Europe’s future growth strategy
EU policymakers need to consider the impact of the Coronavirus crisis and adapt its growth policy initiatives accordingly, argues Siegfried Mureşan.
The Coronavirus crisis has completely turned the policy agenda upside down over the past few weeks in both the EU and Member States.
While all our efforts are currently directed at containing the spread of the virus, saving lives and reviving economies, the European Green Deal is steadily working its way back onto the mainstream agenda.
It is vital that we take action to tackle the Coronavirus situation, but we must not lose sight of our long-term priorities, which includes the European Green Deal.
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The EU will, of course, have to adapt its future policy proposals and action plans following this health crisis, but I strongly believe that the Green Deal will remain a priority and will become the EU’s growth strategy for the coming years.
Yet circumstances have obviously changed, and we need to consider whether our approach needs to be adapted accordingly.
First, the European Commission must evaluate the extent to which the previously proposed targets - particularly for 2030 - are still achievable in the current economic context and at what costs.
“It is vital that we take action to tackle the Coronavirus situation, but we must not lose sight of our long-term priorities, which includes the European Green Deal”
The current 2030 target of 40 percent reductions in greenhouse gas emissions, from 1990 levels, implies an EU-wide cost of some €260bn per year, with some Member States being impacted more than others.
A more ambitious target, according to some calculations, would require investments of at least €400bn per year in the EU - some €4 trillion up to 2030.
While the Green Deal Investment Plan foresees investments of €1 trillion over the next ten years, the remaining funding required would have to be advanced by the national governments and the private sector.
Under the current economic outlook, we still need to see if the economic recovery will be fast enough to allow restarting the necessary investments. This leads to my second point; a successful European Green Deal requires adequate financing.
This is vital if we want to advance together towards a carbon neutral economy. The Green Deal Investment Plan (GDIP), an initiative proposed by the European Commission, is a combination of EU funds such as grants, loans and other financial instruments that could help deliver this transition.
The European Parliament, where I am the rapporteur for this initiative, still has to debate and deliver its position on this instrument. GDIP will support investments in clean energy sources, energy efficiency, the circular economy, environment protection and more.
Together with the European Investment Bank’s goal of providing at least 50 percent of its financing to climate action and environmental sustainability by 2025, this plan should allow the EU and Member States to move towards a greener economy.
“A successful European Green Deal requires adequate financing. This is vital if we want to advance together towards a carbon neutral economy”
At the same time, we must use all available means to ensure a smooth transition and achieve our climate goals, such as using gas as part of the energy mix. In my report, I will insist on the importance of gas, and also nuclear, as transitional energy sources.
Otherwise, I simply cannot envisage how countries such as Poland, with an energy mix containing 80 percent coal energy, will be able to meet the climate targets.
Third, we must make good use of the Just Transition Fund (JTF), an investment mechanism proposed by the European Commission to close the gap between those EU countries that are currently less energy efficient. Each Member State will embark on this climate journey from a different starting point.
The JTF will help reduce disparities among them and aims to finance activities in those areas most affected by the climate transition. For example, my region in Romania will be eligible for the fund, where tourism will most likely replace carbon-intensive industries.
In other EU countries, other clean industries will emerge to replace traditional high-carbon businesses. The European Commission has proposed €7.5bn for the JTF, to be matched with cohesion funds at a ratio of between 1.5 and 3.0.
My opinion is that the JTF should not be matched with any cohesion funds and it should be a standalone instrument. This is because matching the funds, would pre-judge the use of cohesion funds allocated to EU countries. This is why I am calling for an increase in the overall envelope of the JTF.
Finally, in order to deliver on all the priorities we promised our citizens, we must put in place an adequate Multiannual Financial Framework (MFF). The current financial proposal is neither sufficient nor ambitious enough to deliver on the EU’s current and future needs.
Hence I believe we need to postpone the MFF adoption for a year or two, in order to have greater clarity over the impact of the Coronavirus pandemic. In the meantime, we must continue using the current MFF, with refocused priorities, to address the current crisis.
The European Green Deal is currently the most ambitious climate policy proposal in the world. We should be proud of setting such an example and that is why it is imperative that we get it right.
The European Parliament, as always, will be a valuable partner to turning it into a success.
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