Investments in reducing emissions would help grow EU economy – report

The investments needed to cut greenhouse gas emissions by 90 percent by 2040 would help grow the EU economy by around two percent, think tank Agora Energiewende said in a report. It analysed the macroeconomic impacts of a transition to climate neutrality for the EU as a whole, and five of it’s biggest member states: France, Germany, Italy, Spain and Poland. Results showed that investments would strengthen EU manufacturing, create new jobs and bring about economic convergence between western and eastern Europe.

Significant investments will be needed for the implementation of the European Green Deal in the 2024-2029 policy cycle and beyond. At least 462 billion euros in investment will be needed every year in the remainder of the 2020s, the report notes. Public investments are particularly important as the NextGenerationEU budget – implemented in response to the coronavirus pandemic – ends in 2026, creating a ‘climate funding cliff’ in the EU, said the think tank. One proposed measure to deal with this is a mechanism to frontload national revenues from the future carbon market for buildings and transport (ETS II), which the report says can unlock 36 billion euros of investment. Agora also recommends replenishing the InvestEU Fund, adding that a 21.5-billion-euro budget guarantee could leverage around 245 billion euros in additional investments.

Following the elections in June 2024, the European Union has entered its 2024-2029 legislative period and is now setting up the next executive, the European Commission. Re-elected Commission president Ursula von der Leyen today presented the team of Commissioners-designate, which Parliament must now agree to – a process which could take until late November. Von der Leyen has made clear that competitiveness and industry's transition to climate neutrality will become key policy fields of the incoming Commission.