Forum Seminar: The Economics of the EU‘s Green Deal – Highlights

More than 40 experts from academia, media and politics participated in the discussion, among them representatives from the OECD, the EU, the Federal Ministry of Finance and the Ministry for Economics and Energy.

One of the largely shared views has been that in its current form the Green Deal will not have the positive economic impact of a trillion-dollar as the Commission is calculating with. The real additional investment – of probably just 7,5 bn euro – just does not justify this estimation.

Xavier Timbeau from Paris based OFCE made the controversial point that a carbon-neutral economy will be less productive and that the Green Deal is rather an instrument to cope with the costs of the transition than an investment program. These points were contested by multiple guests.

Carlo Jaeger and Sarah Wolf from the Global Climate Forum in Berlin argued that the European Green Deal presents a great opportunity for climate policy and for Europe. They called for a working group of IMF, EC and ECB to develop proposals to be fed into the Eurogroup and into public debate. They cited the US example of a public body like „DARPA“ that could serve as a model for a European Green DARPA, an idea that found support also from Munich based economist Dalia Marin. The message: Investment focused climate policy is the right approach, and it requires an overhaul of the European innovation system.

Discussing the special example of Germany’s coal exit, Jens Südekum, Economics professor from Düsseldorf, defended the idea that policy-makers need to sort out in advance which new industries could be developed in regions that are hit by the end oft he coal industry. The same would apply for other industries and even the car industry that is regionally threatened by the transition of the transport system.

Südekum is consulting the coal industry areas in Northrhein Westfalia on industrial policies and had much to say about the difficulties. The danger looms that industries settle in those areas that are not fitting to the specific talents of those areas.

Xavier Timbeau emphasised that a transition will not be possible without transfers within the EU. The South of Europe has to profit disproportionately from EU-investments. But this requires that countries stop measuring EU-policies through a nationalistic lense.

Peter Bofinger from University of Würzburg addressed the role of ECB and warned that it should not be burdened with the task of realizing green finance mechanisms. He rather sees the EIB as the institutions with the task to provide enough money for green investments. Each problem should have its own answer and the ECB already has different tasks. But would projects should be funded with green investments?

Dietmar Oeliger from the European Climate Foundation and Patrick Graichen from Agora Energiewende elaborated on the possible subjects of investments. Oeliger sees big potential for battery production and the development of green fuels as being flagship programs in the Green Deal. Patrick Graichen argued that further money should go into electric mobility. This technology has won the technological race, which, as he points out, can be seen in the cost curves taking a similar development like the ones for solar and wind did some years ago.