“This is Europe’s man-on-the-moon moment.” This is how European Commission President Ursula von der Leyen presented the Green Deal, a plan of policies and laws aimed at reducing to zero the negative climate impacts of European economy by 2050. It was December 19th, 2019. Four and a half years later and while European voters are heading to polls to elect the new European Parliament, the Green Deal is a rich system of laws.

Meanwhile, the world has changed. The pandemic, the war in Ukraine and the energy crisis, inflation, the competition between China and the United States in an increasingly tense international system: all these dictate new priorities on Europe. Above all, business competitiveness, economic security and defence.

The domestic context has also changed. Far-right parties, highly critical of Green Deal costs and bureaucracy, are on the rise. Citizens are more concerned about the rising cost of living today than about climate effects arising in a few years. Many argue that these factors will challenge the climate agenda for the attention of policymakers and the availability of resources.

On the other hand, growing in green technologies will be crucial to compete with China and the United States. In short, despite the appearances the EU climate agenda may remain a priority, but framed within a broader perspective geared towards competitiveness and economic security. Irina Kustova, Research Fellow at the Centre for European Policy Studies, is convinced of this: “The Green Deal will have less visibility, but it will not undergo significant changes,” she explained to Renewable Matter. "The main elements, such as the 2050 climate neutrality target, are law and it is unrealistic to think that new political balances will repeal these regulations. Rather, we might see some kind of rebranding based on the new priorities."

A more pragmatic Green Deal for a more competitive Europe

Cleantech - that is, the set of technologies used in batteries, electric cars or renewable energy, functional to the energy transition - is one of the areas of competition between China and the United States, which are spending heavily on public incentives to support local production and control of raw materials. According to former Italian Prime Minister Mario Draghi, who is working on a report on competitiveness, the European economy must grow, be more efficient and supported by more powerful investments in order to keep up with competitors. From this perspective, It is essential to reduce fragmentation among member states, for example through investment and/or spending pooling and the creation of synergies between national production systems and an improved infrastructural connection, starting with electricity grids.

“In the coming years, the Green Deal will become more realistic and pragmatic,” Kustova predicts. "What is needed is to make new technology development projects safe and profitable. At the national level, we need to simplify and speed up procedures for granting new plants, a sore point for renewable energy. The European Union could also facilitate the formation of professional knowledge and skills at the local level." These elements are contained in the Net-Zero Industry Act, which requires member states to simplify and speed up bureaucratic procedures for projects in strategic technologies, among other things. It is difficult for Europe to have an influence through such measures alone, which leave wide discretion to national governments and do not allocate resources. The next few years will be crucial in trying to define a more common, more comprehensive and better-funded green industrial plan.

Figure adapted from: European Commission (2020). Action Plan on Critical Raw Materials, via Hertie School Jacques Delors Centre

Securing critical raw materials

Leading globally in green technologies also requires control over components and raw materials (the so-called critical raw materials, such as copper and cobalt). The European Union's subsurface is rather poor in these and much of the supply depends on imports (often as much as 90 percent of requirements), with scarce control capabilities on the continuity of supply. The European position is even more fragile if considering that tension between China and the United States has already resulted in export restrictions on critical raw materials. On the other hand, the war in Ukraine has forced the need to eliminate dependence on Russian fossil fuels.

These difficulties can become a valuable opportunity to advance the climate agenda. “The uncertainty related to the war between Russia and Ukraine will lead to a 'securitization of priorities,' meaning a redefinition of the European Union's political priorities based on defence and security”, Szymon Kardaś, Senior Policy Fellow at European Council on Foreign Relations, said to Renewable Matter. “After the invasion of Ukraine, it was very important for the European Union to put itself in a position to be less dependent on Russian fossil fuels.” Of course, in a greener economy the EU will be even more dependent on critical raw materials, but for Kardaś it is not the same kind of dependence. “Critical raw materials can be used for decades once imported, and the European Union is doing a good job of strategic planning with the goals included in the Critical Raw Material Act, for example, on limiting dependence on individual supplier countries and on recycling levels.”

Szymon Kardaś

Weapons or batteries?

What might compete for resources with the energy transition is the need – emerged with the war in Ukraine ‒ for European states to strengthen their defensive arsenals and to do so in a common way. It is difficult to do both with national and EU budgets. “Certainly, the EU will do what it can to create an enabling environment for member states to spend on both defence and transition,” Pietro Candia, Senior Analyst for the consulting agency Forefront Advisers, tells Renewable Matter.

"For example, in assessing the budgets of states that are in the deficit procedure. However, these are palliatives. Highly indebted states will only be able to spend more through common European debt programs, such as the Next Generation EU, which is not however as popular as it was four years ago." There is much discussion in Brussels these weeks about how to stimulate private investment, but there is much scepticism over the willingness of national governments to give up power to Europe.

Pietro Candia

The future of the European Green Deal

So far, the Green Deal has focused on the energy transition, mainly by setting targets and making emissions increasingly expensive. The second priority has been promoting greater transparency on sustainability practices of companies and investors through reporting requirements. On both sides, many laws have already been introduced. “The next legislature will be focused on implementation, namely, to decide how to achieve the targets, for example on renewable energy development,” Kustova predicts. Here, much will depend on the will of national governments. "Work will be needed also to ensure greater consistency in the regulatory system, for example by eliminating repetitions or inconsistencies between laws. Many companies complain that the new reporting requirements are too complex and burdensome: this issue will also need to be addressed." According to Candia, the European Commission will place greater emphasis on the circular economy: “No longer seen only as an environmental issue, but as a means of securing supplies of materials and components. There is talk in Brussels about an EU Resources Law that could set European and national targets on the use of natural resources."

“A priority is to develop a clear and honest narrative about the Green Deal's regulations in relation to the EU's strategic challenges and priorities”, Kardaś claims. “Until now, the European Union has not been able to convey its benefits." The three experts stressed the importance of power grids: “Another priority is to develop and modernize the networks for the transmission and distribution of electricity. A more modern and decentralized electrical system also reinforces energy security”, Kardaś continues. According to Kustova, “there is a need to make European infrastructure more suitable for electricity distribution, for example with greater capacity to store energy and flexibly feed it back when needed.” Ultimately, an EU that is less ambitious in words will not necessarily be less effective in climate action. Even with other priorities. The real dilemma, still unresolved, is how to finance all of them.

Irina Kustova

 

This article is also available in Italian / Questo articolo è disponibile anche in italiano

 

Cover image: © European Union, 2024, CC BY 4.0. Source: EC - Audiovisual Service

 

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