A Double Mistake

Tomasz Grzegorz Grosse, Professor

The EU's climate policy is an example of failed geoeconomics and defective geoculture.

Geoeconomics stands for the use of economic instruments including the EU climate transition––to produce beneficial geopolitical results. Geoculture [1] is a set of ideas, values, and norms that are inherently linked to geopolitics. Both expose how the EU’s new green policy is dysfunctional for many EU nations, including Poland.

According to geoeconomic principles, the skillful use of economic tools is vital to attain geopolitical goals. Economic processes are channeled to accumulate capital and distribute wealth to a particular political community, also to boost its strategic importance. Any economic policy that consequently impoverishes some communities is erroneous from an election perspective and for geopolitical potential. An inaccurate geoeconomic strategy occurs when one actor excessively depends on another for resources or acquires foreign-made technologies instead of providing long-term benefits to domestic businesses. In an extreme example of flawed geoeconomics, states help build the geopolitical potential of their competitors yet to the detriment of domestic firms. Depreciating the competitiveness of domestic businesses and thus undermining their export opportunities also sets a negative example. Security is a field closely linked to geoeconomics. Its major objective is to sustain economic processes so as not to become overly dependent on foreign-made resources or technologies.

Alexander Hamilton, one of America’s Founding Fathers, claimed that the state should first and foremost sustain branches to render the United States, independent of foreign nations, for military and other essential supplies including resources and energy. “Not only the wealth; but the independence and security of a Country, appear to be materially connected with the prosperity of manufactures. Every nation, with a view to those great objects, ought to endeavor to possess within itself all the essentials of national supply,” he wrote. [2]

From that standpoint, the EU’s climate policy is crucial for both the economy and geopolitics. Its importance stretches EU-wide, for all EU nations, including Poland. A major failure was that the EU rendered its climate transition overly reliant on Russian-sourced energy. Natural gas that Germany imported from Russia via two strings of the Nord Stream gas pipeline was believed to attain the EU’s climate policy goals, at least for some time, in what became a symbol of Germany’s energy policy failures. Consequently, an energy crisis broke out in 2021, followed by huge inflation and an array of economic and social problems, including impoverishment and challenges faced by financial services. They must have reduced Europe’s potential in the global race, at least in short term.

A positive outcome of the Russian invasion of Ukraine was that the European Union cut all energy ties with Moscow. Nonetheless, EU officials did not take a lesson from the mistakes they had made while purchasing Russian energy resources. Climate transition plans, however, make EU states dependent on Chinese technologies and resources, including rare-earth elements and resources for electrification such as batteries and electric vehicles. China is the undisputed leader in solar-power technology within the EU market. In a time of increasing competition worldwide, being overly reliant on foreign resources and technologies could produce negative results as the Russian example has shown. While the EU’s Green Deal was in full steam in 2023, the European Commission began work on the Net-Zero Industry Act proposal to bolster domestic production in clean energy shifts. The proposal aims to ensure that at least 40 percent of the bloc’s demand for clean tech is made domestically by 2030. [3]

Poland’s path towards climate neutrality will be more costly than elsewhere in the bloc. According to estimates, the country will spend €240 billion on climate transition by 2030, more than twice the EU average.[4] Other estimates say Poland might spend €527 billion to reach its climate transition goals by 2030 while the gap between its ETS allowances and EU funds on the one hand and the government spending might reach at least €300 billion [5]. Researchers claim that EU funds account for 5 percent of Poland’s energy transition costs 6 so the remainder will be paid in government spending that includes taxpayers’ money. As a result, rising energy costs might lead to impoverishment and reduced competitiveness.

Security is yet another challenge. New EU climate regulations order Polish coal mines to stop operations past 2027. Importantly, Poland is home to vast hard coal reserves. Consequently, the source of transition fuel is curbed until nuclear power plants are built and proper renewable energy infrastructure is installed. Therefore, Poland is compelled to import resources while putting at risk energy and food security. Such a policy is irresponsible, notably in terms of energy prices and related transition costs. In line with the EU’s climate policy, Poland will have to import most of the necessary technologies, which makes the country a ready market for manufacturers from Western Europe and outside. From the geoeconomic standpoint, this is a strategic mistake. In his 1939 book on international relations, Edward Hallett Carr, a father of historical realism, argued that competition to gain control of foreign markets was a major feature of imperialism in the 19th century. “Powerful countries found their ‘natural’ markets in areas where their political interests lay and where their political influence could be most readily asserted. Central and South-Eastern Europe were Germany’s `natural’ markets.” [7] Thus, the EU-enforced climate transition could reinforce Poland’s geoeconomic dependence on Western Europe, notably Germany.

4 D. Ciepiela, Koszt transformacji energetycznej Polski do 2030 r. to 240 mld euro, wnp.pl, https://www.wnp. pl/energetyka/koszt-transformacji-energetycznejpolski-do-2030-r-to-240-mld-euro,401110.html. DOA: December 27, 2022.

3 G. Leali, V. Jack, Defiant France to continue push for ‘all’ nuclear tech in EU Net-Zero Industry Act, Politico (March 16, 2023). https://www.politico. eu/article/defiant-france-to-continue-push-for-allnuclear-tech-in-eu-net-zero-industry-act/. DOA: March 27, 2023.

5 R. Bojanowicz, Rachunek za Fit for 55. Jakie koszty poniesie polska gospodarka? Forsal.pl (January 11, 2022).https://forsal.pl/swiat/unia-europejska/ artykuly/8330293,fit-for-55-koszty-dla-polskiwplyw-na-gospodarke-bank-pekao.html. DOA: February 27, 2022.

