Europe fears rising cost of climate action sparks anger
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PARIS – Loud protests against high energy bills in Spain. Social protection demands in Greece as coal mines close. New protests in rural areas and small towns in France against soaring oil prices.
As world leaders gather for a United Nations conference in Glasgow to tackle the threat of climate change, attention turns to one of the biggest risks to the planet’s decarbonization: ensuring that people costs of the green transition do not trigger a populist reaction.
Concerns are particularly acute in Europe, where policymakers increasingly worry about the possibility of social unrest and weakening public support if the burden of switching from cheap fossil fuels falls too heavily on poor households. and means.
“The climate transition remains a risk for all democracies, because it will be very expensive – much more expensive than expected,” French Finance Minister Bruno Le Maire said in a recent interview.
“If we are not careful, we run the risk of having a new movement of yellow vests” which could arise “everywhere in Europe”, he declared.
These fiery protests in France in 2018, named after the millions of people who donned fluorescent protective vests as a sign of economic distress, are etched in the minds of many European leaders as they move forward with policies aimed at raising money. continent a net zero emitter by 2050. The protests began as an outcry against a fuel tax increase imposed by Parisian elites and exploded into a nationwide setback against inequality and financial insecurity .
The urgency to prevent further discontent highlights the challenges facing almost all industrialized countries at the Glasgow conference, known as COP26. The rallies of the Yellow Vests in 2018 brought to light in a brutal and sometimes violent manner the risk of losing the political support of citizens facing the rising costs of driving cars, heating homes and operating household appliances.
“People have to think of the end of the month before they can think of the end of the world,” said Guy Ryder, director-general of the International Labor Organization, a United Nations agency.
“If governments neglect to integrate labor market outcomes, societal costs and notions of equity into their climate transition policies,” he added, “people will take a step back from the action against climate change ”.
The United States headed Thursday for the biggest step it has ever taken to tackle climate change, setting aside $ 555 billion in President Biden’s huge spending bill, including financial incentives for encourage the use of wind, solar and nuclear energy.
Europe has set out its own ambitious plan to move away from fossil fuels over the next nine years, accompanied by policies to ensure a so-called ‘just transition’ for vulnerable people as efforts to meet future goals climate directly affects lives and livelihoods. millions.
But soaring energy prices have complicated Europe’s lofty goals, leaving governments scrambling to offset the impact on households as popular discontent grows.
Europe has relied heavily on natural gas to power homes and businesses while building green energy infrastructure. This leaves the continent vulnerable to price fluctuations driven by a global recovery from the pandemic and creates a wedge between countries that see the crisis as a reason to delay – or accelerate – a green energy transition.
In Spain, the government is taking urgent action to redirect profits from energy companies to consumers after protesters in some cities smash windows of energy company offices and thousands of poor families cut off electricity because that they couldn’t pay.
Italian Prime Minister Mario Draghi unveiled a € 3 billion package intended to have a “strong social impact” for the poorest households and small businesses. President Emmanuel Macron subsidizes energy bills in France during the winter and pays 100 euros (about $ 116) per month to low-income people after small protests recently erupted in central France, the heart of the yellow vests.
And in Greece, the government is trying to allay the anger by redirecting money earned from Greece’s carbon trading system to household energy subsidies – while making sure it is known that the funds are coming from a tool to fight against climate change.
“We will need these kinds of mechanisms to ensure that the poorest don’t pay the price,” Prime Minister Kyriakos Mitsotakis said in an interview. “Because if that happened, it would create a wave against the green transition that would undermine the whole effort. “
Even before the recent energy crisis, some governments warned that Europeans might not be ready to make the sacrifices necessary for a carbon-free future. Beyond the short-term pain of energy bills, there are the longer-term structural challenges of a fundamental shift in the global economy as it moves away from fossil fuels.
A seismic upheaval in the way goods and services are produced will affect millions of jobs in fields as diverse as energy, agriculture, construction, shipping, finance, engineering, retail sales. retail and even fashion, changing the welfare needs of people who will need new skills and training to adapt. Electric cars require fewer parts, and in France alone, up to 120,000 jobs in the automotive industry are expected to be lost.
While up to 24 million new jobs linked to the green economy could be created by 2030, according to estimates by the International Labor Organization, “the risk is that skills are too slow to adapt” , said Patrick Artus, chief economist of the Parisian institute. Natixis Bank.
The countries that signed the Paris Agreement in 2015 pledged to target just transition policies in their climate projects, promising fair employment and affordable energy costs for people and businesses affected by the pivot. Europe has released up to € 75 billion for its plan, which provides targeted support to help governments mitigate the social and economic impact in hard-hit regions.
Money is flowing to countries like Greece, which is speeding up the closure of dirty lignite coal mines as it tries to create a clean energy economy. To gain citizen support for the closures, affecting more than 8,000 mining jobs, the government is offering recycling and relocation programs, and seeking investments in carbon neutral agriculture, solar farms and sustainable tourism to create new job opportunities.
Yet how to pay for the transition – and who should shoulder the bill for the most vulnerable – will remain one of the greatest challenges for decades to come. Rich countries pledged last week to raise $ 100 billion a year to help poor countries tackle climate change – long after the pledge was made in the 2015 Paris Agreement.
The European Union aims to raise funds directly from financial markets by issuing up to € 250 billion in green bonds, an instrument increasingly popular among investors, to help member states finance these efforts. And COP26 negotiators will be faced with the thorny issue of setting a carbon price for big polluters.
Ultimately, the social and economic inequalities resulting from the transition must be addressed, said Lucas Chancel, co-director of the Paris-based World Inequality Lab and author of a recent study concluding that an essential way to close this gap is reflected by higher taxes on the richest and on the biggest winners of globalization.
“To resolve the question of who should pay for the transition, you need to target who is contributing the most to the problem,” he said. The study showed that the richest 10 percent of the world emitted nearly half of global emissions in 2019, while the poorest half of the world’s population was responsible for 12 percent.
“There will be no progress in the green transition without large-scale redistribution,” Chancel said. “If we don’t redistribute wealth to support low and middle income groups, then the transition will not work,” he said.
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