Opinion

Europe’s Green Deal must reach beyond its borders

A European Climate and Sustainable Development Bank could become the external investment arm of the European Green Deal.

By: and Date: February 4, 2020 Topic: Energy & Climate

Ursula von der Leyen has made climate change a top priority for the European Commission, proposing a European Green Deal that would make Europe climate neutral by 2050.

This is good for Europe and for the world.

It is good for Europe because deep decarbonisation represents a historic occasion to revitalise Europe’s economy and provide purpose and meaning to the common project.

It is good for the world because it shows that pursuing climate neutrality by 2050 is not only technically and economically possible, but also politically rewarding. This is of paramount importance, as early deployment of low carbon technologies is key to making them globally competitive with high carbon technologies.

Even so, a European Green Deal focused only on Europe itself would not do much to mitigate climate change, as the continent produces less than 10 per cent of global greenhouse-gas emissions. The only way for Europe to exercise global leadership on decarbonisation is to move beyond its own borders. The European Green Deal should go global. To make that possible there is a pressing need to consolidate and streamline the EU’s development finance and climate activities outside Europe, which are today divided between the European Commission, the European Investment Bank, the European Bank for Reconstruction and Development and individual European member states.

Take the example of Africa. The EU and its member states have created a myriad of initiatives to promote electrification and decarbonisation on the African continent. But this fragmentation limits Europe’s leverage regarding credible energy sector reforms and, therefore, does little to promote the much-needed private investment in African countries. In the labyrinth of initiatives, understanding who is doing what is challenging even from an EU perspective, let alone from an African one, especially when China offers to finance coal plants in a far more coherent way.

Europe’s fragmented system creates overlaps, inefficiencies and greater transaction costs. European taxpayers’ money would be far better spent if channelled through a single facility, aimed at co-ordinating the initiatives of European institutions and member states.

The EU should combine the current instruments into a single sustainable development finance entity, such as a European Climate and Sustainable Development Bank — as proposed last year by the High-Level Group of Wise Persons on the European Financial Architecture for Development.

A European Climate and Sustainable Development Bank could become the external investment arm of the European Green Deal, pushing it beyond the continent’s borders. Such an approach would represent a triple win for the EU.

First, it would help to meet Europe’s climate-finance obligations and unlock the conditional emission-reduction commitments provided by most developing countries under the Paris Agreement. Second, it would enable European industry — which is competitive in many low carbon technologies — to find new markets. And third, it would help economic development in partner countries, providing an invaluable foreign policy dividend for Europe.


Republishing and referencing

Bruegel considers itself a public good and takes no institutional standpoint.

Due to copyright agreements we ask that you kindly email request to republish opinions that have appeared in print to [email protected].

Read article More on this topic More by this author
 

Blog Post

A green recovery

Government policy faces various challenges. Before the COVID-19 outbreak, the European Union set ambitious targets to reduce carbon emissions. Now in the midst of the pandemic, the EU has temporarily lifted state-aid rules allowing governments to steer companies through the crisis and to minimise job losses using public money. This column suggests combining these policies by attaching green conditions to state aid. In that way, we can aim for a green recovery.

By: Dirk Schoenmaker Topic: Energy & Climate Date: April 6, 2020
Read article More on this topic More by this author
 

Podcast

Podcast

The European Green Deal rules

When it comes to global carbon emission is a tax the best form of defence? To make the European Green Deal work, the EU is considering a levy on carbon-intensive goods manufactured beyond its borders. But will a carbon border tax spawn a massive bureaucracy and lead to accusations of protectionism? To find out, Nicholas Barrett talked to Georg Zachmann and Ben McWilliams from Bruegel and Gabriel Felbermayr, President of the Kiel Institute for the World Economy.

By: The Sound of Economics Topic: Global Economics & Governance Date: March 9, 2020
Read about event More on this topic
 

Past Event

Past Event

On gains, losses, and trade-offs: the case of Border Carbon Adjustment

How will the border carbon adjustment be implemented and what will be the implications?

