Strategic foresight required to guide leaders

09. 10. 2023

AUTHOR: Linda Kalcher and Neil Makaroff

The Granada Declaration falls short of setting the foundations for the next phase of the European Green Deal.

In Granada, Spain, Heads of State and Governments began to draw up their priorities for the 2024-2029 European policy cycle, known as the "Strategic Agenda". The final declaration names the main challenges facing the European Union (EU), namely the dependence on energy and technology imports, high energy prices and climate impacts. But it falls short in setting a forward-looking agenda to enhance industrial competitiveness, energy security and prosperity across Europe.

The last four years were intense for the EU's political leadership. Brexit was followed by a pandemic of unprecedented scale, Russia's war on Ukraine and the related cost-of-living and competitiveness crises. The European Green Deal provided the right answers in many ways: a green recovery strengthens the sectors that generate jobs and solutions to decarbonise the economy, drastically scaling up renewables, energy savings and efficiencies to reduce the dependence on Russian imports of coal, gas and oil, and transitioning away from fossil fuels, cutting energy bills for households and industry alike.

The continuation and thorough realisation of this success story seems like a no-brainer. However, in the Granada Declaration, EU leaders hardly touched upon the European Green Deal. The recent rise of populist or hard-right parties shifted the political rhetoric. Some politicians believe that actively positioning themselves against a climate agenda will help them in their electorates, a calculus that is at odds with the social and economic benefits that the transition to climate neutrality by 2050 brings, as well as recent Europe-wide polling.

Instead, leaders could have discussed a visionary approach to the future of industry and European competitiveness. It is time for a strong net-zero industrial agenda along with a pan-European action plan for generating tens of thousands of jobs and attracting investments. In the meantime, the United States and China are not waiting. Any slowdown or halt would inevitably lead to a "Made in China" or "Made in the US'' transition. Leaders can strengthen the social dimension of the transition, making climate-friendly equipment more accessible for all households, bringing along citizens currently not benefiting from the transition.

Leaders cannot turn a blind eye on the crucial challenges ahead that require European leadership in the next years:

- Industrial competitiveness: It is time to move beyond weak rhetoric on de-risking from China and matching the financial appeal of the US’ Inflation Reduction Act (IRA). Concrete initiatives could be launched on strengthening the EU’s zero-carbon technology manufacturing in regions facing multiple transitions and a new financial architecture that enables all countries to accelerate the transition.

- Energy security: The EU will not reduce its vulnerability and dependence on fossil fuel imports by diversifying only from Russia. It is time to mitigate the high economic and political cost by setting out a clear gas phase-out trajectory. A fully decarbonised energy system, based on an 80% share of renewables, is the best way to meet the growing demand spurred by electrification of sectors.

- Strengthen cohesion and prosperity: With inflation still high and the transition affecting multiple sectors, leaders can focus on a new impetus to bring people along. It is key to ensure climate friendly solutions (such as electric vehicles, heat pumps, building renovations and solar roofs) are affordable.

- EU’s role in the world: Attempts to adopt strong wording on Russia in the Group of 20 (G20) and United Nations (UN) showed the clear need to invest more in diplomatic ties and alliances again. From continued support for Ukraine to the wider debate on EU enlargement and how to engage with a more assertive China and a potential second Trump presidency, leaders have a complex geopolitical situation to navigate. Strengthening economic cooperation and alignment with countries in Africa, Latin America and Southeast Asia becomes key.

- Climate risk preparedness: After devastating floods, droughts and fires this month, adaptation and resilience to extreme weather events should rise to the top of the political agenda. Stronger intra-European disaster response and solidarity mechanisms are required to support citizens and local governments in need.

The Granada Declaration hardly responds to addressing these defining challenges for the future of the EU. With eight months left before the final adoption of the Strategic Agenda, leaders have the opportunity to position themselves in favour of strengthening industrial competitiveness, energy security, cohesion, prosperity, climate risk preparedness and the EU’s role in the world. The solutions to most of these challenges are closely linked to the next phase of the European Green Deal.