Transition to Low-Carbon Economy
Can Europe Avoid Tough Choices?
Faced with climate change, the dilemmas between social justice and a sustainable use of natural resources pose great challenges for European societies. So, what next for European welfare capitalism if we want a low-carbon future?
In Europe, the welfare state is a comprehensive mix of government policies and legal frameworks in social policy, education, health, and housing. While there are considerable differences in spending levels and priorities across European countries, these institutions play an important role in promoting social justice.
Climate change and policies to mitigate climate risks have numerous social consequences. Extreme weather events, which are becoming more frequent due to climate change, may inflict large damages to private housing as well as cause local labor market disruptions, with considerable economic and social costs. Moreover, the transition to a low-carbon economy, which is required to reduce the direct impacts of climate change, requires a move away from energy-intensive and polluting industries. This shift could reduce job opportunities in these sectors. In the future, modern welfare state institutions could play an active role in addressing, and preferably countering, the social consequences of climate change.
The EU Believes in “Green Growth”
Today, European governments are focusing on efforts to bounce back from the recent economic crisis that has resulted in job losses and considerable financial insecurity for millions of Europeans. Thus, the idea of degrowth—reducing consumption in order to reduce greenhouse gas emissions—is a policy alternative that is not appealing to political elites or to mainstream voters.
Instead, Europe is turning to a more palatable response to climate change: so-called green growth. Leaders hope that climate-friendly technologies will advance rapidly enough to save rich countries from having to cut consumption and production. Essentially, they hope to “decouple” economic growth from increases in emissions.
Based on a belief that decoupling is possible, the European Union’s growth strategy, Europe 2020, presents economic progress alongside more-stringent energy efficiency and carbon emission standards. Advocates believe that these shifts will make Europe able to deliver on its promises to avoid the dangerous impacts of climate change.
Yet many climate experts question whether it is realistic to think that the rate of decoupling will be fast enough to prevent the tough choice between reduced production and dangerous climate risks. If the skeptics are right, Europe and the rest of the affluent world should start looking for ways to make radical emission cuts by other means that may shake up today’s economies even more radically.
An “Active” Welfare State Could Ease the Transition to a Low-Carbon Economy
There is still unexploited potential to push Europe in a “green” direction through the social investment approach. Its emphasis on education and (re-)training may ease the transition from energy-intensive, production-based economies. At the European level, this approach is being used mostly to respond to an aging population and to combat the negative effects of the economic crisis. As the economy “greens,” there will be instances when shifting away from old technologies and production methods will involve economic restructuring and job losses, for which social welfare programs will be critical.
To make the employment consequences of a low-carbon transition socially just, there is much to be said for a comprehensive and “active” welfare state. Traditional unemployment benefit schemes should continue to offer protection against the loss of income, preventing redundant workers from falling into poverty. Training programs will remain essential to give young labor market entrants and workers with outdated skills the tools they need to help them adapt to the demands of green labor markets.
The Contradictions of Economic Growth
Comprehensive welfare state institutions in Europe were developed during a long period of steady economic growth. Continued economic growth will be needed to maintain the level of social protection and care services that European citizens have come to expect. Thus, when bringing climate change mitigation and adaptation into the spending picture, a dilemma arises between long-term sustainability and immediate social justice.
Governments are keen to promote economic growth, which is considered the key to future prosperity and well-being at both the societal and individual level. By definition, however, economic growth implies a continued expansion of economic output, from which growing greenhouse gas emissions tend to follow. Since the required pace of technological progress might not be sufficient to avoid severe climate change impacts, the risk is that the pursuit of economic growth will continue to contradict current efforts to combat global warming, at least in the short to medium term.
Measuring Social and Intergenerational Justice
Bertelsmann Stiftung’s EU Social Justice Index (SJI) for 2015 offers an innovative and up-to-date assessment of the degree to which EU member states succeed in achieving social justice for their inhabitants. More than that, it includes intergenerational justice measures relating to the environment and the need to address climate change. Given the strong conceptual and empirical affinities between the idea of the welfare state and the notion of social justice, the SJI may be read as an encompassing judgment of welfare state performance.
The SJI reveals great disparities in outcomes even within the EU. Northern European countries generally receive high scores across the six dimensions that the SJI takes into account: poverty prevention, equitable education, labor market access, social cohesion and discrimination, health, and intergenerational justice. For Southern European countries and some Eastern European countries, the opposite is true. The country ranking that emerges from an overall SJI score is associated closely with the level of economic prosperity in each country, although the relationship is far from linear, suggesting that policy choices matter.
Reconciling the Needs of Present and Future Generations
From a domestic as well as an international perspective, political leaders face a formidable challenge: how to reconcile social justice in the present with sustainability and intergenerational justice in the long run, within and across both countries and continents. European countries and other affluent parts of the world have a strong moral duty to reduce greenhouse gas emissions related to their high levels of production and consumption. This reduction is necessary to address the double injustice that climate change imposes on poorer countries: the world’s poorest countries are responsible for only modest levels of consumption and resource use and contribute little to rising global temperatures, yet they are the most vulnerable to the harmful impacts of climate change and have few means to tackle the adverse consequences.
When recognizing that actions to reduce greenhouse gas emissions are primarily the responsibility of rich countries, a politically challenging question of burden sharing arises within Europe. What is an equitable division of the costs of cutting emissions, and how do decision makers sell potentially unpopular sacrifices to their domestic constituencies? Europe’s policy choices in response to these questions are likely to influence the direction of intra-European inequalities. A more holistic and coordinated approach to climate policy and the design of welfare state institutions would be a step in the direction of reconciling the needs in these two traditionally separate spheres of public policy — to the benefit of intergenerational justice.
Mi Ah Schoyen holds a PhD from the European University Institute and works as a researcher at NOVA Norwegian Social Research.