Green transition in EU: vital modern issues

The EU institutions in general and the European Commission in particular have suggested a “European Green Deal”, which had formulated a Union’s strategic policy framework for the EU-27 to push through the transition to green growth. In the latest Special Eurobarometer on climate change (September 2019), about 93 percent of EU citizens considered climate change a serious problem and 92 percent agreed that European economy must be climate-neutral by 2050.

The modernisation process would not only involve sustainability, circular economy, digitalisation and climate change measures, extensive cuts in carbon and fossil fuels emissions would at the same time impose dramatic changes in some industries and manufacturing sectors (some would be abandoned completely) while transforming others and force people to change their regular habits in working and living patterns.

More than that, traditional decision- and policy-making, as well as the whole governance processes would be changed too, thus making the whole process look like a “generational shift”. Some politicians have already made notice of the changes: for example, French President E. Macron referred to the “following the next world” process, while Polish Climate Minister Michał Kurtyka (president of the UN-2018 climate summit) called it a “civilizational challenge” that will require fundamental changes in all spheres of socio-economic development.

More in: https://www.politico.eu/article/europe-climate-goal-revolution-net-zero-emissions/

Financial instruments in mitigating crisis: examples

The so-called “quantitative easing or raw cash” aimed at injecting huge sums to combat numerous critical situations have been quite common in history. Some comparisons could be very useful to understand a “sense of scale”: thus, the US government’s spending on the New Deal (during 1933-1941) has been estimated at about $653 billion in modern dollars. It is, for example, less than Obama’s post-crash stimulus after 2009 financial crisis, although significantly larger on a per capita basis.

Other historic examples: the Marshall Plan for the European post-world war-II recovery exposed about $130 billion in today’s money; the Apollo mission to put the US astronauts on the moon has been worth about $288 billion to the American budget.

In Europe, the “de-carbonizing project” will require combined private and public investment of €230 billion each year during 2031-2050.

However, according to the European Commission, a total of €4.6 trillion over two decades will be needed; as for scale, it is about 18 times the cost of the Apollo program).

For the EU member states in order to really mobilize all the needed resources to reach the “net-zero-2050-goal”, would mean that every corporate decision, any lifestyle choice or a political swing, including numerous aspects of European culture – from annual ski trips, to Champions League football matches, to French cheese and wine, etc. – will need to be tested against these actions’ contribution to reducing emissions and combating climate change.

For example, the European climate legislation imply that every EU law – in the past and in future – is to be tested through its compatibility with the continent’s climate neutrality concept.

These measures for a carbon-neutral Europe are regarded as a “tectonic shift”, which includes that: a) cars and trucks in Europe will be powered by electricity or hydrogen and be made increasingly from carbon fiber; b) age-old modes of haulage (i.e. riverboats, trains, etc.) will be equipped with the modern power sources; c) materials commonly used in modern construction industry (steel, other metals and cement) will be made in novel processes that cut their massive carbon footprints thus completely transforming the buildings’ design as boilers; besides windows and insulation will be replaced.

At the same time, to a certain degree, all these changes would at the same time generate on a huge scale new skills and professions; every producer of goods and services will have to find ways of using recycled materials in a larger scale. Presently, only about 12 percent of materials consumed by European industry have been used before; at a local level, people would be forced to use waste-sorting rituals and more complex waste processing.

Source: Commission press release about the climate law at: https://ec.europa.eu/commission/presscorner/detail/en/IP_20_335

Changing tradition growth patterns

In order to reach the “zero-goal” the citizens, industries and governments will change their traditional habits, working procedures and decision-making. Through carbon pricing and policy nudges, citizens will be coerced or convinced to fly less, eat less red meat and use more trains, buses, trams and bicycles. Some communities will have to remake themselves at the most basic level after the near-total replacement of coal power with renewable or nuclear energy. Agriculture and land management can provide some of the solution. Forests will help take up some of the emissions; farmers’ income will be as connected to the carbon going into their soil as the food coming out.

Hence, carbon dioxide removal manager could be a 21st century job title…

Some things can certainly change quickly: e.g. coal power was 40 percent of the United Kingdom’s electricity mix just eight years ago; the country recorded in 2020 two months without coal power – for the first time since 1882.

But the view is very different in Poland, where 80 percent of the country’s electricity still comes from coal. For 100,000 families in the coal mining region of Silesia, net zero leaves no room for evolution. In December 2019, the Polish government promised the EU governance that it would agree to the Europe-wide 2050 climate neutrality goal, but could not see how it could be achieved at home. The message was simple: the moves to climate-neutral stand needed more EU’s financial support. An average Pole earns half of an average German, average Latvian even less: how can they afford to buy expensive electric cars?

People would stick their hopes on the EU’s “Just Transition Mechanism”, which the Commission says would “mobilize” €100 billion in 2021-27 to help impacted communities “reimagining” their futures. More in:

https://ec.europa.eu/commission/presscorner/detail/en/fs_20_39

The EU’s measures

The EU has already started to modernise and transform the member states economies in line with the perspective climate goals. Between 1990 and 2018, greenhouse gas emissions were reduced by 23%, while the economy grew by 61%. The EU’s comprehensive climate and energy framework for 2030 will bring about further emission reductions across the economy. However, current policies are expected to only reduce greenhouse gas emissions by 60% by 2050 compared to 1990 levels, meaning that much more remains to be done.

As part of a two-step approach, the Commission will first assess and make proposals for increasing the EU’s greenhouse gas emission reduction target for 2030 to ensure its consistency with the 2050 objective. By September 2020, the Commission will present an impact assessed plan to increase the 2030 target to at least 50% and towards 55% compared to 1990 levels in a responsible way, and will propose to amend the climate law accordingly.

