Greening Europe: Powering the argument for green investment during challenging times
By Joanne Walton
Greening Europe is concerned with the very real economic challenges faced by Europe –and indeed the world—in becoming a net-zero carbon economy by 2050. To achieve this, there must be a transition from fossil-fuel reliance to renewable energy sources. Editors Francesco Saraceno and Floriana Cerniglia collate analysis and recommendations from the collective minds of key European economists on how this will be achieved. The selected contributors are affiliated to –among others -- the International Monetary Fund (IMF), European Investment Bank (EIB), academic institutions in Spain, Belgium and Italy as well as EU Policy institutions.
As I write this blog, the UK news is concentrated on the newly installed Prime Minister, Liz Truss, and her strategy to help households and businesses with the astronomical jump in fuel prices. At a time of global ‘energy crisis’, Greening Europe is a pertinent and relevant reminder of the challenges faced by all governments as they strive to balance reduced carbon emissions with economic well-being. Although not discussed in this publication, the UK’s policies and strategies align with those of its European neighbours’.
Part One provides the ‘Outlook’ analysis of the European member states’ position in relation to their carbon-emission commitments. It reflects on the EU’s economy and spending over the last 30 years including measures to alleviate the Maastricht treaty restrictions and the costly adoption of the Euro. Specific case studies are provided on France, Germany, Italy, and Spain’s economies and low-carbon investments along with commentary on the Recovery and Resilience Fund (RRF) (1); REPowerEU(2); and ThreeME(3).
Exemplifying the complications governments are faced with, the German case study makes specific reference to the war in Ukraine and its unforeseen impact on military spending. Additionally, the government found itself issuing relief packages as energy prices soared. This coincided with the lifting of pandemic restrictions and counteracted any consumer spending that might have been expected to boost the economy. The repayment of the pandemic and military ‘debts’ will commence in 2028 and 2031 respectively and will impact future spending priorities. While green investment is seen as a good thing, a cautionary approach (post-pandemic) is necessary. Any surge in demand for scarce resources will have the adverse effect of inflating prices.
Part Two investigates the ‘Challenges’ each member state faces. The war in Ukraine coming on the back of the COVID-19 pandemic exacerbates the financial challenges each country faces and economic growth in the EU is set to decrease. The decreasing economies have a direct effect on public spending capability which remains inadequate in terms of ‘green investment’ if the carbon-emissions targets are to be met. There is overwhelming support for the benefits of public investment in green enterprises. The data-rich analysis is compelling: green investments have far-ranging benefits to boost the economy; create employment through training and upskilling; manufacturing; supply; infrastructure; and improve the world we all inhabit. Although the spending trends and forecasts give an alarming picture of the scale of investment required, the evidence also points to green investment giving higher returns than is seen from fossil-fuels with lowering investment needed in the longer-term. Considering the fiscal pressures caused by global events, the emerging priority is now energy security.
Energy security is a broad term relating to both the existing and emerging risks to the energy supply of ‘importing’ countries; the financial and ecological cost of fossil-fuels; and the need to increase the digital network and data protection (Zhiznin et al, 2020). Importing/consumer countries need a reliable supply at a good price; exporting/producing countries need steady demand and to cover their costs while transit countries seek to benefit from allowing the energy supply to transit through their territories (Zhiznin et al, 2020).
The clock is ticking for Europe to meet its interim target of 55% lower carbon emissions by 2030. In less than thirty years’ time, Europe –and this includes the UK--is expected to have a net-zero carbon economy. Each country has made strides in this respect since 1990, but the daily news reports show us that we need to do more to combat climate change. Billions of euros (and sterling) have been invested across Europe, but billions more are needed. Public spending alone won’t be enough. Private investment is needed and, as importantly, we as consumers, need to change our behaviours and become more mindful of how we use energy.
Whether you consider yourself an environmentalist or an economist –or maybe both—or, like many of us, are completely stumped by the enormous price hikes of energy prices in the last year then this book is a must-read. I am not an economist but found this book fascinating and it filled in many of the gaps which are not easily explained by Economics Editors on the News at Ten.
Blog post written by Joanne Walton. Jo is a mature student who joined OBP as a volunteer in September 2022. She is about to commence her third year on the University of Plymouth’s BA (Hons) Creative and Professional Writing course and hopes to continue onto an MA in Publishing after graduation.
(1) The RRF was designed to provide a demand stimulus and strengthen the EU’s recovery and growth potential.
(2) REPowerEU aims to reduce greenhouse gas emissions (GHG) through energy savings, movement away from fossil-fuel reliance, and transition to renewable energy sources.
(3) ThreeME is a framework to assess the impact of environmental policies, specifically ‘pro-techno’ based (climate change managed by technology with no change in behaviours or energy consumption) and ‘sobriety’ based (climate change managed socially through a change in energy consumption and lifestyle behaviours).
Photo by Vlad Hilitanu on Unsplash