On the eve of the UK general election, a group of senior Chatham House experts analyse a range of key foreign policy issues that will hinge on the election’s outcome.

The new European Commission has finally started its work this week. In a world increasingly defined by great power competition and deprived of the certainties of a strong transatlantic partnership, this might well be the first commission where foreign and security policy issues will be equally important to internal EU ones.

Amid an escalating Sino-American rivalry, there is a growing realization in Brussels that something has to change in the way the EU thinks and acts internationally.

Charting a more successful path forward will not be easy. Josep Borrell, the EU’s new high representative for foreign affairs and security policy, during his confirmation hearing, offered a hint as to what might be needed to get there: ‘The EU has to learn to use the language of power.”’

What might this mean in practice?

Four issues illustrate some of the key dilemmas ahead for the EU and its new executive.

Hard power

The most revealing of these concerns hard power.

For a union so addicted to the US security guarantee, and so used to the softer approaches of exercising its influence, this was always going to be a difficult discussion. The recent disagreement between Germany and France over the future of NATO gave a taste of how fraught and complex this discussion can be.

Underpinning it are three fundamental questions. If the EU has to enhance its capacity to defend its interests with military power, how (and how quickly) is it to move ahead, how much additional responsibility will that mean and to what degree will this responsibility need to be shouldered autonomously, potentially distancing itself from NATO or Washington? Moving forward with this agenda while balancing the competing interests of member states and preserving the fragile progress already achieved with initiatives such as PESCO will not be easy.

Discussion and debate among member states should not be discouraged, but the new commission has a role to play in ensuring that such discussion is constructive. Distracting talks about an EU army or a nuclear ‘Eurodeterrent’ should be shelved, with the focus as much as possible on acquiring tangible capabilities, getting the defence architecture right, ensuring operational readiness and spending defence budgets smartly.

How to use power

Great powers have traditionally been able to cooperate in certain areas while competing in others. Given their wide reach, powers like the US have generally not allowed disagreement on one issue to interfere with the ability to work together on others.

If the EU aspires to be a more assertive global player, it will need to grow comfortable with this compartmentalization. For example, if Brussels wants to stand up to Beijing regarding human rights, the South China Sea or issues of acquisition of European infrastructure, this should not mean that cooperation on areas such as peacekeeping, arms control or climate change needs to be blocked.

Footing the bill

Ursula von der Leyen, the new commission president, has announced that she wants an increase of 30% for external action in the 2021–27 Multi-annual Financial Framework (the EU budget). But with the Brexit budget gap looming, and little appetite to increase contributions or reduce the funds allocated to costly schemes, like the Common Agricultural Policy, compromises will have to be made for this to happen.

This will be one of the first key tests for the new commission. Power costs money, not just gestures, and therefore specific commitments already made under the Juncker mandate regarding the European Defence Fund or the new Neighbourhood, Development and International Cooperation Instrument need to be guaranteed, if not expanded.

Internal politics

None of these steps are possible if the internal workings of the EU become too dysfunctional. A stronger stance internationally would make the sometime incoherence of internal EU management more of a liability to the bloc’s credibility. For example, how can the EU advocate for the rule of law beyond its borders while some of its own member states violate the same principles? 

And there remains the perpetual question of how much more power member states are willing to cede – if any – to deliver faster and more efficient decision-making. If the bloc’s reflexes – often slow, consensual and risk averse – are out of place with the role of a modern great power, how does the commission envision introducing decision-making mechanisms, like qualified majority voting, in foreign and security policy matters?

Borrell’s résumé shows his extensive experience in handling critical policy dossiers. He is also expected to travel less than his predecessor, being mindful of the even heavier institutional work ahead, not least in working with a more politically fragmented European Council and a more politicized European Parliament.

Ultimately, learning the language of power might mean that the EU finally deals with the basics of international affairs as a coherent and cohesive actor, rather than as an occasional ensemble. This endeavour clearly lacks a fixed path or destination. But the new commission seems to be mindful that the EU will have to find new ways to use power as the world changes around it. In doing so, it should keep in mind that the language of power is best articulated not with words, but with actions.

The new European Commission, headed by Ursula von der Leyen, assumed office on 1 December, and there are early signs that Africa will begin near the top of their foreign policy priorities. Policy towards Africa under the new EU administration is yet to be fully defined, but its contours are already visible in the selection of commissioners and assignment of portfolios.  

