Managing low-carbon economy: main priorities and controversies

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The main pathways to low-carbon economic development, often called “deep decarbonization” proceed mainly through energy policy and nature conservation, sustainability and governance’s efficiency, etc. In essence, it is about consuming less energy, using available resources more efficiently in construction (both private and public), in transportation and industrial development. 

Background
National and global governance’s systems play a vital role in promoting low carbon political economy by providing guidance and supervision for sustainable growth, green transition and digitalisation. Low-carbon growth requires new “actions” in powerful regulations and economic measures: both for enterprises (as important component in low-carbon economy) and scientific community under the priority’s guidance and technological feasibility.
Presently, several states around the world, as well as in the EU-27, are exploring the ways modern innovation, entrepreneurship and cutting-edge technologies can promote inclusive and sustainable growth, support industry and workforce transformation, as well as achieving a carbon-neutral future.
There are many strategies and approaches for moving to a low-carbon economy, such as encouraging renewable energy transition, efficient energy use, energy conservation, electrification of transportation (e.g. electric vehicles), carbon capture and storage, climate-smart agriculture, etc.

The EU’s priorities for zero-carbon economy
Making Europe the first climate-neutral continent in the world is a binding commitment under the EU Climate Law. The EU has set these proposals in July 2021 to make all sectors of the EU economy fit to meet this challenge, starting by reducing emissions by at least 55% by the end of this decade. The ‘Fit for 55’ legislation, now fully adopted, sets the EU on a path to reach its climate targets by 2030 in a fair, cost effective and competitive way. This shows that Europe is delivering on its promises made to citizens and international partners to lead the way on climate action and shape the green transition for the benefit of citizens and industries.
The EU now has legally binding climate targets covering all key sectors of the economy; the overall package includes: – emissions reduction targets across a broad range of sectors; – a target to boost natural carbon sinks; – an updated emissions trading system to cap emissions, put a price on pollution and generate investments in the green transition; and – social support for citizens and SMEs.
To ensure a level playing field for European companies, the new Carbon Border Adjustment Mechanism will ensure that imported products will also pay a carbon price at the border in the sectors covered. This is a valuable tool for promoting global emissions reductions and leveraging the EU market to pursue our global climate goals. As a further step on the path towards climate neutrality, the Commission presented its assessment for a 2040 climate target for the EU in February 2024. It recommended reducing net greenhouse gas emissions in the EU by 90% by 2040 compared to 1990 levels, which is in line with recent scientific advice and the EU’s commitments under the Paris Agreement. The European Parliament and the states have discussed these targets, and the next Commission College will put forward a consequential legislative proposal.
Besides, the Net-Zero Industry Act, NZIA presented in March 2023 (as part of the Green Deal Industrial Plan to scale up manufacturing of clean technologies in the EU) is aimed at creating “green jobs” and make sure the Union is well-equipped for the clean-energy transition. It will create better conditions to set up net-zero projects in Europe and attract investments. The NZIA’s objective: at least 40% of the EU’s annual deployment needs to be satisfied by 2030 by the strategic net-zero technologies.
More in the special Commission’s “low-carbon economy” website and in: https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/european-green-deal/delivering-european-green-deal_en

Cohesion Policy plays an important role in supporting the EU’s transition to a low-carbon economy, in line with the Energy Union strategy. For the 2014-2020 funding period, the rules on the European Regional Development Fund (ERDF) required member states for the first time to allocate a mandatory minimum proportion of the available funding to the low-carbon economy: = 20% of national ERDF resources in more developed regions; = 15% in transition regions, and = 12% in less developed regions.
Source: https://ec.europa.eu/regional_policy/policy/themes/low-carbon-economy_en

The EU member states have gone well beyond this minimum proportion, and €40 billion from the ERDF and Cohesion Fund are now scheduled to be invested in the low-carbon economy during 2014-2020 (twice the amount spent in this area during the previous funding period).
This will help Member States, regions, local government and cities to implement much needed investments in energy efficiency in buildings, renewable energy, smart distribution electricity grids or sustainable urban transport and also in research and innovation in these areas. These investments will help to decrease costly energy imports, diversify our energy sources, tackle energy poverty, cut emissions, create jobs and support small and medium sized businesses.
It is also possible to receive support for investments in sustainable transport and mobility and smart energy distribution, storage and transmission systems under thematic objective on energy and transport.
Reference to: https://ec.europa.eu/regional_policy/policy/themes/transport-energy_en

    Note. Key Commission documents for the mentioned issues: = Financing the energy renovation of buildings with Cohesion Policy funding; = How EU Cohesion Policy is helping to tackle the challenges of climate change and energy security; = Connecting Smart and Sustainable Growth through Smart Specialisation – A practical guide for ERDF Managing Authorities; = Thematic Guidance Fiche ‘Renewable energy and smart grids investments’; = Thematic Guidance Fiche ‘Energy Efficiency Investments’; = Thematic Guidance Fiche ‘Sustainable Multimodal Urban Mobility’; and = Factsheet on the contribution of ESI Funds to the Commission’s priorities: The Energy Union and Climate-change policies. 

