8 economic recovery lessons for Canada from Europe’s Green Deal

EU leaders have been clear that the pandemic response must integrate climate goals. Here's what Canada can learn from them

EU green deal
Illustration by Dalbert V

The view from the floor-to-ceiling windows of the 11th-floor meeting room in the Berlaymont, home of the European Commission, is all orange tiled roofs and sad-looking chimneys in the January gloom. You’d think Brussels hadn’t changed in 50 years. Inside, however, is a sleek, modern meeting room where 30 of us are gathered around an enormous table, next to a glass wall of interpreter booths and another wall with rows of now-empty stadium seating.

As EU policy and communications manager for Europe’s association of cities in energy transition, I am here to meet Europe’s energy commissioner, Kadri Simson, along with representatives from businesses, cooperatives, NGOs, industry and think tanks who make up the Coalition for Energy Savings. Simson is responsible for the “renovation wave” component of Europe’s Green Deal, as well as the offshore wind strategy, energy efficiency and other initiatives.

Big changes at an EU level, like the euro, come about as the result of years or decades of painstaking planning. The European Green Deal, in the space of less than 24 months, has gone from NGO wish list to “the new defining mission” of the EU. Faster still has been the EU’s response to the coronavirus. EU leaders have been clear that pandemic response must integrate a “green transition.” And while the urgency of the pandemic will delay some aspects of the Green Deal by weeks or months, the overall package could receive a boost from increased lending and spending as the bloc lays out its plans for economic recovery once the crisis has passed.

Last fall, Canada set the same goal as the EU of reaching net-zero emissions by 2050. But they’re not at the same start line. Between 1990 and 2018 the EU reduced greenhouse gas emissions by 23%. Canada’s GHG emissions rose by 18.9% between 1990 and 2017. If Canada is serious about reaching net zero by 2050 it needs to learn everything it can from the Green Deal. Here are eight lessons for Ottawa on how to design its own Green Deal.


1. Ride the “renovation wave”


Renovating Europe’s notoriously drafty old buildings is set to be the flagship program of the Green Deal. Buildings account for 40% of energy use, and the goal is to renovate 3% of buildings annually in the EU over the next decade. It’s an easy idea to sell but harder to do, as current renovation rates languish between 0.4% and 1.2% in EU countries. Expect a focus on public buildings (schools, hospitals) and social housing. Public ownership makes renovation much easier (for more on greening public housing, see p. 14) and the benefits are much greater. Lower energy costs means more money for schools and health, and tackling energy poverty in social housing can bring huge social benefits.

Renovating private homes and apartment buildings with a mix of owners and renters is more complicated and will require carrots and sticks. The carrots will likely come in the form of low-cost financing, energy-efficiency mortgages and schemes to bundle lots of individual renovations into big projects to lower costs. Sticks might include a checklist of things that need to be done in five-year intervals for homeowners: improved insulation, new windows, new heating systems, for instance, that force people to upgrade their property over time. Or, it might be regulations mandating a deep energy retrofit when a building is sold or tenants change. As with the rest of the Green Deal, the details are still being worked out in Brussels. Either way, there could be pushback from property owners when the final proposal comes out in September. New buildings in the EU will be “nearly zero energy buildings” (NZEB) from the end of this year, and the target for net-zero buildings will be 2025 or earlier.

Lesson for Canada: Setting aggressive energy-retrofit targets for buildings will be key to Canada reaching net zero, too. This is one area where Canada can learn by watching what works and what doesn’t in the EU and rapidly rolling out version 2.0 of the renovation wave. Aside from drastically cutting energy consumption, there should be a big boost for the construction industry (already worth $141.6 billion in Canada in 2018) in urban and rural areas – especially amongst people who wouldn’t benefit from data-driven jobs. The Canada Green Building Council, in its Roadmap for Retrofits in Canada, recommends targeting large buildings, especially in Ontario and Alberta, for retrofits to slash GHG emissions by 30% by 2030 and potentially as much as 51% by 2050.


2. Fuel clean tech growth


European Commission President Ursula von der Leyen called the climate crisis a challenge that “we can turn into an economic opportunity . . . Europe has the first-mover advantage. The whole world increasingly needs clean technologies and solutions.” She cited batteries, smart grids, green hydrogen power, offshore wind-power, clean steel and decarbonized gas as industries that “will create innovation, value and jobs.”

Green jobs won’t be just at the manufacturing and construction level. Digitalization is a key part of Europe’s decarbonization strategy. Think smart grids that track when and where electricity is needed and drive down generation, or “5G corridors” for connected and automated mobility. Most excitingly, the EU Commission wants to create a “digital twin” of Earth that would “radically improve Europe’s environmental prediction and crisis management capabilities.” Above all, the goal is to form European digital champions that specialize in monetizing industrial data and ensure those companies are well placed to dominate the field globally.