Although rumours of a dedicated commissioner for Africa were unfounded, the appointment of Jutta Urpilainen to the new role of commissioner for international partnerships – replacing the former post of development commissioner – is a strong signal of ongoing change in EU development thinking, away from bilateral aid towards trade and investment, including by the private sector. 

This may have significant consequences for the EU’s relationship with Africa. In her mission letter to Urpilainen in September, von der Leyen listed the first objective as a new ‘comprehensive strategy for Africa’. Urpilainen, Finland’s finance minister before being posted to Ethiopia as special representative on mediation, has also described her appointment as an opportunity to move on from traditional measures of aid delivery. 

Ambition or incoherence? 

However, this ambition may be at odds with other EU priorities and practices, notably managing migration and institutions and instruments for governing EU–Africa relations that remain rooted in a ‘traditional’ model of North–South development cooperation rather than equitable partnership.

Another newly created post will see Margaritis Schinas assume the role of vice-president for promoting the European way of life – formerly ‘protecting our European way of life’ before a backlash saw it changed – a reminder that migration will remain high on the EU’s foreign policy agenda. The new high representative for foreign and security policy and chief EU diplomat, Josep Borrell, has highlighted the need for bilateral partnership with countries of origin and transit, mainly in Africa. 

Negotiations also continue to stall on a replacement to the Cotonou Agreement, the 20-year partnership framework between the EU and the African, Caribbean and Pacific (ACP) group of states, which now looks certain to be extended for at least 12 months beyond its expiry in February 2020.

Ambiguities in the EU’s negotiating approach have certainly contributed to the delay: having pushed initially for a separate regional pillar for Africa that would be opened to the North African countries (who are not ACP members) and include a loosely defined role for the African Union, this would later be abandoned in favour of a dual-track process on separate new agreements with the AU and ACP respectively.

The EU also continues to pursue controversial economic partnership agreements under the aegis of Cotonou, despite their increasing appearance of incompatibility with the pathbreaking African Continental Free Trade Area (AfCFTA) – one of the clearest expressions to date of African agency.

The EU has so far attempted to gloss over this incoherence, claiming that EPAs can somehow act as the ‘building blocks’ for Africa-wide economic integration. But tensions are appearing between EU departments and within the commission, with the European External Action Service inclined to prioritize a more strategic continental relationship with the AU, while the Directorate-General for International Cooperation and Development remains committed to the ACP as the conduit for financial support and aid delivery.

And it is unlikely to get away with such incoherence for much longer. Change is now urgent, as numerous countries in sub-Saharan Africa continue to attract the strategic and commercial interests of the EU’s competitors: from established players such as China and potentially in future the UK, which is intent on remodelling its Africa ties post-Brexit, to emerging actors such as Turkey or Russia, which held its first Africa summit in October. 

The need for delivery

If the EU is serious about its rhetoric on equal partnership, it must therefore move beyond convoluted hybrid proposals. Delivering on the Juncker administration’s proposal to increase funding for external action by 30 per cent for 2021–27 would mark an important first step, particularly as this involves streamlining that would see the European Development Fund – the financial instrument for EU-ACP relations – incorporated into the main EU budget.

The new commission should therefore continue to exert pressure on the European Council and European Parliament to adopt this proposal, as negotiations on this financial framework have been repeatedly subject to delay and may not be resolved before the end of the year. 

Beyond this, proactive support for the AfCFTA and for structural transformation more broadly must be prioritized ahead of vague promises for a continent-to-continent free trade agreement, as held out by Juncker in his final State of the Union address in 2018. 

The significance of internal EU reforms for Africa should also not be discounted. The EU’s Common Agricultural Policy, for instance, has placed the African sector at a particular disadvantage and has made it harder to compete even in domestic markets, let alone in the distant EU export markets. EU efforts to stimulate inflows of private investments into the African agricultural sector, abolish import tariffs and offer technical support for African producers to satisfy EU health and safety regulations will be of little use if they are undermined by heavy subsidies across Europe.

Ultimately, changes to job titles alone will be insufficient. The new commission’s rhetoric, while ambitious, differs little from that of the previous decade – Africa has heard the promise of a ‘partnership of equals’ and of ‘shared ownership’ since before the advent of the Joint Africa–EU Strategy in 2007. Now is the time for truly bold steps to implement this vision.

