Missing today’s chance to build a low-carbon economy would be a costly mistake handed on to future generations 

We are living at a pivotal time in terms of Europe’s future, and taking the right decisions now could enable decades of investment in clean technologies and smart infrastructure. This would ensure the creation of millions of good jobs across Europe and underpin the creation of a new, inclusive social contract. This is a one-off opportunity for the direct development of a new ‘green industrial revolution.’

The citizens of CEE member states definitely want to part of this opportunity, but can they ensure that their leaders will look to the future rather than the past? The efforts of environmental organisations and civil society groups will be central to making sure that they do, and they could start by focusing attention on opportunities contained in the EU Budget Review.

The political context for action on climate change has improved over the past three years, while an upturn in economic growth has restored some much needed confidence. The European Commission (EC) in particular has recognised the importance of an outward-looking and future-focused European project. It has rightly identified the environment as a core issue that binds Europeans together. Strong leadership from former UK Prime Minister Blair, German Chancellor Merkel and EC President Barroso has helped to secure agreement on ambitious climate and energy aims.

But, of course, it is one thing for politicians to set a policy agenda, and a distinctly different challenge to actually follow through with action to reach those goals. Europe is now in a different phase. Its ability to rise to the climate change challenge is the litmus test of its legitimacy and practical value. The decisions taken now will shape the future of all of Europe and determine its place in the world.

The challenge for CEE member states

In January 2008, Bulgaria and Romania will celebrate their first anniversary as EU members. Their regional neighbours will then have been members for four years, and could quite rightly expect to lose the ‘new member state’ tag. Indeed, Slovenia will take over the reins of the EU presidency.

In the broad view, the enlargement of the EU to 25, and then 27, members has been a great success. As prosperity has improved steadily, so too has economic confidence—even if social confidence sometimes wanes as a consequence of changing patterns of family life.

Similarly, CEE member states have added a new dimension to EU politics. Their geographical position and historical experience has made them quick to grasp that the projection of Europe’s role in the world and the maintenance of security and prosperity at home are two sides of the same coin. They also know that, in an unstable world, they will be the border regions receiving environmental refugees and economic migrants. They have similarly made felt their hard-won experience of liberty—on issues ranging from securing energy supplies to support for democracy worldwide.

Now these countries are facing, perhaps, their biggest test yet: namely, a transition of status within the EU. For the next two years should see not just an end to the EU’s internal institutional disputes that have plagued the recent past, but also the achievement of a global deal on climate change and the foundations for a radical new EU budget.

In all of these processes, the attitude and political leadership of CEE member states will be crucial for delivering an EU that can project its value into the future. The key question is whether CEE leaders will push forward as a motor for EU action with a politics of opportunity; or will they retreat into a politics of poverty? The former alternative would seek to maximise today’s catalytic opportunities for economic modernisation and environmental sustainability, while the latter risks seeing the region leapfrogged by China and India in the deployment of new technologies. At present, the signs are mixed.

The politics of poverty

The recently launched EU Budget Review aims to identify how the EU should spend itsmoney from2013 onwards. Given the tortuous nature of budget politics, it may well be that any new approach might not be fully implemented until 2020.

The review aims to ensure that EU spending adds value, rather than simply redistributing money that could be best spent directly by member states. It wants to make sure that EU spending is effective in achieving economic and social goals. Recent decisions to increase transparency over the receipt of EU funds from the Common Agricultural Policy and Structural Funds are clear attempts to apply more pressure for their revision, which has caused a certain amount of unease that the review will look to cut funding to CEE countries.

At the same time, the EU is developing policy pathways to deliver up to 30% reductions in carbon emissions by 2020, with 20% targets for energy efficiency and renewables. It also plans to roll out a series of demonstration plants for carbon capture and storage technology (CCS). Yet CEE countries, instead of driving these debates forward, have responded to the National Allocation Plans for carbon emissions from the European Commission with legal challenges and protests that they are too severe and too expensive.

Driving this current defensive approach is the plea of ‘poverty.’ This is a tactic that has been used in the past by other new member states, but the subsequent rapid success of Ireland, Spain and others means that it has now lost much of its rhetorical power as a long-term justification for funding. And this is certainly the case for most (although not all) CEE member states as they attempt to project this plea forward 13 years into the future. Given recent rates of growth and the general economic benefits of EU membership, the time is right for the region to pursue a more positive approach.

We must be very clear on this point: CEE member states rightly deserve significant financial support from the EU as they continue to modernise. That is not in question. What is in doubt, however, is what should be the focus of the funding. For the region has far more to gain by pushing for a radical new budget focused on the EU’s core added-value activities, thereby placing major investments in energy and climate at the heart of the EU.

Such a budget would give CEE leaders the opportunity to channel investment into the creation of a new clean-energy economy, which would simply not be possible under the continuance of the old EU budget framework, designed as it was for the challenges of the 1980s.

The politics of opportunity

The transition to a low carbon economy is the best opportunity to modernise infrastructure, industry, housing stock and energy production that we will ever see. It could possibly create and guarantee millions of new European jobs, improve energy security, and spur the renewal of low-carbon, people-friendly cities. It is vital that these changes are made now, as current fossil-fuelled investments are continuing to tack on expensive liabilities for today’s younger generations, rather than creating new low-carbon assets.

CEE countries are positioned to receive the greatest gains from this transformation. Major improvements in energy efficiency will increase energy security and improve trade balances, in addition to generating financial benefits through carbon trading. And the region’s population has strong technical, scientific and industrial skills that are all crucial for the successful development, manufacture and deployment of new low-carbon goods and services throughout Europe and beyond.

The key to securing all of these objectives will be effective investment, which will come from both public and private sources. By taking a positive stance on the EU Budget Reform, CEE leaders could leverage funding that will provide their economies with the low carbon foundations that will be needed in an era of increasingly severe energy and climate constraints. Used this way, EU money would pave the way for a major deployment of climate compatible electricity generation, low carbon transport systems, domestic and commercial energy efficiency improvements and widespread deployment of renewable energy technologies.

Such an approach would solve many political problems. It would demonstrate the EU’s relevance and added value, and would reduce the vulnerability of economies to energy price shocks and the political influence of energy exporters. It would also be a major step towards meeting climate targets and jobs and competitiveness goals, and would also strengthen the EU’s leadership capacity on climate change. Finally, it would be a major driver for greater prosperity and improved quality of life throughout the EU and beyond.

This article draws on E3G’s pamphlet titled: Europe in the World: Political choices for security and prosperity.