Growth and Sustainability, the European Way

On.Simona Bonafé, Member of the EU Parliament Partito Democratico Vice-President Long-term Investment Intergroup.

In Copenhagen, only six years ago, the world ignored the European Union’s call to responsibility for limiting the rise in temperatures.

The diplomatic efforts made in Paris in December showed, for the first time, that we have started thinking globally on the fight to climate change: 195 countries agreed in playing their part, included the four largest polluters of the world: China, India, the US and Europe.

The world leaders finally gave a clear signal to the economies and to every citizen: pollution and climate change have no boundaries and have to be fought united.

It’s certainly a political success for Europe, not only for the evident diplomatic effort made towards many countries in the breakup of old balances, but also because it’s the result of a deep-rooted vision carried on by European legislators in these months. A vision which aims at changing the way we think and organize our economic life on the planet, promoting renewable sources, energy savings and efficiency, recycling of materials, sustainable mobility.

We have an ecological debt with our planet, which means that we are consuming much more quickly than our planet is able to metabolise. This produces damaging effects on the environment in general, as well as on the air we breathe as we have recently experienced in our cities.

Finally, it seems that we became aware that the current development model is an obsolete one, unsustainable for the environment but also from the economic point of view.

However, growth is unquestionably necessary, both for the recovery of the economic system and for the broader goal of environmental sustainability: without growth, the economic system collapses, and without growth there is no space to develop, finance and bring new technologies into the market, allowing the system to become more sustainable and more efficient - in a word “greener”. Linking growth to sustainability is the key. Investing in innovation is the way.

It is important to bear in mind that tackling climate change doesn’t only mean taking the responsibility of coping with a potential global threat, but it also means catching a great development and economic opportunity.

Three main European dossiers are currently on the table: the new circular economy package - which I supervise as rapporteur for the European Parliament -, the revision of the EU emission trading system and the Energy Union Strategy, all absolutely crucial within the climate challenge and for European competitiveness on global markets. This comprehensive approach, that includes updated energetic, waste and emission frameworks, could potentially transform Europe in the most productive commercial space in the world by making it at the same time the most sustainable society of the planet.

Obviously, decarbonizing the economy in Europe is a huge challenge that requires a great amount of targeted investments to be mobilized by public budgets and private financiers. The Junker Commision, thanks to the efforts of the Italian Presidency, has embraced this inclination by enabling Member States to benefit from flexibility mechanisms, to foresee investments outside the Stability Pact and to deduce national co-funding from the EFSI Plan from public deficits. Green projects often have a high investment risk profile, thus the enhanced guarantees under the EFSI Plan and the flexible mechanisms set up in these months will help giving further impetus to the green transition.

The Junker plan seems a good starting point, as it promotes an effective synergy between public and private investment and it seeks to improve the chain of projects, both in quality and in quantity. European legislators are trying to develop a coherent framework, in order to give clear and non-contradictory signals to investors, as visible in the case of the climate roadmap with temporal targets by 2030 and 2050.

The additionality criterion, on which the European Parliament has strongly insisted, can contribute to the realization of projects with a strong added value in terms of sustainability, projects with a high-risk profile that otherwise would not easily find the necessary funding.

Financing the transition to a low-carbon model means having a forward-looking vision and the will to take risks, that also requires a stronger financial stability and clearer regulatory guarantees to attract private finance, insurances and asset owners to invest their capital. The newly released Capital Market Union plan has forecasted the development of green investments to rely only on market dynamics, which is not, in my opinion, sufficient. In this field we probably have to be more ambitious.

Italy has already shown, in recent months, to be able to cut ties with the past and support innovation policies.

From the signature of the Kyoto Protocol, we have maintained our responsibilities in reducing emissions: 20% reduced emissions and 43% of electricity derived from renewable energy.

The tackle to climate change is an undelayable priority. As Europeans, we are strongly determined to play our part. Paris is a starting point, but we now need coherent actions from all the main polluters to move forward.