In recent decades, political party systems across Europe have fragmented and electoral volatility has increased. The number of parties represented in parliaments across the continent has grown and the formerly dominant mainstream parties have seen their support base collapse, forcing parties into often uncomfortable and unstable coalitions.

From the United Kingdom to Germany, politicians and commentators talk of such scenarios in often apocalyptic terms and associate it with political instability and policy paralysis.

They shouldn’t. Instead they should focus their energy on making these increasingly competitive political markets work.

The Netherlands is frequently held up as a prime example of this process, which is therefore sometimes referred to as ‘Dutchification’. Its highly proportional political system has created the opportunity for new parties and specific interest groups to win parliamentary representation, ranging from an animal rights party and a party catering specifically to the interests of the elderly.

This has been accompanied by increased electoral volatility. In the 1970s, less than 15% of seats in the Dutch parliament would change party at any election, but in the last election in 2017, this was just over a quarter. The system also created space for the relatively early rise of populist far-right parties, though it was not the cause of their rise.

Nevertheless, despite the regularly difficult coalition politics, it remains one of the most well-governed countries in the world.

A short history of fragmentation

Looking at the effective number of parties represented in parliaments, the number of parties, corrected for their size, provides a good measure of the extent of fragmentation. In the Netherlands this steadily increased from around four in the 1980s to over eight following the election in 2017. Even the populist far-right vote has fragmented, with two parties partly competing for the same electorate. In other countries it has been a more recent phenomenon. Spain remained a de facto two-party system until the financial crisis. Dissatisfaction with both mainstream parties has seen challenger parties on both the left and the right attract significant support, making it harder to form stable coalitions. Political fragmentation decreased slightly in Italy in recent years, but that was from a high base as it shot up in the early 1990s when the post-war political settlement crumbled.

German politics, long a hallmark of stability, is struggling with the decrease in support for the parties that dominated its political scene in the post-war period. The Christian Democrats and Social Democrats only barely managed to win a majority together in the election in 2017, at 53.4% of the vote compared with the 81.3% achieved 30 years earlier. The latest polls suggest they would only get to 40% together if an election were held today.

A similar trend is visible within the European Parliament. Whereas the two largest groups in the European Parliament, the Christian Democrats and the Social Democrats, together won 66% of the vote in the election in 1999, they did not even manage to win a majority together in 2019, taking just 39.5% of the vote.

No crisis of democracy

If electoral volatility and political fragmentation does indeed constitute some sort of crisis of democracy, we should expect to see voters become unhappy about how their national democracy functions. Largely, the opposite seems to be the case.

In the Netherlands, satisfaction with its democracy went up at the same time as Dutchification did its work. Similar trends are visible in other highly fragmented European political systems, often those with very proportional systems. Despite regular minority governments, satisfaction with democracy is above 90% in Denmark and at 80% in Sweden, according to the latest Eurobarometer data.

In comparison, it stood at 52% in the United Kingdom and 53% in France, where the electoral system has, at least on the surface, prevented the kind of fragmentation supposedly plaguing proportional systems.

Satisfaction with democracy seems to be affected by a number of factors. This includes the state of the economy, particularly in countries that were hit the hardest by the global financial and euro zone crises. Nevertheless, the data suggests that, even if we can’t say that Dutchification by definition leads to more satisfaction with democracy, it is clearly not associated with falling faith in the system.

A competitive political market

Dutchification should be seen as accompanying a more competitive political marketplace. A more emancipated, demanding and politically engaged electorate than in the post-war decades is willing to shop around instead of merely vote according to socioeconomic class or other dividing lines, such as religious ones. The fragmented parliaments that emerge as a result provide better representation of different groups within European societies.

This makes life harder for Europe’s political parties and politicians, as they juggle large coalitions, or changing coalitions under minority governments, but provides voters with more choice and democratic renewal. If handled correctly this would also allow more responsiveness to shifts in public opinion.

Such democratic creative destruction in competitive political markets is to be celebrated in a well-functioning democracy. Just as companies prefer to operate in an oligopoly, political parties prefer the stability of limited political competition. But wishing for this kind of stability comes perilously close to preferring stability over proper representation.

