To achieve the carbon neutrality targets set for 2050 by the International Energy Agency (IEA) (see EUROPE 13258/10), the European Union will need to increase the annual level of investment from €330 billion in 2022 to €530 billion in 2030, stressed the ECB, EIB and IEA on Friday 29 September at a joint conference in Paris.
Private investment and the financial contribution of multilateral development banks will play a crucial role in this. Hence the importance, according to the three international organisations, of deepening the Capital Markets Union (CMU) by orienting it towards financing the energy and climate transitions.
“It will be important to put the right financial infrastructure in place and further expand the financing tools available to support the clean energy transition. This includes establishing a green capital market union to unlock cross-border capital flows to finance the clean energy transition”, stress the three organisations in a joint document that served as a basis for the discussions. It also said: “A green CMU will also help to prevent risks of national fragmentation and greenwashing by enhancing the comparability and standardisation of sustainable finance products”.
Having formalised this call for a ‘green’ CMU in June 2021 (see EUROPE 12751/3), ECB President Christine Lagarde has, however, reported a survey showing that investors are reluctant to commit to sustainable investments. “This is why I have always insisted on the need to complete the EU Capital Markets Union in order to broaden the investor base to which European companies have access”, she said, warning against any procrastination that would increase the costs of adaptation or even repair.
See the ECB, EIB and IEA joint document: https://aeur.eu/f/8t6 (Original version in French by Mathieu Bion)