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Flash News: The European Green Deal Investment Plan and Just Transition Mechanism

Details: Tuesday, 21 January 2020 08:30

On Tuesday 14 January, the President of the European Commission, Ursula von der Leyen, presented to the European Parliament in Strasbourg the European Green Deal’s Investment Plan (the Sustainable Europe Investment Plan), through which the Commission intends to support the implementation of the Union's green transition over the programming period 2021-2027.

The Commission's ambitious environmental strategy requires the mobilisation of substantial public and private investment over the next decade. It will leverage on EU financial instruments such as InvestEu, which will mobilise around €279 billion of private and public investment in the climate and environment sectors over the period 2021-2030, and additional private funds estimated by the Commission of around €1,000 billion. In this context, the role of the EIB (European Investment Bank) and the Commission itself will be crucial to stimulate and redirect sustainable investments.

Source: The European Green Deal Investment Plan and Just Transition Mechanism
explained, European Commission - Press release, Brussels 14 January 2020

With the aim of softening the economic and social costs of the regions that will suffer the most because of the consequences of the energy transition and of the socio-economic transformation process envisaged by the Green Deal, the Commission has created the Just Transition Mechanism, a financial ad hoc instrument, of around € 100 billion, which should foster a just and inclusive transformation for the benefit of all and, as the European executive said, it should help to "create the necessary investment to help workers and communities which rely on the fossil fuel value chain.”
The just transition mechanism will be financially supported by the following sources:
1. A Just Transition Fund: € 7.5 billion of new funds from the EU budget will be allocated in favour of the Just Transition Fund for the benefit in particular of regions where jobs depend on fossil fuels, including coal, lignite, peat and oil shale or carbon-intensive industrial processes emitting greenhouse-gases. In order to enjoy this benefit, Member States in agreement with the Commission will have to identify eligible territories by means of appropriate territorial plans for a fair transition.
2. A dedicated just transition scheme under InvestEU: a mobilisation up to € 45 billion of investment is foreseen, with the dual aim of attracting private investment for the benefit of the regions concerned and of helping local economies to identify new sources of growth.
3. A public sector loan facility with the European Investment Bank backed by the EU budget: the related legislative proposal for the establishment of a public sector lending facility is planned for March 2020. This instrument is expected to mobilise between € 25 and 30 billion in investment.

The European Green Deal Investment Plan (EGDIP), also referred to as Sustainable Europe Investment Plan (SEIP), represents the key instrument to implement one of the main political priorities of the new von der Leyen’s Commission, namely the environmental protection and the fight against climate change.

As a first formal act, on 11th December, the Commission presented the European Green Deal, an environmental strategy by which it intends to make the EU the first block of countries with zero climate impact by 2050.
Achieving climate neutrality will require considerable efforts and financial resources, to be found also outside the EU financial framework.
The Green Deal aims to improve the well-being of present and future generations and to promote fair and inclusive growth. The Commission's policy proposal will involve various sectors:
• climate: a European Climate Law will be proposed in March 2020 in order to promote climate neutrality and stimulate investment
• energy: the aim is to speed up the decarbonisation process in the energy sector
• buildings: the aim is to encourage more sustainable buildings renovation, help people reducing energy bills and energy use
• industry: aims to support industry to stimulate innovation and to become world leaders in the green economy
• mobility: the aim is to introduce cleaner, cheaper and healthier means of private and public transport