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181. Fragile States Index 2021 – Annual Report

Author:
Natalie Fiertz, Nate Haken, Patricia Taft, Emily Sample, and Wendy Wilson
Publication Date:
05-2021
Content Type:
Special Report
Institution:
The Fund for Peace
Abstract:
The Fragile States Index, produced by The Fund for Peace, is a critical tool in highlighting not only the normal pressures that all states experience, but also in identifying when those pressures are pushing a state towards the brink of failure. By highlighting pertinent issues in weak and failing states, The Fragile States Index—and the social science framework and software application upon which it is built—makes political risk assessment and early warning of conflict accessible to policy-makers and the public at large.
Topic:
Climate Change, Authoritarianism, Employment, Fragile States, Economy, Political stability, Conflict, Crisis Management, Peace, Resilience, COVID-19, Health Crisis, Early Warning, and Risk Assessment
Political Geography:
Africa, Europe, Middle East, Tajikistan, Germany, Armenia, Central America, Spain, Lebanon, Timor-Leste, North America, Ethiopia, Southeast Asia, El Salvador, Global Focus, and United States of America

182. Climate change and Finnish comprehensive security: Insights into enhanced preparedness

Author:
Emma Hakala
Publication Date:
12-2021
Content Type:
Policy Brief
Institution:
Finnish Institute of International Affairs (FIIA)
Abstract:
Climate change is already threatening the security and stability of societies in various ways, and the impacts will only be exacerbated in the future. The security consequences of climate change can be broadly categorised into direct, cascading and transition impacts. Direct impacts refer to the damage to people and infrastructure caused by extreme weather and other climate phenomena, while in cascading impacts climate change is combined with political, economic and cross-border effects. Transition impacts are linked to the adverse consequences of climate change mitigation and adaptation. It is increasingly imperative to comprehensively integrate climate change into foresight and preparedness activities. In addition to the identification of individual climate security impacts, it is also necessary to identify and continuously monitor broader political and economic developments relevant to climate security. Cooperation across national borders is important for advancing the climate security agenda. International organisations and individual countries should coordinate and exchange information in order to develop preparedness mechanisms and practices.
Topic:
Security, Climate Change, Environment, and Infrastructure
Political Geography:
Europe and Finland

183. Carbon Accounting by Public and Private Financial Institutions: Can We Be Sure Climate Finance Is Leading to Emissions Reductions?

Author:
Emily Spittle and Martin Dietrich Brauch
Publication Date:
08-2021
Content Type:
Special Report
Institution:
Columbia Center on Sustainable Investment
Abstract:
Anthropogenic climate change due to the emission of greenhouse gases into the atmosphere is the greatest threat facing society this century. The Intergovernmental Panel on Climate Change (IPCC) highlights the urgency of ambitious climate action and the devastation that may be caused if this action is not realized.2 As such, decarboniz- ing the economy is a pressing challenge, and funding the zero-carbon transition will require large-scale finance. To achieve the scale and rate of change required for global carbon net neutrality by mid-century, both public and pri- vate finance must be mobilized to fund mitigation efforts across industries. In addition to directing capital toward mitigation projects, funding to carbon-intensive projects must be evaluated and ended if not aligned with decar- bonization targets. As stated in a 2019 feature in Nature, “[f]inanciers will have to step away from approaching cli- mate change on a project-by-project basis—a wind farm here, a solar plant there—and start thinking about the car- bon impact of every dollar spent. That means an end to projects that lock in unsustainable futures.”3
Topic:
Climate Change, Environment, International Cooperation, and Carbon Emissions
Political Geography:
Europe

184. The Automotive Industry: The Achilles’ Heel of German Economy?

Author:
Marie Krpata
Publication Date:
03-2021
Content Type:
Special Report
Institution:
Institut français des relations internationales (IFRI)
Abstract:
The global car market has been shrinking since 2018. This is a key economic sector for Germany whose producers belong to the Top 15 carmakers worldwide. Yet they are running the risk of being outclassed and eventually replaced, given emerging actors in the USA and China. These new competitors benefit from the growing digitization of the mobility sector, disruptive economic models and the obsolescence of vehicles with an internal combustion engine. This form of propulsion is progressively being replaced by less-polluting alternatives, which are being endorsed by public authorities. The Chinese-American rivalry is also impacting German carmakers, whose strategy greatly relies on the globalization of production chains. This has led to major successes in the past, but the threat of a technological decoupling between the USA and China limits German carmakers’ activities in terms of production and exports. Access to the Chinese market, which accounts for nearly 20% of the global population, is indispensable for the German brands that intend to benefit from China’s catch-up effects. European industrial and political actors plan to invest in promising sectors whilst seeking to respect environmental and social objectives. Also, the European Union (EU), led by a German powerhouse, intends to prevent market distortions such as hurdles to market access, while supporting the emergence of technologies and the compliance with production standards. However, developments in the automotive sector are challenging the EU’s capacity to act in a unified fashion, even if the EU is not seeking to impose its vision on the industry’s private sector, in a top-down manner.
Topic:
Climate Change, Economics, Energy Policy, Industrial Policy, European Union, Social Policy, Mobility, Industrialization, Green Deal, and Automotive Industry
Political Geography:
Europe and Germany

