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The Green Deal will make or break Europe

Posted By on December 16, 2019 @ 11:10

European Commission President Ursula von der Leyen’s ambition to lead a ‘geopolitical commission’ has faced its first big test. European heads of state met last week to discuss her proposed European Green Deal, a sweeping project that could either unite the European Union and strengthen its position on the world stage, or generate a new intra-European political cleavage that leaves the bloc fractured and vulnerable.

The need for concerted action is clear. The Green Deal is a response to accelerating climate change, which poses an existential threat not just to Europe but to the entire planet. The problem doesn’t observe national borders, and thus requires collective global action. But the transition to a carbon-neutral economy also offers far-reaching opportunities. With the right strategy in place, Europe can boost its own technological innovation and deploy carbon pricing and other fiscal policies to protect European labour markets from being undercut by lower-cost production in China and elsewhere.

Moreover, through the European Investment Bank, the EU already has a tool for mobilising massive stores of capital for investments in infrastructure, research and development, and other essential areas. And, as Adam Tooze has argued, by issuing green bonds and other ‘safe assets’, Europe can secure greater economic dependence from other powers and start to establish the euro as a global currency.

But alongside this positive vision are more dystopian scenarios in which the climate-policy debate creates geographic and socioeconomic divisions and fuels a populist backlash. Although climate change touches everyone, its effects are asymmetric, as are the costs of undertaking a transition to a carbon-neutral economy. The danger for Europeans is that the unequal distribution of the costs and opportunities will fuel a culture war between east and west, urban and rural, and so forth.

This European debate is an echo of a broader global challenge. Many Eastern European countries still depend heavily on coal for energy generation, and thus fear that the push for carbon neutrality is an underhanded form of protectionism by advanced economies like Germany. Poland’s energy minister, Krzysztof Tchórzewski, dismissed as ‘a fantasy’ the notion that Poland—which relies on coal for 80% of its electricity—could achieve carbon neutrality by 2050, and estimated that the costs of such a transition would approach €1 trillion. For now, Warsaw has secured an exemption; all other heads of state agreed to move forward with the plan. The next leaders’ summit is scheduled for June 2020.

But, in addition to the east–west divide, the Green Deal could also create political rifts within every EU member state. French President Emmanuel Macron has tried to position France as a global climate leader. But his government’s attempt to raise taxes on fuel last year backfired when millions of gilets jaunes, the ‘yellow vests’, took to the streets in protest late last year.

The European Council on Foreign Relations has conducted in-depth polling to understand policy preferences across Europe, and we have found climate policy to be a particularly divisive issue. On the surface, around two-thirds of Europeans in most countries polled think that tackling climate change should be a priority, even if it means curtailing economic growth. But up to one in four people don’t think that climate change is a real threat and are far more worried about Islamic radicalism and the rise of nationalism.

The gilets jaunes aren’t an isolated phenomenon. Recent elections have shown how a program like the Green Deal could become a useful punching bag for populists and parties like Alternative für Deutschland (AfD) in Germany and Rassemblement National (National Rally, formerly the National Front) in France.

Critically, once you move from asking people whether climate change is a problem to how it should be addressed, concerns about socioeconomic fairness and the distribution of costs prove hugely divisive. Even in the European Parliament, where 62% of MEPs were elected on green-inspired platforms, only 56% agree that the EU should be pursuing a rapid transition to a low-emissions economy. And only one-third of MEPs are prepared to take tough action against companies with large carbon footprints.

Generally speaking, then, there are two possible futures for European climate policy. The Green Deal could become Europe’s chief new cause, lending momentum to European integration and strengthening the EU’s global position vis-à-vis China and the United States. Or, it could become the next ‘refugee crisis’, a singularly potent issue that divides Europe between east and west, and that mobilises populist forces within countries across the bloc.

To make the first scenario more likely, EU leaders need to listen less to moralists like the young climate activist Greta Thunberg, and more to pragmatic realists who understand that paying off reactionary forces has long been part of the price of progress. The only way to shepherd the Green Deal to successful implementation will be to offer large fiscal transfers to the laggards, so that they, too, will have a stake in the clean-energy transition. Without European unity, there can be no effective European response to climate change.

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[1] ambition: https://www.project-syndicate.org/commentary/von-der-leyen-geopolitical-european-commission-by-mark-leonard-2019-11

[2] European Green Deal: https://ec.europa.eu/commission/sites/beta-political/files/political-guidelines-next-commission_en.pdf

[3] mobilising: https://www.project-syndicate.org/commentary/eib-green-new-deal-by-werner-hoyer-2019-11

[4] Adam Tooze: https://www.project-syndicate.org/columnist/adam-tooze

[5] argued: https://foreignpolicy.com/2019/07/20/why-central-banks-need-to-step-up-on-global-warming/

[6] dismissed: https://www.euractiv.com/section/energy-environment/news/poland-stokes-dispute-over-net-zero-emissions-price-and-meaning/

[7] 80% of its electricity: https://www.eia.gov/beta/international/analysis.php?iso=POL

[8] Emmanuel Macron: https://www.project-syndicate.org/columnist/emmanuel-macron

[9] polling: https://www.ecfr.eu/article/commentary_taking_on_climate_change_the_new_east_west_divide

[10] prove hugely divisive: https://speakerdeck.com/ecfr/seven-challenges-for-von-der-leyen

[11] Greta Thunberg: https://www.project-syndicate.org/columnist/greta-thunberg

[12] pragmatic realists: https://www.project-syndicate.org/commentary/climate-change-economic-growth-by-daron-acemoglu-2019-11