An Interview with Raimund BleischwitzGreen Growth – The Industry Will Deliver
What is the narrative of scenario 2?
The main narrative is that EU Goes Ahead. We assume ongoing weaknesses of global governance in this scenario. There is a demand for more European leadership as the world is fragmented and because the super powers (USA, Russia, China) hardly cooperate. Europe has a long tradition of responsibility and leadership, in particular in regard to green growth, green technologies etc., which we expect to thrive in scenario 2. This is also driven by the rationale of export markets for European companies, i.e. the jobs and growth agenda. As such, the EU Goes Ahead scenario is strongly motivated by economic considerations and technology opportunities against the lack of global cooperation. The other assumption, relevant in distinction to scenario 3, is that civil society is important but not an actor ready to take the lead; so there is a demand for political EU leadership also from such a perspective.
What is unique about this scenario?
European policy makers are well aligned with business and the civil society, compared to other regions in the world. They serve a common spirit and an opportunity for leadership, and people accept and support the scenario in many ways such as consuming green products and services. Leadership is exerted through a number of European institutions: the European Commission driving progress, the European Council of Ministers pushing the Commission, the European Parliament being quite a vital force of discussion. The member states are important as well. We would imagine that a number of member states such as Germany, the UK, the Netherlands, Sweden, Austria and others are actively promoting green growth and the circular economy, and push the EU where necessary. Thus this scenario looks at Europe as promoting strenuous efforts by multiple actors for a consensus, and moving forward driven by a spirit of what is necessary, and with long term goals that drive policies and market development.
There is a strong need for the European society to participate, but the assumption is that leadership comes through a number of policies and companies.
The institutions are quite active, but the citizenry generally passive?
I wouldn’t say they are passive. We conceptualize the process as driven by innovative companies, meaning small and medium sized companies, larger corporations but also innovative start-ups. Therefore we rely on the idea that universities and self-employed people innovate too. And citizens are also needed as consumers. Whenever a new product is invented, we need European citizens to test it; to demonstrate to the rest of the world that clean cars can really run smoothly or that urban space can be transformed. There is a strong need for the European society to participate, but the assumption is that leadership comes through a number of policies and companies.
Could you explain the role of the private sector?
Large parts of European industry are in favour of this scenario, because it is supported by policies and focuses on green growth market development. We imagine that the success story of renewable energies of the last years, in particular in a number of countries including Germany, is multiplied in other clean tech areas like housing, mobility and the biggest European industries that all will have a stake in these green growth strategies. The hope was once that there might be growth rates of 3% per year – that was the former so-called Lisbon strategy installed 15 years ago; but in light of real recent developments we are more moderate. We assume growth rates of 1.5 – 2% per year and have done macro-economic modelling with the result that the future growth rates might actually be slightly higher! This is because many environmental damages can be minimized, green growth happens within Europe and the products can be exported. Under the assumption that a number of other countries outside Europe follows the green growth path – which is what we actually see e.g. in China -, there should be good prospects for European industries.
You mentioned the innovation strategy of EU Goes Ahead. How about housing?
Housing in the year 2050 in Europe means, that all people throughout Europe live in climate neutral houses. The foresight is that in 2020 all new houses will be climate neutral. It then takes a lot of time to retrofit all the existing houses but by 2050 this will be achieved. This means that all houses are insulated, they have a modern heating system, they are equipped with renewable energies and people live a convenient life, as energy saving houses are usually more convenient than standard houses as we know them today in many parts of Europe. It also means that we have a holistic view on housing itself. It is not just the climate neutrality; speaking about resource efficiency, we argue that much more of the existing housing stock can be recycled. There are a number of efforts for urban mining; whenever a city might shrink the construction materials can actually be reused in other parts of Europe. The great amount of technology and appliances that can be installed in houses will make the lives of people better.
In our scenario the whole European society is as mobile, if not even more mobile than it is today; which means that the daily commute will be done by high-tech cars, meaning zero emission vehicles. We explain that all urban transportation will be climate neutral by 2050, too. There will still be a number of cars but they will be fuelled by modern biofuels, electricity or hydrogen.. There will be a European high-speed railway network, which means that people will use railways for larger distances (300 – 400 km and more). This is a system one can already see in parts of Europe but we speak about a bigger version: a European high-speed railway system that connects Portugal to the Baltic States, the Scandinavian states, the Mediterranean states etc. We believe that aviation has a future in this scenario – but only if aviation can become much more climate neutral as well. We do believe that cars and railway systems can be climate neutral in the sense that the energy sources are either renewable or electric – with electricity based on renewable energies; plus these systems will become resource-light. For aviation it is more challenging as it is still an oil-based business; we speak about a better engine, a better system in total and a type of biofuel as a main fuel. This means that the aviation itself will emit much less greenhouse gases than today.