185. Green Batteries: a Competitive Advantage for Europe’s Electric Vehicle Value Chain?

Author:
Carole Mathieu
Publication Date:
04-2021
Content Type:
Special Report
Institution:
Institut français des relations internationales (IFRI)
Abstract:
Aligning its climate and industrial policies, the European Union (UE) is introducing sustainability requirements for the whole life-cycle of electric vehicle (EV) batteries. This initiative would not only ensure that EVs fit with Europe’s climate-neutrality and resource-efficiency pledges, but also give European new entrants a better chance to compete. Since 2017, the EU’s nascent green industrial policy has made the EV battery value chain its favored experimental field. The wave of investments in battery cell manufacturing projects suggests that the worst-case scenario of Europe subsidizing massive battery cell imports will not materialize. Cell manufacturers have a direct commercial interest in setting up operations closer to the European automakers’ EV assembly factories, and Member States can provide an additional argument for local cell production with their large financial support for EU-based industrial projects. However, strategic autonomy remains a distant dream, as most confirmed projects are being developed by non-EU stakeholders. In addition, Europe has not yet managed to attract corresponding investments in the manufacturing of battery cell components, while its very limited control on raw material supply chains does not match its political aspirations. Despite pressure from civil society, the lack of consensual calculation methodologies makes it almost impossible for manufacturers to substantiate their green claims, especially with regards to carbon footprints. Yet, the life-cycle assessment (LCA) literature points to cell and active material manufacturing as key climate hotspots. Thus, efforts should concentrate on reducing energy consumption for these critical production steps and covering incompressible needs with grid-based or contract-based low-carbon electricity, provided the latter option guarantees the additionality of renewable electricity supplies. In addition, the extraction and refining of raw materials offer the second largest and mostly untapped potential for green differentiation, especially when combining climate and local environmental impact considerations. Ultimately, manufacturing green batteries does not necessarily require locating all production steps in Europe, but European players may have a competitive edge thanks to their expertise in measuring and improving the sustainability of their operations. In addition, reducing the environmental footprint of products requires a holistic view of supply chain management, which pleads for building closer ties between industrial stakeholders. Should the final text of the Batteries Regulation retain an ambitious timeframe for information and labelling requirements, it could be a game changer for the European EV market. The methodological and practical challenges should not be underestimated, but the best way to obtain robust implementation rules is to engage the industry in the drafting process. If the EU legislator confirms that customers should be able to compare the environmental performance of EV batteries as of 2023, companies should see the urgency of sharing their knowledge with the EC, and Member States will allocate appropriate resources to enforcement procedures. Likewise, the political signal will encourage EU automakers to place greater focus on sustainability in their ongoing supplier selection processes, instead of waiting for future industrial cycles to take serious action. The Batteries Regulation is not just about the EV value chain, it is an opportunity to demonstrate the high potential of Europe’s green industrial policy, delivering consumer trust, jobs, and strategic autonomy.
Topic:
Climate Change, Industrial Policy, Batteries, and Electric Vehicles
Political Geography:
Europe

