Despite many countries are still tackling the pandemic, governments are planning ahead and investing in massive stimulus schemes meant to speed up the economic recovery – and this also presents opportunities for long-lasting environmental changes.
The European Union (EU) just took a first step by unveiling a massive recovery package that sets the bar high on environmental standards for other countries, using the rebuilding of its economy as an opportunity to tackle the climate emergency.
The EU has proposed a 750-billion-euro fund to help member states recover from the coronavirus crisis, pledging to use 25% of the funds for climate action. At the same time, the bloc updated its seven-year 1 trillion budget to include further climate plans.
“The recovery plan turns the immense challenge we face into an opportunity, not only by supporting the recovery but also by investing in our future: the European Green Deal and digitalization,” Commission President Ursula von der Leyen said before the European Parliament.
The spending by the EU will be guided by a sustainable finance taxonomy. This seeks to get private investment into technologies that contribute to a set of environmental goals, such as reducing climate emissions. Technologies like nuclear power will be excluded from the taxonomy.
According to the Commission’s plans, Italy would get 82 billion euros in grants, Spain 77 billion euros, France 39 billion euros, Poland 37 billion euros and Germany 29 billion euros. The money will have to support “investment and reforms” and include green aspects in the criteria used, an EU official told Climate Home.
Before the new aid package was unveiled, European governments had already spent nearly two trillion euros in state aid for companies and small businesses affected by the pandemic. But none of that funds had green conditions, something the new package seeks to change.
There will be a close political control on how EU recovery funds will be spent. Countries will have to formally apply to obtain the funding and present a plan. Then the European Commission will analyze it and see whether it is in line with objectives linked to the environment and the digital economy.
Despite the Commission has said all public investment will have to follow environmental standards, there has been criticism for the lack of hard guarantees that the money will end up in dirty projects. Climate conditions in parts of the EU budget had already been lifted for three years due to the pandemic, for example.
The announcement was welcomed by pension funds and asset managers at the Institutional Investors Group on Climate Change (IIGCC). Alignment with the green finance taxonomy “will ensure public money is helping support a cleaner, more resilient future,” Stephanie Pfeifer, CEO of the IIGCC, told The Guardian.
The Commission plan “puts in place the necessary structure for a pan-European recovery,” Manon Dufour, head of Climate think-tank E3G, told Climate Home. The proposal “upholds the European vision of achieving climate neutrality and economic growth, and puts in place strong European governance to ensure that no investment made for the sake of recovery can harm the bloc’s climate efforts,” Dufour said.
A recent survey showed most believe that climate change is a crisis as serious as the coronavirus epidemic, with over 70% of the respondents agreeing with that statement. Participants from China were the ones to believe this the most, with an average of 87%.