Speakers: Gabriel Felbermayr, André Sapir and Georg Zachmann Topic: Energy & Climate Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: March 5, 2020
Read article Download PDF
 

Policy Contribution

A European carbon border tax: much pain, little gain

The European Commission should not make the implementation of a carbon border adjustment mechanism into a must-have element of its climate policy. There is little in the way of strong empirical evidence that would justify a carbon-adjustment measure. Moreover, significant logistical, legal and political challenges will arise during the design. The EU should instead focus upon the implementation of measures to trigger the development of a competitive low-carbon industry in Europe.

By: Ben McWilliams and Georg Zachmann Topic: Energy & Climate, European Macroeconomics & Governance Date: March 5, 2020
Read article More on this topic More by this author
 

Blog Post

The European Green Deal must cut hidden fossil fuel subsidies

Brussels should ensure that fossil fuels do not get direct or indirect support from governments

By: Simone Tagliapietra Topic: Energy & Climate Date: March 4, 2020
Read article More on this topic More by this author
 

Podcast

Podcast

Can the European Green Deal kill the single market?

The European Green Deal is one of the landmarks of Ursula von der Leyen's Commission. But, without an ambitious investment behind it, what could be its potential implications for the EU? Could it go as far as to threaten the EU's single market? This week, Renew Europe's vice-president, MEP Luis Garicano, joins Guntram Wolff and Maria Demertzis to discuss not only the European Green Deal but also the EU Budget and the Banking Union. Disclaimer: this episode was recorded on the 20th of February, before Bruegel hosted the event "The Ressurection of the European Banking Union".

By: The Sound of Economics Topic: Energy & Climate Date: February 25, 2020
Read article More on this topic
 

Opinion

Berlin will make or break the European Green Deal

€1 trillion isn't enough for the European Green Deal and the EU's fiscal framework is constraining public investment. "Mrs Merkel, tear down this rule".

By: Grégory Claeys and Simone Tagliapietra Topic: Energy & Climate Date: February 3, 2020
Read article More on this topic More by this author
 

Podcast

Podcast

Paying for the European Green Deal

The European Commission has presented its Just Transition Fund to help regions still dependent on fossil fuel as they move towards green energy. But where does the money come from and is it enough to make Europe carbon neutral by 2050? Should the EU re-write its fiscal rules to encourage sustainable investment? And should environmentalists be optimistic? Nicholas Barrett asked Simone Tagliapietra and Grégory Claeys.

By: The Sound of Economics Topic: Energy & Climate Date: January 16, 2020
Read article More on this topic More by this author
 

Blog Post

European green finance is expanding, a discount on bank capital would discredit it

If EU banks are to mobilise a greater share of loans for sustainable projects they will need a reliable policy framework, clear internal performance targets and the relevant skills. A discount on bank capital underlying such assets is neither justified nor likely effective. A comprehensive review of how climate risks are reflected in prudential regulation is nevertheless in order

By: Alexander Lehmann Topic: Energy & Climate Date: January 15, 2020
Read article More on this topic More by this author
 

Opinion

The Green Deal is not just one of many EU projects, it is the new defining mission

The EU has already invested so much of its political capital into the green transition that a failure to deliver would severely damage its legitimacy.

By: Jean Pisani-Ferry Topic: Energy & Climate Date: January 3, 2020
Read article More on this topic More by this author
 

Opinion

Europe’s Apollo 11 will not be about the moon

The European Green Deal has an ambitious double target to “reconcile the economy with the planet” and to become Europe’s “new growth strategy”.

By: Simone Tagliapietra Topic: Energy & Climate Date: December 13, 2019
Read article More on this topic More by this author
 

Podcast

Podcast

What's inside the European Green Deal?

President Ursula Von der Leyen has presented her European Green Deal before the European Parliament. How will it work? What are its implications? And will it make Europe carbon neutral by 2050? Nicholas Barrett asks  Simone Tagliapietra what's inside the Green Deal.

By: The Sound of Economics Topic: Energy & Climate Date: December 11, 2019
Load more posts