"The Green Deal steer the economy towards a sustainable society"

The recovery programme proposed by the European Commission has a clear ambition: restart should be green. This is based on Commission President Ursula von der Leyen's initiative on the Green Deal, presented earlier this spring. What will be of particular relevance for Sweden and how will it impact Swedish companies? We asked the Swedish MEP Fredrik Federley (C, Renew) - is a Member of Parliament's Environment Committee ENVI and alternate member of the Committee on Industry, Research and Energy ITRE – a few questions.

What do you see as particularly important in the Green Deal? What is better and what is worse?

– The Green Deal is the beginning of a complete new and green age era in Europe. It is an opportunity to steer the economy towards a sustainable society with green growth. Given the right management, we can create new jobs, new industry and new technology. This is a crucial opportunity to create jobs, both in Sweden and throughout the Union. We need to create the correct conditions for the EU to lead globally, to show that a modern, industrialised economy is achievable within the limits of the resources that nature has provided.

– The Green Deal embraces higher ambitions for the environment, climate and for an economy that can support this approach. That said, these loftier ambitions must also go hand-in-hand with the correct measures and tools for companies to invest and change, creating a stable business climate that encourages investment, particularly green investments. The Green Deal must bring all Member States and sectors onboard with the green transition. EU Members such as Sweden, who are already at the forefront of climate work, must not be held back by excessive control measures or overly enthusiastic micromanagement that works to inhibit the power of innovation. One part that needs to be strengthened in the green environment is the circular bioeconomy, which gives us a huge opportunity to abandon potentially harmful chemicals and fossil-based materials in favour of green bio-based materials.

How can we ensure that reducing carbon dioxide emissions can be combined with increasing economic growth for EU countries?

– Shifting our social economy towards a green and sustainable direction will not only reduce emissions but will also create new jobs and companies. Effective environmental measures create a breeding ground for both economic growth and reduced emissions – something that is both possible and essential. The green growth strategy is intended to ensure that there are net zero greenhouse gas emissions and that economic growth is decoupled from resource consumption. Efforts to strengthen the circular economy are an important tool in achieving this. The Green Deal must encourage investments in circular solutions, products, services, technical solutions, transport and fuels in order to accelerate the transition. Investments to promote energy efficiency in the EU will also be important, particularly in the construction, real estate and transport sectors. Investing in infrastructure creates strong European added value while at the same time stimulating growth and reducing emissions.

What role do you think a well-executed Green Deal can deliver for the EU, post-coronavirus? And, in your opinion, how would a poorly-executed strategy look?

– The Green Deal will play a huge role in the EU's economy and its society following the coronavirus crisis. We find ourselves in the midst of a global crisis that is affecting all stakeholders and all aspects of their everyday lives. Our companies are experiencing a substantial loss of income with demand approaching zero. We must focus on kick-starting the economy through investments in green technology, sustainable solutions, new companies and thus new green jobs. We must now ensure the start of the Green Deal contains strong ambitions for the climate and the environment, which will ensure a stable, competitive economy. This will be powerful when it comes to transforming our society into a renewable model, one that favours green jobs and technologies in future stimulus packages. Any delay or reduction in ambitions of the Green Deal will be a lost opportunity to act for the future we face. Climate change will not pause, it will not take account of an ongoing pandemic and economic crisis. Any investment in a green society that is less ambitious is, in my opinion, an incorrectly executed strategy.

What opportunities do you see for Swedish companies in the green environment?

– The Green Deal can and must contribute to a better-functioning internal market and greater free trade with the rest of the world. For example, I want to see that we are investing in the digital economy, the services sector and energy. I want to work on strengthening the internal market and on continuing to simplify the existing regulations and removing the barriers to trade that are found there. We need a positive business climate and we need to strengthen our common competitiveness. Above all, we need to take the perspectives of small- and medium-sized companies that have to work with all EU legislation.

– I believe that the Green Deal, given the right management, can deliver the changes similar to those that took place in several Swedish cities, where it went from a total dependence on a local government to today's much more robust situation, with strong business activity and a number of new companies. The Commission will now adopt an industrial strategy for the EU to address the dual challenge posed by the green transition and the digital transition. Therefore, the EU must take advantage of the potential offered by digital change, which is a key factor in achieving the goals of the Green Deal. Here, the Swedish companies are already playing a key role, contributing in their own way to a sustainable value chain. We see this with companies such as Northvolt and Einride, but also in our primary industries. A transition to a circular society will mean, for example, that we must strengthen Europe's self-sufficiency in raw materials. Along with the industrial strategy, a new action plan for the circular economy will help modernise the EU’s economy and will maximise the opportunities offered by the circular economy at home and in the world market. A key objective of the new policy framework must be to stimulate development of pioneering markets for climate neutral and circular products both in and outside the EU.

What do you see as particularly important in this perspective of the Green Deal?

– The new circular financial plan is an important part and represents an opportunity for Swedish companies and the creation of sustainable consumption after the current global Corona crisis. Here, we should take the opportunity to strengthen the development of a resource-efficient circular and biobased economy. I would like to see the opportunity taken for setting environmental targets for increased production in the EU, in order to make it clear that growth and the environment go hand in hand in Europe.

