Financing the Transition to a Low-Carbon Economy and the Challenges in Financing Climate Change Adaptation (Exploratory opinion at the request of the Croatian presidency)

EESC opinion: Financing the Transition to a Low-Carbon Economy and the Challenges in Financing Climate Change Adaptation (Exploratory opinion at the request of the Croatian presidency)

Key points

The European Economic and Social Committee (EESC):

  • strongly welcomes and supports the recent European Council conclusions and the announced European Green Deal, with the joint objective of securing the transition to a low-carbon economy by "achieving a climate-neutral EU by 2050";
  • in light of the COVID-19 crisis has already called for unprecedented solidarity amongst Member States and for a comprehensive European economic recovery plan which would allow the EU Member States, its citizens, companies and workers to best face the consequences of the COVID-19 pandemic and build a more sustainable and resilient European economy. The Next Generation EU of €750 billion as well as targeted reinforcements to the long-term EU budget for 2021-2027, will bring the total financial firepower of the EU budget to €1.85 trillion. In addition to supporting recovery it is focused on the European Green Deal and digitalization to boost jobs and growth, the resilience of our societies and the health of our environment;
  • supports the resolution by the European Parliament adopted on 17 April 2020 by an overwhelming majority to place the European Green Deal at the heart of the upcoming EU recovery and reconstruction package "in order to kick-start the economy, improve its resilience and create jobs while at the same time assist in the ecological transition, foster sustainable economic and social development";
  • supports the European Green Deal Investment Plan as the first of the key financial pillars of the transition to a low-carbon economy, along with the Just Transition Mechanism. The EESC sees these initiatives as a first step in the right direction, and urges the EU institutions to establish transparent and participatory processes for the preparation of further steps, effectively including all relevant stakeholders and aligned with recovery and a just transition to a well-being economy;
  • calls, due to the unprecedented crisis we are facing, for an ambitious reconstruction plan in compliance with the Paris Agreement. A crucial part of this should be a climate action budget at least equal to the previously identified investment gap of around EUR 300 billion a year, and with a strong priority to support decentralised decarbonisation projects co-designed and co-owned by citizens, small and medium-sized enterprises, energy communities and local and regional public entities;
  • feels strongly that the transition and post-COVID reconstruction must be just and lead to a more just and sustainable EU or it will fail, with grave consequences for the European project as a whole. We believe that a crucial component of a just transition is the political, social and economic inclusion of citizens, communities and small and medium-sized enterprises, especially in underdeveloped, rural regions in the EU, without discriminating against Member States that are not currently members of the eurozone. A set of criteria ensuring that the transition is just is paramount, and stakeholders at all levels must be included. The EESC has already contributed to this debate;
  • underlines that a just transition and post-COVID-19 reconstruction must ensure that consumers and communities become active "prosumers" (producers and consumers) for sustainable products and services in the energy and transport sectors;
  • calls for the urgent removal of barriers preventing the reallocation of public and private funds, primarily those of existing direct and indirect subsidies to the fossil fuel sector, as well as fiscal and taxation barriers;
  • supports a strong mandate for the European Commission to develop a new EU adaptation strategy, and calls for equal emphasis to be placed on financing mitigation and adaptation. The EESC considers that an inclusive policy debate on the development of innovative financial mechanisms for adaptation actions and dedicated Just Adaptation Funds should start as soon as possible;
  • calls for a significant increase in available funds, the launch of a "European Climate Action Solidarity Corps" targeted youth programme, and funds for cooperation between local governments and organised civil society in developing community-based and community-owned low-carbon energy and transport projects;
  • believes that the European Green Deal should safeguard the security and international competitiveness of the EU and especially of small and medium-sized enterprises, which are facing increased competition from emerging economies, and supports proposals for a carbon border adjustment mechanism.