The Green Deal is the New Social Contract
Laurence TubianaDirector of the European Climate Foundation (ECF), Founder of IDDRI
The Green Deal is the New Social Contract
Laurence TubianaDirector of the European Climate Foundation (ECF), Founder of IDDRI
The Green Deal is the New Social Contract
Autumn 2021: for avowed climate activists — of which I am one — this is an autumn full of contradictory signals. On one hand we see the rise in climate anxiety, geopolitical paralysis on the other, and a European political response which is both strong and weak.
The first part of the 6th IPCC report published in the middle of A Season in Hell — echoing Rimbaud’s poem — cast a shadow over the chances of controlling the climate crisis. Six years after COP21, it is a final warning to act. Even the most experienced observers of climate change were rattled by the report. It makes it nearly impossible to fall back on the usual psychological techniques — downplaying the crisis — to ward off the deep anxiety caused by this threat. Even before the disasters of the last several months, surveys of young people in ten countries published by Lancet Planetary Health show that 75% consider the future to be “terrifying”, and 56% think that “humanity is doomed”.
Reflecting this anxiety, the preparation of the Glasgow conference — which is meant to launch the implementation of the Paris Agreement — is being held hostage in a sort of Cold War between the United States and China, even as both sides claim to be leaders on both in terms of the climate issue and the multilateral system.
In a context where we are still reeling from the pandemic’s effects and the weaknesses it revealed in our international system and societies, the world’s third largest emitter, the European Union, acts — despite its weaknesses — as an anchor point. This is true both in terms of vaccine and climate strategy.
We are at the half-way point of the von der Leyen Commission mandate. This is the moment to make a first assessment of the path we have taken and of this European Green Deal which was her promise to put Europe on the path to carbon neutrality. The green pact as a mandate commitment is in fact a response to the expressed desires of European societies. Following Brexit, electors that had often been disengaged from the Union decided, through greater mobilization for voting, to give Europe a chance. This green pact is therefore the opportunity to revive the European affectio societatis — the political space for accelerating societal transformation — all while holding a central place in the international scene. A symbol of hope, but also of profound change, it will be a test of the meaning of Europe and a possible cure to treat the democratic deficit ailing the Union.
Green pacts on both sides of the Atlantic
Calls in favor of green pacts or legislative packages of comparable ambition have existed for years in Europe as well as in the United States but had never moved beyond narrow circles of debate. It is striking to observe that on both sides of the Atlantic these projects have begun to materialize and have generated political alignment almost simultaneously. In light of the climate fight, there are two new societal projects — one which sprung from citizens, the other from institutions. Of course, this emergence coincides with a wave of social mobilization on an unprecedented scale under the influence of the younger generations.
Let us not forget that it was the Women’s March organized following Donald Trump’s election which launched a true mobilization movement which went beyond the limits of feminist issues, and which embraced multiple causes, including the climate crisis. In 2017 these grassroots organizations mobilized between 1.8% and 2.8% of the American population
. The activists in the Sunrise Movement, relying on mobilizations rooted in local efforts, built over time the Green New Deal project
. This ambition was centered on both resolving the climate crisis as well as reducing inequality, a central issue in the American debate during the 2020 Democratic primary. If Joe Biden was one of the rare candidates not to align himself with this identity, he was careful to never criticize it in order to bring the Democratic camp together. In the end, he retained a number of its principles, even if he failed to mobilize the scale of his massive investment plans (for bailouts, jobs, and American families).
On our side of the Atlantic, following a year of mobilization — notably among youth — political analysts and elected officials or candidates understand that the ecological transition is a real aspiration for citizens which goes beyond that age or social class. It’s about time. At the end of 2019, one in ten people throughout the world lived in a territory (city, region, country, etc.) which had declared a climate emergency
. The North American political situation has also had a certain influence: the Green New Deal could be enshrined in real policy and not simply a useful political incantation.
This popular demand for climate action was confirmed at the ballots, and not just in the countries which are home to Greta, Luisa, or Adelaïde. In France, Europe Écologies les Verts (EELV) — the French Green party — came in third and established itself as the leading force of the left, a first! In the Czech Republic, nearly one in three voters voted to fight against the climate crisis and to protect the environment
. It is also interesting to note that in Great Britain, Boris Johnson adopted the idea of a green industrial revolution and carbon neutrality, making them central to his political agenda. He is not the only center-right political leader to understand the necessity of adopting this agenda. In Lithuania, the government led by Krišjānis Kariņš was one of the first to support the goal of reducing greenhouse gas emissions by at least 55% at the European level for 2030.
