The European Green Deal is a European Union (EU) project that seeks to radically transform Europe’s economic system to neutralise greenhouse gas emissions and mitigate climate change. But while the Green Deal is the EU’s self-proclaimed “man on the moon” project, in its current form the plan does not provide a rocket sufficient to reach its destination.
The Green Deal aims to reduce European greenhouse gas emissions by 55% in 2030 relative to their 1990 levels and for Europe to become climate neutral by 2050. It is crucial that these ambitions are finally legislated by the EU in order for Europe to fulfill its commitments to the Paris Agreement of 2015 and to play its part in keeping the global temperature rise below 2°C. Nonetheless, while the EU’s legal commitment is a right step to prevent catastrophic climate change, the Green New Deal falls short of offering sufficient tools to achieve its targets.
The Green Deal is likely to fail, for two reasons. First, its Green Deal Investment plan is too small, as the proposed green investment value is lower than the needed sum to transform its economy to achieve long-term greenhouse gas neutrality. In fact, the 1 trillion euros the EU wants to invest in the next 10 years to reach the 2030 emission target are partly just reshuffled from existing sustainability programs and far below the officially needed 3 trillion euros., Due to its limited budget, the EU is dependent on national states and other actors to provide the remaining investment sums. But not all governments are willing to provide these huge investments by themselves, which means that private actors will have to bear a large share of the costs.
That leads to the second point: the deal gives private actors and local governments too limited a role to be able to achieve its goal of carbon-zero emissions by 2050. Both private actors and local governments have a wealth of knowledge on how a transformation to a greenhouse-gas free economy can occur and they can enact specific improvements. However, private companies often lack incentives to invest in long-term green innovations due to the considerable financial uncertainty of those projects and local governments rarely have enough funds to promote structural changes., Luckily, the EU can employ tested and effective mechanisms to better include private actors and local governments in the Green Deal and thereby secure reaching its emission targets.
One effective way of increasing private investments in the green transformation is for the EU to increase its public-private partnership programs. Public-private partnerships are interactions between public and private actors, which together try to provide a common good. In Green Deal partnerships the EU can provide monetary support for the research and development of new green technologies and promise incentives such as subsidies for renewable energy production. An important advantage of public-private partnerships is that the EU must provide only a part of the funding for innovation, while the private sector chips in the rest and helps fund projects that it would otherwise probably not invest in.
An example where a public-private partnership could bring about considerable benefits are innovative electric car charging stations. Only a few companies are investing in quicker stations because the research costs are high and electric cars make up only a small portion of the European car market. However, there is a large window of opportunity for the EU to provide extra funding for research and subsidise quick charging stations in the future, which will incentivize car manufacturers to innovate. Quicker charging stations would make electric cars more attractive to consumers and could thereby help the EU reach its emission targets. In the Green Deal, similar public-private partnerships are mentioned, yet the currently proposed sum is far too meagre to trigger private investment in green technologies in all sectors of the European economy.
Furthermore, the Green Deal should involve and support local governments, such as municipalities, to bring about green change. Worldwide, cities account for 70% of greenhouse-gas emissions, with a similar share in Europe. For that reason, city initiatives can help significantly reduce emissions. To support cities, the EU can shift some of its funds to existing city networks, where municipalities collaborate on how to decrease greenhouse gas emissions. Supporting city networks is promising because local administrations have limited financial means but vast knowledge of specific policies to be implemented and can share their experiences. Some of the city networks lack greenhouse gas emission targets and monitoring mechanisms but by tying its funds to mandatory objectives and monitoring systems, the EU can support and strengthen these existing networks.
Therefore, the European Green Deal is flawed – it sets emission targets but lacks sufficient investments and does not involve private actors and local governments enough. But it does have silver linings. Private actors can be incentivised to do their part with public-private partnerships and local governments can be supported by funding and strengthening city networks. In that way, private actors and local governments can help the EU build its rocket to the moon and create a greenhouse gas neutral Europe.
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