Perpetuating the EU’s global leadership in the clean economy of the future

The European Union has a long history of leading by example on environmental protection, the fight against climate change, and the clean energy transition. It was the first region in the world to set ambitious targets, to develop advanced standards and regulations and to build up international cooperation in these areas. There is no other actor in the world as committed to sustainability, climate action, and the clean energy transition in terms of public funding and investments as the EU.

Thanks to our first mover advantage in the clean economy transition, some 9 million Europeans are already working in the clean energy sector. This includes more than 1.17 million jobs¹ in the renewable energy sector, as well as jobs in energy efficiency and the construction sector. Many of these are local jobs that cannot be outsourced, and the European Commission expects this number to double by 2030 ².  

 

The Paris Agreement – an unprecedented opportunity to modernise the European economy

The Paris Agreement on climate change marked a historic turning point in humanity’s fight against climate change. As a clear result of the EU’s persistent diplomatic efforts over decades and its willingness to lead by example in the transition to a low-carbon economy, countries, cities, citizens, investors and businesses worldwide came to a robust agreement to act together against climate change. And despite the decision of President Donald Trump to seek to withdraw the United States from this agreement, the international community, led by European Commission President Jean-Claude Juncker has been unanimous in defending the Paris Agreement as irreversible, both politically and economically.

Now that the Agreement has entered into force, the transition to a low-carbon economy is an everyday reality that translates into an ever-more intense global competition for market shares, technology, and the brains that will come up with the innovations of the future. In this respect, the EU’s leadership needs to be renewed. Our environmental targets and regulations must be transformed into investments, jobs, growth and innovation. Member States have embraced this view, with the European Council recognising the Paris Agreement as a ‘key element for the modernisation of the European industry and economy’ in its conclusions of 22-23 June 2017. France and Germany further committed to making the fight against climate change, energy and sustainable development their number one research and innovation priority at the Franco-German Ministerial Council in July.

 

Putting our money where our mouth is

The transition to a clean economy requires major shifts in investments towards new infrastructures, technologies, business models and research areas. These investments will make our planet safer, our societies more resilient and the European economy more sustainable. The Juncker Commission has already tabled a number of legislative packages aimed at providing the necessary investment certainty for new business models to emerge in support of the clean energy, low-carbon and circular economy. The EU is not only taking measures to become a more attractive place for investments but also a more sustainable financial actor. 20% of the EU budget is dedicated to climate-related expenditure. The Juncker Plan, with its European Fund for Strategic Investments was set up to support sustainable investments in the real economy, and at least 40% of its investment is to be channelled towards clean-tech projects related to energy, transport, buildings and industries. Along with the mid-term review of the EU Capital Markets Union and the recent work undertaken to scale up sustainable finance at EU level, the next G20 presents a key opportunity to highlight Europe’s position as the most attractive destination for clean economy investments and the role of Europe’s financial sector as the global centre of gravity for capitals markets when it comes to the transition towards a low-carbon economy. 

 

Standing up for a global level playing field on climate economics

The transition to a clean economy is a social and economic long-term project that can increase costs for some economic actors in the short to medium term. This is why the Paris Agreement is so important: it creates a level playing field by ensuring that all global economies engage in the transition and cannot create unfair economic advantages for themselves in the short term. But, as protectionist measures become more prevalent on global scale, with some also engaging in unfair trade practices, European companies and regions need Europe to reinstate itself as a strong global actor ready to ensure fair trade practices.

Examples such as the sharp decline in Europe’s sizeable solar panel industry that was incurred after parts of Asia subsidised mass production and dumped these on the world market cannot be allowed to happen again.

Furthermore, there needs to be a level playing field when it comes to investing in foreign markets. Countries that want to invest in the EU also need to be open to European investments in their domestic markets. It is therefore essential to align the Paris Agreement with the EU’s trade and investment agenda by promoting our values and defending an open and rules-based economic system with a true level playing field. 

 

Ensuring that no one is left behind

Finally, we must plan the transition carefully to minimise job losses and stranded assets as investors divest from carbon-intensive sectors towards clean-tech ones. At home, the European Commission intends to protect and accompany the most vulnerable people and workers – for instance those in coal mining – by reskilling workers, modernising infrastructures and investing in new business models. 

But internationally,  the EU also has a responsibility to help. Although Africa contributes less than 5% of global carbon emissions, the effects of climate change will be much more disruptive there than in other parts of the world, with droughts, famines and human suffering driving civil unrest, conflicts, migration and terrorism. The EU is the largest contributor of climate finance worldwide. Helping the developing world and in particular Africa to leapfrog into a sustainable energy future and extending access to renewable-generated electricity for all can be game changers for the development of Africa and the rest of the world. This will improve living conditions for Africans, providing a perspective for young people, reducing migratory pressures and stopping the brain drain from Africa. Complementary to Member States’ instruments, the EU uses its External Investment Plan to support Africa’s clean energy transition, while also offering an opportunity for European industry to deploy its know-how, technologies and business models on a large scale and contribute to furthering innovation. In Morocco for instance, the EU supports the construction of one of the world’s biggest solar power complexes (‘Ouarzazate Solar Complex’) with Investment Grants. It will be finalised this year and power 350,000 homes.

 

A Europe that protects, empowers and defends

This and other examples show how EU action brings tangible added value in the fight against climate change. They stand as clear demonstrations of Europe’s readiness to protect the environment, to empower its citizens and businesses and to defend the global multilateral order through its commitment to international cooperation. The December climate summit in Paris organised by French President Emmanuel Macron at the two year anniversary of the Paris Agreement is an occasion for the EU to again highlight its key economic achievements, social opportunities and international leadership together with all committed actors. 

 

² European Commission

 

“The EU is the largest contributor of climate finance worldwide”