Europe’s wind and solar industries are enthusiastic about the €1trn ($1.11trn) finance proposal for the recently-announced European Green Deal, which European Commission president Ursula von der Leyen believes will “unleash a green investment wave”.
But will it work out like that?
In reality, only €7.5bn of the massive total amount is actually earmarked as fresh funds, which is supposed to come from the EU’s 2021-27 budget.
Environmental groups have criticised the amount as too small to make a meaningful impact on helping poorer, fossil-dependent regions to kick their coal habit – a vital component of the bloc's entire strategy.
Poland has already made clear that it won’t commit to net-zero emissions by 2050 unless the EU pays it a large-enough share of the cost of exiting coal – although it hasn’t spelled out how much it wants. Basically, the Eastern European country that has been far too slow in its energy transition so far now wants Brussels to pay for it, or else.
Poland’s neighbour Germany – which has earmarked €40bn of its own taxpayers' money to help regions affected by its planned exit from coal and lignite – is uneasy about financing Poland’s shortcomings, especially at a time when the latter has not shown any solidarity with Germany over its refugee crisis.
Germany’s foreign office emphasised that funds available for the green transition are limited, and that it will carefully evaluate the proposal from Brussels. According to the Süddeutsche Zeitung newspaper, German diplomats in Brussels are instructed to block any moves to push the EU’s budget above 1% of the economic block’s GDP.
But that would likely be necessary if the €7.5bn in fresh funds are to be raised.
Germany’s government according to a letter sent to Green Party member of parliament Bettina Hagedorn, made public in Der Spiegel, also sees “sufficient room to provide the necessary funds for reaching the climate protection targets by setting adequate priorities” – meaning the EU should shift resources from other areas to climate protection, instead of demanding fresh money.
Some politicians in Germany are also irritated that the country likely wouldn’t profit from EU funds for poorer coal regions, as a proposed regulation from the bloc states: “The distribution of its financial means will reflect the capacity of Member States to finance the necessary investments to cope with the transition towards climate neutrality”. In other words, richer countries must pay for themselves.
If the largest contributor to the EU budget were really to end up blocking fresh funds for the ‘just transition mechanism’, Ursula von der Leyen’s proposal would be dead.
If the largest EU budget contributor were to end up blocking fresh funds, Von der Leyen’s proposal would be dead.
Obviously, many things can still happen during budget negotiations, but expect them to be tough and include a lot of ugly horse trading.
The wind industry, meanwhile, is already a step ahead of the EU.
WindEurope is opening a training centre to re-skill coal miners into wind workers in Romania, and preparing a similar project in the Polish mining region of Silesia.
WindEurope chief executive Giles Dickson praised the ‘sustainable Europe investment plan’ as bigger and better than previous EU initiatives, and points to the EC’s estimate that wind’s share in the EU’s power mix will grow to 50% in 2050 from 14% today.
“So our sector will be contributing even more intensely for example with re-skilling coal workers into wind jobs,” Dickson said. “We also look forward to an easy-to-use ‘just transition mechanism’ that unlocks investments into projects quickly where they’re most needed.”
SolarPower Europe also says the ‘just transition mechanism’ is a positive sign, as it is crucial to making sure that no European regions are left behind in the climate transition.
“Solar, as the most cost-effective, scalable, and popular energy source, can play a significant role in ensuring a beneficial transition for all,” SolarPower Europe said.
If the EU is really to help the wind and solar sectors in their already ongoing effort to ease the much-needed transition from fossils to renewables, countries like Germany must be willing to spend more not only on their own transition, while green energy laggards such as Poland should stop holding the EU hostage to their own climate-harming policies.