Thread by @DanielaGabor

I talked to @MESandbu about why @EU_Commission #EuropeanGreenDeal should not become a toothless Green Third Way

ft.com/content/74fe73…

@MESandbu @EU_Commission Green Third Way lies between relying on the market to deal w climate crisis and Green New Deal policies that view the state as critical for structural transformation for the low carbon economy.

@MESandbu @EU_Commission The Green Third Way basically seeks to nudge the market in the right direction. It uses public money as 'seed funding' to derisk new technologies and financial instruments. This nudging does not put in place green industrial policies that can engineer a fast and just transition

@MESandbu @EU_Commission The Just Transition Plans may end up just like the CAP, diverting funds to clever local elites - green money farmers - that will siphon them in the same way that powerful elites in Eastern Europe have siphoned common agricultural subsidies. nytimes.com/2019/11/03/wor…

@MESandbu @EU_Commission take Valea Jiului, coal region in Romania, where Commission experimented with Green Third Way – reskilling for miners in particular. This supply side approach doesn’t sort out the demand problems, and that region has not seen any significant private investment.

@MESandbu @EU_Commission problem with the Green Third Way is that it understands ‘justice’ as something that can be expected from private sector – the Just Transition Fund talks reskilling for miners, jobs in new economic sectors and energy-efficient housing – but that is an unreasonable expectation.

@MESandbu @EU_Commission Without significant state intervention in a green industrial policy framework, sectoral measures will not create justice, but the kind of resentment against EU that can easily be captured by populist politicians.

@MESandbu @EU_Commission The national Just Transition Plans that @EU_Commission wants should explicitly be about national green industrial policies that take into account the specificities of each EU country, coordinated at European level.

@MESandbu @EU_Commission I don’t see the politics of this working any time soon, so I think we should ask ‘justice for whom?’ when the Commission promises justice.
I worry that it will be justice for global finance via subsidised greenwashing.

@MESandbu @EU_Commission Green New Deal opens three doors for greenwashing
1. The details of the Green Finance Taxonomy - in particular the transition/enabling categories
2. Voluntary use of either Green Finance Taxonomy or ESG.
3. No regulation of brown finance.

@MESandbu @EU_Commission Green Finance Taxonomy is a public taxonomy of what economic activities and the assets financing them can be viewed as green. In theory, it has important advantages over greenwashing prone private taxonomies like ESG (details in our report for @UKLabour labour.org.uk/wp-content/upl…

@MESandbu @EU_Commission @UKLabour Green Finance Taxonomy reflects broader range of views, including climate experts, avoids the perverse incentives typical to credit ratings (think ESG ratings shopping in a future when brown assets are penalized), and is subjected to democratic control (European Parliament).

@MESandbu @EU_Commission @UKLabour But the devil and details!
The politically sensitive part of the Taxonomy, where the lists with the ‘green’ activities and the quantitative benchmarks are defined, is now being negotiated.

@MESandbu @EU_Commission @UKLabour We know that furious lobbying successfully included in the EU Regulation category of ‘transition’ and ‘enabling’ activities that are ‘pathways to green’, and can easily become loopholes for brown.
If private finance wins this battle, it wins the greenwashing war.

@MESandbu @EU_Commission @UKLabour while we all applaud the future brave Commission that says that it only recognises the Taxonomy as metric for measuring the environmental performance of an asset, making it into a global standard for greening finance, that metric already reflects preferences of private finance

@MESandbu @EU_Commission @UKLabour or when @ecb finally decides to stop implicit subsidies of brown collateral, we'll discover there is not much brown left because we painted everything green :)

@MESandbu @EU_Commission @UKLabour @ecb Commission plans subsidies and deriksing for green assets without penalties for brown. If ECB doesnt push for properly defining & regulating brown finance, there wont be sufficient political appetite for truly greening finance in Europe, despite the rhetoric of the Green Deal.

@MESandbu @EU_Commission @UKLabour @ecb and @ecb should regulate brown finance because of financial stability mandate. It wont, because crazy European politics.
Ironically, with proper regulation of brown finance, @EU_Commission would need less public money for derisking and financing deep decarbonisation.