World’s Greenest Coronavirus Recovery Package Arriving in Europe

EU to Unveil World’s Greenest Coronavirus Recovery Package

21 May 2020, 07:19 PM IST

(Bloomberg) --

The European Union is poised to announce the world’s greenest recovery package next week, as it seeks to curb pollution and save its economy from the coronavirus pandemic.

European Commission President Ursula Von Den Leyen is set to transform her Green Deal strategy to reach net zero greenhouse gas emissions by 2050, into a coronavirus economic rescue plan that’ll rapidly drive private investment and create jobs across the continent, according to a draft document with details of the proposal seen by Bloomberg.

The plan is part of the package that the EU executive will unveil on May 27 for the bloc’s jointly financed response to the pandemic-induced recession. The package will include a proposal for the EU’s next trillion-euro budget for the years 2021-2027 and a “recovery instrument” of at least half-a-trillion euros specifically designed to cushion the economic blow from the outbreak.

“These sums would dwarf any green stimulus announcements to date and signal that the EU really wants to align its economic recovery strategy with the Green Deal,” said Victoria Cuming, head of global policy at BloombergNEF.

Selected proposals (subject to change):
60 billion euros to 80 billion euros to boost electric vehicle sales and a doubling of investment in charging networks Option to exempt electric vehicles from VAT 91 billion euros a year in grants and guarantees for sealing up drafty buildings - including plans to offer home buyers green mortgages 10 billion euros to leverage finance for 7.5 gigawatts of new renewable energy projects over the next 2 years 10 billion euros a year in a fund administered by the European Investment Bank to boost renewables and hydrogen infrastructure As much as 30 billion euros from the EU’s existing Innovation Fund for the development of green hydrogen that can curb emissions in some of the hardest to tackle industries, like steel and cement making

Selected proposals (subject to change):

60 billion euros to 80 billion euros to boost electric vehicle sales and a doubling of investment in charging networks
Option to exempt electric vehicles from VAT
91 billion euros a year in grants and guarantees for sealing up drafty buildings - including plans to offer home buyers green mortgages
10 billion euros to leverage finance for 7.5 gigawatts of new renewable energy projects over the next 2 years
10 billion euros a year in a fund administered by the European Investment Bank to boost renewables and hydrogen infrastructure
As much as 30 billion euros from the EU’s existing Innovation Fund for the development of green hydrogen that can curb emissions in some of the hardest to tackle industries, like steel and cement making

As governments around the world move from health-crisis management to plotting an economic recovery path, they’re under pressure to invest in measures that can scale up rapidly and create jobs for the millions who now find themselves out of work.

A big part of the proposed European stimulus assumes involvement of the private sector in financing or draws on existing projects to accelerate the sustainable transition. The amount of fresh cash to be injected into the clean recovery will be possible to calculate only after the commission has put forward its final proposal next week.

Still, the details from the plans under consideration send an important signal for investors. Before the crisis, the commission calculated Europe will need between 250 and 300 billion investment a year to reach the climate neutrality goal.

The EU’s executive is seeking to strike a fine balance between kick-starting the economy and greening it at the same time. The proposal to be unveiled next week is subject to unanimous approval by the EU’s 27 governments in a process of tough negotiations that could take months to conclude.

“We need an economy that is more resilient, better equipped to use digitalization, and above all, greener,” said Virginijus Sinkevicius, the EU Environment Commissioner.