“A new investment plan worth 180 billion euros between 2024 and 2030 is necessary”

SUnder the leadership of Ursula von der Leyen, the European Commission has succeeded in pivoting the European Union (EU) towards climate neutrality. With the European Green Deal, the EU has set itself clear and ambitious climate objectives for 2030 and 2050 and, to achieve them, it has adopted a series of legislative measures.

And while the Covid-19 pandemic and Russia’s invasion of Ukraine reminded us that the climate crisis was not the only major challenge for Europe, the Commission was able to stay the course. Of the hundreds of billions of euros in green funds of the EU were thus mobilized as part of the European recovery plan.

The EU thus devotes around 50 billion euros per year to climate action. But most of this sum comes from the post-pandemic recovery plan. Next Generation EU », which will reduce the size from 2025. From 2027, the level of budgetary credits for the climate will be less than 20 billion euros per year.

Around 2% of GDP

This reduction in European credits will come at a time when Member States will have to step up their efforts to place themselves on an ambitious decarbonization trajectory. They will have to set an example by implementing an accelerated reduction in emissions from public buildings, supporting the efforts of households and supporting business investments. At the same time, they will have to contain their budget deficits and control their debt.

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This green financing gap therefore risks representing a major obstacle to the implementation of the European Green Deal. The current €50 billion annually represents around 0.3% of the EU’s gross domestic product (GDP), a bare minimum for the Union to play a significant role in mobilizing investment. It should indeed be remembered that the additional annual investments necessary to achieve the EU climate objective for 2030 are estimated at around 2% of GDP, and that the share of public investments should be between 0.5% and 1 % of GDP.

A new European investment plan worth 180 billion euros between 2024 and 2030 is therefore necessary. To finance it, the EU has two main options. The first is to retain a greater share of the revenues generated by the sale of emission allowances. The second is to take out new common EU loans, which would be fully justified from a legal point of view, given that the green transition is an EU public good that requires a specific and temporary budgetary effort.

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