Worrying about Dutchification risks confusing a crisis of the traditional mainstream parties with a crisis of democracy. For some countries, particularly those like the Netherlands and Denmark which have longer histories of consensus-based politics and coalition building, this is an easier adjustment. But this should not be an excuse to not attempt to make politics work better as they were forced to go through, arguably still ongoing, adjustment processes too.

Instead of investing in futile attempts to get back to how things were in the old days, or hoping this will somehow magically happen, political leaders and parties across Europe need to reassess how they deal with the new reality of Dutchification.

Theresa May’s announcement in 2018 on the UK’s ambition to become the G7’s largest investor in Africa by 2022 has been followed by similar stated ambitions at the recent UK-Africa Investment Summit, which saw the attendance of 16 African heads of states. Such ambitions mirror overtures from various international players including a call for a ‘comprehensive strategy for Africa’ by the EU in 2019. While the UK’s recent expansion of its diplomatic networks in Africa and the signing of the Economic Partnership Agreement with the Southern African Customs Union and Mozambique appear promising, there are significant challenges to deepening partnerships including visa restrictions and complex business environments.
 
At this event, the panellists will assess the future of trade and investment relations between the UK and Africa. Amid a proliferation of new trading partners including Asia’s emerging economies, Russia and the Gulf states, what are the points of change and continuity in the long-standing relationship between Africa and the UK? And what are the challenges and opportunities facing governments and businesses in Africa and the UK in efforts to build long-lasting economic ties?
 
This event will be followed by a drinks reception.

This event is open to Chatham House Corporate Members and corporate contacts of Chatham House's Africa Programme only.

Not a member? Find out more. For further information on the different types of Chatham House events, visit Our Events Explained.

There are two well-established ideas in trade. Individually, they are correct. Combined, they can lead to a conclusion that is unfortunately wrong.

The first idea is that, across a range of economic sectors, the EU and the US have been engaged in a battle to have their model of regulation accepted as the global one, and that the EU is generally winning.

The second is that governments can use their regulatory power to extend strategic and foreign policy influence.

The conclusion would seem to be that the EU, which has for decades tried to develop a foreign policy, should be able to use its superpower status in regulation and trade to project its interests and its values abroad.

That’s the theory. It’s a proposition much welcomed by EU policymakers, who know they are highly unlikely any time soon to acquire any of the tools usually required to run an effective foreign policy.

The EU doesn’t have an army it can send into a shooting war, enough military or political aid to prop up or dispense of governments abroad, or a centralized intelligence service. Commission President Ursula von der Leyen has declared her outfit to be a ‘geopolitical commission’, and is casting about for any means of making that real.

Through the ‘Brussels effect’ whereby European rules and standards are exported via both companies and governments, the EU has indeed won many regulatory battles with the US.

Its cars, chemicals and product safety regulations are more widely adopted round the world than their American counterparts. In the absence of any coherent US offering, bar some varied state-level systems, the General Data Protection Regulation (GDPR) is the closest thing the world has to a single model for data privacy, and variants of it are being adopted by dozens of countries.

The problem is this. Those parts of global economic governance where the US is dominant – particularly the dollar payments system – are highly conducive to projecting US power abroad. The extraterritorial reach of secondary sanctions, plus the widespread reliance of banks and companies worldwide on dollar funding – and hence the American financial system – means that the US can precisely target its influence.

The EU can enforce trade sanctions, but not in such a powerful and discriminatory way, and it will always be outgunned by the US. Donald Trump could in effect force European companies to join in his sanctions on Iran when he pulled out of the nuclear deal, despite EU legislation designed to prevent their businesses being bullied. He can go after the chief financial officer of Huawei for allegedly breaching those sanctions.

By contrast, the widespread adoption of GDPR or data protection regimes inspired by it may give the EU a warm glow of satisfaction, but it cannot be turned into a geopolitical tool in the same way.

Nor, necessarily, does it particularly benefit the EU economy. Europe’s undersized tech sector seems unlikely to unduly benefit from the fact that data protection rules were written in the EU. Indeed, one common criticism of the regulations is that they entrench the power of incumbent tech giants like Google.

There is a similar pattern at work in the adoption of new technologies such as artificial intelligence and the Internet of Things. In that field, the EU and its member states are also facing determined competition from China, which has been pushing its technologies and standards through forums such as the International Telecommunication Union.

