Brussels has presented on Tuesday its plan to finance its ambitious Green Pact, whose objective is to make Europe the first climate-neutral continent – that is, with zero net emissions – by 2050. It is about mobilizing a minimum of one billion euros in sustainable investments over the next 10 years, the largest public expenditure in history to combat climate change from the EU budget, according to the European Commission.
However, if you dig in the figures, there are barely 7.5 billion new money. The rest is creative accounting and financial engineering, denounces the Eurocamara.
"We are absolutely in favor of a more circular economy, but we are against the recycling of promises and money. Creative accounting and financial adventures will not take the Commission very far when it comes to finding the trillion euros needed to finance its new climate and energy plans, "denounced the president of the Committee on Budgets of the European Parliament, the Belgian Johan Van Overtveldt.
"In the proposals to finance the Green Pact, the Commission makes promises on behalf of the long-term EU budget that has not yet been approved and places a considerable extra burden on the shoulders of the European Investment Bank (EIB). Then, it's not clear where the rest of the money will come from"Van Overtveldt complains.
"It is essential that there be new money, but the plan contains nothing"The WWF environmental organization has also protested through a statement." Both the amount that is now spent on climate and the environment and future spending targets must be increased massively to finance the road to a sustainable Europe, "WWF claims.
Where does the trillion euros that Brussels promises for the Green Pact for the next 10 years? First, Brussels wants redirect to the climate objectives a good part of the EU budget that is now dedicated to other things. Specifically, it intends that during the next decade 25% of community funds be devoted to the Green Pact. That is, a total of 503,000 million euros, according to their calculations.
Financial engineering and accounting creativity
That would force the Member States to put another 114,000 million national public funds to co-finance the investments. The problem is that EU governments have not even agreed yet on the financial framework for the period 2021-2027. Negotiations are very much behind the war between net taxpayers and beneficiaries of community aid. And it is unlikely that Member States will accept this Brussels taxation.
Secondly, Brussels intends to mobilize a total of 650,000 million euros over the next decade through the EIB in public and private investment with a guarantee of just 15.2 billion community funds. It is the financial engineering of what is known as the Juncker plan, which will continue with the Von der Leyen Commission. Of this supposed amount, around 279,000 million would go to projects related to the Green Pact, the Commission promises. The puzzle is completed with another 25,000 million of the proceeds from the emissions trading system.
This financing plan includes the Fair Transition Fund, which in theory would have a budget of 100,000 million euros during the period 2021-2027 to assist the most coal-dependent regions and mitigate the socio-economic impact of the green transition. But the reality is that there will only be 7.5 billion euros of new money, as the community executive himself admits. In fact, it is the only new money in the whole plan.
Worst of all, this trillion euros that Brussels arrives with its creative accounting is not even enough to meet the EU emission reduction objectives. Only to reach the 2030 goal (a 40% cut) would be required an additional investment of 260,000 million a year, according to the calculations of the Commission itself. The Commissioner for Economic Affairs, Paolo GentiloniHe has been convinced that if the EU creates the right conditions, additional resources will come from both the public and private sectors. The Eurocamara and environmentalists are more skeptical.