A Green New Deal for Ireland – policy options

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A Green New Deal for Ireland – policy options

As we look towards the future and rebuilding our society and our economy the new Government must consider how we can ensure that our recovery package and investment priorities post COVID-19 help us build a sustainable society and economy, and also move us towards a just transition and meeting our climate targets by 2030.

Ireland faces emissions challenges but we now have an opportunity to ensure that our investment strategy supports a just transition, reduces emissions and rebuilds a vibrant society and economy.

International Response

The OECD has called on governments to systematically evaluate the environmental implications of support and recovery measures to businesses and industries and their alignment with longer-term decarbonisation plans and environmental objectives[1].  The OECD notes that “whilst COVID-19 has caused a severe international health and economic crisis, failure to tackle climate change may threaten human well-being, ecosystems and economies for centuries”.  To this end it is vital that COVID-19 stimulus packages help the economic grow back greener, with lower emissions and that any sector-specific financial measures or bailout packages are accompanied by sector specific measures for emissions reductions and improved environmental performance.  In short support provided to companies should be increasingly accompanied by stronger environmental standards.  Signals from carbon prices, emission standards, environmental taxes and environmental regulations must be maintained. 

The OECD[2] strongly recommends that governments “ensure the post-COVID recovery integrates inclusiveness with climate and biodiversity concerns, otherwise future generations will be responsible not only for repaying the massive debt that is now being built up, but also for shouldering the burden of dealing with future crises linked to climate change and biodiversity loss. Poverty and income inequality can limit severely their chances to emerge stronger in the post-COVID world.  A just, net-zero emissions and resilient recovery should create new opportunities for all and reduce inequalities in outcomes”.

The European Network of Advisory Councils on Climate Change, the Environment and Sustainable Development (EEAC) have called upon governments to focus on strengthening social, economic and environmental resilience, to ensure a just transition to a sustainable economy and society where no one is left behind[3].  In fact the EEAC note that the crisis makes ensuring that current investments are future-proof more urgent than ever and that EU environmental policies should be seen as a tool to steer the economy towards a sustainable future for the sake of societies and in order to make the economy itself future-fit and resilient. The EEAC proposes that a strengthened European Green Deal should be used as a framework for a pathway out of the crisis. 

Trade versus Sustainability?

First and foremost a Sustainable or Green recovery from Covid-19 for economies and society requires policy coherence whereby all of the policies pursued are socially, environmentally and economically sustainable.  Economic and trade policies should support social and environmental goals and objectives, not hinder them.  This will require a significant shift from the Irish government, and at a European Union level. 

A case in point is the trade policy being pursued by the European Union via the EU-Mercusor trade deal and the ‘European Green Deal’ launched by the European Commission in December 2019[4]. 

These two policies seem to be entirely at odds with each other.

The ‘European Green Deal’ is a roadmap to transform the European economic model by moving to a circular economy, reversing and averting biodiversity loss, and addressing climate change.  The Green Deal for Europe contains a political commitment to become the first climate neutral continent by 2050. 

Proposals in the European Green Deal include:

• A European ‘Climate Law’ to enshrine the 2050 climate neutrality objective;
• An increase the EU’s greenhouse gas emission reductions target for 2030 to at least 50 per cent, and towards 55 per cent, compared with 1990 levels;
• The introduction of a carbon border mechanism if required to ensure the price of imports accurately reflects their carbon content;
• The Greening of the Common Agricultural Policy (CAP) with a Farm-to-Fork strategy ;
• Integration of SDGS into the European Semester
• A minimum of 40 per cent of the CAP budget and 30 per cent of the Maritime Fisheries budget are to contribute to climate action.  National plans for agriculture are expected to fully reflect the ambition of the Green Deal and Farm-to-Fork strategy;
• All EU policies should contribute to preserving and restoring Europe’s natural capital.  At a national level Ireland should ensure that as part of a new National Progress Index that all policies are assessed as to their contribution to preserving and restoring our Natural Capital;
• The adoption by the European Commission in 2021 of a zero pollution action plan for air, water and soil.  This has implications for Ireland and should provide the political impetus to implement a nationwide ban on smoky coal. 

