Find out how Europe aims to fund projects to tackle climate change and support the regions most affected by the transition to a green economy.
Just over a month after the presentation of the European Green Deal, the European Commission presented a detailed proposal on how to finance it. The European Green Deal Investment Plan is designed to attract at least one trillion euros worth of public and private investment over the next decade.
Why it matters
Turning the EU into a climate neutral economy by 2050 will require massive investment in clean energy technologies. To achieve an interim greenhouse gases reduction target of 40% by 2030 would require €260 billion of additional investment a year, according to the Commission’s estimates.
Where the money will come from
Around half of the money should come from the EU’s long-term budget through various programmes that contribute to climate and environment projects, for instance through agricultural funds, the Regional Development Fund, Cohesion Fund, Horizon Europe and the Life programme.
This in turn would attract an additional €114 billion in co-financing by EU countries. About €300 billion worth of private and public investment is expected to be mobilised through funds from InvestEU and the EU’s Trade Emissions Scheme (ETS) while another €100 billion should be attracted using the new Just Transition Mechanism, which is designed to support regions and communities that are most affected by a green transition, for instance regions that are heavily dependent on coal.
Just Transition Mechanism
The mechanism will be based on three pillars:
- the Just Transition Fund (JTF)
- the InvestEU funding stream
- loans from the European Investment Bank (EIB) backed by the EU budget
All these instruments are expected to attract €100 billion in public and private investment – money that could be used for workers to learn new skills for jobs of the future, support for businesses to create new employment opportunities as well as investment in clean energy and the insulation of homes.
Next steps
In July, the regional development committee approved the establishment of the Just Transition Fund, but called for a larger budget, broader scope and a rewards mechanism. Parliament is expected to vote on its position during the September plenary.
Source: European Parliament