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EU Green Deal in a time of pandemic.

Position • Nikolay Chavdarov •
EU Green Deal in a time of pandemic.

The European Green Deal is an economic stimulus package, and so it should be compatible with the pandemic and post-pandemic crisis, and economic recovery measures.

On December 11, 2019, the European Commission announced its proposal for the European Green Deal. On March 11, 2020, the World Health Organization called the coronavirus a pandemic. Most countries around the world have introduced restrictive measures that would have been impossible for democratic societies just weeks earlier. Stock markets have collapsed, the forecast for global and national economic growth is grim. We are facing a sudden and deep economic crisis and a long recovery. So, what might happen with the European Green Deal? 

Like many other policies it will be disrupted. Voices have been heard saying it is not the time for green ideas, that we should first recover. The Czech prime minister, Andrej Babiš said that we should forget the Green Deal. But such appeals are not justified, not least because energy markets have swiftly moved in support of the consumer. Oil, gas, power and carbon emissions prices have collapsed and provided short-term cost respite, if the energy sector passes the reductions down the line. 

There is more. The European Green Deal is an economic stimulus package, and so it should be compatible with the pandemic and post-pandemic crisis, and economic recovery measures. 

The call now is to save lives and save the economy. Saving the economy, however, also means saving lives, especially in the medium and longer term. In most European countries, the immediate economic response is rightly focused on preventing rapid job losses. We must also think, however, about the economic crisis response in a more complex way than just as short-term employment protection. The opportunities are many. 

Low energy prices offer an opportunity to remove some of the subsidies enjoyed by conventional energy sectors. It would be unwise if the low prices were simply used to extend the life of otherwise ailing companies. The difficult question is how to decide what to support and what to sacrifice.

The European Green Deal offers a good strategic direction. Saving dying coal companies only to see them go bankrupt a couple of years later hardly makes sense. The economic stimulus packages could be used to accelerate the transition rather than delay it. In this way, jobs will be secured, probably increased, and the pain of the expected coal closures avoided. Think of it as two operations under one anesthetic. 

Since the recovery will need vast public financial support it would be unfair to simply throw massive public funds into expanding low carbon energy capacity. The good news is that many new energy, and other industry, technologies are mature and commercially viable and would need mostly political and regulatory, rather than financial, support. Accelerated building of industrial size photovoltaic capacity on coal regions could create many short-term construction jobs, while reducing power prices and carbon emissions. 

Faster integration of European and neighbouring electricity markets, and the scaling up of distributed energy storage and demand side management systems across the continent, will also help lower and stabilise electricity prices. As part of a faster transformation of the heating sector, the European Commission, and national and local governments, could support ambitious programmes for solar heating deployment — cost competitive technology popular in many European countries. Naturally a policy that could be supported is an increased rate of labour intensive mass building renovation. 

The European Green Deal should be examined as a long list of measures that could keep and expand job numbers, while moving forward the carbon reduction and industry modernisation agenda. Concurrently, the green component of coronavirus economic stimulus packages should be significantly increased, not by lavishly subsidising selected businesses, but by finding ways to boost innovation and industrial transition. 

China did that in 2008 by greening huge parts of its economic stimulus. This decision is one of the reasons why China is now running ahead in many low carbon industries and technologies. We must study the impact of the green component of the 2008 packages and learn our lessons. 

Unlike 12 years ago, today we have low priced renewable energy and fast advancing energy storage technologies, which make the rapid expansion of zero carbon power supply much easier. The digitalisation of the energy sector also offers a wide range of solutions for efficient energy management and the transformation of industrial systems. The main barrier will be policy inertia and pressure by incumbents. 

In 2020, we will see also a dramatic decline of travel replaced by distance working, socialising, learning and medicine. We will discover that much of our frantic travelling is not really needed, while the technology to replace it has been around for a long time. 

Interlacing coronavirus crisis mitigation measures with the European Green Deal could enhance the impact of both. That approach will strengthen the economy and save many lives, now and far into the future.