The Green Deal a “costly extravaganza.”

The Green Deal is a key EU flagship policy but instead of being a vehicle of growth has been branded a “costly extravaganza.”

The claim, by one of the mainstream groups in the European Parliament, is timely as it comes in the wake of the European Commission recently publishing the latest “communication” on its 2040 climate targets.

Suffering from an adverse macroeconomic context, the production of pulp and paper in Europe already experienced a decline in 2023 and predicts worse to come unless there is a serious rethink of the Green Deal.

Results show that, in 2023, production in the paper and board industry suffered a second consecutive year of contraction, decreasing by 12.8%. The decrease in production in 2023 continues to be more pronounced even than it was during the Covid-19 crisis (-4.7% in 2020).

It’s not just the paper industry that has concerns.

So, too, do consumer groups like the European Consumer Association which says the Commission should try to better link consumer policy to the Green Deal implementation “to provide for the best outcome.”

It also says the Green Deal does not acknowledge the need to ensure greater coherence between the various EU policies, including agriculture, health, environment and trade.

The European parliament says the pace of change under the Green Deal represents “an industrial revolution at unprecedented speed” with “significant” impacts on gross domestic product (GDP), investment, employment, competitiveness, distribution, public finances and monetary stability.

It warns: “There is a risk of negative short-term impacts if consumption and production decrease.”

Elsewhere, the Centre for the Promotion of Imports from developing countries warns that it is likely that there will be an increase in costs due to transitioning to more sustainable processing/production operations. It is also likely that this may include, for example, potentially high prices of materials with recycled content.

The EU has made the Green Deal – a wide set of policies to address climate change and environmental degradation – a real political priority. It aims to reach net-zero carbon emissions by 2050 and the EU says the Green Deal is “our lifeline out of the COVID-19 pandemic.”

But, even so, there is fast-growing opposition in some quarters and critics insist this is not merely a case of ‘greenlash’, the term referring to political and societal backlash against ‘green’ policies.

Indeed, critical statements about the Green Deal have ranged from heads of government to large-scale societal push-back against – or scepticism about – the environmental policy.

Opposition has been seen at a local level, with citizens pushing back against clean mobility policies such as congestion charges at the national level, exemplified by the yellow vest movement triggered by the French attempt to increase its carbon tax.

At the EU level, Elisabetta Cornago, a senior research fellow at the respected Centre for European Reform, says we have seen attempts of centre-right parties in the European Parliament to “kill” Green Deal policies such as the phase-out of internal combustion engine vehicles or the nature restoration law.

Both French President Emmanuel Macron and Belgian Prime Minister Alexander De Croo have, in the past, called for a pause in new European green policy initiatives. This came after a ‘wave’ of new EU policies were introduced to meet 2030 climate goals.

“Macron and De Croo argued governments and businesses need time to implement these new rules and adjust to them,” says Cornago.

The message is echoed by Europe’s paper manufacturing industry which says a gamut of climate-related goals have been rushed in too quickly and without proper consideration for the potential impact they will have.

Jori Ringman, Director General at Cepi which represents the European pulp and paper industry, says they “completely agree” with the overall aims of the Green Deal which are also shared by the sector. The problem, he says, comes when transitioning from “the old era to the new era.”

What he calls “terrible things” are possible with the result being “huge and profound collateral damage” for the paper industry. Changing so much within a short timeframe can easily lead to “unplanned and unforeseen” results and consequences, he notes, adding, “this is what I mean by collateral damage and this is what we desperately want to avoid.”

So, what does this “collateral damage” look like?

Well, according to the paper packaging industry it means Europe possibly losing much of its manufacturing capacity and skills and being even more dependent than it already is on imports.

Evidence elsewhere of this can be seen, it argues, in what happened in the solar panel sector with European production being devastated by cheaper imports from Asia.

The paper industry is desperate to avoid that happening to its sector but warns this is what could well happen due to the impact of the Green Deal.

Former Polish Prime Minister Mateusz Morawiecki and Hungarian Prime Minister Viktor Orbán have also attacked European policies for the energy transition, with Morawiecki demanding that the carbon prices determined by the EU emissions trading system be capped.

More recently, of course, we have seen noisy and sometimes violent protests from farmers, who say their economic interests could be adversely affected by certain Green Deal policies.

The backlash in some quarters against the Green Deal continues apace with the cost of climate action and its fair distribution worrying the public too. This fear emerged in a survey carried out by Project Tempo last November.

Cornago said the findings underlined the fact that “voters who already feel economically insecure and alienated from politics have been driving the recent backlash against green policies.”

The survey results suggested that ‘fatigue’ about green policies will also be an important theme in the run-up to this Spring’s European elections.

The paper packaging industry, shares many of these concerns, saying the EU has failed to fully grasp the economic challenges associated with achieving ambitious decarbonisation targets, especially the need for predictability as a pre-condition for unleashing green investments.

One example is the deployment of biogenic carbon capture and utilisation technology, which is reflected in the Industrial Carbon Management communication, also published by the Commission recently. The price tag of the transition will be high with the Commission estimating that €1.5 trillion a year needs to be deployed, warns the industry.

The first order of business, the sector insists, is to keep ‘made in Europe’ industries investing locally, via an industrial policy that would double as a comprehensive investment friendly framework.

The paper industry says it has got its own house in order, pointing out that some 85% of its raw materials are sourced from within the European Union while 92% of the water it uses is returned in good condition to the environment. It also says it is a “world champion” in recycling at the rate of 71.4%.

ECR Group co-leader Nicola Procaccini has called for an “undogmatic and realistic approach that “puts citizens at the centre” and adds, “When we look at the Green Deal, we see that it has become a very divisive issue within the European Parliament. This is not the time for green ideological radicalism, but for a technology-neutral approach,” adds the Italian deputy.

Her fellow group leader in the EU Parliament, Prof Ryszard Legutko, adds, “The negative effects of failed migration policies and the Green Deal are being felt by citizens on a daily basis.”

The Polish MEP goes on, “The Green deal, the Commission’s flagship, instead of being a vehicle of growth, is a costly extravaganza, costing over €300 billion by 2030, with rising living costs, energy bills, and other unpleasant aspects of the Commission’s and the parliament’s fantasies. The Commission has been unsurprisingly silent on this matter.”

The EU, however, points out that the European Green Deal is the EU’s “strategy for reaching climate goals and making Europe climate neutral by 2050.”

The package includes initiatives covering the climate, the environment, energy, transport, industry, agriculture and sustainable finance. The aim is to make the EU’s climate, energy, transport and taxation policies fit for reducing net greenhouse gas emissions by at least 55% by 2030, compared to 1990 levels.

An EC spokesman said, “The European Green Deal is our lifeline out of the COVID-19 pandemic.”