What is happening to EU green policy in light of Corona?

Our keen eye on green policy, former Junior Consultant, and newly crowned Associate Consultant, Alessandro Calissi, looks at how EU green policy is fairing in light of Corona, and what can be expected.

Alessandro Calissi, Associate Consultant
Published April 6, 2020

In the emergency scenario shaped by the Coronavirus pandemic, urgent measures are being rapidly put forward by the EU Commission, squeezing and rearranging the budget available to give support to Member States’ healthcare systems and economies. Quarantined citizens and policymakers can directly experience the delicate political balance between national(istic) preservation and the need for EU-level cooperation. Another crucial political balance is however looming large: short-term vs long-term, or rather, hastening post-crisis economic reconstruction vs transforming the EU economic model to reflect climate protection targets and avoid climate catastrophe.

Green Deal Vs Covid19

A few months ago, at the launch of the ambitious EU Green Deal, nobody could have expected that a virus may have been the greatest obstacle to implementing the EU environmental agenda. Political and industry actors who have been sceptical about the Commission’s plans since the beginning, can now take advantage of the situation, trying to redefine political priorities in the EU environmental agenda. Some MEPs and EU political leaders, especially from Central-Eastern Europe, have openly expressed their opposition to further advancement of the EU green agenda in these times of crisis. Representatives from heavily affected industries are already calling for a review of political priorities in light of the Coronavirus-related economic downturn, including CO2 emissions pricing and reduction targets. At the same time, key industry sectors for the energy transition are facing increasing pressures, with supply chain disruptions and potential downward trends in investments and consumer demand caused by the ongoing pandemic.

The EU Commission has so far dismissed calls for a general review of the Green Deal, assuring that the EU environmental policy agenda “is not over”, but also admitting that the implementation of specific initiatives listed in the roadmap might suffer some delay. The Commission notably resisted attempts to delay the deadline for firms to surrender carbon permits under the EU Emission Trading System (ETS), a main pillar of EU plans for climate action which some see as the first climate policy instrument at risk of collapse under the consequences of the pandemic. The Commission is also moving ahead with the revision of the 2030 emission reduction targets, aiming at a 50% to 55% reduction from 1990 levels, rather than the “at least 40%” target required by existing provisions. Slightly delayed but still scheduled in the Commission green agenda, the EU Biodiversity Strategy for 2030 and the Farm to Fork Strategy covering sustainability in the agri-food sector should complete the first batch of environmental policy strategies foreseen in the 2020 Work Programme for the first part of the year.

Squeezing the budget

Despite advancements on policy strategy-making, the stark reality of the economic impact of the Coronavirus epidemic, and the magnitude of the financial means currently being mobilised to contrast it may reduce budgetary space for a full-fledge green transformation as envisaged by the Green Deal agenda. Furthermore, the current response to Corona could “distract the attention of policy makers, business leaders and investors away from clean energy transitions”, warned the International Energy Agency Executive Director.

Even considering the recent European Council statement inviting the Commission to put forward a “comprehensive recovery plan” integrating the green and digital transitions, it should not be forgotten that the EU sits in the middle of a critical phase for long-term budget negotiations, as proved by the lack of progress on the 2021-27 MFF at the special European Council last February. Considering the likely delay for an agreement on the MFF, the Committee on Budget of the EU Parliament has already called on the Commission to propose a contingency plan for 2021, capable to address the immediate consequences of the Corona emergency. It is easy to imagine EU leaders fighting over the EU long-term budget in normal circumstances. Corona-related tensions - already evident in the debate over “coronabonds” – could further ease the negotiating strategies of Green Deal-sceptic Member States.

Furthermore, as reported in a previous article, the original Commission’s budget proposal for the Green Deal had already been criticised for its limited resources, in particular considering the “Just Transition Fund”. With current expectations for a Corona-induced global economic recession, spikes in layoffs and business bankruptcies, the need for socioeconomic support to Corona-battered regions would require a much more significant financial commitment, and the environmental transition angle could easily be discarded.

Or not.

Times of crisis, times of change

A growing number of voices across the political spectrum and among organised civil society are calling for environmental clauses to be applied to bail-out schemes and financial aid measures under consideration at EU and Member State level. As acknowledged by the Chair of the EU Parliament Committee on Environment, Public Health and Food Safety: “If we manage to get it right, it will speed up the Green Deal[...] If we get it wrong, that means we will delay the Green Deal and make carbon neutrality even more difficult to reach".

Many in the environmental NGO landscape are hoping that the renewed state-led interventionism characterising the Corona crisis will function as an enabler for a deep economic transition, ditching subsidies for polluting industries and focusing public investments and financial safeguards to prop up a new wave of green and sustainable modes of production and consumption. Government-driven support for green-tech, renewable energy and energy efficiency technologies could produce important results both in terms of employment opportunities and climate action. The rapidly developing green finance sector could provide additional options for embattled governments.

EU leaders have not showed the type of cooperative approach many would expect of them in such times of crisis and, given the overarching nature of the EU Green Deal initiative, a clear change of pace will be needed to deliver concrete results, starting from the review of the 2021-27 EU long-term budget. The EU Commission has so far stayed true to its green commitments, announcing that, despite the de facto loss of political momentum, the EU “will not slow down” on climate action. EU public awareness of the impact of human activity on the environment remains high, possibly even higher in these lock-down days of quiet roads and cleaner air, and clearly the long-term climate challenge has not disappeared.

A test for the Union

The tragic toll of the Corona epidemic will surely impact on policy-making in the coming weeks, re-shuffling political priorities and budget lines, but it might as well fuel the will to overcome the common difficulties and kick-start the EU economy in new, possibly green, directions. Important EU industry sectors are understandably worried about the economic fallout of the pandemic, and many EU citizens risk to be unemployed in next coming months. The EU institutions are being tested by this difficult situation and the ability to identify the right solutions to get over the crisis will be crucial not only for the well-being of EU societies but for the Union itself. Carpe diem.

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