One of the policies that the EU has adopted to achieve economic growth following the recession caused by the COVID pandemic is to push ahead with what it called the European Green Deal. This is an initiative promoted by the European Commission president, Ursula von der Leyen, and is a set of measures to protect the environment and fight climate change.

The ambition is to get at least €1 trillion of investment over the next 10 years and to use a mix of private and public funds, including a quarter of the EU budget. The European Green Deal will impact Malta as well. However, a question that keeps coming to mind is what this European Green Deal will look like in concrete terms. How will the economic situation of a country recover and eventually thrive, thanks to such a policy?

This sort of scepticism is very evident among certain countries, such as Russia and Turkey. At the other end of the spectrum, there are Germany and France who strongly believe in low carbon economic growth. Then there are countries whose attempts at transforming their economy into a green economy is, at best, half-hearted.

One of the conflicts facing individual countries is how to balance their need to generate economic growth once more with their obligations under the Paris climate agreement, which is easier said than done. The underpinning principle is for economies to shift away from fossil fuels to one based on low carbon usage with the objective of generating new jobs to compensate for the job losses resulting from the coronavirus.

The recovery plans of some countries could be going in the opposite direction and have included bailouts for fossil fuel companies or companies that make use of carbon intensively. Practice is showing that it is not easy to have economic growth and, at the same time, to bring carbon emissions down.

As such the question persists: what will the European Green Deal look like in concrete terms? What steps should countries take to develop a green economy?

Consumers need to change their behaviour

A significant part of the strategy shall rest on two elements – government subsidies and a willingness to change our behaviour. One without the other will not work. We cannot expect consumers to change their behaviour unless they are incentivised to do so by subsidies. At the same time, government subsidies alone would be money thrown down the drain if consumers do not change their behaviour.

In concrete terms, there needs to be more investment in the production of renewable energy. The costs of generating energy through solar and wind power have decreased significantly, making them now even cheaper than the cost of generating energy through fossil fuel.

In a number of developing countries, solar panels could change the lives of hundreds of millions of people who do not have access to electricity. This would also mean providing jobs and savings to households as their electricity bills are reduced.

Another important initiative is nature restoration. In simple terms, the planting and growing of trees and protecting natural landscapes are two main ways of tackling the climate change issue. However, we need to go beyond that. We need to stop giving up rural land for it to be transformed into buildings. Agriculture requires a new injection of life. The protection of the environment through rural development is another sure way of generating jobs.

The third initiative I want to mention is the use of electric vehicles. There are various ways of supporting these initiatives such as providing charging stations for free and giving subsidies for the acquisition of electric vehicles. However, governments need to appreciate that they may need to intervene so that subsidies provided to consumers do not end up in the pockets of manufacturers or traders through higher prices.

There are other initiatives that can be taken by governments to give substance to the concept of the green economy. Malta also needs to look closely at this as it could eventually become a sector that could be targeted for foreign investment. Successive governments have given subsidies but little has been done to change the mindset of people to help them appreciate that we need to move towards a green economy.