and raise their ambitions.
The EU is also a world leader in sustainable finance. Its taxonomy for sustainable activities will provide urgent clarification on what counts as a âgreenâ investment. By codifying new standards, EU taxonomy is likely to influence capital markets globally.
European diplomats have long excelled at encouraging other great powers to step up their own climate ambitions. In this sense, the implementation of the Green Deal will be a major test for Europe. With Sino-U.S. Tensions at record highs, it remains to be seen precisely what role Europe will play in the next phase of climate diplomacy. Much will depend on its ability to bring together a single, integrated European voice, rather than passively relying on the existing bilateral and trade relations of its member states. To use its weight on the world stage, Europe must act as a single block. But can he?
The challenges ahead
For the first six months of 2022, France will hold the presidency of the European Council (coinciding with its own presidential and legislative elections in April and June, respectively). Its success will require a delicate touch to balance the different interests and adapt to the departure of German Chancellor Angela Merkel from European politics.
One of France’s main tasks will be to defend the Fit for 55 package at home and among Member States. To ‘bring the Green Deal home’ it must help translate the objectives of the commission into a wide range of national policy contexts.
Navigating these political challenges will not be easy. But European leaders must retain a simple proposal: the Green Deal is an invitation to rethink the social contract. Rather than being imposed as a single policy, the Green Deal should be presented as an agreement between the citizens themselves. Because it calls for legislation, it represents an opportunity for an open debate on crucial issues of social justice and equity. Meanwhile, the wave of support for climate action is only getting bigger. Tellingly, a recent poll in France showed that nearly 9 in 10 right-wing voters believe the environment is a multi-party issue, adding to a cascade of similar findings across the continent.
One model to consider is the French Citizens’ Convention on the Climate, which was organized in response to the yellow vests (yellow vests) protests in 2018. While the commitment of the French government to the convention’s proposals has been uneven, polls show that almost all of them are supported by most of the country. In this result, we see the obvious institutional hurdles that need to be overcome, but also the untapped potential. Other like-minded efforts, notably in Ireland, Scotland and beyond, as well as an upcoming global initiative, are further signs of momentum for democratic innovation.
As the energy crisis plaguing much of Europe has shown, concern about carbon pricing is already high, even when it has only contributed marginally to the problem. Implementing Fit for 55 will raise these questions time and time again. Policymakers will face difficult questions and trade-offs whenever higher carbon prices are extended to sectors that directly affect citizens’ wallets, such as transport and heating. Combine these challenges with the task of re-qualifying entire segments of the European workforce, especially in the more fossil fuel intensive economies, and the contours of Europe’s coming political battles can already be seen.
At the heart of the matter is the debate over borrowing and debt. Managing the common and sovereign debt of member states will remain one of the most important – and most difficult – political issues on the European agenda. As the clouds of the pandemic begin to clear in Europe, there will be pressure to revert to previous fiscal rules limiting member states’ debt-to-GDP ratios. The battle lines are already drawn. While countries like France, Italy and Spain are in favor of relaxing the rules, a “frugal” bloc – led by Austria and backed by the Netherlands, the Czech Republic and Sweden – s strongly opposes such revisions.
Either way, the pursuit of economic growth in Europe will have to be very different from what is envisioned in current models. A net-zero model raises many important questions. What will the new growth path look like? Will private consumption have to fall? Will investment, especially public investment, play a more important role? If so, where will these resources come from?
Clearly, European governments will have to reconcile an investment program capable of implementing the Green Deal with a viable plan to consolidate deficits. This means that we will have to reconsider the very meaning of borrowing and debt – starting in the coming year.
At the height of the COVID-19 crisis, EU member states have shown genuine solidarity with each other in their commitment to increase public spending, largely funded by pooled debt. The stimulus fund was a historic breakthrough. But the coming political contest will put Europe to the test – in order of magnitude.
There are obvious reasons to exclude climate investments from the calculation of the debt-to-GDP ratio and to rethink short-term budgetary rules when the real priority is to preserve the planet for future generations. The net-zero transition is an extraordinary challenge. But now is also the time for Europe to shine. Let’s make the most of it.
Laurence Tubiana, former Ambassador of France to the United Nations Framework Convention on Climate Change, is CEO of the European Climate Foundation and professor at Sciences Po, Paris. Â© Project Syndicate, 2021
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