The EU cannot be a green island in a dirty world

The writer is director of the Open Society European Policy Institute and one of the authors of the International System Change Compass, written with Systemiq and the Club of Rome

The EU has a commendable story of leadership on climate, having made legally binding commitments to climate neutrality and created an ambitious policy framework to meet them. Unlike the US and other global players, Europe has put its money — and its policies — where its mouth is.

But this story will start to look less praiseworthy if the EU does not address the worldwide implications of its transition, as set out in the recently published International System Change Compass. To put it bluntly, the EU cannot be a green island in a dirty world. Unless its trade, aid and other external policies help other regions to achieve their own green transitions, the EU’s ambitions will fail.

There is only one climate, so emissions reductions on one continent do not help if it continues importing products made with dirty energy elsewhere in the world. By 2030, the EU is likely to be responsible for less than 5 per cent of global emissions, thanks to its “Fit for 55” package. But European demand drives a big chunk of the other 95 per cent of emissions because of the CO₂ embedded in imports from other regions.

Carbon emissions are not the only problem. The EU is a massive importer of virgin resources that are extracted in other parts of the world. Global extraction of natural resource materials tripled over the past 50 years, according to the UN’s International Resource Panel, while global material productivity has declined and material consumption is forecast to double by 2060. To avoid outsourcing the emissions and ecological damage from that consumption, high-income countries need to use resources much more efficiently by moving to a circular economy.

Resource efficiency has grown more urgent now that Europe’s decarbonisation drive is pushing up demand for critical raw materials, such as lithium for batteries. If the US and Europe were to maintain the same levels of consumption, currently known resources or planned mines could supply only about 50 per cent of the lithium and 80 per cent of copper needed for humans to move to electric mobility and renewable energy generation, according to the International Energy Agency.

Renewables buildout is Europe’s solution: it is the best way to decarbonise the economy and provide long-term energy security, far better than finding new sources of oil and gas. Renewables are freedom fuels because sun and wind are abundant and well distributed across the globe. But the critical raw materials to make solar panels and other clean tech are concentrated in specific places, and most of the supply is controlled by just one country — China. Shortly after Europe’s huge effort to escape reliance on Russian hydrocarbons, it will find itself more dependent on China. Moreover, the mining boom for renewable tech could start new resource conflicts. A significant challenge for the next phase of the European Green Deal is to develop a comprehensive plan to ensure good governance of natural resources.

The EU has to drive forward its investments in the demand side as well as the supply side. Along with the US and China, the EU needs to see the move to more efficient use of materials as a security imperative, both for energy security but also as a conflict avoidance strategy. A circular economy would be more resilient because higher reuse and recycling of materials means less vulnerability to external supply chains. It would also mean less competition for virgin resources among these three big economies.

However, the EU needs to cushion the impact on its lower-income trade partners of cuts to imports and the introduction of climate-motivated trade barriers. Before introducing the carbon border adjustment mechanism planned for 2026, the EU needs to bring in parallel commitments for finance and technology transfer to help its lower-income trade partners to develop their own sustainable industries and move up the value chain.

Europe’s global reputation is at stake. To be a leader on climate, the EU has to avoid starting a new era of extractivism reminiscent of its colonial past, and instead make its own economy more resource and energy efficient. It needs to help other regions to change their economic systems, not only threaten them with measures that they see as protectionism in a green wrapper. The European Green Deal will succeed only if it fosters a global green deal that advances Europe’s trade partners along their own paths to sustainability.