EU’s Green Deal Faces Obstacles Amid War and Pandemic, Experts Warn
The European Union’s ambitious plan to become climate neutral by 2050, known as the European Green Deal, has encountered significant challenges since its inception in 2020. Key hurdles, including the war in Ukraine and the economic fallout from the COVID-19 pandemic, have diverted attention from climate initiatives, slowing the progress needed to meet crucial environmental targets.
Despite growing awareness of the climate crisis, many economically strained member states have been forced to prioritize immediate crises over long-term environmental goals. The European Scientific Advisory Board on Climate Change recently warned that the current trajectory is not aligned with the EU’s 2030 energy targets or its 2050 climate neutrality objective. “Long-term energy infrastructure planning and development at EU level are not compatible with the EU’s climate 2030 targets,” the advisory board stated in June.
Financing the Transition
At the heart of the debate is how to fund the transition to green energy. While shifting to renewable energy is essential for the EU’s economic future, especially to reduce reliance on fossil fuels, the initial costs of integrating green technology are significant.
Speaking at a Business Europe conference in Brussels, Fabien Roques, Executive Vice President at Compass Lexecon, stressed the importance of deciding who should bear these costs. “There needs to be a debate in Europe as to who pays for the energy transition,” Roques said. He pointed out that the U.S. Inflation Reduction Act, which funds climate investments through fiscal measures, places the burden on taxpayers, whereas in Europe, some suggest raising energy prices, meaning consumers would shoulder the financial strain.
This approach has raised concerns, especially for households already grappling with the rising cost of living. The International Energy Agency estimates that around 30% of global climate funds will need to come from public sources, while 70% must be secured through private investments, including financial instruments like green bonds.
Market Reform and Investment Barriers
Christian Ehler, a Member of the European Parliament for the EPP party, also addressed the need for market reform to secure adequate financing for the green transition. “The European financial market is not going to deliver that in its current state,” Ehler said, calling for progress on the Capital Markets Union, which aims to create a single market for capital across the EU.
Ehler highlighted the complexity of fragmented financial systems across Europe, noting that this raises the costs of funding green projects compared to countries like the United States. He also pointed out that many EU member states have struggled to access post-COVID recovery funds due to bureaucratic red tape.
Harmonizing Energy Markets
Pierre Schellekens, head of Strategy and Coordination at the Directorate-General for Energy at the European Commission, emphasized the need for greater unity among member states in the energy market. He warned that uneven levels of compensation for fossil-fuel-dependent industries across the bloc could undermine Europe’s climate goals. Schellekens called for a more harmonized approach as Europe’s energy crisis begins to stabilize, suggesting that fossil fuel subsidies should gradually give way to greener policies.
The EU’s Green Deal, while essential, will require more efficient financing and stronger solidarity between member states to ensure its success in the face of growing challenges.
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