It takes a crisis to bring about real change. When the crisis arises, the actions that are taken depend on the ideas and abilities of those around us.
If we want to Unlock Energy Independence, we must accept the challenge of adopting the economic model in which companies, through partnerships, can solve social and environmental problems without sacrificing economic efficiency. Because a sustainable future is the only one we can afford.
The citizens of the European Union in search of this future form a community that wants to find solutions for a sustainable and inclusive development. This, I think, is now our main concern: to create alternatives to existing politics, to campaign for them and to keep them available until the political impossible becomes the inevitable political.
The new geopolitical and energy market reality requires us to drastically accelerate the clean energy transition and increase Europe's energy independence from unreliable suppliers and volatile fossil fuels. Oil and gas firms are now hugely profiting from the energy crisis, with the biggest listed companies making enormous profits in 2021 and they use a lot of green washing to finance their activity. But even if the geopolitical situation is changing so quickly, I think it is not impossible to make longer term decisions in the field of building an ecological future financed responsibly by the financial industry.
And, for the financial industry to become truly sustainable, we need to approach its development differently and rethink how this sector impacts society and the economy.
With the liberalizing of the energy market and Ukraine crisis that caused a surge in energy prices, even the European Central Bank (ECB) is facing a big dilemma between its price stability task and its duty to support the European Union's objectives on mitigating the effects of climate change. Moreover, strengthening the EU’s autonomy from Russian gas, as tightening ECB policy would make green energy investments more expensive.
In the midst of the perfect storm, however, we must not overlook our goals: the objective of achieving climate neutrality by 2050. This requires a transition of the entire economy, especially those sectors and economic activities that have a significant impact on the environment and therefore need to be transformed urgently or even stopped if the transformation is not possible.
Extending the EU taxonomy to cover significantly harmful economic activities has also been recognized by the financial industry as it “would allow asset managers to bring to market financial products that help the‘ hard-to-decarbonise ’sectors confront climate change and accelerate their necessary transformation ”. This does not mean refusing to fund such activities, but rather prioritizing capital over companies that make the effort to make the transition to environmentally friendly, sustainable and environmentally sustainable activities, thus recognizing their efforts.
However, nothing comes without costs, but a well-thought-out strategy will give security to our steps towards a sustainable future.
Even given the high level of uncertainties in “turbulent” times it has become difficult to make concrete proposals for defining ex ante expenditures and fiscal strategies to be privileged, I would recommend further tax reforms to be introduced in the form of a fiscally neutral, variable stamp duty and land tax, granting credits for more efficient homes, offices, business venues and production plants.
Rather than the current approach of a ‘green levy’ on energy bills directly, the costs of decarbonisation should be funded by the government. This would allow the government to use taxation in a way that distributes costs on those who can most afford them. Retrofitting homes would save households and entrepreneurs hundreds of euros a year in energy bills while also reducing demand for Russian gas.
We can do it by cheap government borrowing. Even with rising interest rates, and with the spectrum of inflation hanging around the corner, the service costs of government debt still remain at historic lows. In the event of concerns that monetary policy as a whole is too lax, Member State governments could issue new perpetual, interest-free bonds, especially in order to respond to the energy crisis, which the ECB and the Central Banks of the Member States could also buy using new central bank reserves, obtaining financing for investments in upgrades and renewables without increasing the net burden of government debt.
We must consider redirecting private investment. Lenders and investment finance institutions should introduce a Green Term Funding Scheme that provides reduced credit to different sectors of Member States' economies, provided that the funds are channeled at low rates to investments that support the transition, starting with housing modernization. The scope of such targeted lending could then be extended in line with the EU's green taxonomy once it is implemented.
We will also save money. Terminating our dangerous overdependence on fossil fuels from Russia can be achieved well before 2030. Currently, renewables are helping to limit price rises for electricity, by reducing the amount of gas needed for generation, and by refunding part of the wholesale price. There will be initial costs associated with integrating a larger share of renewables, such as strengthening transmission networks and maintaining enough capacity to meet demand at peak times but, in time, we can conclude that with sufficient flexibility, a system based on renewables could actually be cheaper than one running on fossil fuels.
But first of all, in the face of the current crisis, we need to understand that sustainability is a great opportunity and, in fact, only people and businesses that think in terms of sustainability can have a long-term future.
