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Financing the green transition: The European Green Deal Investment Plan and Just Transition Mechanism

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The European Union is the first to become carbon neutral by 2050 in the world. The European Green Deal's Investment Plan - the Sustainable Europe Investment Plan - will mobilise public investments and unlock public funds through EU financial instruments which will lead to at least €1 trillion of investments.

 

Complementing other initiatives announced under the Green Deal, the European Green Deal Investment Plan is based on three dimensions:

 

  • Financing: mobilising 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.
  • 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 executing sustainable projects.

The scale of this transition will not be the same for all Member States, as some of them will undergo profound economic and social transformation. The Just Transition Mechanism provides tailored financial and practical support to help workers and generate the appropriate investments in those areas. This will mobilise at least €100 billion over the period 2021-2027. The Just Transition Mechanism will consist of three main sources of funding:

 

  • 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. 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.
  • A dedicated just transition scheme under InvestEU to mobilise 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.
  • A public sector loan facility with the European Investment Bank backed by the EU budget o mobilise 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.

Read the full article here.