Environment: Experts: Billions are missing for the EU’s green transition

Environment: Experts: Billions are missing for the EU’s green transition

The economy and society in Europe are changing. Thats expensive. According to a study, there is not enough investment in the EU so far. Experts put a solution on the table.

The Brussels think tank Bruegel sees a gigantic investment gap in the EU in the transition to a green and digital economy and society. Experts put the annual investment gap for the two transitions at a total of at least 481 billion euros by 2030, according to a report published today. Closing this gap depends on the efficient use of public resources and the mobilization of private investments.

In general, the experts believe that more continuous investment is needed for change. Existing investment programs were sporadic and limited in time, with different sources of financing and overlapping goals. As a solution, the experts advocate a fund for strategic investments.

Permanent Fund for European Investments

“We propose the creation of a dedicated and permanent European Strategic Investment (ESI) Fund,” say the authors. This could initially be financed from the long-term EU budget. The multi-year EU community budget for the years 2021 to 2027 amounts to around 1.1 trillion euros.

According to the experts, such a fund should be managed by the European Investment Bank (EIB). The EIB is the EU institution for long-term financing. The owners are the Member States. The bank is intended to finance investments that contribute to achieving the EU’s political goals.

Mountain of debt due to Corona relief fund

Furthermore, the EU must raise additional own funds in addition to the current financing resources or otherwise generate income for the EU budget. This is necessary in order to repay the debts taken out for the Corona relief fund. Additional new own resources could later be used for the ESI fund. “This would ensure continuity in the pursuit of strategic objectives,” said the authors.

For the Corona aid fund (“NextGenerationEU”), which is worth around 750 billion euros, the EU took on very large sums as joint debt for the first time and awarded debt-financed money as a grant to EU states. The money is intended to promote growth and jobs, but at the same time make the European economy more modern and environmentally friendly. The program expires in 2026.

Macron: Need more public investment

Further possible joint borrowing is controversial within the international community. French President Emmanuel Macron recently expressed his openness to this. “We need more public investment in Europe. And that’s why we need to embark on a phase of new reinvestment, as we did in the Covid crisis, and perhaps venture back into Eurobonds for priorities,” Macron said at the World Economic Forum in Davos last week.

Eurobonds are European government bonds. The states raise money together on international financial markets and are jointly liable.

Source: Stern

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