Glasgow’s COP 26: a new hope

Glasgow’S COP 26 begins in dramatic climate conditions. However, some signals make us hope in the future. Why so? Let’s go in order… and may the force be with us!

COP26 and CO2 emissions by region

Powerful forces awaken before COP 26

Movements such as Fridays for Future, proposals such as the Carbon Border Adjustment Mechanism and the recent adoption of renewables along technological advances may represent a point of discontinuity with the past.

But in my opinion the last two years have marked a change of direction and I hope COP 26 in Glasgow will certify it. If you look at the graph above, you can see that emissions in the EU and the US are falling. This in itself is not particularly encouraging given the top half of the picture, but three key things have happened in the last two years. First, there has been a great collective awareness of the phenomenon thanks to bottom-up movements such as Fridays for Future, which has resulted in increased media coverage and an exploit of green movements in the Western political landscape[5]. Secondly, there was a change of administration in the White House which resulted in the comeback of the United States to the Paris Agreement[6]. Finally, China has started its own emissions trading scheme[7] and in Europe there are serious talks of a Carbon Boarder Adjustment Mechanism (CBAM)[8] (for an explanation of what an emissions trading scheme and a CBAM is, read here and here).

These three factors alone could be decisive in the fight against climate change. In particular, if both the EU and the US adopt a CBAM, and after the Biden administration’s snub to France this is a bit more likely, then the chances of a global cascade effect are even higher. Moreover, even if the US were to be more timid than the EU, this does not mean that it would not follow in the old continent’s footsteps later on. The EU has already played a pioneering role in the world, legislating regulations that have been cascaded down to other continents – examples include energy labelling of household appliances, privacy regulations and regulations on chemicals used in the production of children’s toys – the phenomenon is known as the Brussels Effect[9].

Electric appliances energy-efficiency labelling adoption Source: The World is changing -

Powerful forces awaken before COP 26

Movements such as Fridays for Future, proposals such as Carbon Border Adjustment and recent technological advances may represent a point of discontinuity with the past.

The rise of renewables

On the other hand, the energy landscape has also changed a great deal in the last decade, and the global scenario in which COP 26 takes place it is not the same as the one of COP 21. Indeed, the rate of adoption of renewable energies such as wind and solar has grown exponentially in the space of a few years. Thanks to their increasing use, the cost of new renewable installations has fallen dramatically globally. The price per megawatt hour of electricity from solar, net of subsidies, has fallen by 89% in 10 years, from $359 to $40 (as of 2019), while the price per megawatt hour of electricity from wind has risen from $135 to $41/MWh. In contrast, the price of electricity from coal on a global scale remained more or less the same at $109/MWh in 2019[10].

In many countries around the world, solar and wind power are becoming the cheapest option for generating electricity.

Unfortunately, renewables have some limitations, first and foremost those of intermittency (wind power produces energy only when the wind blows and solar only during the day) and storage (it is not easy to save all the energy produced and batteries wear out and cost money). In addition, renewable energy plants require far more land than fossil fuels, with solar and wind requiring 17 to 46 times more space than coal[11].

Fortunately, technology is making leaps forward in many key areas such as hydrogen, carbon capture and nuclear.

  • Hydrogen will be crucial in the energy transition because it compensates for some of the shortcomings of renewable energies. Once obtained, hydrogen is easy to transport and store, making it an ideal substitute for renewables in times of low energy production. That’s why it’s great news that last August, Hybridt, a Swedish consortium, marketed the first green steel made using energy from hydrogen[12].
  • The term Net Zero was coined when it was realised that it would be impossible to achieve Emission Zero by 2050. All sensible scenarios for achieving Net Zero now involve the extensive use of carbon-negative technologies, i.e. technologies that remove greenhouse gases from the atmosphere. The opening of Iceland’s largest carbon capture plant ‘Orca’, with an absorption capacity of 4,000 tonnes per year, is therefore also very good news[13].
  • In the last 20 years there have been major developments in nuclear energy and some of its biggest problems, such as waste, construction time and nuclear proliferation (the risk of know-how and by-products of nuclear reactions being used for military purposes). A new generation of reactors is just around the corner (one has just been switched on in China[14]) and new modular reactors that are faster to build, safer, more compact and use waste material from the nuclear reaction as fuel are about to become a reality[15],[16], while nuclear fusion (which unlike fission does not produce radioactive waste and does not need uranium) is perhaps no longer just a distant dream[17].
COP 26 may the force be with us
Source: Flickr, John Englard -

Solo: A Green Story

The road is certainly uphill, and it is by no means sure that the human species will succeed in limiting the temperature increase compared to pre-industrial levels to 1.5°C.  On the other hand, we now know exactly what actions and investments are needed to achieve the goals agreed in Paris six years ago: halving greenhouse gas emissions by 2030 and zeroing them by 2050.  This COP will no longer be about future ambitions, but about how governments will fulfil their Paris commitments. The Conference of the Parties in Glasgow has all the makings of a turning point in the fight against global warming.

May the green force be with us.

Giovanni Sgaravatti


[1] UK, Finland, France, US, Australia, Portugal, Brazil, India, Philippines and Nigeria.

[2] Young People’s Voices on Climate Anxiety, Government Betrayal and Moral Injury: A Global Phenomenon

[3] Four in 10 young people fear having children due to climate crisis

[4] Climate Emergency And Civil Disobedience

[5] The (unequal) European Green parties’ rise in the 21st Century. Origins, development and possible causes

[6] The United States Officially Rejoins the Paris Agreement

[7] China launches world’s largest carbon market: but is it ambitious enough?


[9] The Brussels Effect ; The European Union as a Global Regulatory Power




[13] Orca – the world’s first large-scale direct air capture and storage plant

[14]  Why China is developing a game-changing thorium-fuelled nuclear reactor

[15] Traveling Wave Reactor Technology

[16] France to Build Small Nuclear Reactors by 2030 in Export Push

[17] Fusione a confinamento magnetico: una fonte di energia pulita

Click Here
Source: ECB, 2021 Climate change and monetary policy in the euro area
Click Here
Global CO2 emissions from energy and industrial processes by scenario and temperature increase above pre-industrial levels in 2100
Click Here

The twin transition challenges

Twin transition (green and digital) will affect the world as we know it. Will this change be beneficial for everyone? Are there risks?

An example from the recent past

Trade liberalisation over the last 30 years has impoverished some well-defined groups of the population in advanced countries. While most economists kept repeating how good it was to lower tariffs and customs barriers in order to open up to the whole world, they underestimated the impact this would have on those affected. Autorn, Dorn and Hanson – for example – analysed government aid programmes in the areas of the US most affected by trade with China. Their study indicates that even though people in the affected areas received subsidies, these were not sufficient to cover the loss of income. The authors estimate an annual loss per adult of $549, compared to government subsidies of just $58 [1], [2].  Moreover, it is clear that purely financial aid cannot really compensate for the human and psychological difficulties caused by a job loss, especially late in someone’s working life.

