With rising fossil fuel prices comes a short-term political temptation to shy away from the investments necessary to decarbonise energy and industry. However, this current crisis must not become a driving argument to halt long-term goals for a transition to a green and sustainable economy, writes Tahmid Chowdhury.
Tahmid Chowdhury is an industry programme manager at CLG Europe, a cross-sectoral group of European businesses collaborating to accelerate economy-wide action for a climate neutral economy.
A global increase in the price of natural gas is having a debilitating effect on citizens across the EU, causing many governments acute political headaches. France and Spain have already taken urgent measures to curb the impact on European households, with Italy expected to follow shortly.
As ministers of the Competitiveness Council meet this week to discuss the Fit for 55 Package from an industrial perspective, they will be acutely aware of the fragility of business that is being exposed by the present crisis.
As geopolitical tensions over Russian gas giant Gazprom’s role in the crisis grow taut, the instinct to pull back to the business-as-usual model must be resisted.
With rising fossil fuel prices comes a short-term political temptation to shy away from the investments necessary to decarbonise energy and industry. After all, this is a difficult moment across the EU for its citizens. Rising energy prices hit our poorest and most vulnerable citizens; it is imperative to protect those worst affected.
However, this current crisis must not become a driving argument to halt long-term goals for a transition to a green and sustainable economy. If anything, the fact that this crisis is being driven by increasing gas prices demonstrates that we must implement clean technologies at a greater pace.
By reducing our dependence on fossil fuels through renewables, we can avoid such a crisis in future by making our continent more self-sustaining.
The current rise in energy prices comes in the context of the European Commission launching the ‘Fit for 55’ package, which aims to reduce carbon emissions by 55% in 2030 and net-zero by 2050. It is vital decision-makers are not swayed by outdated notions that business growth is the enemy of climate policies.
Such short-sightedness would miss the point that green technologies are the only viable future.
The European Commission has made this clear by framing the European Green Deal as the bloc’s de facto growth strategy, while Vice-President Frans Timmermans has stated that if we had got round to the Green Deal five years earlier, this situation would have been avoided due to lower dependency on natural gas.
Meanwhile, the European Central Bank has reiterated the heavy costs of climate change, which are higher than that of a green transition. In a new paper they state that no action on global warming would cut 10% off European GDP and cause a 30% rise in defaults in corporate loans.
Clearly, the effects would be disastrous for the economy, not to mention the planet and its people.
With the high number of energy-intensive industries in the EU economy, it is essential the industrial sector plays a leading role in the agenda towards decarbonisation.
Emissions from basic materials (e.g. cement and steel) account for 16% of net annual greenhouse gas emissions in the EU, and 20% globally; current policy proposals are inadequate to realise a green transformation by 2050. A more ambitious industrial policy is required to get the continent net-zero.
In May 2021, the European Commission updated its European Industrial Strategy, bringing a vision for a twin green and digital transition. Whilst an emphasis on a green transition is welcome, the strategy itself lacks substance in terms of genuine measures to drive the delivery of a decarbonised and circular industrial sector through specific policy measures.
There are still many opportunities the EU can take to remedy this policy shortfall. This includes building incentives for companies across the supply chain to limit embedded CO2 on final products, measures to improve embedded CO2 data quality, and where appropriate take temporary measures to remove barriers to market entry for recycled or innovative materials.
It is crucial the EU takes action now to mitigate the most negative effects of climate change, both for our economy and for the planet. As ministers meet this week, it is vital they drive an ambitious Industrial Strategy which delivers a green transition to meet the aims of achieving net zero by 2050.
This green transition will ensure the stability of the energy sector for the future.