In parallel with European elections, European heads of state and government expressly called for climate action to be a priority for the Union while taking into account its social consequences
. President Von der Leyen therefore proposed a Green Deal to the European Parliament, led by a heavyweight, Frans Timmermans. This was a political necessity. The European Green Deal is effectively a synthesis of proposals made by political parties and member state positions in response to social pressure. It is due to this successful synthesis, a true political coup, that the current Commission has been able to rally a majority in the European Parliament. Europe is therefore building a new promise, a new project, centered on the ecological transition. But contrary to the American movement, the European Green Deal is a political project rooted in institutions in response to citizen demands and not a project brought directly by citizens. This is a strength for its institutional character and a weakness for its dynamics.
If the previous Commission had proposed that the European Union reach carbon neutrality in 2050 — the objective laid out in the Paris Agreement — its formal ratification was made possible by the current Commission, allowing climate to be officially added to the European political agenda. Nevertheless, carbon neutrality was still a long-term objective in search of tangible measures. This was achieved through the increase of the European contribution (the NDC, or Nationally Determined Contribution) as well as the adoption in December 2020 of a mandate for action to define a legislative package. This is the origin of the “Fit for 55” legislative package that is now in the spotlight.
Through its European Green Deal and coming under pressure from Parliament and member states, the Commission made the decision to go even further. The Green Deal states that “All EU actions and policies will have to contribute to the European Green Deal objectives”. Beyond revising the EU’s policy on climate and energy, it is also a demand that weighs on all of the Union’s actions.
The European Green Deal, according to the European Commission:
- Change the fundamentals of the economy:
— Under the ” traditional ” climate and energy umbrella, this means: raising climate ambition, changing energy sources, creating a circular economy, building and renovating our buildings, accelerating the transition to sustainable mobility, building a new food system, preserving biodiversity and removing toxic substances from the environment;
— Beyond these policies traditionally linked to climate action, the Green Deal also promises to promote green finance and investment and ensure a fair transition, to make national budgets green and send the right price signals, to mobilize research and foster innovation, and to accelerate education and training. It also promises to “do no harm” by avoiding any policy that would run counter to these goals.
- Create a Green Deal diplomacy: the EU aims to continue promoting the Paris Agreement and multilateralism, engage all its partners to accelerate climate action, use trade policy as a platform for dialogue on climate action and continue its commitment to an international financial system that supports sustainable growth;
- Unite around a European Climate Pact: the Commission will promote the exchange of best practices between citizens and companies, create spaces for sharing in order to develop solutions to the crisis together, and will support more education on climate and environmental issues in schools.
It must be said that some shock therapy is needed. At a time when, in all of Europe, trust in institutions and politics is in decline and European construction uneven
. Economic Europe is strong thanks to the single market — the great driver of integration — but nearly nonexistent on the social level, with this area having remained under the control of the member states. Because it is an economic as well as a technological, social, and international political project, the Green Deal reverberates differently: it is a unifying force, but above all a clear, concrete, and visionary direction for the European project.
By aiming for consistency in all policies implemented, Europe is adopting an approach which goes beyond the traditional limits of climate policy. Thus, the Green Deal becomes the standard of measurement and reference. It is a political evolution which is also taking place in the United States with Joe Biden’s “whole of government” approach. It is an extremely logical evolution given the scope and breadth of actions which must be taken, but it is a true revolution in European governance, for in order for the idea of the green pact to work, it must inspire international, European, national, regional, and local actions. It means creating new benchmarks and allowing each level of decision and action to contribute to the common goal. The Green Deal represents a metamorphosis of European identity, a new definition which reflects the aspirations of its citizens.
More than two years have passed since Europeans went to the polls and two years since the promise of the green pact was made. Significantly, this promise was reaffirmed in the middle of the COVID crisis — a human, health, economic, and social crisis — and this is the moment to keep it. Two months after the publication of the Fit for 55 legislative package, it is necessary to analyze where we stand on the promises of the European Green Deal and to list the priority tasks for Europe in a geopolitical context marked by a rise in populism and the weakening of multilateralism.
