As governments spend massively to revive economies, a huge battle has emerged around whether the economic recovery should also achieve other goals, particularly cutting the emissions that cause climate change. Those advocating green spending say the $10 trillion that governments have already committed to stimulus should be just the beginning, and an even bigger pile of cash is now needed for expansive “green new deals.”
In most countries, the political forces are blowing against green recovery. Distant, abstract goals like global warming have fallen far down the list of priorities while paychecks and health loom much larger than they did six months ago. Some have actually relaxed pollution control standards and will take growth at any cost. While there are many policies that could deliver economic growth and lower emissions, most of them don’t work quickly — and thus don’t deliver what most citizens expect from government today. With global markets and societies in chaos, our ability to forecast has gone down; risks for investors in long-lived technologies, which is most of what’s needed for deep decarbonization, have gone up. Unlike the last financial crisis, when nations spent up to 15 percent of their stimulus money on clean energy, few have such forward-looking plans this time.
Europe, however, is the exception. There, the European Green Deal — a $1.1 trillion climate-focused infrastructure and decarbonization plan that had been cooked up before the pandemic — looks set to get even bigger now. Why? Because for decades the problem of climate change has gone mainstream in Europe. Outside of a few places (e.g., coal-burning Poland) and a few political stripes (e.g., populist nationalists) every major political party, left and right, has embraced climate as a core goal. As the U.S. government has waxed and waned on enthusiasm for climate policy (right now, we are in the Dark Ages), Europe has always been supportive. Now is Europe’s moment to use that leadership to change the world.
With political support at home, spending piles of money on deep decarbonization in Europe may prove to be the easy part. Much harder will be making sure global economies build back together. A hyper-green Europe will have little impact on the climate unless the better technology and business practices nurtured at home can spread widely to the places that cause most emissions. Only 9 percent of world emissions come from Europe, a share that has dropped steadily and will decline even faster the more Europe invests in weaning its economies off of fossil fuels. Leadership is great, but followership is what really matters for the climate because it is the total emissions from all over the planet that accumulate in the atmosphere and cause global warming.
The good news is that nearly all the key elements of a successful foreign policy strategy for building back together are in place in Europe.
Markets in Europe are already open to global competition, which will help make the whole world greener. For example, Europe has a highly competitive market for building renewable power — one that is anchored in global supply chains that allow the best systems to be purchased for the lowest cost.
Source: “Why Europe Must Lead a Global Green Recovery”, Brookings Institute