The European Commission estimates that achieving the goals of the Green Deal and the RepowerEU initiative will require an additional investment of 1.7% to 2% of European GDP per year compared to the past decade. Importantly, limiting global warming to 1.5°C and avoiding the potentially devastating effects of runaway climate change will require the commitment of significant public and private resources. The cost of that transition is significantly lower than the cost of doing nothing.
Europe is at a crossroads, with the end of the Next Generation EU (NGEU) in 2026 meaning significant cuts in investment. This will reduce the EU’s financial strength by half (about 800 billion euros). This would mean around €300 billion less in funds available for climate and nature investments, particularly affecting Central, Eastern and Southern European countries, which rely heavily on these funds for transition financing. .
Moreover, the current political consensus on the review of the EU’s fiscal framework (in particular debt and deficit rules) suggests that many member states are eyeing fiscal austerity. This will constrain financial capacity to invest in the Green Just Transition for the time being. Public investment is critical as only 60% of all green investments required by 2030 have a “bankable” business case. Coupled with the current high interest rate environment, which imposes further constraints on both public and private investment, this risks significantly undermining the means to achieve his 2030 targets for the Green Deal.
There is therefore an urgent need for new investment plans for the post-next-generation EU period. T&E, WWF, CAN, EEB and Birdlife have outlined what to do.
