Macroeconomics For A Greener Economy
Switching towards an ambitious and inclusive green economy: the European path or “Yes we can, and yes we share”
Addressing climate change and related issues as well as designing an ambitious path towards a greener, better, and shared common world are the main priorities of the European Union (EU). With the Green Deal as our growth strategy and our 2030 emissions-reduction target of at least 55%, the EU is well on the way to achieving climate neutrality by 2050. The EU has embarked on a green transition because science tells us that we must, economics teaches us that we should, and technology shows us that we can.
While an unprecedented worldwide effort is under way to fight the COVID-19 pandemic, the persistent threats to the health of our planet call for urgent remedies too, for both climate and the environment. The next years will be crucial. There is no time to lose. Unchecked climate change — with its devastating droughts, famines, floods, and glacial lakes outburst floods in particular — would put further stress on government and societies, fuel new migration waves, and significantly increase the probability of conflicts. Environmental pollution and the unsustainable use of natural resources pose multiple risks to human, animal, and ecosystem health.
There is an urgency to act — ice is melting, rains are turning out scarce or creating floods, biodiversity is challenged; all have a devastative impact on agriculture and increase disasters-related costs. Instead of investing for growth, we are paying more and more for relief. We are lagging behind the pace of environmental disruptions. And the hidden cost of unsustainable development is considerable. Look at pollution, for instance: despite tangible progress, in 2015, pollution still led to an estimated 9 million premature deaths worldwide (16% of all deaths) — three times more deaths than from AIDS, tuberculosis, and malaria combined and 15 times more than from all wars and other forms of violence.
The fight for a greener planet is also a fight for fairness and equality. The most harmful impacts on human societies and health are typically borne by the most vulnerable groups. These include children, people with medical conditions, older persons, persons with disabilities, and those living in poorer socio-economic conditions, for instance in droughts, landslides or floods outbursts exposed areas. Worldwide, low- and middle-income countries bear the brunt of pollution-related illnesses, with nearly 92% of pollution-related deaths.
Economic progress can go together with addressing issues such as climate change and pollution: between 2000 and 2017, the EU’s Gross Domestic Product (GDP) grew by 32%, while emissions of the main air pollutants contributing to the global warming decreased by 10% (ammonia, mainly from agriculture), to 70% (sulphur oxides, mainly from the industry).
The economic case for acting is clear, and the benefits for society far outweigh the costs just as the costs of inaction hugely outweigh the costs of action. For example, per year, air pollution costs health and economic activities an estimated EUR 330–940 billion in the EU, including lost workdays, healthcare costs, crop yield loss, whereas all the measures to improve air quality have an estimated combined cost of EUR 70 to 80 billion.
While the lockdown measures to fight the COVID-19 pandemic have led to temporarily cleaner air, water, and reduced noise in many places, slowing down all economic activities is not the way the EU envisions its own and the world’s path towards zero pollution. Instead, the EU can sustain prosperity while transforming production and consumption modes and directing investments towards zero pollution. Investments in clean and sustainable design, circular economy business models, cleaner transport and mobility, low-emission technologies, nature-based solutions, and sustainable digitalization offer strong opportunities for green growth while reducing inequalities, creating jobs, and enhancing collective resilience.
Assigning a right price to pollution and creating incentives for alternatives, as required by the “polluter pays” principle, constitute a key driver to stimulate cleaner production and consumption. The zero-pollution ambition requires collective action and collective change. Everyone has a role to play. For businesses and governments, the zero-pollution ambition offers an important opportunity to innovate by investing in clean technologies, products, and services. The recovery efforts can support this trend. Acting on pollution as a means to address climate change also means inter-generational solidarity.
Internationally, the EU will continue promoting a green finance agenda to mobilize private capital for environmentally sustainable investments, including through the International Platform on Sustainable Finance. It will engage with the EU Member States, the European Investment Bank, and other relevant International Financial Institutions. To better address together this common challenge, the EU will thus promote the zero-pollution ambition for a toxic-free environment, in its external action, including its Green Deal diplomacy and investments, providing expertise and financial resources to scale up international partnerships and action in and with third countries. In particular, the EU will advance international cooperation on black carbon policies to reduce the climate change impacts and improve air quality.
In close relation with Nepali stakeholders, the European Delegation and European Member States are committed to a Green, Resilient and Inclusive Recovery.
By : By: Nona Deprez
Ambassador | Head of Delegation
Delegation of the European Union to Nepal