The situation is different in developing countries, many of which have benefited greatly from globalisation. Countries such as Mexico, China, Colombia, India and Argentina have become richer in the last 30 years. Although the proportion of the population in extreme poverty in these countries has decreased, inequality on the other hand  increased, indicating that this new wealth has not been distributed evenly. Some economists (including the two recent Nobel laureates Banerjee and Duflo) suspect a causal link between the growth of inequality in these countries and their trade liberalisation policies [3],[4]  .

However, tariffs cannot be the solution: most supply chains nowadays are international, introducing tariffs has repercussions on the cost of materials used by companies. Moreover, trying to impose an industrial strategy based on old standards has a negative effect on productivity and gross domestic product. Finally, new tariffs imply higher prices of imported goods, with a consequent negative impact on the purchasing power of citizens. [5]

International trade has helped global growth, contributing to an increase in the standard of living of many citizens in developing countries and increasing the purchasing power of those in advanced countries (especially small ones). However, one cannot overlook the suffering of those who have been personally affected by the transition from certain types of economic activity (such as steel or textile) to others (e.g. business and financial consulting). Ignoring the suffering of these people – often living in production clusters – could have been one of the causes behind the radicalisation of the electorate in the West, which led to phenomena such as Trump and Brexit.

Learning from your mistakes

Today it is important not to make the same mistake with the economic recovery packages in the advanced economies. It is vital to implement them, just as it was right to open up to trade thirty years ago. This time, however, we have to make sure that no one is left behind, or further discontent will rise. It is important to think in these terms of the twin transition – green and digital – promoted by the EU Commission. These changes are already underway and will be accelerated by the €750 billion from the Next Generation EU package. Like all revolutions, this one will bring about epochal changes that have winners and losers.

Everything below is an extract – with some additions – of page 6 of the European Policy Centre’s report “National Recovery and Resilience Plans: Empowering the green and digital transitions?”, written by Marta Pilati and available here.

While there is a common goal for these transformations – reaching a sustainable and inclusive society, economy and model of growth –, the scale of the required change is not the same for everyone involved. To be successful, the sustainable and digital transitions will require adaptations in production processes, public administration and services, education, the labour market, skill base, energy mix and infrastructure, and more. There is large heterogeneity across the EU regarding these policy fields, implying that the transformation towards the common objectives will require different, tailored efforts.

From a geographical perspective, EU regions that are less developed and/or underperform economically are also less equipped to successfully engage in the twin transitions. A

recent EPC study[6] puts forward the following conclusions:

  • The twin transitions may force some occupations to transform significantly or disappear completely. While they are expected to create new jobs, an issue arises if the jobs created and lost are not located in the same area and to the same workers. This is notably the case

for regions whose labour market is heavily reliant on energy-intensive industries (e.g. extraction and processing of fossil fuels). As large workforce mobility cannot be assumed, labour repurposing and retraining will be necessary to avoid higher localised unemployment. With this in mind the EU Commission launched the REACT-EU package[7].

  • All economic sectors will demand more (and new) skilled job profiles with more knowledge and technology intensity. Areas where the skill base is less advanced and/or there is less capacity to support in-work training will be less successful in engaging with the transitions quickly. This could result in negative effects on prosperity in the long term.
  • In order to reap the benefits of the digital transition and improved connectivity, digital infrastructure remains crucial. The ‘digital divide’ across EU regions is a cause for concern, as the lack of appropriate (digital) infrastructure can exclude entire areas from high-value

activities. It can also challenge existing activities, which might move elsewhere and therefore lead to economic decline. Similarly, it can prevent some areas from benefitting from digital public services. This is why the Commission has called for digital infrastructure to be put at the heart of recovery and resilience plans.

Copyright ©️ Bruegel 2015: European Union countries’ recovery and resilience plan
Copyright ©️ Bruegel 2015: European Union countries’ recovery and resilience plan

Social aspects must be a central focus when planning structural changes. Social cohesion will be the key determinant of the success or failure of the twin transitions. If these major transformations are perceived as leaving individuals, vulnerable groups or regions behind and/or forcing them to shoulder most of the burden, public support for these structural transitions will diminish. This would risk their overall success and thereby reduce the resilience of the EU economy. Some potential social effects of the twin transitions that are worth mentioning are listed below.

  • The impact of technological change on the labour market. For example, new forms of work linked directly to digitalisation, notably platform work, have recently emerged. Social protection systems have not always been able to adapt to these labour developments, resulting in protection gaps. [8]
  • The employment risk of automation. One in five low-income jobs is at risk of automation. This is one in six for middle-income jobs and only one in ten for high-income work[9]. Job disruption caused by automation represents a real concern of increased inequality and new instability.
  • The symbiotic relationship between social exclusion and digital exclusion. Vulnerable and socially excluded groups use the internet and technological tools less than the rest of the population, as they tend to have fewer digital skills and access. This digital exclusion also prevents them from reaping the benefits of new technologies, leading to poor educational attainment, for example. This exacerbates their social exclusion further[10].
  • Low-income groups’ vulnerability to price increases. If the ecological transition leads to higher energy or mobility prices, this will be problematic for low-income groups (at least in the short term) and affect the poor disproportionately[11].
  • The digital transition’s gender dimension. As STEM (i.e. science, technology, engineering, mathematics) skills and occupations become more important and requested in the labour market, there is a risk of women being left out of the gains and the gender gap increasing, as they tend to be less present in these areas.

Outlining these risks of inequality is by no means to undermine the need for the twin transitions. Rather, it is to ensure that the transitions are successful and just. The transitions can lead to a digital and sustainable economy and more cohesive society, as long as their benefits reach the more vulnerable. For example, digitalisation and teleworking can bring jobs and economic activities to areas where it is not physically feasible. Speeding through structural transformations without a strategy to prevent distortive effects and counterbalance costs dooms the effort to failure. There is increasing recognition that Europe’s social and territorial cohesion must be protected.

Marta Pilati

Giovanni Sgaravatti


[1] Abhijit V. Banerjee & Esther Duflo (2019), Chapter 3, “Good Economics for Hard Times”.

[2] Autorn, Dorn, Hanson, American Economic Review (2013) “The China Syndrome: Local Labor Market Effects of Import Competition in the United States”

[3] Ibid

[4] Goldberg, Pavcnik (2007), Distributional Effects of Globalization in Developing Countries, American Economic Association

[5] John K. Ferraro and Eva Van Leemput (2019) Long-Run Effects on Chinese GDP from U.S.-China Tariff Hikes, Federal Reserve

[6] Pilati, Marta and Alison Hunter (2020), EU lagging regions: state of play and future challenges“, Brussels: European Parliament.

[7] La quota del react eu dovrebbe essere diretta proprio a contenere squilibri territoriali e a supportare le aree più in difficoltà. REACT-EU – Regional Policy – European Commission

[8] Dhéret, Claire, Simona Guagliardo and Mihai Palimariciuc (2019), “The future of work: Towards a progressive agenda for all”, Brussels: European Policy Centre.

[9] OECD (2019), “Under Pressure: The Squeezed Middle Class”, Paris: OECD Publishing.

[10] Martin, Chris et al. (2016), “The role of digital exclusion in social exclusion”, CarnegieUK Trust.

[11] López Piqueres, Sofia and Sara Viitanen (2020), “On the road to sustainable mobility: How to ensure a just transition?”, Brussels: European Policy Centre.

