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Europe will apply its emissions trading scheme to buildings and transport, European Commission President Ursula von der Leyen told a summit of world leaders on Thursday (22 April), setting the stage for the EU’s planned overhaul of its carbon market.

The EU’s carbon market is the backbone of its plan to cut greenhouse gas emissions. The scheme forces power plants and industry to buy permits when they emit CO2, effectively putting a price on pollution. Companies can buy and sell these CO2 permits on the carbon market, known as the EU Emissions Trading Scheme.

The EU has big and growing ambitions for emissions reductions by 2030: down 40% below 1990 levels, increasing the share of renewables to 32% of final energy consumption and improving energy efficiency by 32.5% above business-as-usual. These targets will be further revised as the more ambitious goal of cutting emissions by 55% by 2030 becomes legally binding. This means the EU as well as individual nations must estimate the cost of meeting these goals. Carlo Stagnaro and Carlos Di Bonifacio at Istituto Bruno Leoni have reviewed the individual National Energy and Climate Plans (NECPs) and warn there is a wide variation of methodologies and cost/benefit results. In other words, they give the EU no useful guide to how much it actually needs to spend. As an example of the range, the EU-average expected total investment cost to cut one ton of CO2 is €522/annum. The highest-cost countries are Portugal (€1,645), Italy (€1,312), and Bulgaria (€1,174). The least-cost are Estonia (€47), Lithuania (€67), and Denmark (€82). The authors strongly urge the EU Commission to help the member states revise their NECPs and make them consistent and transparent. The climate challenge is too important, and the amount of money to be mobilised too large, to get away with loose numbers.

The test for the EU's biodiversity strategy will be whether all EU legislation matches its ambition on nature protection, Green lawmakers argued in an environment committee debate about the strategy on Thursday (14 January).

The European Commission on Tuesday (15 December) proposed rules to restrict EU funding for natural gas infrastructure and instead funnel cash into electricity and low-carbon energy networks to meet climate goals.

The European Commission will present in early 2021 an “ambitious” sustainable finance strategy to mobilise the private investment needed to meet the EU’s climate targets.

For the post-2020 budget, the EU has fixed the objective of spending 25% (EUR 320 billion) of its long-term budget on climate action, an increase of 5% compared to the current budget. However, to avoid climate catastrophe, this percentage alone will not be sufficient: the whole EU budget should be aligned with the Paris Agreement in what is called the ‘climate proofing’ ofthe budget.

With the bloc headed for a steep recession and its executive, the European Commission, drawing up a trillion-euro recovery plan, calls are growing from politicians, companies and campaigners to make sure the money does not prop up environmentally damaging industries.
The Commission had planned to introduce rules on which investments can be called "green" from 2021, forcing providers of financial products to disclose which investments meet the criteria - known as the EU "sustainable finance taxonomy".

The European Commission is planning to present an updated multi-annual financial framework proposal on 29 April, as part of the recovery strategy to tackle the economic fallout of the coronavirus, according to an internal document seen by EURACTIV.com.
An updated MFF, the EU’s long-term budget for the period 2021-2027, is seen as a key tool to overcome the severe recession that the pandemic will cause in Europe, according to Commission President Ursula von der Leyen.
The head of the EU executive said early this month that “we all know that in this crisis we need quick answers and we cannot take two or three years to invent new tools” and that “the MFF is the strongest tool we have”.

Brussels is about to start a debate on waivers for green investments from the EU’s budget-deficit rules. But almost half the bloc is already moving to kill them.
A dozen EU countries from Northern and Eastern Europe have been working since last year to line up opposition to the idea of privileging environmentally minded projects within the bloc's review of national spending plans. Officials from the governments have a policy paper in the works.

The EU's Green New Deal will only work if the EU - the Commission, the Council and the Parliament - radically changes their way of working. On speed, on priorities, on results & and on the big bucks

What is the world’s remaining “carbon budget”? Or, how much more CO2 can the Earth take before we know we’ll miss our 1.5oC (and 2oC) goals for 2050. Making those calculations is not easy and IPCC benchmark estimates inevitably include levels of uncertainty in the final answer. Kasia Tokarska at the ETH Zurich Institute and Damon …

The Beacon is a quarterly newsletter with stories, news and developments on financial instruments in the context of Cohesion Policy. The winter edition, published last week, features among other things a significant study on residential energy efficiency financial instruments in Lithuania, two new videos on the combination of grants and financial instruments, as well as a new podcast episode on how ESIF Financial instruments support the development of the Venture Capital/Private Equity ecosystem in Greece.

