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Environmental degradation is a fact. The prevailing scientific consensus is that humankind is directly responsible for most of the rising carbon dioxide emissions in the atmosphere and their related negative effects. Within the EU political mainstream, these findings have positively resonated in policy and resulted in the most ambitious climate agenda globally. Most European citizens also recognise the threats of climate change and the need for our society to adapt and move in a more sustainable direction.
Decarbonisation is one of the most important political challenges of this century. The goals that have been set for European carbon neutrality by 2050 are laudable but presuppose the mobilisation of huge financial and material resources, as well as fundamental changes in the economic, industrial, transport, agricultural and energy sectors of European states. Climate spending already dominates the EU’s Multiannual Financial Framework (MFF) and the post-Covid recovery fund, with hundreds of billions of euros earmarked for the transition. The European Green Deal has a direct bearing on the economic performance of member states and private enterprises, while also becoming ever more present in the lives and pockets of European citizens.
Importantly, the clean energy transition has a direct impact on the EU’s competitiveness and geopolitical clout. Consider the complexity of implementing such a transformative effort in concert with the rest of the international actors, which have all the incentives to free-ride on the efforts of others or delay the transition away from fossil fuels as long as possible.
The decarbonisation destination is set, but the policy routes are many and uncertain. Regrettably, the EU is in a completely different financial and geopolitical position compared to 2019, when the European Green Deal was announced. We already see clear signals that the current framework is neither generating ‘green growth’ nor putting the continent on a fast track towards carbon neutrality. If the EU is serious about its decarbonisation pledges, it needs to rethink its approach.
This paper has two main objectives. First, it briefly addresses the main shortcomings of the Green Deal—the economic costs of the transition and the effect on European energy security and resource scarcity. It also looks into the overly optimistic projections for the renewable energy rollout and the huge investment gap in decarbonisation. More importantly, it puts forward a number of policy recommendations for European policymakers in the new legislative period. Achieving carbon neutrality should remain the long-term goal, but the policy arsenal has to be improved. The European centre–right needs to be actively involved in leading this strategy by crafting a blueprint that is both realistic and achievable and that is shaped by its own vision and political values.
Achieving a successful clean energy transition while retaining control over necessary critical resources cannot happen if EU Member States continue to avoid the inconvenient discussion on the importance of domestic production.
This week the European Commission is set to unveil the Critical Raw Materials (CRM) Act to provide a framework to tackle the issue of resource dependencies in pursuit of the Green Deal policy objectives. However, the success of this framework hinges on the willingness of Member States to move beyond quick fixes and to make hard choices on the trade-offs between security of critical resources and Europe’s long-term environmental agenda.
European policymakers have long been aware that action needs to be taken to ensure the stability of its domestic supply of CRMs. These resources, which include amongst others rare-earth elements (REEs), lithium, silicon, and zinc, are crucial for the development of green energy solutions, such as for solar PVs, and off-and-on-shore wind turbines, as well as electronic vehicles (Fig 1). However, the vast majority of CRMs are currently sourced from China, which holds a near monopoly over the refinement of REEs, and accounts for over half of the production of processed cobalt and lithium.
Table 1: Minerals used in clean energy technologies compared to other power generation sources
Beyond its borders, the Asian country is investing heavily in the extraction of strategic resources, further cementing its leadership position. In the Democratic Republic of the Congo, which produces 70% of the global cobalt supply, Chinese companies own 15 out of the 17 mining operations. China’s dominance in the field of CRMs has facilitated its rise as a top producer of clean energy technology. For years, Beijing has aggressively subsidised its clean energy industry and manufacturing, resulting in a market share of 75% to 90% of every stage of the production process (Fig. 2). Not to mention the continuing use of Uyghur slave labour in the Xinjiang region, which is extremely rich in polysilicon supply.
Despite the existence of adequate deposits within the continent, the EU lacks any meaningful domestic production of CRMs. The economic bloc stands for less than 5% of global production while our industries require around 20% of global supply. This is not sustainable. Global consumption is set to increase substantially over the years, especially within the EU, which is investing heavily in sustainability. World Bank estimates show that demand for minerals such as graphite, lithium or cobalt will increase five-fold by 2050.