186. Denmark: A Case Study for a Climate-Neutral Europe

Author:
Thibault Menu
Publication Date:
04-2021
Content Type:
Special Report
Institution:
Institut français des relations internationales (IFRI)
Abstract:
In recent years, Denmark has steadily emerged as a leader and role model in the global green energy transition. Its greenhouse gas (GHG) emissions since 2010 have been reduced at greater pace than those of the European Union (EU) average. This transformation is all the more impressive, given that the country used to be a significant oil and gas producer which also relied heavily on coal for power generation. From its highly publicized success in offshore wind, to its ambitious goal of cutting GHG emissions by 70% by 2030 - which would put Denmark as a European and global frontrunner, with only Finland being more ambitious and planning to be climate neutral already by 2035 – as well as its pioneering green energy policies, the country has transformed itself into a beacon for low carbon technologies and public policies. The country has a record high share of renewable energy sources in power generation, with wind in the lead. Given the recent announcements and climate goals set by the Von der Leyen Commission, Denmark serves as an interesting case study for other European and world nations alike on how to embark on their own energy transitions. This paper assesses whether the country is really successful in accelerating even more than its European peers in its decarbonization process. And if so, what is so special about Denmark and what can be learned from its transformation? Policies range from well-publicized successes, such as the country’s ability to nearly rid itself from coal in its power mix in less than thirty years by increasingly developing its wind power potential, in leading the offshore wind segment and championing repowering, but also its lesser-known achievements, such as the diffusion of combined heat and power (CHP) and district heating across the country. Another success point of the country’s strategy relies in promoting energy efficiency in the industrial sector as well as its use of energy taxation for enhanced decarbonization, even in challenging sectors such as transportation. Questions remain open, especially concerning the sustainability credentials of biomass, a fuel which is a key component of the country’s energy mix, but also the future role of natural gas, which has an important balancing role in power generation, given the country decision to rid itself of oil and gas (O&G) production by the middle of the century. To a large extent, the Danish success story so far can be linked to a combination of socio-political factors including: a high level of stability and predictability in energy policy stemming from Denmark’s long historical tradition of broad energy agreements, a cross-sectoral and holistic approach to developing the nation’s energy policy involving a high level of participation from various public and private actors, a willingness to back innovative technologies, combined with generous public policy schemes in order to bring them to market-level competitiveness. Next frontiers will consist of large-scale carbon capture and sequestration projects, as well as low carbon energy islands. However, it would be somewhat reductive to simply equate Denmark’s success story to these previously mentioned factors. Indeed, the Scandinavian nation also benefits from certain geographical dispositions which are great assets for its path to decarbonization. For one, the country is ideally placed to develop variable renewable energy sources, most notably wind power given its topography and its strong wind resources. On top of this, Denmark also benefits from an incredibly reliable and interconnected power grid thereby making renewable energy integration into the wide energy system all the easier. In addition, the fact that its power grid is one of the most interconnected in Europe entails that excess renewable energy production can quickly be exported when the wind blows, just as imports can hastily be called upon when wind is found to be lacking. Finally, from a more socio-political perspective, the relatively flat social structure of Danish society as well as the country’s high level of institutional trust, makes policymaking and policy implementation simpler as well as more effective than in other European states. As such, although this paper identifies important lessons to be learnt from Denmark’s decarbonization strategies, the context as well as the particular characteristics of the country in which these were implemented should nevertheless be considered when seeking to establish similarly successful carbon reduction policies. In any case, Denmark is still far from coming close to achieving its objectives and will have to accelerate its decarbonization on all fronts: the country’s current total primary energy supply still relies for 60% on fossil fuels.
Topic:
Climate Change, Energy Policy, Decarbonization, and Green Deal
Political Geography:
Europe and Denmark

