The European Green Deal

After its introduction at the end of 2019, the plan now becomes increasingly concrete with a more precise identification of the areas of intervention and the necessary investment sources

Introduced on the 11th December 2019 with Communication 640 of 2019 of the European Commission, the European Green Deal provides a roadmap of actions aimed at a more efficient use of resources, with the ambition of a transition to an efficient and competitive circular economy, which reduces pollution and restores biodiversity, within which growth is economic growth is decoupled from resource use.

The Green Deal consists of a new strategy aimed at transforming the EU into a fair and prosperous society, with a modern economy, resource-efficient and competitive, emission free by 2050.

The aim set in the Green Deal surpasses the aim previously  set by the  2030 climate & energy framework (a reduction of at least 40% of greenhouse gases emissions by 2030 compared to 1990) which will have to be reviewed accordingly.

The plan identifies the necessary investments, as well as the available sources of financing and the methods through which carrying out a fair and inclusive transition to a sustainable economy within the European Union. While maintaining that all sectors of economy shall be involved by the plan, some are highlighted as of strategic relevance, and namely: environmentally-friendly technologies, industrial innovation, sustainable transports, decarbonising the production of energy, improving global environmental standards. Within the scope of the Green Deal, the Commission launched on the 14th January 2020 the so-called European Green Deal Investment Plan, which will mobilise sustainable investments up to at least 1 trillion over the next decade. The investments will be finalised to the creation of an enabling framework to facilitate and stimulate the public and private investments needed for the transition.

The EU is committed to providing targeted support to the individuals, companies and regions most affected by the transition to a green economy through the so-called Just Transition Mechanism, for which at least 100 billion over the period 2021-2027 will be mobilised. The Mechanism, aimed at a just and inclusive transition, will provide financing through three main channels:

  • A Just Transition Fund: which will receive €7.5 billion of fresh EU funds, coming on top of the Commission's proposal for the next long-term EU budget. In order to tap into their share of the Fund, Member States will, in dialogue with the Commission, have to identify the eligible territories through dedicated territorial just transition plans. They will also have to commit to match each euro from the Just Transition Fund with money from the European Regional Development Fund and the European Social Fund Plus and provide additional national resources. The investments provided, which will be between €30 and €50 billion of funding, will be primarily devoted to providing grants to regions to help SMEs, start-ups and incubators and to foster the transition in general;
  • A Just Transition Scheme: scheme dedicated to the transition within InvestEU. It will seek to attract private investments to the strategic sectors for a transition to a green economy, stimulating regions to find new sources of growth;
  • A public sector loan facility with the European Investment Bank backed by the EU budget: to mobilise between €25 and €30 billion of investments for loans to the public sector, mainly for investments in district heating networks and renovation of buildings. The Commission will come with a legislative proposal to set this up in March 2020.

The Just Transition Mechanism is about more than funding: the Commission will be providing technical assistance to Member States and investors and make sure that all the affected entities are involved, also through territorial just transition plans.

On the 4th March 2020 the Commission has proposed a regulation establishing a framework for the achievement of carbon neutrality, amending regulation EU/2018/1999, through which the Commission intends to make the aim of carbon neutrality by 2050 binding. To that end, the proposal defines a roadmap for a gradual and irreversible reduction of greenhouse gas emissions (not just limited to CO2) in all sectors.

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