The focus in the POLFREE project is on natural resources and energy. How do these elements connect in EU Goes Ahead?
It is partly an energy transformation but looking at housing, mobility and agriculture we also speak about land, water and materials use. We have undertaken dedicated analysis of how many materials should be used; we follow other researchers in proposing headline targets of 5 tons per capita in the year 2050 – which is much less than today. But at the same time it also means that we look at all those areas with a view on what resources are being used. And for mobility, for instance, we believe that there should be more circular economy efforts. We do believe that extended producer responsibility and material stewardship have a role to play; so that the cars can be dismantled and reused to a much larger extent than they are today. Today some 80% of vehicles are being exported as ‘used cars’, which is good for a number of reasons but it usually also means that they end up being land filled, quite often not in the way we would like to see it. For the future we assume that there will be a European-wide recycling system that doesn’t exist to this extent today. In this assumption all the cars are being recycled, predominantly in Europe but also through partnerships with other countries to which the European Union, car manufactures or owners will export cars. There should be an international metal recycling system in place.
What about nutrition in EU Goes Ahead?
We speak about a society with an eating habit that is more environmentally conscious than today, but also green growth orientated. We argue that there will be a large share of organic farming in agriculture in Europe; here, we speak about 75% provided by organic farming in 2050. At the same time we speak about a busy society: people run their businesses, they work hard, and they want to have a good and decent income. We also have a highly mobile and education-orientated society, which probably means that there will be a high fast food oriented habit. You can imagine that people will have a pretty short lunch break in the coming years. So they might go to the next grocery store and pick up a sandwich and a salad whose ingredients might be organically produced; but still it will be like fast food. Also delivery services that you have at your finger tip, providing lunch boxes, snacks in between or a dinner which you might enjoy with friends or your loved ones in your house fit into such a sustainable fast food habit. People may like cooking once a week, but quite often they may choose the more convenient way of ordering something or going out. I would say that the difference to what we see today is that there’s more variety and sustainability in the fast food culture of 2050 – and indeed more sustainable food chains through retailers, producers and consumers, and strenghthed sustainable farming. It is worth noting that with regard to land use, water and greenhouse gases this scenario is much greener with a high share of organic food and sustainable intensification at the beginning of the supply chain.
Our modelling results confirm that we can have European societies with less use of resources in line with our headline indicators. This is what we would call green growth – a GDP growth with environmental pressure significantly reduced.
Can green growth lead to a radical decline in resource use? Or is it an illusion?
That’s one of the discussions we’ve had in on POLFREE and I’m certainly aware of it. I do believe this is a valid point and fairly strong in this scenario. In a number of analyses we do see that growth in fact is a driver of material or resource use – but it can be decoupled, even in an absolute manner. At the end of the day it is an empirical question on whether the results of the manifold activities – that all together result in growth – can’t be done in quite a different way. Our modelling results confirm that we can have European societies with less use of resources, definitely much lower greenhouse gas emissions as well as land use and water in line with our headline indicators. This is what we would call green growth – a GDP growth with environmental pressure significantly reduced.
We should certainly keep in mind that this also comes with policies; with changes that might also be seen as painful in some ways. Some of the resource intensive or currently dirty industries, for instance aluminium producers, parts of the metal and steel industry, and the automotive industry may not be able to cope with it unless they embark on a pathway of systemic eco-innovation – while they are under enormous pressure from world markets but also from this ambitious environmental policy in the EU. We speak about the introduction of higher carbon prices and other resource taxes here. You can imagine that a number of producers will be able to produce sustainable high tech steel, high tech materials and work together in a supply chain to deliver better products.
But you can also imagine that some companies will just not get it. Forces of competition will continue to work: not all producers of today are likely to survive. Therefore we will have losses, of course. We will have winners and losers, absolutely. But in that regard I would say that green growth is not different from traditional growth. Traditional growth is also a competitive process with winners and losers. And here I would also like to ask the ones who promote a zero growth or a de-growth society: Does that mean there won’t be losers? I would say that it is a ridiculous assumption to think that zero growth is a paradise; it is certainly not. In particular the transition to a zero growth society would be probably even more painful. And from that regard: Yes, it is a bigger discussion. We are no illusionists in the scenario, but looking at the variety of Europe with its strong industrial base we say: yes, the industrial base can be maintained, it can become greener, but of course, along the way, there are winners and losers.
Does green growth come with higher prices for the consumer?
