The Green Transition Under Strong Review
The new European Commission is already facing a tough challenge regarding the Green Transition. Against a backdrop of serious issues surrounding the restoration of European economic competitiveness, the EU also faces an uncertain security landscape due to Russia’s invasion of Ukraine. It seems that a united Europe must either reformat its 2050 carbon neutrality goals or intensify efforts to meet these objectives. A compromise scenario combining moderated targets with increased efforts is also possible. In any case, this challenge is one of three key priorities for the new European Commission. The good news for Europeans is that the European Commission (EC) understands the magnitude of these problems. This recognition offers hope for maintaining competitiveness, employment, and high wages. However, the bad news is the limited time available to address these challenges.
On 2 December, the Climate Action Network (CAN) Europe, a leading coalition of NGOs fighting climate change, called on the new Energy Commissioner, Dan Jørgensen, to maintain strict Green Transition targets. CAN Europe’s letter reiterated the EU’s commitment to limiting global warming to 1.5°C and achieving climate neutrality by 2040 through a complete transition to renewable energy.
Action Needed
CAN Europe is advocating two priorities: reducing energy demand and enhancing energy efficiency, alongside a phased exit from fossil fuels, with a particular focus on fossil gas. These proposals are intriguing but not without controversy. For example, improving energy efficiency and reducing energy demand could indeed lower emissions while boosting Europe’s economic competitiveness by cutting energy costs, which remain relatively high. However, these measures require significant capital investment.
The associated costs of improving energy efficiency would compete with businesses’ needs for investments in technology upgrades, equipment modernisation, innovation, and market protection. Currently, the source of resources for such "climate-friendly" investments is unclear. This is especially troubling given the security risks constraining public budgets, limiting the ability of governments to subsidise businesses’ climate efforts.
Accelerating the abandonment of fossil fuels, with an emphasis on gas, is even more contentious in the current context. Europe has ceased purchasing Russian pipeline gas, a strong move to limit financial resources for a state sponsor of terrorism. However, the EU has not yet stopped buying Russian liquefied natural gas (LNG), which poses both security and climate concerns. Such imports finance the Russian military and come with a heavy carbon footprint, as Russia's fuel industry pays little regard to Green Transition goals.
On the other hand, natural gas is the cleanest of fossil fuels, and its rapid reduction could slow the phasing out of dirtier energy sources.
Unclear Next Steps
If the European Commission faces three challenges – security, competitiveness, and the Green Transition – certain priorities must be established. European Commission President Ursula von der Leyen addressed these priorities on 27 November, urging Energy Commissioner Dan Jørgensen to address the issue of energy prices. She demanded a policy to lower energy costs.
However, this will not be the Commission’s sole focus. Von der Leyen announced that the guiding principle would be the Competitiveness Compass, built on three pillars of the Draghi Report: reducing the innovation gap with the US and China, developing a joint decarbonisation and competitiveness plan, and enhancing security while reducing dependencies.
Regarding competitiveness and the Green Transition, von der Leyen believes flexibility is essential: “If we want to succeed in this transition, we must be more flexible and better support people and businesses on this journey.” Flexibility, she suggests, is a promising path for adapting to new conditions. However, the exact measures remain unclear even to the European Commission.
Von der Leyen pledged to prepare and publish a Clean Industrial Deal within the first 100 days of the new Commission's work. “We have done much to respond to Russia’s energy blackmail and the high inflation that followed. But energy prices must continue to fall, and this is what Dan Jørgensen will work on, leveraging his previous experience: reducing costs for households and businesses, investing in clean energy, and replacing imports of Russian LNG. It is time to act,” von der Leyen concluded.
Challenges for the European Commission
Combining the Green Transition with restoring Europe’s economic competitiveness is a dual challenge. So far, only 13 of the 27 EU member states have submitted their updated National Energy and Climate Plans (NECPs). This lack of transparency hinders coordination and risks inefficiencies.
The new Commission is almost guaranteed to face the risk of misjudging the situation in individual countries and industries, leading to ineffective policies. This challenge arises amid intensifying global economic competition and geopolitical tensions in Europe.
This portfolio will be overseen by First Vice-President Teresa Ribera Rodríguez, a Spanish socialist known for her anti-nuclear stance. She faces the daunting task of balancing new competitiveness goals with existing Green Transition objectives. Her team will draft the Clean Industrial Deal mentioned by von der Leyen.
Energy Commissioner Dan Jørgensen is expected to adopt a technology-neutral approach, focusing on carbon capture and storage (CCS), clean hydrogen, and small modular reactors (SMRs). His practical mindset and ability to set long-term goals while achieving short-term results could lead to a push for developing nuclear energy based on SMRs. This balanced approach could enhance competitiveness while advancing the Green Transition.