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The EU Green Deal: one trillion euro investment plan to make EU the world’s first climate-neutral continent

On January 14, the European Commission unveiled its one trillion euro public and private investment plan to finance the European Green Deal. The overall goal of the plan is to create an enabling framework for private investors and the public sector to facilitate sustainable investments and to provide support to public administrations and project promoters in identifying, structuring and executing sustainable projects.
The Commission also presented the Just Transition Mechanism, intended to address the social and economic costs of the transition and to support workers and citizens of the regions most impacted by the transition.
On January 15, the Parliament voted in favour of the package and pushed for higher ambitions (increasing EU's 2030 goal of emissions reductions to 55%).

Where will the money come from? 

Graphic Source: European Commission

 The EU budget, Member States and private actors will all play an important role in financing the European Green Deal. 

  • EU budget: the European Commission proposed 25% of its total budget to contribute to climate action through several EU programmes, including the European Agricultural Fund for Rural Development, the European Agricultural Guarantee Fund, the European Regional Development Fund, the Cohesion Fund, and the Horizon Europe and Life programmes. Overall, the EU budget will provide €503 billion to the European Green Deal Investment Plan. 
  • Member States: co-financing of around €114 billion on climate and environment projects is expected over this timeframe. 
  • The InvestEU programme will generate around €279 billion from the European Investment Bank, national banks and international lenders. 
  • The Just Transition Mechanism will mobilise around €143 billion. The Commission proposed to allocate the newly announced €7.5 billion on top of the long-term EU allocations for the energy transition. EU Member States will need to match the €7.5 billion from the European Regional Development Fund and European Social Fund Plus. The dedicated Just Transition Scheme under InvestEU will provide around €1.8 billion from the EU budget in order to generate up to €45 billion in investments. The Commission will set up a new public sector loan facility with the European Investment Bank in March 2020 in order to mobilise between €25 and €30 billion in investments.
  • Finally, the EU Emissions Trading System (EU ETS) will provide around €25 billion for the EU's low-carbon transition. 

What projects will be financed? 

The projects that will be financed under the new Investment Plan are the ones that will contribute to reaching the goals of the European Green Deal; to the emergence of new, clean energy and circular economy industries; and to the creation of high-quality jobs for a competitive European economy.
The Just Transition Mechanism will provide tailored financing to a wide range of projects, including renovation of buildings, investments in renewable energy and efficiency, installation of electric vehicle charging stations, district heating networks, sustainable transport, job creation and re-skilling of workers. Nuclear is omitted from the Just Transition Mechanism.
The InvestEU programme will provide technical assistance and advisory support through the InvestEU Advisory Hub. It will provide public and private project promoters with technical support and assistance to help with the preparation, development, structuring and implementation of projects, including capacity building.

Selection criteria
The Commission will first assist those Member States and regions that are likely to be most affected by the transition. The most affected regions are the ones where jobs depend on fossil fuels, including coal, lignite and peat, as well as oil, shale or carbon-intensive industrial processes.
With regard to the Emissions Trading Scheme, the Commission proposed to reduce the number of industries eligible to receive compensation for the costs incurred from their inclusion in the EU's carbon market, shortening the list of sectors from fourteen to eight. The sectors that the Commission proposed to remove include mining activities and fertiliser manufacturing.

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