Lesson for Canada: There’s no decarbonization without digitalization, and this is one area in which Canada could be well placed, with its internationally recognized strength in artificial intelligence. That expertise, however, can be commercialized only if government policy ensures that a market forms quickly enough to maintain a global edge. Canada’s world-class network speeds are also a strong asset in maximizing the technological opportunities of the energy transition, but creaking rural connectivity could leave part of the country behind. The EU is in a similar boat and unlikely to meet its 2013 goal of 100% broadband coverage by the end of this year.

The pandemic may delay aspects of the Green Deal, but the overall package could receive a boost in spending as the EU lays out plans for economic recovery once the crisis has passed.


3. Make it right


What and how things get made in the EU is set for a complete overhaul. Some energy-intensive sectors, like steel, chemicals and cement, will get investment to develop new, lower-carbon manufacturing techniques. Using hydrogen to make steel is a good example. Assuming that zero-carbon steel is more expensive than traditionally made steel, a carbon border tax will likely be implemented on imports to make sure they don’t undercut European companies. A “sustainable products” policy will ensure that all products are designed with common principles that prioritize reducing and reusing materials before recycling them (such as the Netherlands’ Fairphone) and prevent environmentally harmful products from being sold. As well, all packaging will have to be reusable or recyclable in an economically viable manner by 2030, with new rules for biodegradable and bio-based plastics.

Lesson for Canada: Canada needs to decide if it wants to sell goods to the world’s largest economy or not. If it does, then it is going to have to read the fine print on the Green Deal closely and change the way it manufactures products. Biofuels, made using Canada’s low-carbon grid, could lead to the production of sustainably sourced aviation biofuels that European airlines will be increasingly anxious to use. Canadian products that don’t meet these emerging standards either won’t be allowed on the market or will be hit with a carbon border tax or something similar. If Canadian manufacturers embrace this change, they will have privileged access to 500 million consumers.


4. Bet the farm on greener food systems


EU food makers are going to be biting off some big changes under the Green Deal. Foods will be grown with drastically fewer pesticides, antibiotics and fertilizers, and sales tax could be lower on things like organic fruit and vegetables. Eating locally produced food is also expected to be strongly encouraged. As the world’s largest importer and exporter of food, the EU is also looking at raising international food standards; in particular, there will be pressure to curtail soybean and beef imports from regions that don’t promote biodiversity or reduce pesticide use.

Lesson for Canada: Canadian farmers are already torn between their biggest market, the U.S., and the higher standards in the EU. Canadian agricultural exports to the EU fell 15% after the Canada-EU Comprehensive Economic and Trade Agreement (CETA) was signed, thanks to Europe’s ban on antibiotics and growth hormones. If Canada wants to improve its trade deficit at all in the coming decades, it will have to raise the bar on greening its farms (see “Seeding Climate Action on Canada’s Farms,” p. 50).


5. Rev into emissions reductions


The Green Deal aims to move substantial amounts of freight off roads and onto rail and rivers. Aviation and maritime fuels face the prospect of new taxes, while emissions from those sectors may soon become subject to payments under the Emissions Trading System. The delicate matter of road-pricing is on the table, and rural EV-charging infrastructure and alternative fuels can look forward to direct financial support. Car emission standards will be reviewed in 2021. Already, tough new standards (set in 2009) that level hefty fines on automakers are being phased in for 2020. The result has been a massive increase in the number of battery-electric and plug-in hybrid cars available in Europe. Groupe PSA (Peugeot, Citroën, Opel, Vauxhall and others) sold more electric cars in January 2020 than in all of 2019. Of course, the pandemic has since stalled that growth. The main European auto industry association has been lobbying to have stricter emissions standards delayed, but VW, Daimler and BMW have said they plan to hit the ambitious targets.

Lesson for Canada: Canada may not think it has the market size to push car manufacturers, but with more than two million new cars purchased each year, it is a larger market than California, which is setting its own fuel economy standards. Canada can put some teeth in its pledge to ban internal-combustion vehicle sales by 2040 and ensure that its ambitious clean-fuel standard is implemented with a sense of urgency.

Canada could also follow the EU’s lead on setting ambitious standards and levying steep penalties on automakers that fail to keep up with the program. This would result in a massive uptake in electric vehicles without costly cash rebates for EV purchasers. Canadian auto sales to Europe rose 83% in 2018 thanks to CETA; if Canada wants to maintain that growth in the coming years, it will need to encourage more EV production, which is almost non-existent in the passenger market at the moment.


6. Go local to get community support


Europeans might have a reputation for being tree-hugging, planet-loving people, but the scope of these changes promises to challenge even their willingness to embrace sustainability. Senior officials have warned of a “tectonic” shift and compared the Green Deal to changes brought about by the industrial revolution. To cope with this, the Green Deal envisages a big effort to engage with citizens to ensure they “remain a driving force.” This is known as the Climate Pact, and the Covenant of Mayors Europe will play a central role in rooting the Commission’s high-level objectives in the local community.

Lesson for Canada: It’s no secret that parts of Canada are less keen on an energy transition than others. Emulating something similar to the Climate Pact to transform headline ambitions into local improvements in infrastructure, air and water quality and other tangible benefits, particularly in rural farming communities, will go a long way to making a Canadian Green Deal more politically palatable.

