Regional Frontrunners for the Low-Carbon Economy

Regional Frontrunners for the Low Carbon Economy -- Why Europe and the US have to think local to act global.

Traditionally, Europe and the US share close political and economic ties. With the election of Barack Obama, there were high hopes that these ties would also be established in the areas of climate and energy policy. Together, Europe and the US had the potential to lead the world into a global low- carbon economy. But after the international climate conference in Copenhagen, with an increasing stalemate in the US Senate and mid-term elections in November, Europeans begin to worry that the promised change in US climate and energy legislation will come rather later than sooner.

Some fear that the change may not come in time for the next international climate conference in Mexico. Meanwhile, Europeans see how their own leadership role has diminished under economic pressure from record unemployment rates of 20 % as in Spain and growing resistance from rural and manufacturing regions in Central and Eastern Europe. However, Europe and the US can build the political support that is needed to pass federal legislation and enhance the strategy of the 27 EU member states by enabling core regions on each side of the Atlantic to adopt the necessary economic strategies to become frontrunners in the shift toward a low-carbon economy.

In the US, resistance against ambitious federal policies comes primarily from regions which tend to be predominantly rural, depend on coal for electricity production; and possess a strong agricultural or manufacturing base. There are fears that curbing carbon emissions and promoting renewable energies will make energy more expensive, harm the economy and threaten jobs. Some of the objections are not very partisan in nature, but rather linked to the daily worries of middle-class Americans who see their traditionally strong regional economies weaken and put their jobs at risk. Particularly strong concerns exist in the Southeast and Midwest regions of the US where, even before the economic crisis hit, more than 1.2 million jobs were lost in the last decade.

Europe, on the other hand, has shown that reducing emissions does not necessarily conflict with economic growth. The EU has provided leadership by blazing a path toward a low-carbon economy.  Internationally, the region stands out -- not only due to its climate and energy package but also its unilateral target to reduce emissions by 20 percent by 2020.   Certain EU member states, such as Germany, have proven that the EU could be even more ambitious. The German emission reductions of 28 percent since 1990 and 280 000 green jobs demonstrates the strength of a low-carbon growth strategy. While some critics belittle the German achievements as deriving from the fall of the Berlin Wall, they are still remarkable, particularly since they required the fundamental structural transformation of former industrial strongholds in Western Germany.

This is also the case for the Ruhrgebiet, an area with 5 million inhabitants in Germany’s most populous state North-Rhine Westphalia, which was almost exclusively dependent on coal and steel production until the 1980s. In 1987, North-Rhine Westphalia launched the REN program to promote the development, demonstration and application of efficient and renewable energy technologies. The program has funded more than 50,000 projects and triggered investments of more than 3 billion Euros, in solar power, biomass, and combined-heat-and-power generation in particular. In 2010 the Ruhrgebiet launches the campaign “Innovation City” that calls on cities of about 50 000 inhabitants to apply for a city-wide weatherization grant. One successful candidate will be modernized and entirely retrofitted to become an energy-saving model city, displaying the latest state of the art technologies. The refurbished city will emit 50 percent less emissions due to improved insulation of houses and industry, and the use of solar and wind energy in combination with electric cars. Already now, in the run-up to NRW state elections in May, politicians from various political backgrounds -- from the progressive green party to the conservative christian democrats – are campaigning for low-carbon growth strategies.

In the Midwest and Southeast regions of the US, few politicians are running “green” campaigns.  Apparently, their constituencies are too dependent on carbon intensive industries. Candidate’s platforms calling for a low carbon-economy could put their political future at risk.  States such as Indiana, North Dakota, and Wyoming produce more than 80% of their energy from coal. States such as Louisiana, Texas and North Carolina rely heavily on revenues from the oil and gas industries.  However, there is greater openness to low-carbon development strategies in states such as Michigan, Ohio and Pennsylvania where the auto and other manufacturing industries have been hard hit by the economic downturn. Michigan has launched the No Worker Left Behind -- Green Jobs Initiative to accelerate workers’ transitions into new jobs in the areas of alternative energy production and energy efficiency, green building construction and retrofitting. Currently, Michigan can point to 7.7% faster growth in the low-carbon sectors of its economy as compared to its conventional industry sectors.

Ohio, Indiana and Illinois have also adopted such programs successfully.  However, few states are tapping into their full potential for economic growth dependent on low-carbon energy paths, particularly since political leaders are facing tough (re)election races and messengers such as labor unions, farmers and faith communities are only beginning to make the case for low-carbon growth strategies. A 2009 study conducted for the RES-Alliance has shown that a national renewable energy standard of 25% could create 2.36 million new jobs by 2025: more than half would be manufacturing jobs, one fourth would be construction and craft-related jobs, and one-tenth would be engineering and technical services jobs.  This potential explains why labor unions such as United Steelworkers and other employee-based organizations such as the Blue-Green Alliance and Green for All are advocating for low-carbon growth strategies. But also farmers are slowly beginning to tap into the big potential for renewable energies, as they deplore wind energy and biomass.  And even faith- groups, such as the National Council of Churches, an organization with 45 million members in 100,000 local congregations, are now promoting the economic opportunities in the field of green building and retrofitting.

In Central and Eastern Europe, it is also crucial to build political support within and beyond the established political parties in order to, for instance, persuade countries such as Poland to pursue low-carbon development strategies and withdraw its objections to the European Emissions Trading Scheme. Poland, which produces more than 90% of its energy from coal, signed an accord with Hungary, Slovakia and Bulgaria in 2009, which calls for delays in price increases on carbon emissions. While these countries with unemployment rates of 7%-10 % resist low-carbon energy paths due to their fear of continued economic turmoil, other countries, such as Romania, are forging ahead and implementing legislation which will increase the contribution of renewable energies to economic growth. In 2011, Southern Romania will launch the second largest onshore wind farm outside the United States, an investment of 1.1 billion Euros in building 600 megawatts (MW) of installed capacity.

Both Europe and the US have core regions with strong potential to become frontrunners in the competition to establish a low-carbon economy. On both sides of the Atlantic, however, these regions remain economically and politically bound to carbon intensive electricity production and manufacturing. But this stalemate can be overcome. By maximizing policy exchange and mutual learning, Europe and the US can make progress toward regional low-carbon growth strategies. Implementing regional strategies can enhance economic success and build the kind of local political support required for effective national energy legislation and probably for an international agreement as well.

Till Koetter
Project Coordinator
The Climate Network-Transatlantic Solutions for the Low Carbon Economy