In a report published on Wednesday 24 June, the European Environment Agency warns that demographic and technological transitions might overpower the fiscal and financial systems and affect environmental policy objectives aimed at steering the EU towards a sustainable and climate-neutral future.
The report, entitled ‘The sustainability transition in Europe in an age of demographic and technological change’, explores the fiscal and financial strategies brought about by Europe's ageing population and the technological transition. In order to remove obstacles to a sustainable future for the EU, it calls for better integration of environmental policies into the overall work of governments.
According to the EEA, the ageing of the European population will lead to changes in the level and type of consumption. An older population is expected to consume more house and home-related services, but fewer transport-related services, with resultant changes in energy consumption and emissions.
Ageing is also expected to have a negative impact on fiscal sustainability because it may increase the need for spending on social protection and health, while also eroding the tax base through a reduced labour force. It will therefore have varied interrelated effects on sustainability transitions and on public institutions that are endeavouring to manage societal change.
Gains in resource efficiency and decarbonisation of the economy are expected to arise from technological innovations, especially in combination with social and political innovations, for example in the circular and sharing economies. The EEA warns of drawbacks, however: productivity gains may exacerbate labour substitution, increasing the pressure on public budgets through a shrinking tax base, which will in turn affect public expenditure and investment.
In addition, the artificial intelligence and automation used in self-driving cars and sharing platforms may not be as environmentally friendly as expected. To read the report, go to: https://bit.ly/2Z3WsRN (Original version in French by Aminata Niang)