Meeting the climate target requires rapid realignment and mobilisation of finance at a massive scale. To avoid greenwashing, the EU's sustainable finance taxonomy needs to establish screening criteria, rooted in science and linked to the metrics of climate change, writes Peter Sweatman.

Key elements of the EU’s foreign policy funding will be finalised during 'trilogue' talks this week. Raising the climate spending target there could make a vital difference to supporting partner countries to deliver green recovery plans, writes Rachel Simon.

The European Commission is considering issuing green bonds for the first time, as investors and politicians call on Brussels to raise sustainable debt as part of its €750bn borrowing spree to fund Europe’s economic recovery from Covid-19.
Johannes Hahn, commissioner for the EU budget, told the Financial Times that Brussels was “exploring the possibility” of selling sustainable bonds as part of an unprecedented debt-raising exercise that is expected to begin early next year.
Green bonds are a way of raising money for environmentally friendly purposes; issuance has exploded in recent years, with a total of $263bn sold globally last year, according to figures from Moody’s, up from less than $1bn a decade ago.

“While I welcome the announcement of a doubly increased renovation rate of the building stock across Europe, it was very disappointing to see that the Commission had not proposed a dedicated fund within the recovery package that would cover the upcoming renovation wave,” said Ciarán Cuffe, an Irish MEP from the Green party.

According to Cuffe, the EU recovery plan and renovation wave has the potential to create more than two million new jobs and contribute to a clean economy, on top of phasing out the worst energy performing buildings.

But without a dedicated budget, he doubts those promises can be kept.

A powerful array of EU countries including Germany is lining up against a key element of the post-coronavirus economic recovery plan floated by European Commission President Ursula von der Leyen.
Von der Leyen has proposed that the Commission raise money on financial markets, using guarantees that would be provided by EU members raising the ceiling on how much they could contribute to the EU budget. A large chunk of those funds would likely go to Southern European countries such as Italy and Spain, which have been hit hard by the pandemic and have limited fiscal room for maneuver.
But, although the Commission has yet to present a formal proposal, that central element of the plan is already facing deep skepticism from Berlin, Vienna, Stockholm, Helsinki and The Hague — highlighting once again a North-South divide when it comes to questions of EU financial solidarity.

Governments and financial institutions are under growing pressure to make economic bailouts designed to counter the coronavirus pandemic dependent on climate action in the longer term.
Over the last week, hundreds of billions of dollars worth of stopgap measures have been announced to fight the coronavirus and limit economic shortfalls.
Last week, the European Central Bank (ECB) announced a €870 billion emergency bond-buying programme to stabilise the euro zone economy until the end of the year – the equivalent of 7.3% of the euro area’s GDP.
In contrast, the EU Commission has promised a trillion euros over a decade to finance its Green Deal and support the union’s plan to be the first climate neutral continent by 2050.

The European Commission launched on Wednesday (6 February) a consultation with member states, the European Parliament and other stakeholders to review the EU’s fiscal rules, the Stability and Growth Pact.

The review comes as part of a multi-front effort to channel billions of euros into making the European economy more sustainable and achieving the zero-emission goal by 2050.

Depuis plusieurs décennies, les règles budgétaires définies dans le Pacte de Stabilité et de Croissance constituent l’une des principales boussoles des politiques économiques européennes. En 2020, leur réforme est à l’ordre du jour : la Commission européenne va bientôt en dresser un bilan et faire des propositions pour les réformer. Ollivier Bodin contributeur régulier de notre blog décrypte pour nous l’état des réflexions sur cette réforme ainsi que ses enjeux car comme il le souligne il reviendra non seulement à la Commission de faire le point sur le chemin parcouru depuis les réformes des années 2011 et 2013, mais aussi de se projeter dans les dix prochaines années qui seront décisives pour le succès du Pacte Vert pour l’Europe qu’elle vient de proposer.