Specifically, to support the EU Green Deal, the EU aims to mobilize investments in the next ten years to support its goals towards climate neutrality by 2050; the half of the amount will come from the EU budget while Member States are expected to co-finance another €100 billion. The rest will come by private and public investments.
The European Investment Bank will play a major role in the investment; It has already committed to increase its climate finance to 50% of all its lending. It has also laid out a new energy-lending policy to stop financing traditional fossil fuels and focus fully on energy efficiency, renewable energy and climate-friendly projects.
The President of the European Commission, Ursula von der Leyen, commented that
The Green Deal comes with important investment needs, which we will turn into investment opportunities. The plan that we present today, to mobilise at least €1 trillion, will show the direction and unleash a green investment wave.
Accordingly, the European Green Deal Investment Plan is divided into three dimensions:
- Financing: mobilising at least €1 trillion of sustainable investments over the next decade. A greater share of spending on climate and environmental action from the EU budget than ever before will crowd in private funding, with a key role to be played by the European Investment Bank.
- Enabling: providing incentives to unlock and redirect public and private investment. The EU will provide tools for investors by putting sustainable finance at the heart of the financial system, and will facilitate sustainable investment by public authorities by encouraging green budgeting and procurement, and by designing ways to facilitate procedures to approve State Aid for just transition regions.
- Practical support: the Commission will provide support to public authorities and project promoters in planning, designing and executing sustainable projects.
Following the EU is also launching the “Just Transition Mechanism”, a tool which will ensure that the switch towards a climate-neutral economy happens in a fair way, leaving no one behind.
The Just Transition Mechanism will consist of three main sources of financing:
- A Just Transition Fund, which will receive €7.5 billion of fresh EU funds, coming on top of the Commission's proposal for the next long-term EU budget
- A dedicated just transition scheme under InvestEU to mobilise up to €45 billion of investments.
- A public sector loan facility with the European Investment Bank backed by the EU budget to mobilise between €25 and €30 billion of investments.