Econostrum | Economic News in the Mediterranean

EU invests €1000bn in energy transition

Written by Frédéric Dubessy on Wednesday, January 15th 2020 à 16:08 | Read 65 times

The EU will help regions in their ecological transition (photo: F.Dubessy)
The EU will help regions in their ecological transition (photo: F.Dubessy)
EUROPEAN UNION. The Investment Plan for a Sustainable Europe (part of the European Green Deal) will invest at least €1,000 billion over ten years to address climate and environmental challenges.

As stated in the European Commission's report to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, released on Tuesday 14 January 2020, "this is a new growth strategy to transform the EU into a fair and prosperous society with a modern, resource-efficient and competitive economy, where net greenhouse gas emissions will be zero by 2050, the environment and citizens' health will be protected, and economic growth will be decoupled from resource use.

Upon her election as President of the European Commission in July 2019 at the European Parliament in Strasbourg, Ursula von der Leyen had focused her speech on her willingness to invest in "a green pact for Europe" to become the "first climate neutral continent in the world."

An InvestEU fund to guarantee investments

In concrete terms, this investment plan for a sustainable Europe will involve three actors (private sector, EU budget and national budgets) and rest on as many pillars.
Firstly, the mobilisation of the EU budget on this theme will be at least 25% of the total budget. This should represent €503 billion of spending on the environment between 2021 and 2030, plus €114 billion of additional national co-financing.
This impetus will help attract private finance, notably through the InvestEU fund, which could mobilise €279bn of private and public investment over the same period by providing an EU budgetary guarantee to reduce the risk attached to financing and investment operations.

At the same time, public sector investment - targeting €100bn between 2021 and 2027 (€143bn extrapolated over ten years) - will focus on the regions most affected by the transition through the Just Transition Facility, funded by the EU budget, Member States and contributions from InvestEU and the European Investment Bank (EIB). Almost one third of the operations signed by the EIB already contribute to climate action and the EIB aims to reach 50% by 2025. In March 2020, the European Commission will present a legislative proposal to set up a public sector lending facility with the EIB. The bank will provide technical assistance and advisory services to generate a pipeline of projects for the benefit of regions in transition.

Secondly, a comprehensive and facilitating framework for private investors and the public sector will be put in place to ensure the transition to sustainability across the EU, "targeting climate and environmental investments, as well as social investments, insofar as these are relevant to the transition to sustainability," the report says.

Finally, the plan will provide tailored support to administrations and project promoters to help them define, structure and implement sustainable projects.


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