Authored by Katharine Hawthorne, MBA 2020 and Nancy Reyes Mullins, MDP 2020
In February 2020 Nancy and Katharine attended “Europe’s Green New Deal: Fueled by Innovation”, a talk with Jean-Eric Paquet, the European Commission’s Director General for Research and Innovation. Fascinated by the ambition of the proposal, this blog explores the similarities and differences between the European Green Deal and that of the US Green New Deal.
Europe’s Green Deal
European Commission president, Ursula von der Leyen, introduced the Green New Deal at COP25 by calling it, “Europe’s man on the moon moment.” Such a description is accurate considering that many consider it a virtually impossible mission. And, like the moon shot, those leading Europe’s Green Deal are relying on research and innovation to underpin the bold Deal.
The European Green Deal is described as “a new growth strategy that aims to transform the EU into a fair and prosperous society, with a modern, resource-efficient and competitive economy where there are no net emissions of greenhouse gases in 2050 and where economic growth is decoupled from resource use.” A copy of the full report is available here. To give the strategy greater authority, on March 4th the Commission proposed the European Climate Law, which makes the 2050 target legally binding and provides direction for all EU economic policies, not just those of sustainability initiatives. At the center of the Deal is a focus on climate change, biodiversity, support for a circular economy, and fairness and inclusivity.
In addition to the Climate Law, member states are being asked to support the following: revision of the Energy Taxation Directive, a proposed Carbon Border Adjustment Mechanism, alignment between the Common Agricultural Policy and the Deal (aka the Farm to Fork strategy), and mobilization of €100 billion towards a Just Transition Mechanism, as well as another €100 for the Horizon Europe research and innovation program. In all, the budget for the Deal is estimated to be €1 trillion — the European Commission says that half of the investment will come from the EU budget, national governments will contribute €100 billion, and €300 billion will come from the private sector1.
Citizens are called to contribute to the 2030 climate target plan through a questionnaire on the European Commission website, open through June 23, 2020. Through this consultation, the Commission aims to better understand the implications of the proposed climate policies for different sectors of the economy and provide a mechanism to collect stakeholder feedback.
The US Green New Deal
The US Green New Deal (GND) is modeled after the Depression era New Deal public works program sponsored by President Franklin Delano Roosevelt. The GND seeks to curb greenhouse gas (GHG) emissions in order to avoid the worst consequences of climate change, while also addressing economic inequality and racial injustice. Popularized by the youth activist group, the Sunrise Movement, the GND is sponsored in the US Congress by Representative Ocasio-Cortez (D-NY) and Senator Ed Markey (D-MA). The 14 page resolution can be read in full here, with the five main goals: 1) Achieve net zero GHG emissions by 2050; 2) Create millions of high paying jobs; 3) Invest in sustainable infrastructure and industry; 4) Ensure clean air, water, and healthy food are basic human rights; 5) Promote racial justice and economic equity.
The US GND sets forth an expansive vision that entwines climate justice with economic equity. The initial proposal does not include specific initiatives or explanations of how desired outcomes will be achieved, beyond government direct investment and public financing. Progressive criticism of the GND centers on its reliance on future economic growth to achieve a just transition. Tim Jackson’s report Prosperity without Growth, created for the UK Sustainable Development Commission in 2009, describes the fallacy of absolute decoupling of economic growth from resource intensity, arguing there is no socially just, sustainable scenario involving continued growth in global income.
Notable Similarities & Differences
Similarities of the US and EU Green Deals include targeting net zero GHG emissions by 2050, and broad alignment across main goals and the integration of economic and environmental well-being. Notable differences include the EU’s inclusion of a funding plan, specific pathways to achieve stated outcomes, legislative support and public consultation. While the US lags behind the EU in terms of implementation and commitment of resources, the US GND has become a central tenet for Democratic presidential candidates in the 2020 election, including presumptive nominee Joe Biden who believes “the Green New Deal is a crucial framework for meeting the climate challenges we face.”
What Comes Next
The COVID-19 crisis has created many unexpected challenges, but also creates new opportunities for both the European and US Green Deals. The US Congress recently passed relief packages authorizing government action on a scale previously politically unthinkable, a scale similar to that outlined in the GND. Additional stimulus will likely be required to respond to the current crisis, and there is already a green stimulus proposal being circulated which attempts to use the current moment to pivot the US economy towards a more sustainable future. In Europe, Reuters reports that 10 environment and climate ministers wrote an open letter recommending that any rescue package should support the European Commission’s Green Deal strategy.
About the Authors
Katharine Hawthorne recently completed her MBA at Berkeley Haas, where she served on the CRB Student Advisory Board and as a principal on the Haas Sustainable Investment Fund. She is pursuing direct investing opportunities with positive environmental and health outcomes, building on her career in impact investing and global health.
Nancy Reyes Mullins graduated in May 2020 with a Master of Development Practice (MDP) Degree from UC Berkeley and served on the CRB Student Advisory Board along with Katharine. Nancy’s focus is on social impact metrics and in collaboration with the Human Rights and Business Initiative (HRBI) will soon be publishing a guide for investors on addressing forced labor in the apparel industry.