A methodological problem and a strategy for the Green Deal

Column by Francesco Grillo published on the Italian newspapers Il Messaggero and Il Gazzettino del Nord Est

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This is for Europe, our “man on the moon moment”

Two years ago, before the pandemic,  President Ursula Von Der Leyen announced through this ambitious methoaphorthe decision of the European Commission to propose to the Parliament and to the Council of the European Union the Green Deal aimed at guiding decisions and development policies. 

Two years later, the idea of a “social contract” based on the environment and considered as a generational pact was even inscribed inthe Italian Constitution. Nevertheless, the question is: is it working? Are we succeeding in reversing the course of the “Titanic” that keeps heading towards the iceberg? The feeling is that the European Union (especially the Commission) is working hard on these goals, however there is a methodological error that seems to make many laudable efforts inefficient. 

The pact that the European Union is proposing to its citizens is extremely ambitious: not only because of the promise of reaching net zero emission by 2050, but also because it undertakes the goal of a 55% emission reduction compared to the 90’s levels in 2030. This means that Europe, which has achieved a 20% decrease of emission since the 90’s (as shown in the graph below), is committed to reducing them by another 35% in only 8 years. 

So, an ambitious project, but also necessary if we truly believe in what scientists keep saying about the “point of no return”. However, this ambition entails acceleratingthe decarbonization process of the European economy. This challenge implies a radical transformation of production and consumption models for which we do not have appropriate tools and in a context where we cannot afford to play a waiting game.

As already stated by the European Commission, public resources are scarce, both those of highly indebted countries and those of the European Commission which are not even 2% of the European Union GDP. 

In order to guide private resources to sustainable activities, the Commission has chosen to identify these activities with a so called “taxonomy”: the idea is that, by increasing the transparency of banks, funds and businesses assets, it is possible to reduce the costs that consumers and savers nowadays demand and which dependnot only on risk but also on the sustainability of  investments. The European Commission identified,- in a 349 pages Regulation published in June 2021 the activities that contribute to the mitigation or adaptation of climate change without relevant side effects. . Among other things, the Regulation defines the technical criteria that must be followed in 13 different fields and for 85 activities (from the maintenance of cycle lanes to the production of nitric acid). However, just after one month after the Regulation enforcement, a technical and political battle arose on the topic of the possible inclusion of (new generation) nuclear power plants and gas generated electricity (till 2035) among the list of  sustainable activities. This goes to show there are several problems with the method in use, at least four. 

The first is that a very detailed list struggles to keep up with technological innovation.

As stated by the Imperial College of London, even cement, which is responsible for 8% of global emissions, could become a tool to remove greenhouse gases from the atmosphere. 

The second is that, through a Regulation valid for all, we lose on flexibility.

In this sense, it is not irrational to conceive selective investments, even in old fossil energy, in order not to spoil the political consensus that the great transition needs. 

The third is that, with low interest rates, the amount of bureaucracy that the European Commission imposes might lead only to a marginally lower funding cost for those who work with renewable resources. 

In the end, even though the European Commission can have an influence on its own emissions (which are less than 10% globally), it cannot have an impact on other countries' activities. 

Does an alternative strategy exist? The answer is yes and we should take it into account, coherently with Von Der Leyen’s requests.  

On one hand, we need to focus on a few, but real, industrial policy objectives: one objective towards which both public and private resources could converge could be rebuilding the entire production chain in order to produce solar and wind energy on a large scale. On the other hand, cities might be the right environment to experiment  new consumption models (on that, the Commission initiative to select 100 cities committed to reducing emission by 2030 is admirable). However, between these two initiatives a monthly emission monitoring system is needed in order to know how many emissions are produced and consumed by territories in every sector (industry, transportation, houses…). This would help us visualise how fast the world is changing. 

In closing, it is necessary to think about the possibility of providing a renewable energetic capacity as the unique solution to reach a strategic autonomy: only a (renewable) energy autonomous European Union can have the strength needed to close its markets to those who do not share the same objective. 

The comparison that Ursula Von Der Leyen has proposed between the Green Deal and the Apollo Mission is technically wrong. The latter was a challenge that could be won by NASA researchers and brave astronauts; the Green Deal needs the collective change of habits of hundreds of millions of people. A much more political Union is needed, now.