6 W. Mielczarski, Koszty transformacji energetycznej w Polsce (ANALIZA) (February 7, 2022), biznesalert. pl, https://biznesalert.pl/mielczarski-kosztytransformacji-energetycznej-w-polsce-analiza/ DOA: February 27, 2022.

A feature of the EU-wide geoeconomics is that it brings France and Germany the bloc’s top decision-makers into an internal competition rather than those with the EU’s biggest competitors globally 8 Specifically, it is more attractive for them to address the markets within the EU and seek to gain an advantage globally rather than to build the bloc’s strategic capacity vis-a-vis the world’s economic giants. It is difficult to talk about efforts to build the EU’s potential while climate transition painfully affects households and businesses, including food production, while states are struggling to contain the energy crisis and the Russian war in Ukraine. The EU burdens its nations while idly looking at its competitors, including China, that do not overwhelm their businesses and people. China has also pledged to expand coal mines and coal power plants by 2030. Beijing is now a top supplier of critical raw materials and technologies to the EU. The more onesided decision EU states take within the bloc, the more favorable this is for China.

7 E.H. Carr (2021) The Twenty Years’ Crisis: 19191939, Kraków, p. 175.

8 Cf. T.G. Grosse (2020) Wprowadzenie, [In:] Paliwo dla dominacji. Warszawa, pp. 7–83.

In 2022 and 2023, new EU rules defining energy transition intensified a long-running disagreement between France and Germany to become a tech leader in Europe. France has bet on nuclear for climate transition, also to produce hydrogen. Germany and its allies threatened to block that legislation, seeking to promote other methods of producing hydrogen and boosting gas imports from outside the EU, used for transition. France in the past has been reluctant to a gas pipeline project that could link Spain and Germany. Meanwhile, Paris is ready to “fight” Germany’s automotive industry. Germany spared no effort to allow the sale of vehicles that burn fuels made from renewable energy after 2035. The collision course Germany and France had been put on raised the ire of other EU nations. Some diplomats claim that Germany and France “are playing by different rules than the other member states.” [9] Both states align EU policies with their interests while seeking to compromise the strategic advantage of other EU countries. “This approach threatens not just the climate agenda, but the entire EU decision-making process upon which the stability of the bloc depends.”[10]

9 Cf. G. Gavin, V. Jack, France drops pink atomic bomb on EU green energy talks, Politico, March 30, 2023, https://www.politico.eu/article/france-pinkatomic-bomb-eu-green-energy-deal/. DOA: March 30, 2023.

10 Cf. Ch. Cooper, K. Mathiesen, Nuclear car crash: Bickering between Berlin and Paris threatens EU’s green ambitions, Politico (March 24, 2023). https:// www.politico.eu/article/olaf-scholz-emmanuelmacron-germany-france-nuclear-combustionengine-cars-berlin-paris-eu-green-energy-climate/. DOA: March 27, 2023.

The main shortcoming of how the EU’s climate transition policy is run is that it does not comprise local realitiesalongside incurred costs and security challenges. Instead, the EU imposes top-down regulations that foster the development of some business sectors also through EU funds, public aid, and banking investments while obstructing that of other fields. The decisions are made by the bloc’s biggest members and Brussels’ most powerful lobbyists.

From a geoeconomic perspective, climate policy is thus erroneous. It is no different for geoculture, where both culture and geopolitics intertwine. Ideas could first inspire and motivate and then leverage geopolitical advantage. It could yet end up in strategic failure if ideological matters overlap economic issues, including the cost-benefit balance. Unfortunately, EU climate policy is overly tainted with ideology. It generates extra costs for the bloc’s most vulnerable or peripheral members. Shifting the burden of climate transition has its mostly financial constraints for societies and state budgets and thus cannot last long.

Excessive costs could prompt the ire of EU nations. This was the case when the Polish authorities did not respect the decisions of the Court of Justice of the EU regarding the closure of the Turów mine. In late March 2023, Poland’s Climate and Environment Minister said she would not allow the EU-wide methane directive to close coal mines throughout Poland. [11] “As long as Poland has not reached nuclear power capacity, we are not able to phase out coal-generated energy, and we are now updating our system to welcome new sources of energy,” she said. [12]

11 300polityka (March 30, 2023). http://300polityka. pl/live/2023/03/30/moskwa-nie-dopuscimy-dotego-zeby-dyrektywa-metanowa-byla-przyczynazamykania-kopalni/ DOA: March 30, 2023.

12 Moskwa: Tak długo, jak nie pojawi się atom,nie będziemy mogli wycofywać mocy węglowych, 300polityka (April 3, 2023). http://300polityka.pl/ live/2023/04/03/moskwa-tak-dlugo-jak-nie-pojawisie-atom-nie-bedziemy-mogli-wycofywac-mocyweglowych/. DOA: April 4, 2023.

The Polish government will be committed to its long-term agreements with the mining trade union so its compliance with EU laws is no longer a priority, she added. Respecting local realities is vital in efforts toward climate transition.

Further objections against EU regulations can be expected if those appear either too costly or jeopardize energy security. This, however, would leave the whole bloc vulnerable. Other EU nations might also follow suit in disregarding EU regularity authorities. This is all the more likely as financial repercussions of the bloc’s climate agenda might strain state budgets, societies, and industries in Western Europe, a core area for EU decisionmaking processes. A wave of social discontent with the EU’s climate agenda is seen in the German tech business and Dutch agriculture. The rising cost of gasoline and diesel fuel had also sparked protests in France.

Climate policy has thus its limits. It is challenging to mobilize societies in favor of energy transition throughout Europe in a time of successive crises. The cost of living crisis might prompt a wave of social unrest and thus comprise governments around Europe. Amid the protracted war in Ukraine and ongoing economic challenges, this might eventually compromise the EU’s climate agenda or even the bloc’s integration processes.

Tomasz Grzegorz Grosse May 2023