On paper, European countries are taking climate change very seriously. Finland has pledged to be carbon neutral by 2035, Austria by 2040, and both Germany and Sweden by 2045. A number of European countries—Denmark, France, Hungary—have even put their commitments into law.
These commitments are all the more serious because European countries have some of the worst carbon footprints in the world. In terms of per-capita emissions, Germany is number seven at 10.4 metric tons per person while France clocks in at number 14 with 6.6 tons (which is also roughly the EU average). As a whole, the European Union is the third largest emitter of carbon dioxide after China and the United States.
The carbon neutrality pledges are also within the realm of the possible. After all, the EU has been fairly successful at cutting emissions, having reduced levels by nearly 20 percent from 1990 to 2017. The United States, by contrast, increased emissions over that time by 0.4 percent while China’s ballooned by over 350 percent.
In July 2021, the European Union unveiled its “Fit for 55” plan by which the 27-member regional bloc aims to reduce its collective emissions by 55 percent by 2030. “This demand was made by the European Parliament,” notes economist Ann Pettifor of Policy Research in Macroeconomics. “The European Commission offered a 30 percent and then a 40 percent reduction. The parliament kept ratcheting up the number to 55 percent. This is wholly inadequate, it’s not fast enough because we should be aiming at 2025 not 2030. But this target is being embedded in rules and institutions—and those institutions apply across 27 countries.”
This carbon reduction plan is part of a larger “European Green Deal” first introduced in December 2019 that promises “economic growth decoupled from resource use.” This larger plan, which European member states are still debating, envisions increasing the share of renewables to 40 percent of overall energy use, renovating 35 million buildings to make them more energy efficient while creating 160,000 new Green jobs in the construction sector, and boosting organic farming as part of a “Farm to Fork” program that aims to make agricultural production, distribution, and consumption more sustainable.
All of this will, of course, cost a lot of money. The EU has pledged to spend as much as 30 percent of its long-term budget, which would amount to around $700 billion, to climate action. As part of the plan, a Carbon Border Adjustment Mechanism would effectively apply a tariff on carbon-intensive goods coming into the EU. A Just Transition Mechanism of around $85 billion over six years would help poorer regions of the bloc meet the plan’s goals. Within this mechanism, a “public sector loan facility” would combine grants from the EU budget with financing from the European Investment Bank
But as Clara Bourgin, the policy and advocacy officer of Counter Balance points out, much of the money that the EU has promised is really just old money under new labels: “The only two new things—the just transition fund and the public sector loan facility—despite their novelty and added value, are of very limited size. They’re more like pilot initiatives than significant investments.”
Integral to paying for the European Green Deal is a heavy reliance on private finance as well as modifications to the EU’s existing Emissions Trading Scheme (ETS). Established in 2005 and currently the world’s largest carbon market, the ETS covers factories, power stations, and the airline industry. The Fit for 55 plan proposes to include emissions from ships and, in a separate new market, road transport and the building sector. The higher price for carbon that will likely result has divided the EU along the east-west axis, particularly since eastern Europe is more heavily dependent on fossil fuel than the west.
“Including housing and transport into the ETS may sound like a good thing,” adds Dusan Pajovic, the coordinator of the Green New Deal for Europe project of Democracy in Europe Movement 2025 (DiEM25). “But common people will feel this on their skin. They will see it in their heating bills and at the gas station when they pump gas into their cars. Once again, common people will pay for the sins of big corporations.”
European policymakers have repeatedly acknowledged the scale of the climate crisis and the urgency of acting sooner rather than later. But however ambitious the European Green Deal might look on paper, the reality is that is insufficient. Implementing this landmark initiative might well be a victory, even an impressive victory when compared to what China, the United States, or Russia are doing. But given the timeline for cutting carbon emissions and the increasing likelihood of a catastrophic increase in global temperature, it’s not a big enough victory.
As the executive director of War on War Asad Rehman succinctly concludes, “Winning slowly is the same as losing.”
Pluses and Minuses
Unlike other parts of the world, European countries are acting in concert in response to climate change. The European Green Deal is a regional approach that coordinates among 27 countries.
“What we most miss in this global geopolitical state of rising nationalism and authoritarianism is the failure of the international community to work together and coordinate,” Ann Pettifor notes. “We saw that most tragically through the pandemic when the so-called international community absolutely refused to work together to get through this crisis. If only Africa had such rules bringing all the countries in Africa around a plan for decommissioning greenhouse gas emissions. The same for Asia.”
Europe is laudably “providing the institutions and frameworks within which countries operate and will be held accountable,” she adds.
