€500 billion for the green and digital transition and a non-ideological but sustainable European policy
Once again, the words of Mario Draghi deserve attention: “The green and digital transitions are estimated to require at least 500 billion euros per year.” He said this on Saturday in Ghent, at the meeting of EU economics ministers, talking about European competitiveness with respect to the two biggest global players, the US and China, and reaffirming concepts already expressed on multiple occasions. Draghi added that it isn’t only defence investments that must be added to such investments, but also “productive” investments, for industry and services. He explained that “the gap between the EU and the USA is widening, above all after 2010”, the end of the Great Global Financial Crisis. The US “needed two years to return to the previous levels, but the EU nine. And we haven’t climbed since then.” Indeed, there’s “an investment gap of 1.5% of GDP, or €500 billion.” In short, “we’ll have to invest huge sums in a short space of time.” Participation from both the state and private investors will enable companies to construct new and better international competitiveness on the very foundation of a balanced transition.
There are many issues that require clarification, taking responsibility for challenging decisions. First and foremost, how do we locate such huge sums? One response can be identified following use of the financial markets as already successfully tested on the 250 billion required to cover the “Next Generation EU” Recovery Plan following the Covid pandemic, which is to say turning to eurobonds. That means both for defence, following the suggestions of Ursula von der Leyen, President of the European Commission (a hypothesis that met with perplexity in Berlin, however; la Repubblica, 24 February), and to finance the twin green and digital transition that Draghi mentions effectively.
A second answer would be increasing the amount of the UE budget and allocating these resources adequately to investments, also in individual European countries. Additionally, a third response asks us to draw conclusions from a clear observation: In a climate of uncertainty and ‘polycrisis’ or ‘permacrisis’, if you prefer, the other major international players – the US and China first and foremost – are acting according to geopolitical strategies that combine the major issues of security and energy, innovation and competitiveness, investing enormous resources. And Europe can’t stay on the sidelines, unless it is content to lose its economic role and erode its political prestige. As we have repeatedly written in this blog, this prestige is founded on its historic and pragmatic future capacity to positively maintain a combination of political democracy, the market and the welfare state, i.e. freedom, economic growth and widespread well-being.
We therefore need ambitious EU policy, with an appropriate reform of governance, abandoning the requirement for unanimous decisions among the 27 member states: defence and security, energy and industry, environmental and digital transition, employment and the new frontiers of artificial intelligence are the constituent sections of a single, forward-looking sustainable development strategy. In the last two weeks, indeed, our blog has addressed “digital humanism” and the need for a European Artificial Intelligence, to stand up to the power of the USA and its Big Tech, of China, and now also India. It’s a political and economic challenge that requires consideration of the Next Generation EU package first and foremost with a broad perspective.
We require investment, therefore, but also research, science and culture. We need a strategy that makes sustainability politically attractive and acceptable, as a system of values and as concrete projects for intervention, endeavour and indeed participation.
The coming generation in particular demonstrates a generous willingness to participate in this way.
One of many signals comes from the world of Italian universities. 2,062 students from over 80 universities took part in the “Dieci tesi per la sostenibilità” (10 theses for sustainability) competition, in an initiative promoted by the Symbola Foundation, Unioncamere and LUISS with the support of Deloitte Climate & Sustainability, and sponsored by the Italian Ministry for Universities and Research and the Conference of Italian University Chancellors. 62% of the participants were female and 38% male. Moreover, the scientific committee, chaired by Stefano Zamagni, Professor of Political Economy at the University of Bologna, and Paola Severino, President of the LUISS School of Law, is already working hard to identify the best theses, in fields concerning economics and statistics, civil engineering, architecture and design, legal, political and social sciences, industrial and information engineering, chemistry and biology, and of course all aspects of the humanities.
This participation is “extraordinary, worth much more than a survey,” comments Ermete Realacci, President of Symbola. “It can provide us with important information and stimuli. We can also count on the clean, renewable energies from the knowledge and intelligence of the young people in our country for our ability to face the challenges ahead of us.” But it’s also “an opportunity to strengthen an Italy that makes Italy […:] facing the climate crisis with courage is not only necessary, but can make our economy and society more compatible with humanity and consequently compatible with the future.” Because, in the wake of exhortations to commitment from the Pope and President Mattarella, Realacci considers it necessary to put European commitment into practice, “indicating cohesion and the green and digital transition as the path to strengthening our economy.”
This is the pivotal question, on which European entrepreneurs also insist, linking the Green Deal to an Industrial Deal that combines the unavoidable decisions for averting a worsening of the climate crisis with the issues of economic development and social sustainability. There are also clear voices in the “Fabbrica Europa” document that Confindustria prepared as a platform for exchange in view of the June elections to renew the EU Parliament and in the Charter that 73 business associations and energy-intensive multinationals signed last week in Antwerp (Il Sole24Ore, 21 February).
There is a clear indication of the method: technological neutrality for the choices to be made. The goal can be found in ESG criteria, but achieving it must not depend on choosing a particular technology. In the case of energy, that includes supply security considerations (with attention to next-generation atomic power). It also includes EU policy with an obsessive focus on reuse as opposed to recycling, and therefore against recyclable packaging (where Italian industry is actually a positive leader). Or to take one more example with a great impact, it includes the radical decision to favour electric cars over the use of internal combustion engines using non-polluting fuels. That’s also a choice that would harm the entire European automotive component industry, with dramatic and unacceptable social consequences.
We need less green ideology and more and better industrial and social policy guided by concrete sustainability. “An industrial renaissance for a competitive EU”, summarises Confindustria. It’s a clear path, along which European political and economic debate must continue.
