The European Union plans to dedicate a quarter of its budget to tackling climate change and to work to shift 1 trillion euros ($1.1 trillion) in investment toward making the EU’s economy more environmentally friendly over the next 10 years.
Aiming to deliver on European Commission President Ursula von der Leyen’s Green Deal, EU officials said the Europe Investment Plan unveiled Tuesday will be funded by the bloc’s budget and by the private sector.
It includes a mechanism designed to help the regions that would be most disrupted economically by the transition to cleaner industries.
Von der Leyen took office Dec. 1 and has made the fight against climate change the priority of her term as president of the EU’s executive arm. Her Green Deal is aimed at making Europe the world’s first carbon-neutral continent by 2050,
“We will support our people and our regions that need to make bigger efforts in this transformation, to make sure that we leave no one behind,” she said.
The European Commission says that half of the investment will come from the EU budget. National governments will contribute 100 billion euros and 300 billion euros will come from the private sector.
Another 7.5 billion euros from the 2021-2027 EU budget is earmarked as seed funding within a broader mechanism expected to generate another 100 billion euros in investment. That money will be designed to convince coal-dependent countries like Poland to embrace the Green Deal by helping them weather the financial and social costs of moving away from fossil fuels.
“This is our pledge of solidarity and fairness,” said Frans Timmermans, the Dutch politician tapped as executive vice president of the European Green Deal.
The plan would allocate the money according to specific criteria. For example, regions where a large number of people work in coal, peat mining or shale oil and gas would get priority.
EU leaders agreed last month to make the bloc’s economy carbon neutral by the middle of the century, but Poland, which depends on coal for much of its energy needs, did not immediately agree to the timeline.
“The workers losing their jobs should be helped for re-skilling. There will be support for new infrastructure, job-seeking assistance, investment in new productive activities. And the regions where existing activities will cease will also need to be regenerated,” said a senior commission official, who was not authorized to speak publicly as a matter of practice.
The final amount of financing from the plan will depend on discussions between EU countries on the next multi-annual EU budget.
Johan Van Overtveldt, the head of the EU parliament’s Budget Committee, was skeptical about how the scheme set-up.
“It carries a one-trillion euros prize tag,” he said. “Where the money should be coming from remains extremely unclear. We are against the recycling of promises and money. We don’t back creative bookkeeping and financial adventures.”
The Greens group in the European Parliament, meanwhile, rued the fact that the commission did not tie the money to a deadline for the phasing out coal.
“No money should be distributed from this fund before there are clear commitments and concrete dates for the coal phase-out from member states,” Green European lawmaker Niklas Nienass said. “Poland should sign up to EU climate targets before being eligible to money under the Just Transition Fund.”
The European Commission said the plan will also be supported by money from EU regional programs, from the InvestEU Program, which mobilizes public and private investment using an EU budget guarantee, and from the European Investment Bank.
According to the commission’s estimates, meeting the 2030 climate goals – which include reducing greenhouse gas emissions by 40% from 1990 levels – will cost an additional 260 million euros per year.
In order to qualify for the financial support, member states will need to present plans to restructure their economy detailing low-emission projects. The plans will need the commission’s approval.
Projects including nuclear power won’t be eligible for funding, except for those related to Euratom’s program for nuclear research and training.
European lawmakers are expected to hold a non-binding vote on a Green Deal resolution on Wednesday and von der Leyen wants to have a climate law adopted by March.