EESC in the front rank of EU institutions: 40% of the EU budget should be earmarked for climate change

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Financing climate change

Shortly after the UN's Intergovernmental Panel on Climate Change (IPCC) report of 8 October urging countries to massively shift towards a new paradigm, the European Economic and Social Committee (EESC) has adopted an opinion arguing for a "finance-climate pact" to ensure the financing of the necessary transitions. With the EU budget for the period 2021/2027 about to be adopted, the EESC tables the most ambitious proposal among the EU institutions: 40% of the EU budget should be devoted to the fight against climate change and its consequences, be it environmental, economic or social. 

There will be no jobs and no entrepreneurship on a dead planet. It is up to us to avoid this nightmare scenario and we need to act now, says the EESC in its own-initiative opinion on European Finance-Climate Pact adopted on 17 October

While we believe that climate change is one of the biggest threats to human beings and our planet, we also see the opportunities emerging from the need to change Europe's economy to a sustainable one, says Rudy de Leeuw, rapporteur for the opinion. While we believe that climate change is one of the biggest threats to human beings and our planet, we also see the opportunities emerging from the need to change Europe's economy to a sustainable one, says Rudy de Leeuw, rapporteur for the opinion.

According to the French Agency for the Environment and Energy Management (ADEME), the fight against climate change could lead to a net increase in jobs of five to six million by 2050; and the European Commission predicts three million additional jobs in the renewable energy sector by 2020.

Let's stop backward-looking national thinking and instead face the challenges ahead, seizing the opportunities to promote a sustainable model that helps to effectively combat inequality and to strengthen democracy. This cannot be achieved by any single Member State alone: it needs Europe to act collectively.

Investment in real economy

The European Commission and the European Court of Auditors estimate that EUR 1 115 billion need to be allocated each year in Europe to fight climate change and its effects.

With the finance-climate pact we want to redirect the vast amounts of money – currently flowing into financial bubbles – into the real economy. This includes more investment in innovation and R&D, with a special focus on energy transition, the circular and collaborative economies and automation in order to prevent the decline of quality jobs, underlines Mr de Leeuw. We are convinced that in the longer run, only those who green their economy will stay at the top of the world market. We Europeans can become the leaders of this development.

Europe needs a plan and the necessary financial instruments

The finance-climate pact requires the establishment of a clear and predictable European policy framework over the longer term, with a view to ensuring planning security for investments. The next multiannual financial framework (2021-2027) must promote sustainable economic development and high-quality jobs by contributing to the transition to a low-carbon economy by 2050. The EU budget devoted to the fight against climate change and its consequences should shift from the current 25 % or 30% (respectively Commission and European Parliament proposals) to reach 40%.

The EIB to become a major green investor

The EIB's work should be stepped up, not only in terms of volume, but also of its capacity to take on more risk. Extending the Juncker Plan to projects under the finance-climate pact, for instance, would allow the EIB to make use of the guarantee for the European Fund for Strategic Investments.

Consideration should also be given to the EIB becoming the bank for sustainable development, mainly financing the energy transition, ecological mobility and innovation and moving away from financing traditional projects. Green projects should be earmarked in line with a new European taxonomy.

The circular economy as well as investments in the energy efficiency of buildings need to be encouraged.

The transition must be economically, socially and environmentally sustainable

In order to promote sustainable projects and identify areas in which investments can have the most positive environmental and economic impact, the EESC supports the development of a unified EU classification system (taxonomy). Green labels should be granted to investments that comply with the EU taxonomy and the highest sustainability standards, with a view to ensuring the positive earmarking of investments.

The EU should not only encourage cooperation between Member States, but also align its own policies with the aim of supporting shared prosperity for European entrepreneurs, workers and individuals.

In each trade agreement, social and environmental clauses should be completed by a binding commitment to the Paris Agreement.

Nobody must be left behind, this is the EESC's credo, aligned with the UN 2030 Sustainable Development Agenda. It is crucial that SMEs as well as cooperatives and small organisations at all local levels have access to finance and R&D. In order to guarantee a fair social transition, part of the funding should be allocated to an adjustment fund for regions and workers affected by the sectors in transition. The EESC proposes to earmark a substantial part of the European Cohesion Fund to climate objectives and their positive socio-economic benefits.

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