The EU has been attempting to write international rules for the use of AI which it hopes to be widely adopted. But again, these are a constraint on the use of new technologies largely developed by others, not the control of innovation.

By contrast, China has created a vast domestic market in technologies like facial recognition and unleashed its own companies on it. The resulting surveillance kit can then be marketed to emerging market governments as part of China’s enduring foreign policy campaign to build up supporters in the developing world.

If it genuinely wants to turn its economic power into geopolitical influence – and it’s not entirely clear what it would do with it if it did – the EU needs to recognize that not all forms of regulatory and trading dominance are the same.

Providing public goods to the world economy is all very well. But unless they are so particular in nature that they project uniquely European values and interests, that makes the EU a supplier of useful plumbing but not a global architect of power.

On the other hand, it could content itself with its position for the moment. It could recognize that not until enough hard power – guns, intelligence, money – is transferred from the member states to the centre, or until the member states start acting collectively, will the EU genuinely become a geopolitical force. Speaking loudly and carrying a stick of foam rubber is rarely a way to gain credibility in international relations.

This article is part of a series of publications and roundtable discussions in the Chatham House Global Trade Policy Forum.

What role does the EU want to play in a world characterised increasingly by power politics? The new European Commission has explicitly stated its ambition for the EU to become a stronger geopolitical actor. Is it capable of becoming a third pole in an enduring US-China stand-off?

From climate change to trade policy and security, the next 5 years may prove decisive in proving the EU can be a strong player both in its neighbourhood and globally. Given what is at stake, what are the Commission’s strategic and policymaking priorities for the next five years? With the discussions on the future EU budget ongoing, what areas will be prioritized when member states come to make decisions between competing objectives? Does the way the EU is perceived externally depend on its member states’ ability to put on a united front when it comes to the most pressing global challenges?

Finally, is this ambitious geopolitical vision deliverable within the EU’s existing structures? If not, are member states ready to give up more control for a stronger Europe at the EU level?

PLEASE NOTE THIS EVENT IS POSTPONED UNTIL FURTHER NOTICE.

In the past few weeks, European Union member states have implemented measures such as social distancing, school and border closures and the cancellation of major cultural and sporting events in an effort to curb the spread of COVID-19. Such measures are expected to have significant economic and political consequences, threatening near or total collapse of certain sectors. Moreover, the management of the health and economic crises within the EU architecture has exposed tensions and impasses in the extent to which the EU is willing to collaborate to mitigate pressures on fellow member states.

The panellists will examine the European Union's response to a series of cascading crises and the likely impact of the pandemic on individual member states. Can the EU prevent an economic hit from developing into a financial crisis? Are the steps taken by the European Central Bank to protect the euro enough? And are member states expected to manage the crisis as best they can or will there be a united effort to mitigate some of the damage caused?  

This event is part of a fortnightly series of 'Business in Focus' webinars reflecting on the impact of COVID-19 on areas of particular professional interest for our corporate members.

Not a corporate member? Find out more.

In the last 100 years, global economic crises from the Great Depression of the 1930s to the 2008 financial crash have contributed to significant political changes in Europe, often leading to a rise in popularity for extremist parties and politics. As Europe contends with a perceived crisis of democracy - now compounded by the varied responses to the coronavirus outbreak - how should we understand the relationship between externally-driven economic crises, political upheaval and democracy?

The panellists will consider the parallels between the political responses to some of the greatest economic crises Europe has experienced in the last century. Given that economic crises often transcend borders, why does political disruption vary between democracies? What can history tell us about the potential political impact of the unfolding COVID-19-related economic crisis? And will the unprecedented financial interventions by governments across Europe fundamentally change the expectations citizens have of the role government should play in their lives?

This event is based on a recent article in The World Today by Hans Kundnani and Pepijn Bergsen who are both researchers in Chatham House's Europe Programme. 'Crawling from the Wreckage' is the first in a series of articles that look at key themes in European political discourse from the last century. You can read the article here. 

This event is open to Chatham House Members. Not a member? Find out more.

In recent years, clean energy access for refugees and internally displaced people has emerged as a potential method of improving humanitarian outcomes and enabling self-reliance. While recent research emphasizes the need for more quantitative data to inform energy access interventions, better qualitative understanding would also improve innovation in this area.