The gender employment gap in Europe

The gender employment gap is not as hotly debated as the gender pay gap; nonetheless, it is a crucial issue for the economic recovery of the European Union (EU) and the continuation on the path of female rights embarked upon more than a century ago by the suffragettes[1].

Paid work is possibly the primary means of emancipation and plays a crucial role in defining a person, making them free to self-determine. Performing domestic and caring tasks should be a choice free of any restrictions, be they cultural, social or economic. Furthermore, the role and importance of caring for the weakest (the youth, the elderly and the disabled) should be formally recognised by society and not just informally by families.

Limiting women’s presence in the labour market means limiting talents, skills and capabilities available to the productive part of a country. A 2017 Eurofound report estimates that the economic loss due to the gender employment gap in the EU amounts to more than €370 billion [2]. The analysis also shows that there is significant heterogeneity between different European countries: for Malta, the percentage of gross domestic product (GDP) lost each year amounts to 8.2%, for Italy to 5.7% and for Greece to 5%, while at the other end of the spectrum we find Sweden and Lithuania with losses lower than 1.5% of GDP.

Eurofound (2016), The gender employment gap
Eurofound (2016), The gender employment gap: Challenges and solutions, Publications Office of the European Union, Luxembourg.

Using the latest available Eurostat data (2019), thus pre-coronavirus[2], the focus of this article is placed on the six most populous EU countries: Germany, France, Italy, Spain, Poland and Romania. The following graph highlights the problem within the EU and in these six countries. The employment rate for women is shown in green, the employment rate for men in blue. The difference in percentage points (pp) between male and female employment is shown in the dotted rectangle.

Employment gender data
Employment data by gender, age-cohort 20-64, year 2019, value % and percentage points (pp) - Source: Eurostat and author's computations

The gender employment gap is particularly evident in Poland, Romania and, above all, in Italy – where almost one in two women aged 20-64 is not employed.  The gap is also clearly visible in Spain, where the differential is nearly 12 percentage points, exceeding the EU average of 11.4 pp.

The importance of policies reducing gender employment gap

Unequal gender representation in the labour market is an expression of a long-standing patriarchal legacy. To change this it is needed a cultural shift, accompanied by reforms to tackle the gender employment gap. Let us then look at some of the policies introduced by France and Germany to boost female employment.

FR – Chèque emploi service universel: a voucher system introduced in 2006 through which domestic and childcare workers can be paid. The voucher simplifies the procedure of hiring, paying and contracting these figures, combining a tax incentive (expenses are deductible) and co-financing opportunities [3][3].

DE – Perspektive Wiedereinstieg: A support programme for women who have been out of the labour market for more than three years for family reasons. It offers professional assistance -both online and face to face- as well as training courses and tax incentives for employers [4].

FR – Complémente de libre choix du mode de garde: a financial compensation aimed at covering part of the costs of childcare for children up to six years old [5].

DE – Elterngeld: a parenting allowance to which parents are entitled if they reduce their number of working hours to less than 30 per week during the child’s first year. The funding is equivalent to the claimant’s corresponding salary if he or she had continued to work full-time. With different methodologies, also students and unemployed people can benefit as well [6].

DE – Pflegezeitgesetz und Familienpflegezeitgesetz: A legal provision allowing employees to take unpaid leave to care for immediate family members. The leave can be short – 10 days – or long – with a reduction of working hours up to a maximum of 15 per week for up to two years [7].

FR – La Charte de la Paternité en Enterprise: a charter of intents to be signed – on a voluntary basis – by companies that want to commit to the work-life balance of their employees. The aim is to guarantee more flexibility in working hours and to create an environment with an eye on employees with children, respecting the principle of non-discrimination in the career development of those with children [8].

I think it is important to highlight two recurrent elements in the policies listed above. The first is their flexibility: the burdens and benefits of companies and workers are modulated on a case-by-case basis and change as situations change. In fact, too rigid impositions may negatively influence employers, who may be inclined to prefer hiring a man rather than a woman. One example is the case of compulsory maternity leave: in France and Germany this is respectively 16 and 14 weeks, compared to 21 in Italy [9], [10]. The second element is that of inclusion: almost all the policies listed above are not aimed exclusively at women, but they rather try not to discriminate on the basis of gender. Returning to the example of maternity leave, a reduction in maternity leave in countries where it is very long should correspond to a lengthening of paternity leave. In this respect, Italy and Romania are adapting to the demands of the European Commission, reaching the European minimum standard of ten days of leave for neo fathers.

Finally, another important aspect of some of the policies listed above is that they lower the cost of childcare: this, in turn, reduces the incentive for the second earner (which often corresponds to the woman) to stay at home with the children not to incur the costs of kindergartens, summer camps and all childcare services. These policies also have a positive impact on the birth rate, an endemic problem in many European countries.

The level of education in the female employment rate

Education attainment is generally considered one of the strongest predictors of employability. This is confirmed in all six countries under review, for which a higher level of education corresponds to higher employment rates across the populations.

Below are the employment rates for women aged 20-34 by level of education, where Low indicates that the highest education attainment was that of compulsory education or less, Medium refers to a high-school diploma, and High to University or postgraduate education.

Female employment rate by education level
Female employment rate by education level, age cohort 20-34, year 2019, value % - Source: Eurostat

It is evident from the graph that a high level of education on average corresponds to a higher employment rate. This is particularly evident in Poland, where the employment rate between women with a low education level and those with a high-level changes by 60 percentage points. In Germany, on the other hand, the employment rate among those with a secondary school education (Medium) is very close to that of those with a university degree (High). This peculiarity could be attributed to the strong presence of vocational schools that prepare for the labour market already during the upper secondary education.

Promoting learning is therefore also a useful tool for closing the gender gap in the employment rate. Countries such as Romania and Italy -with a gap of more than 19 percentage points- could thus benefit from positive effects in the labour market by providing more incentives for female higher education.

It is interesting to note that, with the exception of Germany, girls tend to be more likely to complete tertiary education than boys[4].

tertiary education by gender
Share of population with tertiary education by gender, age cohort 15-64, year 2019, value % - Source: Eurostat and author's computations

Gender employment gap and the role of women in the future of the EU

The relaunch of the European Union should also pass through women and a renewed recognition of their role in society. To do so would be not only fair, but also necessary. For this reason, the European institutions have decided to tie all the funds of the multiannual budget and of the Next Generation EU destined to climate change mitigation and adaptation (a slice of 30% of the total, corresponding to about €547 billion) to projects with an eye on the gender employment gap. Thus setting the direction for the future: a transition towards environmental sustainability free from gender discriminations [12].

Despite the EU’s clear stance, some expected more: Alexandra Geese, MEP for the Greens/EFA, launched a petition asking that the funds allocated to digitalisation should also focus on women and their rights in the labour market. This would bring half of the Next Generation EU package’s total expenditure to projects attentive to the gender employment gap. The proposal may seem disproportionate, but given the extent of gender inequality in the labour market perhaps it is not so disproportionate after all.

