The European Green Deal is the EU’s brand-new growth strategy to transition the European economy towards a more sustainable model for economic growth. The Green Deal was first introduced in December 2019, along with its overarching objectives. The European Green deal embodies the European aspiration of becoming the first climate-neutral continent by 2050 by having a cleaner environment, affordable energy, smart transport, new jobs, and an overall healthier life. To achieve the ambitious European Green Deal plan, over €1 trillion EU funds are to be invested through various existing EU funding mechanisms. This green deal finance will support projects and the need for policy changes to reach the EU climate targets, eventually achieving a climate-neutral continent.
WHAT ARE THE SOURCES OF THE GREEN DEAL FUNDING?
The Green Deal finance is laid out in the EU Green Deal Investment Plan (EGDIP), which will mobilise at least €1 trillion in investments over the next decade. About half of the budget, €528 billion, will come directly from the EU budget. The EU Emissions Trading System (ETS) will trigger a further €114 billion in National co-financing for green projects. At the same time, €279 billion will come from the InvestEU programme, in the form of guarantees, so that European Investment Bank Group and implementing partners to invest in higher-risk projects. Finally, €279 billion will come from the Just Transition Mechanism to focus on the regions and sectors most affected by the transition to a more sustainable future. A central idea of the European Green Deal is that Europe can achieve true sustainability only if it’s done equitably and inclusively.
THE EUROPEAN GREEN DEAL STRATEGIES
Taking actions to limit the consequences of climate change was integral in developing the Green new Deal. Specifically, reducing greenhouse gas emissions has been a long-standing European commitment since the ‘90s. With the EU Green Deal, Europe has renewed this commitment by aiming to make the continent carbon neutral by 2050. However, this transition cannot be drastic as it will have devastating consequences. For this reason, the EU Commission has set milestones like the 2030 climate targets that demand a 55% reduction of greenhouse gas emissions compared to the 1990 levels. To make it happen, this comes together with the “Fit for 55” package, which is a suite of legislative initiatives across sectors to revise the current European Climate Law to reflect the climate neutrality objective of the EU Green Deal.