This ethnographic study is the first of its kind to analyse energy access and resilience strategies deployed in two refugee camps, Kakuma in Kenya and Goudoubo in Burkina Faso. The stories of residents in these camps demonstrate the importance of considering everyday experiences of displaced people in developing sustainable humanitarian energy interventions.

This paper highlights the need for new methodological approaches to expand the evidence base for humanitarian energy interventions and policies. Future research could usefully inform humanitarian energy projects by examining the technical knowledge and existing practices of refugees in the design of energy technologies, systems and business models. Uptake and sustained use of new systems may be more likely where interventions build on or work in harmony with these factors.

In a new event in the Sustainable Transitions series, the speaker will present an update of Sino-Russian gas cooperation.

To give a comprehensive account of their impact on global liquefied natural gas (LNG) supplies, he will discuss the following points:

• Gas is scheduled to start flowing from the Power of Siberia I (POS) on 2 December 2019. But what is the background of development of POS 1 and what is its current status and prospects? 
• What are the chances of exporting gas through the proposed Altai pipeline? Why is the Mongolia export route so significant? And how will it affect the Central Asian Republics and in particular Turkmenistan’s gas export to China? 
• What are the implications of both POS I and Altai gas via Mongolia route in the context of global LNG supply?
• What are the prospects for multilateral pipeline gas cooperation in northeast Asia?
• What are the implications for other Arctic onshore LNG supply, in particular, for Novatek's Yamal LNG and Arctic LNG 1 and 2 to China on top of POS 1 and Altai gas?

Attendance at this event is by invitation only.

A ground-breaking research project from Chatham House, supported by The Power of Nutrition, is exploring the business case for tackling undernutrition, micronutrient deficiencies and overnutrition. Companies across all sectors hold huge, transformative power to save countless lives and transform their own financial prospects. To act, they need more compelling evidence of the potential for targeted investments and strategies to promote better nutrition and create healthier, more productive workforces and consumers.

At this workshop, Chatham House will engage business decision-makers in a scenario exercise that explores different nutrition futures and their commercial prospects in each before examining what different strategies business can pursue to maximize future profitability through investments in nutrition.

Attendance at this event is by invitation only.

To identify and promote collaborative opportunities for an inclusive and sustainable circular economy transition at the international level, a clearer understanding and discussions of the potential winners and losers of such a transition is needed. In short, a ‘win-win-win’ vision for the environment, people and the economy, needs to be built and credible pathways to achieving this vision.

This research workshop, organized by Chatham House and UNIDO, will build on previous and ongoing research by Chatham House, and others, to drive forward an inclusive circular economy agenda and promote a just transition from linear to circular economic models. Chatham House, in collaboration with partners, aims to provide a strong evidence base of the opportunities and trade-offs in this transition from linear to circular models by robustly analysing the political economies in key regions in the developing world and engaging with leading stakeholders from governments, international organizations, civil society and the business community.

Latin America is an important geographical region for the circular economy especially in view of the circular bioeconomy and the agenda around inclusiveness. Several countries are beginning to embrace the circular economy concept and related policies. This workshop will bring together circular economy leaders from policy, business and civil society across Latin American countries to identify and discuss challenges, large-scale positive sum opportunities, investment needs, existing alliances and the potential to scale up circular economy practices. The second day of the workshop includes site visits to various circular economy projects in Uruguay.

Attendance at this event is by invitation only. 

In the context of the feasibility of reducing greenhouse gas emissions to net zero, policymakers are beginning to pay more attention to options for removing carbon dioxide from the atmosphere. A wide range of potential carbon dioxide removal (CDR) options are currently being discussed and modelled though the most prominent among them are bioenergy with carbon capture and storage (BECCS) and afforestation and reforestation.

There are many reasons to question the reliance on BECCS assumed in the models including the carbon balances achievable, its substantial needs for land, water and other inputs and technically and economically viable carbon capture and storage technologies.

This meeting will examine the potentials and challenges of BECCS in the context of other CDR and emissions abatement options. It will discuss the requisite policy and regulatory frameworks to minimize sustainability and socio-political risks of CDR approaches while also avoiding overshooting climate goals.

Attendance at this event is by invitation only.

