Europe doesn’t need to choose between the environment and growth

Three tactics for green growth

We often think about our environment and our economy as two equal and opposite goals that we have to choose between. We would like both, but it seems impossible to pursue one without hurting the other.

It’s not. Recent pieces of legislation across Europe show us how we really can have our cake and eat it, balancing the needs of our economies with environmental protection. We should take lessons from them and apply them more broadly.

Helping nature centrally

The first lesson is that nature can be helped centrally more easily than on site.

In Britain, onerous requirements are placed on developers, but the current rules don’t protect nature very well. Absurdly expensive but potentially ineffective mitigation is common, such as a £120 million bat tunnel and a so-called fish ‘disco’ (an underwater acoustic deterrent device). Meanwhile, the environment is not obviously improving: only 14% of rivers are in good ecological condition, for example. (Note that the environment in this essay refers to habitats and nature, not climate- or carbon emissions-related directives.)

Britain’s Labour government has now been elected on a platform of housebuilding, infrastructure creation, and energy development. They’ve proposed a new environmental regime as part of the draft Planning and Infrastructure Bill. Sam Dumitriu outlines its environment provisions:

The core idea is to scrap the specimen-by-specimen, site-by-site approach to protecting nature and replace it with one that addresses habitat loss at a higher, more strategic level. Instead of a housebuilder carrying out an environmental assessment for a given development and addressing its impacts on newts, bats, and river pollution directly, the housebuilder would refer to a high-level strategic assessment and mitigate likely impacts by paying into a Government-run Nature Restoration Fund.

The principle behind the law is clear: at times, development will have a negative impact on specific places. But that doesn’t mean it needs to have a negative impact on the environment as a whole. Instead of mitigating the impact locally, which could cost a huge amount of money and ultimately prove ineffective, more good could be done for habitats and species by spending money centrally. Central mitigation is a win for nature and a win for development.

The role of derogations

The second lesson is that derogations for important projects are necessary. (A derogation is an exemption from a particular law.)

In 2024, the EU adopted its first nature restoration law. It creates targets for ecosystem restoration across all member states, which will also help countries to meet climate targets.

The goals are ambitious: 20 per cent of the EU’s land and seas are to be protected in law by 2030, followed by “all ecosystems in need of restoration” by 2050. Forests, pollinating insects, agricultural systems, rivers, and even urban green spaces are included.

The law itself doesn’t specify exactly how these areas are to be protected. Member states have to file a national restoration plan by September 2026, which will be reviewed by the Commission.

Two interlocking principles underpin the law. One is “continuous improvement”, in other words a duty to keep indicators climbing upwards instead of meeting a single, one-off target. The second is “no deterioration”, a commitment to maintain healthy environments once established. Together these impose a high standard for member states.

However, the legislation also includes a series of derogations. One is for specific causes like natural disasters, “unavoidable” climate-driven habitat change, or projects of “overriding public interest for which no less damaging alternative solutions are available”. There is also an exception for projects relating to national defence.

The law also notes that “the planning, construction and operation of plants for the production of energy from renewable sources, their connection to the grid and the related grid itself, and storage assets shall be presumed to be in the overriding public interest.” This automatic presumption of public interest makes it easier to clear one of the tests that normally applies to projects affecting habitats. Environmental assessments still apply, but if the location is not a sensitive site, a single strategic environmental assessment might suffice – a lower burden than projects normally face. Given the positive climate impact of green energy projects, this is a reasonable tradeoff.

The EU already has legislation (EU regulation 2022/2577, later made part of the Renewable Energy Directive) exempting renewable energy projects from some environmental procedures. The Centre for British Progress recently highlighted how these have been transposed into national law by Germany and Spain:

Germany [amended] its Spatial Planning Act. This allowed states to designate ‘wind energy areas’, subject to an SEA. In these areas developers are not required to conduct specific EIAs or species protection assessments, so long as they comply with certain conditions. Germany’s rules also include provisions for developers to pay a fixed levy where the environmental authorities are not otherwise able to secure suitable and proportionate mitigation measures. This levy is calculated based on the megawattage of the scheme.

Spain created a simplified regime to authorise renewable energy projects that streamlined environmental assessment outside of specifically protected sites.

There shouldn’t be a derogation for every kind of project, but low-carbon energy and climate projects are clearly a priority across Europe, given our lack of energy security and the need to decarbonise. If there’s anything that deserves a derogation, it’s projects in those two categories.

Ireland has yet to take advantage of this opportunity, and will be required to do so by this directive in the coming years. The result is that we’re still approving important energy projects on a case-by-case basis, despite new projects being crucial to our security and prosperity.

Protecting regions as a whole

The third lesson is taking a wider view of the environment and nature by protecting regions as a whole.

This is closely related to the first lesson, but where it focused on central mitigation, this lesson focuses on how we evaluate the health of a particular ecological area as a whole.

Imagine a project is being built that might affect a nearby habitat, say a coastal area. If you look only at this small area, then the project looks like a big ecological problem. However, what if that nearby habitat could be extended and improved in another place? Zooming out, the project no longer looks so bad: the very same habitat will be the same or larger overall.

Article 4(13) of the EU’s Nature Restoration law states that outside Natura 2000 sites (a network of important species and habitats underpinned by the Birds and Habitats directives), non-deterioration may be applied at the level of each biogeographical region for each habitat and species.

Member states have to notify the Commission if they want to avail of this option. Once they do so, as long as a development doesn’t adversely affect a protected habitat or species (admittedly a big “if” when almost 20 per cent of EU land is a Natura 2000 site), limited local deterioration may be tolerated if offset elsewhere within the same biogeographical reason.

A win for the environment, which will be enhanced overall, and a win for development.

The path forward for the economy and the environment

Rightly applied, the principles above can help safeguard our environment while allowing room for development.

Centralised nature funding allows mitigation to go further, enhancing the environment. Derogations can protect our national security and our climate goals – to jeopardise either of these would be bad for the environment in the longer term. Lastly, protecting regions as a whole instead of every individual site means that we allow room for development that won’t damage habitats overall.

Environmental protection in the 2020s must be increasingly adaptable, able to work with new political priorities around growth and climate change. The principles outlined above can help us do so.