– Another example is the updates to all climate and environmental legislation. The Green Deal and the Climate Act include a revision of the EU's emission allowance trading. This is an important focus area; emissions allowances cover the energy sector, most industries, but not all, for example, agriculture and transport. Moreover, the price so far has been set too low and has not had the effect we hoped for. The free allocation of allowances must decrease, while at the same time it must be more favourable to improving processes and driving innovation to reduce carbon dioxide emissions. To date, the system has worked well for the energy sector, where all energy-producing companies face high prices for carbon dioxide. The emissions trading scheme is a mechanism that works but needs to be developed, tightened and include more sectors if it is to achieve our emission targets.

Forests are often highlighted as making an important contribution to the work on climate change. How do you think forests can be best used as a resource?

– I can see that the forestry and the green industries will play a crucial role in shifting society in a climate-smart direction. It is also crucial for Sweden to be able to maintain a large carbon sink, which active forestry can provide, and that there is a basis for a continued innovative bioeconomy that develops forest products with higher added value. Therefore, it is important to ensure that - in the short term - the reduction of forests is not used as a guarantor to meet the net zero target by 2050. The EU must promote innovation and investments in the forest-based sector and a strong bioeconomy.

Some people believe that the stricter emissions and environmental regulations resulting from the Green Deal will encourage companies to move their production outside the EU, to countries with less regulation. How do you perceive this risk and how can it be curbed?

– Obviously, we must ensure that European companies remain competitive. This means that we must demand appropriately high standards on what is imported and make it work for companies in the internal market. We must build on open competition, to create the security and stability needed to mobilise the large levels of financial investment needed enable us to cope with the required change. This will provide a solid foundation for innovation and guarantee the security of those making long-term investments. For example, revenue from a potential carbon dioxide tax on imported goods should be used to stimulate the green transition of the economy, not least for climate investment in European industry.

How do you see that competition neutrality between companies and countries' business climate is factored into the Green Deal?

– It is important that any transition we make now - not least in the light of the economic crisis - is also sustainable for the EU countries' business. Yet it is clear that those companies and industries that are currently at the forefront in terms of adapting to climate change and sustainability are those who will receive the most rapid distribution of work with the Green Deal. It is for the very purpose that we need to provide incentives to change. At the same time, I see growth as a cornerstone of the green transition, so it will also be important to ensure that companies, both in Sweden and the rest of the EU, are given the optimal conditions for creating jobs, innovations and value.

A ‘Just Transition Fund’ is an important part of the Green Deal for many countries. How do you view this? What should be taken into consideration and how far should ‘solidarity’ extend?

– I can see that there is a need for a common fund so that we can address the climate issue together and bring everyone onboard in the green transition. It is important that the Just Transition Fund has a function in Europe’s green journey, which includes being able to stimulate innovation and technological development while also ensuring that the transition is accessible to everyone.

– Efforts are needed to stimulate technology development and innovation, so that those who are already at the forefront and have embraced the need for climate investment will continue to do so. The Fund's foundation is also the basis for efforts and support for change in those regions whose labour markets are affected much more by the green transition. Funds should primarily go to investments and restructuring; they must not be used for fossil investments.

In the Green Deal, the European Commission proposes that the EU adopts a climate neutrality law by 2050 and increases its emission ambitions by 2030. What opportunities and risks do you see in these proposals?

– I think it is a positive move to set this binding target in legislation. If we are to have a chance to achieve the Paris Agreement and keep global warming below 1.5 degrees, the EU must be climate neutral by 2050. If the law is worth anything, it must be a long-term tool that provides clarity until 2050. I therefore also want to see goals for 2040, to create stability and predictability for the market and to give us clarity and long-term perspective in climate and energy policy at EU level. To achieve climate neutrality by 2050, we need higher ambitions by 2030. It will also be necessary to ensure that other energy and climate legislation is updated with higher sector goals; however, other mechanisms must also be reviewed, such as the emissions requirements in the transport sector and quotas for advanced biofuels.

What investments do you think will be needed in the future to make Europe the world's first climate-neutral continent?

– The Green Deal serves as a new growth strategy for the EU and requires efforts to fully support the clean and circular economy ambitions; investment plans and a new circular economy plan are both being developed. Within the Innovation Fund, for example, a great deal is set aside for emission rights sold on the market; the revenue from this system should be used for these innovative cutting-edge projects to allow us to reduce carbon dioxide emissions. We must see major green investments if we are to deliver on a climate-neutral EU by 2050, restructuring the economy through these investments and pushing investments that will quickly reduce emissions from the transport sector. I would like to see further measures to promote green investment in Europe, including for circular economy and bioeconomics. This transition will require massive public spending and increased investment by directing private capital to climate and environmental measures, while avoiding lock-in to unsustainable methods. The EU must also take the lead in coordinating international efforts to create a coordinated financial system that promotes sustainable solutions across all sectors.