The War of Two Green Deals

On Wednesday 4 March 2020, the European Commission presented the legislative and binding framework of its Green Pact. Ursula Von der Leyen promoted it in the French "Journal du Dimanche" newspaper this weekend. She writes about it:
"Its central objective is to make Europe the first climate-neutral continent by 2050. Just this week we proposed to implement this strong ambition into binding legislation.
Of course, it is about bringing nature back into our lives and reducing emissions. But the Green Pact for Europe is more than that: it is also our new growth strategy. It will provide security for investors and promote economic growth that gives back to citizens, the planet and society more than it takes from them". 

 

On the other side of the Atlantic, the two main candidates for Democratic nomination are also supporting a "green new deal" which also aims to ensure "that the United States achieves the global goal of zero net emissions of greenhouse gases by 2050. This means a balance between CO2 emissions produced by human activity and those that can be absorbed by ecosystems".

 

In the United States, the Democratic proposals developed and promoted by Alexandria Ocasio-Cortez in particular and taken up with important nuances by Bernie Sanders and Joe Biden are very interventionist, proposing in particular a return of the energy sector under State control and 16,300 billion dollars of investment which, according to Sanders, would lead to the creation of 20 million jobs. He proposes to create new emission limits for power plants as the EPA did under Barack Obama for automobiles. He calls for massive investment in public transit and the creation of a regional high-speed rail network. It calls for subsidizing the purchase of electric cars and funding a new federal network of charging stations.

 

Such proposals are met with strong criticism from Republicans in general and from Donald Trump in particular. Trump estimates that such a program would destroy "millions" of jobs and cost "$100 000 billion". When the bill was presented to Congress in February 2019, a White House press secretary declared: "America will never be socialist". Not much more muted, D. Trump spoke out in Davos against the other "green deal", that of the Europeans. Indeed, as Jean-Paul Oury wrote in an editorial entitled "European Green Deal: welcome to the era of green neo-planning" on the European Scientist website :
"For Trump, preserving the environment is not 'climate neutrality', but the quality of water, air and abundant flora. He believes in innovation, the market and green technologies to solve all problems. Energy independence justifies the use of fossil fuels. On a philosophical level, finally, he makes an unmasked criticism of Greta Thunberg, who, as we recall, was welcomed with open arms in the European Parliament. Two diametrically opposed models, then: confidence in the virtues of the market on the one hand and planning on the other."

 

For J.-P. Oury, as we can understand, it is rather Trump who is right and the criticisms made in Europe of the Commission's proposals as being too timid - compared to those of Sanders for example - must be reversed: the Commission is giving in to a dangerous ambient ideology symbolised by Greta Thunberg. He concludes as follows:
"Strategic divergences and ideological oppositions at world level make the plan ineffective for the objective it aims to achieve, inequalities between European countries make it difficult to achieve, and the recurring technological controversies over the energy solutions to achieve it show how planism, by putting ideology before the market and scientific rationality, reverses values, cuts itself off from reality and always ends up failing".

 

Conversely, in an op-ed published in the Guardian on 7 February and broadcast on Mediapart on 12 February under the headline "The European Union's Green Deal is a huge greenwashing manoeuvre", Yanis Varoufakis, co-founder of DiEM25 (Democracy in Europe Movement 2025) and David Adler, the movement's political coordinator, warn of the sham of the European Green Deal carried by Ursula Von der Leyen. For them, it is a "plan for conservation, not transformation" that "recovers the slogans of climate activism by emptying them of their content".

 

Apart from the fact that the resources promised (the famous 1 000 billion) do not correspond to public investment or monetary creation but essentially to private investment supported and guaranteed by the EU budget and the EIB, they consider the very content of the pact to be "desperate" and write:
"The Green Deal proposes to encourage investment by shifting the risk from the private sector to the EU budget. This does not reduce the risk, but simply transfers it to the shoulders of the European population, while ensuring that private investors enjoy the benefits. Without a coordinated plan for the production and distribution of energy in a true energy union, the Commission's commitment to private capital only promises to intensify inequalities between and within Member States".

 

Thus, the climate issue is anything but consensual and, in the United States as in Europe, no one can hide behind the IPCC reports to hope to put an end to the political debates that open up as soon as we leave the field of findings to consider taking action. From this perspective, Europe's ambition to position itself as a leader in relation to other regions of the world comes up against two obvious obstacles. The first is economic and corresponds to the fact that, if Europe were to stand out in this way, it would risk undermining its competitiveness in order to contribute to solving a warming problem that the emissions of others would make insoluble. The second is political and is symbolised today by Poland's opposition: not everyone in Europe has the same interest in subscribing to the pact and the solidarity or transfer mechanisms that can be mobilised through the EU budget are clearly insufficient to support investment on the one hand and to buy the accession of the countries most weakened by the affirmation of the objective of neutrality on the other.

 

In these two problematic perspectives and in the face of the irreducible oppositions described here, the establishment of a carbon mechanism on products imported into the EU that should be part of the Green Pact could be a real step forward. It would involve extending the European carbon market to imports in order to preserve the competitiveness of continental players. The Novethic website explains that "basic goods such as steel, aluminium and cement, for which data are known and reliable, could be the first concerned" and mentions proposals from French researchers from the OFCE (French Observatory of Economic Conjunctures) and the Ademe (French Environment and Energy Management Agency) developed in a report published in early January. 

 

The report calls for a fairer and more efficient carbon tax at the borders which, unlike the CCE (climate and energy contribution) which had put the yellow vests on the streets because it concerned consumption that was difficult to compress, would also apply "to non-energy goods for which the possibilities of substitution, or at least of reducing the level of consumption, are greater, even for the most modest".
Such a scheme can be seen as a tool for industrial policy and potential relocations, including within the EU in an industry such as the automotive industry. If such a mechanism could find its way between the red balls that will continue to be thrown at each other, the Green Pact would have served a purpose.

 

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