An Existential Crisis? The European Union, Austerity and Paris 2015

Paul Tobin, Charlotte Burns |

Since 2010, the European responses to the global financial and economic crises have been dominated by a narrative of austerity. European governments have sought to bolster confidence in their economies by rolling back public spending. Austerity may pose an existential crisis for the European Union (EU), both regarding austerity-hit states being forced to leave the single currency (think Greece), and the EU’s willingness to be a global leader on key issues outside economic growth (think climate change). The extent to which austerity is necessarily a barrier to climate ambition is a crucial component of our research, funded by the Leverhulme Trust. The 2015 United Nations Framework Convention on Climate Change (UNFCCC) summit in the French capital, Paris, has been identified as a crucial opportunity to foster ambitious climate goals. Will the EU be a leader during the negotiations, or fade into the background?

The Barroso Commissions

While US leadership in environmental policy declined during the 1990s, the EU moved to position itself as a global pioneer of climate policy, particularly following the Kyoto Protocol negotiations in 1997.[1] International climate policy provided the EU with a niche into which it could forge its global identity. The European Commission is the ‘commissioner’, or source, of all EU legislation. Under the guidance of José Manuel Barroso (2004-2014), the win-win objective of ‘green growth’ dominated Commission thinking around climate change. Here, the Porter hypothesis[2] underlined the belief that by stimulating innovation, environmental policy can be economically beneficial. The EU Climate and Energy Package, with its ‘20-20-20’ targets, was a notable centrepiece. In 2008, Barroso claimed confidently that the 20-20-20 targets were the most ambitious in the world; indeed, compared against other developed states, the EU’s targets remain world-leading. Moreover, the separation of the Commission’s Environment and Climate Change briefs in 2010 enabled Janez Potočnik and Connie Hedegaard, respectively, to push their remits onto the global political agenda. Thus, under Barroso, climate change leadership was a key signifier of the EU’s global identity.

The Juncker Commission

However, since the financial crisis of 2008, newer European states (such as Poland) have played an active role in blocking new proposals, while previously ambitious states (such as Germany) have shied away from leadership. (Moreover, officials within the Commission have also been known to block new legislation.) The narrative of climate change being a ‘win-win’ opportunity appears to have been replaced by a zero-sum framing of economy first, everything else second. Crucial to this new context were the changes of 2014, seeing the formation of both a new European Parliament and a new European Commission. Jean-Claude Juncker touted climate change leadership amongst his key messages during his successful election as the new Commission President during the summer of 2014. However, his pro-austerity leadership as President of the EuroGroup between 2011 and 2014 suggests that he will continue to favour austerity measures. As such, a reduction in ambition regarding climate change may not solely be a reflection of member state preferences, but also an indication of the new Commission expressing its own agency.

The new Commission and Paris 2015

The new structure of the Commission under Juncker appears to give a lower priority to climate change than under Barroso. So how will this reduced ambition manifest itself in the run up to the Paris climate talks? Let’s identify the internal and external impacts. Internally, the EU may formulate fewer and less ambitious climate policies, preferring instead to focus on facilitating economic growth. The Circular Economy bill, for example, was dropped in December 2014, shortly after the new Commission took office. By restricting new climate legislation, the EU may hold a less credible leadership position with which to participate in international negotiations. Moreover, under the auspices of austerity, the EU may reduce spending on its own climate projects, hindering the capacity of the EU to encourage other states to follow its lead. For instance, the EU will not ring fence funds to pay for projects that boost energy efficiency in buildings, instead encouraging the private sector to decide where funding should be allocated. The EU member states have committed, however, to a minimum 40% reduction of emissions by 2030, based on 1990 levels.  Although this 40% target is the overall percentage reduction to be met by the EU rather than an obligation for every state to achieve individually, it provides a relatively ambitious starting point for negotiations with states outside the EU.

Externally, the new structure of the Commission will allow less time for the Commissioner responsible for climate change, Manuel Arias Cañete, to build ambitious coalitions in the run up to the Paris talks. Also responsible for energy policy – a significant portfolio in its own right – Cañete is tasked with responding to fluctuating oil and gas prices, opposition across Europe to the construction of new nuclear reactors and energy security challenges. Overseeing these developments is likely to limit Cañete’s ability to prioritise climate change effectively. Second, with budgets squeezed within EU member states, the EU may feel unable to offer significant funding to developing states for climate change mitigation and adaptation. With the UN’s Green Climate Fund struggling to reach its $100 billion target, having been designed to release funds from developed to developing states for climate mitigation and adaptation, a lack of leadership from developed states could hinder significant policy action. As such, regardless of how much the Commission would wish to prioritise climate change, its hands are likely to be tied by its member states’ unwillingness to spend.

Next steps

2015 is a critical year for climate change mitigation. For the past 15 years, the EU has been at the forefront of climate negotiations. But with a new European Commission and austerity measures being implemented in EU member states, the EU may not assume its traditional leadership position at this year’s international negotiations. Will the EU be willing and able to lead in Paris? If not, which states will press for ambitious targets? And how will the EU define its international reputation going forward, if not through climate change? The answers to these questions will not only shape the future of the EU, but the future of the planet as well.

[1] Kelemen, R. D. (2010). Globalizing European Union environmental policy. Journal of European Public Policy, 17(3), 335-349.

[2] Porter, M. E., & Van der Linde, C. (1995). Toward a new conception of the environment-competitiveness relationship. The Journal of Economic Perspectives, 97-118.