A new social contract
The pandemic has raised questions about the social model for many European citizens. If the debate on the “world after” was quickly shut down in favor of messaging about the return to normal, many questions and concerns remain. The gradual emergence from the health crisis reveals increased inequalities between countries in terms of illness, poverty, and employment — even within our wealthy societies. At the same time, there is increasing awareness of environmental crises. The return to “normal” should not be an excuse to overlook these.
Discouragement, hopelessness, and lack of political energy are also impacting our societies. In France, for example, 62% of citizens believe that “we should seize the opportunity of COVID-19 to bring important changes to our country” while 70% “doubt that much will change in our country after the pandemic ends”
. The same people who hope for profound change do not think it is possible. This same hopelessness was also found in the same More in Common study conducted in the United Kingdom. At the EU level, nearly seven in ten Europeans do not expect the economy to return to pre-COVID levels between now and 2023
This thirst for transformation creates a space to rebuild a post-COVID-19 societal model which is more durable and more just. It is a project which resonates in European society, particularly with young people. A recent survey showed that protecting the climate and environment are the top priorities for 15–35-year-olds surveyed in 23 European countries and 77% recognized that our consumer habits are not sustainable
. This is a generation of new engagements which go beyond traditional political participation such as voting or campaigning for a party
, which has a passion for associations and protests
, and which can be felt all over Europe. These youth, which have been particularly affected by the crisis, are looking for alternatives and wish to participate in bringing about change, which can be seen in a large number of initiatives. The ecological transition as a new societal and political project might be persuasive beyond generational or political divides, but for the first time the demand for social justice has become a central component.
This demand is understandable. Faced with the profound changes that the ecological transition implies, the question of the social contract has once again arisen. How will the costs and benefits of the changes — whose scope we are only just beginning to grasp — be distributed? The denial of the climate crisis in particular has obscured the scope of industrial restructuring, the transformation of agricultural production models, and the redevelopment of urban spaces. At the same time, the foundations of previous social contracts founded in large part on increasing consumption of material goods and access to long-term employment, have largely been eroded. The perception of the environmental costs of economic growth for the least privileged and most precarious social groups in Europe is becoming increasingly real. These groups are (and will be) the ones most exposed to pollution and climate-related impacts, but also the ones who currently receive the least amount of economic aid to confront them
. Among the public policy tools available to policy makers, certain public policies are more regressive whereas others are more progressive
. But European environmental policies have until now been rather regressive.
In the coming era, solving the climate crisis and reducing inequalities cannot and should not be separated. This integration has progressively imposed itself in the debate as the condition for succeeding in the transition and the Green Deal, the sine qua non. The Yellow Vest movement in France, which opposed the increased carbon tax on fuels for automobiles while fuels for aircraft were exempt, clearly demonstrated the need for fairness and equity when it comes to the distribution of costs arising from the ecological transition.
The main challenge of climate action lies in moving from a policy which has until now been peripheral to a more central and fundamentally structuring role in all collective decisions. This requires policy makers to shift their mindset in order to not think about policy in terms of policy, or instruments in terms of instruments, but to reconsider their very way of thinking. The effectiveness of such lies in its intersectional nature and in the leveraging and influencing effects of the various sectors between them. Managing this level of complexity, this new and more strategic role of public institutions, requires deliberation, learning, and consistent long-term thinking.
We now find ourselves at a crossroads: the old world is no longer relevant, the image of the new one is not yet in focus, the debate on the nature of this change is just beginning, and visions of the future — still largely abstract — are mostly technical. Who, then, think about the collective change within societies that are divided in terms of life paths, identities, ambitions, and ideological references?
It is difficult to imagine traditional institutions — alone — being able to address this question at a time when, in order to be heard, discourse must come from “ordinary heroes”, from citizens, and be spoken from the field and the action and reflect this diversity. Technocratic discourse and governments of experts will not be enough to win this battle.
A pact to negotiate
Political disenchantment is being met with multiple modes of collective engagement which are mainly local and at a direct, citizen level: new forms of alliances have emerged, including pacts that have been defined as ecological pacts for climate action. In a compilation from the think tank Energy Cities, we read about a large variety of forms and ambitions, always with a common foundation
. The parameters of this green pact change by continent, by country, and even by city, but a few parameters are consistent: decentralized leadership allowing for greater citizen participation, a variety of actors engaged beyond the political sphere, a multi-thematic project, and the desire to bring more citizens together.
