How to boost the European Green Deal’s scale and ambition

The European Green Deal (EGD) is the European Union’s flagship strategy to tackle climate change. This policy paper compares the ambition and scale of the EGD with the current relevant scientific literature. The goal is to assess whether the current proposals are capable of fulfilling the EU’s commitment to limit global warming to 1.5°C in line with the Paris Agreement. Before embarking on the details of that question it is crucial to emphasize three core messages which emerge from climate science: 1. Tackling climate change requires that greenhouse gas emissions (GHG) are cut to net zero. Importantly, this net zero goal allows for positive emissions as long as they are offset by negative emissions. However, the technological and ecological uncertainties involved in large scale deployment of negative emissions technologies, means the emissions goal should be thought of as being close to an absolute zero goal. 2. There is not much time left to take action globally and in Europe. The latest estimates of global, as well as European carbon budgets, suggest that at current emission rates global warming will increase by more than 1.5°C in less than ten years. In addition, self-reinforcing feedback loops which push earth onto an irreversible warming path (hothouse earth) might set in from global temperature increases as little as 2°C. 3. The price of inaction will be high and most likely underestimated by the general public. While Europe will not suffer the worst consequences of climate change, heat waves, floods and droughts will still cause severe human suffering and economic damage. In addition, by 2070 up to 3.5 billion people could live in regions unsuitable for human habitation. This has the potential to trigger an unprecedented global migration wave. The question which emerges against this background is whether the EGD is ambitious enough to avoid the worst consequences of climate change. First, and most important, is the overall emissions reduction targets. While the EGD proposes to cut emissions by 50% to 55% percent by 2030 compared to 1990 levels, recent research suggests that in order to stay well below 2°C, a reduction of 65% by 2030 would be required, as would reaching net zero by 2040 rather than 2050. The EGD currently assumes that reducing GHG emissions by 40% by 2030 requires additional annual investments of € 260 billion. This is likely an underestimation of the volume of required investments for several reasons. First, increasing the reduction target towards 55% or even 65% will require faster and broader action. Second, increasing energy efficiency renovation of buildings alone is likely to require annual investments of € 490 billion. Third, scaling up Research and Development (R&D) investment to 3% or 4% of GDP in the EU27 requires additional annual investments of between € 75 and € 200 billion. Many of the required carbon neutral processes, especially in manufacturing, do not exist yet, and will require an increased expenditure in R&D for a successful transition. Taken together, this suggests that annual investment requirements of up to € 855 billion in the EU27 would be required for a successful transition. Setting and delivering on more ambitious GHG emission reduction targets requires the use of all possible policy tools. The EGD is a promising start in this context as it relies on a broad set of instruments from regulations, carbon markets, taxes and public investment. Given the limited time available the EGD should go a step further and upgrade the Sustainable Europe Investment Plan into a comprehensive climate master plan which determines clear targets and timelines for renewable energy capacity, building renovations, transport infrastructure, R&D targets etc. This would not only provide the private sector with clear long-term signals but also allow for timely monitoring of the EU’s progress

Can a European wealth tax close the green investment gap?

This paper analyses the European Commission’s assessment of investment needs as implied by the EU’s Paris commitment. We find that official estimates of the green investment gap until 2050 are likely to seriously understate actual investment required. Against this backdrop, we assess the potential of a European wealth tax to close this investment gap. In doing so, we first provide a detailed estimate of the wealth distribution across 22 EU member countries and then develop a microsimulation model for recurring wealth taxes in these countries. The model is based on household survey data from the HFCS, but compensates for missing observations at the top of the wealth distribution by means of a Pareto model. Taking different tax designs into account, we generally find a substantial revenue potential that could contribute significantly to closing currently existing green investment gaps. We also find that compensating for the ‘missing rich’ is essential for sensibly evaluating progressive tax designs

Policy Brief: A European Wealth Tax

The distribution of wealth in the European Union is heavily concentration at the top. The richest 1% of households hold a third of total aggregate net wealth while the poorest 50% of households hold less than 5% of total net wealth. The flipside of this strong concentration of wealth is the high revenue potential of wealth taxes. The estimates presented here suggest that a progressive tax on net wealth could generate revenues between 3% and 10.8% of GDP