(Photo Getty Images)
Once again, the words of Mario Draghi deserve attention: “The green and digital transitions are estimated to require at least 500 billion euros per year.” He said this on Saturday in Ghent, at the meeting of EU economics ministers, talking about European competitiveness with respect to the two biggest global players, the US and China, and reaffirming concepts already expressed on multiple occasions. Draghi added that it isn’t only defence investments that must be added to such investments, but also “productive” investments, for industry and services. He explained that “the gap between the EU and the USA is widening, above all after 2010”, the end of the Great Global Financial Crisis. The US “needed two years to return to the previous levels, but the EU nine. And we haven’t climbed since then.” Indeed, there’s “an investment gap of 1.5% of GDP, or €500 billion.” In short, “we’ll have to invest huge sums in a short space of time.” Participation from both the state and private investors will enable companies to construct new and better international competitiveness on the very foundation of a balanced transition.
There are many issues that require clarification, taking responsibility for challenging decisions. First and foremost, how do we locate such huge sums? One response can be identified following use of the financial markets as already successfully tested on the 250 billion required to cover the “Next Generation EU” Recovery Plan following the Covid pandemic, which is to say turning to eurobonds. That means both for defence, following the suggestions of Ursula von der Leyen, President of the European Commission (a hypothesis that met with perplexity in Berlin, however; la Repubblica, 24 February), and to finance the twin green and digital transition that Draghi mentions effectively.
A second answer would be increasing the amount of the UE budget and allocating these resources adequately to investments, also in individual European countries. Additionally, a third response asks us to draw conclusions from a clear observation: In a climate of uncertainty and ‘polycrisis’ or ‘permacrisis’, if you prefer, the other major international players – the US and China first and foremost – are acting according to geopolitical strategies that combine the major issues of security and energy, innovation and competitiveness, investing enormous resources. And Europe can’t stay on the sidelines, unless it is content to lose its economic role and erode its political prestige. As we have repeatedly written in this blog, this prestige is founded on its historic and pragmatic future capacity to positively maintain a combination of political democracy, the market and the welfare state, i.e. freedom, economic growth and widespread well-being.
We therefore need ambitious EU policy, with an appropriate reform of governance, abandoning the requirement for unanimous decisions among the 27 member states: defence and security, energy and industry, environmental and digital transition, employment and the new frontiers of artificial intelligence are the constituent sections of a single, forward-looking sustainable development strategy. In the last two weeks, indeed, our blog has addressed “digital humanism” and the need for a European Artificial Intelligence, to stand up to the power of the USA and its Big Tech, of China, and now also India. It’s a political and economic challenge that requires consideration of the Next Generation EU package first and foremost with a broad perspective.
We require investment, therefore, but also research, science and culture. We need a strategy that makes sustainability politically attractive and acceptable, as a system of values and as concrete projects for intervention, endeavour and indeed participation.
The coming generation in particular demonstrates a generous willingness to participate in this way.
One of many signals comes from the world of Italian universities. 2,062 students from over 80 universities took part in the “Dieci tesi per la sostenibilità” (10 theses for sustainability) competition, in an initiative promoted by the Symbola Foundation, Unioncamere and LUISS with the support of Deloitte Climate & Sustainability, and sponsored by the Italian Ministry for Universities and Research and the Conference of Italian University Chancellors. 62% of the participants were female and 38% male. Moreover, the scientific committee, chaired by Stefano Zamagni, Professor of Political Economy at the University of Bologna, and Paola Severino, President of the LUISS School of Law, is already working hard to identify the best theses, in fields concerning economics and statistics, civil engineering, architecture and design, legal, political and social sciences, industrial and information engineering, chemistry and biology, and of course all aspects of the humanities.
This participation is “extraordinary, worth much more than a survey,” comments Ermete Realacci, President of Symbola. “It can provide us with important information and stimuli. We can also count on the clean, renewable energies from the knowledge and intelligence of the young people in our country for our ability to face the challenges ahead of us.” But it’s also “an opportunity to strengthen an Italy that makes Italy […:] facing the climate crisis with courage is not only necessary, but can make our economy and society more compatible with humanity and consequently compatible with the future.” Because, in the wake of exhortations to commitment from the Pope and President Mattarella, Realacci considers it necessary to put European commitment into practice, “indicating cohesion and the green and digital transition as the path to strengthening our economy.”
This is the pivotal question, on which European entrepreneurs also insist, linking the Green Deal to an Industrial Deal that combines the unavoidable decisions for averting a worsening of the climate crisis with the issues of economic development and social sustainability. There are also clear voices in the “Fabbrica Europa” document that Confindustria prepared as a platform for exchange in view of the June elections to renew the EU Parliament and in the Charter that 73 business associations and energy-intensive multinationals signed last week in Antwerp (Il Sole24Ore, 21 February).
There is a clear indication of the method: technological neutrality for the choices to be made. The goal can be found in ESG criteria, but achieving it must not depend on choosing a particular technology. In the case of energy, that includes supply security considerations (with attention to next-generation atomic power). It also includes EU policy with an obsessive focus on reuse as opposed to recycling, and therefore against recyclable packaging (where Italian industry is actually a positive leader). Or to take one more example with a great impact, it includes the radical decision to favour electric cars over the use of internal combustion engines using non-polluting fuels. That’s also a choice that would harm the entire European automotive component industry, with dramatic and unacceptable social consequences.
We need less green ideology and more and better industrial and social policy guided by concrete sustainability. “An industrial renaissance for a competitive EU”, summarises Confindustria. It’s a clear path, along which European political and economic debate must continue.
(Photo Getty Images)