These pacts are policy vehicles which can allow our societies to progress not only in terms of climate, but also on matters of discrimination, economic inequalities, and conflicts over identity. This is a change of political mores which puts collective deliberation at its heart in order to consider changes in the economic paradigm and the perception of progress and the public good, to develop societal projects based on concrete problems to be solved, urban planning and space optimisation, energy, transportation, food, solidarity, etc.
At the European level, once it had been given a mandate, the Commission relied mainly on its area of authority — legislation — to create the European Green Deal. This explains its strengths, but also its limits. Its strength lies in the fact that the Green Deal serves as a benchmark in the inevitably fractious debate that each piece of legislation provokes. Its limits lie in the difficulty of reaching consensus among member states on each text which can weaken overall coherence.
As with agriculture, international trade — despite being a domain overseen by the Commission — is currently missing from the European Green Deal’s strategy. This inertia, the “path dependency” that has been used over and over again to conclude trade agreements, weighs heavily, as does the lack of definition of a clear and coherent doctrine with the Green Deal.
Of course, free-trade agreements which exclude climate-protection clauses — like the one concluded between the United Kingdom and Australia — are no longer possible in Europe. Any agreement must be in line with the implementation of the Paris Agreement. However, the interpretation of these principles still remains too generalized and ad hoc as the clauses related to sustainable development are not always binding. This can be seen in the MERCOSUR trade deal which has become a political headache for the present Commission and the Slovenian Presidency.
However, these environmental clauses are an integral part of the trade agreement with New Zealand currently being finalized. But Europe cannot change its character depending on who it is dealing with, and environmental clauses cannot only be applied to our climate allies. The Green Deal must become the frame of reference that will render null and void any agreement that does not respect the Paris Agreement.
In order for the Green Deal to have an impact on all public policies — and this is no small task — three handicaps must be overcome: the burden of the past, the authority of Brussels, and the distance between the institutions and European societies.
The burden of the past: while new initiatives must be aligned with the goal of carbon neutrality, the necessary legislative revisions which are a part of the traditional arsenal, such as common agricultural policy, among many others, promises to require significant effort.
The Commission’s authority: as the Commission’s freedom of movement is greatest in the realm of environmental policy, this aspect of the Green Deal is more developed. However, we must go further in the fiscal and social domains and the member states should give them a larger role.
Distance: the representatives of the European Commission are governments and elected officials, never directly citizens. Yet if the Green Deal remains a project of experts, it is undoubtedly destined to fail. Here again, the willingness of governments to share is not obvious, as shown by the right of scrutiny and veto demanded by the member states on the proposals resulting from the Conference on the Future of Europe.
If these three handicaps cannot be quickly overcome, there are nevertheless some initiatives which must be urgently undertaken which are in line with the established institutional order. I will propose five which should be considered as priorities. The successful alignment of these policies is the key to a successful mandate for the President of the Commission, her Executive Vice-President, Frans Timmermans, as well as for national governments and parliaments.
First initiative: Anchor the Green Deal within societies
A Green Deal designed, driven, and negotiated by Brussels will certainly have a large political and economic reach, but it is clear that this government of experts does not have much credibility with Europeans and will not be able to single handedly ensure citizen acceptance.
Beyond legislative negotiation, implementing the Green Deal depends in large part on governments and national institutions which have a great deal of freedom. For example, governments will be solely responsible for delivering greenhouse gas emission reductions in sectors that are not covered by a carbon price. The new rules of the Common Agriculture Policy (CAP) leave much of the details of implementation to governments. The survey of opinion leaders by the Institute for European Environmental Policy shows that the three main reasons that could impede the implementation of the European Green Deal relate directly or indirectly to member state responsibility
. Lack of commitment, absence of adequate governance mechanisms to measure progress, in combination with the lack of uniform progress across European countries may put the effectiveness of the Green Deal in jeopardy.
In the coming months, we will be able to better judge member state support for the Green Deal’s vision, especially the willingness to communicate the challenge of this pact within their national communities.
However, the present situation lends itself to a different exercise and European social movements demonstrate new aspirations for climate action. In France, the Citizens Convention for Climate showed the appetite for a coherent reform project. In Germany, at the behest of nine young citizens, the Constitutional Court in Karlsruhe ruled against the government for its insufficient action in regard to its international engagements. This decision caused a swift response from the government, recalling what was observed in the Netherlands. In Poland, public protests against the rollback of women’s rights and in favor of climate action put pressure on the government. These citizen-led mobilizations use European and international texts to make the case for urgent climate action, including through the use of judges.