Fig. 2 Regional shares of manufacturing capacity for selected mass-manufactured clean energy and components, 2021
The current EU strategy, focusing on strengthening the circular economy and diversifying supply chains, provides a good long-term framework to tackle the issue. However, Member States should take the lead in the discussion of how to operationalise this in the short to medium-term, as serious obstacles remain.
While efforts to strengthen the circular economy and recycling practices will undoubtedly aid the EU, this will be far from sufficient to ensure true strategic autonomy. Recycling CRMs outside of the production process is often economically unviable or downright impossible. The end-of-life recycling rate of silicon metal, germanium and REEs, all crucial in the development of clean energy technologies, remains extremely low, and will thus not solve the EU’s dependence on Chinese resources.
Diversifying the supply chain of CRMs can partially remedy the shortcomings of recycling and avoid the issues related to domestic production. While this option is promising and should be explored, it has a number of caveats. Exporting these industries to friendly nations abroad (i.e., friend-shoring) will not prevent the inherent risks attached to stretched-out global supply chains. Furthermore, research has highlighted the negative economic consequences related to friend-shoring practices, as well as the practical issues of reconfiguring global supply chains in the short to medium-term. Lastly, the environmental as well as ethical implications of moving mining operations to areas with often poorer environmental/labour standards should not be underestimated.
The issues related to recycling and friend-shoring show that true security of critical resources can only be attained in combination with an increased domestic supply of CRMs within Europe. Member States must resist the temptation to take the path of least resistance and instead address the issue head on. Many governments are nervous about openly supporting new mining projects given the potential local backlash or time restraints due to long permitting processes. However, the solution remains entirely in their hands as national governments are the ones to actually push for optimising these processes and increase domestic production in Europe. The length of the permit granting procedures must be curtailed so that we see actual progress by the end of this decade. An increase in domestic production and improved predictability of supply can also bring the EU closer towards the additional goal of improving its critical materials stockpile in the long run.
Simply put, the EU cannot afford to repeat the same mistake it made on Russian energy imports with critical materials supply. If Europe wants to weave a convincing narrative about strategic autonomy, perhaps it would be best if it worked towards genuinely improving its self-sufficiency in key areas.
Dimitar Lilkov Rick Slootweg Energy European Union Green Deal
In the last six months, energy prices have skyrocketed across the continent. European governments are already announcing multi-billon euro emergency measures in order to soften the blow for citizens. One of the reasons for the price surge is the growing demand for gas from industries and for power generation across the EU, as our economies bounce back from the pandemic. At the same time, Russia has limited its natural gas exports to Europe, mostly due to its dirty political game of applying pressure to Germany for the final greenlight on Nord Stream 2. Moscow’s antics and a cold winter in Europe could lead to unheated homes and even put ‘lives at stake’. This also means that inflation will continue to grow.
To make matters worse, the wind has literally stopped blowing in the sails of renewables – calm weather in the North Sea has meant very low renewable energy output. In parallel, the carbon price on the EU’s Emissions Trading System (ETS) has reached a record 60 euros per tonne of CO2. Ironically, the UK is desperately turning to dirty coal in order to provide electricity to citizens and industry.
All of this has prompted calls to speed up the EU’s transition, in order to reduce the bloc’s dependency on fossil fuels. However, before EU policy-makers push for even stronger (and costly) green commitments, it would be welcome to pause and reflect on what is actually happening.
It is easy to get lost in all the numbers about energy and climate, but a couple of basic facts are essential.
The first is that it takes a long time for new energy sources to displace existing ones. Unfortunately, fossil fuels are sticky and still account for 80 % of the world’s energy generation. Currently, solar, wind, and hydro are negligible chunks of the global energy mix. Even in the EU, their impact is overstated – more than half of the EU’s renewable sources are actually biomass (i.e., literally burning wood and crop waste). Not to mention that renewable energy from photovoltaics and wind is intermittent and challenging to store and transport.
