The European Commission speaks of needing "at least € 1 trillion over the next ten years". The proposals for budgeting this are confusing because they mix up the sums needed to reach the current 2030 energy efficiency and renewables targets with the extra money needed to reach the new proposed 2030 targets (see epf20-03 of 27.01.2020, section 2) and because everything including the 'leveraging' is vaguely costed and conditional on currently non-existent budgets and revenues:
- Lack of clarity about how to even finance reaching the current 2030 targets
- No attempt to put a figure on the cost of meeting the proposed new 2030 climate targets
Extremely vague seed funding. The Commission states that if, as it has proposed, InvestEU (new name for Juncker Fund) devotes 30% of its capacity to climate projects, that will give €28 billion a year or € 280 billion over ten years. That doesn't mean that those are the sums invested by the EU, it means that a much smaller sum kick-starts, seeds, the total investment the rest of which comes from private investors and financial intermediaries who get EU guarantees. Nowhere could we find actual EU-budgeted seed-capital figures.
The Just Transition Mechanism (or Fund) (€143 billion over ten years) is to help member states that have to phase out their heavy coal-fired industries. It has to be subtracted from the € 1 trillion climate package as almost none of itwill go to climate action. The funding of investments in energy efficiency and renewables is like an afterthought. It's mostly about reconversion and reskilling of workers laid off from the heavy industries (Art. 4, p. 14).
The Commission's proposed very partial solutions:
1. New EU revenue:
- taxation of non-recycled plastic-packaging waste (directly proportional to the quantity generated in each member state)
- 20% of the revenues from the auctioning of the EU Emissions Trading System (ETS). The Commission hopes to expand the ETS (and therefore revenue) to other sectors, in particular buildings (see epf20-03)
But this only brings €3 billion for plastics and €7 billion for ETS.
2. Freeing-up member state resources for climate investment:
- by allowing member states to discount climate spending from their balanced budget obligations to the EU
- and by loosening EU State aid controls on investment in energy efficiency of buildings
Full report under epf20-04 of 30.01.2020