How green lobbyists helped drive unprecedented EU climate action
- EU Investment
- December 22, 2022
- No Comment
The last year has seen EU policymakers deal with the unprecedented dual challenge of net zero and energy security following Russia’s invasion of Ukraine. Emergency measures – the REPower EU package – have been unveiled in quick succession, against the backdrop of an existing ‘Fit for 55’ package that was designed to put the EU on track to greenhouse gas emissions reductions of 55% by 2030 and net zero by 2050.
Many key political agreements have fallen in the last few weeks of the year, including on a reform of the EU’s Emissions Trading System (EU ETS), and the introduction of an EU carbon border adjustment mechanism (CBAM). The final wording of all these laws has the fingerprints of lobbyists all over it: the chairman of the European Parliament’s environment committee, Pascal Canfin, has hailed “a tsunami of lobbying” in 2022.
Lobbying is the activity of various groups – including businesses of all sizes, industry groups, consultants, lawyers, think tanks, NGOs and individuals – to attempt to influence legislation. It can form a valuable and important part of the democratic process.
“We are able to directly engage politicians on key issues that, in all likelihood, policymakers are not exceedingly familiar with”, explains Peter Collins from Hydrogen Europe, which represents the European hydrogen industry. “We help to build an efficient and inclusive policymaking culture.”
Traditionally, however, fossil fuel lobbyists – who typically represent multinationals that have massive resources at their disposal – have had an outsized influence. In the EU, the five largest publicly listed oil majors spent a massive €251m ($266.26m) lobbying EU politicians between 2010 and 2018, reported a coalition of NGOs in 2019. More recently, Canfin criticised companies including BMW and the European steel trade association Eurofer of seeking to “torpedo” ‘Fit for 55’ in an op-ed published in French daily Le Monde.
The effects of this lobbying can be seen in elements of recent EU energy policy. REPowerEU controversially included significant funds to construct new oil and gas infrastructure, while a new EU Taxonomy for green investment recognises some gas and nuclear investments as “green”.
“The fossil fuel lobby is pervasive in many different policy discussions, is far more numerous, spends more time in the discussion and runs events with a much larger budget,” says Ben Allen, research director at the Institute for European Environmental Policy, a think tank. “There is just more time and money to delay conversations or influence debates.”
Allen adds that recent geopolitical developments around the war in Ukraine have provided greater opportunity for the fossil fuel lobby, with a “marked shift back to more conservative and entrenched rhetoric that favours the status quo”.
Lobbying success for established green players
Nevertheless, green lobbyists now also exert significant influence on the EU in Brussels, with increasingly favourable Western media coverage, broad backing among EU citizens and a sympathetic ear from many politicians. “A few decades ago, the pioneers pushing for renewable energy were considered weirdos and nobody wanted to listen to them,” explains Christoph Zipf from WindEurope, which represents the European wind industry.
“Now, after a strong year, WindEurope has more than 500 company members, all across the wind industry supply chain. We are at the forefront of policymaker interactions, to ensure that the EU really does meet its energy targets, and reach net zero by 2050.”
Today the wind industry provides jobs for 300,000 people in Europe. By 2030, this number is set to rise to 450,000.
Renewables companies and their trade associations lack the lobbying personnel and financial resources of their fossil fuel counterparts. However, their growing political capital means they make up for this with access: data from the NGO EU Integrity Watch shows that three of the ten organisations with the most high-level meetings in 2021 can be considered “green”, compared with two that represent traditional industrial players, and zero fossil fuel companies.
Other data from the NGO Influence Map shows that only around one fifth of EU lobbying now comes from organisations that can be considered to be “misaligned with the Paris Agreement”.
Many companies not historically considered “green” – including oil majors like Shell, BP and Equinor – have themselves now signed up for net zero, and have significant parts of their businesses operating in ‘green’ sectors. Hydrogen Europe’s Collins point out how many traditional oil and gas industry players are now “leading the push for green hydrogen”.
Others, though, continue to warn that oil and gas companies are still investing in fossil fuels and pushing for loopholes to enable fossil fuel extraction to continue.
