EU News #1: useful news about the Green Deal for our GIMED community

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About the EU News:

The GIMED Green Impact Med project aims at boosting the development of green and eco-innovative entrepreneurs in 5 Mediterranean countries (Egypt, Italy, Lebanon, Palestine and Tunisia) by  creating the required environment and improving knowledge base to better access finance and markets, creating jobs and driving the green and circular economy in the region.

With an important investment in green and circular economy committed through the European Green Deal, the European Union is today the frontrunner to become the first carbon neutral economy by 2050. With the aim of keeping you updated on the Union’s strategy to become a more resource-efficient and competitive economy, we will publish a monthly EU news  to share useful news about the for our GIMED community.


On 22nd of May 2020, the EU new action plan for circular economy was adopted, creating a new level playing field for many sectors towards more circularity in design, production and consumption and waste reuse. We now want to take a closer look on how much this new Green Deal will cost and what is in the EU pipeline to finance this transition to a green Europe and its commitment to become the first climate-neutral continent in the world by 2050.  We will give you also links to two very interesting EU factsheets about Investments that are already in progress to green the economy [1] and about investing in a climate neutral and circular economy [2].

To finance this new Green Deal, it will require significant investments from both the EU and the national public sector, as well as the private sector. Several actions are currently being integrated in the decision process of the European Institutions. 

In mid-January the Commission adopted a communication on the European Green Deal's Investment Plan - the Sustainable Europe Investment Plan. This Sustainable Europe Investment Plan [3] will mobilize public investment and help to unlock private funds through EU financial instruments, notably InvestEU, which would lead to at least €1 trillion of investments.
 

The European Green Deal Investment Plan 

The European Green Deal Investment Plan will mobilize EU funding and create an enabling framework to facilitate and stimulate the public and private investments needed for the transition to a climate-neutral, green, competitive and inclusive economy. Complementing other initiatives announced under the Green Deal, the Plan is based on three dimensions:

  • Financing. mobilizing at least €1 trillion of sustainable investments over the next decade. A greater share of spending on climate and environmental action from the EU budget than ever before will crowd in private funding, with a key role to be played by the European Investment Bank. 25-30% would come mostly from the private sector: the idea is that companies would be encouraged to make risky green investments by loan guarantees from the European Investment Bank, the EU lender, which recently pledged to phase out loans to fossil fuel projects.
  • Enabling: providing incentives to unlock and redirect public and private investment. The EU will provide tools for investors by putting sustainable finance at the heart of the financial system, and will facilitate sustainable investment by public authorities by encouraging green budgeting and procurement, and by designing ways to facilitate procedures to approve State Aid for just transition regions.
  • Practical support: The Commission will provide support to public authorities and project promoters in planning, designing and executinsustainable projects. 

While all Member States, regions and sectors will need to contribute to the transition, the scale of the challenge is not the same. Some regions will be particularly affected and will undergo a profound economic and social transformation. In order to convince these more reluctant countries, the environmental program of the new Commission will also provide budgetary support in the form of a Just Transition Fund [4]. The Just Transition Mechanism will provide tailored financial and practical support to help and generate the necessary investments in those areas.

The Just Transition Mechanism. The Just Transition Mechanism (JTM) is a key tool to ensure that the transition towards a climate-neutral economy happens in a fair way, leaving no one behind. While all regions will require funding and the European Green Deal Investment Plan caters for that, the Mechanism provides targeted support to help mobilize at least €100 billion over the period 2021-2027 in the most affected regions, to alleviate the socio-economic impact of the transition. The Mechanism will create the necessary investment to help workers and communities which rely on the fossil fuel value chain. It will come in addition to the substantial contribution of the EU's budget through all instruments directly relevant to the transition.

The Just Transition Mechanism will consist of three main sources of financing:

1)   A Just Transition Fund, which will receive €7.5 billion of fresh EU funds, coming on top of the Commission's proposal for the next long-term EU budget. In order to tap into their share of the Fund, Member States will, in dialogue with the Commission, have to identify the eligible territories through dedicated territorial just transition plans. They will also have to commit to match each euro from the Just Transition Fund with money from the European Regional Development Fund and the European Social Fund Plus and provide additional national resources. Taken together, this will provide between €30 and €50 billion of funding, which will mobilize even more investments. The Fund will primarily provide grants to regions. It will, for example, support workers to develop skills and competences for the job market of the future and help SMEs, start-ups and incubators to create new economic opportunities in these regions. It will also support investments in the clean energy transition, for example in energy efficiency.

2)   A dedicated just transition scheme under InvestEU to mobilize up to €45 billion of investments. It will seek to attract private investments, including in sustainable energy and transport that benefit those regions and help their economies find new sources of growth. 

3)   A public sector loan facility with the European Investment Bank backed by the EU budget to mobilize between €25 and €30 billion of investments. It will be used for loans to the public sector, for instance for investments in district heating networks and renovation of buildings. The Commission will come with a legislative proposal to set this up in March 2020.

The Just Transition Mechanism is about more than funding: relying on a Just Transition Platform, the Commission will be providing technical assistance to Member States and investors and make sure the affected communities, local authorities, social partners and non-governmental organizations are involved. The Just Transition Mechanism will include a strong governance framework centered on territorial just transition plans.

Next month we will focus on two financial instruments of the EU and their specific roles in the framework of the EU’s green transition and  support to the circular economy:  the EIB - the European Investment Bank-  and the InvestEU program.

 

This EU News#1 had been produced by our Italian partner Fondazione di Comunità di Messina.
Visual post: © CONECT 


 

[1] https://ec.europa.eu/commission/presscorner/api/files/attachment/860384/EU_funded_projects_green_economy_en.pdf.pdf

[2] https://ec.europa.eu/commission/presscorner/api/files/attachment/860667/Investing_climate_neutral_circular_economy_en.pdf.pdfhttps://ec.europa.eu/commission/presscorner/api/files/attachment/860384/EU_funded_projects_green_economy_en.pdf.pdf

[3] Brussels, 14.1.2020  COM(2020) 21 final

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS  Sustainable Europe Investment Plan European Green Deal Investment Plan

[4] Brussels, 14.1.2020  COM(2020) 22 final 

Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL  establishing the Just Transition Fund

11 May 2020 - 09:00