To make the European Green Deal succeed and to halve our greenhouse gas emissions by 2030, Europe needs between 300 and 500 billion euros of investments per year (building insultation, renewable energy, public transport, agriculture…)
We propose 3 effective solutions capable of financing a real Green Deal which can create 5 millions jobs in the EU:
- FATCA-Climate Law
- EU Climate Bank
- EU Climate Budget
Madam von der Leyen, President of the European Commission,
The urgency is to save lives, of course, and protect jobs.
But are we going to let this crisis make us forget once again the climate emergency? No! More than ever, it is time to rebuild Europe with a unifying project for climate and jobs!
The World Bank is announcing more than 140 million climate migrants by 2050 if we fail to make the drastic shift needed to combat climate change. But the latest reports from IPCC scientists show that it is not too late to act, but all the steps we are slow to take are already causing irreversible upheavals today. Therefore, delaying efforts and changes, as many vested interests are now using the covid-19 crisis to do, would be a terrible mistake and has to be countered at any cost.
On the contrary! The European Green Deal that you have proposed, if it is substantially funded, is the best way forward to make the real changes Europe needs to be able to recover from the corona crisis, to generate millions of jobs and to make it the most resilient economy possible.
But, in all our countries, the obstacle is the same. Of course, we want to insulate all buildings, boost public transport and renewable energies, transform our agricultural model, protect biodiversity, protect and clean forests and the ocean, develop adaptation and even reparation policies… But all these projects are facing the same obstacle: who will pay? Will this “Green Deal” have the means to deliver on its promises? Today we have no guarantee that financial resources commensurate with the challenge will indeed be integrated into the Climate Law.
Already before the Covid-19 crisis, and before the Green Deal, when working on a scenario of a 40 percent emission reduction target for 2030, the European Commission “has estimated that achieving the current 2030 climate and energy targets will require €260 billion of additional annual investment” (Green Deal Communication, 12/2019).
Meanwhile, the commitments from the European Commission to finance the Green Deal are very far from such amounts: there is a commitment for a « Climate Bank » but with an increased lending capacity of only approximately … €16 billion per year by 2025 (corresponding to a doubling of climate financing by the EIB). This is part of a « Sustainable Europe Investment plan » which would provide around €100 billion per year, although it is not certain that this insufficient amount can actually be fully mobilised. And no promise for a proper climate budget!
Compared to the needs assessed by European institutions and experts, the Green Deal has so far been promised far too few financial resources, between 2 and 10 times too few, and in a manner too vague to ever see it succeed.
In order to create international momentum, the EU must agree on an increased 2030 climate target, in line with science, equity and the Paris Agreement’s 1.5°C objective, well in advance of the COP26. And the way to have Member States agree on this will necessitate to identify how this transition will be paid for.
To be credible and to have a real catalytic effect, the Climate Law must complement the quantified emission reduction targets with proportional quantified targets setting the level of funding needed. Here are 3 solutions that seem capable of reaching a broad consensus:
1. In order to drastically reduce our consumption of fossil fuels, stop all fossil fuels subsidies and investments. The Climate Law must prohibit all Member States from continuing to subsidise fossil fuels. It must also guarantee that all banks (private and public) and insurance companies operating in Europe are transparent about all their activities and organise the progressive end of fossil investments. In 2010, to fight tax evasion, Barack Obama passed the FATCA law. It closed the US market to banks that did not provide the US tax authorities with full transparency. Similarly, to fight climate change, we need a “FATCA-Climate law” that reserves the EU market to banks and insurance firms that have redirected their investments to be consistent with the Green Deal.
2. The European Central Bank created 2 600 billion € since 2015. Only 11% of these colossal amounts of money so far went to the real economy, while most of the rest went to speculation. For 2020, besides the hundreds of billions it will create to face the Covid Crisis, the ECB will create another 240 billion. Rather than risking to feed speculation, it is essential to invest the entirety of these billions in climate and jobs. These billions must feed a real Climate and Biodiversity Bank – from the European Investment Bank for example – , which will provide interest-free loans to each Member State (up to 2% of its GDP each year for 30 years, as suggested by Nicholas Stern in 2008, which would mean €300 billion for the whole EU).
3. If every family, every small company and every territory is to invest in a deep zero carbon transformation, zero interest loans will not suffice, as the payback is limited or uncertain. For a catalytic effect, loans must be complemented with public subsidies. This necessitates an EU climate budget financed through EU own resources. There have never been as much dividends going to shareholders as in recent years. The average corporate tax rate in Europe has fallen by half over forty years (falling from 45% to 19%). A 5% European profit tax on large companies (adjusted according to their carbon footprint), combined with other own resources, would bring in €100 billion per year to feed a real EU Climate-Biodiversity Budget. This additional 100 billion would allow us to pass the threshold of 50% of the European budget devoted to climate.
With these 3 solutions to finance it, the European Green Deal could create more than 5 million jobs in Europe and improve the livelihoods of millions of households, thanks to the savings they will make on their energy bills.
Mrs von der Leyen, you said in July that you were inspired by “the passion, conviction and energy of those millions of young people who have made their voices heard in our streets and found the way to our hearts“. You added, “It is the duty of our generation not to disappoint them“.
Indeed, we cannot afford to lose any more time. The IPCC scientists are very clear: we cannot lose 5 years. The citizens of Europe are 84% in favour of increasing funding for the ecological transition. They are waiting for elected officials to unlock these new funding opportunities. The European Union was born with coal and steel. It can be reborn with a unifying project for climate and jobs.
Nothing would be worse than a false Green Deal that would not be given the means to deliver on its promises and to be fully implemented in all our territories. This would only be greenwashing. Nothing would be worse than a fake Green Deal with unfair financing, which would provoke the anger of thousands of yellow jackets in all our countries. We would then stand no chance of winning the climate battle.
Can you assure us that these three solutions will be integrated into your Recovery Plan to ensure a “Real Green Deal”?
If not, if these solutions do not suit you, what financing do you propose to reach equivalent amounts, while meeting the demand for tax and social justice of EU citizens?