European Commission outlines €1tn Green Deal ambitions

The European Commission has officially announced its ambitions to generate €1-trillion in order to finance its European Green Deal. Commission president Ursula von der Leyen challenged EU member states and the European Parliament to take up the cause by emphasising the urgency of the situation, and highlighting the need to push through climate change funding arrangements as talks over the bloc's next long-term budget near completion.

Ms von der Leyen, who took up her role as Commission President on December 1, said in a statement: “The transformation ahead of us is unprecedented. And it will only work if it is just and if it works for all. We will support our people and our regions that need to make bigger efforts in this transformation, to make sure that we leave no one behind. The Green Deal comes with important investment needs which we will turn into investment opportunities. The plan that we present today, to mobilise at least €1-trillion, will show the direction and unleash a green investment wave.”

In order to progress, the Green Deal must be approved for inclusion in the EU's 2021-2027 long-term budget - the bloc's multi-annual financial framework. In order to make the budget 'greener', it will have to withstand budgetary negotiations between member states which are, at present, deadlocked.

When the UK finally withdraws from the EU, it will also increase pressure on the bloc's finances and there is currently little consensus on the upcoming budget.

Under the plan, the EU envisages €503-billion coming from the next seven-year budget and an additional €25-billion from funding allocated for the emissions trading scheme. A further €279-billion will be generated by the InvestEU programme - 75% of which is guaranteed by the European Investment Bank.

Member state structural funds will be asked to contribute an additional €114-billion and the Just Transition Fund will provide new money - €7.5 billion -  to finance projects in regions dependent on fossil fuels. In total, the EU hopes to mobilise €100-billion through this fund over the next few years.

The European Green Deal’s funding comes, in large part, from the budgets being redirected towards the energy transition. “This obviously does not represent the full financing needs, which are estimated at €260 billion of additional investment by the European Commission,” said a Commission source.

InvestEU will be asked to raise €45-billion of the Just Transition cash from private investment and the EIB is opening a €25-30-billion facility which offers affordable loans to the public sector in member states. Legislation pertaining to the loan facility is expected in March.

The Just Transition Fund, the commission said, will be intended “to help workers and communities which rely on the fossil fuel value chain” and efforts will be made to circumvent any state-aid related restrictions which would otherwise apply.

It is hoped that nations such as Poland, which are highly dependent on coal and somewhat resistant to the Commission's plans for an energy transition will come around following Ms von der Leyen's announcement. 

French President Emmanuel Macron has stated that funds for the energy transition will not be released if Warsaw does not adhere to the European objective.

Poland's other stumbling block could prove to be the Cohesion Fun, another major source of funding for the Green Deal. Member states and the European Commission want the use of these funds to be made conditional on respect for the rule of law. That could hinder Poland's accedd, which has been in Brussels’ firing line over its judicial reforms.

Back to Homepage

Back to Politics & Economics