Is the European Green Deal such a good deal for the EU ?

written by Lucie Landon, President of European Horizons Bath

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European Commission

On 11th October 2019, the European Commission unveiled the European Green Deal, its plan to make Europe carbon neutral by 2050. All sectors were affected: Finance, economy, agriculture, transport, construction. But what does this green transition mean for the European Union? It is no secret that the Union has been dependent on Russia’s oil and gas industry for many years, despite attempts at diversifying its energy sources. Will the European Green Deal manage to eliminate the EU’s strategic dependence on Russia ? Or will it simply shift this dependence on another country?

Transitioning to a green economy is creating many new challenges for industry. One of them is the ability for producers to access new raw materials in large quantities. Some of the materials involved in the production process of green technologies are rare earth metals. They are used for their unique composition and chemical properties but are also very difficult to find and extract. One country stands out on a global scale in the production of those rare earth metals : China. In 2018, 98.5% of the EU’s imports of rare earth metals and alloys came from China, according to the United Nations’ comrade database. This is a significant problem for the European Union for several reasons.

The first problem is ecological : the extraction of rare earth metals comes at a high cost for the environment. In China, the mines are contaminating local villages with polluted water, natural landscapes are devastated by extraction, and workers often possess inadequate equipment that does not protect them from rejections of toxic materials. In practice, this means that the very materials destined to reduce the carbon footprint of the planet are generating a lot of pollution. Worst, the European Union does not have leverage on those production processes precisely because of its dependency towards China.

Moreover, China is becoming the most important leader in the exploitation of those metals and their transformation into cutting edge green technologies, thanks to vast resources invested in those projects and research centres. This has been illustrated recently by the « Made in China » 2025 plan which created about 40 new centres in the country dedicated to industrial innovation. This plan highly improved China’s ability to innovate and be competitive in the production of new green technologies, ranging from solar panels to wind turbines. China now dominates both global patents and global supply chains for rare earth elements, according to research firm Adamas Intelligence. If Xi Jinping’s country is now providing us with the majority of strategic materials we need to decarbonise our economies at a relatively cheap cost, the long term consequences of this dependency might be disastrous.

The second problem is indeed strategical: Brazil, Vietnam and Russia also possess large quantities of rare earth metals and could be potential alternative sources. However, as well as having the largest rare earth reserves in the world, China possesses the ability to exploit them at low production costs. This means that the country’s current domination of the world’s market is not coming to an end anytime soon. China’s demand for energy is growing. The country represented roughly 24% of the world’s energy consumption in 2018 and its energy consumption is expected to grow further in the upcoming years. Due to internal affairs, the Chinese authorities have already started their country’s green transition and China’s internal energy mix are becoming increasingly based on renewables. Consequently, the world might soon face shortages in raw materials in the face of rising Chinese demand. If shortages materialise or if production is severely reduced and prices go up, there is a good chance the EU will be strongly affected. As China exploits raw materials and transforms them on its own territory, the country is likely to prioritize national needs before exporting in times of crisis.

In order to ensure the European’s security of supply for raw materials, original alternative solutions have been considered: the Moon and Mars. However, the European Union is not the only one competing in this domain as we have seen with the launch of several exploratory missions all around the planet. Another and probably simpler option would be to ensure the EU’s supply chain security through collaboration with allies and diversification policies but the task is far from easy. China’s current edge in green technologies makes it difficult for others to catch up, especially in resource intensive domains such as research and innovation. Hence, the European Green Deal may be delivered by 2050, as the EU had promised but at great ecological and strategic costs.

In conclusion, is the European Green Deal an opportunity for the EU to become more independent in terms of energy resources or is it just giving China more leverage? For now, it seems like the Chinese state has been empowered by the EU’s will to fully decarbonise its economy. The remaining question is whether the Union will be capable of diversifying its importation sources in the near future.

Lucie is currently a final year Politics with International relations student at the University of Bath. She is interesting in European politics and Transatlantic Affairs and more particularly in the energy, climate and transport policy issues. Lucie is a member of European Horizons since 2018 and has had many occasions to enjoy the European Horizon’s experience since. She is currently the President of the Bath chapter and work with a fantastic team from many different European backgrounds ! Lucie decided to join the PR team as PR-chapter liaison officer as she believes communication is an essential component of European Horizons. She is committed to increase the visibility of our chapters and help them achieve their full potential.

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