A European wealth tax for a fair and green recovery

The European Union faces the twin crises of Covid-19 and climate change. Confronting both crises leads to an unprecedented demand on public resources which in turn leads to the question of how to raise the required funds a) without jeopardising a weak economy recovering from the pandemic and b) without undermining broad political support for climate action. This policy study investigates the potential of a European net wealth tax to raise substantial revenues while supporting the economy and the consensus on climate action. To achieve this, household survey data from the European Central Bank (covering 22 EU countries) are analysed. To address the problem of under-reporting of wealth at the top of the distribution in survey data, a Pareto distribution is fitted to the right tail of the data and used to create an amended data set which also represents these missing rich, whose wealth goes unreported. The Pareto-amended data show that household wealth is highly concentrated among the wealthiest households: the richest 1% hold 32% of total net wealth in the EU22 while the poorest half of all households only hold about 4.5% of total net wealth. These data are then used to estimate revenues for four different tax models. The results show that annual revenues between €192 billion (1.6% of GDP) and €1,281 billion (10.8% of GDP) across the EU22 are possible. Non-progressive (flat tax) designs yield revenues at the low end of this range while strongly progressive designs are responsible for the high revenue estimates at the upper end of this range. Conversely, the models’ ability to actively reduce the current concentration of wealth in Europe varies with the degree of progressivity of the tax design. In sum, a net wealth tax exhibits high revenue potential, which is a direct result of the observed high levels of inequality and is far larger than that for other proposals currently being discussed at the European level. A combination of clever design choices, more resources and better infrastructure for the EU’s tax authorities would make a European net wealth tax feasible. With respect to the tax design, high exemption thresholds between €1 million and €2 million, paired with progressive tax rates and a broad tax base, imply that only the richest 1% to 3% of all households are taxed and thus the problem of illiquid tax subjects is avoided, while keeping the revenue potential high. Boosting tax authorities’ resources to enforce the tax and to build appropriate infrastructure, such as real estate valuation databases and company registers, will ensure high levels of compliance and enforcement. Best practice examples such as Switzerland (valuation) and Norway (third party reporting) exist and can be used as a point of reference for successful implementation. To strengthen compliance an implementation at the European level is desirable. The results of this policy study show that overall, a European net wealth tax has the potential to make a substantial contribution to the EU’s efforts to organise a decisive response to the twin crises of Covid-19 and climate change. A net wealth tax is not only attractive because its revenue potential ranks amongst the highest of the potential alternatives that are currently being discussed at the European level, but also because of its ability to reduce historically high levels of wealth inequality in Europe

Is a €10 trillion European climate investment initiative fiscally sustainable?

This policy study asks to what extent large-scale public investment efforts could be a viable tool to provide the necessary infrastructure to break Europe’s dependency on fossil fuel and carbon emissions more broadly. We estimate semi-structural VAR models for the EU27. These are used to study the impact of permanent as well as 5-year long public investment programmes. Three key findings emerge: First, government investment multipliers for the EU27 are large and range from 5.12 to 5.25. Second, debt-to-GDP ratios are likely to fall in response to the strong economic impulse generated by additional public investment spending. The study therefore classifies additional public investment spending in the EU27 as sustainable fiscal policy. Third, single country investment initiatives will likely lead to smaller economic expansions when compared to coordinated EU-wide investment, due to Europe’s strong intra-member state trade flows. A coordinated approach to fiscal policy is thus substantially more effective not only when it comes to delivering network-dependent infrastructure (rail, grid) but also with respect to the economic stimulus it creates

Examining increased flexibility in assessment formats

There have been calls in the literature for changes to assessment practices in higher education, to increase flexibility and give learners more control over the assessment process (Boud and Falchikov 2006; Nicol and MacFarlane-Dick 2006; Taras 2002). This article explores the possibilities of allowing student choice in the format used to present their work, as a starting point for changing assessment, based on recent studies and current examples of flexible assessment practice in Higher Education. The benefits of this flexible assessment format approach are highlighted, along with a discussion of classic assessment considerations such as validity, reliability and marking concerns. The role of technology in facilitating assessment method choice is considered, in terms of new opportunities for providing student choice in the way they evidence their learning and present their work. Considerations for implementing flexible assessment choices into the curriculum are presented, along with a call that further research into such practice is needed to develop a comprehensive set of practical recommendations and best practice for implementation of flexible assessment choice into the curriculum. The article should be of interest to curriculum developers and academics considering implementing changes to the assessment process to increase student ownership and control

Developing Risk Management as a Competitive Capability

At the level of the firm, three major parameters are found to influence the ability of SMEs to develop risk management competencies; these are enterprise risk management, internal control, and risk culture

The CARMA Paired Antenna Calibration System: Atmospheric Phase Correction for Millimeter Wave Interferometry and its Application to Mapping the Ultraluminous Galaxy Arp 193

Phase fluctuations introduced by the atmosphere are the main limiting factor in attaining diffraction limited performance in extended interferometric arrays at millimeter and submillimeter wavelengths. We report the results of C-PACS, the Combined Array for Research in Millimeter-Wave Astronomy Paired Antenna Calibration System. We present a systematic study of several hundred test observations taken during the 2009–2010 winter observing season where we utilize CARMA's eight 3.5 m antennas to monitor an atmospheric calibrator while simultaneously acquiring science observations with 6.1 and 10.4 m antennas on baselines ranging from a few hundred meters to ~2 km. We find that C-PACS is systematically successful at improving coherence on long baselines under a variety of atmospheric conditions. We find that the angular separation between the atmospheric calibrator and target source is the most important consideration, with consistently successful phase correction at CARMA requiring a suitable calibrator located ≾6° away from the science target. We show that cloud cover does not affect the success of C-PACS. We demonstrate C-PACS in typical use by applying it to the observations of the nearby very luminous infrared galaxy Arp 193 in ^(12)CO(2-1) at a linear resolution of ≈70 pc (0".12 × 0".18), 3 times better than previously published molecular maps of this galaxy. We resolve the molecular disk rotation kinematics and the molecular gas distribution and measure the gas surface densities and masses on 90 pc scales. We find that molecular gas constitutes ~30% of the dynamical mass in the inner 700 pc of this object with a surface density ~10^4 M_⊙ pc^(−2); we compare these properties to those of the starburst region of NGC 253