The Forecasting Forum 2020 will present the latest thinking from the Chatham House Energy, Environment and Resources Department's senior research team on the dynamics that will affect fossil fuel and energy investments and markets in the year ahead.

14:00 - 14:30 | Introduction and Climate Risks Outlook 

In the last decade, following the financial crisis, the literature on systemic risks has grown. Systemic risks occur when complex, non-linear, interconnected systems fail, often through relatively small perturbations, as their impacts cascade and amplify across the system. Within this context, climate change is a 'threat multiplier' with the risks increasing in scale, frequency and magnitude. Just as complex systems can pass thresholds and tip from a functional state to a non-functional state, so can societies and people’s attitudes. Together risk cascades or systemic risks and attitudinal tipping points have the potential to rapidly change the way the world works. 

Professor Tim Benton will open the Forecasting Forum 2020 with reflections on what this might mean for the pace and linearity of the fossil fuel transition.

14:30 - 15:30 | Session 1: An Outlook on Oil Prices in 2020

In this session, Professor Paul Stevens will argue that the recent events associated with the assassination of Iranian General Qasem Soleimani have exacerbated the sensitivity of oil markets to political events and brought 'geopolitics' back into global oil prices. Up to 2014, geopolitics played a key role in determining oil prices in the paper markets where perceptions and expectations ruled. By 2014, the world was so oversupplied with real oil barrels that the oil price collapsed and little attention was given to geopolitical events as geopolitics became marginalized in the determination of crude oil prices. However, recent events in the Middle East suggest that prices will become increasingly volatile but, at the same time, benefit from a rising geopolitical premium.

15:45 - 16:45 | Session 2: An Outlook for Energy in 2020

Recent years have brought significant disruption to the European power sector. Not only are many of Europe’s major utilities restructuring their businesses in light of decarbonization and technological developments but Brexit has distracted - and detracted from - efforts to create more systemic energy linkages between the UK and the rest of Europe. During his presentation, Antony Froggatt will draw on his ongoing research to outline what he believes are the prevailing challenges and opportunities for the European power sector over the coming year while highlighting some of the most significant global trends.

Please note, attendance at this event is by invitation only.

Summary

• Current climate efforts are not progressing quickly enough to prevent the world from overshooting the global emissions targets set in the Paris Agreement; accordingly, attention is turning increasingly to options for removing carbon dioxide from the atmosphere – ‘carbon dioxide removal’ (CDR).
•  Alongside afforestation and reforestation, the main option under discussion is bioenergy with carbon capture and storage (BECCS): processes through which the carbon emissions from burning biomass for energy are captured before release into the atmosphere and stored in underground reservoirs.
• This pre-eminent status is not, however, based on a comprehensive analysis of the feasibility and impacts of BECCS. In reality, BECCS has many drawbacks.
• Models generally assume that biomass for energy is inherently carbon-neutral (and thus that BECCS, by capturing and storing the emissions from combustion, is carbon-negative), but in reality this is not a valid assumption.
• On top of this, the deployment of BECCS at the scales assumed in most models would consume land on a scale comparable to half that currently taken up by global cropland, entailing massive land-use change, potentially endangering food security and biodiversity. There is also significant doubt about the likely energy output of BECCS solutions.
• BECCS may still have some role to play in strategies for CDR, depending mainly on the feedstock used; but it should be evaluated on the same basis as other CDR options, such as nature-based solutions or direct air carbon capture and storage (DACCS). Analysis should take full account of carbon balances over time, the requirements of each CDR option in terms of demand for land, water and other inputs, and the consequences of that demand.
• There is an urgent need for policymakers to engage with these debates. The danger at the moment is that policymakers are ‘sleepwalking towards BECCS’ simply because most models incorporate it – or, almost as bad, it may be that they are simply ignoring the need for any meaningful action on CDR as a whole.

This meeting formed part of a programme of work which investigates the role of negative emissions technologies (NETs) in achieving the Paris Agreement climate targets. Previous meetings held in London and Brussels have looked at integrating negative emissions into EU policy-making, the implications and degree to which NETs, and in particular bioenergy with carbon capture storage (BECCS), can be an effective climate mitigation tool. This meeting focused on the possible deployment pathways of NETs and alternatives to BECCS for the US in particular, in the context of geographical constraints and socioenvironmental implications, the role of the private sector, and appropriate governance and finance mechanisms. 

