Heard of Europe’s Green Deal? No?
That may not be surprising, as it was only announced last month. While it sounds like the latest fruit and veg special offer at your local supermarket, it is likely to be one of the most profound policy changes to hit Europe since the formation of the Common Agricultural Policy or the creation of the Euro — or so says Nick Butler, chair of the Policy Institute at Kings College London, writing in the Financial Times this week.
The Green Deal was announced by new European Commission President Ursula von der Leyen, and in brief, is a commitment by the E.U.’s 27 member states to achieve zero net carbon emissions by 2050.
In the U.S., at least outside of California, we are used to rather hollow commitments to carbon reduction.
There is a lot of talk – even a proposed U.S. Green New Deal – but relatively little action; there isn’t likely to be any under a Trump presidency.
The Europeans, however, are dead serious about it.
While there are big questions still to be answered about how it will be funded, the probability is they will achieve it, with profound consequences for many industries, trading partners and trading patterns.
The Green Deal envisions a power sector based largely on renewable sources, the rapid phasing out of coal, decarbonization of gas and a focus on energy efficiency, Butler writes. The strategy will affect many established businesses, particularly those working in the eastern Europe coal market, and trading patterns, as Europe needs less oil and gas in its move to renewables.
The most substantial loser will be Russia, Butler suggests, currently the largest single supplier of European energy imports in the last two years.
Russia may succeed in gaining an even greater share of the European gas market by building new pipelines. However, within a couple of decades these could become redundant as Europe embraces its green future, unless the holy grail can be found of gas being decarbonized at a competitive cost.
How it is to be paid for is of less interest to those outside the bloc. Much water needs to pass under the bridge before it will be clear how the estimated $100 billion of E.U. support funding – not the cost, that will be many times that figure – is to be met.
Diversion of existing regional funds is the most likely source of the majority of funding but, more to the point, maybe the change in trade practices the new policy provokes. The approach is inherently protectionist, Butler writes, with policy implemented through regulatory enforcement, but those outside the bloc that do not observe the same standards are likely to see trade penalties as Europe seeks to ensure it is not disadvantaged by its drive toward zero emissions.
The Green Deal is yet another example of what is becoming increasingly obvious. It doesn’t matter whether or not you believe in climate change, global warming and man’s impact upon this planet, because enough of the rest of the world does to impact your business, your lifestyle and your future opportunities and threats.
Believe it or not, we are all going to be impacted by the movement to reduce emissions.