EU Confirms Green Strings Attached to €750-Billion Recovery Package, €1-Trillion/Seven-Year Budget
News reports are confirming that the European Union’s seven-year, €1-trillion budget proposal and its €750-billion coronavirus recovery package will both have green strings attached, with 25% of the funds devoted to climate action and a “do no harm” clause to prevent environmentally damaging investments.
“The recovery plan turns the immense challenge we face into an opportunity, not only by supporting the recovery but also by investing in our future: the European Green Deal and digitalization,” European Commission President Ursula von der Leyen told the EU parliament Wednesday.
Like this story? Subscribe to The Energy Mix and never miss an edition of our free e-digest.
“Under this new recovery instrument, we will support the investments and reforms that are essential for a sustainable recovery,” added EU Commission Executive Vice-President Frans Timmermans, in a statement to reporters Thursday. “Member states will design national recovery plans, with the twin green and digital transition at their heart, and they will be assessed accordingly.”
The stimulus plan “aims to accelerate the transition to clean transport, increase energy savings, and boost the production of renewable energy,” Bloomberg Green reports. “To access funds in the rescue plan, European Union member states will need to show that their investment is in line with the ambitious objective of the Green Deal to eliminate net greenhouse gas emissions.”
Bloomberg, Euractiv, and Greentech Media previously reported that the EU was planning the world’s greenest recovery package, complete with a 15-gigawatt renewable energy tender and auctions for green hydrogen. It will still take months for the bloc’s 27 member states to approve the deal.
“The costs of the clean transition are dizzying,” Bloomberg writes. “The commission estimates that reaching the current 2030 climate and environmental targets needs additional investment of €470 billion a year. To alleviate financial concerns by some member states, the blueprint also promises more funds to help the regions most affected by the green shift,” with an immediate, €30-billion boost to the bloc’s just transition fund and another €40 billion available “for reskilling of workers or putting small and medium-sized companies on a more sustainable track” in the most heavily-affected regions.
The plan also includes a European agriculture fund to help farmers and rural areas implement the Green Deal, including €15 billion to help the sector fulfill biodiversity targets and Europe’s clean food supply chain strategy.
Once program funds begin flowing, “spending will also be guided by a sustainable finance taxonomy, which aims to channel private investments into technologies that contribute to at least one of six pre-defined environmental objectives, such as climate change mitigation,” Climate Home News reports. The “do no harm” provision will be “embedded in the taxonomy”, and “will in principle exclude technologies like nuclear power, which are seen to be undermining other environmental objectives such as pollution prevention and control.”
The environmental criteria attached to the European Commission stimulus package are meant to “restore a level playing field between rich and poor EU member states,” Climate Home explains. “During the corona crisis, national governments have spent nearly €2 trillion in state aid for ailing companies and small businesses, without any green conditions attached. And 52% of that aid was spent by Germany alone, raising fears that the crisis will deepen economic disparities within the 27-member EU bloc.”
The history so far prompted Spain’s ecology minister Teresa Ribera to warn that “this is not an even game,” adding that “allowing countries to get an unfair advantage may create more problems” for economic and social cohesion.
At a recent Euractiv online event, Ribera called for “a level playing field” where “everybody sets the same targets,” Climate Home adds.
In an emailed statement to Bloomberg, Greenpeace said the EU’s menu of “eye-catching green options” didn’t solve the existing support the continent hands over to polluting industries. “For every sensible measure there is another that keeps us dependent on fossil fuels, encourages the destruction of nature, and prolongs job insecurity,” the organization warned.
Manon Dufour, head of the Brussels office of the climate think tank E3G, said the plan “puts in place the necessary structure for a pan-European recovery.” It also “upholds the European vision of achieving climate neutrality and economic growth, and puts in place strong European governance to ensure that no investment made for the sake of recovery can harm the bloc’s climate efforts.” But she cautioned that strong governance of the fund was “not sufficient in itself”, and that the 25% climate quota in the EU budget “is too low given the scale of the challenge”.
Transport & Environment Executive Director William Todts called the announcement a “once in a generation” opportunity. “If we get this right, we’ll emerge in a Europe with healthy and livable cities, a cutting-edge automotive industry, and millions of new green jobs,” at a time when “the stakes couldn’t possibly be higher.”
“I commend President von der Leyen and her Commission for their 21st-century leadership and foresight,” agreed Club of Rome Co-President Sandrine Dixson-Declève, who sat on the technical committee that advised on the green finance taxonomy. “They have listened to calls from economists, scientists, and NGOs to not go back to business as usual,” she said, and the ‘do no significant harm’ provision “will guarantee that we continue to build a low-carbon economy as we exit and recover from COVID”.
In what was previously a part of the EU, Bloomberg reported last week that a green recovery could create 850,000 jobs in the United Kingdom.