Economics / Politics

The crisis: opportunity or risk for sustainable development in the EU?

While media and politicians have focused for many months on the economic, social, and maybe institutional crisis shaking Europe, other challenges seem to have lost importance, though the urgency to tackle them remains.

One of these main challenges is to promote on a global scale the protection of the environment and a more sustainable development, i.e., a development that “meets the needs of the present without compromising the ability of future generations to meet their own needs” in the words of the Brundtland Report in 1987. 

This article does not aim at giving a clear and definitive response to the question – I do not possess the data necessary to do so – but rather at raising questions and sparking a debate.

We will indeed see that a situation of economic crisis may generate complex consequences regarding sustainable development.

I/ Opportunities to progress towards sustainable development

Let us start with the most positive elements, looking at how our way of life might become more “sustainable”, more respectful of the environment despite of the current crisis.

A first aspect that should be mentioned is economic: household’s incomes stagnate or decrease (depending on countries), but energy prices increase. For example, the oil’s price remains well above 100 US dollars a barrel because of extra-European reasons, such as fears of instability in the Middle East (Syria, Israel-Iran…). So, households are prompted to reduce their energy consumption. It can be very simple gestures, such as not leaving electrical devices on standby. Gestures can also have more impact on daily life, such as reducing the use of the car to spend less money on fuel. These actions help reduce energy consumption and pollutants’ emissions, enabling us to progress towards sustainable development.

A second aspect, linked to the first one, is the decrease in consumption linked to the decrease in income. This development lets us hope for a fall in waste and in the superfluous consumption that we notice in developed countries. Furthermore, a decrease in consumption should lead to a decrease in imports. We observe this by looking, e.g., at the Chinese exports towards Europe: they dropped significantly compared to the previous year. Imports are, of course, a source of pollution, because of the maritime, air and land transportation means they need. In brief, a lower consumption is also a new reason to hope to progress towards a more sustainable development.

Finally, the third aspect – and probably the most important and hopeful – is the potential for growth in the sector of renewable energies. Some people even talk of a potentially new industrial revolution. In any case, this is the occasion to stimulate innovation (one of the rare sources of growth in the long run), in order to become a global leader and to increase exports of these products… Developing green energies would furthermore enable us to reduce our reliance on other sources of energy. Different reasons can prod governments to direct their industrial and research policies towards this new sector: geopolitical (e.g. the wish not to depend on the good will and the political stability in energy-exporting countries), political (some public opinions are very hostile to nuclear energy) or economic (the price of fossil energies will continue to rise and the long-term costs of nuclear energy are underestimated) ones.

That being said, it is evident that a situation of economic crisis carries uncertainties and risks for sustainable development.

II/ The risks to divert from sustainable development

I will here separate economic and political risks.

Among economic risks, we can first mention the decrease in direct public investment or in subsidies prompting to a more sustainable and environment-friendly behaviour. So, it might be that investments favouring the development of renewable energies diminish. Nevertheless, Germany provides a counterexample with its “Energiewende”. The aim is broadly accepted, but the method and the means to reach it are more debated. The main objective is to strongly increase the share of renewable energies in heating, energy and transport. But there are major challenges, such as developing the electrical grids (including connecting off-shore infrastructure to the continent) and storage capacities. A similar risk is a decreased investment in ecological housing, as it is more expensive. A solution could be that the EU or Member States establish rules to thwart this potential evolution.

A second type of economic risks regards situations in which there is an existing market, such as for emissions of carbon dioxide (the EU Emissions Trading Scheme – EU ETS). If activity slows down and some businesses go bankrupt and disappear, the demand for “permits to pollute” will probably decrease. But the offer does not adapt as quickly, so the permits’ price (the “cost of pollution”) would fall and the market would lose its function (which is to induce polluting businesses to become friendlier to the environment). A solution to this problem could be that the Member States buy back some permits to reduce the offer, but most governments need to cut expenses.

Finally, the crisis generates political risks on the road to sustainable development. Indeed, governments (or other elected bodies) could decide to repeal or postpone rules, giving the businesses’ difficulties as a pretext. This situation is happening in the United States where the Obama administration has rejected a proposal of stricter regulation by the EPA (Environmental Protection Agency) and where many Republicans would even get rid of this agency.

The choice is ours…

In conclusion, it seems that the key element for further implementing reforms towards a more sustainable development – an economic, social and environmental development – despite of the persisting crisis is the political courage of the elects and the involvement of each citizen. Short-term decisions are too often privileged at the cost of long-term reflexion. The current situation is an opportunity to change that…

Pierre-Antoine KLETHI

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