European initiatives also reinforce the seriousness of the problem. Climate denial remains powerful in countries like the United States and Brazil. By contrast, “more than 90 percent of Europeans think that climate change is a real problem that needs to be solved thoroughly,” points out Dusan Pajovic.
And yet, he continues, the European Green Deal is not enough to keep temperatures to below the 2-degree-Celsius threshold much less the 1.5 degrees that scientists agree is the minimum to avoid the worst effects of climate change.
Meanwhile, the European Green Deal does not live up to its name. “The European Commission had at least the decency of dropping the word new when they co-opted the term Green New Deal,” Pajovic argues. “Indeed, new it is not. But nor is it green. As to the word deal, we can only understand it as a tribute to the backroom dealing between Brussels career politicians and well-paid lobbyists that brought this disastrous plan to life.”
The European package, for instance, bears little resemblance to the job-creation element of its erstwhile antecedent, the New Deal of Franklin Delano Roosevelt in the 1930s. “The European Commission says it will open up 160,000 new Green jobs in infrastructure,” Pajovic reports. “But compared to the EU’s working population, it’s basically nothing, only about 0.07 percent. FDR opened up 20 million jobs between 1933 to 1935.” Nor does the new plan address public housing or the widespread problem of homelessness.
Finally, the European Green deal “doesn’t take into consideration the historic injustices of Europe toward the Global South,” Pajovic points out. “The EU talks vaguely about allocating $250-300 billion in a decade, which is nothing. Fossil fuel gets $11 million in subsidies every minute. When we say we need more money, they say it’s not possible. But it’s possible when they bail out banks, big corporations, and fossil fuel companies.”
“We are the continent with the most resources in the world,” he concludes. “We must lead this global transition.”
Following the Money
The European Union is attempting to funnel both public and private money into its proposed economic and environmental transformation. In mid-October, for instance, the EU issued its first “green bond” in the expectation that it would bring in $14 billion for its Green Deal budget. Instead, the bond was wildly oversubscribed to the amount of $156 billion.
“The private sector is very fragile and insecure and desperate to get its hands on safe collateral,” Ann Pettifor explains. “The safest asset is not London property or the queen’s racehorse or a Van Gogh. It’s not even oil or gas any longer. The safest asset is government debt like the EU’s.”
Safe collateral that can provide a reliable return on investment is thus a tremendous opportunity. “Bonds are only that valuable because they are backed by taxpayers,” she continues. “It’s the general flow of income into the EU governments and into the EU commission that makes their promise to pay in the future on that bond so incredibly valuable to the private finance sector. This a kind of citizen power. We taxpayers should be demanding that those bonds, especially Green Bonds, should be issued with certain terms and conditions. You can access those bonds, but only if you’re not invested in fossil fuel. But right now, the European Central Bank and the Federal Reserve are very relaxed about accepting dirty bonds from fossil fuel companies as an asset in exchange for liquidity.”
The financial system is the spigot that keeps the global economy running, so “unless we follow the pipeline and switch it off at the source, we will have difficulty reducing carbon emissions,” she concludes. “We should be arguing that the private sector is the servant of the state, not the master.”
At first glance, Europe is putting together a considerable amount of money for its Green Deal. The Sustainable Europe Investment plan expects to mobilize $1 trillion by 2030. Around half this money will come directly from the EU budget, which will in turn trigger national co-financing of $114 billion over the period 2021 to 2027. A guarantee fund called Invest EU will also spur public and private investment of $279 billion. And the Just Transition Mechanism will assist poorer and more fossil-fuel-dependent areas keep pace with the rest of the EU.
Clara Bourgin identifies three main structural flaws in this financial architecture. First of all, it’s “undersized,” she says. “The $1 trillion is mostly a political announcement. It doesn’t reflect what the EU will invest. Most of the money is leveraged from the private sector by investment mechanisms.” A lot of the money is also just old wine in new bottles. The Invest EU fund, for instance, is simply a continuation of the older European Fund for Strategic Investment.
Second, the plan shows “a strong bias in favor of private finance,” she continues. “It is using public investment to derisk private finance. It ignores that what we need for a just and equitable climate transition will not bring returns on investment in the short term.” Such a channeling of public funds into private equity runs the risk of reinforcing the financialization of European economies and increasing inequalities within and between countries.
Finally, Bourgin notes, the entire plan is top-down and “it’s unlikely that decisions about loans and financial instruments will be taken in a transparent, accountable manner.”
