Is the end of austerity the end of Greek climate action?

Greek voters on Sunday have ushered in what British commentator Paul Mason describes as the most left-wing government seen in Europe since the days of the Spanish republic in the 1930s. This radical shift away from business-as-usual quite naturally focuses attention on questions of austerity, social programmes and the integrity of the Eurozone. But what impact does the election also have on the Greek, European and even global climate conversation?

Greece is a small country of course, and its greenhouse gas emissions represent just 0.3 percent of the global total (Per capita, Greece comes 41st in the world, performing slightly better than Germany and Japan, but slightly worse than the UK and Denmark). Nonetheless, it will be interesting to watch how the new governing party’s pivot towards the public-sector and regulatory mechanisms and away from free-market incentives—which from emissions trading to catastrophe bonds have dominated climate change policy proposals for two decades—will play out.

The global economic crisis has worked to de-emphasise efforts toward addressing climate change not just in Greece, but around the world in two primary ways. Governments strapped for cash have slashed public spending on climate projects and, concerned at the negative impact on businesses that strict emissions regulations, capitals have—until recently—been reluctant to ratchet up mitigation targets.

Greece, with the additional burden of EU, IMF and ECB-imposed austerity requirements as part of bail-out packages, has been particularly hard hit in this fashion according to the European Environmental Agency, affecting, amongst other areas the national priorities of expansion of metro system, renewal of the bus fleet and electrification of the railways, as well as grid connections to islands and neighbouring countries. Its flagship feed-in-tariff policy for renewable energy which had been responsible for a quadrupling of installed photovoltaic capacity and the country ranking 5th worldwide in terms of per capita PV, all but stalled in 2013 as a result of the increasing debt burden of the national financing mechanism. The boom had outstripped the ability of increasingly economically dislocated electricity consumers to finance the tariffs.

Any return to the feed-in-tariff option will likely be unattractive to the new government due to the increase in consumer electricity prices upon which it depends. Germany, which has perhaps the most developed of feed-in-tariff policies, has the highest rates of fuel poverty in Europe, while Greece now suffers the indignity of 350,000 households having been cut off from electricity.

However, at the heart of the ‘modest proposal’ for turning around the Greek economy and solving the wider Eurozone crisis developed by the incoming finance minister, Yanis Varoufakis and his fellow Keynesian economist colleagues James Galbraith and Stuart Holland, is a burst of New Deal-style stimulus financed through bonds issued jointly by the European Investment Bank and the European Investment Fund, focusing on low-carbon infrastructure and technology. If the new government is successful in opening up more space for such public spending rather than renewable energy costs being borne by consumers, this could have a ripple effect throughout Europe, permitting a loosening of the purse strings and greater stimulus spending on a range of green transition initiatives elsewhere.

At the same time, the barrier to such spending is the ideological conflict at the heart of the Eurozone. Tiny, isolated Greece will have to default on much of its debt and ultimately win the argument in the single currency area for EIB-EIF bonds before any of the above programme could be implemented. But Syriza, and indeed many international commentators quite far from the party’s leftist politics such as centrist American Nobel-laureate economist Paul Krugman, believe that it is in Greece’s very weakness where its strength lies: They reckon the new government may be able win the high-stakes game of poker with other European powers on the presumption that the Eurozone project is too important to the wider EU system to permit any member state to exit from the euro once they are inside. The implicit or explicit ultimatum that Athens must bring to the Brussels negotiating table, say these analysts, is the possibility that this project can indeed be wrecked if Greek demands are not met. However other Eurozone negotiators react to such a confrontational stance, the party is hoping to hold out long enough for their comrades in the Spanish anti-austerity party, Podemos, to win July elections in what is the fourth largest economy in Europe, which polls predict they will. Even if Greece is in some minds expendable, the loss of Spain would spell the end of the Eurozone project.

Dovetailing with this, the new government is also committed to a reversal of the part-privatization of the country’s power company that had been demanded by the EU, ECB and IMF ‘Troika’ in return for being bailed out. This shift away from liberalization has significant ramifications for clean energy infrastructure development. While in many jurisdictions, not just in Greece, private small-scale renewable energy producers are some of the biggest cheerleaders for liberalization and privatisation, these companies are not as capable of financing the construction of large-scale non-intermittent baseload power generation capacity as the public sector is due to the vast costs involved. Additionally, everywhere electricity privatization has been implemented, infrastructural underinvestment and network unreliability has followed.