To achieve the revised and more ambitious “zero-emission-2030 targets”, the Commission in summer 2021 already propose reviews of the following legal acts: – European Emissions Trading System (EU-ETS) Directive; – Effort Sharing Regulation; – Land use change and forestry (LULUCF) Regulation; – Energy Efficiency Directive; – Renewable Energy Directive; and – CO2 emissions performance standards for cars and vans, etc.

European political guidance of eliminating gases emissions to “net-zero” by 2050 will require a comprehensive modernisation in almost all spheres of socio-economic development in the EU-27 states, and probably will affect the European integration too.

Several other initiatives in preparation under the European Green Deal will also help achieve the objectives of the Climate Law, including making a proposal for a “carbon border adjustment mechanism” for selected sectors, launching a new EU Adaptation Strategy and the European Climate Pact. More in: https://ec.europa.eu/commission/presscorner/detail/en/QANDA_20_336

The Commission will support the mentioned “green policy” goals with the following appropriate funding and financing tools:

  • The European Green Deal Investment Plan, initiated at the end of 2020 to unlock at least €1 trillion of sustainable investments over the next decade to help finance the climate transition; besides, the InvestEU guarantee will support the “greed deal” by de-risking private funds.
  • The European Renewed Sustainable Finance Strategy will aim at redirecting private capital flows to green investments, ensuring that sustainable investments are mainstreamed across our financial system.
  • The Just Transition Mechanism, and its accompanying Just Transition Fund, proposed in early 2020 will support the most affected regions and sectors ensuring the transitions are fair and socially responsible. Both the mechanism and the fund will help the member states to modernise and diversify their economies and alleviate the social and economic costs of the transition.

Actions and ambitions

It has to be underlined that the transition to climate-neutrality will require action in all socio-economic sectors: i.e. from changing generating energy’s practice and producing food to consuming foods, other goods and services, to the employment patterns and jobs, as well as communication and travelling patterns. Ambitious action will help both protect the planet and improve quality of life by acquiring numerous socially important benefits: e.g. cleaner air, water and soil; healthier food, more energy-efficient housing, better transport alternatives and new opportunities for businesses to take the lead in developing clean products and technologies.

This transition will require significant investments: hence the Commission put forward in January 2020 a European Green Deal Investment Plan to mobilise at least €1 trillion of sustainable investments over the next decade, as well as a Just Transition Mechanism to ensure that the transition towards a climate-neutral economy happens in a fair way, with targeted support for the most affected regions.

Modernising and decarbonising the EU’s economy will stimulate significant additional investment. Today around 2% of GDP is invested in the states on modernizing energy systems and related infrastructure, which would have to increase to 2.8% in order to achieve a net-zero greenhouse gas economy; the latter means considerable additional investments compared to the baseline, in the range of €175-290 billion a year.

The following issues shall be taken into account in transformed national political economies concerning agro-sector: – Future vision of biomass, – Biomass market overview with changes in regulations, followed by opportunities in operating biomass power-plants, – Moving towards sustainability in the biomass sector, – Biomass conversion to power with the latest biomass technologies, – Biomass production and conversion methods, – The Role of Climate change in Biomass.

Delivered properly, the promise of the European Green Deal isn’t just a halt to the greenhouse gases warming the world. Many things will be better. The air will be cleaner, work safer, homes warmer, cities more livable. Even Poland has had an ambitious plan to turn the country a world leader in wind energy and electromobility technology. There will be larger, more diverse and healthy environment; at the same time, “the green deal” has huge potentials to foster a sense of common purpose and achievement. Reference to: Matheisen K. 19.06.2020 in: https://www.politico.eu/article/europe-climate-goal-revolution-net-zero-emissions/?utm_source=POLITICO.EU&utm_campaign

Additional reading: = MEMO: Questions and answers on the European Climate Law; = European Climate Law; = 2050 long-term strategy; = European Climate Pact; =European Green Deal

The Covid-19 crisis is a blunt wake-up call for all member states: the pandemic has exposed all fragile and dysfunctional aspects of the EU states’ socio-economic system, including inequalities that have been now reaching unsustainable levels. Globalization and democracy are being challenged from all sides. This outbreak has also accelerated tectonic shifts already well under way in society and the economy (digitalization, sustainable consumption, de-globalization, etc.).

In financing the European SDGs, it has become a top agenda for institutional investors: e.g. after the epidemic impact investing may well become the new standard.

See for example, Ronald Cohen’s new book “Impact, reshaping capitalism to drive real change”, – Ebury Press, Penguin Books, 2020 – on pre-order on Amazon.com).

After pioneering venture capital and private equity, Sir Cohen has dedicated two decades to leading the “impact revolution” to achieve real social and environmental change. His cornerstone book could not be more relevant today, as the dust of the coronavirus crisis starts to settle and massive challenges unfold.

Besides, another issue is an utmost importance; as the Economist (28.05.2020, Bartleby) pointed out, the “working life has entered a new era” and signified a historic-type transformation from a “farewell BC” (before coronavirus) to a “welcome AD” (after domestication).

https://www.economist.com/business/2020/05/28/working-life-has-entered-a-new-era

Tried and tested solutions and approaches with the potential to go to scale and to be replicated elsewhere, making them available to leaders and partners around the globe. These leading examples can help keep the SDGs front and center in the discussions taking place at all levels on the road to recovery, whilst harnessing the momentum of solidarity in fighting COVID-19.

Novel ideas are arising daily to mobilise, inspire and connect communities, so whether your initiative is a pre-COVID example of best practice or in response to the global health crisis, share your story through the application process, demonstrate the impact and let us celebrate the incredible achievements towards a more sustainable and inclusive future for all.

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