09/04/2021

Energy transition, ends, and sticks

3 min
Nissan Motor Corporation employees assemble electric cars at the Oppama factory
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Unfortunately, the Catalan economic model is but a variant of that of southern Europe, which includes Portugal, Spain and Italy. This model is fundamentally characterised by the low incorporation of knowledge in production. Three indicators make this clear: in these countries between 30% and 40% of employed workers have at most lower secondary education, when in central and northern Europe the proportion does not exceed 15%; in these countries investment in R&D by private companies does not reach 1% of GDP, when there it is between 1.5% and 2.5%; finally, in these countries there is no university ranked among the best 150 in the world (according to the classification most commonly used to measure this evanescent concept).

As a result, productivity per hour worked, which had grown at very fast rates in the 1950s, 1960s, and 1970s, is now stagnating, which means that the gap between us and the countries of central and northern Europe is growing. In the context of an ageing population that is increasingly demanding in terms of the quality of public services, this means that the financing of these countries is and will be permanently in crisis.

It is in the light of these facts that I believe we need to consider three impulses coming from the European Union. The first is the growing commitment to the fight against climate change. The second is the growing conviction that Europe must reindustrialise. The third is the synthesis of the previous ones: the conviction that carbon neutrality can be the basis of an economy that creates highly productive jobs. Commission President Ursula von der Leyen sums it up by proclaiming that "Green Deal is the new European growth strategy".

At the same time, the member states are approving, in the form of the Next Generation funds, a gigantic programme to support the modernisation of the productive apparatus, the main aim of which is to finance the ecological and digital transitions in the Mediterranean and Eastern countries.

In Catalonia (as in the rest of southern Europe) we therefore have a very serious problem, a diagnosis, and the means to put it into practice. The purpose of the remainder of this article is to warn of the danger that, in putting the remedy into practice, we are aiming at the wrong target.

To begin with, I must stress that the energy transition requires three types of action, which are complementary but very different.

The first is to have an impact on energy consumption. We are talking about improving the insulation of buildings, installing sensors to optimise consumption, replacing heating boilers with more efficient and, if possible, electric ones, replacing internal combustion vehicles with electric ones (and therefore installing chargers on the streets of our cities), and so on.

The second is to produce a lot of renewable electricity. We are talking about installing wind turbines and solar panels.

These are essential actions, but they will not help us to solve our problem with the production model, with productivity and with the sustainability of our welfare state. To make this clear, let us imagine that an extremely backward country decided to electrify itself completely (including its entire fleet of vehicles and its rudimentary industry) and produce as much green electricity as it consumes, and thus become carbon neutral. The country in question would become a model for many others, and its milestone would be an example of solidarity with the rest of the planet, but it is important to note that it would not have advanced one millimetre in the race to provide its inhabitants with a better economic future: neither more jobs, nor better wages.

We are mistaken, then, if we believe that Catalonia will transform its growth model for the better by installing insulation, wind turbines and solar panels, or by acquiring electric vehicles and their corresponding chargers.

The only aspect of the energy transition that can constitute a "growth strategy" is the third: manufacturing insulation, wind turbines, solar panels, electric vehicles, sensors, control systems and any "green" product (from hydrogen to steel).

It is in accordance with this reasoning that I am shocked to note that, for many, the key to what we have in hand is none other than Catalonia producing a lot of green electricity by occupying the territory with Chinese panels and Danish wind turbines. This is, in effect, getting the wrong end of the stick.

Miquel Puig is an economist

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