Greening the European Economy
The European Union represents, in GDP terms, the world’s largest economy. However, in real terms the EU is a Single Market or Free Trade area, comprising many different national economies. To date, it has not been very meaningful to speak about the “European economy”. However, this is likely to change as EU Member States face into what may be a very deep and prolonged global economic recession, one that has been compared to the Great Depression of the 1930s. In fact, I believe that if the Member States engage in a much closer form of economic co-operation resulting in a strengthened and more integrated European economy, this will have the effect of stimulating new economic activity and job-creation at the level of individual Member States, and will leave Europe in a very competitive position when the eventual upturn in the global economy occurs.However, the political and practical obstacles to be overcome in order to achieve this are considerable. Much will depend on the political will that exists both at the level of the European institutions, but in particular amongst the governments of Member States. Unfortunately economic and social conditions may have to deteriorate significantly within the Member States before governments are willing to take the action that is necessary. In simple terms what needs to be done is to position the European Union to take advantage of the next major area of economic growth internationally – that of the green economy and clean technology. No one doubts the next industrial revolution will be the Green revolution. There is a growing consensus that if we want to give a new horizon to our economies, there is no real substitute for the green transformation of our societies. It encompasses huge swathes of our economy: energy production and distribution, energy efficiency in all domains – transportation, construction, agriculture, tourism etc. Europe missed the previous industrial revolution – that of information and communication technologies; if it does not want to repeat this mistake, and be at the forefront of the next one, it has to mobilise now.
In order to assist all EU Member States to be able to invest in developing necessary infrastructure and to create new jobs, EU institutions such as the European Investment Bank and the European Central Bank will have to play a central role. This will involve, for example, the issuing of Euro Bonds in order to help Member States to raise money both to finance massive new infrastructural projects, but also to provide credit/loans to thousands of new SMEs that will be created across the Union in response to new economic opportunities. Instruments such as loan guaranties, interest subsidies, direct equity participation or other tools should be utilised, that provide leverage and allow the mobilisation of 10 to 20 times more funds (including private funds) than relying strongly on traditional old-fashioned state aid tools and classic state investment. The more traditional approach allocates state aid only to the big energy and telecom oligopolies instead of supporting the more dynamic, innovative and creative economic actors such as small and medium-sized enterprises, cities, local authorities, etc. that are the real catalysts for the kind of change Europe needs.
While the inability to be more proactive in areas such as tax policy is a weakness when it comes to strengthening the European economy, the EU has several other useful instruments at its disposal. Each year there is a broad discussion about the Common Economic Guidelines involving ECOFIN, the Commission, the Parliament and the Council. This provides a way to coordinate different economic policies including budgetary policies even if it is just a guideline and has no binding effect. EU governments always have the liberty (and the duty) when the need arises to sit together and coordinate their actions and set national targets even if they are not bound to do so by the existing treaties. The Open Method of Cooperation has already been applied in the social area and budgetary agreements show that possibilities are not so limited.
When one thinks back to the post -World War Two period in Europe, and the Marshall Plan that was implemented with the assistance of the USA, it appears that the same kind of massive economic stimulus programme will be necessary in order to lift Europe out of the recent economic doldrums in which it finds itself. But this time, the US is in a similar economic depression, and therefore the EU will have to launch and to finance its own economic rescue plan. In fact most significant businesses in the industries concerned with a Green New Deal – energy, transportation, industrial equipment and of course banking and finance – are transnational; they cannot be addressed by national initiatives alone. The economies of scale that will apply at a European level may also serve to unlock significant private finance to match that being provided by the European Banks and the governments of Member States
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This is why one of the main policy demands around which the European Green Party is organising in advance of the European Parliament elections this June is the call for an EU-wide Green New Deal, an economic stimulus programme that would see 500 billion euros being made available from public and private funds over the next five years in order to create up to 5 million new ‘green-collar’ jobs in Europe. The need for urgent action to stimulate a green economy within the European Union is clear when one examines what other major global powers are doing in this regard. Volume-wise, over this year and next year, the USA has already committed more than $110bn to green initiatives, and China, Korea and Japan combined more than $260bn, while the combined EU effort trails behind at $54bn (that is 0.2% of the EU’s GDP for that period). Percentage-wise, Asian recovery plans have an average 23% of green content, while the plans of EU Member States on average have only 16% green content. Most of the green content of the Chinese plan go towards the expansion of the railway system and of the electric grid.There is a danger that if the EU fails to stimulate green economic activity across its Member States, that it will eventually find itself at a competitive disadvantage in relation to other major player in the global economy such as China, the US and Japan. Europe risks being overtaken by other economic giants.
So what does the EU need to do in order to ‘green’ its own economy? Well, in addition to assisting the governments of Member States and SMEs across Europe in raising finances, the EU could also promote European -wide infrastructural projects such as a European electricity grid and a major off-shore wind farm stretching from the North Sea down to the Iberian Peninsula. Such projects will have major job-creation potential. (In the United States, wind energy- related jobs now outstrip coal related jobs for the first time and this sector could provide thousands of new jobs in Europe).
