Europe’s $13 Trillion Climate Plan Might Be About to Get Serious

(Bloomberg) -- Call it the Greta Thunberg effect, democracy against the establishment, or simply an issue whose time has come.

Whatever it is, the pressure is ratcheting up for the European Union to finally get its act together on climate.

The incoming European Commission has made the climate emergency its No.1 priority. Angela Merkel is trying to revive her reputation as the climate chancellor in Germany. And Austria’s Green Party, once scorned as single-issue outsiders, is in pole position to join the next government after a surge in support in Sunday’s election.

“There’s a clear expansion in the political resonance of climate change, led by Europe, but more broadly by younger generations across the developed world,’’ Ian Bremmer, president of the Eurasia Group, said Monday in a note to clients. “More political and corporate leaders don’t want to be seen as failing to address the issue.’’

The challenge is to turn the political impetus into effective policy without running into the vested interests that have held back so many European initiatives. And without being deterred by the eye-watering price tag.

Climate Price-Tag

The European Commission estimates that even if member states deliver on all their plans for the next 10 years, it will take as much as 575 billion euros ($626 billion) every year for two decades to reach zero net emissions by 2050. That goal is the cornerstone of new Commission President Ursula von der Leyen’s program. EU environment ministers meet Friday in Luxembourg to begin to lay the groundwork.

But even the on-ramp is littered with obstacles.

Poland blocked EU leaders from endorsing the 2050 objective at a summit meeting in June and the 54 billion-euro climate package Merkel announced two weeks ago was a bust. Scientists and environmentalists said it’s still not enough to meet Germany’s climate goals.

EU diplomats insist that Warsaw will most likely fall into line when von der Leyen’s target goes back to the European leaders’ council in December with a package to help Poland’s coal-dependent economy.

In a further sign of the changing political winds, Merkel’s coalition is considering doubling the price of CO2 emissions to answer their critics. With the Greens vying with Merkel’s Christian-Democratic-led bloc for the lead in opinion polls, the next German government could see them join forces.

That combination is already on the cards in Austria, where the Greens tripled their vote on Sunday to displace an anti-immigrant populist group as the most likely coalition partner for Sebastian Kurz’s center-right People’s Party.

Austria could prove a testing ground for whether the Greens can make the transition from protest group to a party of government. Or whether they’ll just add to the volatility of a political map that’s seen insurgent populists disrupt Europe’s fragile postwar establishment.

In Italy, the anti-establishment environmentalists of the Five Star Movement are already onto their second shot at governing. Their first, an alliance with the right-wing populists of the League, collapsed this summer after a year of acrimony that drove the economy into recession.

The new coalition in Rome, with the center-left Democratic Party, is promising a “Green New Deal’’ to boost renewable energy sources and counter climate change. But its most immediate challenge is winning EU support for its plans to get the public finances in order.

And that may be where von der Leyen’s ambitions stand or fall.

For all the talk of transforming transport systems and housing, the more arcane world of budget policy will need its own revolution if any of the rest is to happen.

European politics for the past decade has been riven by debates over spending -- the euro nearly split in 2015 over an 86 billion-euro bailout package for Greece.

When it comes to funding von der Leyen’s climate targets, the numbers are about to get a whole lot bigger.

©2019 Bloomberg L.P.

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