The price system in 2050 will differ significantly from the price system we have today – in two regards. This scenario proposes that the rest of the world is not entirely on our side and may continue to have lower energy prices. Thus this scenario promotes higher carbon prices and a much stronger emissions trading system and other resource taxes in order to stimulate innovations for resource efficiency here. Prices for resource-intensive products are thus likely to be higher. On the other hand, industry itself will become more resource-efficient and will deliver better products and services – which is why the prices for green products will become cheaper, along with mass market development.
A mobile society means that people have an appetite for mobility for reasons of job flexibility, career development, personal relationships, visiting friends etc. In that regard they are mobile. This is supported by a much more resource efficient transportation system. They can also take a bike, of course. Nevertheless we imagine that the number of commuters for the daily commute remains high and that leisure-oriented transport remains high, as people don’t connect via the internet etc. only – they also like to visit their friends. You would have a smart travel card where you can have your personal choice of using any car you would like to use, either a larger van if you travel in a group or a smart city vehicle; or if the railway might be better for the purpose of your trip. But when you arrive at the railway central station there will be a resource efficient car for you to pick up. Here you have a combination and smart mobility cards will facilitate this. This all still means that you could eventually have an old fashioned polluting car; but if you want to drive larger distances you would pay a higher price. Therefore smart cars being available probably is a smart choice for the majority of the citizens.
How about taxation in EU Goes Ahead?
Fiscal systems are supposed to shift towards taxing resources and away from labour. To illustrate this: If you’re driving a conventional vehicle, you’ll need to go to the gasoline station to refill your car – here the assumption is that standard gasoline will be more expensive. But there will be market introduction programs for electric vehicles and hydrogen cars. That type of alternative fuel will then over time become cheaper, so people have incentives to switch. The important thing indeed is that people realise they have alternatives. They will be able to use public transport, the high speed rail etc. At the same time we also need to keep in mind that companies and markets will change. So it’s more a question of having a mindset that is open for change, making innovation happen at large scale and manage transitions. When the citizens are ready for a change, they can cope with higher resource or energy prices as soon as the companies deliver. The green growth scenario is a scenario where the industry delivers and innovative niches that exist today are upscaled into European and international mass markets. Taxes are just a small part of a much broader incentive system of removing the ‘web of constraints’ to resource efficiency.
The POLFREE approach is to derive policy options for different scenarios. Please give us a sketch of the EU Goes Ahead toolbox!
Prices play a crucial role. We speak about carbon taxation, resource taxation, but also taxation of land use and water certainly. We also speak about phasing out environmentally harmful subsidies, introducing eventually also new emission trading systems. And we do speak about encouraging producers to produce new services, goods etc. where we have suggested a revised eco-design directive as well. There is a network of experts suggesting this is an area where the eco-design as a total can be grossly improved, halving resource use in the next 5 – 10 years. There will be standards for a number of products and by this producers have a great incentive to move forward more rapidly and disseminate eco-innovation in the remote neighbourhoods of Europe. We look at this as a long term change, a 2050 roadmap. In that regard the policy toolbox has a strong emphasis on economic incentives, innovation support programs, eco-design directives and innovation alliances.
I wouldn’t like the idea of looking at it as a constraint-oriented scenario. That is not what it is about; it is about innovation and change.
Do you think of constraints or ‘sticks’ as well?
Constraints are everywhere. Real constraints like a rapid phasing out programmes are only necessary if a product is an immediate or irreversible threat to public health or ecosystems. Our toolbox is basically a European transformation program with a long-term perspective, where the main instruments target industry – they wish to encourage industry to innovate. I tend to characterise it as a facilitating role for policy makers with a number of incentives to move forward rather than imposing constraints. I wouldn’t like the idea of looking at it as a constraint-oriented scenario. That is not what it is about; it is about innovation and change.
Who are the political drivers?
Future generations might say: “There was a moment in time when the world was in a difficult situation; gladly the Europeans took the lead and paved the way.” Thus we believe that policy makers have a motivation to demonstrate not only to tax payers and voters but also to future generations that he or she could make history. Remember the former great Europeans such as Jean Monnet or Robert Schuman; those are still well-known for having created something that lasted for decades. Entrepreneurial spirit together with political will thus is a political driver. But of course we have the economic motivation too as it is a growth scenario that helps to cut costs and to introduce products that are sold on markets. We may also add the security dimension that should drive Europe into becoming more resilient.
How would you describe the relation between Europe and other regions of the world?
