Green Focus Pledged for EU’s Virus Recovery Plan
03 April 2020 | Trading
The European Union is set to make greening the economy an essential part of efforts to recover from the shock of the coronavirus pandemic.
Heads of government pledged on Thursday to make their emergency measures compatible with the principles set out in the Green Deal. The promise, while short of details, is the first reassurance for investors who want to take stakes in climate projects and are looking to see how their work will be treated in stimulus packages now evolving worldwide.
“The urgency is presently on fighting the Coronavirus pandemic and its immediate consequences,” according to a joint statement agreed by the EU leaders meeting via a videoconference. “We should, however, start to prepare the measures necessary to get back to a normal functioning of our societies and economies and to sustainable growth, integrating inter alia the green transition and the digital transformation, and drawing all lessons from the crisis.”
Europe is aiming to zero out greenhouse gas emissions by the middle of the century in its far-reaching environmental clean-up. Its Green Deal, which was launched shortly before the virus outbreak, will overhaul everything from transport to energy production and agriculture, putting Europe’s ambitions on climate change ahead of most other major polluters.
EU leaders used the first scheduled gathering after the pandemic to confirm the region remains committed to its environmental clean-up. That ambition remains even as millions of citizens stay in lockdown and governments turn their focus to preventing the spread of the virus.
“Let’s see and make sure that no measure of the stimulus package goes against the Green Deal,” said Jos Delbeke, a former senior European Commission official and now a professor at the European University Institute in Florence. “Let’s look for synergies to immediately kickstart meaningful measures under the Green Deal as well as under the coronavirus crisis package.”
The statement at the highest level of European leadership will also be a sign for governments putting together similar recovery packages in other regions.
“We’ll be looking at the EU for the first signals of how long-term recovery is designed,” said Nick Robins, a sustainable finance professor at the London School of Economics. “The EU Green Deal provides a broader platform already in place to shift the direction of growth in the European economy.”
The European Commission, the EU’s executive arm, expects the spreading contagion to cause a deep recession this year. To stave off a full economic crisis, it is readying a 37 billion-euro ($40 billion) “Corona Investment Fund” that would use spare money from the EU budget to help businesses, health-care systems and sectors in need.
Putting Europe back on track to sustainable growth will require “a coordinated exit strategy, a comprehensive recovery plan and unprecedented investment,” the leaders said. They invited the Commission President Ursula von der Leyen and European Council President Charles Michel, in consultation with the European Central Bank, to start work on the necessary measures.
The statement explicitly mentions the green transition in the context of an exit strategy from the crisis. It reflects a growing concern in the bloc that handing out aid to companies without conditions may hinder efforts to cut emissions and could result into public funding for businesses that boost pollution.
Concerns that the Green Deal may fall down the political agenda have helped depress the value of carbon allowances. Benchmark permits in the EU Emissions Trading System, the region’s flagship tool to reduce pollution, slumped by almost a third this month.
“If we come out of this with an economy into pieces, then it will be hard to put climate back on the agenda, for sure,” said Ernest Urtasun, a member of the EU parliament and the vice president of the Greens group. “Most stimulus programs after the 2008 crisis had no environmental focus -- we need to avoid that.”