Public procurement policy also offers considerable possibilities in relation to developing a green economy across the EU.16% of European GDP is spent by public authorities on goods and services and over half of this spend relates to building – construction, renovation and running costs. It makes sense for European public procurement to go green, both economically and environmentally. The European Commission apparently is planning to make green procurement policies mandatory within the short term. This has the potential to open up new markets and create new jobs. The EU eco-industries sector already accounts for one-third of the global market, which is estimated at €550 billion per year, and it has enjoyed a healthy annual growth rate of around five per cent since the mid 1990s. The EU’s Environmental Technologies Action Plan (which includes a range of measures to overcome barriers to the development and wider use of eco-technologies) and Integrated Product Policy (which seeks to reduce the negative environmental impacts of a product throughout its life cycle) will also complement a green procurement policy at a European level. A recent study on GPP performance across EU Member States has provided the Commission with clear indications on the current level of GPP in the best performing Member States, which is the baseline for the target set in the renewed Sustainable Development Strategy. On this basis, the Commission proposes that, by the year 2010, 50 % of all tendering procedures should be green.
Every year billions of euros are spent under the EU’s Cohesion Policy for regional development and economic and social cohesion throughout Europe. For the 2007-13 programming period (with a total budget of €308 billion), sustainable development was reconfirmed as one of the most important principles of the Cohesion Policy. The EU’s Regional and Cohesion Policy can also clearly be used as instruments in greening the European economy.
The EU Services Directive is being implemented later this year. The aim of this directive is to remove many of the barriers that prevent businesses within the EU being able to operate across borders in other Member States .When implemented the Services Directive will facilitate Small to Medium Irish companies to compete for contracts all over Europe, for example in the areas of insulation, heating, cooling, ventilation and reducing the energy consumption of public buildings. Standards for cleaning are about to be mandated all over Europe, both for products – detergents, sanitisers, glass cleaning products, and for the cleaning service companies who use these products. Greening cleaning services will create new jobs and businesses across the EU.In public offices, the government departments, the legal offices, the health services, all across Europe, preferences in tenders will be given to suppliers of paper that is either recycled or from renewable resources. Mandatory Green procurement policies across the EU will not just create new business opportunities for developing greener office equipment with quieter and recyclable components, but also opportunities for businesses that specialise in the disassembly and recycling of existing equipment that has reached the end of its life. Greener procurement policies will also require office equipment to come in recyclable packaging, opportunities will be created for companies to supply that packaging. The suppliers of goods; equipment, furniture, vehicles, components, parts and so on in an almost endless list, will be favoured if they use renewable energy. Everyone in Ireland can be part of this green new deal. For example in Dublin the farmer in Saggart can provide electricity from a turbine on his land to a manufacturer in Tallaght producing components for Europe’s rail network. A horticulturist in Rush can supply a caterer in Swords with organic produce with which to make meals for our hospitals.
I also believe that the European Union needs to establish a European-wide system of training and accreditation for new “Green- collar” trades. The Spanish government has approved 18 new professional certificates, which represent the official accreditation of professional skills for certain labour market activities. These certificates respond to the labour market needs of certain emerging professions such as microbiological and biotechnological trials, renewable energies and those related to environmental issues such as ecological agriculture and the management and assembly of wind and solar power plants. These certificates and their related training aim to cover new labour market needs stemming from the emerging ‘knowledge society’. By the end of 2010 it is expected that the total number of official certificates will amount to 700.
The Spanish have the lead here, and their workers will find it easier to find good, stable employment in the emerging Green industries. As the European Commission make cuts in national emissions mandatory, and as the price of fossil fuels increases again, properly- certified workers will have a clear advantage in gaining contracts, both at home and abroad. When the Services Directive is fully implemented across the EU over the next few years, this will mean that Irish companies and Irish workers with appropriate accreditation will be able to compete for contracts in the Green economy across all EU Member States.
The Lisbon 2000 scheme is a European Union fund that provides for skills training and lifelong learning. I believe this scheme should be used to support a single, Europe – wide, Green-collar certification scheme. It is also clear that we cannot have a number of different national certification schemes. Instead we need to ensure a supply of properly qualified workers who will be able to exploit the new job opportunities across Europe’s emerging Green Economy.
There is a lot more that I could say today but I have been asked to limit myself to 20 minutes! So, in conclusion, the economic or development model that has been adopted by European (and indeed North American) countries is unsustainable. It is based on present and excessive levels of consumption; it allows greenhouse gas emissions that will upset the balance of our climate and ultimately of non-renewable resources at a rate that would see many of them depleted in a few decades. This will not only threaten the survival of the human species on Earth; but it will leave a majority of the world’s population in a state of utter poverty. We need to radically change that development model, focusing instead on renewable sources of materials and energy, thus allowing current and future generations to live a decent life on the planet. The very difficult economic circumstances that now confront the global community do also present us with an opportunity to move quickly toward the kind of green, low carbon economy that will be necessary if we are, and if the planet is, to survive. At a European level we need to mobilise the political will to transform the European economy and to show critical leadership at a global level. As the title of my paper today makes clear – it is imperative that we green the European economy. Thank you for listening to me and I look forward to taking questions afterwards.