The pressure of the coronavirus pandemic is adding to a widely held misconception that trade in food products is bad for the environment due to the associated ‘food miles’ – the carbon footprint of agricultural products transported over long distances.

This concept, developed by large retailers a decade ago, is often invoked as a rationale for restricting trade and choosing locally-produced food over imports. Consuming local food may seem sensible at first glance as it reduces the carbon footprint of goods and generates local employment. 

However, this assumption ignores the emissions produced during the production, processing or storage stages which often dwarf transport emissions. Other avenues to address the climate change impact of trade are more promising.

Demystifying food emissions

In the US, for example, food items travel more than 8,000 km on average before reaching the consumer. Yet transport only accounts for 11 per cent of total emissions with 83 per cent – mostly nitrous oxide (N2O) and methane (CH4) emissions – occurring at the production stage.

US Department of Agriculture data on energy use in the American food system echoes this finding, showing that processing, packaging, and selling of food represent ten times the energy used to transport food.

In practice, it may be preferable from an environmental perspective to consume lamb, onion or dairy products transported by sea because the lower emissions generated at the production stage offset those resulting from transport. Similarly, growing tomatoes under heated greenhouses in Sweden is often more emissions-intensive than importing open-grown ones from Southern Europe.

Seasonality also matters. British apples placed in storage for ten months leads to twice the level of emissions as that of South American apples sea-freighted to the UK. And the type of transport is also important as, overall, maritime transport generates 25 to 250 times less emissions than trucks, and air freight generates on average five times more emissions than road transport.

Therefore, air-freighted Kenyan beans have a much larger carbon footprint than those produced in the UK, but crossing Europe by truck to import Italian wine might generate more emissions than transatlantic shipments.

Finally, one should take into account the last leg of transport. A consumer driving more than 10 km to purchase 1 kg of fresh produce will generate proportionately more greenhouse gas (GHG) emissions than air-freighting 1 kg of produce from Kenya.

Shifting consumption towards local foods may reduce GHG emissions in sectors with relatively low emissions intensities but, when non-carbon dioxide emissions are taken into account, this is more often the exception than the rule.

Under these circumstances, preventing trade is an inefficient and expensive way of reducing GHG emissions. Bureau et al. for example, calculate that a global tariff maintaining the volume of trade at current levels until 2030 may reduce global carbon dioxide emissions by 3.5 per cent. However, this would be roughly seven times less than the full implementation of the Paris Agreement and cost equivalent to the current GDP of Brazil or 1.8 per cent of world GDP.

By preventing an efficient use of resources, such restrictions would also undermine the role of trade in offsetting possible climate-induced production shortfalls in some parts of the world and allowing people to access food when they can’t produce it themselves.

Reducing the climate footprint of trade

This is not to say that nothing should be done to tackle transport emissions. The OECD estimates that international trade-related freight accounted for over 5 per cent of total global fuel emissions with shipping representing roughly half of it, trucks 40 per cent, air 6 per cent and rail 2 per cent. With the projected tripling of freight transport by 2050, emissions from shipping are expected to rise between 50 and 250 per cent.

Furthermore, because of their international nature, these emissions are not covered by the Paris Agreement. Instead the two UN agencies regulating these sectors – the International Civil Aviation Organization and the International Maritime Organization – are responsible for reducing these emissions and, so far, significant progress has proven elusive.

Regional or bilateral free trade agreements to further stimulate trade could address this problem by exploiting comparative advantages. Impact assessments of those agreements often point towards increases in GHG emissions due to a boost in trade flows. In the future, such agreements could incorporate – or develop in parallel – initiatives to ensure carbon neutrality by connecting carbon markets among contracting parties or by taxing international maritime and air transport emissions.

Such initiatives could be combined with providing additional preferences in the form of enhanced market access to low-carbon food and healthier food. The EU, as one of the chief proponents of bilateral and regional trade agreements and a leader in promoting a transition to a low-carbon economy could champion such an approach.

This article is part of a series from the Chatham House Global Trade Policy Forum, designed to promote research and policy recommendations on the future of global trade. It is adapted from the research paper, Delivering Sustainable Food and Land Use Systems: The Role of International Trade, authored by Christophe Bellmann, Bernice Lee and Jonathan Hepburn.