Climate change 1/3: Green Deal – will it be enough?

The energy transition is currently under way—that is, the shift towards low-emission and renewable energy sources—but the main reason for these changes is sometimes forgotten: climate change. Climate change represents one of the greatest challenges humanity has ever faced[1]. Scientific evidence warns that crossing certain tipping points in the climate system could lead to irreversible and accelerating climate changes[2]. We are already observing impacts that scientists have long predicted—the loss of Arctic ice, melting glaciers, rising sea levels, more frequent extreme heatwaves and more frequent extreme weather events [3].

All the changes currently taking place in the energy sector are justified by the fight against climate change. However, it is an immensely complex phenomenon, the understanding of which requires an entire scientific discipline—climatology. In reality, we are trying to confront something so complex in order to preserve our current way of life, yet it is likely to change irrevocably, and not only in the energy sector.

The authors of a recent report on climate tipping points even warn that these phenomena represent some of the most serious threats to humanity, with no way back once they are crossed[4]. The international community has therefore been seeking ways to slow climate change for decades—from the establishment of the Intergovernmental Panel on Climate Change (IPCC) in the 1980s to the Paris Agreement of 2015, which aims to keep global warming below 2 °C (ideally 1.5 °C) compared with the pre-industrial era. These initiatives have spurred a range of specific policies at national and supranational levels.

Europe’s response: the Green Deal and its costs

In the European Union, the response to the climate crisis has been the ambitious European Green Deal and the associated European Climate Law. These documents enshrine in law the target of achieving climate neutrality by 2050 and the interim target of reducing emissions by 55 % by 2030[5]. To support these commitments, the EU is adopting a broad package of measures—reforming the emissions allowance market (EU ETS), extending allowances to additional sectors (the so-called ETS 2), stricter standards for industry and transport, and ESG reporting rules (new corporate sustainability reporting directives). The aim is to decarbonise the European economy and help fulfil the commitments of the Paris Agreement.

The question, however, remains at what cost and with what effect. Implementing the Green Deal requires enormous investment, with the European Commission estimating that hundreds of billions of euros will need to be invested annually in energy infrastructure and new technologies. Companies also bear not only the costs of the technologies themselves, but also administrative costs in the form of expanded ESG reporting and other obligations. From the perspective of businesses and investors, a major problem is the unpredictability of the environment—the price of emissions allowances fluctuates, complicating the planning of long-term projects and undermining confidence in carbon market price signals[6]. Adding ever new regulatory requirements creates an image of an inconsistent environment that discourages rather than supports investment.

These concerns also have a macroeconomic dimension. High energy prices and complex regulations weaken the competitiveness of European companies, especially in energy-intensive industries. In his recent report for the European Commission, Mario Draghi pointed out that expensive energy and the bureaucratic burden are among the main reasons for the loss of momentum in the European economy [7]. Production of key materials such as steel, cement and chemical products is therefore moving outside the EU—a phenomenon known as carbon leakage[8]. For example, obtaining a permit to build a new factory in the Czech Republic takes years; developers therefore often prefer to build abroad, where the process is faster[9].

Such cases illustrate that the administrative burden and strict environmental limits may deter investors not only in Czechia but across the EU. It is therefore no coincidence that the European Commission this year introduced the “Simplification Omnibus” initiative to simplify sustainability legislation, specifically with the aim of easing the burden on businesses. Companies have long made clear that complex regulations and bureaucracy are holding them back and putting them at a disadvantage compared with competitors in the US and China. In response, the Commission proposes cutting reporting requirements by 25 % and relieving small and medium-sized companies in particular of certain aspects of ESG reporting[10].

Despite these adjustments, the fact remains that the European path to decarbonisation is deliberately highly ambitious and strict—and therefore costly. Certain industries that are inherently “dirty” (high-carbon) may reach the limits of operating in the EU; they must either transform quickly, scale back production or relocate elsewhere. However, this trend carries risks: if global trade were disrupted or geopolitical conflicts arose in the future, Europe could lack key materials and capacities that it had meanwhile outsourced beyond its continent[11]. Critics therefore point to the need to carefully balance climate targets with economic reality so that Europe does not lose its industrial backbone and become excessively dependent.

Europe as a “drop in the ocean” of global emissions?

It is also worth asking what global effect European efforts will have. The European Union currently produces only around 6 % of global greenhouse gas emissions[12]. By comparison, it was 15 % in 1990. A significant share of the decline in European emissions is due to reduced industrial production, but above all to rising emissions in developing economies. China alone now emits around 35 % of global CO₂ emissions, and India has also recently joined the top three emitters. Of course, if the EU fulfils its ambitions and becomes climate-neutral by mid-century, it will help, but we will not save the global climate this way without similar action elsewhere. Europe’s share of current emissions is already relatively small—certainly, we are still the fourth-largest emitter, but it nevertheless amounts to roughly one-twentieth of global emissions [13]. It is therefore understandable that questions are being raised as to whether Europe’s enormous investments and strict measures are merely a drop in the ocean in terms of their effect, while other players (the US, China and the developing world) are not pursuing emissions reductions as vigorously—at least not as quickly—and instead place greater priority on their industry and economic growth.

On the other hand, historical responsibility and fairness must be mentioned. Europe (like other developed countries) used a vast “carbon budget” in the 20th century—our current prosperity was built in part on burning coal, oil and gas on a massive scale. Cumulatively, European countries rank among the largest historical polluters. As early as the 1990s, the IPCC warned that climate change could trigger mass migration and that developed countries bear the main share of responsibility for the problem[14]. Even today, our per-capita emissions are higher than the global average—European per-capita CO₂ emissions have fallen, but still exceed the global average by around 15 %[15]. From the perspective of the principle of “common but differentiated responsibilities”, enshrined in international climate agreements, it is therefore morally impossible to say that “Europe has already done enough”. On the contrary, it is argued that wealthy countries should lead by example and invest in reducing emissions first, even though they are no longer the biggest polluters[16]. This climate justice is often invoked by developing countries: Europe and the West have a “debt” from centuries of emissions, and should therefore act now regardless of the fact that others are still increasing their emissions.

The real “catch”, however, is whether even with maximum European effort we will prevent catastrophic changes, or whether our contribution will not be enough because of objective limits. In other words, are we sacrificing too much, at too high a cost, for too little result? This question is increasingly being heard in European political debate.