The EU wants to make Europe the first carbon-neutral continent and transform its economy at the same time. But the European Green Deal will also have substantial impact on the EU’s neighbors and trading partners.
For Asad Rehman, the EU’s initiatives must be understood in the context of an unjust, unequal world that, during the pandemic, “put the profits of big pharma ahead of the lives of people in the Global South.” He continues, “There is widespread recognition of the magnitude of this crisis facing humanity. It dwarfs everything we face. But there is a cognitive dissonance in terms of the scale of action needed that is matched by a shrugging of shoulders when you point out the responsibility of the rich.”
Rehman proposes four questions to ask of any climate plan to assess whether it’s just and sustainable, not simply for the region it covers but also for the majority of the world’s citizens.
- Does it keep to the 1.5 degree Celsius limit with everyone doing their fair share?
- Does it tackle economic inequality?
- Does it put well-being ahead of unsustainable growth?
- Does it undo embedded systems of racism, patriarchy, and economic injustice?
In order to keep below the 1.5-degree Celsius limit, the world has approximately 500 gigatons left in its carbon budget. “We will have burned through 89 percent of that budget by the end of this year,” Rehman explains. “That means we have a one in three chance of breaching the 1.5-degree guardrail.” Exceeding that limit, however, “will spiral into runaway climate change that will dwarf all the killer fires, droughts, and famines destroying the economies of the Global South. No one in the European Commission would countenance a policy for Europe that would put European citizens at that risk. Not one of those commissioners would board a train with a one in three chance of crashing. But that is exactly what is being sold to the Global South.”
At the same time, Rehman continues, “the EU continues to capture more of the remaining carbon budget, which amounts to a form of carbon colonialism, through more loopholes and offsets in carbon markets.” So, on the first test, the European Green Deal fails.
On the second test of addressing inequality, “while the EU talks about setting up a fund to tackle inequality within Europe, neither the European Green Deal nor Europe’s other external policies see the need to tackle global inequality as a cornerstone of policy,” Rehman observes.
On the question of growth, the EU continues to pour billions of dollars into fossil fuel subsidies and expanding fossil fuel infrastructure. European financial institutions continue to “provide financial oxygen to the fossil fuel industry,” he notes. “We need immediate new regulations on corporations to meet the 1.5 degree limit.” Meanwhile, the new Green energy infrastructure will increase the use of new metals. “We’re looking at an estimated doubling of current extraction,” he reports, “while meeting climate targets will require cutting extraction in half.”
The Global North is responsible for the lion’s share of carbon emissions historically, with the EU alone contributing 22 percent of the total from 1751 to 2017. So, Europe has a special responsibility to address the climate crisis not just within its own region but globally. But so far, the EU has not ponied up the money. “According to the UN, the finance needed to meet the climate goal and the Sustainable Development Goals is $1.4 trillion a year,” Rehman notes. “For a decade, the promise of $100 billion for the Climate Fund has still been unmet.” Indeed, the flow of money continues to go in the opposite direction, with $24 in debt repayment and other funds going from the Global South to the north for every dollar that goes the other way.
This is a “civilizational crisis,” Rehman concludes. “The poor pay the heaviest price while the EU seeks to normalize walls around Europe.”
The European Green Deal is still a work in progress. The European Commission presented its “Fit for 55” package in July 2021, and debate over the details is ongoing. However, it is not easy as a citizen or an NGO to intervene in the decision-making process and influence outcomes. Activists then have a choice: to push the European Green Deal toward more just and sustainable outcomes or organize in favor of an alternative.
“We work as a movement to push institutions,” Dusan Pajovic says of DiEM25, “but we can’t push a rotten structure to do something good.” DiEM25 calls for carbon neutrality by 2030, not 2050, and is also urging that an annual five percent of European GDP go to Green Bonds, which would generate around 750 billion euros. On related issues, it is also pushing for a shorter work week as part of a general push for degrowth and an end to arms exports so that countries can redirect their budgets to tackling the climate emergency.
At the same time, DiEM25 has outlined a comprehensive alternative: a Green New Deal for Europe. This plan has three pillars: a public works program funded through public financing, a regulatory framework that aligns European law with the scientific consensus on climate change, and an independent commission that researches, monitors, and advises EU policymakers on how they can advance the cause of environmental justice across Europe and the world.
This alternative, he emphasizes, involves citizens directly through deliberative democracy via people’s assemblies. It also relies on the principle of subsidiarity: “Ursula [von der Leyen] in Brussels can’t know better than people in Portugal about what to do here in Lisbon,” he argues.