Canadian products that don’t meet the EU’s emerging standards either won’t be allowed in or could be hit by a carbon border tax.


7. Bank on financially savvy climate spending


The European Commission is more of a regulator than a government. Its strength is setting the rules for the game rather than spending money the way a national government does. Its budget is about 1% of Europe’s gross national income. So the headline of €1 trillion in green financing between 2020 and 2030 is substantial. About half the money comes from the regular EU budget – 25% of the EU budget is expected to be spent on climate action. Then there is an existing fund, which will be rebranded and used to leverage €280 billion and another €143 billion of public and private investment, specifically to help regions most reliant on carbon intensive activities. It’s an impressive amount of financial heft when the total amount of new money is a mere €7.5 billion over the next seven-year budget.

A major player in the leveraging and investment is the European Investment Bank (EIB), which announced in November a phase-out of all fossil fuel funding and a ramp-up to 2025, when 50% of its lending will be spent on climate change projects. It is the EU’s “climate bank.” A “green taxonomy” was agreed upon last year that clearly defined what constitutes a green investment to help funnel interested investors. Non-financial risk disclosure rules will be updated to force companies to come clean on the risks they face and actions they are taking to mitigate climate risk. They propose raising additional money with a new tax on non-recyclable packaging waste and rolling out a market for green bonds.

Lesson for Canada: The figures involved in the energy transition can seem large, but making systemic changes to the financial system can bridge the gap between purse strings and ambition. The Canada Infrastructure Bank already has a similar mandate to the EIB, but reimagining the much larger Business Development Bank of Canada as Canada’s climate bank would be a boon to green businesses.


8. Act soon – it’s cheaper than stalling


Economic opportunities aside, climate change is still a bad thing. The EU Commission estimates that a high warming scenario of more than 3 degrees C will result in GDP losses in EU countries ranging from 2% in northern Europe to more than 8% around the Mediterranean as productivity dives and mortality climbs from heat, forest fires, floods and other natural disasters. Climate neutrality, however, is expected to boost GDP by 2% and create millions of jobs.

Lesson for Canada: Canada is already warming twice as fast as the rest of the world, and average temperatures have increased 3.06 degrees since 1948. The cost of coping with the fallout of a warming world will be far more than the cost of climate neutrality.

The three-hour meeting in the Berlaymont is up, and we’ve barely had enough time to have a shallow discussion of the issues involved in energy efficiency. Much like this article, there just isn’t time and space to go into all the details and all the different initiatives because of the Green Deal’s enormous scope, size and ambition.

Two things are clear though. One, Canada has a lot of catching up to do if it is going to hit net zero by 2050. The head of the Business Council of Canada, Goldy Hyder, agrees, recently telling the government “Let’s get on with it,” with respect to the net-zero target and calling on business, government and labour to “lay down the arms on this issue and find a way forward.”

And two, in the EU’s Green Deal, Canadians have a template that can drastically improve their prospects of getting there.


Green Deal plans


There are 47 initiatives listed in the Green Deal communication, with the aim of slashing emissions and creating a climate-neutral continent by 2050.

Here are the top 10 that haven’t already been mentioned.


Carbon border tax
A carbon tax, likely on just a few sectors to start, to ensure carbon-intensive industry doesn’t move abroad.

Strategy for smart sector integration
Matching industries with complementary energy profiles – think data centres and district heating.

EU industrial strategy
Creating European champions and funnelling subsidies into priorities like e-mobility, hydrogen, health, the Internet of Things and microelectronics. Decarbonization of energy-intensive sectors such as cement, steel and chemicals.

Circular economy action plan
Designed to decouple resource use from growth. Will halve waste, reduce
embodied carbon in construction and put in place sector-specific plans for
textiles, food and transport.

Waste reforms
Tackle over-packaging, mandatory recycled content. New EU-wide model for
separate waste collection and new rules on waste shipments and illegal exports.

EU biodiversity strategy for 2030
Increase biodiversity-rich land under protection, restore damaged ecosystems, “green” cities and increase urban biodiversity.

EU forest strategy
Increase absorption of CO2, reduce forest fires; focus on afforestation, forest preservation and restoration.

Trans-European Network – energy regulation review
Ensure pan-European energy infrastructure is prioritized: smart grids, hydrogen networks, energy storage and carbon capture, storage and utilization.

Zero-pollution action plan
Tackle urban runoff of microplastics, chemicals and pharmaceuticals; revise air
quality standards; create specific measures to help cities improve air quality.

Research and innovation
“Green Deal Missions” will help deliver large-scale changes in areas such as adaptation to climate change, oceans, cities and soil. This will entail funding research and start-ups and forming industry-government partnerships in batteries, clean hydrogen, circular bio-based sectors, food, urban transport and more.


Adrian Hiel is a Canadian dad, husband and writer who has spent the last 16 years in Brussels imbibing more Tintin, Gueuze and political dysfunction than he ever thought possible.

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