Climate neutrality for growth and jobs
The European Green Deal is, at its core, a growth strategy that will transform the EU’s economy and society in a way that sets us on a sustainable and climate-neutral path.
It will provide us with a modern, efficient and competitive economy where there are no net emissions of greenhouse gases in 2050 and where economic growth is decoupled from consumption of natural resources.
To this end, on 4 March the European Commission adopted the EU Climate Law, initiating the process of establishing this 2050 goal in legislation and thereby sending a clear signal to economic operators that Europe is committed to the transition to climate neutrality.
Analyses carried out as part of the Commission’s long-term strategy A Clean Planet for All indicate that, overall, the economic impacts of such a deep transition will be positive despite the upfront investments required in all economic sectors.
So long as it is carried out in a just and socially fair manner, this investment is therefore a vital opportunity for sustainable and inclusive EU growth.
The European Green Deal will provide the toolkit with which we will accelerate and underpin the transition needed in all sectors of the economy and society.
As with any system change, the transition to a climate-neutral society requires significant investment. This will have to be sustainable in more ways than one; not only must it be objectively and undeniably ‘green’, but also maintained and increased over time.
In fact, up to an additional €260 billion of annual investment is required to achieve the current 2030 climate and energy targets alone.
Public and private investment must therefore be mobilised on a large scale to achieve and sustain the goal of climate neutrality by 2050.
The European Green Deal Investment Plan will be a key facilitator of public investment, combining dedicated financing with an optimal enabling framework to achieve at least €1 trillion of investment.
A crucial element will be the Just Transition Mechanism, focused on those EU regions and sectors at most risk from the transition because they are economically dependent on fossil fuel or carbon-intensive processes.
The Mechanism will support regions to diversify and modernise their economies, as well as citizens via public and private resources, for example re-skilling programmes, jobs in new economic sectors and energy-efficient housing.
It will make investments more attractive, with an overall financial package worth at least €100 billion.
‘Green jobs’ already represent 4 million livelihoods in the EU.
Further investment into industrial modernisation, energy transformation, the circular economy, clean mobility, green infrastructure and the bio-economy will create new, local, high quality employment opportunities.
Actions and policies to implement the EU’s 2020 climate and energy targets have already increased the EU labour force by 1% to 1.5% and this trend is projected to continue.
The private sector will be also be key to financing the green transition and the Commission will present a Renewed Sustainable Finance Strategy later this year.
It will strengthen the foundations of green investment, aiming to embed these principles deeper into corporate governance frameworks.
Companies will disclose more climate and environmental data so that investors are fully informed of their decisions. Moreover, it will aim to simplify identification of sustainable investment opportunities via labelling or an EU green bond standard.
The EU already has a global competitive edge in clean innovation and technologies.
In order to maintain these first-mover advantages in this key economic sector as the transition to climate neutrality progresses, the EU will significantly increase large-scale deployment of new technologies across sectors and the Single Market, constructing new value chains as it goes.
The full range of instruments available under Horizon Europe will be made available to leverage national public and private investments in this sense, with at least 35% of the Horizon budget dedicated to climate-focused solutions.
30% of the InvestEU Fund will contribute to climate objectives and support the European Green Deal Investment Plan by de-risking private funds. Moreover, the role of the Innovation and Modernisation Funds, currently financed by auction revenues from the EU Emissions Trading System, will also support investments in the transition.
The EU’s long-term budget will play a key role and discussions on increasing climate mainstreaming in the next multiannual financial framework are ongoing.
Further decarbonisation of the energy system will be undertaken in a manner that involves and benefits consumers.
Maximising the efficiency of our energy production and use, which currently accounts for over 75% of the EU’s greenhouse gas emissions, is imperative to achieving the climate neutrality objective.
A renewables-based power sector must complement a rapid coal phase-out and decrease the use of fossil gas, whilst ensuring security of supply and affordability for consumers, taking the issue of energy poverty into account.
EU-level support for smart integration of renewables, energy efficiency and other sustainable solutions will help achieve decarbonisation at the lowest possible cost while opening up new job sectors.
In fact, the rapid decrease in the cost of renewables combined with improved support policy is already having a positive impact on household energy bills.
The Commission will continue to make consistent use of all policy levers at its disposal to ensure that the European Green Deal delivers fair and sustainable economic growth.
We are already witnessing the benefits of the clean energy transition; extending this to the entire economy will not only reap significant economic and social benefits, but also underline the EU’s status as a global leader in climate action and sustainable economic growth.
