Economic Impact of Decarbonizing Europe and Interregional Relations Study
The study examines the economic impact of decarbonizing Europe through the European Green Deal, focusing on the substitution of coal production and import. Various scenarios are evaluated in terms of regional GDP, employment, and CO2 emissions. Additionally, the study explores interregional relations within the EU27 in the context of decarbonization efforts.
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The European Green Deal in times of conflict Carlos Llano Universidad Aut noma de Madrid. & CEPREDE (carlos.llano@ceprede.es) (*) Joint with: Juli n P rez (UAM& CEPREDE) Miguel ngel Almaz n (UNIZAR&CEPREDE) Interregional Relations in Europe
Outline 1. Introduction 2. The economic impact of decarbonizing Europe Context / Methodology / Results / Conclusion 3. Discussion 4. Conclusion 2 Interregional Relations in Europe
1 Introduction The European Green Deal (EGD) is the strategy agreed to transform the European economy in the fight against Climate Change. Among other measures, it foreseen the progressive decarbonization of Europe, suppressing the use of coal in the EU27... By means of the EUREGIO-2017, we calculate the economic impact of the substitution of the production and import of coal in the EU27, considering different scenarios of substitution by energy sources. The impacts are obtained in terms of regional GDP, employment and CO2emissions. other alternative
2 Methodology Decarbonizing Europe Intermediate demand Final Demand Sector B Sector B Sector C19 Sector C19 & D Sector D Interregional Relations in Europe
3 Results Case B.1: the substitution is based on the current structure of flows % regional GDP % regional employment % regional CO2 How much mining production are we willing to exchange for fresher air ? How many new clean jobs will be generated by substituting coal by other energetic inputs? Where such jobs are lost, and where the new ones will be created? Who will take the profit in terms of emissions? Interregional Relations in Europe
3 Results Case B.2: the substitution is within the EU27 % regional GDP % regional employment % regional CO2 The production lost in mining is substituted by more production within the EU27 in other energies. International imports/exports with extra-UE27 countries remain equal.
3 Results Case B.3: the substitution assumes moderate integration (contiguity) % regional GDP % regional employment % regional CO2 The production lost in mining is substituted by more production within each country and the neighbors. International imports/exports with extra-UE27 countries remain equal.
4 Discussion: how the COVID and the war affects? Effects in terms of employment (%) Why? Who consume? Who pay taxes? Who vote? Will be the Eastern EU27 countries able to assume all these simultaneously? European Green Deal. B3. Partial integration Ukrainian conflict COVID19 + NGEU
4 Discussion: how the COVID19 and the war affects? European Green Deal. B3. Partial integration How much new oil & gas will be provided by Russia,... to substitute coal? How might the simulation change if the substitution operates just with friends (NATO&Co.)? Should we postpone the decarbonization of Europe until geopolitical tensions relaxes? Should EU27, instead, accelerate such process, promoting a more radical energetic transition? Should we us EDG as a tool to consolidate more friendly relations? How might the European Border Carbon Tax Mechanism contribute to this respect? Interregional Relations in Europe
4 Discussion: what if the EU Border Carbon Tax promotes new trade wars against the EU? % regional GDP US Tariffs against the UE: US Tariff against the UE: 25% US Tariff against the UE: 25% 10% 25% 10
4 Will be the Eastern EU27 countries able to assume all these simultaneously? Discussion: how the COVID and the war affects? COVID19+ NGEU Ukranian conflict European Green DealProtectionism All Resilience RERI Rank Country Region code Region name scenarios 1 2 3 4 5 6 7 8 9 BG PL EL PL RO PL CZ UK BG PL UK CZ UK NO BG BG34 PL22 EL53 PL71 RO41 PL81 CZ04 UKM9 BG32 PL21 UKL1 CZ08 UKM7 NO07 BG41 UE_28 ESPON UE_27 Yugoiztochen Slaskie Dytiki Makedonia L dzkie Sud-Vest Oltenia Lubelskie Severoz pad Southern Scotland Severen tsentralen Malopolskie West Wales and The Valleys Moravskoslezsko Eastern Scotland Nord-Norge Yugozapaden UE_28 ESPON UE_27 15.9% 0.0% 1.8% -0.1% 2.4% 0.6% -2.0% -3.6% 6.3% 0.7% -1.3% -2.7% -1.9% -2.8% 6.1% -2.0% -2.0% -1.7% -2.8% -2.4% -1.5% -2.5% -1.9% -2.1% -2.7% -1.4% -2.7% -2.5% -1.3% -2.6% -1.4% -0.8% -2.8% -2.0% -1.9% -2.1% -3.6% -3.2% -2.0% -1.9% -1.4% -1.3% -0.9% -0.8% -0.6% -0.6% -0.6% -0.5% -0.5% -0.4% -0.4% 0.0% 0.0% 0.0% -0.1% -0.1% -0.1% -0.1% -0.1% -0.1% -0.2% -0.2% -0.1% -0.1% -0.2% -0.2% -0.2% 0.0% 0.0% -0.2% -0.2% -0.2% 9.5% -5.7% -1.8% -4.6% -1.0% -2.9% -5.8% -6.0% 2.9% -2.5% -3.4% -6.1% -3.9% -4.0% 2.9% -4.2% -4.0% -4.1% 0.39 0.49 0.09 0.67 0.44 0.56 0.47 0.56 0.33 0.52 0.55 0.58 0.62 0.61 0.71 10 11 12 13 14 15 48 49 81 UE_28 ESPON UE_27
5 Conclusions Eastern Europe benefits a lot from the NGEU but suffers the most from the war (even without including the refugee's crisis). The decarbonization of Europe puts and additional pressure on this area. Just transition funds might not be enough. How resilient Eastern countries are? In economic, social, but also in political terms? Acceleration of European Green Deal or moratoria ? Europe is in a crossroad. Two dimensions should be clearer in advance: Technology/Capacity: Finding the right energy mix. Autonomy/Geopolitics: Building solid and stable relations.
6 Annex The structure of the EUREGIO-2017 Z Y V Z = Intermediate demand Y = Final demand V = Primary Inputs 14 Interregional Relations in Europe
6 Annex The IO model in 2 minutes ?1 ?2 ?? ?1 ?2 ?? ?1 ?2 ?? ?11 ?21 ??1 ?12 ?22 ??2 ??1 ??2 ??? = ? + ?? ??=??? ??? ? ?? 1 ?1 ?? ?1 ?? ?11 ??1 ?1? ??? ? 0 0 ? = How much the output of each region and sector in the system will decreases, w d p f f d d j ? ?? = ? ? 1?? How much of this fall is in the sector where the initial shock took place (direct effect) or in all the other sectors used as inputs by j in s to produce its output? ?? = ?? ?? ?? = ? ?? = ? ? ?) 1?? How much employment will be lost by this total (direct + indirect effect)? 15 Interregional Relations in Europe
