Green Deal will remain after EU elections, just with different marketing, says analyst

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pv magazine spoke with Linda Kalcher, executive director at Strategic Perspectives, to understand the consequences of the European elections on the PV sector. According to Kalcher, the results of the European elections are such that the Green Deal should be confirmed, but giving priority, especially in terms of communication, to its industrial dimension. According to the director of the Belgian think tank, some countries run the risk of not understanding international trends, remaining exposed to the variability of fossil fuel prices, at a time when competition for research, production and sales of green technologies is stronger than ever.

In your report, you underlined that the European elections will mostly change the perspective of the climate action policies, promoting a switch from climate to industry and energy security. Yet, in a moment in which renewable energy offers competitive prices, this might mostly mean a change in marketing and political messaging while maintaining substantial coherence with previous policies and measures. Is this correct?

Linda Kalcher: Correct, the center-parties are expected to shift focus towards industrial competitiveness and energy security given the challenges the EU is facing. Renewable energy can be an essential solution, making electricity prices cheaper for households and businesses and contributing to reducing Europe’s fossil fuel import dependence . The Green Deal is seen as essential for European competitiveness, energy security, and prosperity, making a full rollback unlikely.

You wrote that, if the European People's Party (EPP) wants a comfortable and reliable majority for industrial competitiveness and economic security, the Greens are the best choice. How likely is that, from your perspective? What is the most likely alternative to this coalition?

The center-right EPP, social-democrat S&D and liberal Renew groups are now starting to negotiate a sort of coalition agreement in the European Parliament with priorities for the next five years. A European Industrial Strategy that strengthens Europe’s industrial base, creates good jobs and global market leadership is in the interest of the three parties.

However, to have a comfortable majority to get the next Commission president approved in the Parliament, they will need around 450 parliamentarians in support. The Greens can bridge that gap and align on topics around industrial competitiveness, energy security and investments.

An alternative coalition involving far-right parties is less likely as they do not have enough seats and some delegations in the ECR (like the Polish Law and Justice) are not acceptable to the EPP.

You wrote, “A social dimension of the transition and how to make climate-friendly equipment more affordable will also be a key challenge for this term as far-right parties have won votes on the back of the cost-of-living crisis. With the second carbon market (ETS) on buildings and mobility due to be implemented in 2027, attention should focus on how to better distribute transition solutions.” What are the long-term consequences on R&D in renewable energy technologies in Europe? How could the EU avoid losing out on the global net-zero industrial race led by China and challenged by the US? For instance, how likely is it to increasingly use ETS money to support technological developments in Europe?

Addressing the social dimension of the transition is crucial, especially as far-right parties have gained support by focusing on the cost-of-living crisis. Ensuring climate-friendly equipment is affordable will help in this regard. Proper financial schemes for citizens are vital to bring energy prices down and help households renovate, buy clean tech and use their own renewable energy.

The next five years are key for the EU to step up in the competition with China and the US in cleantech. Investments, R&D and innovation on renewables, electrolyzers and storage are key assets in this race. On top of it, they can bring energy prices down for households and businesses.

Now that all revenues from the carbon market need to go into climate-related projects, national governments can increasingly use ETS funds to support technological advancements to stay competitive with China and the US.

Some EU countries are scaling down their climate targets. Does that mean that more European countries will remain dependent on imported gas, being therefore exposed to a likely increase in volatility of fossil fuels prices? What could be the consequences on future elections? Could it for instance give more political space to the groups that will not be part of the coalition?

Rolling back climate policies is an economic and security risk. The investments going into battery, EV, renewable and electrolyzer manufacturing can create jobs and prosperity. Investors and businesses need security and predictability to thrive. If cleantech is not manufactured here, the jobs and investments go to the US and China and a deindustrialisation looms. This cannot be in the interest of any politician.

How do you see or expect Italian energy and climate policies to change in the coming years? Do you see any risk in the reduced focus on solar energy, as shown for instance by the decision of the government to pass the DL Agricoltura?

Italy has a choice: does it want to play a role in the global race on cleantech with a modern, competitive zero-carbon industry or become a gas hub at times of decline of demand? The economics, investments and global demand shifts to cleantech. Italy risks missing out on this trend.

Italian business and farmers might benefit from abundant, affordable energy to stay competitive. Balancing economic and security goals will be crucial for the government's strategy.

What's the risk of a two-speed Europe?

A two-speed Europe happens if governments can’t invest in the transition due to fiscal constraints. The result would be uneven progress and economic imbalances within the EU, undermining collective efforts towards net-zero goals. This remains a significant risk, especially when the recovery funding ends in 2027. Italy might be impacted significantly as the biggest beneficiary of the funds.

When will we know more about the consequences of the European elections on the European energy ambitions and targets?

Three processes will inform the priorities for the next five years. The negotiations in the European Parliament on the coalition’s priorities, the “strategic agenda” that heads of states will adopt in the European Council at the end of the month and the work program of the European Commission that gets defined by the end of the year. The new coalition in the Parliament will likely focus on making the transition to a net-zero economy economically viable and socially just, reducing energy dependency, fostering green jobs, and ensuring competitiveness.

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