187. Can the Biggest Emitters Set Up a Climate Club? A Review of International Carbon Pricing Debates

Author:
Carole Mathieu
Publication Date:
06-2021
Content Type:
Special Report
Institution:
Institut français des relations internationales (IFRI)
Abstract:
The world’s largest emitting countries are reconsidering the role of carbon pricing instruments and increasingly looking at carbon border adjustment mechanisms (CBAMs) to address leakage concerns. This renewed momentum should trigger a broader discussion on how to make trade policies compatible with the climate agenda. With the Glasgow climate conference (COP26) approaching, the concept of putting a price on carbon is generating unprecedented interest in Canada and the United States (US), China and Japan. But the European Union (EU) still stands as an exception; it is the only regional trading bloc that is determined to leverage the full potential of its emissions trading system (ETS). To date, others have lacked the political backing to deploy nation-wide carbon pricing initiatives with a design sturdy enough to drive meaningful emission reductions. Canada has made significant progress with the adoption of a national framework for carbon pricing in 2018. The country’s draft regulations foresee the introduction of a federal ETS as of 2022 and a gradual increase in carbon prices, but its ambitions risk being upset by the lack of consistent efforts in the US, its largest trading partner. Given US political divides, a federal carbon pricing scheme is unlikely to materialize in the short run. In China, the long-delayed national ETS has finally been launched. However, its scope is restricted to the power sector for now, and it is likely to only have a modest impact on coal use with its current design. Several arguments may discourage China from fully extending its ETS as planned and rather argue in favor of introducing a complementary carbon tax. Japan has also engaged an expert debate on the benefits of introducing carbon pricing at the national level, but the government is struggling to find a balance between the risk of worsening competitiveness and the need to mobilize investment in clean technologies. For the EU, the upcoming reform of the EU ETS is an opportunity to introduce a truly demanding cap reduction for the 2023-2030 period and make this flagship instrument more robust, predictable, and fair. To initiate in-depth decarbonization of its industry, the EU will need to phase out free allowances. Therefore, other measures addressing unfair competition will have to be introduced and CBAM could be part of the solution. A unilateral application is however no panacea. The EU should move cautiously and start implementing the CBAM to a small set of sectors. This also means that the challenge of leveling the playing field with non-EU producers will remain largely unresolved. There is little chance that an international alliance on carbon pricing or “climate club” can be set up within a timeframe compatible with the climate emergency. Yet, the EU’s CBAM proposal can encourage trading partners to accelerate decision-making on carbon pricing, at least to obtain partial exemption. In addition, having a concrete anti-leakage proposal on the table leads to a sense of the inevitable mismatches between the global trade and climate agendas. Large emitters are starting to acknowledge the need for a multilateral discussion on how to decarbonize industries while maintaining a level playing field. The next step should be to kickstart an open discussion in all possible multilateral fora (G20, International Energy Agency, global industry associations, etc.) and mandate the World Trade Organization (WTO) to develop guidance on a wide range of instruments (including CBAM, but also eco-design labelling and standards, differentiated tariffs based on CO2 intensity, etc.) and including a common exemption approach for Least Developed Countries. Exploring a set of workable solutions should be more attractive to trade partners than pushing for a uniform solution, but results would still take time to materialize. Hence, establishing a level playing field with imports will likely require the EU – and all countries with an aggressive decarbonization agenda for their industries – to strengthen their financial and regulatory support to the deployment of innovative low-carbon manufacturing processes. Again, this almost-unavoidable resort to State aid would strongly benefit from a multilateral discussion.
Topic:
Climate Change, International Trade and Finance, European Union, Carbon Tax, and Carbon Emissions
Political Geography:
Japan, China, Europe, and Canada

188. Can EU carbon border adjustment measures propel WTO climate talks?

Author:
Gary Clyde Hufbauer, Armen Hovakimian, and Jeffrey J. Schott
Publication Date:
11-2021
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
Reforms proposed in the European Union’s “Fit for 55” climate policy package are likely to sharply increase the cost paid by European firms for their greenhouse gas (GHG) emissions. Recognizing that increased carbon prices would put European firms at a disadvantage in competing with imports from countries that produce without incurring these costs, the European Commission has proposed a Carbon Border Adjustment Mechanism (CBAM) requiring that the most carbon-intensive EU imports either incur comparable carbon charges as EU firms or pay the equivalent of a carbon-based tariff. The CBAM aims to deter carbon leakage, which could arise if firms shift carbon-intensive production out of Europe to facilities in countries that do not tax GHG emissions (or tax at a low rate) and then export the goods to Europe. European production and output would suffer and global climate efforts to reduce GHG emissions would be undercut. The loftier goal is to encourage other countries to follow the European example and strengthen their own national decarbonization policies, which in turn would exempt their goods from CBAM charges. The CBAM would cover five carbon-intensive industries: iron and steel, aluminum, fertilizer, electricity, and cement. Countries most affected by the CBAM include Russia, China, Turkey, the United Kingdom, Ukraine, South Korea, and India. Some are likely to contest the policy, claiming that the CBAM is a unilateral measure that violates World Trade Organization rules and bolsters protectionism while hampering rather than encouraging efforts in other countries to tackle climate change. A better and more feasible approach would be adoption of a CBAM moratorium while negotiations are conducted to promote carbon abatement policies that comply with the rules-based global trading system.
Topic:
Climate Change, European Union, Economy, Carbon Emissions, and Imports
Political Geography:
Europe

