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Europe's gamble

The ambition is to become the most important global agent of change in technological innovation between 2030 and 2050.

by Roberto Di Giovan Paolo
26 August 2019
10 min read
by Roberto Di Giovan Paolo
26 August 2019
10 min read

Whether or not you agree with the climate policies or have doubts about the IPCC report adopted last October by the United Nations, Europeans, whether leaders, entrepreneurs or ordinary citizens, will not be able to ignore the policy framework proposed by the Commission and European Parliament, which forms the basis of the work to be done by the new Commission President, the German Ursula von der Leyen. The framework - based on the budget proposal that was finalized in May 2017 and which, in the first instance, was to be approved last May 9th at the Sibiu Summit, and was then delayed due to the European Parliament elections - is not expected to change substantially, thus maintaining 25% of the budget, and of the related structural funds for the period 2021-2027, dedicated expressly to the battle for climate change, the environment and renewable energy. Behind this plan is an ambition, supported by the document approved in November 2018, for the European Union to play a leading role and be the first to achieve zero emissions by 2050. The new President reiterated this during her investiture speech in the European Parliament, and the negotiations that preceded her “début” in the European Council, under the Romanian Presidency last June, specified the outlines with a final document that dedicates a whole paragraph to “the importance of tackling climate change in line with the Union's commitment to implement the Paris agreement and the UN's sustainable development goals”, and therefore “programs and instruments should contribute to the integration of climate actions and the achievement of the general objective of allocating (at least) 25% of budgetary expenditure.” What does this mean in daily practice for each Member State, which should have presented a general plan by December 2018?

