Brussels launches a plan of one billion euros for the ecological transition

A billion euros to reduce to zero the CO2. The Commission, chaired by Ursula von der Leyen, is expected to approve Tuesday a funding plan, which aims to mobiliz

Brussels launches a plan of one billion euros for the ecological transition

A billion euros to reduce to zero the CO2. The Commission, chaired by Ursula von der Leyen, is expected to approve Tuesday a funding plan, which aims to mobilize one billion euros over the next decade to ensure that Europe becomes the first continent to achieve climate neutrality in 2050.

The plan, whose draft has had access to THE COUNTRY, ensures that “the transition to an economy-neutral climate and sustainable will require significant investment”. The paper argues that the public sector should “take the lead, but the private actors are the ones who must provide the volume” of the tremendous transformation in economic, social, technological, and industrial progress.

The plan of the Commission (referred to in English as the Sustainable Europe Investment Plan, or SEIP) it is proposed to use massive resources from the community budget to stimulate investment; designing a legal framework to facilitate and attract private capital; and reserve special items for the members of the EU's least wealthy and to the regions with high reliance on energy sources or industries with a high level of emissions.

“we Want the European Union to become a model and that is the world leader in this area,” said Von der Leyen this Friday in Zagreb, where the European Commission held the first meeting with the six-month presidency of the European Council, occupied from the 1st of January in Croatia.

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The meeting sought the support of the Croatian Government of Andrej Plenkovic for a Green Plan that, as said Von der Leyen, “I am convinced that it will become the new european strategy for growth”.

But Croatia is one of the few partners of central and Eastern Europe that embraces you with a certain enthusiasm a strategy of decarbonisation that makes you shiver to partners such as Poland, Hungary, the Czech Republic, and even, in certain regions of Germany. And other partners, among them Spain, although they are firmly supporters of the ecological transition, they fear losing some eu funds which could concentrate on the countries from the former soviet bloc, whose industrial model and energy requires a modernization much more expensive.

despite the many misgivings, the European Council adopted at the December summit the aim of achieving by 2050 a level of zero net CO2 emissions. But in return, the European Commission promised to present an ambitious and generous funding plan, which will clear the doubts of the countries with a transition to more costly, in particular, of Poland.

Von der Leyen has fulfilled his promise, and this Tuesday will be the financial arm of a Green Plan that could place Europe at the forefront of the fight against climate change.

The document to which you has had access to this journal, detailing the resources to mobilize one billion euros between 2021 and 2030. A good part, 485.000 million euros, will come from the next EU Financial Framework (2021-2027). Brussels proposes to allocate 25% of these budgets to policies related to the fight against climate change, which will force them to redirect in part models of spending in the traditional structural funds and the common Agricultural Policy.

The plan, the Commission calculates that eu budget will lead to a co-financing by national coffers of 115,000 million euros, which would amount to more than half a billion of the available capital.

The second major contribution would come from InvestEU, the program formerly known as plan to Juncker, which aims to mobilize 280.000 billion, between public and private resources.

A third game, dubbed the Innovation and Modernization would be financed through the resources generated by the sale of rights to CO2 emissions in the european market created years ago for the marketing of these titles. The Commission estimates that this resource could provide 12,000 million euros. And Brussels intends to spend that money in priority to countries with a Gross domestic Product well below the european average.

The plan is completed with the creation of a Transition Fund that, over the next decade, it would be the catalyst for investment value of 143,000 million euros. Your target priority would be the regions with high dependence on energy sources like coal or to areas with industries of high energy consumption.

financial Engineering

The colorful and bulky figure of a trillion euros is not without criticism nor appeases all countries and industries are anxious for the cost of a restructuring with a scale without recent precedent.

The objections to the plan of Von der Leyen pointed to the reliability of the financial engineering that with a limited volume of resources aims to meet figures in the billions. 280,000 million euros from the InvestEU, for example, will come from a fund that only will come with a guarantee of 38,000 million euros from the community budget, with only 40% in hard cash.

Brussels remember that the same doubts were raised at the beginning of the plan Juncker, with a minimum guarantee sought to mobilize 300.000 million euros. The goal was achieved, and the plan has been extended to reach half a billion euros. With this successful precedent, the Commission is now confident to mobilize 93,000 million euros a year. And 30% of that game (some 28,000 million euros per year) is concentrated in the projects of the ecological transition with a higher risk for the private investor.

The SEIP also raises suspicions because of the risk of draining the resources of the structural funds towards projects related to the transition and to leave them without funding the infrastructure or investments that facilitate economic convergence, the original goal of the european cohesion policy.

Brussels acknowledge that the reorientation is inevitable. And proposes that at least 25% of the next budgetary framework of the EU (for the period 2021-2027) is allocated to policies related to climate change. In the Cohesion Fund and the structural funds, that contribution will amount to 40%. And in the agricultural policy, the 40% of the direct payments to farmers will be linked to the environmental objectives.

A fund for "an existential challenge"

One of the great battles of the Covenant Green will revolve around the so-called Transition Fund Fair, which will be funded from the structural funds of the EU. The european commissioner for Cohesion and Reforms, the Portuguese Elisa Ferreira, will be in charge of dealing with a dossier of explosive that faces the countries potentially most benefited by the new Fund (with Poland in front of it) with those who are fearful of losing funding (such as Spain).

Brussels plans to use between 5,000 and 7,500 million euros of the cohesion policy to the new Fund. The endowment will be doubled, as a minimum, through the structural funds allocated to each country, which must be reserved for the transition in an amount equal to that received from the Fund. And each State will be able to complete with their own national co-financing. Brussels calculates that, in total, could be mobilized between 30,000 and 50,000 million euros.

The plan approved Tuesday, the Commission ensures that the Fund Just Transition "will provide support to all member States", while acknowledging that "will focus on those that support a few major challenges".

Brussels will require as a step prior to the disbursement the presentation of spatial plans of transition. And the financial resources are awarded to facilitate the economic diversification of the region benefit, the training of the workers affected by the reconversion and the generation of jobs in alternative sectors.

The Commission proposal also includes a Mechanism of just Transition, funded from the investment plan InvestEU. That game, which could mobilize up to 65,000 million in a decade, would go to boost investments in sectors and modes of production that are acceptable from a climate point of view, and to replace the industries that were becoming outdated in some regions.

Brussels acknowledge that the staggering figure of a trillion euros expected to be mobilized is not more than a minimal part of the investment required for green transition. The Commission estimated that only the objectives of climate and energy until 2029 will require an annual investment of 1.2 billion euros, of which off 260,000 million should be additional resources above the expected in a scenario without changes.

Updated Date: 12 January 2020, 15:00

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