The results of the European Elections clearly indicate a shift in peoples’ priorities since 2019, with economic security (cost of living), national security (defence) and national identity (immigration) pushing long term climate and environmental concerns into 4th place. The knee-jerk reaction is to assume the new political order will look to dismantle the Green Deal, Europe’s flagship environmental and economic policy. This is too simplistic and does not reflect the reality that far from unravelling, the Green Deal could now be injected with a much needed dose of economic sense, helping to reverse the bureaucratic muddle that it has become.
What is The Green Deal?
‘The Green Deal’ is one of the original six core European Commission Priorities* for implementation during the 2019-24 term, adopting radical economic change aligned with environmental purpose or:
“…the EU’s growth strategy for achieving a climate-neutral, resource efficient, non-toxic, resilient and competitive circular economy in a just and inclusive way.” (European Commission COM(2022) 357)
It is Europe’s great economic experiment, designed to address the imbalance between member states through redistribution of wealth, levelling-up skills and accelerating fiscal union in the name of climate and environmental action. At its core are seven massively ambitious goals to meet the 2050 Net Zero Transition, now enshrined in The Climate Law.
Issues from the onset:
As the goals emerge from Brussels into the real world, they are exacting an economic and bureaucratic toll, causing elevated friction between lawmakers and industry, resulting in accusations of impractical and heavy-handed implementation, loss of income, increased administrative red tape, and loss of market share to competition in less burdened jurisdictions. Protests from the communities that feel most penalised such as farmers (and consumers) have damaged momentum and forced the EC to delay and retract some of the more controversial mandates.
Summarising The Seven Transition Goals for the Green Deal:
However, a closer look at the components of the Green Deal disclose highly relevant, actionable and even visionary proposals that are tuned towards bolstering economies and improving the blocs ability to compete more effectively with global economic superpowers like the USA and China. The problem is execution, not content. The sheer size of the task, the speed of roll-out and the ballooning bureaucracy accompanying the strategy is stalling progress.
| The Green Deal – December 2019: Achieve climate neutrality, leaving no one behind | |||||||
|---|---|---|---|---|---|---|---|
| Climate Action Plan agenda: | 1. Sustainable/smart mobility | 2. Clean and Circular Industry | 3. Clean, affordable, secure energy | 4. Greener Buildings/Renovation Wave | 5. Nature and Biodiversity | 6. Farm to Fork: New Food Systems | 7. Industrial Action Plan |
| 2030 / 2050 | 2030 / 2035 / 2050 | 2030 | 2030 | 2030 | 2030 | 2030 | 2030 / 2050 |
| Reduce emissions 55% by 2030. | Cut transport related emissions by 90% by 2050 | Production and Consumption | Reduce energy consumption 36-39% | Eur72bn building renovation fund | Expand protected areas on land and sea | Sustainable production | Improve EU competiveness globally. |
| Carbon Neutrality by 2050 | 30m zero-emission vehicles on EU roads | Waste Management | Increase renewable energy mix to 40% | 3% of floor area pa public building renovation | Restore degraded ecosystems for carbon capture | Sustainable Processing | Strengthen EU strategic autonomy (reduce external critical product dependency) |
| Written into Climate Law 2021 | 100 climate neutral EU cities | Secondary Raw Materials (closed loop) | Heating tax (ETS2) | Use 49% renewable energy in buildings | Tackling global biodiversity challenge | Sustainable Consumption | Better support for SMEs and start-ups |
| Double high speed rail traffic | Competitiveness and Innovation -> Green jobs | Target 35m building unit renovations by 2030 | Natural carbon sink. Target 310mt CO2 removal pa | Preventing Food loss & waste | Improving resilience of the Single Market | ||
| carbon neutral travel <500 kms | Boost cleantech market share ex EU | ||||||
| Large scale automated mobility | |||||||
Source: Sustainable Development in the EU – Monitoring report on progress – 2022 edition
Post election fall-out for the Green Deal:
Some observers are already declaring The Green Deal dead as a result of the electoral swing towards a more radical group of climate-sceptics, but the reality is more nuanced due to the extent to which the laws are already in place and rooted to greater economic reform, the fact that the EPP which developed the policy remains the single largest party, and the knowledge that despite voters prioritising emergent concerns for safety and security, climate change remains a clear and present danger to society.
Realigning priorities:
The political shift to the right is therefore likely to wipe some of the troublesome ideological fingerprints left by the Green party, in favour of more compromise and pragmatic solutions that industry can work with. Of the seven Goals above, the three highlighted in red: Mobility, Biodiversity, Agriculture are attracting the greatest ire and are likely candidates for dilution, restructuring and budget reallocation. For example the first thing EPP President Manfred Weber signalled after the elections was the intention to delay the laws phasing out combustion engines by 2035**, aligning himself more closely with the conservatives in the EPP than the liberals/Greens.
Shift the focus to incentives, technology and skills:
The questionable implementation of the Green Deal with its heavy reliance on regulation and restriction is in contrast to the lighter touch incentive-based policies of other developed economies such as the USA:
| USA | Europe |
|---|---|
| Massive investment through the IRA and limited red tape. Develop or acquire technology/skills where possible to accelerate and lead climate solutions. Attract clean tech entrepreneurs and businesses using incentives to rise up in the US and deliver the solutions for them that target long term clean energy replacement over CO2 reduction. | Protectionism, bureaucracy and taxation; CO2 reductions that compromise industry and growth, rather than support it. The message has to shift towards positive change and how the Transition will improve business, profitability, skills and jobs, in which case legal infrastructure erected to support the Green Deal will require substantial review. |
Why should business care?
Like many other European economic or legal initiatives, there is global interest in implementation of the directives to assess the potential for adoption by other regions, as well as the impact they may have on industry and economies outside the EU. The Green Deal has seismic impact on many countries outside the EU because it affects any entity with a presence in or selling goods into the bloc either directly, or indirectly through supply chains for example.
A slimmed down Green Deal aligned with business interests may still achieve the 2050 climate goals, while delivering on the promise of better economic performance, and its commitment to “leaving no one behind” in the process. Reform should be encouraging inward investment, making it a destination for the private sector in competition with the super-powers rather than trading climate goals for talent.
Business will still need to demonstrate ESG awareness to earn the passport to operate in the zone, requiring knowledge and support from experts, but the future rewards may be worth the effort — we will need to watch this space carefully.
For more information on how to build and manage your sustainability strategy to benefit your business and serve your corporate supply chains, contact The Disruption House or email [email protected]
Additional references:
*2019 European Commission Priorities:
- European Green Deal
- Economy that works for the people
- Europe fit for the digital age
- European way of life
- Stronger Europe in the world
- European democracy
