January 15 (Renewables Now) - The European Commission (EC) on Tuesday presented a plan to mobilise at least EUR 1 trillion (USD 1.13tr) of investments in the years through 2030 in support of its recently unveiled Green Energy deal that aims to make the bloc carbon-neutral.
While putting Europe on track to reach the carbon-neutrality goal by 2050, the all-encompassing Green Deal, unveiled at the end of 2019, will require significant investment from both the European Union (EU) and the national public sector. This major investment plan, called the Sustainable Europe Investment Plan, will be the financial pillar of the initiative, betting on a specific mechanism that puts a focus on encouraging coal-dependent member-states to move away from fossil fuels and coal, the EC said.
The overall idea of the investment plan is to create an enabling framework for the energy transition by spurring public and private investments and providing incentives for sustainable financing, while also offering practical support to generate the needed investments in the designated areas.
The so-called Just Transition Mechanism will have three main sources of financing, with only EUR 7.5 billion envisaged to come as fresh funds from the EU budget. The money will be allocated according to specific criteria, with at least EUR 100 billion to be provided in 2021-2027 to the most affected regions.
“The plan that we present today, to mobilise at least EUR 1 trillion, will show the direction and unleash a green investment wave,” said Ursula von der Leyen, president of the EC, adding that the objective of the plan is to turn the investment needs into investment opportunities.
The three main financing sources are:
-- A Just Transition Fund -- this fund will get EUR 7.5 billion in fresh EU money that will come on top of the EC proposal for the next long-term EU budget. In order to get a grant, member states will need to identify the eligible territories through “dedicated territorial just transition plans.” This, according to the EC, will provide between USD 30 billion and EUR 50 billion in funding and mobilise even more investments.
-- A dedicated just transition scheme under InvestEU will aim to mobilise up to EUR 45 billion of private sector investments, including in sustainable energy.
-- A public sector loan facility with the European Investment Bank will seek to mobilise an additional EUR 25 billion-30 billion in investments that will go for loans to the public sector. A legislative proposal on the matter is to be made in March.
“The necessary transition towards climate-neutrality is going to improve people's well-being and make Europe more competitive," said Frans Timmermans, executive vice-president for the European Green Deal. He went on saying: “The Just Transition Mechanism will help support those most affected by making investments more attractive and proposing a package of financial and practical support worth at least EUR 100 billion."
When it presented its Green Deal plan in December 2019, the EC said reaching the current 2030 climate and energy goals will require additional investments of EUR 260 billion a year by 2030. Its plan calls for lifting the greenhouse gas emissions reduction target to 50-55% by 2030 from 1990 levels as an interim goal before fulfilling the 2050 ambition.
(EUR 1.0 = USD 1.114)