Why Visegrad 4 need to get real about climate change

By | 2019-07-29T09:20:44+01:00 July 29th, 2019|

As Europe is experiencing hottest weather in decades, climate change is back in headlines. More accurately, it never leaves the headlines. It has become a constant feature of our news cycle. Be it warnings about biodiversity loss or about melting ice caps, climate change is part of the current Zeitgeist, at least in the developed world. Yet only recently, some of the Visegrád Group countries blocked the EU’s climate target, showing great unwillingness to face the elephant in the room: that as the climate changes, the European countries relying on coal are on a path that is neither environmentally nor economically sustainable.

If counted as a single country, the Visegrád Group or V-4, comprised of Poland, Hungary, Slovakia and Czechia, would be the fifth largest economy in Europe and the twelfth largest in the world. Poland has been experiencing “a golden age of growth”, according to the World Bank. Its economy is growing faster than most of its European neighbours’, driven also by strong domestic consumption. The V-4 as a whole expects its GDP to reach 4.5 percent this year. In addition, despite remaining risks and issues, the EU as a wider region is experiencing economically benign conditions with low unemployment.

The current situation offers a real window of opportunity for the Visegrad countries to start strategically working on how to transition to more renewable energy sources. The movement driving divestment from fossil fuels was not a glitch, it was one of the signs of things to come. If Canada is starting to worry about getting left behind because of its reliance on coal and other fossil fuels, the Visegrad countries should take note.

The region is very well placed to attract private and institutional investor money for investments in sustainable energy sector, provided their governments create appropriate policy frameworks and initiatives. The V-4 has some of the lowest price levels for investment in comparison to the rest of the EU, and it ranks relatively high in Human Development Index which means great potential. As investors increasingly seek out a range of environment, social and governance (ESG) products, countries offering well-structured green infrastructure investment opportunities can reap benefits from the trends. The Visegrad region with its spending power and EU membership is a very attractive place to invest.

Besides, as other European countries, including the Nordics, focus on circular economy initiatives and cutting carbon emissions, the V-4 risks being left behind. If the EU as a block shifts its paradigm to more sustainable energy, the Visegrad region’s energy infrastructure will look out of date. Notably, Europe is already a leader in climate change preparedness, mainly led by Western European countries. So, if the trends continue, which they will, industry in the V-4 countries may struggle to attract investment if it relies on unsustainable energy. Add to that the dangers that arise from its ageing demographics, which will require increasing pension expenditures. If the pension funds are invested in coal production or other unsustainable businesses, lower returns and greater pension pay-outs can create a perfect storm.

Unfortunately, the political elite in Poland, Hungary and the Czechia especially have opted for an approach that is best described as kicking the can down the road and hoping for the best. Currently, coal provides 80% of Poland’s energy. The country expects it to still be 60% by 2030 and possibly 50% by 2050.

Under the circumstances, it is true that the transition to renewable energy sources will cost money, have social implications and take time. Challenges such as regional over-reliance on coal for jobs and energy are very real and should be addressed not to leave people behind.
The pro-Brexit vote and under-development in former mining regions in the United Kingdom shows what negative and unexpected long-term consequences that can create.

It will require political will and courage to initiate change. The opposition by political leaders to the EU’s 2050 carbon-neutral target amongst other instances has shown how beholden to the status quo and vested interests political forces can be. Yet this can change and can also be actively changed by good leadership. Globalisation and digitalisation are social and economic drivers that keep creating pressures to shift to a more sustainable growth path. Growing urbanisation and the rising millennial generation will demand change.

Sustainability is something that can be actively promoted and can pay off handsomely. It can create cheaper energy for customers, upgrade the energy grid for coming decades, create healthcare savings by addressing health issues arising from pollution, generate new employment and improve energy and thus national security. Energy security does matter. A country can be brought to standstill if its energy supplies are disrupted, which was aptly demonstrated by Russia when it cut off Ukrainian gas. Poland spends approximately a whopping 2bn euros a year on coal subsidies – something that can be gradually diverted for supporting renewable energy projects and also creating initiatives to retrain and re-employ those in danger of losing their employment. It would also create savings from cleaner environment and better health.

Opting for more sustainable energy can serve as a great public relations campaign at a time when sustainability and climate change awareness is a growing mega-trend across society and industry. Clean air and better health is also something that is hard to argue against.

Climate change as an issue is forcing us all to change our mindset, as it challenges the prevalent short-termism built into our financial and political cycles. The ones who will position themselves best will reap the greatest rewards economically and socially. The V-4 political leaders should take nota and finally do the best thing for their countries and their own children, who will otherwise be part of the next generation inheriting the climate and economic problems.

 

This piece first appeared in Euobserver and can be accessed here.

Author: Linda Zeilina focuses on sustainability at RE-DEFINE and is also a Think Visegrád Fellow at EUROPEUM Institute for European Policy in Prague.

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