The EU-Mercusor trade agreement undermines the commitments and and ambitions of the ‘European Green Deal’.  If ratified by the European Parliament the EU-Mercosur trade deal will eliminate tariffs on roughly 90 per cent of Mercosur’s exports to the EU over 10 years – chiefly agricultural products such as beef, poultry, and fruit and in turn, EU companies would pay less tax to export products – mostly machinery, car parts, and dairy products like cheese – to Mercosur.

This deal would lock the European Union into an unsustainable economic model, entirely at odds with the stated aims of the Green Deal for Europe.  How is importing significant amounts of agricultural products such as beef, poultry and fruit (which the EU itself already produces) and the increased emissions that this will inevitably lead to supporting one of the stated aims of the Green New Deal – Greening of the Common Agricultural Policy (CAP) with a Farm-to-Fork strategy.  What incentive is there for Irish famers and their counterparts across the European Union invest in sustainable forms of agriculture and the Farm-to-Fork Strategy if they have to compete with agricultural imports from the other side of the world? A detailed analysis of the deal itself and the potential impact on the environment, biodiversity, climate change notes concludes that it will not support strengthening clean and short supply chains, product pricing by carbon footprint or binding environmental standards[5].

The European Union and the countries that comprise the Mercosur trading bloc are also all signatories to the Paris Agreement.  This trade agreement is entirely at odds with the international climate commitments that the European Union and the countries that comprise the Mercour trading bloc all signed up to, and it is difficult to see how there is any policy coherence between pursuing and investing in a Green Deal for Europe, supporting a Just Transition and simultaneously supporting trade policies that will increase emissions, support long supply chains and damage rural livelihoods on both sides of the globe. 

Investment, recovery and our climate ambitions

Globally the focus is slowly moving towards ensuring the investment in our social and economic recovery after Covid-19 is sustainable.  A recent report from Smith School at Oxford University notes that the recovery packages, soon to be designed and implemented, will reshape the economy for the longer-term, representing life and death decisions about future generations, including through their impact on the climate[6].  The report recommends that governments should steer investment towards a productive and balanced portfolio of sustainable physical capital, human capital, social capital, intangible capital, and natural capital assets consistent with global goals on climate change.  The authors are clear that any recovery package must also address existing concerns such as poverty, inequality and social inclusion.

The authors of the report found that in terms of expansionary policies, government spending on investment appears preferable to tax reductions, delivering higher multipliers.  The report also found that recovery packages could exacerbate intergenerational inequities if they are focused on consumption, rather than productive investment delivering sustainable returns for future generations. [7]

The report identified five policy areas with high potential on both economic multiplier and climate impact metrics.

1. Clean Physical Infrastructure
2. Building Efficiency Retrofits
3. Investment in Education and Training
4. Natural Capital Investment
5. Clean Research and Development

These have obvious implications for Ireland 2040 (National Development Plan) and for public policy.  Renewable energy and clean energy infrastructure are job intensive and they offer high returns on public investment as they drive down the cost of transition to clean energy.  Residential and commercial retrofitting, natural capital spending in areas such as rural ecosystems, biodiversity and expanding parkland are identified as fast-acting climate friendly policies that will have an immediate impact and long-term returns.  Natural capital spending is identified as particularly appropriate in current circumstances because worker training requirements are low, many projects have minimal planning and procurement requirements, and most facets of the work meet social distancing norms.

Ensuring a sustainable recovery

The investment plans associated with Covid-19 recovery will be critical in setting the environmental pathway for the next few decades, and crucial for Ireland’s climate ambitions and targets. The OECD recommend three overarching principles to accelerate a fair, low-carbon recovery.  The new Government should adopt these when developing Ireland’s post-Covid investment strategy.

1. Aligning the short-term emergency responses to the achievement of long-term economic, social and environmental objectives and international obligations (the Paris Agreement and the SDGs). This includes, in the short run, securing jobs while avoiding unconditional subsidies to polluting activities.
2. Preventing both lock-in of high-emissions activities and worsened well-being of those in the bottom 40% of the income distribution. COVID-19 has dramatically worsened the conditions of vulnerable groups, both in advanced and developing economies. The efforts to build an inclusive and sustainable future must prioritise a fair transition to a low-carbon economy.
3. Systematically integrating environmental and equity considerations into the economic recovery and stimulus process. Support to the most affected sectors and investment in infrastructure must pass the test for contributing to a low carbon economy going forward.

