Europe’s main focus is rightly on COVID-19: stopping its spread, developing a vaccine, caring for people suffering from the virus, and ensuring a functioning healthcare system. Yet it must also put in place suitable policies to address the massive short-term economic repercussions of the corona crisis and to ensure that companies remain economically viable so that they help propel the post-crisis economic recovery. To have a broad and rapid impact, these policies should be straightforward, pragmatic, and unbureaucratic.
Europe needs a green recovery program
Europe also needs mechanisms for long-term crisis management. Countries typically launch big stimulus packages to revive their economy. The experience of the 2008-09 economic crisis shows that it pays off to think early about where to target funds and how best to achieve the desired outcomes. Considering the huge transformation challenges ahead, this means prioritizing investments that make Europe’s economy sustainable, climate-friendly, resource-efficient, and—just as importantly—resilient.
Three-phase model of dealing with the Corona crisis
Making Europe’s economies resilient and climate-friendly will require a green recovery pro-gram. It should be compatible with the European Green Deal, in particular with the com-mitment to achieve climate neutrality by 2050. Scaling back Europe’s climate-protection efforts in response to the corona crisis would be precisely the wrong approach. Allowing climate change to continue unchecked could lead to an even broader and permanent crisis of devastating global proportions.
How to avoid the next crisis
A green recovery program that makes Europe’s economies more resilient should direct in-vestments toward:
enhancing regional production capacity, particularly for basic products and services (like products for the healthcare system)
gradually but systematically establishing a circular economy
accelerating the development of green production processes (like hydrogen-based steel production
establishing and expanding supply infrastructure in areas like a Europe-wide hydrogen economy
developing green product markets through targeted public procurement policies or (voluntary) product standards (like climate-friendly steel and plastics for car manufacturing)
establishing development infrastructure (like living laboratories) that helps start-ups and SMEs design, develop, and test climate-friendly products and services.
These are examples of policies that will help protect the earth’s climate, enhance resource efficiency, and reduce Europe’s dependence on imports and global supply chains, which seems advisable after the experience of the corona crisis.
Up the transformation tempo
The increased economic resilience that such policies will achieve will have to be quantified in completely new ways using metrics that have yet to be developed. But it’s also clear that these policies will not only require massive investments but will also lead to changes in Europe’s economic cycle and will in some cases result in the abandonment of structures that have developed over decades. But these are extraordinary times for companies and policy-makers. If this isn’t a good opportunity to overcome supply-chain dependencies and use economic stimulus investments to accelerate transformation processes that are necessary anyway—when is?
A longer version of the discussion paper is available here.
Author: Prof. Dr. Manfred Fischedick, Scientific Managing Director, Wuppertal Institute, a think tank for sustainable development.