The new government also plans a major expansion of energy efficiency building renovations as this kills two priority policy birds with one stone, tackling both emissions reduction and Greece’s spike in fuel poverty. One of the problems of subsidies for energy efficiency renovations is that renters and the impoverished have had no incentive to replace windows or insulation. The more comprehensive approach covers everybody, renters and owners, and not just those who can afford it.

Greece has considerable potential for further development of solar power. Indeed its sunny, Mediterranean location, as with southern Spain and Italy, makes this energy source much more viable and less intermittent than cloudy northern Europe. Yet wind and solar make up just 7 percent of the country’s electricity generation. And the country’s many rivercourses make Greece rich in further hydroelectric potential, both large and small-scale, a non-intermittent electricity source that can make up for the fact that even in Greece, the sun does not always shine and the wind does not always blow.

There are real climate-related pitfalls for the new government in the near term however. The components for wind and solar tend to be manufactured outside the cash-poor country. Meanwhile, the country is rich in lignite, often referred to as brown coal, boasting lignite resources of some 4.7 billion tonnes, 3 billion tonnes of which are economically accessible. Roughly 70 percent of its electricity comes from this non-imported, cheap and dirty source—which emits 37 percent more CO2 per unit of power than its cousin, black coal. Some 41 percent of Greece’s CO2 emissions come from this sector.

Further, lignite mining, transport and electricity generation all employ a significant number of employees. The private renewables producers are frequently anti-union and are viewed by some working class communities as a stalking horse for EU austerity. If Syriza is to work toward a “just transition” to a low-carbon future over the next couple of decades in Greece, these thousands of workers will have to be assured that they have a place in that new economy.

But most importantly, the country has never industrialised to the extent of its northern European neighbours. Cutting off coal as a cheap source of energy compared to the much more expensive renewables makes further development of the economy that much more difficult. Anyone who has paid any attention to the climate finance debate within UN negotiations or the fraught question of emissions reduction burden-sharing between the developed and the developing countries will be very familiar indeed with this line of argument.

A fresh report on Greek energy and climate options from the left-wing German Rosa Luxemburg Stiftung think-tank published after the Greek election warns of the temptations that lie in wait for Syriza: “the pressures of lignite-based ‘resource nationalism’ will be considerable. Note the similar phenomena in Argentina, Bolivia, Brazil, South Africa, and Venezuela where left and centre-left governments are in power, but which all make the argument that domestic fossil fuels are needed to fight poverty and develop a strong economy.”

Syriza itself is a coalition of ‘red’ and ‘green’, socialists and environmentalists, albeit with socialists in the majority. Historic tensions between these two worldviews that have temporarily been put aside while in opposition are likely to come to the fore now that the party is in government. Harokopio University of Athens political scientist and geographer Haris Konstantatos, a member of Syriza’s coordinating committee and its department of ecology and environment, told The Guardian that the government wants to build new lignite plants, albeit with cleaner technology.

Meanwhile, large-scale renewables, such as the Messochora hydroelectric dam on the Acheloos river, have for years been prominent targets of young environmentalist activists who otherwise may be supporters of the new government, and are looking to it to deliver their preferred option, local, small-scale renewables—a position that can be argued as being in harmony with that of the small independent renewable energy producers.

These forces also tend to support a movement away from a growth-based economy toward one embracing the increasingly popular concept of ‘degrowth’. Konstantatos for his part, told the British daily that such ideas are “absurd”. Navigating these ideological disagreements between traditional left-wing productivist politics and latter-day ecological-transformational thought thus may be difficult or even impossible for the coalition of different groups that make up Syriza.

Many of the green activist groups we see with their placards and banners on the sidelines of international climate talks have had their perspectives embraced to greater or lesser degrees by governments of the Global South, and they now will be hoping to see their positions also reflected for the first time in a northern, developed country.

But whichever route is chosen, the new administration and its mandate for a Green New Deal is now at the centre of the wider global debate about austerity vs stimulus, large-scale vs localism, and public-sector-led vs free-market approaches to climate change.

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