Even though citizen mobilizations for the environment are generally local and focus on concrete projects (gas infrastructure projects, highways, air or water pollution, etc.) and are aimed at local political decision-makers, they also allude to global challenges, from greenhouse gas emissions to loss of biodiversity. These mobilizations therefore shape — on the ground and through direct action — the narrative of tomorrow’s society. It is this connection between the different scales of decision-making and collective action which can, in my opinion, create the dynamics of change for which the Green Deal is ideally suited.
It is therefore necessary to anchor the Green Deal in national political ecosystems and develop green pacts based on mobilizations and problems in citizens’ lives and which link the European, national, and local levels. In order to fight against inertia and political deadlock, the different pacts linked together could offer solutions to citizens. The European Green Deal should be used to advance local struggles that share the same vision.
By connecting the different levels of governance, this new choreography of collective action could restore the agility that we currently lack. It would allow parties involved in each pact to see and understand their place in a complex ecosystem. In order to become a legitimate political project, the Green Deal needs a dynamic architecture which once again gives citizens control of their lives, and the vision of their futures.
We must launch the green deal initiative as soon as possible in the member states with green pacts that can be adapted to national issues while still meeting Europe’s climate objectives for 2030. This will allow European action to reinforce national dynamics that are already in place.
Second initiative: Reconcile Social and Climate Justice
Not all the consequences of the COVID-19 crisis can yet be felt. However, we already know that the inequalities which existed before were reinforced by the crisis, particularly for the most vulnerable people
The Green Deal cannot be summed up in a calculation of tons of tons of carbon prevented. As a social project it must anticipate its impacts and support the rapid changes in all sectors. This is its greatest challenge. In broad terms, the decarbonization of the European economy and the reduction of greenhouse gas emissions to zero have technical scenarios which are mostly known: the production of zero-carbon energy, the electrification of energy use, changes in agricultural and dietary practices, the recycling of resources, etc. These technical scenarios systematically lead to economic and social changes: industrial restructuring, the need for new infrastructure, professional transitions, changes in the distribution of wealth in the economy, etc.
The Green Deal’s success will be measured by its ability to anticipate these shocks and the formulation of a fairer social pact in a context where the machine for creating inequality is still highly efficient. Without a social pact, legitimate opposition will multiply. We must acknowledge that purely European instruments are limited and are largely in the purview of national policies.
The implementation of the Fit for 55 legislative package, and especially the decision to put a price on carbon in the building and road transport sectors, made the social impact of these measures and their regressive nature clear. Both member states and European institutions will need a solid response for a population which already feels particularly vulnerable. The “social climate fund” is one of the envisioned solutions, but it will not be sufficient. It will be even less sufficient if the revenue generated by the different mechanisms related to carbon pricing are primarily used to quickly pay down debt. Furthermore, actions to offset the impacts of public policy on revenues are difficult to get people to understand and accept and require intense communication. Trust is often not forthcoming, as the French experience has shown in the past.
This narrow approach to social justice therefore runs the risk of quickly being invalidated, for at any given moment circumstantial events could be used to point the finger at climate policies. This is exactly what is happening today with the continual rise in electricity prices in a number of European countries along with the surge in natural gas prices
. These increases feed the arguments of those opposed to the Green Deal, which will then be blamed for what is presented as a policy meant to impoverish European citizens who will be sacrificed at the altar of the climate.
The Green Deal project is one of new promise. Adopting a social approach to the ecological transition does not mean simply anticipating the negative effects of public policy or verifying that they are working properly. It is also about anticipating the problems that will impact citizens during the transition, whether or not they are related to climate. In an historic moment of reorienting the economic and technological system, it is a matter of discussing the social bases and conditions for societies’ acceptance of this future. This debate is at once European, national, and local and must be carried out at the different levels without opposing them.
Third initiative: Defeat Short-term Thinking and Fight Against Advocates of the Status Quo
Climate action sceptics will always find opportunities to blame Europe and its Green Deal to absolve themselves. Polarization of debate as a political strategy, which plays on fear and the feeling of belonging to one group over another is more the rule than the exception
. Building and capitalizing on false arguments designed to divide societies and which constantly appear in political news, is an effective strategy to prevent dealing with complexity. It’s a well-known recipe: Euroscepticism, questioning science, and evoking the coming economic catastrophe. These are easy elements to activate in the public communications sphere. Added to this is the idea that climate policies are the result of liberal and elitist conspiracies which will unfairly and disproportionately impact ordinary citizens (Counterpoint, 2021).
