The European Commission launched on Wednesday (6 February) a consultation with member states, the European Parliament and other stakeholders to review the EU’s fiscal rules, the Stability and Growth Pact.
The review of EU´ fiscal rules, Stability and Growth Pact comes as multi-lateral effort to make the European economy more sustainable and to achieve the zero-emission goal by 2050. Part of this includes also a review of the state aid rules and a “green supporting factor” in the capital requirements for banks. A new taxonomy has also been adopted to better channel funds to sustainable goals.
With the European Green Deal the European Commission aims to mobilise at least €1 trillion to become the first zero-emission region by 2050. Around half of the funds will come from the EU budget, at least €300 billion from national contributions, while the private sector would contribute the rest. An important pillar of this package is the Just Transition Mechanism which will mobilise €100 billion to support the transition of regions with a large number of workers in coal, peat mining or shale oil and gas.
Last autumn, the European Fiscal Board proposed that member states could voluntarily top up expenditure on EU projects co-financed by them beyond their national commitments. This additional investment in ‘green’ projects could then be deducted from the calculation of the deficit. This “golden rule” is supported by Eurogroup president Mario Centeno, by member states including Italy and Spain, and by the Commissioner for Economy, Paolo Gentiloni, EU sources said. However, there is much criticism from 14 Member States about this rule.
The European Banking Authority is assessing whether the capital required for banks to deal with potential risks could be lowered when they provide credit and loans to sustainable-related projects. This beneficial regulatory treatment would incentivise credits to “green” causes.
The Commission also started a review of its state aid rules last year to see if they are aligned with the ‘green’ priority, which could open the gates to public support for sustainable projects.
Concerning taxonomy, the EU institution sealed a deal in one and a half year on the definition and criteria that will be used to determine what is ‘green’. This common labelling will help to channel billions of euros from the private sector, but also from the EIB and the ECB, to projects supporting the sustainable transition.
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