 Giovanni Sgaravatti


[1]  Women’s emancipation movements and demands for the right to vote appeared all over the world in the late 1800s and early 1900s, although immediately after the French Revolution (in 1791) Olympe de Gouges wrote the Declaration of the Rights of Women and Citizens, in which she declared political and social equality between men and women. [1]

[2] Recent studies indicate that the employment gap in some developed countries will widen after the crisis. This is because the woman is more often the partner with the lowest income, who therefore decides to give up work to look after children during school closures. Moreover, in some countries women’s employment is higher in the most affected sectors, such as retail and catering [4], [5].

[3]  A similar instrument also exists in Italy, but unfortunately it does not seem to be bearing the desired results [3b].

[4] The phenomenon is also present in Germany in the younger population: those between 20 and 34 years of age.


[1] Dai primitivi al post-moderno: tre percorsi di saggi storico-antropologici, di Vittorio Lanternari, Liguori Editore, 351

[2] Eurofound: The gender employment gap: Challenges and solutions, Luxembourg 2016, Publications Office of the European Union.

[3] Le Cesu, qu’est-ce que c’est

[3b] Prestazioni di lavoro occasionale: libretto famiglia

[4] Perspektive Wiedereinstieg: Startseite


[6]Elterngeld und ElterngeldPlus



[9] COVID-19 and the gender gap in advanced economies | VOX, CEPR Policy Portal

[10] Il 98% di chi ha perso il lavoro è donna, il Covid è anche una questione di genere 

[10b]  (Occupati e disoccupati (dati provvisori)

[11] File:Total fertility rate, 1960–2018 (live births per woman).png – Statistics Explained

[12] The 2021-2027 EU budget – What’s new? | European Commission

Decrease taxes on labour through Carbon Pricing

Last June 27 2019, the most important scientific organisation in the field of environmental and economic resources, the European Association of Environmental and Resource Economists, met in Manchester to launch a proposal for a carbon tax [1], obtaining, in 24 hours, the adhesion of more than 600 signatories among academics and scientists from all over Europe [2].

In the wake of this proposal, a European citizens’ initiative was recently launched to strengthen the European Union’s Emissions Trading System (ETS), increasing both the number of industrial sectors involved and the minimum cost of one ton of CO2. The ETS is an environmental policy instrument, based on market mechanisms, to control the emissions of all the countries engaged in the system. To date, the ETS operates among all EU Member States as well as Liechtenstein, Iceland and Norway, limiting emissions of approximately 11,000 firms including energy providers, large factories and airlines, covering 40% of EU greenhouse gas emissions [3].

Carbon pricing is nothing new or particularly ground-breaking. Sweden, for example, adopted carbon pricing policies as early as 1991, and the emission price of one tonne of CO2 in 2018 was $139 [4]. For those interested in learning more about the EAERE proposal and the possible instruments used to combat global warming, please read the post What is Carbon Pricing? by Enerlida Liko on this very blog.

The proposed reform on carbon pricing

But let’s discuss the crux of the initiative, which can be found at There are three pillars in the proposal. First, to increase the minimum price per tonne of CO2 from the current price (which fluctuates between €10 and €35) to €50. Second, to introduce a border adjustment mechanism, so as not to disadvantage companies within the EU, by imposing equivalent duties for all countries outside the EU that are not members of the Emissions Trading System (ETS). The new rules should also include sectors such as international aviation and maritime transport, which are currently excluded from the ETS. Third, and this is the most interesting point in my opinion, new revenues should be used to lower taxes on labour and on the income of the least wealthy, as well as in encouraging investment in energy efficiency and renewables.

European citizens’ initiatives, if they reach one million signatures, are then examined by the European Commission, which in turn converts them into legislative proposals for discussion in Parliament and the Council [5]. Therefore, the details of this initiative, if it reaches the quorum, would then be deliberated further and probably widely amended. In this short article I will thereby focus on the soundness of some of the ideas underlying the initiative, rather than on its particular details.

Many EU Member States are at the forefront of renewables adoption and the EU ETS has often been taken as a model around the World [6]. Unfortunately, however, the climate crisis is getting worse every year and even the European model is not drastic enough in the eyes of an increasingly large part of the scientific community. Despite its limitations, the ETS has great potential and that is why the initiative we are discussing aims to strengthen it rather than reinvent it.

EU ETS Carbon Pricing
Source: 2020 State of the EU-ETS-Report-Long-Presentation

Double dividend

So let us come to the most interesting point of the initiative: the use of revenues from the expansion of the ETS. To date, the funds have been used to promote renewable energy, energy efficiency and sustainable transport.

Source: Report from the European Commission to the European Parliament and Council {SWD (2018), 453 final} (figures in billion of euro for the period 2013-2017) 

The novelty of this initiative is that of using the new resources for tax relief for businesses and workers. At a key moment in the history of the European Union, which has just passed two of the darkest quarters in its history, distortionary taxes on the labour market represent a huge burden for the recovery of employment. In addition, the European Commission is desperately looking for solutions to expand its multi-annual budget and use the additional resources in the green economy and the labour market. Finally, using the revenue from this carbon tax to reduce taxation on workers would make it easier to adopt the new measure and would protect the most vulnerable individuals in society by stimulating employment and offsetting a possible loss of purchasing power (due to price increases) with a parallel net wage rise [7][8][9].

In terms of employment, the effect of lower taxation on labour would add to that of investments in renewable energy and energy efficiency. A study by Heidi Garriet-Peltier and substantiated by Oxford University has shown that these investments require a larger workforce than those in fossil fuels, with an average of 7.49 jobs generated for every million dollars invested in renewables and 7.7 for every million dollars invested in energy efficiency, compared to just 2.65 new jobs created by a million-dollar fossil fuel investment [10].

Source: Nasa

As The Economist points out in an article on 23 May “The world urgently needs to expand its use of carbon prices[11], there may be many difficulties in implementing such a proposal: from determining the ecological footprint in terms of CO2 -or equivalent gas- of goods and services provided by each company, to the unpredictable reaction of superpowers such as China and India, which could respond to the border adjustment mechanism with new duties on EU goods and services.

Despite these enormous challenges, I believe that the European Union must continue in its role as a forerunner in the fight against climate change. This European citizens’ initiative can provide a push in the right direction. I invite you to read it and share it, together we can still change the course. 

Giovanni Sgaravatti


[1] Economists’ Statement on Carbon Pricing – EAERE

[2] EU economists call for carbon taxes to hit earlier net zero goal

[3] EU Emissions Trading System (EU ETS) | Climate Action

[4] State and Trends of Carbon Pricing 2018

[5] How it works | European citizens’ initiative – portal

[6] The EU ETS: The Pioneer—Main Purpose, Structure and Features

[7] Environmentally motivated energy taxes in Scandinavian countries

[8] OECD Environmental Performance Reviews – Germany

[9] Environmental Fiscal Reform in Developing, Emerging and Transition Economies: Progress & Prospects

[10] Working Paper No. 20-02 Hepburn, O’Callaghan, Stern, Stiglitz and  Zenghelis Working Paper No. 20-02 and


To read more on the topic

Read More – Stop Global Warming (European Citizen Initiative on Carbon Pricing)

Economists’ Statement on Carbon Pricing – EAERE

Trust in the Single Market? The case of the EU Emissions Trading System

EU economists call for carbon taxes to hit earlier net zero goal (28 June, Financial Times)

The world urgently needs to expand its use of carbon prices (23rd of May, The Economists)

Will COVID-19 fiscal recovery packages accelerate or retard progress on climate change?Cameron Hepburn, Brian O’Callaghan, Nicholas Stern, Joseph Stiglitz and Dimitri Zenghelis Forthcoming in the Oxford Review of Economic Policy 36(S1) 4 May 2020 Oxford Smith School of Enterprise and the Environment | Working Paper No. 20-02 ISSN 2732-4214 (Online)

EU and the virus: what did actually happen?

