European Parliament endorses $1.6 trillion investment plan for Green New Deal

The European Union is set to allocate up to a quarter of its annual budget towards tackling climate change, as part of a plan to attract as much as €1 trillion (A$1.61 trillion) in new investment to drive the transition towards clean technologies.

The world’s first major ‘green new deal’ will see theEU accelerate its push towards decarbonisation. The European Commission estimates that the bloc has already reduced its greenhouse gas emissions by 23 per cent between 1990 and 2018, while the value of its economy grew by 61% over the same period.

“People are at the core of the European Green Deal, our vision to make Europe climate-neutral by 2050. The transformation ahead of us is unprecedented. And it will only work if it is just – and if it works for all,” President of the European Commission, Ursula von der Leyen, said.

“We will support our people and our regions that need to make bigger efforts in this transformation, to make sure that we leave no one behind. The Green Deal comes with important investment needs, which we will turn into investment opportunities. The plan that we present today, to mobilise at least €1 trillion, will show the direction and unleash a green investment wave.”

The plan has been developed by the European Commission and won the support of the EU parliament this week, with MEPs voting to endorse the plan. Implementation of the European Green Deal will require further amendments to EU legislation, including the setting of interim emissions reduction targets.

“Parliament overwhelmingly supported the Commission’s proposal on the Green Deal and welcomes the fact that there will be consistency between all European Union policies and the objectives of the Green Deal. Agriculture, trade and economic governance and other policy areas must now be seen and analysed in the context of the Green Deal”, the EU parliament’s environment committee chair Pascal Canfin said.

The plan will see more €500 billion allocated from the budget of the European Union Commission, which it hopes will leverage further private sector investment to reach the €1 trillion investment goal over the next 10-years.

In May 2018, the European Union established a 25% climate mainstreaming target, which sees 25% of EU expenditure contributing to its climate change objectives.

The European Green Deal’s Investment Plan will include a Just Transition Mechanism to provide investment support to communities disproportionately impacted by the transition away from emissions intensive industries, and help them transition to a zero carbon economy.

To access the funds, EU member countries will need to develop just transition plans, which identify regions that require investment support to undertake measures like the closure and rehabilitation of coal mines and coal fired power stations, and to build new industries and reskill workers in low emissions industries.

“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 €100 billion. This is our pledge of solidarity and fairness,” executive vice-president for the European Green Deal Frans Timmermans said

While the plan has received in-principle support from most of the European Union parliamentarians, European Greens members were keen to ensure the allocation of funding was directly tied to a transition away from coal.

In particular, Poland, which has large reserves of brown coal which is used to generate around a third of its total electricity production, in addition to producing around half its electricity using black coal, is a key target for coal-phase out demands.

“No money should be distributed from this fund before there are clear commitments and concrete dates for the coal phase-out from member states,” European Green MEP Niklas Nienass said.

“Poland should sign up to EU climate targets before being eligible to money under the Just Transition Fund.”

Environmental groups, including Greenpeace EU’s Sebastian Mang, echoed the concern about funds being allocated to countries that have softer commitments to transition away from fossil fuels.

“If this funding is really meant to promote a green transition, it must only be available to governments that are committed to that transition and have a clear plan to ditch coal. If they want the cash, the likes of Poland and the Czech Republic will have to prove they are serious about tackling the climate emergency,” Mang said.

“For the European Green Deal to be successful, all funding, including from the EU budget, needs to stop supporting fossil fuels, nuclear energy and other destructive industries.”

The European Union has a target to reduce its greenhouse gas emissions by 40 per cent by 2030 and is recently endorsed the formal adoption of a target to achieve zero net emissions by 2050, each based on 1990 levels.

The EU Green Deal resolution was endorsed with 482 votes for, 136 against and 95 abstentions. Further legislative amendments will be required to implement the plan.