The Problem with Europe's Green New Deal
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- Dec 13, 2019 10:06 pm GMT
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What should one make of Europe’s Green New Deal?
On the one hand, it is a positive development. There is something to be said about the world’s biggest economic bloc pledging to become climate neutral by 2050. But that vision seems to be cloudy, grounded as it is in vague proclamations and riders for members. For example, Poland, a country that is heavily reliant on coal, is exempt from the target and is expected to become climate neutral “at its own pace”.
To briefly recap, Europe plans to become the first climate neutral continent by 2050. It will achieve this goal through a “just transition”, meaning the transition to sustainable sources of energy will be achieved with a focus on economic equality. However, the document announcing the deal and its details is long on ambition and short on specifics.
Consider, for example, the words used to describe targets for Europe’s energy markets. According to the document’s authors, their goal is to make sure that the “European energy market is fully integrated, interconnected, and digitalized while respecting technology neutrality.” That prosaic vision is not qualified with an explanation of the terms involved nor backed by quantitative data to understand the gap between vision and reality.
Despite advances in renewable energy technology on the continent, Europe still meets a majority of its energy needs from fossil fuels. Specifically, 51% of Europe’s current energy mix is derived from fossil fuels while nuclear (23%) and renewable energy sources (13.6%) are second and third respectively. The priority of nuclear versus renewable energy sources for electricity generation is unclear from the document.
There’s also the fact that integration of energy markets has been an ongoing project in the EU since the early 1990s. Increased use of renewables has added wrinkles and an urgency to the effort. But the document does not provide details on steps to accelerate the integration process while renewables are still being integrated into the grid.
Where Will the Funds Come From?
On the all-important question of raising funds to meet its goals, the document proposes levying taxes on aviation and maritime fuels. The Wall Street Journal estimates that the initiative could mop up as much as $16 billion without the UK (which, as is evident from yesterday’s election results, is leaving the EU) and $19 billion with it. That’s not an amount to sneeze at. But the EU Investment Bank (EIB), which will become Europe’s climate bank, is tasked with disbursing funding up to $1 trillion to achieve the goal.
Where will the remaining funds come from? One way to achieve this goal is through the sale of green bonds for products or services deemed ‘sustainable’. But there are already rumblings of discontent about the definition of “sustainable” and “green”. According to a Reuters report, a bunch of countries, which includes the likes of Britain and France, are opposing the rules that define which financial products can be labeled ‘green’ or ‘sustainable’. Their main concern is that nuclear and coal might lose on funding, if they are excluded from the list.
To be sure, the optics of having Europe target a green new deal is an achievement for sustainability activists. Just like their counterparts across the pond, however, the authors of the European version of the deal have skimped on the details, leaving out the hard part for later.