189. A transatlantic agenda for homeland security and resilience beyond COVID-19

Author:
Anna Wieslander
Publication Date:
05-2021
Content Type:
Special Report
Institution:
Atlantic Council
Abstract:
The ongoing COVID-19 pandemic has disclosed the importance of resilient power – a society’s capability to absorb unexpected major shocks, handle and adapt to these, and then, most importantly, bounce back. As the pandemic still rages, endurance has become a major challenge for individuals, institutions, companies, and societies. It emphasizes another dimension of resilience: it is not only about how fast society is able to bounce back and recover at a certain moment, but also how it can withstand repeated shocks over time. The pandemic also brought the notion of solidarity to the forefront and exposed the connection between strong resilience and solidarity in open societies. Solidarity was repeatedly tested within and between nations, as well as between different parts of society. Fragmentation and competition flourished amid weak resilience and discouraged tendencies toward cooperation, despite potential gains. To successfully handle modern challenges to homeland security and resilience, such as climate change and pandemics, there is no way around efficient cooperation. For resilience to be strong, it must be developed not only among states but also in partnership with the private sector, as resilience must be ensured for individuals, communities, private businesses, and public institutions, and at all levels of authority. Furthermore, the pandemic has heightened other threats to modern societies, including disinformation, cyber operations, attacks on election systems, and social media manipulation. Ultimately, these threats are targeted to undermine democracy itself. They differ in character, magnitude, and scope, but are often non-military. This new report, “A Transatlantic Agenda for Homeland Security and Resilience Beyond COVID-19”, highlights some of these modern challenges, which could be possible focus areas for transatlantic cooperation, as well as ideas for building and enhancing capabilities. This report is the result of a half-day online workshop held on January 28, 2021. This report aims to help shape a transatlantic agenda on homeland security and resilience that encompasses everything from policy and capabilities to future science and technology in a time when the transatlantic relationship is ideally positioned to be revitalized and deepened.
Topic:
Security, Defense Policy, Climate Change, Terrorism, Infrastructure, European Union, Crisis Management, Resilience, COVID-19, Disinformation, and Non-Traditional Threats
Political Geography:
Europe, Eurasia, and United States of America

190. Europe’s Carbon Border Adjustment Mechanism: Time to Go Back to the Drawing Board

Author:
Fredrik Erixon
Publication Date:
11-2021
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
This Policy Brief takes stock of the global and European trade and carbon-emission effects from CBAM. It argues that the current design of the CBAM is not good enough and, ultimately, that there are risks that it will dent the positive effects on global carbon emissions that come from a lower cap on carbon emissions in Europe. These effects will happen through trade and the reallocation of production – and from retaliatory responses from countries that will be negatively affected by the CBAM. This Policy Brief provides recommendations on what the EU could do to improve the CBAM. First, it should respond better to concerns about WTO compatibility. No one knows if CBAM would stand up in a WTO dispute, or if the issue of WTO compatibility is of relevance at all. What we do know, however, is that the EU is going a bit off-piste with CBAM, and it knows it. It’s better to address these issues directly than to pretend that they don’t exist. It could, for instance, pre-empt problems by offering compensatory concessions for affected countries. Moreover, the revenues raised by CBAM fees could be paid out to the origin country for the exports. There will be a price for the EU to pay and the more front-footed it is, the more choices it will have in deciding what political currency to use for the payment. Second, the EU should address development problems that will arise from CBAM. The genie is already out of the bottle since development concerns have been raised by the European Parliament and EU member states. Something will have to be done to avoid that CBAM makes it harder for poor countries to improve their welfare. Third, the EU should provide workable ideas for how CBAM could be anchored in trade and climate agreements. If more economies go off-piste in their climate policies (e.g. in subsidies and procurement), the EU is going to be harmed. Hence, the EU has a strong interest to establish an example and provide international rules for how other countries should act in the future when they take measures that ‘beggar-thy-neighbour’. Fourth, the EU should provide a realistic assessment of what retaliatory strategies that other countries will use against the EU, and get a much better understanding of the dynamic or second-order actions that CBAM will prompt. These actions can have a very bad impact on both EU growth and its efforts to decarbonise the economy. It is just decadent to avoid dealing with them pre-emptively. Finally, and more ambitiously, the EU should consider how it can avoid that CBAM (not the ETS) provokes carbon leakage through both imports and exports. In its current shape, the CBAM provides an incentive to move imports up the value-chain and reallocate imports to goods with embodied carbon. Moreover, the CBAM will reduce the external competitiveness of EU exports, leading to a reduction in foreign sales. Both effects will move the global production of CBAM goods to countries with lower carbon costs and higher carbon intensity in the production.
Topic:
Climate Change, European Union, Trade, Carbon Emissions, and WTO
Political Geography:
Europe