Europe’s Recovery Plan Has Green Strings Attached
Europe Pledges Green Recovery in Historic Stimulus Program
(Bloomberg) -- Meeting the climate-neutrality goal is a key pillar of a 750 billion-euro ($824 billion) economic recovery plan unveiled by the European Commission, one of the Brussels-based executive’s top officials said.
The unprecedented stimulus program -- along with a revised budget for the next seven years -- aims to accelerate the transition to clean transport, increase energy savings and boost the production of renewable energy. To access funds in the rescue plan, European Union member states will need to show that their investment is in line with the ambitious objective of the Green Deal to eliminate net greenhouse gas emissions.
“With the new package we also commit to do no harm with regard to our climate ambitions,” EU Commission Executive Vice-President Frans Timmermans told reporters in Brussels on Thursday. “What we do should help us fulfill these ambitions and should not go in the other direction.”
The package, the world’s greenest stimulus plan to mitigate the economic effects of the coronavirus crisis, needs to be approved by the bloc’s 27 member states in difficult negotiations that may take months. It would promote a clean link that was missing in many national Covid-19 bailouts despite encouragement from the commission.
Recovery efforts by individual European governments have so far had a mixed record when it comes to climate. France’s 7 billion-euro bailout for Air France-KLM has green strings attached, including the need for the airline to eliminate short-haul flights for routes covered by high-speed trains. By contrast, the Italian government’s 3 billion-euro support plan targeting Alitalia had no similar conditions.
“Under this new recovery instrument, we will support the investments and reforms that are essential for a sustainable recovery,” Timmermans said. “Member states will design national recovery plans, with the twin green and digital transition at their heart and they will be assessed accordingly.”
The stimulus program, which will be funded by the commission’s borrowing on financial markets, includes 500 billion euros in grants and 250 billion euros in loans. It comes on top of a jointly-financed 1.1 trillion-euro EU budget for the 2021-2027 period. It’s not immediately clear how much of the funds will be earmarked for green initiatives, though analysts put the numbers at more than 100 billion euros.
“This is a great step forward in accelerating the ecological transition,” said Pascal Canfin, a French member of the liberal group in the European Parliament and chair of the assembly’s environment committee. “This is a historic day for Europe.”
The costs of the clean transition are dizzying. The commission estimates that reaching the current 2030 climate and environmental targets needs additional investment of 470 billion euros ($517 billion) a year. To alleviate financial concerns by some member states, the blueprint also promises more funds to help the regions most affected by the green shift that Commission President Ursula von der Leyen put at the heart of her political agenda.
The Just Transition Fund will get a 30-billion-euro boost and will now have 40 billion euros at its disposal to help the most affected regions bear the costs of transitioning toward eliminating emissions. The aid can be used for re-skilling of workers or putting small and medium-sized companies on a more sustainable track.
On the list is also a proposal to reinforce the budget for a European agriculture fund to help farmers and rural areas implement the Green Deal. The 15 billion-euro fund will help the agriculture sector achieve new biodiversity targets and Europe’s clean food supply chain strategy.
The recovery package includes “eye-catching green options,” but doesn’t solve existing support for polluting industries, environmental lobby Greenpeace said in an emailed statement. “For every sensible measure there is another that keeps us dependent on fossil fuels, encourages the destruction of nature, and prolongs job insecurity.”
The sense of urgency to act on the climate has been building up in past weeks even as the pandemic swept countries across the world, killing thousands and sending entire economies into lockdowns. Companies worth $2 trillion, top economists led by Nobel laureate Joseph Stiglitz and even medical professionals are calling on governments to implement a green recovery.
“The EU’s stimulus plan is a once in a generation opportunity, if we get this right we’ll emerge in a Europe with healthy and livable cities, a cutting-edge automotive industry and millions of new green jobs” said William Todts, executive director at the Transport & Environment lobby. “The stakes couldn’t possibly be higher.”
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