It is a fragmented world with super powers, some fragile states and with a number of conflicts. Europe is struggling to lead of course, but we do speak about a world where partnerships, bilateral agreements, plurilateral agreements and clubs are feasible. When we look at China these days, it has a huge circular economy program, suggesting a good relationship between Europe and China in the cooperation of clean tech. Europe will also extend the existing raw material partnerships with a number of supplying countries and extend them so that these countries, for instance Chile, Brazil etc., also have better environmental assessment procedures in place, with support of the European Union. We also speak about lead markets for recycling, for example having cooperation between western Africa and the European Union in the metal recycling area, so that the emerging societies there could benefit much more from European recycling technology while still receiving many of the electronic products and vehicles produced in Europe.
We do think that EU Goes Ahead indicates that others will follow, others will collaborate with Europe, and in some cases others might even be ahead
Obviously, there are a number of regional clubs feasible. And we do think that EU Goes Ahead indicates that others will follow, others will collaborate with Europe, and in some cases others might even be ahead – in terms of having a better culture, market or system in place. But the overall idea still is that Europe goes ahead with green growth development. Of course there is also the flip side to it: some countries might be unwilling to cooperate and to follow environmental considerations. This is why we also have border tax adjustments in our scenario. We also envision international trade conflicts; if Europe, for instance, imports goods from other countries, they will have to undergo full due diligence in order to minimize risks of burden shifting and creating pollution havens. The whole due diligence process along international value chains is strengthened in the EU Goes Ahead scenario.
Nowadays Europe has a lot of problems, if you only look at the refugee crisis. Is EU Goes Ahead a realistic scenario?
Despite all current challenges like migration, the ongoing economic crisis etc., we see Europe leading in the climate and energy area – there is no other major region in the world that has as such an ambitious program for greenhouse gas reduction as the European Union. And this has been going on for years. Europe is delivering on those targets. It has been a leading provider of a number of green technologies for a couple of years. So do foresight about what already exists and in that regard I would say: yes, this at least is feasible.
So what does it take to make it happen? I think we need more political will – and this would need to include the UK – and we need to broaden the areas from greenhouse gas emissions, climate and energy to other resource efficiency issues. We also need more will from the companies’ side; we do have market leaders in Europe, but quite often we have a gap between successful niches – where I would say Europe is excellent. The development from a successful niche to a successful mass market deployment however is quite often just not happening, so we need a number of uplifting activities, as I would call it, where market actors and policy makers alike (also with civil society) take this job more seriously and don’t just experiment here or there; but really actively demonstrate that change is possible with a European leadership. Many things have to not just change gradually but also fundamentally in a way; we speak here about a scenario with higher ambitions.
Personally I may add that quite often the European Union and the Europeans have an inward oriented outlook; they tend to focus on European affairs – what we describe in this scenario is a much stronger leadership attitude. We will also need strong political will to speak with countries outside of Europe and come to terms with partnerships and alliances. Such globally oriented views and attitude, the aspiration for leadership, is probably still a bit underdeveloped. This scenario strongly encourages the existing leaders in Europe to have a greater global ambition. And that’s probably where we need to see more change in the attitude of the existing leaders.
We can learn a lot from real life experience on green tech market development for green energies etc. That’s a positive part and the success evidence is very good. We can build on that. That’s the kind of strong driver that we have extended onto a set of other areas. The weaker part is probably the leadership attitude, as I said, and also the collaboration. Quite often the Europeans are not united enough, they don’t speak with one voice. There should be more coherence, meaning that the European Council should have the support of a strong majority of member states. People won’t have a “wait and see, let others do their part first then I will eventually follow”-attitude. There should be a greater appetite for leadership. We do have some turning points ahead of us and we speak about 2050, yes. But we speak about 2020, 2025 and 2030 as well, so this is definitely a scenario where, due to environmental challenges and geopolitical risks, we need to rapidly do these things. This requires collaboration between a number of actors within the EU along supply chains, with larger and smaller suppliers but also consumers; this readiness to act now, to move forward and to take over risk is certainly the spirit we can learn from EU Goes Ahead.
What is your personal motivation concerning the POLFREE project?
I like to do research and I like to think positively about Europe. My personal motivation is a European background. I belong to a generation where WWII has been a story within the family when I was young. Being able to recognise how reconciliation has been managed in Europe still motivates me; in such a perspective it is kind of a miracle that people in Germany, France, Poland and a number of other nations not just speak to each other but have managed to establish a European internal market, and European mobility and education patterns, where people can become friends. Yet we don’t see this in any other parts of the world. The vision of European reconciliation and change being adopted in Asia and other parts of the world and developing research concepts that help to make it happen is a strong motivation beyond green economy issues.