green deal

courtesy : green deal

Summary

• The European Green Deal will have profound geopolitical repercussions, some of which are likely to have an adverse impact on the European Union’s partners.
• The EU should prepare to manage these repercussions in its relationships with important countries in its neighbourhood such as Russia and Algeria, and with global players such as the United States, China, and Saudi Arabia.
• The bloc should engage with oil- and gas-exporting countries to foster their economic diversification, including into renewable energy and green hydrogen that could be exported to Europe.
• The EU should improve the supply security of critical raw materials and limit its dependence on other countries – primarily on China – for these materials.
• It should work with the US and other partners to establish a ‘climate club’ whose members would apply similar carbon border adjustment measures.
• The EU should become a global standard-setter for the energy transition, particularly in hydrogen and green bonds.
• It should internationalise the European Green Deal by mobilising the EU budget, the EU recovery fund, and EU development policy.
• The EU should promote global coalitions for climate change mitigation, such as one to protect the permafrost.
• The bloc should promote a global platform on the new economics of climate action, to share lessons learned and best practice.

Introduction

In December 2019, the European Commission introduced the European Green Deal, an ambitious policy package intended to make the European Union’s economy environmentally sustainable. The goal is to reach climate neutrality by 2050, and to turn the transition into an economic and industrial opportunity for Europe. The deal is made up of a wide array of policy measures and subsidies aimed at cutting pollution while increasing research and investment in environmentally friendly technologies.

The Green Deal is at root an effort to transform the European economy and European consumption patterns. But, because it entails a fundamental overhaul of the European energy system and because it ranks so high on the EU policy agenda, it will also change the relationships between the EU and its neighbourhood – and it will redefine Europe’s global policy priorities. As such, it is a foreign policy development with profound geopolitical consequences.

Firstly, such a sweeping structural change will alter European trade and investment patterns. The EU imported more than €320 billion worth of energy products in 2019, and more than 60 per cent of EU imports from Russia were energy products. A massive reduction in this flow will restructure EU relationships with key energy suppliers. Countries including Russia, Algeria, and Norway will, ultimately, be deprived of their main export market. Inevitably, Europe’s exit from fossil-fuel dependency will adversely affect a number of regional partners, and may even destabilise them economically and politically.

Secondly, Europe accounts for around 20 per cent of global crude oil imports. The fall in oil demand resulting from Europe’s transition to renewables will have an impact on the global oil market by depressing prices and reducing the income of the main exporters, even if they do not trade much with the EU.

Thirdly, a greener Europe will be more dependent on imports of products and raw materials that serve as inputs for clean energy and clean technologies. For example, rare-earth elements, of which China is the largest producer, are essential for battery production. Moreover, Europe could remain a major net importer of energy but that energy will need to be green, such as green hydrogen produced in sun-rich parts of the world.

#Summary of green deal

#introduction of deal

#isbc