The European Green Deal or How to Overcome the Tragedy of the Commons

‘Our most pressing challenge is keeping our planet healthy. This is the greatest responsibility and opportunity of our times.’ 

Those words were pronounced by Ursula Von der Leyen, the new president of the European Commission, when she urged the European Parliament to back her European Green Deal (EGD) aiming to make Europe Carbon Neutral by 2050. 

Pessimists might believe that her plan is doomed to fail, just like the failed Kyoto Protocol or the inefficient Paris Agreement. These repetitive failures might be attributed to Hardin’s infamous Tragedy of the Commons. According to his theory, no one has an incentive to protect the ‘commons’ (in this case the climate), because individual action is only effective if others act as well. This could explain the ambient passivity towards the threat represented by global warming. 

The EGD, however, might be the solution to this current catatonia. As I shall demonstrate, it combines all the necessary ingredients to foster cooperation on an unprecedented scale. As such, it can be called a catalytic institution. That is, it relies on various mechanisms and strategies which could foster cooperation, proactive actions to tackle climate change, and overcoming the lack of incentive to act. With this in mind, the EGD could well be a game-changer. 

Firstly, the EGD aims to stimulate first-movers to act against climate change in order to create a snowball effect. As Cohen and DeLong explain in Concrete Economics, the invisible hand of the market must be ‘lifted at the elbow by the government and re-placed in a new position from where it could perform its magic’. This is exactly the objective of the EGD. It defines the challenge – to be carbon neutral by 2050 – and incentivizes the private sector to address it. In the words of Mazzucato, a special advisor on research and innovation at the Commission, ‘You don’t pick the winners, you pick the willing. The question should be: who’s willing to engage across any sectors […] to engage with Green Deal strategies?’ Accordingly, the European Commission recently issued a communication underlining the necessity to send long-term signals to direct financial and capital flows towards green investments. It will do so via (i) a renewed sustainable finance strategy in 2020, and (ii) increased opportunities in sustainable investments by developing clear labels for retail investment products and via the development of an EU green bond standard. 

Secondly, as a catalytic institution, the EGD will promote material transfers. These are catalytic methods to enhance the capability of the benefitting actors to cooperate and innovate. EU industry needs ‘climate frontrunners’ to develop breakthrough technologies in key sectors, such as clean hydrogen, energy storage, or alternative fuels. Hence, the EGD proposed to support clean steel disruptive technologies via the innovation fund of the European Union Emission Trading Scheme. The Commission also plans to use 30% of the Invest EU Fund to fight climate change by encouraging greener activities. Another example is the European Innovation Council which will dedicate “funding, equity investment, and business acceleration services” to promising start-ups in order to create pivotal and disruptive innovations in the fight against climate change. Lastly, the EGD proposes to invest one trillion euros over the next ten years.

Thirdly, in addition to material transfers, sharing experiences and information are key to bolster both compliance and actors’ willingness to tackle climate change. The EGD wants to use non-state actors as laboratories for climate policy or new technological innovations. As such, the European Commission has created five research and innovations ‘missions’. As Mazzucato reports, these missions must be inter-actors (ministries, national and local governments), inter-sectoral (public and private sectors) and interdisciplinary (e.g. health, transport, energy). For example, the Commission knows that the climate change challenge is beyond the reach of any single European state. Hence, it has proposed, with the Green Deal, to use Horizon Europe alongside other EU programs to create new innovative value chains across sectors and the single market. More specifically, the catalytic strategy of the EGD lies in the Commission’s Strategic Action Plan on Batteries and its support to the European Battery Alliance. The objective is to create a sustainable battery value-chain for all batteries, including the future supply of electric vehicles in the EU. 

Fourthly, the EGD seeks to promote cooperation thanks to normative goal-setting and benchmarking. Indeed, as explained by Hale, goal-setting “provides a focal point around which actors can converge,” while also raising the costs of non-compliance for laggards. In terms of goal-setting, the Commission has set out a clear vision to achieve climate neutrality by 2050 and will propose the first European “Climate Law” by March 2020. The objective is to enshrine its objectives in the legislation. It will notably ensure that EU policies follow the climate neutrality objective and that all sectors will get involved. In terms of benchmarking, all member states will have to present a revised energy and climate plan by the end of 2019 in line with the Regulation on the Governance of the Energy Union and Climate Action. These plans will be assessed by the Commission and will be rejected if they are deemed insufficient. The consequence will, of course, be to increase the ambitions of every European actor, while at the same time penalizing free-riders. 

Finally, the Commission and the Green Deal aim to foster cooperation at the national level by promoting and building new coalitions for enhanced climate action. This strategy will enable the European Union to bring new resources and actors into the fight against climate change. A notable example is the Commission’s launch of a European Climate Pact by March 2020 to focus on three different ways to engage with European citizens on climate actions. It will encourage the sharing of information concerning the threat posed by climate change and ways to counter it, notably by using events in member states. Secondly, it will create real and virtual spaces to enable European citizens to work on ‘ambitious actions’ both at the individual and collective levels. Thirdly, the Commission will focus on capacity-building to facilitate grassroots initiatives on climate change and environmental protection. 

Only time will tell us how effective the EGD really is. In the meantime, it could very well be a game-changer, for Europe and the world. 

Maxime Sommerfeld Antoniou

Maxime Sommerfeld Antoniou is a member of the Energy and Environment policy centre’s working group.

 

Bibliography 

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