by Sanne de Jong
The European Green Deal: EU's Great Power Strategy?
Also Published by the International Affairs Forum on 19th January, 2024
Photo Credits: Pixabay
In 2019, the president of the European Commission Ursula Von der Leyen announced the European Green Deal (EDG) as “Europe’s man on the moon moment.” This hefty announcement should be scrutinized, especially regarding its choice of putting the green transition at the center of the EU’s growth strategy. Is the EGD a credible attempt of the EU to achieve great power status?

Essentially, the EGD announcement is a European attempt to gain great power status. While the EU could claim such a status in the late 2000s, where its GDP surpassed the US’ GDP with US$ 16.3 trillion compared to US$ 14.77 trillion in 2008, its relative decline started from that peak onwards, having dropped to the third biggest economy of US$ 16.75 trillion in 2022, compared to the US and China as the first and second biggest economies with US$ 25.44 trillion and 17.96 trillion respectively. As the EU’s power primarily stems from being an economic union, it is in its interest to regain these economic highs, making the EDG ultimately an economic growth strategy. But the EDG serves another purpose: that of a common narrative to tackle the EU’s central issue of bridging its internal divides. Historically, the EU has used the green transition to bolster its international influence before. For instance, in 1997, the EU spearheaded the Kyoto Protocol successfully, while the US as the largest emitter stepped out, not willing to accept economic obstacles to its “unipolar moment” at the time. Moreover, the European institutions have exploited the green transition to bolster their supranational competences since 2005, starting with the establishment of the European Emissions Trading Scheme (ETS). Additionally, it fits with the EU’s narrative of being a normative power, ruling by its norms which grant its actions more legitimacy. While fitting historical pathways, the EDG pledge had to satisfy timely democratic institutional conditions. Von der Leyen’s Commission Presidency had to scramble for political support, after the Spitzenkandidatensystem had failed, where the European Commission’s President should be chosen amongst the lead candidates per European Parliament Political Party. Since the lead candidate of European Popular Party (EPP) as the biggest party did not reach the required support in the European Parliament (EP), and heads of state like Angela Merkel reactively refused the lead candidates from other parties, Von der Leyen’s last-minute appointment by the European Council made her candidacy unpopular especially amongst the Socialists & Democrats (S&D) and Green Parliamentarians. To corroborate her weak support, Von der Leyen had to present a strong green agenda to secure especially the Green Party’s approval who had acquired a heavy weight in the 2019 EP elections. Regardless, the EDG only passed because it fulfilled several national interests.

The EDG addresses European states’ concern of lacking energy sovereignty. European countries rank amongst the most energy import-dependent countries, which worsened during the covid-19 pandemic and Ukrainian war and strongly weakens their ability to act independently, being vulnerable to international energy price shocks. Shifting to renewable energy not only wishes to answer to the climate crisis, but also to progressively decouple the EU from those gas and oil imports.
Importantly, Germany as the EU’s implicit leader shares this interest. Around 95% of its 25% dependence on natural gas was met via imports in 2022 alone. This dependency was ultimately exposed by Russia’s invasion of Ukraine in February 2022, where Germany lacked Russian gas supply accounting for 55% of its gas imports at the time. Second, as the most industrialized country in the EU, having traditionally benefited from exporting its “high quality” manufactured and engineered products, Germany probably uses the EDG as a strategy to counteract the outsourcing tendency that occurred in favor of China. Having invested in wind and solar technologies already since the 1980s and 1990s, Germany ranked as the top producer of these green technologies, until China overtook German industries in 2015 through its “Made in China 2025” strategy and dominated many green technology industries ever since. Hence, the EGD partially represents a German attempt to build its competitiveness while not losing its industrial might.

Ramping up green industries through increased investment is also in France’s interest as the EU’s other major player, recognizing the dual use of many of these green industries. The fact that France is less dependent on coal and relies heavily on nuclear power not only grants it options of claiming green leadership in the EU, historically remaining one of its key objectives, it also allows France to take the lead on producing nuclear power-sourced, “pink” hydrogen.

However, it remains questionable whether the EGD itself is achievable, and whether its realization would achieve the wished effect. The EGD’s success is dependent on many uncertainties. First, the French-German tandem is unstable. Given their different energy trajectories affected by domestic politics and the 1973 oil crisis, France and Germany are set up to disagree on the European energy transition, materializing for instance in the German anti-nuclear policy against France. Every time when these historical rivals cannot compromise, it paralyzes the EU.
Second, the EGD confronts a great West-East divide. Central and Eastern European member states confront a larger dependency on fossil fuels and a marginally larger prospect of losing jobs, putting them in a worse position compared to the richer economies. In addition, climate policy remains a strongly politicized issue. Ideologies get replaced easily, and climate policy represents such an ideology. If that ideology loses political will and public support and splits the Union, which is likely given its uneven affect per country and job, it becomes questionable whether the EU will be able to perform this growth strategy.

Third, the EU confronts a sovereign debt crisis, threatening the EU’s ability to issue required investments. Public finance is in a worse state compared to the peak of the previous European debt crisis from 2009 to 2012. For instance, at the peak in 2020 during the covid crisis, the government debt-to-GDP ratio had climbed to 120%, 155%, and 211% for Spain, Italy, and Greecerespectively, mirroring many Southern countries’ conditioned tendency of overspending their public budgets. But also France and Germany face overburdened budgets, with French public debt levels approaching 112% in 2022, and Germany facing its highest court’s recent ruling, creating a hole of €60 billion in their public spending plans. These trends will probably increase given the required investments for fulfilling the EDG targets, for rising security concerns (e.g. Ukraine’s defense), and ultimately for counteracting the unsustainable social welfare states considering current fertility rates and its aging population. The latter will further confront the European block with labor shortages for these green industries, creating another obstacle.

Even if the EU met the EDG targets, the US and China could outperform it. Through its “Made in China 2025” strategy, Beijing currently processes most critical raw minerals required for green technologies and dominates the solar, wind, and battery production. Its interest is to “enhance international value chain dependencies on China,” aiming to contain its competitors. Indeed, European industries undeniably depend on Chinese supply chains, and most solar and wind technologies are directly sourced from China. This explains the EU’s current narrative of “de-risking” rather than “decoupling” supply chains. The US, while being similarly dependent on Chinese green supply chains, but choosing the costly decoupling strategy given their rivalry, has another instrument that the EU lacks: While the US can simply issue massive subsidies for green technologies and industry deployment, as it did with the Inflation Reduction Act, the EU cannot do that in such a simple way because it does not have unified fiscal power. Hence, while the US currently lags regarding green energy technology deployment, it could likely catch up faster.

In summary, the EDG is an economic and great-power-seeking geopolitical strategy, but also an EU-internal cohesion strategy. However, its success remains uncertain. Even if EGD targets were achieved, whether the EU can thereby enhance its great power status remains questionable. Not only does the EDG’s success depend at least on parallel developments in the US and China and the influence of climate policy ideologies internationally, other escalations and crises arising in the current tense international arena will probably interfere in the EU’s general capacity to build its great power potential.
The opinions expressed in this article are of the author alone. The Spykman Center provides a neutral and non-partisan platform to learn how to make geopolitical analysis. It acknowledges how diverse perspectives impact geopolitical analyses, without necessarily endorsing them.