Within democracies which have been weakened by the pandemic, these attacks are serious, especially as their instigators can skillfully link them with legitimate social demands, notably when it comes to energy prices. The recent decision by the British government to ban gas heating is a case in point. This resulted in a media frenzy and a campaign led by the conservatives themselves against climate action, as a sign of society’s decline. Another example is the attacks on the Spanish government’s climate policy in the face of rising electricity prices. This campaign will not be the last. Denying the reality of the climate crisis remains a convenient way to mark political differences, even if it does not play the identifying role seen in American society. Confronted with the impressive ambition — it bears repeating — of the Green Deal, the “coalition of ill-intentioned”, as Mickael Mann would say, will increase their attacks and use any and all lobbying and communication tactics.
Denouncing climate inaction does not mean, however, imposing measures without consultation or refusing to take into account the actors affected by them. Policies geared towards mitigating the climate crisis will necessarily imply constraints, choices, and sacrifices. They will only be socially acceptable if they are also debated and evaluated in function of the criteria of justice and if they leave room for the power of action by citizens. Otherwise, these policies will leave room for populist, demoralizing speeches and defenders of a wait-and-see attitude and the status quo.
Waiting, stalling, criticizing excessive haste, negotiating more time… the arsenal of those defending the status quo is well developed. They have the advantage of moving over sure ground, in a universe known to political leaders who are used to evaluating the risk of changing the status quo and trained in negotiating exceptions or delays. The projection into the future that the Green Deal implies is full of uncertainties, while the familiar short-term is reassuring.
It is for this reason that politicians must not alone be left to find compromises. Mobilizing societies’ power of action is the surest way to generate a wider political space that can make room for the long term and its integration into today’s life. In order for the Green Deal to succeed, we must be able to count on the political leadership of member states, who must stop criticizing Brussels. We must also be able to count on the economic actors who have chosen this time frame for action and who are honestly undertaking this transition. Finally, we must be able to count on the commitment of diverse societies who can adopt and adapt to pave the European path and become the vigilant safeguards of the commitments made.
Fourth initiative: Definitely Integrate Climate Action Into Macroeconomic Policies
In this context, the question of European budgetary governance comes into its own and can have a long-term impact on climate action. The Green Deal and its means of implementation have macroeconomic consequences and depend on decisions and rules outside climate and energy policies.
The Recovery and Resilience Facility was one response, as was the creation of the still too modest Just Transition Fund. The question now is how to pay it back and, more generally, the debt status of the European countries in the eurozone. This is a crucial discussion. The transition to climate neutrality requires infrastructure investments that will weigh on public budgets and, in one way or another, on taxpayers.
Climate is now considered “macro-critical” according to the words of Christine Lagarde, then Managing Director of the IMF, and currently President of the ECB, who holds the same conviction. This conviction is now widely shared by academic macroeconomists and central bankers. Problems are no longer only sectoral. In order to solve them, the ecological transition will mobilize large-scale resources and make major transfers, particularly in terms of investments that will transform the European economy.
The Green Deal therefore cannot be isolated from the debate on the governance of public finances. Yet the question of managing a potential common debt as well as individual debts within the eurozone is one of the most difficult, crucial, and strategic political issues on the European political agenda.
Following the economic support measures put in place by European countries during the COVID-19 pandemic, this debate is now being framed in new terms. The Franco-German initiative for a joint recovery plan led to the creation of a recovery fund of more than 800 billion euros available to member states. The possibility for the Commission, on behalf of the Union, to borrow money on the markets in order to finance the recovery plan made it possible to overcome taboos and to demonstrate true solidarity between European countries. This is the biggest step forward in the construction of a political Europe in recent years.
The exceptional circumstances of the preceding months led to the suspension of certain rules governing public debts, where the question of solidarity arose in terms of limiting risk. The purpose was to prevent the negative impact of an out-of-control sovereign debt of one State on the markets and the ability of other member States, particularly those in the eurozone, to obtain financing. Such considerations were abandoned when exceptional measures had to be taken to support the economy. This loosening of restrictions has led to an increase in the debt/GDP ratio from 83.9% to 98% for Eurozone countries and from 77.5% to 90.7% for the whole of the EU
With government economic support measures about to be scaled back, if not halted, the question of a return to previous rules, especially regarding fiscal discipline, arises. The political scene is divided. While countries such as France, Italy, and Spain are in favor of revising the rules, the so-called frugal countries, led by Austria and supported by the Netherlands, the Czech Republic, and Sweden are strongly opposed
. The debate is open, however, even if no significant movement is expected before the German elections and the formation of a new government.’