Source: Adapted from Gates, B. ‘How to avoid a climate disaster’ (2021). Original data: Smil, V., ‘Energy Transitions’ (2018)
Second, if the EU has made the sustainable transition one of its top priorities, the rest of the world has not. The EU’s agenda on sustainability is laudable, but the bloc currently contributes less than 8 % of global CO2 emissions. Even with the hypothetical support of the US, the efforts to reverse rising temperatures by mid-century would be almost futile if the other major polluters don’t chip in.
The harsh reality is that for every coal plant we are closing, China is opening at least three new ones per annum. The EU’s coveted mechanism to impose a carbon levy (CBAM) on third countries is not planned to fully be in force until the late 2020s. Not to mention that Brussels will need to find trusted international allies on this subject in order to avoid trade wars and ensure such a mechanism bears fruit.
In the next decade, Europe’s energy demand is projected to increase, and we are on a risky path of making energy supply extremely volatile and costly. Regrettably, the biggest pain of this transition will be felt by the poorest households and certain middle-class families across Europe. Currently, there are more than 30 million Europeans who cannot pay their energy bills, and millions more that need to make monthly compromises in order to do so.
Even if the EU overachieves its current climate targets by 2030, this will be a tiny dent in the global fight against carbon emissions. This doesn’t mean that the bloc should sit on its hands and do nothing. Improving air quality, reducing biodiversity loss, and building a true circular economy should remain among the priorities for European policy-makers.
However, the biggest risk is that if the EU succumbs to all of the current green demands, the energy math simply won’t add up. We’ve decided to phase-out coal, which is needed, but in our devotion to a carbon-neutral future, we seem to have miscalculated the energy transition.
There is growing pressure on countries to snub nuclear, even though there is scientific proof that its risks are manageable and nuclear energy does not cause more harm, when compared to other clean energy sources. Germany’s decision to decommission its nuclear plants means that the country is losing one of its major sources of carbon-free electricity, and will become even more dependent on Russian gas. The same will most likely happen in the UK and Belgium.
This is a folly. The stigma on nuclear should be lifted and we shood collectively pool additional resources in exploring novel applications of this clean energy source. Brussels likes to see itself as the main agenda-setter on climate and environment, but the EU Treaties clearly define that sovereign member states make the ultimate decisions on their national energy mix.
The EU needs to have a more pragmatic and targeted approach to climate change. Let’s focus not only on ambitious legislation and climate targets, but also on becoming leaders and exporters of innovative green technologies. How many more billion euros are we willing to invest in solar panels and EV batteries with low efficiency gains, most of which are produced by slave labour in China? Most importantly, how does the continent intend to guarantee stable and affordable energy supply to households and industries in the short-term?
Try as it might, the European Union simply cannot repent for the climate sins of the rest of the world. The current energy price hike is just a precursor of the problems European politicians will have to confront in the next decade. They need to be overcome by prioritsing security of supply, innovation, and boosting the competitiveness of the European economy.
Not by prioritising dogmas and climate grief.
Dimitar Lilkov is a Research Officer at the Wilfried Martens Centre for European Studies in Brussels. The views expressed in this piece are his own.
The event will focus on the intersection of the green and digital transition, looking at how connectivity and ICT, in general, can be used as an enabler for a more sustainable economy and personal wellbeing. We will try to explore how policy-makers and leaders in the telecom industry can help one another to become more sustainable, while also ensuring Europe’s leading role in the global economy. The event will also address the role of new initiatives such as the European Green Digital Coalition, which focuses on the collaboration between the public and private sector.
Some of the questions that our panellists will try to address are: how interconnected are the green and digital transitions and what will be their impact on the lives of EU citizens? How can digital innovations be leveraged and help lead the charge in the green transition and the implementation of the European Green Deal? How can we ensure that all parts of society are included and benefit from the dual digital and green transition process?
