Blog post 200423

COVID-19 Crisis: An Occasion to Accelerate the Transition Towards a new Development Model ?

By Geneviève Pons, Director General, Europe Jacques Delors

| 23/04/2020

At the end of his mandate as President of the European Commission, Jacques Delors laid out his answers to the challenges of the 21st century. Chapter 10 of his 1994 White Paper on Growth, Competitiveness and Employment proposed a new development model – which deserves our renewed attention today.

Already in the early nineties, Jacques Delors had called for increased measures to tackle growing inequalities and the depletion of natural resources. To this end, he proposed to reshape our taxation system to alleviate its weight on labour and to give a real price to natural resources. Beyond, he envisioned to radically transform our production system through a circular economy model – a pretty futuristic concept at the time. This Delorsian vision has been largely forgotten in the meantime (despite the efforts of those who never gave up) until the arrival of President Von der Leyen and the European Green Deal.

Crucially, the current COVID-19 crisis must not be seized as an opportunity to push the European Green Deal aside (let’s hope that this is not the meaning of Business Europe’s letter to the European Council published on Wednesday). On the contrary, the current crisis must be transformed into an occasion to accelerate the transition towards a new development model, inherently more respectful towards our people – and our planet.

The current COVID-19 crisis illustrates the strong links between our present development model and the increasing frequency of global sanitary crises. Often originating from animal sources, the spread of global pandemics, including COVID-19, cannot be detached from human actions such as deforestation, rapid urbanisation and the illegal trade in endangered species.

The impact of these crises and in particular of the present one are – at least temporarily – favourable to our environment. Look at our sky, bluer and quieter than ever. Listen to the silent streets. Road and air transport represent major sources of CO2 emissions, which kept increasing everywhere in the world, including in Europe. As emissions from transport and industrial activities are drastically reduced, we can see the environmental benefits of this evolution in a spectacular manner.

Does this mean that we should stop driving and taking planes once the sanitary crisis is over ? Of course not. But hopefully we will have realised that teleworking is a noteworthy option and that business meetings requiring long distance travel can sometimes be equally efficient by videoconference.

As the economy will have to be relaunched, we should seize this opportunity to privilege low-carbon processes and environmental best practice. Encouraging green financing through taxonomy, transparency and targeted incentives will be key in this regard. The annual amount of investment necessary to finance the transition in Europe is estimated to be over one trillion euros. Whereas it is clear that public spending will not be sufficient, public money must serve as a stimulus as well as a risk insurance for private funds. The next MFF will have to be profoundly reshaped to properly finance the post-crisis agenda, thus offering much more opportunities to finance the European Green Deal. Beyond, we will require new, inventive financing models. The European Central Bank should actively promote the radical transformation towards a carbon-neutral economy. Last but not least, the 3% rule, as finally accepted in the context of the COVID-19 crisis, must be implemented in a flexible manner to facilitate the financing of the Green Deal.

Exceptional circumstances call for exceptional measures. But to get there, European leaders must show solidarity. If not, they put Europe at mortal risk, as Jacques Delors warned them, in a very rare public declaration, commenting the results of the last European Council.

Geneviève Pons
Director General

Europe Jacques Delors