The E.U.’s executive body on Tuesday launched a one-trillion-euro ($1.1-trillion) plan to finance its goal of making the bloc carbon neutral by 2050.
That figure, a 10-year investment to be sourced from leveraged public and private funds, is part of a European “Green Deal” – an ambitious rethinking of the economy, transport, and energy sectors to turn the E.U. into a leading light in the fight against global warming.
European Commission chief Ursula von der Leyen, who has made the project the centrepiece of her mandate that started last month, presented the plan at the European Parliament in Strasbourg.
With those outlays came some growth opportunities, she insisted. But in any case, “the costs of failure to act here would be enormous … so we have no option other than to invest in this now.”
That message is reinforced by recent scientific assessments that carbon dioxide concentrations are heating the planet faster than previously predicted.
In its most recent report, the world’s top body of climate scientists warns that anything shy of an urgent, system-wide overhaul of industrial economies will result in a devastating feedback loop that some experts believe could ultimately threaten the existence of organized human life on Earth.
To help overcome the knotty problem of putting coal-dependent E.U. regions – for instance Poland, the Czech Republic, or parts of Germany – on the path of renewables, her Commission has proposed a “just transition mechanism” meant to bankroll the sort of deep changes needed.
A ‘Daunting’ Path
The plan aims is to make available up to 100 billion euros a year, as a “pledge of solidarity and fairness for those who face the deepest challenges to make this journey with us,” Commission Vice President Frans Timmermans told MEPs.
The core of the mechanism will be an E.U. transition fund of 7.5 billion euros over the period of the next E.U. long-term budget, running from 2021 to 2027, as part of “cohesion” spending meant to boost regional development.
While open to all member states, it is meant more for those that will have to give up fossil fuel energy.
“What we’re doing here is a message to coal miners in (Spain’s) Asturias, (Greece’s) western Macedonia or Silesia (a region including parts of Poland, the Czech Republic and Germany), to the peat harvesters in the Irish midlands,” Timmermans said.
“We know you face a steeper path to climate neutrality … the road to it looks daunting today,” he said. The transition mechanism “is a pledge that the E.U. stands with you in this transition”.
The Commission wants to see the fund encourage equivalent investments from members states, and also spur private sector activities in areas protecting the environment, making buildings more energy-efficient, and boosting the use of renewable energy. The European Investment Bank will become a “climate bank” by offering loans to further the E.U. goal.
The Commission says an extra 260 billion euros in investments are needed per year to finance the switch, which would also entail social changes as populations adapt to new policies for transport, energy, and agriculture.
Some of the gap between the transition mechanism and that cost projection would come from a quarter of the long-term E.U. budget under a proposal by the previous Commission.
A final agreement on the way forward has to be worked out between the Commission, the European Parliament and member states.
Poland’s right-wing government has so far refused to sign on to the far-reaching project, worried about the economic and social costs involved.
And there is also a tricky debate over nuclear energy to be navigated.
France champions the atomic power it relies on as a relatively beneficial energy source when it comes to climate emissions. The Czech Republic and Hungary also defend nuclear as part of their energy mix.
But other member states, such as Luxembourg and Austria, are opposed to nuclear energy being painted as “green.”