With regard to climate politics, we are in need of trans-Atlantic solidarity. Corporations in particular must play a crucial role in this – and according to our guest author they will, as it is in their own interest.
After four years of trans-Atlantic estrangement, European-American relations are in desperate need of a positive, forward-looking impulse. President of the European Commission in Brussels Ursula von der Leyen has high hopes for Joe Biden’s new administration in Washington.
Von der Leyen’s ambitious, indispensable Green Deal agenda has shifted a seemingly unalterable European structure of thinking. Climate and environmental politics, political ideas addressable only during a favorable economic cycle, are included as the main pillar for the future creation of prosperity in Europe.
While some are still having a difficult time keeping up with this mind shift, Europe’s new business doctrine gets a new, international dimension: America’s President-elect Biden announced that, on the day of his inauguration, he will rejoin the Paris climate agreement. During his election campaign, Biden promised America to invest $2 trillion in his “Green New Deal,” particularly in renewable energies and sustainable infrastructure, to reactivate the post-pandemic American economy.
America’s about-face regarding climate and environmental politics brings about a chance for Europe that we should seize swiftly and decisively. A trans-Atlantic closing of ranks in terms of environmental politics could – politically and economically – initiate a “race to the top.”
The political piquancy in this? Here in Europe especially, skeptics of von der Leyen’s Green Deal, often conservatives, should ask themselves whether biting the bullet regarding environmental policies would be necessary to maintain the integrity of the alliance.
The cogency in this? Biden’s step could be more than an American attempt at making up ground in terms of environmental politics and the return to international sanctity of contract. Should America identify green growth and sustainable technology as “the next big thing,” we might suspect the unleashing of a Prometheus with maximal economic dynamism. Biden’s new policies could systematically aim the concentrated power of America’s capitalism at the epochal task of fighting against climate change. That would force us to let go of remaining doubts about this new business model.
The common goal is to furnish proof that terms like “financial capitalism,” used pejoratively, embedded in the appropriate confines and market rules (first and foremost a carbon tax), can absolutely serve as positive and transformative forces for our societal conduct.
The odds for that are good. Despite all of Donald Trump’s braking maneuvers, the most important financial intermediaries of the United States have made an active emission reduction policy part of the fixed criteria for their choice of equities. Due to their own insight, many large U.S. companies like Microsoft and Amazon are advancing plans for carbon neutrality, and companies like Apple and Walmart are pursuing ambitious goals with regard to circular economy.
Wall Street’s attitude regarding environmental politics and climate change is starting to shift toward seeing both as future business opportunities. This will also have an impact on the Republican position, as the disengagement of the financial world from Trump toward Biden prior to the presidential election was a clear sign.
The same applies to a large number of institutional investors and industrial corporations in Europe. The European Commission is getting a lot of encouragement from leading CEOs like the CEO Action Group for a European Green Deal. In this respect, trans-Atlantic development over the past few years has been pleasingly parallel. Under the torn cloth of environmental politics – so it seems – an implied coalition of ecologically enlightened companies has emerged.
When, during the reboot of the American climate policy, the innovative powers of American companies and start-ups join hands with the scale effects of the sizable U.S. domestic market, things really start moving.
It should also help Biden that the Pentagon declared climate change a serious threat to national security in 2015. Under a sign like this one, it will be much more difficult for Republicans to oppose a Green New Deal.
Renewal of Infrastructure Is Badly Needed
But the employment situation, weakened by the pandemic, is going to help Biden with linking the Green Deal investment program he announced to the necessity for the creation of nationwide and broad job creation programs for the time after the coronavirus-fueled recession.
Biden’s $2 trillion program focuses on the badly needed renovation of the country’s infrastructure. He wants to make sure that these investments are optimized regarding climate policies for the decades to come. That’s the same agenda as von der Leyen’s European Green Deal.
Beyond the European Union level, this impending shift in American policy will be a major strategic challenge, particularly for German climate politics. In the past four years, Germany has rested on its political laurels in a rather complacent manner. We have long since lost our position as a pioneer nation in this field, a position we established two decades ago.
To keep up with the U.S. which is set to act dynamically in the realm of climate change, we have to not only pool our resources between industry and government, but also define our priorities.
The focus must switch from old to new systems of added value. Making the traditional core industries like automobile manufacturing, chemicals and mechanical engineering more efficient and providing them with green electricity won’t suffice to reach climate and competition goals. An orientation toward the new champions, industrial systems like hydrogen production, recycling systems or 3D printing, is necessary. What they all have in common is that they emerge at the juncture of existing industries and require new forms of integrated energy.
The Club of Rome and Systemiq recently presented a report to the European Commission regarding the 50 most promising champion systems. Supporting these important future fields is critical for an export economy as well – but it’s often avoided. This avoidance behavior is often sold to the German public as “openness to technology.”
The United States and China Rush Ahead
In reality, however, this often means allowing the proponents of the status quo to cling to their established product and marketing strategies, even though they are incompatible with the challenges of climate change.
In light of the new American dynamic and China’s announced intent to become climate neutral by 2060, it’s obvious that this new form of competitiveness cannot be achieved nationally. The European Green Deal will only be able to cast its industrial and technological weight when we start to think in European terms – no longer nationally. Only then will we be able to offset the American and Chinese scaling advantages.
The Biden administration won’t pursue a zero-sum game regarding Europe. His team is consciously working toward cooperation with Europe in order to break new industrial and technological ground to be able to efficiently fight climate change.
Casus Foederis: Fight against Climate Change*
This opens the perspective for a positive recharge of trans-Atlantic relations. Instead of arguing mainly about NATO’s defense budget, as occurred under Trump, consciously accepting the challenge, to see climate change as a casus foederis, should really stimulate the U.S. and Europe.
The objective is to swiftly end an unsustainable state of affairs. Since China decided to become carbon neutral by 2060, China and the European Union have achieved more common ground than Europe and the U.S. The only professed goal here can be a threefold race to the top.
Europe’s relationship with America has always been characterized by partnership and competition. The election of Biden creates a new and promising playing field for both. Europe should seize it.
*Editor’s note: Casus foederis is a term derived from the Latin for “case for the alliance.” In diplomatic terms, it describes a situation in which the terms of an alliance come into play, such as one nation’s being attacked by another, or here, climate policy considerations.
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