As governments spend massively to revive economies, a huge battle has emerged around whether the economic recovery should also achieve other goals, particularly cutting the emissions that cause climate change. Those advocating green spending say the $10 trillion that governments have already committed to stimulus should be just the beginning, and an even bigger pile of cash is now needed for expansive “green new deals.”
In most countries, the political forces are blowing against green recovery. Distant, abstract goals like global warming have fallen far down the list of priorities. Some have actually relaxed pollution control standards. Unlike the last financial crisis, when nations spent up to 15 percent of their stimulus money on clean energy, few have such forward-looking plans this time.
Europe, however, is the exception. There, the European Green Deal — a $1.1 trillion climate-focused infrastructure and decarbonization plan that had been cooked up before the pandemic — looks set to get even bigger now. A hyper-green Europe will have little impact on the climate unless the better technology and business practices nurtured at home can spread widely to the places that cause most emissions. Only 9 percent of world emissions come from Europe, a share that has dropped steadily and will decline even faster the more Europe invests in weaning its economies off of fossil fuels.
Markets in Europe are already open to global competition, which will help make the whole world greener. For example, Europe has a highly competitive market for building renewable power. Open competition in these sectors of the energy system is essential because it produces bigger demand for clean energy, which means more robust international supply chains, faster global improvement in technology, and cheaper options for all countries.
Europe is also poised to show the world how to achieve a “just transition” — a concept built centrally into the European Green Deal and designed to look out for those, notably workers, hurt by technological transformation.