In response to the COVID-19 pandemic and resulting economic crisis, the European Commission has set out a proposal for a Recovery Plan to return Europe to growth, whilst also tackling the continent’s long-term challenges.
'The recovery plan turns the immense challenge we face into an opportunity, not only by supporting the recovery but also by investing in our future: the European Green Deal and digitalisation,' explained Commission President Ursula von der Leyen.
In the Recovery Plan, the Commission has proposed a total of 1.85 trillion EUR of spending, including a revised multiannual financial framework (MFF) for 2021-2027 of 1.1trillion EUR, plus a new recovery instrument, 'Next Generation EU' of 750billion EUR to be borrowed on financial markets. This borrowing is to be repaid from future MFF (up to 2058) and via carbon taxes raised from the EU Emissions Trading Scheme and the proposed Carbon Border Adjustment Mechanism.
Implementing the Green Deal
The proposals seek, in particular, to turbocharge the implementation of the European Green Deal which the Commission sees not only as an environmental and climate initiative, but as a fundamental economic strategy and a 'job-creating engine'. In the revised MFF, a least 25% of the 1.1trillion EUR available will be spent on implementing the Green Deal, with up to 1.7million new jobs created by 2030.
In particular, the Commission’s proposed 'Renovation Wave' – outlined in the Green Deal – is seen as a driver for employment, aiming to double the annual renovation rate of buildings, with significant investment in energy efficient materials, technologies and the accompanying renovation workforce. Further details on the Renovation Wave are expected in the third quarter of 2020.
The Commission will also target investments at clean technologies, including renewable and energy storage technologies, sustainable energy infrastructure, production of sustainable vehicles and alternative fuels (particularly clean hydrogen) as well as the roll-out of e-vehicle charging infrastructure.
Next Generation EU
Alongside the MFF, the 'Next Generation EU' instrument would support EU Member States with 500billion EUR in grants and 250billion EUR in loans, implemented through three pillars:
- Supporting Member States to Recover – Comprising a 560billion EUR Recovery and Resilience Facility to support Member State’s own recovery plans (in line with National Climate and Energy and Just Transition plans), a 55billion EUR increase of cohesion funding for the most deprived regions (named 'REACT-EU'), and a strengthened Just Transition Mechanism, seeing its budget increased from 7.5billion to 40billion EUR
- Kick-starting the economy and helping private investment – Including a 31billion EUR solvency support instrument aiming to unlock 300billion EUR for companies and regions hit hardest by the crisis, and a strengthened InvestEU programme for sustainable infrastructure;
- Learning lessons from the crisis – Comprising a new health programme and crisis preparedness initiatives.
For more information, see the European Commission’s Communication, 'Europe's moment: Repair and Prepare for the Next Generation' its revised Work Programme factsheet, and press materials on the MFF. Additional material on the EU’s response to the COVID-19 pandemic can be found here.