However, the debate should be reframed beyond the opposition between “free spenders” and “frugals”. As Jean Pisani-Ferry shows, the macroeconomic implications of the transition to a climate-neutral economy have not been sufficiently taken into account. If economic growth continues in Europe, there is no doubt that its composition will change. Should we anticipate a reduction in private consumption and an increase in investment, especially public investment? Where will the resources come from to finance these investments? Will they come from the increasing use of carbon tax mechanisms?
In their publication last September, Zsolt Darvas and Guntram Wolff showed that European governments have not yet been able to reconcile an investment program capable of implementing the Green Deal with deficit consolidation
. In order to overcome this dilemma, they explore three solutions: 1. a general relaxation of rules, 2. the creation of a centralized European investment capacity to finance the transition through markets, and 3. the removal of green investments from the accounting of sovereign debt, a solution that would enable these necessary expenditures to be protected. It is an entire philosophy of debt that needs to be rethought at a time when young generations are calling for climate policies in order to preserve their future.
The debate, as presented by Darvas and Wolff, must also include the political dimension. Citizens have little confidence in the future or in their governments, yet this confidence is the basis of consent to taxation. Fiscal consolidation will, in most cases, be achieved through increasing taxes. At the same time, extending carbon pricing to sectors that affect citizens, such as transport and heating, risks creating the impression of a one-way policy. Citizens would only be expected to pay and pay back.
It is therefore necessary to strike a deal with citizens, to debate the justice and equity of contributions, and the collective priorities of the common goods to be provided. Arbitration in favor of the future must be managed through collective deliberation. There is a risk that rising energy prices and taxes, coupled with a lack of opportunities in the labor market, will be attributed to climate policies. However, it will be the lack of investment, of planning, and the failure to question the current situation that will truly be responsible for this.
Fifth initiative: Towards Diplomacy in Line with the European Green Pact
The European Green Deal implemented in member states will have real economic repercussions, both at the level of citizens and at the international level. Indeed, it is a great opportunity for Europe to show climate leadership on the world stage.
Since COP21, carbon neutrality has become a baseline that states, local authorities, and companies have been able to seize upon, admittedly sometimes clumsily or dishonestly. By adopting its 2050 carbon neutrality goal in 2019, Europe was already ahead of other major emitters. Subsequently, in September 2020, Chinese President Xi Jinping caused a stir by announcing China’s goal of carbon neutrality by 2060 and peak emissions before 2030. China’s announcement is in line with its own commitments to climate action, but it also echoes earlier announcements by the European Union, which remains a key partner of the Chinese government on this issue.
Although there are growing mentions of carbon neutrality by the middle of the century, most of them lack precision on the trajectories to achieve this and which endangers this objective which is central to the Paris Agreement. As of today, more than 100 countries have committed to achieving carbon neutrality by 2050, in accordance with the 2015 Paris Agreement. Yet the new 2030 targets (NDC) would lead us to a 16% increase in global emissions compared to 2010 when they would need to be reduced by 45% to maintain the chance of keeping global temperature rise below 2°C
There is already justifiable criticism pouring in, denouncing empty commitments, long-term commitments. This is a far-off prospect that allows supporters of the status quo to remain vague and to promote disingenuous commitments because they are poorly framed. What is worse, the fight against climate change is read by the United States and China as part of the global military, technological, and commercial competition. The world’s two largest emitters are in fact jeopardizing their sovereignty — their control over their national territory — which they claim to want to protect at all costs.
The Green Deal is currently the most specific path to decarbonization among the proposals of the three major global emitters. It gives the European Union the means to display leadership in climate diplomacy, a leadership that today depends more on actual implementation than on international negotiating skills.
It should be recognized that the European Union’s impact on the international scene is greater once internal compromises have been reached and a roadmap drawn out. Political resources available are now being mobilized by the internal negotiation of the Green Deal. This mobilization, while logical, carries risks in a particularly turbulent geopolitical scene. Green Deal diplomacy is necessary to make its deployment possible, for the Green Deal implies a realignment of many financial and commercial relations.