Counter Balance, too, has specific recommendations. When it comes to decarbonization, “we should introduce strict social and environmental conditions on all the financing connected to the European Green Deal,” Clara Bourgin says. “There should be no more financing of fossil fuels, but also we should make sure that meaningful conditions on human rights and workers’ rights are embedded in the financing.”
Also critical is putting public finance at the heart of the initiative so as to take investments out of the hands of the private sector and direct them toward the public interest. “We need to shrink private market capital and rechannel private wealth into public mechanisms that can act progressively outside the pure market,” she continues. “Instead of giving big credit lines to banks, we should fund cooperatives in the social and solidarity sector. We should set up community-led banks that invest directly in local and sustainable communities.”
Part of this effort must include great transparency and monitoring of institutions. “We need to fundamentally reform institutions like the European Investment Bank, the Sustainable European Investment Plan, and the national public banks so that these institutions can become easier to control democratically and so that they prioritize quality over quantity,” she concludes.
To advance these alternatives will require popular mobilization. Ann Pettifor cites polls in the United States that a strong majority of the American public wants federal money invested in building clean energy infrastructure. “But these masses haven’t been mobilized enough to challenge the power of Wall Street, London, and Frankfurt,” she notes. “When you drive into a garage to buy oil, there is something tangible there. You can touch an oil company or a fracking outfit. You can’t see finance or its immense power. What you can see is the role of the taxpayer in backing the private sector and the role the public sector also plays in providing support.”
One sector of the world’s population has, in fact, massed on the street. “The children have mobilized,” Pettifor notes. “They have a leader, and Greta Thunberg is exercising extraordinary leadership that is inclusive. But why is it on the shoulders of children? Why haven’t adults mobilized as well?” Pettifor wants to see a Parents for the Future movement, one that draws people together into a large movement rather than simply into groups dedicated to ever purer missions. “We need to speak to the public in language that is accessible and that mobilizes,” she says. “The whole point of leadership is to be able to bend public opinion, even those hostile to us, behind progressive policy.”
Asad Rehman also emphasized the importance of mobilization, noting that individuals acting alone or as consumers can’t solve the climate crisis. Mobilization is also about power. “As Frederick Douglas famously said, ‘power concedes noting without a demand. It never did, and it never will,’” Rehman recalls. “We know that to build power requires a movement of movements. We need a vision. We need to describe the world we want to create where people can see themselves in. We can’t tell people that everything is going to be all right. They’re going to hold onto what little they have. They know firsthand what deindustrialization and austerity means. They’ve been thrown onto the historical scrapheap.”
The climate strike that Thunberg initiated has been effective in this regard. “It moved the dial on climate in a couple years in ways that decades of activity by mainstream NGOs hasn’t,” Rehman acknowledges. “But it also comes on the back of many years of climate justice activism in the Global South. We need to do political education within our movements so that those hundreds of thousands of young people turning out on the street today understand what we’re fighting for. If we don’t provide the demands and the vision, the calls for action could easily veer into ecofascism. Young people in the recent German election didn’t just vote for Greens and die Linke, but also for the far right.”
What’s missing, he concludes, is solidarity. “Without that concept of solidarity being rebuilt we’re not going to get internationalism,” he says. “Without solidarity, climate action will only result in climate walls in the global north.”
“We need to connect our domestic demands to our international demands,” Asad Rehman concludes. “Too often they are separate. When we talk about public services, it should be about public services in Europe and globally. It’s not ‘or.’ It’s ‘and, together.’”
A concrete form of international solidarity is for the Global North to provide funds to the Global South to help with its carbon emission reductions. Dusan Pajovic views these funds as “reparations” for the historic and current injustices visited upon the Global South. Another concrete example of such solidarity is to transform trade rules so that they don’t disadvantage poorer countries. A third example is to restructure global supply chains so that production is decentralized and the poor don’t have to shoulder the burden of making manufacturing carbon-neutral. Toward that end, technology waivers, similar to those discussed around COVID-19 vaccines, are essential so that poorer countries can afford to access clean energy technology.
Ann Pettifor also advocates for solidarity, but one forged through a kind of environmental populism. “When the corporations realized the scale of what was coming, they decided to invent something called the ‘carbon footprint,’ which disperses responsibility for carbon among everyone. But the top percent—the north, the rich—are responsible for 50 percent of all emissions. Instead of carbon taxes that affect everyone, we should focus on getting the top one percent or 10 percent to give up their frequent flyer privileges and their huge motor cars. The problem doesn’t lie with Africa or the poor. It lies with the rich.”
FPIF, November 9, 2021