Politicians have done too little to prepare their citizens for the “tectonic” economic shifts that will be propelled by the drive towards carbon neutrality, a senior Brussels policymaker has warned, comparing the impending transformation to the disruptive effects of the industrial revolution.
Frans Timmermans, the European Commission executive vice-president in charge of its green policy, said the EU’s decision to push for carbon neutrality by 2050 would bring opportunities for new jobs and better living conditions — but would be painful for some workers and involve massive public and private investments well beyond the capacities of EU institutions.
“If you say you are moving from an economy entirely based on carbon to an economy that should be weaned off this carbon dependency, that is not a small change of policy, that is a tectonic shift in the way our society is structured,” Mr Timmermans said in an interview with the Financial Times in Strasbourg. “We still have a long way to go before this sinks in everywhere.”
The EU on Tuesday signed off on a €1tn green investment drive as commission president Ursula von der Leyen attempts to convince member states to support tougher climate targets in 2030 as part of a push for carbon neutrality by mid-century.
Close to half of the amount will come from an existing plan to deploy a quarter of the EU’s budget to green causes. Co-financing from member states would add more than €100bn, while EU guarantees would aim to leverage private sector spending of €280bn.
The money is only a fraction of the investment needed, and the European legislation required for the green transition faces a rocky path given the high risk of job losses in carbon-intensive sectors.
In Germany, for example, a government-sanctioned report this week estimated that more than 400,000 jobs could be lost over the next decade in the country as its car industry shifts towards electric vehicles. In December, Poland refused to join European leaders in pledging to meet the 2050 targets because of concerns it will not get enough EU financial support to modernise its energy sector, which is still 80 per cent coal-fired.
Mr Timmermans insisted that while the transition for countries such as Poland that rely heavily on coal would be painful, it could not be avoided and said governments needed to ensure their populations were prepared.
“If governments do not act, it does not mean these changes will not happen,” he warned. “Any industrial revolution leads to a shift in jobs, a shift in institutions. If you only concentrated on the jobs that will disappear and do not have a plan for the jobs that will emerge then you get into trouble.”
He said the car industry was “waking up to the new reality” and could become a “powerful agent of change”.
EU proposals for the green transition include €100bn over the period from 2021 to 2027 to alleviate transition costs in carbon-intensive sectors and regions.
It will comprise €7.5bn of fresh money from the forthcoming EU budget, coupled with support from national budgets, EU regional aid programmes and the European Investment Bank.
A key political question is whether this contains enough new money to win over Warsaw and other capitals that are further behind in the shift towards greener economies. The commission also needs to win member states’ support for a climate law enshrining the new goals. Mr Timmermans said the extent of the “binding elements” of any legislation was still being debated.
Mr Timmermans pledged further reform of the EU’s emissions trading scheme and vowed to protect European industry from countries that did not implement Paris climate change commitments via a carbon border adjustment — a proposed levy on some carbon-intensive imports that is already proving contentious among EU lawmakers and could provoke a backlash from trading partners.
Some sectors were easier than others to bring within the levy, he said, arguing that the measure would be entirely compatible with World Trade Organization rules — a key area of concern among analysts.
If a trading partner was not taking the necessary measures to drive towards carbon neutrality “we will have to protect our industry by introducing correction at the border”, he said.
While Mr Timmermans said he regretted the loss of the UK as an influence on EU climate policy, he hoped that the two sides could remain “as close as possible in terms of policy alignment” in the area. “I think the main parties in the UK will always sign up to a progressive and forward-looking climate policy.”