TheExternalDimensionoftheGreen Deal,betweenCooperationandCompetition byPierPaoloRaimondi,MargheritaBianchi,NicolòSartori,MariaLelli PaperproducedintheframeworkoftheIAI-EnelFoundationproject“EuropeanGreenDeal:ReachingBeyondBorders”,October2022. PierPaoloRaimondiisResearchFellowintheEnergy,ClimateandResourcesProgrammeattheIstitutoAffariInternazionali(IAI)andPhDcandidateattheUniversitàCattolicadelSacroCuore,Milan.MargheritaBianchiisHeadoftheEnergy,ClimateandResourcesprogrammeatIAI.NicolòSartoriisSeniorResearcherattheEnelFoundation.MariaLelliisResearcherattheEnelFoundation. Copyright©2022IstitutoAffariInternazionali(IAI)ViadeiMontecatini,17–I-00186Rome Tel.+39066976831 iai@iai.itwww.iai.it ISBN978-88-9368-272-5 TheExternalDimensionoftheGreenDeal,betweenCooperationandCompetition byPierPaoloRaimondi,MargheritaBianchi,NicolòSartoriandMariaLelli Introduction Climatepolicyhastakencentrestageinthepoliticaldebatesincethe1990smainlydrivenbyscientificawareness,risingsocio-politicalpressureandclearerperceptionofthecostofinaction.1TheParisAgreementhasraisedtheglobalconsensusonclimatetoawholenewlevel–insuchapowerfulwaythatDanielYerginaffirmedwecandefinetwoeras:“beforeParis”and“afterParis”.2DifferentlyfromtheKyotoProtocol’stop-downarchitecture,Parisoffersgreaterflexibility,withnationallyandinternationallydeterminedelementsthatcanbecombinedinmanyways,makingiteasiertositatthetable.TheimportantmilestonereachedinParisillustratesthepositivebenefitsofcooperationamongmajoreconomicsuperpowers,suchastheEuropeanUnion,USAandChina,withintheinternationalclimateframework,startingfromtheUnitedNationsFrameworkConventiononClimateChange(UNFCCC)arena.TheParisAgreementalsoservedasacompassforgovernmentactionandtheengagementoffinancialinstitutionsinthewakeoftheCovid-19pandemic –inEurope,NextGenerationEUisconceivedasatooltosupportthepoliticalvisionoftheGreenDeal.Afurthersteepaccelerationhasoccurredinthepastthreeyears.Anincreasingnumberofcountrieshavebeenannouncingcarbon 1Implementingmitigationmeasuresmakessenseinfinancialterms,asinvestingtowardthatglobalgoalofnet-zeroby2050isestimatedtobebyfaroutweighedbytherelatedeconomicbenefits.SeeNatalieMarchant,“ThisIsHowClimateChangeCouldImpacttheGlobalEconomy”,inWorldEconomicForumArticles,28June2021,https://www.weforum.org/agenda/2021/06/impact-climate-change-global-gdp;andAndreaJanuta,“EconomistsSupport‘ImmediateandDrasticAction’againstClimateChange”,inWorldEconomicForumArticles,1April2021,https://www.weforum.org/agenda/2021/04/economists-global-action-climate-change-natural-disasters. 2DanielYergin,TheNewMap.Energy,ClimateandtheClashofNations,NewYork,PenguinPress,2020. neutralitytargetsbyandaroundmid-century3andhavecommittedpublicandprivatespendinginlow-carbonenergysectors. TheEUhasincreasinglytakentheleadinglobalclimateambitionswiththeEuropeanGreenDeal(EGD)asmajorinstitutionalmoverinthisfield.TheEUaimstobecomethefirstclimate-neutralcontinentby2050–agoalenshrinedintolegislationwiththeEuropeanClimateLaw.4In2021,theEuropeanCommissionturnedthenet-zerovisionintoreal-worldpolicyproposalsbyreleasingitsstrategy(theFitfor55package5)toacceleratethetransitioninthe2020s.TheEGDisevidentlyadecarbonisationstrategy–butalsomuchmorethanthat:theEUhaselevatedittoitsnormativevision,aneweconomicgrowthparadigm,afreshnarrativefortherevitalisationoftheEuropeanintegrationprojectandapotentialroutetoapoliticalUnion. Whatisclearisthat,besidesinternaltransformations,theEGDwillhaveasignificantexternalimpactinaglobalisedandconnectedworld.AmongstthemostobviousconsequencesisthattheEGDmighttriggereffectsonhydrocarbon-producingcountries,forwhichtheEUisandhasbeenakeydestinationmarket;oritmighthaveimplicationsontrade,whichshouldincreasinglyneedtoconsiderthecarboncomponentofitsproducts.6TheEUwillneedtoelevateitsforeignpolicytothechallengeandengagewithothercountries,managethedirectandindirectgeopoliticalrepercussionsofitsEGD,fosteritsgreenleadershipanda“globaljusttransition”,andrecognisethatdecarbonisationeffortsbuilduponverydifferentbasesaroundtheworld.Ingeneral,theEGDwillneedtoguidethechangesofthetransition.Withawideruptakeofrenewableenergysources,theveryconceptofsecurityofsupplywillgainnewconnotations7andthemapofenergygeopoliticswillchangeassomeolddependencieswillbereduced(yetnotvanished)whilenewoneswilllikely 3136countrieshaveset,orareformallyconsidering,net-zerotargets.SeeNetZeroTrackerwebsite:https://zerotracker.net. 4EuropeanParliamentandCounciloftheEuropeanUnion,Regulation(EU)2021/1119of30June2021EstablishingtheFrameworkforAchievingClimateNeutralityandAmendingRegulations(EC)No401/2009and(EU)2018/1999(“EuropeanClimateLaw”),http://data.europa.eu/eli/reg/2021/1119/oj. 5SimoneTagliapietra,“Fitfor55MarksEurope’sClimateMomentofTruth”,inBruegelBlog,14July2021,https://www.bruegel.org/node/6497. 6JeanPisani-Ferryetal.,“TheEUCan’tSeparateClimatePolicyfromItsForeignPolicy”,inBruegelComments,5March2021,https://www.bruegel.org/node/7258. 7LucaFranza,MargheritaBianchiandLucaBergamaschi,“GeopoliticsandItalianForeignPolicyintheAgeofRenewableEnergy”,