European Green Deal Investment Plan (Sustainable Europe Investment Plan) [ Departures ]

LEGISLATIVE TRAIN 10.2020 1 A EUROPEAN GREEN DEAL

EUROPEAN GREEN DEAL INVESTMENT PLAN (SUSTAINABLE EUROPE INVESTMENT PLAN) [ DEPARTURES ]

CONTENT

In December 2019, during its first weeks in office, the von der Leyen Commission launched the European Green Deal as the EU's new growth strategy, with a view to promoting and facilitating the transition to a climate-friendly, competitive and inclusive economy.

The following month, the Commission published a communication detailing the investment pillar of the strategy: the European Green Deal Investment Plan (also known as Sustainable Europe Investment Plan).

The Investment Plan, which complements other initiatives under the European Green Deal, aims to contribute to financing a sustainable transition, while supporting the regions and communities most exposed to its impact. By combining legislative and non- legislative initiatives, the Plan addresses three aspects:

• Funding. Over the 2021-2030 period, the Commission wants to mobilise at least €1 trillion of sustainable investment by increasing the resources devoted to climate action under the EU budget and leveraging additional public and private financing. The European Investment Bank (EIB) should be a key partner in the mobilisation of additional funding. Part of the overall resources will focus on the regions most exposed to the challenges of the transition thanks to the proposed establishment of a Just Transition Mechanism that should generate targeted investment worth €100 billion over the next seven years. • Enabling framework. The Commission plans to use a mix of regulation and incentives to ensure that sustainability is duly taken into account in investment decisions, by putting sustainable finance at the heart of the financial system (e.g. through the implementation of the EU taxonomy and the establishment of an EU Green Bond Standard), by providing the public sector with guidance and appropriate tools (e.g. in the field of green public procurement), and by promoting a supportive state aid framework. • Support for implementation. Advisory and technical support will be provided to public administrations at relevant levels (under the Reform Support Programme) and project promoters (under the InvestEU Programme) with a view to creating a pipeline of sustainable projects.

The debate on the Investment Plan is interlinked with the ongoing negotiations on the EU’s 2021-2027 Multiannual Financial Framework (MFF), which requires the European Parliament’s consent and unanimity in the Council. Parliament, which is traditionally a strong advocate of climate and environmental objectives, has called for an ambitious MFF, with resources commensurate with the goal of facilitating a just transition to a carbon-neutral economy.

1/4

Commentators have identified both positive elements and possible weaknesses in the Commission’s plan, arguing that it is a step in the right direction but would provide only part of the resources needed to meet the current climate targets for 2030. The impact of the coronavirus pandemic has raised concerns that decarbonisation strategies could be derailed. However, analysts and stakeholders generally agree on their continued relevance, arguing that green investments from public and private sources must play a central role in any economic recovery plan.

On 27 May 2020, the Commission presented its recovery plan from the consequences of the coronavirus pandemic, including proposals for a new recovery instrument worth €750 billion and a revised MFF. The Commission underlined that the recovery plan will be closely linked to the European Green Deal, devoting resources to initiatives such as renovation of buildings and infrastructure, renewable energy projects, and cleaner transport and logistics. The proposal includes additional financing for climate-related instruments such as the Just Transition Fund.

In the European Council of July 2020, Heads of State or Government reached political agreement on a package worth €1 824.3 billion combining the new MFF and the recovery instrument, Next Generation EU (NGEU). The European Council conclusions have a number of implications for the contribution of EU budgetary instruments to the Investment Plan. The share of the total resources to be devoted to climate-relevant measures has been raised from the current 20 % (2014-2020 period) to 30 %. This objective of climate mainstreaming will apply to both the MFF and NGEU. This means that, over the 2021-2027 period, climate-relevant projects could receive up to €547 billion, i.e. an amount higher than the EU budget's contribution initially planned in the Investment Plan. However, the European Council reduced the allocations proposed by the Commission for a climate-specific instrument such as the Just Transition Fund (€17.5 billion, down from €40 billion).

On 23 July 2020, the European Parliament welcomed the European Council’s acceptance of a recovery fund, as proposed by Parliament in May, deeming its creation a historic move for the EU. However, Parliament did not accept the political agreement on the 2021-2027 MFF, expressing its readiness to engage immediately in constructive negotiations with the Council to improve the proposal. Parliament deplored cuts to a number of flagship programmes, including the Just Transition Fund. In addition, Parliament stressed that a legally binding climate-spending target of 30 % should be included as a horizontal principle in relevant legislation. Parliament reiterated its call for improvements in the methodology for climate mainstreaming.

In her State of the Union address in September 2020, Commission President Ursula von der Leyen announced that 37 % of NGEU would be devoted to Green Deal objectives. The Commission will set a target of 30 % of NGEU resources to be raised through green bonds. Key initiatives envisaged for 2021 include the establishment of an EU Green Bond Standard.

On 16 October 2020, Parliament's Committees on Budgets (BUDG) and on Economic and Monetary Affairs (ECON) jointly adopted a report on the investment plan. The vote in plenary is currently scheduled for November.

References:

LEGISLATIVE TRAIN 10.2020 1 A EUROPEAN GREEN DEAL 2/4

• EP Legislative Observatory, Procedural file on Sustainable Europe Investment Plan - How to finance the Green Deal, 2020/2058 (INI) • European Commission, Sustainable Europe Investment Plan - European Green Deal Investment Plan, COM(2020)21 • European Commission, Europe's moment: Repair and prepare for the next generation, COM(2020)456 • European Council, Conclusions of a special meeting of 17, 18, 19, 20 and 21 July2020, EUCO 10/20

• European Parliament, Resolution of 23 July 2020 on the conclusions of the extraordinary European Council meeting of 17-21 July 2020, 2020/2732(RSP) • European Commission, State of the Union 2020 documents