³Ô¹ÏºÚÁÏÍø

In the run up to the 6-9 June European elections, there was much speculation about the future of the European Green Deal, the European Union’s overall plan for net-zero emissions by 2050. There were fears it could be dismantled in a scenario of surging far-right parties. But the surge didn’t happen: the pro-European centre has retained the majority of seats in the European Parliament, indicating that Europe is not going to reverse course on the green transition.

However, swings to the right in Germany and France, and President Macron’s decision, in response, to call snap parliamentary elections suggest unease among voters about climate policy that must be taken seriously. Two major risks for the European Green Deal can be identified.

The first is procrastination in the new European Parliament. With increased pressure from the right, the mainstream centre-right European People’s Party (EPP) might be tempted to push for postponements or watering-down some of the most controversial provisions of the Green Deal. This could be done by taking advantage of revision clauses in Green Deal laws, as for example with the ban on sales of new internal combustion engine cars from 2035.

This temptation must be avoided. Reopening files agreed after years of negotiations would disrupt confidence in Europe’s green trajectory, harming European industry and leading to postponed green investments. This would raise costs for those who already embarked on the transition, investing in clean tech, from energy-efficient industrial processes to electric cars, leaving them feeling betrayed. In other words, a credible climate policy framework is key to sustain private sector green investment in the coming years.

The second risk is inaction by national governments. As the Green Deal moves into its implementation phase after five years of policy design and law-making, getting things done at national level is what will really make or break Europe’s green ambitions. In the next five years, decarbonisation will have to accelerate sharply if the EU is to meet its climate goals. More is needed at national level to decarbonise sectors such as buildings and transport, via which climate policy enters the daily lives of citizens. Germany, France, Italy and other large countries are expected to do the heavy lifting, but what if their governments do not deliver? The reality is that the EU has limited tools to push governments to act. 

To head off this crucial risk, an EU green investment strategy should now be launched as a matter or urgency. This could entail different measures, including making a better use of the EU budget, providing greater firepower to the European Investment Bank for financing the green transition, and establishing a new EU Green Fund to be funded by new EU joint debt. The latter would be fully justified as it would be about one-off financing for a transition that is extraordinary, temporary and beneficial for future generations.

The radical Green Deal transformation raises tough questions about who will pay. If those costs end up falling disproportionately on ordinary workers – let alone the poorest and most vulnerable communities – the transformation will worsen inequality and become socially and politically unviable. That is not an option.

Fortunately, properly designed climate policies can prevent that outcome and instead lead to greater social equality. The Green Deal already encompasses the and the new , and thus has an excellent basis for a new green social contract. The EU should now streamline and simplify funding instruments to deliver even more decisive support for the most vulnerable, and also for the middle class, who need support to take up green alternatives, from electric vehicles to green home-heating systems.

The EU must also turn decarbonisation into a real economic opportunity by developing a solid green industrial policy. This will require, first and foremost, revitalising the ‘boring' single-market agenda to leverage the EU’s huge shared market for goods, financial services, energy, workers and ideas to incentivise new clean-tech investment. Interventions in specific technologies will also be needed.

For this, rather than mimicking the subsidies of the US Inflation Reduction Act, the EU should give targeted support in areas where it already has a solid comparative advantage. While some incumbent industries might need support as they decarbonise, supporting breakthrough innovation should be the primary goal. Green industrialisation has not been at the core of the first phase of the Green Deal. It must now be put at the forefront.

The European elections must thus mark a new beginning for the Green Deal, rather than its disassembly. Decarbonisation is the only route for Europe to resilience and competitiveness. The new European Parliament has the responsibility to keep moving, and must avoid futile diversions.