A Green Return to European Growth

THE HAGUE – Mitigating climate change is often presented as imposing a trade-off between the economy and the environment. For too long, the debate has been framed around the concept of “burden-sharing.” But new analysis by a team from six leading European universities and institutes casts new light on this debate, and shows that Europe can make choices that are in its own best economic and environmental interest.

The analysis contained in our new report, A New Growth Path for Europe – Generating Prosperity and Jobs in the Low-Carbon Economy, is based on a comprehensive assessment of European growth prospects in the aftermath of the financial crisis. Its publication is timely, because the European Union will decide this year whether to raise its target for greenhouse-gas reduction.

Increasing the current emissions target from -20% to -30% by 2020 compared to 1990 would represent an important opportunity to revitalize the European economy – independently of what the rest of the world did in terms of climate policy. Over the coming decade, seizing that opportunity would increase the size of Europe’s economy considerably – by up to 5% over the next decade. This translates into six million new jobs and an increase in GDP of up to €800 billion by 2020.

The reason for these results is straightforward: increasing Europe’s climate-policy efforts boosts investments, thus inducing learning-by-doing, especially when these efforts are channeled into new technologies like renewable energy and advanced construction materials. Learning-by-doing, in turn, increases competitiveness and spurs economic growth, thereby improving investors’ expectations – and inducing further investment.