The European Commission (EC) has agreed to sustainable investments of €1000bn ($1100bn) for the next decade through the European Green Deal Investment Plan (EGDIP) as part of its Green Deal.
In December EU member states undertook to tackle the effects of climate change and to make the EU climate-neutral by 2050, although Poland said it would first assess the financial incentives.
The plan aims to help coal-producers move away from fossil fuels, except gas infrastructure. However, funding through the scheme will not finance nuclear power plant construction.
The EC said it will require significant investment from the EU and the national public sector, as well as the private sector.
EGDIP, based on the three pillars of financing, enabling, and practical support, aims to mobilise public investment and help to unlock private funds through EU financial instruments, notably InvestEU.
"A greater share of spending on climate and environmental action from the EU budget than ever before will crowd in private funding, with a key role to be played by the European Investment Bank," the Commission said.
The plan seeks to offer incentives to unlock and redirect public and private investment by "putting sustainable finance at the heart of the financial system". The EC will support public authorities and project promoters in planning, designing and executing sustainable projects.
Because some regions will be particularly affected than others, the EC also launched the Just Transition Mechanism (JTM), to provide "tailored financial and practical support to help workers and generate the necessary investments in those areas".
Finance for the JTM will come from three key areas:
- A Just Transition Fund (€7.5bn of EU funds, in addition to proposals for the next long-term EU budget);
- A dedicated just transition scheme under InvestEU (€45bn), and
- A private-sector loan facility with the European Investment Bank backed by the EU budget.
EC President Ursula von der Leyen said: "The transformation ahead of us is unprecedented. And it will only work if it is just - and if it works for all." The plan will "show the direction and unleash a green investment wave" she added.
Industry body reactors to the exclusion of nuclear
While the European nuclear trade body Foratom welcomed financial support to help the transition of coal-dependent regions it regretted the exclusion of nuclear from the funding.
"At the end of the day, the EU should be focusing on helping people in these regions to transition into low-carbon industries. Limiting the low-carbon sectors which will be eligible for such funds will make achieving our low-carbon targets without leaving anyone behind a lot more difficult - if not impossible," Foratom said.
Reports published over the last 18 months by the Intergovernmental Panel on Climate Change, the International Energy Agency and the EC had concluded that low-carbon nuclear is an essential component of a low-carbon economy.
"At the end of last year, several member states made it clear that in order to commit to the 2050 decarbonisation targets then they must be allowed to invest in nuclear power," Foratom said. "We, therefore, find it hard to justify such a proposal by the commission."