Challenges facing green innovators
Net zero by 2050 will not only require the scale-up of already established green industries like wind and solar, but also new technologies and innovation. Unfortunately, the EU green lobby’s disadvantages around personnel and financing have profound implications for the start-ups that often lead green technological innovation.
Planet A is a Berlin-based investment fund that backs European cleantech start-ups with the hope of turning them into scalable businesses. According to co-founder Lena Thiede, EU conditions for cleantech have improved in recent years, but there is much still to be gained.
“We are currently seeing a tightening in regulation, which is changing the conditions of doing business and creating advantages for green tech start-ups,” says Thiede. “To ensure advantages continue growing, we understand that – unlike traditional venture capital funds – we need to play an active part in policy advocacy.”
Speak to some of the companies Planet A is partnering with and it becomes clear why active engagement with relevant authorities is important. Many face significant challenges as a result of an unfavourable policy landscape.
For example, Carbon RE is a start-up in the cleantech space, which claims to be building the world’s most advanced AI-powered platform. It will use machine learning to optimise energy efficiency and therefore enhance decarbonisation in the cement and steel industries. “Our technology has the potential to enhance all manner of industrial sectors, from chemicals and steel to manufacturing,” explains CEO and founder Sherif Elsayed-Ali. “Our current focus is cement, where we target an 8–10% reduction in fuel use, with equivalent levels of production.”
The company is lobbying against the EU’s distribution of free carbon permits – worth €100bn over the past nine years – to energy-intensive industries, to safeguard against ‘carbon leakage’, or these industries leaving Europe for regions with looser carbon constraints. However, campaign groups like Carbon Market Watch call these free pollution permits and lament the EU will not phase them out as part of its EU ETS reform concluded on 18 December.
Free carbon permits, as well as restrictive and outdated building codes in the case of cement and steel, dilute the incentive for big steel or cement producers to reduce their emissions – and invest in technologies being developed by companies like Carbon RE. Lobbying for tighter regulation is therefore important “but to get any real influence on policy, it takes time – and for small companies, that is very hard”, says Elsayed-Ali.
Igor Kočiš, co-founder of GA Drilling, which claims to have developed a revolutionary ultra-deep geothermal drill, agrees that it sometimes feels like EU policy is working against them.
“We are offering the potential for clean and baseload geothermal energy in every part of the world, not just countries like Iceland or the US, where the crust is thin,” says Kočiš. “There has, though, been next to zero EU support for geothermal R&D, unlike the solar and wind sector. Nobody from a political perspective will bet on something that is untested for the time being; geothermal remains in the ‘other section’ for renewable energy.”
Kočiš adds that with the growing global climate movement, as well as increasing pushes for energy independence following Russia’s invasion of Ukraine, prospects have improved for the company. When he spoke to Energy Monitor, he did so from Houston, Texas, where he was holding discussions with US oil companies about prototyping the deep-drilling technology for the first time.
Kočiš also met with European Commission climate chief Frans Timmermans earlier in 2022 – but he says the fact that it will take a number of years for the technology to be deployed for the first time, and the significant financial backing such a deployment will require, means it will remain a low priority for the EU for the time being.
Turning political will into action
Generally, though, the confluence of climate, security and economic crises provide an unprecedented opportunity for green lobbyists. There is more political will to drive the energy transition than ever before. “We are determined to tackle climate change and turn it into an opportunity for the European Union,” said Commission President Ursula von der Leyen back at the launch of the European Green Deal in December 2019.
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It makes sense that politicians and bureaucrats make use of relevant expertise in the EU to develop green policy. Nevertheless, the amounts that oil majors continue to spend on lobbying shows that the power of the incumbent remains strong. It is also evident that cleantech start-ups need more policy support.
As evidenced by GA Drilling, there is a risk that European start-ups may start looking for opportunities abroad. Already, between H2 2020 and H1 2021, 65% of global cleantech investments happened in the US, versus 21% in the EU. There is a growing rivalry between the EU and the US on attracting green investment. The hundreds of billions of subsidies for green business now available under the US Inflation Reduction Act potentially put EU cleantech start-ups at a further disadvantage.