Measuring urban accessibility for low-carbon modes
Good urban public transport can reduce congestion, air pollution and greenhouse gas emissions. It can improve a city’s quality of life and strengthen its economy. This working paper measures access to public transport for many European cities using the United Nations Sustainable Development Goal indicator. It shows that in virtually all cities at least 80 % of the population has easy access to public transport. In addition, it reveals that 56 % of an average city’s population has access to at least 10 departures an hour. Access to high-frequency departures is highest in cities with at least 1 million inhabitants and considerably lower in cities with fewer than 250 000 inhabitants, although some cities perform much better or worse than their size implies. A comparison between the population accessible by public transport with the nearby population in 42 cities shows that within 30 minutes people can only reach 24 % of the population living within a distance of 7.5 kilometers. Walking and cycling perform well in cities with dense road networks, higher densities and fewer steep slopes. Finally, the paper provides a set of context indicators to help to interpret the results, including the speed of public transport, vehicle kilometers traveled, building block size and density. To provide easy access to all this information, the working paper is accompanied by city fact sheets which report its various indicators and benchmark them to other cities.
Reference to the Commission’s publication/working paper, 2020. -54 pp in: https://ec.europa.eu/regional_policy/sources/work/012020_low_carbon_urban.pdf

Low-carbon industrial transition: Slovakia’s example
After the political decision to phase out coal mining in Upper Nitra, the present discussions are now focused on policies, activities and steps in the transition: SMEs are seen as the key stakeholder in the process. Although the regional position of Slovakia’s mining industry has been steadily declining, it remains the economic backbone of the region. Mechanical calculations reveal that immediate total closure of main coalmines would most likely increase the regional unemployment rate in the Prievidza district from the current 4.5% to an estimated range of 8–10%, depending on the effects of indirect employment from coal mining.
SMEs and corporate entrepreneurship in general are seen as main actors in ensuring economic growth, innovation, job creation and social integration in Slovakia. The sector plays, and will play, a crucial role in the transformation of the region of Upper Nitra after coal mining. The SME segment was identified as a challenge and, at the same time, an opportunity in addressing adverse effects affiliated with the transition.
The recent report conducts an in-depth analysis of the SME sector in the Upper Nitra region and, through the collection and interpretation of quantitative and qualitative data, provides additional data and information for shaping economic and social policy, planning and programming utilization of the European Structural and Investment Funds (ESIF), as well as supporting the implementation of the Action Plan for Transformation of Coal Mining Region Upper Nitra.
Source (the report 2019, -74pp): https://ec.europa.eu/regional_policy/sources/studies/upper_nitra_en.pdf

Asian approaches to low-carbon economy
It was acknowledged that the regional carbon market includes two main parameters:
1. Promoting links between national carbon trade schemes, which will require the creation of a regional public–private policy dialogue and framework to prepare the ground. Links will include transparent agreements and rules (for instance, measuring, reporting, and verification systems) and institutional arrangements.
2. Encouraging investment in cross-border low-carbon energy infrastructure and transport projects.
Thus, e.g. Asian region has declared to be at the center of the global efforts against climate change; the reasons are apparent: it is the world’s most populous region, with high economic growth, rising share of global greenhouse gas emissions, and the most vulnerable region to climate risks.
However, the region’s current resource- and emission-intensive growth patterns are not really sustainable; hence the low-carbon green growth is recognized as an imperative (though not an option) for developing strategies in the Asian states. The whole region has already started to move toward low-carbon green growth: many regional powers and economies have started to use sustainable development strategies to bring competitiveness to their industries and to serve growing green-technology markets. The experiences of developed Asian economies and the lessons they have learned can be a useful technical assistance for other regions in the world, e.g. the European one to assess the low-carbon and green political economies patterns and examining new opportunities for low-carbon green growth around the world.
Source: Managing the Transition to a Low-Carbon Economy: Perspectives, Policies, and Practices from Asia. 2015. – Asian Development Bank Institute. -416 pp. www.adbi.org.
In: https://www.adb.org/sites/default/files/publication/176262/adbi-managing-transition-low-carbon-economy.pdf ; the full volume of the book can be downloaded from: http://www.adb.org/publications/low-carbon-green-growth-asia-policies-and-practices-0

Future forecast
There are signs that the global outlook has started to brighten, though growth remains modest. The impact of tighter monetary conditions continues, especially in housing and credit markets, but global activity is proving relatively resilient, inflation is falling faster than initially projected and private sector confidence is improving. Supply and demand imbalances in labour markets are easing, with unemployment remaining at or close to record lows. Real incomes have begun to improve as inflation moderates and trade growth has turned positive. Developments continue to diverge across countries, with softer outcomes in many advanced economies, especially in Europe, offset by strong growth in the United States and many emerging market economies.
Although global growth in 2023 continued at an annual rate above 3%, despite the drag exerted by tighter financial conditions and other adverse factors (e.g. Russia-Ukraine and the Middle East military conflicts) global GDP growth is projected at 3.1% in 2024 and 3.2% in 2025, little changed from the 3.1% in 2023. This is weaker than seen in the decade before the global financial crisis, but close to currently estimated potential growth rates in both advanced and emerging market economies.
Global energy demand for 2030-50 is expected at the level of 80 percent; global energy mix is going to be the same: 85 percent in fossil fuels, 10 percent in renewables and the rest in nuclear energy. However, the global GDP will quadruple by 2050! By 2030-50 China mill make about 20 percent of global GDP, while the EU will be below 10 percent; besides, about 70 percent of global population will reside in cities.
Source: https://www.oecd.org/economic-outlook/may-2024/

 

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