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EBS 2008: Who will lead the eco-industrial revolution? 25 February, 2008

Posted by Willy De Backer in Climate change, European Union, energy security, sustainability.

In a recent interview with EurActiv, Jeremy Rifkin expressed his belief that “Europe can lead the third industrial revolution”. In the closing debate of this year’s European Business Summit, the American author repeated his admiration for the EU’s policies but added cautiously that “the EU might well tell the right narrative, but the US could well do it”.

Rifkin’s warning confirms my views (which I have already expressed several times on this blog) that the EU leads on talking about the need for a low-carbon economy, but that, on the ground, many more interesting developments are taking place in the US and that once the sleeping giant wakes up to the climate/energy crisis, it might quickly overtake the EU in terms of real and effective action.

One of Rifkin’s arguments in his story about the “European Dream” is the fact that the European Union now is the biggest market in the world (Rifkin talks about Europe’s ‘golden goose’). If you ask me, this is a very weak argument when it comes to leading a new economic revolution which is needed because the market has not exactly functioned as it should(see Nick Stern’s report: “Climate change is the biggest market failure ever”).

Furthermore, the United States disposes of some “golden geese” which I think are much more essential to take leadership in the transformation to a new eco-industrial society: a “risk-taking entrepreneurial mentality”, a system of dynamic venture capitalists who do not shy away from investing in nine failures to get the tenth investment right, and a political system which is less structurally linked to the economic and financial elites (less of Europe’s neo-corporatist “social economy” which is based on a historic compromise between state power and economic interests).

All this makes the US much more open to the “creative destruction” and radical innovation which will be needed to move as quickly as possible from the second fossil-fuel-based industrial economy to the new solar economy. For anyone who is still in doubt, just look at the new green tech boom which has grabbed the former Silicon Valley or the sudden awakening of American banks and even Wall Street to the carbon crisis.

Rifkin’s session was not the only event during EBS 2008 which strengthened my view that the EU could soon be surpassed by the US in terms of leading the transformation to the green economy. In Thursday’s high-level debate between Commission President Barroso and Business Europe chief Antoine de Sellière, the European businesses leader expressed his frustration with the EU’s explicit focus on climate change. Sellière urged the Commission President to refocus on its “economic compass” (competitiveness) demonstrating that business still sees the EU’s efforts to tackle climate change not as an opportunity but as a burden.

Mr Séllière’s speech expressed big doubts about EU renewable energy policies and demanded more support for new nuclear power. This message was all the more remarkable as the EBS sessions on renewables and nuclear had clearly sent other messages: a resounding “yes” to renewables and lots of scepticism about the role of nuclear power.

In conclusion: European business should not go soft on its low-carbon revolution or it will lose the economic competitiveness it is pretending to defend.