Europe’s €1 trillion “Green Deal”
December 12, 2019 - The European Commission’s incoming President, Ursula von der Leyen, is planning to present “European Green Deal” legislation -- to enshrine climate neutrality in EU law -- at the next EU summit, due to take place on December 12-13.
Dutch Socialist Frans Timmermans will control the “European Green Deal” portfolio, the implementation of a package of policies designed to achieve an emissions-free continent by 2050.
A priority for Timmermans’ team includes the raising of the EU’s carbon reduction target from 40% to 50-55% by 2030, compared with 1990 levels. The entire EU has only managed to lower emissions by 23.5% per cent so far -- while Spain has seen a 17.9 per cent increase -- a further 26-31 per cent cut appears a high ask.
Latvian conservative Valdis Dombrovskis will handle the “Economy that Works for People” portfolio, tasked with transforming the European Investment Bank (EIB) into a climate bank and unlock €1 trillion of investments over the next decade.
The EIB strategy includes a major “green” bond issuance programme to fund R&D and low-carbon technology. The European Central Bank, private finance and institutional investors are expected to buy these green bonds.
The Green Deal also requires an end to all EU and national public funding for fossil fuel-powered energy projects. Germany, Italy, Poland, Latvia and Spain want the EIB to keep funding gas projects to help the transition from coal or nuclear power. EIB figures show it funded almost €2 billion of fossil fuel projects in 2018.
There is also a “Just Transition Fund” to ease the pain for fossil fuel-dependent regions. The European Parliament has called for an extra €4.8 billion for this fund. The Polish Economic Institute estimates that to be effective, the fund needs at least €10-20 billion annually in the 2021-2027 period.
- Annual European Union greenhouse gas inventory report 2019 (European Environment Agency)
- Funding the Just Transition to a net zero economy in Europe (E3G )
- Financing the European Green Deal (Civil Society Briefing)
- Ursula von der Leyen’s Green Deal is doomed (Politico)
- European Investment Bank postpones decision on fossil fuel lending (Reuters)
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