The European Green Deal (EGD) has certainly intensified discussions at the European level on how to put climate goals into practice and how to achieve climate neutrality by 2050. Such initiatives are essential for enabling a coordinated European approach to the much-needed energy transition, which cannot be undertaken by member states alone. The EGD comprises several policy initiatives (for example, the extension of carbon pricing) and funding instruments such as the Just Transition Mechanism, the new InvestEU program and funds from the EU budget. Altogether, the instruments promise to mobilize 1.8 trillion euros of investments for green projects until 2030. This seems astonishing, given the decades-old tug of war between Southern and Eastern European members (net-beneficiaries) and net contributors such as Austria and the Netherlands over slight increases/decreases of the European budget. However, especially the specific financial and management architecture has three important implications for regions and regional actors.
First, to realize the trillions of investments, the Commission stated that “the private sector will be key to financing the green transition” (p.16). The InvestEU program by the European Investment Bank (EIB) will be of particular importance because most of the funding will be realized by attracting private co-investments through public guarantees. The EIB thereby provides safe collateral to (global) financial institutions that wish to diversify and safeguard their investment portfolios. This very much seems to be in line with the rise of the de-risking state, which the economist Daniela Gabor has recently criticized as a potential, market-based approach to tackling the climate crisis. In essence, large parts of the EGD remain demand-driven, as the NGO Counter Balance has recently remarked in their report on the EGD. This means that the EIB or intermediary financial institutions within the member states are approached by project promoters seeking EGD funding. The EIB then chooses the projects that best fit the investment criteria of the EGD.
Regional actors will thus only play a secondary role within this EIB administered financial compartment of the EGD. The EU’s partnership principle, which traditionally involves authorities from the regional and local level as well as social partners in monitoring and evaluating regional development plans – seems to have a weakened position within the EGD framework. In this way, democratic voices that might oppose investment priorities become marginalized. In response, earlier this year, a coalition of 18 environmental organizations called upon the Commission to urgently enforce public participation and the partnership principle in the EGD.
The involvement of regional actors is all the more critical, as the Green Deal might already repeat mistakes of one of its blueprint programs: the Juncker Plan. The Juncker Plan had been the EU’s flagship in fighting the European financial crisis. In its evaluation, the European Court of Auditors concluded that the Juncker Plan had likely replaced rather than added funding for several investment projects. As the Just Transition Mechanism mainly targets the national level, some regions might come away empty-handed again. As recently reported, Germany planned to partly replace the expenditure under its federal “Investitionsgesetz Kohleregionen (InvKG)” with money from the Just Transition Mechanism. Thus, instead of receiving the EU funds on top of national funding, some of the German coal regions might not see much of an increase in investments to deliver a just energy transition. In this regard, comparative research could help uncover how far such replacement strategies are planned in other member states too.
However, the policy area of the EDG, in which regional actors are more closely involved, might be threatened by new conflicts of objectives. Under the EGD a substantial amount of cohesion and regional development funds will target climate and environmental objectives.
This is an excellent initiative, were it to involve additional funds. Yet, in the form of earmarked investments, regions seem to have to target more objectives with the same amount of financial resources. Therefore, the German Trade Union Confederation has already warned that the reallocation of funding might put the EU’s territorial convergence efforts – which are a crucial component of any social-ecological transition – further into the background.
Regions will be crucial to achieve local consensus on the energy transition
Such conflicts between energy transition efforts and regional development are not just hot air but point to structural tensions, reproduced by green transition plans, which try to fuse economic growth strategies with environmental protection. Take Portugal, for example. The government plans to extract lithium in the beautiful northern landscape Trás-os-Montes and thereby increase economic activity. Lithium is a core component of batteries in the electric car industry and is only degradable to a very limited extent in Europe. Yet, the local population of the under-developed region fights back as they have to deal with the consequences of environmental pollution and are threatened to lose their status as an agricultural world heritage. This award has certainly added to the growing ecological tourism in the area. German car-industry regions and polish coal mining areas expose similar conflict structures. Here, European energy strategies meet local realities, which give a glimpse at the political conflicts the EU will face even more strongly in the dual economic and ecological crisis, as the sociologist Klaus Dörre calls it.
As we have seen, there is ample room for a stronger voice of regional and local actors to participate in the EGD. The “Green Deal going local” campaign by the European Committee of the Region is, therefore, an important initiative to engage local and regional politicians within the EU’s climate flagship project. To better dovetail local and regional needs with EGD priorities, the NGO Counter Balance has made some interesting suggestions too. For example, EIB investments could be channeled through local community banks and specifically support small-scale environmental projects and the social service sector. In addition, regional monitoring committees involved in the EU’s regional development strategies could certainly be a key forum to process regional conflicts. Moreover, the Community-Led Local Development strategy, a bottom-up approach implemented in many rural areas of the EU, could pose a fruitful blueprint for a stronger involvement of local civil society too. This needs to be accompanied by a reform of the European (regional) state aid legislation, to allow regions to make necessary investments in public and private companies, despite current competition regulations. It thus remains to be seen in how far regional actors will actually become involved in the European Green Deal in a meaningful way.