EU 27 commitments and funds

I should point out first of all that we are talking about a draft budget and funds for 2021-2027. These are currently being debated by the new European Parliament (which can approve or reject them in their entirety but not propose individual amendments) given that, following the European Council’s decision to postpone the final decision and the related agreements, outgoing legislators only issued an "interlocutory report" on the multi-year financial framework and in theory any changes can only be made following a laborious meeting of the "sherpas" from each individual country, who are analyzing the budget and its items, calculating losses and related gains. However, it is highly likely that the general framework will not change and the allocation of approximately 1.246 billion euros at current prices, or 1.08% of the EU 27’s Gross National Income (GNI), will be confirmed (removing the United Kingdom and its position as a net contributor, which, despite the Thatcher "rebate" of one billion a year, accounts for 8-10 billion euros a year). Within these figures is a commitment on the part of the European Union to climate, renewable energy, combating emissions, and the circular economy, in line with the indications of the 2015 Paris Agreement for a 2-degree decrease in global warming, bringing it to at least 1.5 degrees by 2030, when the EU has set itself a first threshold of a 40% reduction in its contribution to global emissions and contributing, starting with Africa, to improving the condition in countries with which it has a stable trading relationship. The objective, however, is much more ambitious, considering that a quarter of the EU budget and funds will be devoted to this and it involves all EU policies or almost all of them, given that the proposed actions concern energy and its efficiency, the development of renewables, mobility, industry, infrastructure and European infrastructure connections, the bio-economy of biomass and the circular economy, the thorny issue of the transition from coal and the organization, both administrative and social, of a sustainable society, particularly in a continent where 75% of the people live in a situation that can be defined as "urbanized". The road has already been "marked", it is a very long "road map" that includes intermediate stops, verifications and monitoring. Launched with current funds, which provided for a 20/20/20 option for 2020: a 20% cut in the 1990 parameters for CO2 emissions; 20% more renewable energy; 20% more efficiency in the use of existing energy resources. A program that is objectively almost completely in sight, so much so that the European Union has relaunched it with new targets for 2030, bringing success rates to 40% for emission cuts, 32% for sharing renewable energy and finally 32.5% for more efficient use of available energy in its entirety. In short, the European Union (in this respect Brexit could be significant, because the UK has been one of the countries that has most ardently marched in sync with the EU's demands in this field) feels that, in the wake of the US trade wars and China, it might be able to seize the opportunity to be the number one global power in this field, with repercussions on the economy, society, innovation and employment. The budget is in fact based on the "long-term strategy for 2050", which lists possible actions also divided territorially within the Union, considering the substantial social and industrial differences between Scandinavian countries and the continental or Mediterranean economies. Hypothesizing as many as eight specific scenarios: the production of lower emissions; the widespread use of renewable energy and decarbonization; transport and mobility policies; the use of land, the environment and new agriculture; an innovative and technologically cutting-edge European industry in the world; the sustainability of cities; the construction of socially informed and resilient communities; the social "experience" of a circular economy. As well as concrete measures, replicable actions, stringent checks and huge funds, both in the public and private sectors. In the first scenario, a lot of attention is being paid, for example, to the current condition of the continent's buildings: here "energy efficiency will be decisive and the most visible drop in energy demand will occur in buildings, both in the residential sector and in the service sector, whose energy consumption now stands at 40%. In 2050, most of the building stock will be made up of buildings that already exist today. The rate of refurbishment needs to be stepped up, switching to different heating fuels so that the vast majority of houses are heated by renewable energy (electricity, district heating, renewable gas or thermal solar power), disseminating the most efficient products and equipment, using intelligent building and equipment management systems and improving insulation materials." There is also widespread discussion about the current problems of transport and mobility, which produce 25% of current EU emissions, 2/3 of them from road transport alone, not to mention that everything that travels by sea, from or to Europe, consumes one billion tons of fuel per year, producing 3% of global/world-wide emissions alone. Here too the EU is providing funds for switching to other fuels, greater efficiency in energy use, renewing the European shipping stock, starting with fishing boat fleets. There is also a commitment to create financing lines for projects related to the climate and energy challenge, as well as European Union plans to invest in remote, rural or island areas, or - as already mentioned - projects in neighboring Africa, including economic support for technological upgrading and change in regions that have long been structurally committed to coal and linked to its economy, and finally investments in industrial sectors and technological and public and private mobility hubs. Actions that provide for millions of euros of integrated investments in each of the seven different areas of the European budget and which, according to Juncker's EU Commission, which is now passing the baton to von der Leyen, could bring the Union's commitment in this field from 2% of GDP currently invested to around 2.8% as early as 2030, corresponding to around 550 billion euros of total public and private commitment, including around 200 billion in investments alone, which is why the EU is already showing its satisfaction and, at the same time, reaffirming its commitment with the 70 billion euros a year invested in supporting the European energy system.
This would guarantee a 1 to 1.5% increase in employment levels according to Commission documents, specifically derived from the policies on climate change, the circular economy and technological innovation for new renewable energies.

A challenge that Europe is setting itself

Here, then, is the paradox: while those who zealously denounce the risks of climate change scramble to define as "post Truth" the reasons that Trump and the detractors of the IPCC and the United Nations believe to be the actual global "post truth" that needs to be fought, the leaders, entrepreneurs and citizens of the European Union, whether willingly or not, have to deal with a challenge that, beyond ideological motivation, will mobilize resources, projects, initiatives and actions with an economic lever that the European Union estimates to be around 312 billion euros over the next seven years, this being only the "public" part of the Union, not taking into account the power that can be exercised on private financial commitment in these sectors. Whichever way you look at it, this is a commitment not just for the EU but also a challenge that Europe is setting itself, not only as an institution but as an economic and social community. The worst thing would be to pretend that the challenge/opportunity did not exist.

The author: Roberto Di Giovan Paolo

A professional journalist since 1991, he has collaborated and written for Ansa, AvvenireLa DiscussioneFamiglia CristianaAvvenimenti and Gr Rai, among others. An Editorial and Strategic Communication Consultant, he was Secretary General of AICCRE [the Italian section of the Council of European Municipalities and Regions, CEMR] and member of the European Policy Bureau of the CEMR. As Senator of Italian Republic from 2008 to 2013, he was among the founders of ELANET, European information society network. He is a lecturer at UNINT University of International Studies of Rome.