Dear readers, at this moment in history it is very difficult to keep a clear head and analyse facts with reason. It is difficult not to be influenced by natural concerns, which in some cases evolve into real family dramas. However, I believe that, today even more than yesterday, it is necessary to make a critical effort and evaluate the facts outside of rhetoric or, even worse, propaganda.

Italy’s relationship with the European Union in these weeks of health emergency has been severely questioned and Eurosceptics are on the rise [1]. Undoubtedly Europe plays a fundamental role in the society in which we live, as well as in the political and economic current affairs of our beautiful country, whether we like it or not [2].

©️ Comitato Ventotene
Italy export worth 533 billions €, of these 52% is towards EU, 2% Russia, 3% China, 5% UK, 9% USA, 20% other countries, 9% towards countries that have commercial agreements with EU

Since the beginning of the crisis, the European Union has responded in a fragmented and inconsistent fashion. For this reason, last Thursday the President of the European Commission publicly apologized to Italy on the behalf of the European Union as a whole. A powerful as much as a necessary political gesture. In the last two months, there have been unpleasant episodes, not up to a Union whose founding values are respect and solidarity between peoples. Let us think of the case of the medical devices blocked at the border by Germany and France, the unfortunate phrase Mrs. Lagarde said that sent the FTSE MIB index nosedive, or the inappropriate comments from the Dutch Finance Minister [3]. It is clear that the European Union project is still far from being completed.

In the same way, however, we cannot forget everything that has been done at the European level to help Italy and how much is now under study. Since the beginning of the epidemic, the EU has proposed the suspension of the Stability Pact and it has given the green light to state aid. Both initiatives have been widely approved by the Eurogroup. Moreover, the European Central Bank has launched the Pandemic Emergency Purchase Programme for an amount of 750 billion euros, substantially lowering interest rates [4] on Italian treasury bonds. In addition, the re-use of unused European funds in 2019 has been authorised, freeing up a fund of 37 billion for businesses in the fight against the virus. All this while Germany started receiving Covid-19 patients in its hospitals, taking care of transportation, and becoming the first country in the world to help the Lombardy region (even before many other Italian regions). Sure, an airplane with the Chinese flag printed on the side is more impressive, but the EU has never been very good at communication (perhaps because of the bad memories that propaganda evokes among its Member States).

Picture by DAVID ILIFF. License: CC BY-SA 3.0 The European Parliament in Strasbourg

Let’s now turn to the proposals that are being prepared and the negotiations underway in Brussels.

On 9 April, the Eurogroup approved a coordinated response at the European level for about 540 billion, with the commitment to implement a Recovery Fund for the future economic restart which would amount to about another 500 billion once this first phase is over. The first tranche of aid approved is divided into 200 billion for companies to be disbursed through the European Investment Bank, 240 billion through the European Stability Mechanism (with the only condition of being spent on the health emergency) and 100 billion of a European fund to support workers who risk losing their jobs (the SURE fund). Once we sum these instruments to the responses taken at the national level by individual member states, we obtain an amount of 430 billion in fiscal stimulus and 2,240 billion in liquidity injections [5].

As Adriana Cerretelli writes on -Il Sole 24, April 15th edition- “In simple terms, this means that Europe is ready to help Italy with 80-82 billion in loans from the EIB (20), Sure (15), unused structural funds (10-11) and Mes (36, with savings of 1.5 billion interest rates). All of this while waiting for the European relaunch plan which, with or without Eurobonds, it is known that it will take time to build. Hard not to call it solidarity.”

But let us return for a moment to the instruments agreed by the Eurogroup. Last April 17, the European Parliament approved both the Recovery Fund and a new credit line of the European Stability Mechanism (ESM), while it was said no to the Corona Bonds. As Carlo Cottarelli points out in the press, these instruments (SURE and EIB loans included) are all based on a concept very similar to that of the Corona Bond. That is, the disbursement of common debt, guaranteed by a fund made available jointly by all Member States, basically a mutualisation of debt. This is also written black and white by the Italian Office of the European Parliament [6].

Last Friday’s vote is also important for another reason. With its vote against Corona Bonds, the League party has made its position clear before the eyes of the Italian electorate. After weeks of bitter controversy over the ESM, the League refuted any doubt that the problem is not the ESM, but solidarity within the European Union. For a certain kind of rhetoric to continue, the EU must show no signs of solidarity. Not even if such gestures are directed towards our country. Unfortunately, the idea of blaming Europe for all Italian evils and the nostalgia for a weak currency, which would be catastrophic for Italy at this time, remain very much in vogue among many Italian voters – and the two main opposition parties are well aware that such beliefs must not be contradicted -. Their political future would be at stake. Be very well aware, dear readers, of alleged economists who call for a return to monetary sovereignty and at the same time speculate on the condition of political instability in our beautiful country, perhaps while they are in government [7].

To save itself from this health emergency, which is quickly turning into an economic drama, Italy must instead hope for a stronger, more supportive and more united Europe. Within this European Union we not only have our shoulders covered by a central bank that is doing our interests and a single market that will soon allow us to return exporting without duties and customs, but also, and above all, the political and economic support of 26 other friendly countries thanks to which we can jointly face the difficulties we are facing. Of course, some of these countries are not living up to the enormous crisis that has hit us. That is why we hope that we will continue to work towards the development and profound renewal of the European Union, which is an enormous guarantee for the well-being of all of us citizens. We should probably take as an example the 136 teams of international researchers who, funded by the EU, are joining their forces in trying to synthesize a vaccine against the virus.

I do not know what will be decided at the European Council on the 23rd, but I know for certain what to hope for.

