The EU Green Deal
Introduction
Europe’s overall climate goal is to become the first climate-neutral continent in the world. It aims to generate 55% less emissions by 2030 compared to 1990 and become climate-neutral by 2050.
The EU Green Deal is a set of policy initiatives designed to achieve this goal. It is based on a clean and circular economy1. The main objectives of the Green Deal are:
- Protecting vulnerable workers and societies
- Financing green reforms and investments
- Improving energy efficiency, energy security2 and reducing dependency from Russia
- Enhancing the competitiveness of Europe’s net-zero industry
- Restoring the wealth of the environment
1. Protecting vulnerable workers and societies
Through the Green Deal, the EU seeks to put people at the center of the transition to climate neutrality. This is through ensuring that the energy transition is just and fair by supporting those who are most vulnerable in the transition and most affected by the effects of climate change. It does this through various funds.
The Just Transition Fund aims to support regions and communities that are most negatively affected by the transition to climate neutrality, ensuring that no one is left behind. It seeks to address employment, economic, social and environmental impacts that come with shifting away from carbon intensive activities. The fund supports activities such as training the workforce that has been working in carbon intensive sectors, providing them with new skills that they can use in the clean energy sector.
The Social Climate Fund supports the transition to climate neutrality by providing EU member states with funding to support the most affected vulnerable groups, such as households in energy or transport poverty, ensuring no one is left behind. The fund can be used to support investments in energy efficiency and renovation of buildings, clean heating, cooling and integration of renewable energy, as well as in zero-emission and low-emission mobility solutions. Additionally, it can be used to provide temporary direct income support.
The EU Solidarity Fund provides financial support to EU member states after several natural disasters (like floods and earthquakes) and major health emergencies.
The NextGenerationEU is a stimulus package3 used to fund investments projects in EU member states. These projects focus on healthcare, supporting workforce to acquire education and digital skills to help them prepare for a tech-driven world, and assisting SMEs and young entrepreneurs by nurturing innovation, creating jobs and spurring future growth. 40% of NextGenerationEU goes to climate action.
The EU Civil Protection Mechanism supports EU countries and 10 additional participating states (Albania, Bosnia and Herzegovina, Iceland, Moldova, Montenegro, North Macedonia, Norway, Serbia, Türkiye, and Ukraine) when struck by climate-related emergencies. It is a well-coordinated joint response, allowing the authorities of the country(ies) affected by disaster to communicate through a single point of contact rather than multiple channels. Additionally, it helps to pool expertise and capacities of first responders, prevents duplication of relief efforts, and ensures that assistance effectively addresses the needs of those affected. The Mechanism also helps coordinate disaster prevention and preparedness activities among national authorities and fosters the exchange of best practices.
The EU also supports farmers and rural communities when they are impacted by climate-related disasters. In the recent past, it has extended €330 million to 22 member states to cope with the impacts of climate events and higher input costs. Some of the countries that received this funding include Spain, Portugal, Greece, Slovenia and some parts of Italy that experienced severe floods recently.
2. Financing green reforms and investments
The EU mobilised funding to support the deployment of low-carbon energy sources that increase the energy efficiency of buildings. The EU Green Deal stipulated that €275 billion of NextGenerationEU and REPowerEU funds and €118 billion of the Cohesion Policy would support investments in clean energy.
The Green Deal also led to the expansion of the European Trading Scheme (ETS) to accommodate more economic sectors. This led to an increase in revenue, which has been reinvested in innovation, climate action, and social support.
3. Improving energy efficiency, energy security and reducing dependency from Russia
At the outbreak of the Russian invasion of Ukraine in 2022, almost half of EU gas imports were sourced from Russia. In a bid to undermine their support for Ukraine, Russia weaponised the EU’s over reliance of its energy supply by reducing and in some cases cutting off natural gas exports to Europe.
Europe quickly recognized a need to end its reliance on Russian imports of fossil fuels and develop alternative ways to ensure constant energy supply. Consequently, it established the REPowerEU Plan. REPowerEU is helping the EU to save energy, diversify energy supplies and produce clean energy. It has enabled the EU to overcome its dependency on Russian fossil fuels. This led to the share of EU gas imports coming from Russia dropping from 45% in 2021 to 15% in 2023.
4. Enhancing the competitiveness of Europe’s net-zero industry
The Green Deal has contributed to Europe’s economic growth through various policies.
The first policy is the Green Deal Industrial Plan. It creates conditions for the scaling up of manufacturing capacity for the net-zero technologies and products required to meet Europe’s climate targets and secure its position as the industrial lead in the fast-growing net-zero technology sector. This plan covers four pillars. The goal of the first pillar is to create a simpler, faster and more predictable framework, securing the volumes needed for raw materials, and ensuring users are able to benefit from the low costs of renewables. The second pillar aims to speed up investment and financing for clean-tech production. The third pillar emphasizes the need for a huge growth in skills and skilled workers in the tech sector. The fourth pillar is about global cooperation and making trade work for the green transition, under the principles of fair competition and open trade.
The second policy is the Critical Raw Materials Act, whose objective is to ensure the EU’s access to a secure, diversified, affordable and sustainable supply and to increase domestic capacities for critical raw materials such as lithium, cobalt and nickel (used to produce batteries), gallium (used in solar panels), raw boron (used in wind technologies) and titanium and tungsten (used in the space and defence sectors).
The third policy, the Net-Zero Industry Act aims to scale up the manufacturing of clean technologies in the EU. This means increasing the EU’s manufacturing capacity of technologies that support the clean energy transition and release extremely low, zero or negative greenhouse gas emissions when they operate.
5. Restoring the wealth of the environment
The EU has worked to restore biodiversity, address pollution, and make efficient use of resources. This is in line with the Kunming-Montreal Global Biodiversity Framework. It adopted the Zero Pollution Action Plan in 2021, whose objective is to reduce air, water and soil pollution to levels that are no longer considered harmful to health and natural ecosystems, that respect the boundaries with which the planet can cope, thereby creating a toxic-free environment.
Footnotes
A circular economy is a system where products and materials are reused, repaired, and recycled instead of being thrown away. It aims to reduce waste and pollution by keeping resources in use for as long as possible, protecting the environment and making better use of resources.↩︎
Energy security refers to the reliable availability of energy resources at an affordable price. It involves ensuring a stable and uninterrupted supply of energy to meet a country’s or region’s needs for heating, electricity, transportation, and industrial activities.↩︎
A stimulus package is a form of government spending offered to the public during times of economic distress.↩︎