On 27 May 2020, the European Commission’s published its historic proposal for the ‘Next Generation EU’ recovery fund worth €750 billion, topping the renewed proposal for a €1.1 trillion Multiannual Financial Framework (MFF) 2021-2027. After the approval by the Council of the EU and the European Parliament (16 and 17 December 2020 respectively) of the EU’s Multiannual Financial Framework 2021-2027, it is now clear how Green Deal initiatives are incorporated into the Commission’s recovery plans.
- The European Green Deal will be central in Next Generation EU, public recovery investments should follow EU energy and climate priorities;
- Funding of €10 billion for the Just Transition Fund;
- The Commission will increase its own resources via an extension of the Emission Trading System (ETS)to the maritime and aviation sectors and a carbon border adjustment mechanism.
Accelerated investments in the green transition
To kick-start the green transition in times of crisis, the European Commission published a Renovation Wave Communication on 14 October 2020. This massive renovation wave of buildings will improve energy efficiency and promote the circular economy, whilst creating local jobs in the coming years.
On top of the renovation wave, the Commission will focus on rolling out renewable energy projects, especially wind and solar. To this end, the Commission published an Offshore Renewable Energy Strategy on 19 November 2020. Moreover, the EU will reinforce its efforts to develop a clean hydrogen economy in Europe, something that is currently mainly promoted by Germany and the Netherlands.
When it comes to clean transport and logistics, the Commission aims to accelerate the production and deployment of sustainable vehicles and vessels as well as alternative fuels. This ambition includes the installation of one million charging points for electric vehicles and a boost for rail travel and clean mobility in European cities and regions, as set out in its Strategy for Smart and Sustainable Mobility published on 9 December 2020.
EU ‘green’ levies to finance recovery
How will this sustainable recovery be financed? The Next Generation EU will raise money by temporarily lifting the own resources ceiling to 2.00% of EU Gross National Income, allowing the Commission to use its strong credit rating to borrow €750 billion on the financial markets. To repay these loans in a fair and shared way, the Commission proposes a number of new own resources. The Commission will for example increase its own resources via an extension of the Emission Trading System (ETS) to the maritime and aviation sectors and a carbon border adjustment mechanism.
For the Commission to start borrowing under NextGenerationEU, thus making the instrument operational, the ratification of the new Own Resources Decision by all Member States in line with their constitutional requirements is still needed.
This blog post has been updated with new information on 5 February 2021.