Giovanni Sgaravatti

Chronicle of the EU and its approach to the coronavirus

  • On January 29th the first two cases of Coronavirus were reported in Italy (in Rome)
  • On 21 February, the first cases of local broadcasting (from people who had not recently travelled to China) were recorded
  • On March 4, the painful threshold of the first 100 deaths is crossed
  • On 6 March at an extraordinary European Council the Italian Minister of Health denounced some countries, including France and Germany, to prevent the export of health equipment
  • On 6 March the EU announces a package of 140 million, of which 47.5 million for 17 research projects involving 136 teams of scientists focussed on the development of a vaccine and 50 million for Italian companies producing medicinal products
  • On 9 March the Prime Minister signed the decree (Dpcm) “I stay at home”, asking all Italian citizens not to leave their homes except for compelling reasons
  • On 10 March the EU allocates a 25 billion euro fund to counter the emergency (10 billion SURE guarantee).
  • On March 11 the President of the European Commission publicly condemned the behaviour of some Member States to restrict the free movement of goods and in a video she addressed the European citizens saying “Today we are all Italians”.
  • On March 11 China sends a team of doctors to Italy
  • On 12 March Lagarde says that it is not within the ECB’s mandate to decrease spreads (the Italian spread soars)
  • On 13 March, the European Commission announces 37 billion in public investment using EU structural funds
  • On 15 March, the single market returns to be a de-facto single market again and shipments are allowed to transit freely
  • On 16 March the Eurogroup meeting happens online
  • On 16 March the “Cura Italia” was approved, with which the government authorized 25 billion in debt to deal with the emergency
  • On March 17, the USA NGO Samaritan’s Purse installs a field hospital in Cremona with 60 beds, 8 of which are equipped for intensive care and 60 doctors and health personnel
  • On 18 March the European Central Bank launches the Pandemic Emergency Purchase Programme for an amount of 750 billion euros (the spread returns to normal levels)
  • On 19 March, the European Investment Bank announced that it was working on a pan-European investment plan worth 250 billion euro for companies and especially SMEs. The underlying guarantee should be a fund of 25 billion euro
  • On March 20, the Stability Pact is suspended
  • On March 22, the government closes all non-essential production activities
  • On March the 22nd, 52 Cuban doctors land in Malpensa
  • March 24th, Germany is the first country in the world to receive COVID-19 Italian patients
  • 24 March, the European Commissioner for Economic Affairs confirms that the member states that will be able to use European funds to deal with the emergency 
  • March the 25th, China sends 30 lung ventilators, 20 sets of health monitors, 3,000 protective suits, 300,000 masks (plus another 20,000 of type N95) and 3,000 face shields
  • On March 26, 120 doctors, equipment and pharmaceutical products and 122 military personnel arrive from Russia. A journalist from “La Stampa” is later threatened by a spokesman of the Russian Ministry of Defence via Twitter for an inquiry into the type of aid granted and the reasons behind it
  • On 26 March the European Council meets to put in place a joint fiscal response to the pandemic. The first opponent of this response is the Netherlands, whose Finance Minister asks why countries like Spain cannot respond independently after 7 years of economic growth in the eurozone. The Portuguese Prime Minister will label the phrase as “repugnant”
  • On March 27, French President Macron gives a series of interviews to Italian newspapers where he publicly sides with Spain and Italy in favour of the Corona Bonds
  • March 28th Von Der Leyen gives an interview to the German newspaper DPA where he defines the Corona Bonds a slogan
  • 29 March, Albania sends a medical-health team to Italy to reciprocate gestures of solidarity of the past
  • On 2 April the European Commission formally proposes the SURE, a 100 billion euro fund to support unemployment caused by the emergency.
  • 8 April, Mauro Ferrari leaves the European Research Centre
  • April 8th, Schroder opens Eurobonds
  • 9 April, the Eurogroup agrees on the measures to be taken (ESM, SURE, EIB, Recovery Fund)
  • 10 April, Conte announces that Italy will be locked-down until the 3rd of May
  • On 17 April, the European Parliament approves the Recovery Fund and the new ESM credit line, no to Coronabonds

[1] Coronavirus: Is Europe losing Italy?

[2] Economics – Let us trade



[5] Economia | Commissione europea)


[7] Italy’s Top Euroskeptic Made Hefty Profit From Salvini’s Bad Bet

Further readings

Riprende l’export di mascherine verso l’Italia: Germania e Francia costrette a piegarsi alla Ue

Let us trade

Giovanni Sgaravatti

Giovanni Sgaravatti

The European Union was built to restore peace and equilibrium in a continent wounded by the two World Wars. However, a second objective simplified the path towards the Union: the ambition of creating a European economic area. These two goals are the foundations of the EU. As Churchill emphasized, they are deeply connected with each other. The direct evolution of the second objective is the European Single Market (ESM). Having a GDP of 13 trillion euro and a population of 500 million people, it represents the largest economic area without barriers in the world. The abolition of customs duties, legislative obstacles and restrictions on the quantities of goods and services that can be exchanged, allowed to the EU member states to grow in synergy. 

The economic benefits directly related to the European Single Market are estimated at 8.5% of the EU GDP. These have generated an increase of the employment rate, creating 2.8 million jobs and stimulating the birth of 21 million new companies. The cornerstone of the European Single Market is the free movement of goods, capital, services and labour. In fact, the ESM is not just an efficient tool to strengthen the relationships and the cohesiveness among the countries, it also guarantees a regulated market with high standard of quality for the products exchanged. The European Commission establishes the safety and quality standards of the products to safeguard the consumers, taking care also about the protection of the environment.

The EU is also continuously changing and updating its regulation to follow the main social and economic needs of its citizens. For this reason, recently the debate has focused on technology, data protection (GDPR) and e-commerce. Today a relevant portion of the exchanges of goods are made online and this trend will grow in the next years. Therefore, the EU has devoted explicit attention to such sector, creating the Digital Single Market. The intention is reducing legal obstacles and inefficiencies that condition e-commerce performances, but also contributing to a fair legislation of the web. In this debate crucial aspects are: copyright protection, online products’ quality standards and consumers’ protection. The European Commission evaluated the potential impact on the European economy of the Digital Single Market at 415 billion euro per year.

The fundamental role of the EU to support the economy of member States is not limited to the European Single Market and internal synergies. Belonging to the Union, European countries have a significant power on the global market and they can defend their interests negotiating with the other world’s super powers such as the US and China. Some examples are anti-dumping measures, the rules on foodstuffs quality standards, on children’s toys or on pharmaceutical products and pesticides.

The volume of Italian exports between 2002 and 2018 rose from 266 to 463 billion euros, which (discounting for inflation) is equivalent to an increase of 44%. Of these 463 billion, 202 account for exports destined for countries outside the European Union (in 2002 they were 103 billion, which means an increase of 68%). Between 2002 and 2018, the EU negotiated and allowed the entry into force of 23 free trade agreements (FTAs) with as many countries. This type of agreements has often been criticized (with good reason) for the lack of transparency in the negotiations. The EU responded becoming the first institution in the world to publish all the approved chapters, whilst the whole agreement is still being negotiated. 

Furthermore, the highly controversial mechanism for resolving disputes regarding investments has also been completely revised, guaranteeing a high level of investor protection and at the same time maintaining the full right of governments to regulate and pursue legitimate public interest objectives such as the protection of health, safety or the environment (see the most recent agreements, such as CETA or the one with South Korea). 

Finally, one of the fears of skeptics is that of facing unfair competition for products protected at the EU level, such as indications of origin (IG). This fear is mostly unfounded since the EU has always fought to defend all the characteristic products of its territory, especially the Italian and French top products. With CETA, Italy obtained the recognition of as many as 41 IG (corresponding to 90% of the total), and in the first 5 months of 2019 the country saw an increase in exports of almost 13% (for a value of € 3.5 billions) with a strongly positive trade balance (import-export ratio of 1: 3), while with Japan, food exports grew by 80% with the recognition of 45 Italian excellencies (IGP).

