The European Union at the crossroads – what role for philanthropy?
Over the past years, the European Union finds itself in the midst of political turmoil. After the Covid pandemic, two blistering wars are being fought in its neighbourhood, large numbers of refugees are flocking to the EU seeking shelter, the number of long-lived autocratic governments is rising and a new global divide is emerging fast, and the prospect, even if highly uncertain, of a Trump2 presidency who would certainly withdraw from global politics and cooperation. As a consequence, human suffering is increasing, poverty trends are reversing, and the global climate and biodiversity crisis are ploughing ahead. These are dramatic disruptive changes at a scale that the EU and the rest of the World have not seen since the fall of the iron curtain in the early 90’s or even the end of WWII. The EU will have to respond with a bold cool headed equally disruptive policy response. In the midst of this turmoil, Europeans – for the first time from the age of 16 – are called to the ballot box to elect a new European Parliament on June 6-9, 2024. Politically, these elections will be the most decisive elections in the 50+ years of history of the EU. The outcome will define whether the EU will continue to be able to stand united and will swiftly find the right responses to the many challenges.
What does this all mean for the just and fair global energy and industrial transition that was just agreed upon at the Dubai COP? In this respect, what are the imminent, the short-term, mid- and the long-term challenges the newly elected EU Parliament and the new European Commission are expected to effectively tackle within its next 5-year mandate?
The imminent (next 12 months)
The elections to the European Parliament need to secure clear majorities in favour of the needed disruptive policy change recognizing and filling the EU’s new global leadership role. However, contrary to this, the polls show the rising popularity of nationalist forces, particularly on the extreme right, which are rather playing into the hands of autocratic regimes abroad. Apart from openly denying global climate and biodiversity challenges, they are threatening to actively undermine the functioning of basic democratic institutions like a free press and an independent justice system. The European extreme right is battling against an open and pluralistic European society, attacking the basic human rights of refugees, and wanting to withdraw from international cooperation and solidarity. Fighting fake news and misinformation in the next months, and mobilising voters to go to the ballot box will be vital for the weight of the voice of democratic parties. Philanthropy has a track record in supporting freedom and democracy and could still step up their support in the crucial months ahead.
After this summer, once the Parliamentarians and the new Commission are in office, one of the first urgent issues is for the European Union to decide on its next pledge under the Paris agreement, the so called nationally determined contribution (NDC). According to the Paris agreement, it should be tabled around the end of 2024, i.e. 9-12 months before the decisive COP in Brazil at the end of 2025. The EU together with other high-ambition countries should take this opportunity to come in early – ideally around the Baku COP in mid-November 2024 – and to set the yardstick of contributions as high as science demands. EU Member States who are members of the G7/G20 should also rally the other members of these two exclusive clubs. In terms of substance, the recent proposal of the European Commission for a -90% reduction of GHG emissions by 2040 is an excellent starting point. In parallel, the EU needs to establish a progressive position on future international climate finance. Alongside, philanthropy should expand its support to governments as much as possible, think tanks and civil society, both in the Global South/North, to formulate their ambitious nationally determined contributions. This should be complemented with track 1.5 dialogues and roundtables between the Global South and North building trust and embarking on a collective learning process.
The short-term (- next ten years)
The EU has set itself the target of reducing greenhouse gas emissions by 55% by 2030 compared to 1990. In fact, this means a tripling of the pace of change compared to the previous decade. Contrary to this, the recent report of the European Scientific Advisory Board on Climate Change concludes that many Member States individually and the EU as whole are not yet on track to meet the 2030 target. Europe is, for instance, not transitioning fast enough away from the use of fossil fuels, not ramping up fast enough the use of renewables and energy efficiency measures. Thus, for the EU the three key short-term priorities will be: implementation, implementation, and implementation!
However, winning the battle against climate change will be so much harder without global peace and deeper international cooperation. Instead, the current wars have set off a new arms race. At a time, when public budgets have already come under strain, NATO members intend spending at least 2% of their GDP on armies, ammunition and fortifications annually. Coincidentally, the similar annual amount of 2-3% of GDP is required in additional investments to decarbonise the energy sector, industry, mobility, housing and agriculture. Even worse, most of the military expenditure will be spent on steel, concrete and fossil fuels aimed at destroying existing infrastructure resulting in vastly increased GHG emissions. Therefore, returning to peace by organising peace processes and rebuilding the international understanding among decision makers and citizens in the coming years will be pivotal. Again, philanthropic support has a track record here.
