Is the Ukraine war killing the EU Green Deal? Not so fast
With much of Europe toiling under the current gas price crisis, it may seem as though the EU’s green ambitions have been upended. Scarcity in gas supplies have prompted a relapse into reliance on coal across the continent, while the surging prices have had a knock-on effect on food inflation that could potentially lead to consumers opting for cheaper junk food options, especially in the absence of a plan to promote healthier eating from Brussels. Meanwhile, industries across the board are struggling to remain resilient and competitive on the global stage.
At first glance, European prospects for achieving its key priorities do appear to be pessimistic. But while the bloc is undoubtedly experiencing painful times, there are green shoots among the gloom and doom. Encouraging agreements have been made with regard to reducing energy consumption and diversifying generation sources, which will ease the pressure on individual households, private businesses and entire sectors alike. And though a harmonized front-of-package (FOP) labelling system is yet to be decided upon, the process of elimination followed thus far is showing signs of progress. All is not lost.
A nuclear solution to the coal question
It may be true that war produces no real winners, but one industry enjoying a resurgence as an indirect result of the conflict is coal. Many European nations had been planning to phase out the damaging fossil fuel entirely in the coming years, but the shortfall in gas supplies caused by the closure of Russia’s Nord Stream 1 pipeline has precipitated more activity in the sector. European imports of the fuel have leapt up 35% since last year, with an additional 43% expected in 2023 resulting in 10 million more tons of carbon emitted into the atmosphere. High demand has precipitated a sixfold increase in the price of the commodity since the beginning of last year.
To tackle those undesirable economic and environmental outcomes, the EU council has devised a plan to reduce energy consumption, redistribute surplus profits to the most vulnerable members of society and diversify its power portfolio going forwards. Member states must curb consumption by 5% during peak hours and have a voluntary target of 10% the rest of the time, while a market cap of €180/MWh should free up funds to help struggling households. Elsewhere, the decision by regulators to categorize nuclear power stations alongside renewables such as solar and wind farms signals their intention to take advantage of the immense benefits that a nuclear solution can bring, at least in the short term.
Food for thought
Of course, high fuel prices incur ripple-effects across a variety of other sectors, with agriculture one of those most heavily impacted. Production and processing of food consume significant sums of power, while fertilizer and transportation costs have also soared. Imports of grains, seeds and additives have been hampered, hamstringing crop yields and driving up food prices. Inflation in the sector rose by 7.5% across the EU in May, which is the biggest hike experienced since the formation of the Eurozone; in certain member states, prices leapt up by as much as 19%.
That has led to fears that consumers could be forced into buying more affordable but less nutritious fodder, especially given that the EU continues to dally on introducing a bloc-wide FOP system. But while its hesitation may be less than ideal, it’s certainly better not to rush into a scheme that’s not fit for purpose. The news that the European Commission is apparently planning to sidestep Nutri-Score is very much to be welcomed for that reason, given that it has been heavily criticized for being misleading and counterproductive in the frequently arbitrary and unscientific way that its algorithm ranks foodstuffs. Although it’s still unclear what the final labelling choice will look like, the fact that Nutri-Score is out of the race means that a better choice that equips consumers with the information they need can now be implemented. Other systems, like the Nutrinform battery, could now receive renewed attention and be part of a compromise for a more informative and useful FOP label.
Vorsprung durch Technik
Aside from farming, industry is another sector badly hurt by the ongoing energy crisis. Global factory output slumped in September as industrial activity contracted for the third straight month in the UK and Germany. As the EU’s industrial powerhouse – Germany is dependent on industry for 27% of its GDP, compared to 17% in the UK and France – the Berlin’s travails are particularly worrying. 62% of industrial firms in the country have reported difficulties in securing raw materials and have experienced supply chain bottlenecks. Concerns are shared throughout the bloc, too, with Belgium Prime Minister Alexander De Croo suggesting that a cohesive strategy to bring down energy prices is essential to avoid further decline and subsequent unrest.
The good news is that such short-term fixes appear to be in the works. Norway has replaced Russia as the EU’s biggest gas supplier and the two parties are working on “joint tools” to the problem, while a market price cap and the pledged consumption cuts are all decent stopgap solutions. In the longer term, green hydrogen – powered by renewables such as solar panels – could prove an effective means of overcoming industrial energy issues in sectors such as chemicals. Technological innovations such as those being pioneered at one Hong Kong university could serve as the building blocks of a reinvention for industry in Germany, the EU and beyond.
EGD still within reach
As such, the storm clouds gathering over Europe’s green vision may be ominous, but that doesn’t mean blue skies will never reappear. Straits may be dire at the present time yet conscientious planning, intelligent investment and a pragmatic approach to handling the pressures engendered by the crisis can help to overcome it.
As with any issue faced by a bloc as fragmented and diverse as the EU, cohesion and cooperation will remain key in the months and years ahead. Since the EU was founded with those very principles at its core, there is every reason to believe that the European Green Deal remains eminently achievable, regardless of the obstacles currently in the way.