To fully appreciate the scale of the transition now underway, it is worth recalling that nearly three-quarters (72.2%) of the European Union’s total energy needs are currently met by fossil fuels and that three-fifths (61%) of the EU’s energy is imported. To achieve a 55% reduction in emissions by 2030 – let alone net-zero by 2050 – the European Union will have to embark on a radical overhaul of its energy dependencies, which will have profound implications for its diplomatic partners. This is the case for countries around the Mediterranean, in the Balkans and in Central Asia, as well as for more distant exporters
With the European Union’s oil imports accounting for 20% of the global market, a decline in these imports also implies a fundamental change in the oil economy, regardless of the specific trade relationship with Europe. For major exporters as diverse as Norway, Saudi Arabia, and Venezuela, the price of a barrel of oil has been a central feature of their geopolitical arsenal for decades.
The Green Deal sets a target of 40% renewable energy by 2030, up from 20% today. A significant share of Europe’s energy will likely come from imports and will therefore require new partnerships with neighboring countries and beyond. Combined with the anticipated application of the Carbon Border Adjustment Mechanism (CBAM) to these energy imports, this dynamic will certainly have regional and global ripple effects.
It is also a question of capitalizing on European progress in terms of climate ambition and transforming it into diplomatic ambition: neither the Chinese New Silk Road (Belt & Road Initiative), nor the “Blue Dot Network” partnership led by the United States are currently references on the world stage in terms of international cooperation aligned with the objectives of the Paris Agreement. This is the message sent by the President of the Commission during her State of the Union address with the “Global Gateway” project. All that remains now is to define its content.
The return of the United States to the center of the diplomatic stage has allowed the European Union to regain a strong partner to stand together with on major issues. However, the acute tensions between China and the United States remain the biggest obstacle to implementing ambitious climate policies. This dangerous game is leading to paralysis within the G20, a second critical obstacle to advancing climate action.
Europe must do all it can to implement the new dynamic created by the Green Deal. This implies understanding and accepting that intra-European decisions have major repercussions for its partners. As a “benevolent” actor within the international system, Europe must engage in discussions on the consequences of its policies. Indonesia’s reaction to the freeze on palm oil imports in response to the mobilization of European parliamentarians can also be understood in this context
The launch of the border carbon adjustment mechanism will potentially have similar consequences. Its political visibility makes it a prime target for controversy. It is important that international trade not distract from European efforts to decarbonize, especially in heavy industries, but the implementation of the CBAM goes hand in hand with the necessary increase in domestic carbon prices. Indeed, it is facing strong opposition from our trade partners, who see it as a form of climate protectionism.
Due to World Trade Organization rules, the CBAM will probably only be applicable to raw industrial materials (steel, cement, fertilizer, or aluminum) for which “carbon leakage” presents a real risk. In the Commission’s proposal, the mechanism would primarily concern Russia, Turkey, Korea, India, and China, and it has also raised concerns — but also interest — in the United States.
The CBAM and the extension of the carbon market to air and maritime transport have the advantage of sending a signal to the freeloaders of climate action. It sends out a warning, potentially a deterrent, which has and will have a domino effect. Of course, the internal market will not alone bring along the rest of the world, but the EU is still the largest market in the world, owing to its openness.
It will now be necessary to balance the tension between European objectives and diplomatic consequences. The EU must explore opportunities for positive international cooperation — support for the transition, standards for measuring carbon content, markets for zero-carbon products — with special provisions for the least developed countries. The Green Deal can become a formidable diplomatic tool for European leadership.
European politics operates on five-year cycles, coinciding with European parliamentary elections. During the next elections in 2024, the Green Deal project will still be present. It will have to be expanded and updated. Until then, the question will be to know if this vast project has succeeded in its challenge: to change the European political system. Responsibilities are and will be shared: the President – a conservative – has made it her pet project, the Commissioner – a socialist – ardently defends the project, while the President of the European Parliament’s Environment Committee – a liberal – has built a narrative around the Green Deal. Beyond the responsibility of Brussels, the responsibility of member states must be stressed. The elections in Germany, the Czech Republic, Bulgaria, and France are all opportunities to debate and lay the foundations for national green deals. Parliamentarians, local elected officials, and all national stakeholders have a role to play in encouraging the creation of national green pacts in collaboration with their citizens.
The Green Deal has the potential to be a political revolution and its narrative can change Europe’s identity. These European, national, and local green deals could establish its founding principle: a fair ecological transition, to be built together.
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To cite the article
Laurence Tubiana, The Green Deal is the New Social Contract, Sep 2021,
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