In a policy paper published on Monday 2 December, the Bruegel think tank proposes possible sources of funding to achieve the level of public and private investment needed in the coming years. The authors of the publication calculate that between 2025 and 2050, the share of investment in the green transition should reach almost 2% of GDP per year. Over the next five years, this amounts to €1,304 billion a year.
The authors estimate that the proportion of public funding should vary between 25 and 50% of total investment. They detail several ways of achieving these sums, including quoting and validating the proposals made by Mario Draghi in his report on competitiveness (see EUROPE 13478/1).
The idea of a Competitiveness Fund proposed by the President of the European Commission should not be abandoned by the Member States, according to Bruegel. Instead, they should “consider different funding options, including new EU joint borrowing, as suggested by Draghi”, write the document’s authors.
The EU budget should also be leveraged to a greater extent for the climate transition, in their view. This means maintaining the threshold for green spending in the next Multiannual Financial Framework (MFF) at 30%, or even increasing it.
Finally, according to Bruegel, work is needed on EU tax policy. An exception should be made in the Excessive Deficit Procedures (EDP) to allow for green investments. Revising the rules in this way would allow countries with EDPs to invest in green projects, provided that they have measurable results in terms of reducing CO2 emissions.
Private investment should be facilitated by a completed Capital Markets Union, a strengthened EIB, an effective carbon price and greater clarity on the definition of green investment.
More generally, the authors of the publication stress the need for the EU to pursue full implementation of the ‘Green Deal’ in order to gain a competitive advantage over the United States, in particular. It is also about sending clear signals to investors about green technologies.
See the guidance document: https://aeur.eu/f/elj (Original version in French by Léa Marchal)