Former Italian Prime Minister Mario Draghi‘s long-awaited report on Europe’s competitiveness presents ambitious plans to stimulate the continent’s economic growth.
For Europe’s cities, there is much to be positive about, with the report focusing on boosting innovation to enhance the competitiveness of EU industries, balanced with the twin ambitions for digital and green transformation. These are proposals already outlined in Eurocities’ own manifesto, A better Europe starts in cities, published at the end of last year.
Notably, Draghi has underlined cities’ importance to sustainable growth, calling for local administrations to “participate in the sectors that will drive future growth,” such as net zero technologies. Also welcome is the report’s focus on the circular economy and clean technology.
Despite these positives, there are key areas in the report that raise concerns for cities, including the proposal to provide environmental exemptions to some sectors until climate neutrality is achieved, which could lead to serious environmental consequences.
There is also no mention of training the EU workforce, which is key to implementing the twin transition, and city’s key role in developing partnerships with industries is not given enough recognition. As the main implementers of the European Green Deal, it is essential that cities have a role in designing EU strategies and are given the funding they need to implement green initiatives.
Good intentions
In the report, Draghi paints a grim outlook for Europe’s future prosperity, stating that Europe is going to become a society that “basically shrinks” due to a widening GDP gap between the EU and its competitors: the US and China. To respond to the EU’s decline, he promotes the concept of decarbonisation as a growth strategy, proposing an unprecedented investment plan of €800 billion per year, consisting of both private and public investments.
Draghi also calls for reform of the EU budget to better direct investments towards key priorities, such as critical raw materials, electricity, trade and industrial policy, digitalisation, defence and space and transport. He also suggests reinvesting revenues from the EU Emissions Trading System into some of these sectors.
Most controversially, Draghi proposes to make the Recovery and Resilience Facility permanent, with a common debt mechanism. While the recommendations have been welcomed by European business leaders, other national leaders, particularly those in northern Europe with low levels of debt, have rejected them immediately. Making the plan a reality will clearly prove challenging.
Positives for cities
Despite the negative response from some national governments, for Europe’s cities, Draghi’s huge investment plan and strategic approach to the new EU budget are timely, given the Multiannual Financial Framework proposal being announced by the European Commission next spring and the €1.5 trillion per year required to reach climate neutrality by 2050.
Recognising the importance of boosting investment in urban areas and across the EU, city leaders have established two key new positions in the Eurocities Shadow Commission College: Eurocities Vice-Presidents for Industry and Competitiveness, which will be carried out by Natalia Chueca, Mayor of Zaragoza, and Juhana Vartiainen, Mayor of Helsinki.
With the threat that is currently posed to the EU Cohesion Policy, the main EU investment policy for cities, “it is good to hear Draghi calling for cohesion funds to be used more effectively and to be refocused on areas that are central to sustainable growth in our cities, and specifically education, transport, housing, digital connectivity, and planning,” says André Sobczak, Secretary General of Eurocities.
“Another positive aspect is Draghi’s emphasis on the importance of the circular economy and massive investment in the deployment of clean technologies,” adds Sobczak. Investment in green infrastructure is something that cities have long asked for from the European Commission, and it is an area where many cities are already leading the way, despite limited funding and resources.
It is good to hear Draghi calling for cohesion funds to be used more effectively
Cities recognise that “renewable energy is the only credible path for Europe to gain energy sovereignty and protect Europeans from volatile energy prices,” according to Sobczak, and they understand that sustainable mobility, especially updated public transport, will ensure more resilient and productive cities.
Utrecht, for example, is investigating the combination of green and solar roofs, while Warsaw is giving vulnerable communities new and better transport options by investing in shared electric mobility, and Lodz is completing a raft of climate projects related to residential buildings, parks, and its mobility infrastructure.
Regarding proposals to simplify EU regulations, “this is a very welcome proposal that can significantly reduce the financial and administrative burden placed on cities, as long as it doesn’t lead to complete deregulation,” says Sobczak. While initiatives such as the EU Mission for 100 Climate Neutral and Smart Cities by 2030 are proving effective, a single EU urban governance framework will increase cities’ capacity to improve public services for their residents.
Cities’ concerns
However, “very concerning for cities,” says Sobczak, “is Draghi’s call to reduce some environmental regulations for industries working on clean technologies until climate neutrality is achieved.” For example, he proposes that the EU does not restrict some man-made chemicals (PFAS) to avoid hindering the deployment of clean technology.
“This is a mistake that overlooks the need to protect the other aspects of our environment, including biodiversity and nature, healthy ecosystems, and clean water, which are so important to the health and prosperity of the people in our cities,” says Sobczak.
Draghi’s position also suggests that the precautionary principle, which protects European citizens from policies that a significant proportion of scientists or experts believe could be harmful, is hampering European innovation. If anything has been learnt from the Covid-19 pandemic, it is that failing to take adequate precautions can lead to more harm than good.
Draghi seems to have forgotten that the essence of growth is managing to achieve more with fewer resources
In addition, “Draghi seems to have forgotten that the essence of productivity and growth is managing to achieve more with the same or fewer resources,” adds Sobczak. “We know that by changing our behaviour and embracing greater energy sobriety, as well as more energy efficient technologies, Europe can realise just as great a gain as it can from economic growth.”
Finally, Draghi’s failure to identify training for the EU workforce as a priority is a misstep, given the overwhelming need to develop a skilled workforce for local green industries and economic development. In addition, a process should be undertaken with local authorities to ensure investment in more sustainable and inclusive products and services.
Working with cities for a prosperous future
Overall, Draghi’s report presents the ambitious plans that are needed to overcome the significant economic and social challenges facing Europe, despite its failure to recognise important environmental protections and to give full recognition to cities’ priorities for the implementation of Europe’s climate goals.
“Cities play a leading role in implementing the European Green Deal, which is crucial for sustainable economic growth,” states Sobczak, “and they must be given the financial support needed to develop clean technology, build energy efficient buildings and sustainable transport, and train the workforce needed for new green and digital jobs.”
Only by working with cities on EU strategies and policies, including the Recovery and Resilience Facility, will the EU be able to build a prosperous future for the people of Europe.
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All photos in this article are © European Commission.
