Meeting the energy and climate challenge in Europe: 5 think tanks’ proposals

This report is the result of a cooperation between five French and European think tanks. Initially published in French in May 2019, its purpose was to inform debate prior to the European elections. With the new European Commission taking office, it is now translated and published in English, to provide new insights and proposals to be implemented in the next 5 years as part of the “Green Deal” promised by its new President Ursula von der Leyen.

This compilation is not meant to be exhaustive: we focuse above all on certain key aspects of European energy and climate change policies. The conclusions presented in this paper are those of the authors.

A l’occasion de la COP25 à Madrid et de l’entrée en fonction de la nouvelle Commission Européenne présidée par Ursula von der Leyen, nous publions une version en anglais de la note « Relever le défi énergétique et climatique en Europe : les propositions de 5 think tanks » de Terra Nova, la Fondapol, l’IDDRI, I4CE et l’Institut Jacques Delors sortie en mai 2019 au préalable des élections européennes. 

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The necessity of energy transition and the fight against climate change becomes more pressing every day. Almost four years after the signing of the Paris Climate Agreement, the European Union must quickly revise its targets upwards in the fight against climate change if it wishes to maintain its leadership role on climate and encourage other countries to do the same. To have a chance of limiting climate change to an increase of 1.5°C or 2°C, much remains be done, and action at European Union level is essential.

The transformation of the financial system, rules for international trade, industrial practices, and the establishment of standards for low-carbon technologies are all 2 challenges that must be faced at a continental scale, if we are to change the course of our destiny as a planet. The European Union is not starting from scratch. It is in the process of achieving its objectives for the reduction of greenhouse gas emissions for 2020. It plays a decisive role on the international stage and has set ambitious climate objectives when compared to other regions of the world, but which are now insufficient given the magnitude of the task to be accomplished.

A roadmap was set out in the « Strategic Vision » published in November 2018 by the European Commission with a view to achieving climate neutrality by 2050 across the European Union (reducing greenhouse gas emissions to a minimum and compensating for the residual emissions with the capture of the same quantity of emissions). Accomplishing this requires the immediate acceleration of transformations in all sectors of the economy: construction, transport, industry, energy production and agriculture. As the objectives and, with them, the magnitude of the transformations to be carried out increase, new challenges emerge.

The ways of reducing emissions applied so far (such as launching the development of electricity production from renewable energy sources) have been the simplest and most acceptable. The European Union now has to make more difficult strategic choices. The necessary conversion of high fossil fuel consumption economic sectors raises both social and territorial issues. The effects of policies encouraging energy transition, whose costs and benefits are not necessarily evenly distributed, can highlight persistent social inequalities. Asymmetrical treatment between economic sectors, or between industries and households, may be the subject of criticism and fuel the rejection of transition policies that are nevertheless necessary to preserve the climate and improve the well-being of European citizens and future generations.

The absence of European harmonization must not serve as a pretext for inaction. The Union can, through concerted action, enable the essential changes for the transition to carbon-free electricity production, cleaner transport (taxation of air transport and connections between railway and charging infrastructures), the integration of climate change into trade policy, and a shift from "brown” to “green” financial investment. Energy transition also challenges the ability of European institutions to act on citizens’ practical concerns: can they help them to reduce their carbon footprint on a daily basis, to travel and to heat their households in different ways, while at the same time putting an end to energy poverty? Can the European Union of major infrastructure projects become – with its structural funds and the European Investment Bank (EIB), etc… – a channel for financing the energy renovation of housing and everyday carbon-free transport? The insufficient coordination of national energy policies in an energy system that is nonetheless physically and economically interconnected also underlines the fact that further debate is sorely needed on the linking of European, national and local policies. Without a coordinated effort, the cost of energy transition and risks in terms of the security of the supply can only increase.

Energy transition also poses the challenge of linking the energy system’s trajectory with that of the agricultural sector and the use of land, into which biodiversity and soil health issues must be integrated in the same way as those relating to climate preservation. Finally, climate change raises the question of Europe’s role on the world stage: can it lead other countries and regions by example? Should it adopt firmer positions regarding access to its common market, at the risk of triggering potentially counterproductive protectionist measures? The challenge of climate change and energy transition thus echo many of the fundamental issues at the heart of the European project.

In response, our think tanks joined forces to identify concrete proposals in key fields of action: the governance of European energy and climate policy; the greening of finance and the European budget; instruments to encourage social justice and innovation; trade policy; and, finally, the decarbonization of the electricity sector. Our belief is that this is now an urgent matter: in order not to become locked into choices that are incompatible with climate and environmental preservation and be capable of meeting the challenges ahead, the 2019–2024 European Commission and Parliament need to instigate profound and irreversible changes. The time has come to act decisively and without delay with all available means!