The European Union has unveiled a comprehensive, €750 billion ($A1.2 trillion) plan for a climate-led economic recovery from Covid-19 that puts investment in renewable energy, clean transport, smart energy and emissions reduction at the front and centre – and casts Australia even more starkly as a backwards-looking global laggard.
The “Next Generation EU” plan, announced on Thursday (Australian time), is designed to chart a sustainable path out of the Covid-19 economic slump, while delivering on the Commission’s pledge to ratchet down Europe’s emissions to “net zero” by 2050.
“This is Europe’s moment,” said European Commission President Ursula von der Leyen in a statement announcing the plan.
“The recovery plan turns the immense challenge we face into an opportunity, not only by supporting the recovery but also by investing in our future: the European Green Deal and digitalisation will boost jobs and growth, the resilience of our societies and the health of our environment.
“Our willingness to act must live up to the challenges we are all facing. With Next Generation EU we are providing an ambitious answer.”
A big part of that “ambitious answer” seems to be to expand on the “Green Deal” that the European Union Parliament approved in January. This includes spending of €91 billion a year on green incentives like low-interest loans to drive sustainable building initiatives across the continent, including renewable heating systems, rooftop solar, batteries, and other smart energy and energy efficiency measures.
The Commission says it aims to use the publicly-funded policy levers to drive private investment in the decarbonisation of the EU’s building stock, which it hopes will take the annual spend on this sector alone to a potential €350 billion annually.
The government funds, however, will prioritise the greening up of schools, hospitals and social housing, while an allowance would also be made for €5 billion of guarantees for “green mortgages,” to tie low-carbon renovations into property sales.
On the renewable energy front, the EU would tender for 15GW of new capacity over the coming two years, with expected investments of €25 billion, focused particularly on large-scale solar and wind. Renewable projects would also have access to a €10 billion loan pool administered by the European Investment Bank.
The Commission also wants to double down on plans for the production of clean hydrogen from renewable electricity, boosting funding for this to €1.3 billion and paying carbon “contracts for difference” to projects to bridge the gap between the price of an EU carbon permit and the actual cost of cutting CO2.
Another two-year €20 billion package would aim to drive the shift to electric and other zero-emissions vehicles, including the installation of one million electric vehicle charging stations by 2025.
And a €40-60 billion fund would target investments in zero-emission trains, while provisions are expected to be made for another €20 billion in existing EU funds to be freed up for investments in cycling infrastructure and clean public transport.
“A new Strategic Investment Facility will invest in technologies key for the clean energy transition, such as renewable and energy storage technologies, clean hydrogen, batteries, carbon capture and storage and sustainable energy infrastructure,” says a report titled Europe’s moment: Repair and Prepare for the Next Generation.
“The work of the European Battery Alliance will be fast-tracked and the new Clean Hydrogen Strategy and Alliance will steer and coordinate the rapid upscaling of clean hydrogen production and use in Europe.
“The Commission will also make proposals to boost uptake of offshore renewable energy and to better integrate the energy system,” the report said.
All told, it couldn’t look more different to Australia’s Coalition government policy plan for the post-Covid world, which puts gas at the centre of economic stimulus plans and completely ignores the glaring opportunity to ratchet up the nation’s dangerously inadequate climate targets.
That said, the Next Generation EU plan still has to get the nod from the bloc’s 27 member states and the European parliament. One road block could be reluctance of some countries to take on new debt. The Commission has proposed €500 billion in grants and €250 billion in loans to the member states.
But even this part of the plan has a green tinge; the Commission proposes to raise this money by borrowing from capital markets, and then paying it back by 2058 through a carbon tax, as well as a digital tax and a tax on non-recycled plastics.
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