For decades, the social and economic role of cities has steadily increased. Cities are financial hubs, accounting for at least 70% of the world’s GDP, while also being responsible for 70% of the world’s greenhouse gas emissions. Over the last few years, their political ambition —on both the national and international level – has also grown. Cities have been hailed as our best hope to save democracy in the 21st century and as laboratories to rethink the EU as a bottom-up network of functional cooperation, with them at its centre. They command the trust of Europeans better than national governments do, but increasingly display political preferences at odds with those of rural areas, often supporting liberal, progressive, and green forces.
How can cities contribute to solving the many challenges our societies face, starting with climate change? Should they have a more prominent role in EU institutions and policies, and how can they achieve it? How can the growing political gap between urban and rural areas be bridged and what is the role of centre-right parties? To mark the publication of its new policy brief by Konrad Niklewicz, the Martens Centre has the pleasure to invite you to a public discussion among two successful centre-right mayors of important European capital cities.
Federico Ottavio Reho Rafał Trzaskowski Environment Greece Green Deal Technology
There is a growing disparity between new and old European member states when it comes to tackling climate change and transitioning to a more sustainable economy. Large scale public and private funding, coupled with lower capital costs for financing clean energy technology, means that most of the investments and supply chains are being concentrated in the bigger Western economies. At the same time, Central and Eastern European countries (CEE) experience some of the biggest economic losses from climate-related extremes.
The Martens Centre webinar aims to address these divisions in light of the implementation of the European Green Deal and the long-term goal of carbon neutrality by 2050. How can CEE and Baltic economies make an ambitious effort toward a more sustainable economy without risking heavy job losses in specific economic sectors? Is the current design of the European Green Deal suitable in a post-pandemic Europe? How can EPP-affiliated parties in Europe introduce sensible climate policies and attract additional voters who are concerned about the environment but do not see green parties as a viable political alternative?
Rafał Trzaskowski Dimitar Lilkov Environment Green Deal
On 24 March 2021 the German Federal Constitutional Court issued a decision with far-reaching consequences. The court ruled that the lack of sufficient specifications for further CO2 emission reductions from 2031 onwards in the German Climate Act ran contrary to the Constitution. In so ruling, the court narrowed the scope of action available to the legislator. Just a few weeks later a Dutch court went one step further, declaring that the oil and gas company Shell had violated its human rights obligations by failing to take adequate action to curb its contributions to climate change and global warming.
These are just two examples of the approach to climate change that has been adopted by some courts in the EU. They coincide with the EU’s very recent legislative initiatives to promote a uniform legislative package on climate change that could act as a vehicle for the European Green Deal. We are confronted with two mutually exclusive risks: regulative overreach and efforts that are too little, too late.
This policy brief proposes a balance between them. It demands that the legislator on the European level take a proactive role, especially in a time when climate change litigation is growing exponentially. The gap between legislative intentions and actions has been left unfilled for too long, so the courts are stepping in. To tackle a contemporary issue such as climate change, we have to find a solution to the old problem of the EU’s legitimacy and the extent to which member states have leeway in developing their own climate change policy.
Our societies have been witnessing the effects of climate change, which requires a swift reaction in terms of adaptation and mitigation. The European Union (EU) presented its main instrument to address these challenges, known as the European Green Deal, in 2019. One could discuss the various measures it proposes and their applicability, but another equally important factor is how to communicate this ambitious plan to the European public.
The Czech public does not seem to recognise that climate change will have a substantial impact on the country, their local communities, and their own lives. In order to bring about genuine change to an issue that will undoubtedly and significantly alter our lifestyles, we need to mobilise public support. This publication looks into the opportunities and challenges that the Green Deal might bring. The authors are academics, economists, environmentalists, journalists, lawyers, politicians, and practitioners and together they present a comprehensive introduction to the Green Deal debate with a special emphasis on the Czech and European middle classes. Among them, Bedřich Moldan, Luděk Niedermayer, Ivan Štefanec, Merlene Mortler, Ladislav Cabada, Soňa Jonášová, Luboš Palata, Rumiana Stoilova, Ondřej Vícha, Lucie Tungul, Arjen Siegmann, Kateřina Davidová, Tomáš Jungwirth, and Aneta Zachová.
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