Green policies: shift from climate protest to climate action

The Green Wave is conquering Europe, albeit with some setbacks here and there. In most countries, however, there is a clear movement towards making policy greener, like the European Green deal. 2020 in particular will be an important year for green policies as the climate protests of 2019 will make way for green policy implementation. This implementation will inevitably bring about winners and losers. To limit the negative side-effects of green policy, implementation should be managed carefully.

2019 was a big year for climate change protest, both for and against green policies. On the one hand we had the climate marches of school children and we saw green parties doing well in the European elections. On the other hand, the agricultural and construction sector took to the streets to protest against the ever more stringent green regulations they face. Balancing the benefits and costs of climate policy will therefore be key in 2020, as green policy implementation takes flight.

Opportunities abound…

On the whole, government policies in Europe have become increasingly green in recent years. With consequences of phenomena like climate change and pollution becoming increasingly visible and calls for action swelling, we think that 2020 will be a pivotal year for green policies. Green technologies and initiatives will therefore be interesting growth engines for businesses. Not in the least because investors will increasingly look at what the impact of the activities of businesses are on the environment. In the years to come, we expect to see a boost in funding towards green projects. The European Investment Bank for one, decided in 2019 to cease financing unabated oil and gas projects by the end of 2021. This represents a major shift of public finance away from fossil fuels and towards clean energy projects. In addition, many central banks will increasingly pressure financial institutions to take climate change into account when making investment or lending decisions (see also the trend on Climate Change and Central Banks on page 13).

… but smart implementation will be key

Change is never without its obstacles. Opposition to green policies is understandable as, depending on their specific situation, companies and other economic actors stand to lose money because they are forced to dramatically change their business model or behaviour. It is not surprising that those who are negatively affected try to hold back green regulation initiatives. According to a number of environmental groups, lobby groups of oil and gas companies and trade groups spent more than 250 million euros lobbying the EU to influence climate action between 2010 and 2018.

In order to limit and cushion the negative impact of green policies for those on the losing end of the scale, implementation should be well-considered and planned. One important area of impact that has to be taken into consideration is the labour market. New technologies and regulations impact the labour market both by destroying and creating jobs. The International Labour Organisation estimates that taking action in the energy sector to limit global warming to 2 degrees Celsius by the end of the century can create around 24 million jobs (ILO World Employment Social Outlook 2018). Taking into account the 6 million jobs the ILO expects to be lost, we come to a net increase of approximately 18 million jobs across the world.

For those jobs that will disappear, some reorganising of the labour market will be necessary. The potential skill mismatch that can arise from changing policies should, however, not be overestimated. Job creation and destruction tend to involve largely similar categories of skill (OECD Employment implications of Green Growth: linking jobs, growth and green policies, 2017). To ensure a smooth transition across sectors and jobs, there will be a need for a well-functioning and flexible labour market. In addition, education and training policies should be aligned to meet future skill needs.

In the end, we will all benefit greatly from environmental improvements like cleaner air, healthier food, limits on global warming and less contaminated water. The road to get there is paved with challenges but also with plenty of opportunities. This year will be crucial as we shift from climate protest to climate action.

 

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