Translating the OECD principles to the Irish context the new Government should:

Integrate a Sustainable Development Framework into economic policy.  This would ensure that policies are socially, economically and environmentally sustainable.   Sustainable development is defined as ‘development which meets the needs of the present, without compromising the ability of future generations to meet their needs’. It encompasses three pillars; environment, society and economy.  A sustainable development framework integrates these three pillars in a balanced manner with consideration for the needs of future generations. Maintaining this balance is crucial to the long-term development of a sustainable resource-efficient future for Ireland.

Develop a new National Index of Progress.  We must look beyond growth and take a new approach to economic policy which recognises the equal importance of social and environmental issues .  Government should develop a new National Index of Progress encompassing environmental and social indicators of progress as well as economic ones. By measuring and differentiating between economic activities that diminish natural and social capital and those activities that enhance them, we can ensure that our economic welfare is sustainable. 

This would involve moving beyond simply measuring GPD, GNI and GNI* and including other indicators of environmental and social progress.  Indicators such as the value of unpaid work to the economy and the cost of depletion of our finite natural resources among others would be measured.   Wellbeing indicators such as health (physical and mental), economy and resources, social and community development, participation, democracy and good governance, values, culture and meaning and environment and sustainability would be an appropriate frame for developing a new National Index of Progress. 

Investment underpinned by a Just Transition Strategy.  One of the fundamental principles of a Just Transition is to leave no people, communities, economic sectors or regions behind as we transition to a low carbon future.  Transition is not just about reducing emissions.  It is also about transforming our society and our economy, and investing in effective and integrated social protection systems, education, training and lifelong learning, childcare, out of school care, health care, long term care and other quality services,  Social investment must be a top priority of transition because it is this social investment that will support those people, communities, sectors and regions as we make the difficult transition to a carbon-neutral economy, transforming how our economy and society operates.  Transition to a sustainable economy can only be successful if it is inclusive and if the social rights and wellbeing of all are promoted.

Policy considerations for a sustainable recovery and a ‘Green New Deal’ for Ireland:

• The new Government should put clean energy technologies at the heart of their plans for economic recovery.  Investing in those areas can create jobs, make economies more competitive and steer the world towards a more resilient and cleaner energy future[8].
• Any additional financial supports or bailouts for fossil fuel industries should be conditional on these industries developing a measurable plan of action to transition towards a net-zero emissions future.
• Set ambitious emissions reduction targets for 2030 and ensure sufficient resources to support implementation of these targets.
• Develop a progressive and equitable environmental taxation system.
• Develop a new National Index of Progress encompassing environmental and social indicators of progress as well as economic ones.
• Mainstream biodiversity into economic decision-making and reform subsidies harmful to biodiversity, including in the agricultural sector.
• Develop and implement an ambitious and effective Post-2020 Global Biodiversity Framework under the United Nations Convention on Biological Diversity and scale up policies to support our biodiversity. 
• Adopt targets and a reporting system for each of the Sustainable Development Goals.
• Integrate a Sustainable Development Framework into economic policy.
• Introduce a strategy for Ireland that includes the principles of the circular economy and cradle-to-cradle development.
• Introduce shadow national accounts, and assign value to natural capital and ecosystems in our national accounting systems.
• Develop a comprehensive mitigation and transition programme to support communities and people in the transition to a low carbon society.
• Develop a progressive and equitable environmental taxation system.
• Develop a Just Transition Dialogue

[1] https://read.oecd-ilibrary.org/view/?ref=129_129937-jm4ul2jun9&title=Environmental-health-and-strengthening-resilience-to-pandemics

[2] https://read.oecd-ilibrary.org/view/?ref=129_129937-jm4ul2jun9&title=Environmental-health-and-strengthening-resilience-to-pandemics

[3] http://eeac.eu/wp-content/uploads/2020/04/Responding-to-Covid19-Building-social-economic-and-environmental-resilience-with-the-European-Green-Deal.pdf

[4] https://ec.europa.eu/info/sites/info/files/european-green-deal-communication_en.pdf

[5] https://extranet.greens-efa.eu/public/media/file/8650/6294

[6] https://www.smithschool.ox.ac.uk/publications/wpapers/workingpaper20-02.pdf

[7] https://www.smithschool.ox.ac.uk/publications/wpapers/workingpaper20-02.pdf

[8] https://www.iea.org/news/global-energy-demand-to-plunge-this-year-as-a-result-of-the-biggest-shock-since-the-second-world-war