Furthermore, the next European Parliament and Member States have the opportunity to decide on, and therefore to take a fresh look at the EU’s next multiannual spending cycle supposedly starting on 1.1.2028. This time the largest part of the budget will have to be made 100% climate-proof supporting the modernisation of the EU economy and society towards climate neutrality. However, the EU budget only represents around 1% of EU GDP while Member States’ public budgets amount to 40-50% of their GDP. As yet, Member States’ spending for the modernisation of their economies falls not only short of what is required, but unfortunately, over the past two years, poorly targeted fossil fuel subsidies skyrocketed. This calls for setting up a much more effective and stringent governance of public spending at EU level.
Still, the future public budget – even with rising revenues from the EU emissions trading system – can be expected to fall short of what is required. During COVID, the EU was exceptionally allowed to temporarily increase its spending by accessing private capital markets through the issuance of public bonds. The same mechanism should be used again in the coming years for fighting climate change. Without increasing the fiscal debt temporarily, the modernisation of the economy will be delayed, and, as a result, the carbon debt will grow unnecessarily putting higher risks and financial burdens on future generations.
In addition, while the EU will have to triple its domestic reduction efforts, in parallel the EU’s international efforts should be tripled. Deeds must follow words. Intensified EU climate diplomacy in the run-up to the Brazil COP and beyond will have to be complemented with tangible climate cooperation, especially promoting the transitioning away from the use of fossil fuels, tripling the deployment of renewables and adaptation.
The mid- and long-term (- up to 2050 and thinking beyond)
In the coming years, corporates and individual citizens will make decisions about long-term investments worth trillions of Euros with the help of the financial sector. Their investment choices will directly lock-in Europe’s future GHG emissions. In order to move towards much needed low carbon investments, they demand – and deserve – predictability and investment certainty. So far, the EU has charted out a sound policy path only until 2030. Hence, the next Commission, the EU Parliament and the Council must adapt the EU’s policy framework making it fit for 2040 and 2050. Besides reducing emissions of agriculture and land use, the other missing piece in the puzzle is the gradual integration of carbon capture, use and storage as well as greenhouse gas removals from the atmosphere without undermining the necessary emission reduction efforts and the overall environmental integrity of EU climate policy. Within the timeframe of the next European Parliament, this requires (i) support for R&D and scaling up technologies in time, and (ii) building a robust governance system that can last well beyond 2050. From then onwards, the EU’s main task will be to clean up the carbon debt it accumulated in the atmosphere over the past decades.
Civil society and foundations can greatly assist in implementation by e.g. questioning commitments on the basis of solid analysis, carefully double-checking that Member States effectively implement, ensuring that nobody is left behind in the transition but can benefit equally from the modernisation, pushing the frontiers of action at the local and regional level, and by increasingly taking legal action in the case of undercommitment or underachievement. In the international context, European civil society should ever closely and intensely cooperate with civil society partners around the world. Over the past two decades, philanthropy has played an increasing and beneficial role in supporting civil society. Still, future challenges look daunting and, ideally, philanthropy should redouble its efforts as well.
Conclusions
After summer, the incoming Members of the European Parliament and the next Commission will be confronted with numerous urgent matters, starting with helping to re-establish peace in Europe’s neighbourhood. When it comes to addressing climate change, the three main tasks to be accomplished will be: full implementation of the 2030 targets, charting the way ahead beyond 2030 and starting to lay a solid foundation for the longer term. If the EU continues to be at the forefront of action at home, and at the same time be more vocal and active internationally, urging the rest of the World to make headway. Only with civil society playing an active role each task on the long list can be ticked off within the 5-year mandate of the next European Parliament and the Commission. Philanthropy can facilitate an even greater and pro-active participation of civil society.
Still, all depends on the results of the upcoming election at the beginning of June. They matter as never before for preserving and strengthening democracy and the long-term sustainability of the planet. In short, the EU finds itself at the most important crossroads – probably since WWII.