Free trade agreements are often accused of being for the exclusive benefit of large companies and of hindering small businesses. In reality, FTAs benefit the most efficient exporting companies, be they large or small. Examples of Italian small and medium enterprises that have benefited from FTAs are: the family company of Crotone Astorino (which after the entry into force of the FTA with South Africa in 2015 began to export pasta for volumes greater than one ton, using ancient Italian grains); the Venetian design company Moving (that increased its turnover from the Chilean market by 51% between 2011 and 2015); the Trapanese company Graffeo Cravatte (nowadays enormously benefitting from the total abatement of customs duties with Canada, until yesterday at 16-18%). There are lots of success stories, please find some of those at this link.

Giovanni Sgaravatti and Michele Corio

References:*&c=#filter-countries-Italy [not mentioned] [not mentioned]

The advantages for Italy of being in the EU

Giovanni Sgaravatti

Giovanni Sgaravatti


It is really difficult to explain the advantages of being within the European Union and the monetary union to those who have seen their wages remain the same in the last twenty years, when services and the cost of living have generally increased. Nevertheless, at Jeune Europe we believe it is important trying to do it because the European Union is our only hope, and we should keep this in mind. Below you will find a list, inevitably incomplete, of the advantages that Italy gets from being in Europe. Some of the benefits of being inside the EU are very well known (as the 70 years of peace, or Erasmus), so in the following articles we tried to focus only on those known the least.

Giovanni Sgaravatti, Michele Corio

  1. The least known advantages for Italy of being in the EU
  2. A dream of unity
  3. Monetary union, the Italian case.
  4. Banking Union: a step for more stability.
  5. Let us trade.

Climate Emergency and Civil Disobedience



The urgency of action

Anyone who is intellectually honest and who has taken the time to document himself knows that our civilization is galloping towards a wall. It is useless to beat around the bush, the effects of human activity on the environment are unequivocal and under everyone’s eyes. I came up with this article to give myself a general picture of both the phenomenon and the historical moment we are living. In the first part, I list a series of incontrovertible data that outline the current situation (and I warmly invite the sceptics to verify the sources). In the second part, I make a brief consideration about the peculiarity of the problem. Then, I report the forecasts of the most eminent body on the subject: the intergovernmental panel on climate change (IPCC). Subsequently, I give space to some critics addressed to the IPCC, accused by a slice of the scientific community of being too conservative in its estimates. Finally, I conclude with some reference to working groups and initiatives to save what can be saved.

The situation today

With the year 2018 we have just experienced the four hottest years in history (from the start date of measurements), with as many as 17 of the 18 warmest years in the new millennium [1a] [1b]. Reason for which the Arctic continues to lose a volume of ice at the rate of about 13% per decade, following a rising trend (it is estimated that between 1979 and 2018 the ice lost has been between 35 and 65%) [2]. In the meanwhile, the seas have already risen by 80mm since 1993 [3] and we begin to see its impact on the total surface of emerged land (see Florida, or the 5 islands in the middle of the Pacific erased from the maps) [4];[5]. In addition to the uninhabitability of some coastal areas, climate change increases episodes of drought and floods. These extreme events impact the livelihood of entire countries, reason for which migrants caused by climate change are increasing, and the United Nations estimates they could reach up to one billion by 2050 [6]. Meanwhile, permafrost in Siberia and Alaska began to melt, releasing methane and probably triggering a chain mechanism that cannot be stopped [7]. As if this was not enough, pollution and economic overproduction are amplifying the effects of climate change, seriously damaging the planet’s biodiversity. In 2016, the WWF declared that we are in the middle of the sixth mass extinction in the history of our planet, with a loss of global wildlife topping to 58% just between 1970 and 2012 [8a]. This is validated by the United Nations’ Panel on Biodiversity and Ecosystem Services, which estimates a rate of species extinction already at least tens to hundreds of times higher than it has averaged over the past 10 million years and likely to accelerate [8b]. Unfortunately, the list is still long: from the acidification of oceans, with the consequent annihilation of entire ecosystems (see coral reefs), to whales dying from plastic indigestion, fires increasingly frequent and extensive, stronger whirlwinds and hurricanes due to the greater energy present in the air, the melting of glaciers, more and more countries experiencing water scarcity, etc … [9];[10];[11].

WWF 2016 Living Planet Report. Intense colour indicates absolute water scarcity, the middle one indicates water scarcity and the green one water stress.

The response

The main problem in dealing with climate change is the discrepancy between its global nature and the political structure of human beings relying on multiple States. Furthermore, the first impacts of climate change have been localized, causing far greater damage in poorer countries. This has contributed to a general feeling that climate change was just another plague of the South of the world and that the West (the only possible leader of an international equity-based concertation) would not have suffered much from it. However, recently, the effects have started to become increasingly stronger and more frequent, helping a belated as much as indispensable global awareness. 

Prospects according to the IPCC

While the time available is relentlessly thinning, indifferent to the long delays necessary for international coordination, the planet’s temperature has already increased by one degree and the damage is starting to become irreversible. The IPCC’s predictions, laid down in its 2018 special report, tell us that even if we could keep the temperature increase within 1.5°C (best-case scenario) we would still see a further decline of coral reefs by 70-90%, an Arctic for the first time ice-free by 2100, a rise of seas level between 26 and 77 centimeters, a 9% decrease in wheat harvests, a lowering of about 1.5 million tonnes of fish caught (with a growing world population), a further increase in extreme weather events and a 9% decrease in fresh water just in the Mediterranean [11]. The increase of 1.5°C is estimated to take place between 2030 and 2050. To achieve this “optimal” scenario we should start from 2020 to cut global emissions so to place ourselves on the trend depicted in graph (b), which represents a 45% reduction of the CO2 levels emitted globally by 2030 (compared to those of 2010) and zero emissions by 2055 (gray line). However, the cumulative figure for greenhouse gas emissions will continue to increase for a few decades (c) and (d). This is because we have triggered natural mechanisms that cannot be turned off with a switch (if you are going at 200 mi/h and you start breaking you will still make several feet more from the point where you pulled the break).

IPCC Summary for policymakers 2018 Special Report, SPM.1

The criticism

It is terrifying to think that those measures needed to put the world on the trend shown in graph (b) have not yet been undertaken and nothing seems to indicate that they will be in the next months. In contrast, political leaders willing to free-ride on others’ commitments abound in rich countries (USA, Russia, UK, etc). Not to mention those in developing countries like Brasil where we recently assisted to a deforestation revival in the Amazon [12], or Poland, where political leaders have no intention of replacing coal as the country’s main energy source, or China, the incarnation of energy ambiguity with a government that declares waging war on pollution but at the same time (a bit out of necessity, a bit out of interest) finances coal power stations abroad and holds the majority share in the most polluting company in the world [13] [14].

Below you can look at a map elaborated by three international institutes that depicts the degree of efficiency of the combined climate-related policies by country.

Counries’ efforts to achieve the Paris agreement targets. Picture obtained from the collaboration of Climate Analytics, Ecofys and NewClimate Institute.

