Luc Triangle, General Secretary of industriAll (the Trade Union Federation of Trade Unions in the manufacturing, mining and energy sectors) reminds us: “decarbonisation is not happening in a social vacuum. Years of austerities have increased precariousness and inequalities while weakening public services and threatening workers’ rights”.
The European Green Deal will not succeed without strong provisions for a Just Transition. If the Deal leads to massive investment in the EU industrial base, if it offers quality jobs to European men and women, if it resolves regional and income inequalities, industriAll European Trade Union will count among its strongest supporters. But as trade unions we know that the proof of the pudding is in the eating. Our support should not be taken for granted. The workers we represent request more than nice words. They want the Green Deal to be social and they have three messages for the EU policy makers.
Secure investment in the transformation of industries in Europe
The objective of making the EU “carbon neutral” marks a new phase in climate policies since the objective is not just to reduce emissions but to bring them to the lowest level possible in three decades. This is an unprecedented challenge.
Energy-intensive industries are at the frontline of the decarbonisation challenge. They are an important source of greenhouse gas emissions (15% of 2015 EU emissions) and an important provider of employment, representing 5,9 million of jobs in the EU. Moreover, they are the bedrock of crucial value chains for the EU economy and society as well as for decarbonisation. Transport, and road transport in particular, presents a similar picture: an important source of emissions (25% of EU emissions in 2017) and important source of employment (2,6 million jobs in the automotive industry itself).
Any serious discussion about reaching “carbon neutrality” will necessarily address tackling emissions from these sectors. In that context, searching for policies that will facilitate their transformation through innovation, massive investment and flanking measures must be a priority. The report ‘A vision for the Industry in Europe until 2030’ as well as the new EU Energy-Intensive Industries’ 2050 Masterplan suggest how to operationalize this transformation which is vital for EU prosperity.
Reforming the EU Emissions Trading System (ETS) seems to be among the new Commission’s preferred options, but it raises a series of crucial questions. Rushing to increase the CO2 price for industries without a carbon adjustment mechanism and other flanking measures would increase the risk of carbon leakage without providing solutions to accelerate the deployment of low carbon breakthrough technologies (such as CCS, CCU, Hydrogen, circular economy) that are not yet rolled out at an industrial scale mainly because their use would entail serious competitiveness challenges for first-movers.
Steel is a good example of such a risk. We have seen steel imports rise in the EU over the last years, with Asian countries but also countries like Turkey, Russia and Ukraine as main sources. A sudden rise of CO2 price would damage further the ability of EU steel producers to compete with imported products. Offshoring more steel production to third countries would be a social, economic and strategic disaster for the EU. At the same time, the impact on global emissions would be worrying. Many countries selling their steel on the EU market are neither known for their carbon pricing schemes, nor for having low-carbon industrial processes. What is true for the steel industry might apply, mutatis mutandis, to other sectors as well.
Increasing the carbon price within the ETS might not be the silver bullet that will trigger the expected transformative change, also because this would neglect the specificities of the different industrial sectors regarding technological readiness and cost of low-carbon options. Instead of gambling with the possible impact of a higher CO2 price, workers from industries expect from the EU a comprehensive low-carbon industrial policy. It should consist of technological and investment roadmaps that will secure decarbonisation and the presence of industrial value chains and related jobs in the EU.
Watch regional inequalities
Regional disparities represent another risk for the Green Deal. In its Communication ‘A Clean Planet for all’, the Commission pointed out that economic activities that will be heavily impacted by decarbonisation are concentrated in some regions, mainly in Central and Eastern Europe. Hard coal and lignite mining, coal-based electricity, energy intensive industries and automotive represent for them important economic sectors and crucial sources of employment. On the other hand, regions in the North West of Europe gather many assets that will secure further investments in low-carbon value chains such as hydrogen, renewables or CCS.
Again, with decarbonisation entering a new phase, there is a significant risk of deepening regional disparities. Cohesion policy, the Modernisation Fund and more targeted initiatives such as the ‘Coal Regions in Transition Platform’ or the future Just Transition Mechanism will have a major role in keeping all European regions on board while shifting towards carbon neutrality. However, this might not be enough, and the European Commission should from the outset pay a lot of attention to the regional dimension when designing the European Green Deal proposals. It must deliver substantial answers to the challenges that industrial regions depending on carbon intensive activities are struggling with.
Deal with distributive issues
The Green Deal must also be discussed from a distributive perspective since many climate policy instruments might entail effects that have a greater impact on lower and middle incomes[1]. Expect resistance and rejection from workers if they are squeezed between the fear of losing their jobs or severe pressures to reduce wages, and a carbon taxation that makes poorer households and the middle class pay the bulk of decarbonisation costs. Likewise, it should be kept in mind that decarbonisation is not happening in a social vacuum. Years of austerities have increased precariousness and inequalities while weakening public services and threatening workers’ rights. The European Green Deal, together with other EU initiatives, should therefore also contribute to redistribution of wealth. We have to be clear, the divide between the EU and its citizens will become deeper and deeper if social justice is not a key guiding principle for all EU policies in the coming years.
The “left behind” regions and communities that have been hurt by de-industrialisation provide a fertile background for political anger. The European Commission must bear that warning message in mind when drafting the Green Deal. It must deliver concrete answers to the fears and hopes of the millions of Europeans who work in and live from industries.
The text was originally published in polish quarterly magazine "Nasze Argumenty", Nr 02/2019, ISSN 2658-0209 published by Fundacja Naprzód.
[1] G. Claeys, G. Fredriksson, G. Zachmann, The distributional impact of climate policies, Bruegel, November 2018