The European Union’s (EU) Green Deal is the EU’s main new growth strategy to transition the EU economy toward a sustainable economic model. The proposed financing of the EU Green Deal is set out in the EU Green Deal Investment Plan.
Several funding mechanisms were created to facilitate the EU Green Deal, totalling over €1 trillion. Over 50% of the budget, €528 billion, will come directly from the EU budget and the EU Emissions Trading System.
The rest will be sourced through the InvestEU programme, which combines €279 billion from public and private sectors to 2030 and €114 billion from national co-financing. It will provide an EU budget guarantee to allow the EIB Group and others to invest in higher-risk projects, enabling private investment.
In addition, the Just Transition Mechanism is designed to support the regions and sectors (and workers) that depend on fossil fuels or carbon-intensive processes and which will be the most affected by the transition. It draws upon both the EU budget and InvestEU programme to generate €100 billion in funding.
To the €1 trillion 2021-2027 multiannual financial framework described above, we add the Next Generation EU funding, a €750 billion temporary recovery instrument, which will be channelled through the EU’s long-term budget, particularly in the years 2021-2023.
The majority of funds from Next Generation EU (€672.5 billion) will be spent through the Recovery and Resilience Facility (RRF) programme. The RRF consists of large-scale financial support to public investments and areas such as green and digital projects.
A selection of specific Programmes for climate-related innovations
While a significant part of the aforementioned budget lines may not be directly accessible to economic actors in the form of funding schemes, we have selected a number of programmes which are directly applicable to market innovations.
The Innovation Fund will provide around €10 billion of support over 2020-2030 for commercial demonstration projects involving innovative low-carbon technologies, aiming to bring to the market industrial solutions to decarbonise Europe and support its transition toward climate neutrality.
The goal is to help businesses invest in clean energy and industry to boost economic growth, create local future-proof jobs and reinforce European technological leadership on a global scale.
Horizon Europe is the EU’s key funding programme for research and innovation for the period 2021-2027 with a budget of €95.5 billion. €86.1 billion come from the Multiannual Financial Framework and the rest from Next Generation EU.
It tackles climate change, helps to achieve the UN’s Sustainable Development Goals and boosts the EU’s competitiveness and growth. The budgetary target for tackling climate change is 35%, allocated in a variety of calls for proposals, targeting Private for profit and non-profit actors, Public Bodies and Institutions, as well as the Research community.
LIFE is the EU's flagship programme dedicated to nature, biodiversity protection and the fight against climate change. From 2021, LIFE will also fund actions related to energy efficiency and renewable energy. The LIFE programme for the 2021-2027 period will have a budget of €5.4 billion. This is 60% more than the previous period. €3.5 billion will go to environmental projects and the remaining €1.9 billion will be allocated to those on climate action.
The European Innovation Council, through its variety of calls (Accelerator, Transition and Pathfinder, amongst others), has also set aside a minimum of 25% of its €10 billion budget to invest in market-creating innovations that contribute to the goals of the EU Green Deal.
Connecting Europe Facility is a key EU funding instrument that aims to promote growth, jobs and competitiveness through targeted infrastructure investment at a European level.
For the 2021-2027 period, in the framework of the Green New Deal, the EU has allocated a budget of €5.84 billion to energy projects for the transition towards clean energy and complete the Energy Union, contributing to more interconnected, smarter and digitalised EU energy systems.
The focus is on cross-border renewable energy projects, interoperability of networks and better integration of the internal energy market.
For more information regarding the above programmes, we invite you to consult the relevant webpage of the newly established European Climate, Infrastructure and Environment Executive Agency, as it offers a good summary view of all programmes.
For the European Innovation Council, we invite you to consult directly the agency’s website.
Article courtesy of EAIC member, My EU Consulting.