This political landscape is probably one of the factors that pushes more and more researchers to disagree with the IPCC forecasts, labelling them as too optimistic. The skeptical front is quite broad, I will here mention some of the most prominent figures: Peter Wadhams, one of the most famous glaciologists in the world, Jem Bendell, professor at Cumbria University (UK), Mayer Hillman, a scientist who dedicated his life to sustainable transport, Stuart Scott, founder and president of Transition University (USA), Guy McPherson, Professor Emeritus at the University of Arizona, James Hansen Former Director of NASA’s Goddard Institute. What is being reproached to the IPCC are basically three points: 1) underestimate the impact of methane released into the atmosphere as a result of the permafrost thrusting, 2) considering the effects of climate change as linear and not exponential and 3) putting in the equation geoengineering technologies to extract CO2 in a scale currently not available. Wadhamas, for example, predicts an ice-free September in the Arctic already in the imminent future and a rise of the seas between 1 and 2 meters before the end of the century [15]. Professor Bendell, after a sabbatical year dedicated to research, wrote a paper entitled “Deep Adaptation” (rejected by the scientific journal to which he submitted it due to its harsh language). In the paper, Bendell writes that it does no longer make sense to do research on sustainable development, field to which he dedicated his life, because the 1.5°C and also the 2°C targets will be extensively exceeded by the next twenty years and all efforts should now turn to understanding how to adapt to a scenario of civilization collapse.

Data obtained from Corinne Le Quéré et al. (to compare with graph (b) above)

Save what can still be saved

The fact that people who have dedicated their lives to studying and research are so alarmist surely gets one thinking. Of course, the most respected body on climate change is and remains the IPCC. However, it must be acknowledged that the panel only reports forecasts widely accepted by the scientific community at the international level, and therefore these are necessarily conservative. This article aims at encouraging the reader first of all to document himself, by now there is an amount of bibliography, articles and documentaries on the subject (in all languages) that anyone can have a sound idea of the phenomenon. Secondly, I hope this piece of writing has transmitted the urgency of a global response. In democracy this can only come from a strong popular pressure towards governments, for this it is necessary to participate in movements like that of Fridays for Future, or at least to support organizations deployed for environmental protection. Individual actions are certainly important, but investments in the fashion of the Marshall plan are needed if we want to put ourselves on the trend outlined in graph (b) of the IPCC (above). For those wishing to explore the type of investments required, I recommend taking a look at the Drawdawn project (there is also a Ted talk by Chad Frischmann translated into 19 languages). In order for this change of gear to take place, you need to vote more carefully, inform the sceptics and hit the streets. 

Giovanni Sgaravatti




[2] ;







[8b] Report of the Plenary of the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services on the work of its seventh session (May 2019)





[13] ;



[Picture in Cover by Nick Cobbing, Greenpeace]

[Global Carbon emission picture from:]


Banking Union: a step for more stability

Giovanni Sgaravatti

Giovanni Sgaravatti

The Banking Union is a set of rules, established to strengthen the European financial system. Its main components are the Single Supervisory Mechanism (SSM) and the Single Resolutory Mechanism (SRM). Their focus is on preventing and managing banks’ crises.

The Single Supervisory Mechanism monitors banking activity to increase the solidity of the financial system. It reduces the risk of banks’ crises, which are threats for the economic stability of the single States and the entire Union. Mainly, the SSM checks and guarantees that the Euro-Area banks have enough liquidity to absorb potential losses coming from wrong strategic decisions of the management or from crises.

European Central Bank in Frankfurt.

On the other hand, the Single Resolutory Mechanism is applied when a bank is already facing a crisis or financial distress is considered very likely. The objective is to manage the bankruptcy of a single institute in the least harmful way for the financial system and the people. The SRM functioning has been conceived to increase responsibility in the banking system. Banks must manage carefully their financial resources, maintaining a sustainable level of exposure to risk. Besides, it is crucial for the regulators to avoid contagion effects, namely the risk that the bankruptcy of a bank affects the stability of other banks and institutions.

A debated element of SRM regulation is the so-called “bail-in” mechanism that does not allow to the State, except for special situations, to buy out banks that are close to default. Under “bail-in” regulation, when a bank is going bankrupt the costs of the failure is not only paid by the shareholders, bondholders too may be involved if necessary. A reason in favour of “bail-in” is that it encourages banks to be prudent, reducing hazardous behaviours of the management. Indeed, the achievement of high returns in investments requires a higher exposure to risk. This does not always lead to positive outcomes, but if someone, external to the bank, is available to cover the losses or save the bank in hard times, then the drawbacks will be less harmful. Management can be less worried about losses and bankruptcy risk. “Bail-in” works exactly against this inefficiency.

The main alternative is the “bailout”. In this case, the State would intervene, using taxpayers’ money to fix the bank management inefficiencies and mistakes. Some countries, Italy is an example, could have a dramatic growth of public debt because of “bailout”, especially if the default involves big national banks. Another possibility to solve the crisis of a bank is the Deposit Guarantee Scheme, a fund created collecting capital from all the banks of the system. In Italy, such a fund, the Fondo Interbancario per la Tutela dei Depositi (FITD), is used to cover the depositors from losses in case of bank distress. Depositors are covered up to 100,000 euro. Theoretically, tools of this sort could be used also to prevent catastrophic effects deriving from big banks’ failures.

Banking Union: Member countries in blue.

Banking Union has faced many criticisms, especially raised by small and medium entrepreneurs, who blame it for the limited access to credit of these recent years. This is partially true. After the Basel agreements and the birth of SSM in 2014, banks have become more and more cautious in supplying credit. However, such inefficiencies are not completely ascribable to European regulation, for example, Italian banks were not always supplying credit in a transparent and trustworthy way. In 2015 in Italy, Non-Performing Loans (NPLs) (i.e. debts which are unlikely to be paid back) were as much as 16% of the total. The EU average is 3.4%. Moreover, 70% of these NPLs were distributed to 4.7% of debtors with an average value of 2.2 million euro per loan. Hence, small entrepreneurs have reasons to complain, the malfunctioning of the system is certainly not their fault.

However, it is important to stress that the drastic rules imposed on the banking system to increase capital reserves and creditworthiness’ standards have been crucial to increasing the solidity of the Italian economy. The failure of a bank causes damages to investors, depositors, entrepreneurs and (with “bailout”) also to taxpayers.
Finally, among the benefits of the banking union it is also worth mentioning the SEPA, Single European Payment Area, which involves 36 countries and allows to make bank transfers easily, only using the IBAN.

In conclusion, the banking union appears to be a source of advantages to the Italian economy much more than a cause of drawbacks. Restrictions are a requirement for stability, and recent history should have taught us that a stable banking and financial system should be preferred to one little regulated.

Michele Corio, Giovanni Sgaravatti
With special thanks to Beatrice Armanini

Monetary Union, the Italian case

In Italy, the monetary union is often taken as a scapegoat for all the ills of the last twenty years. To verify the factuality of this criticism we must weigh the disadvantages of the single currency with the advantages. Furthermore, a critical effort to verify the counterfactual (i.e. what would have happened if we had not adopted the euro) is paramount.

euro One euro Italian coin, picture by Alberto Moglioni

The disadvantages reiterated by the discontented is in having lost the monetary sovereignty and in the unfavourable exchange rate. Let’s start with the first topic. What was once the role of the Bank of Italy has now passed to the European Central Bank (ECB). The advantage of being able to print money lies in the possibility of using expansive monetary policies and devaluation. With the former, the central bank aims to lower interest rates, favouring consumption and investment. While with devaluation export is favoured and the cost of labour is lowered.



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