The year 2020 was expected to bring historic contributions and credible international commitment to push ahead on climate targets. However, the first months were overshadowed by the escalating crisis in the wake of the coronavirus outbreak with social and economic impacts still unfolding. Energy markets were hit by collapsing oil prices, a major demand shock and supply surplus, raising concerns about the viability of delivering on climate objectives.
As attention shifts to emergency responses, the pandemic puts unprecedented pressure on the European Union’s ambitious Green Deal aiming to reach carbon neutrality by 2050. The European Commission is currently reviewing its 2020 work program due to the outbreak of the virus and although some elements are projected to be delayed, the key priority areas such as the 2030 Climate Target Plan and the Renewed Sustainable Finance Strategy seems to remain on track.
Choosing the pathway to growth
Talking about financing the recovery of European economies, the President of the European Commission Ursula von der Leyen emphasised the need to boost the EU’s resilience by investing in the European Green Deal, arguing that “global warming will not slow down and first-mover advantage will count double, thus finding the right projects to invest in will be key.”
Discussing the implications of COVID-19 on the energy agenda, Stavros Lambrinidis, the European Union Ambassador to the United States, underlined that once the global health crisis is over we will still face the same realities, the urgency of climate change mitigation.
“As we will recharge our economies after the crisis is over […], we have to decide if we embark on the growth model of the past, that by definition has an expiration date, or we will invest in a new kind of growth that is circular and sustainable,” stated the Ambassador. “The EU Green Deal has been conceived as a modern growth strategy, that will pour substantial investment in the green transition.”
The litmus test of just transition
The post-corona recovery has another essential angle, that was also highlighted by the President of the Commission; cohesion and convergence. As Ms von der Layen phrased it, “while the crisis is symmetric, the recovery will not be.”
As national governments take measures to stabilise their economies some member states such as Poland and the Czech Republic already signalled that they could face difficulties while pursuing the targets of the Green Deal in a very uncertain period. The economic aftermath of the coronavirus highlights another crucial element of the Green Deal, which is that transition towards the net-zero has different impacts on different actors.
Nikos Tsafos, Senior Fellow at the Center for Strategic and International Studies, Energy Security and Climate Change Program highlighted the importance of the Just Transition Mechanism of the Green Deal, that aims to help those who are exposed to more risks or have disadvantageous starting points in the energy transition.
Unless you bring in the people currently working in the fossil fuel value chain it’s impossible to make progress.
Mr Tsafos argued that it is crucial how the EU will address the issue of fossil fuel stranded assets in fast-forwarding the clean and just transition. As some polluting technologies run out, the shutdowns along these industries will have a serious impact on assets that still have economic value.
Nikos Tsaros took the example of the US coal industry that went through a stranded asset value destruction as coal generation dropped by half over a course of a relatively short period. Leaving the owners of these assets and participants of the fossil fuel value chain without compensation might be economically beneficial, but it could have serious consequences as the damage inflicted could resurface on a political level later on.
“The practice of just transition is not only essential for the recovery but also for the lesson that Europe learns, as it sets the example for the rest of the world on how economies traditionally engaged in fossil fuel production could shift towards a sustainable future,” said Mr Tsafos.
Energy security and green transition are intertwined
By setting ambitious goals for the deployment of renewables, the European Green Deal has policy implications on another, less discussed level as well: geostrategic stability. The commitments made on a European level will have defining and long-lasting impacts on the energy markets of Central and Eastern Europe that is very much reliant on fossil fuel imports from Russia.
Ambassador Stavros Lambrinidis pointed out how the green transition could change the status quo not just for the Eastern EU member states but on a much broader scale to the whole region as countries would replace energy imports with renewables and make progress on energy efficiency targets.
Speaking of the fossil-fuel driven economy of Ukraine the Ambassador referred to the substantive amount of funds the EU commits to Ukraine to assist its ongoing energy transition. Mr Lambrinidis argued that projects like building renovations to increase energy efficiency in Ukraine might sound trivial at first, especially in the wake of the current crisis, but projects like this have the potential to significantly decrease energy dependency on Russia, thus energy efficiency is a hardcore security project.
One has to think about the tremendous benefits of energy transition that are usually overlooked, and geopolitical stability is one of them
The upcoming months will test the dedication of European leaders to deliver on their commitments on short-term as well as long-term climate objectives, but Ambassador Lambrinidis says Europe has the “will and the way to achieve the green transition.”
“It won’t be as easy as it was a few months ago, but rest assured it will happen and it will create jobs, growth and a future for people in a way that is unprecedented,” he concluded.