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EU Parliament sets out how to finance the Green Transition

The European Parliament called for a shift to sustainable economic activities that boost competitiveness and result in high-quality jobs. In a non-binding resolution on the Sustainable Europe Investment Plan (SEIP) and financing the Green Deal, MEPs stressed that the green transition should focus on reducing existing and potentially exacerbated disparities between Member States.

MEPs agreed that public investments should respect the do no significant harm principle and only national and regional programmes with the highest potential to achieve these objectives should receive public investment.

Therefore they called for harmonised sustainability indicators and a methodology to measure impact and highlighted that the criteria established by the Taxonomy Regulation should also be taken into account if an investment is to meet green transition.

MEPs want to phase out public and private investments in economic activities that are harmful and pollute the environment when economically feasible alternatives are available. At the same time, the resolution states that the right of Member States’ right to choose their own energy mix must be respected.

MEPs welcomed that the COVID-19 Recovery Plan for Europe and the subsequent national recovery and resilience plans have been designed to put the EU on the path to climate neutrality by 2050. However just last week the economic affairs and budgetary committees voted on the EU’s recovery fund package, which did not include a ban on spending funds on fossil fuels. This came one month after the environment committee’s vote to exclude polluting fuels like natural gas from the 750 billion euros recovery funds.

Romanian EPP member, Siegfreid Muresan said that to achieve the objectives of the Green Deal we need to know how to finance them in the current context, working together with EU economies and companies, not against them.

Mr Muresan was also the rapporteur on the Recovery and Resilience Facility adopted last week by the economic affairs and budgetary committees. Commenting on the agreement he said that other political groups wanted to make a list of types of projects that would be excluded from the start from funding through this mechanism.

“We managed to avoid such a list, especially because, for Romania, gas, based on modern technologies, is a less polluting fuel alternative that can be used during the transition to a green economy,” he said.

MEPs also stress that public and private investments must complement each other and that the private sector should not be crowded out. They welcomed the European Investment Bank’s decision to devote 50 per cent of its operations to climate action and environmental sustainability from 2025 onwards.

Rapporteur Paul Tang emphasised that there are four pillars which will help to reach our climate goals: firstly, all EU spending must be subject to the ‘do no significant harm’ principle; secondly, the EU monetary and financial institutions must ensure the goals are financed; thirdly, private investment in harmful activities should be phased out; and finally, public money must be spent sustainably.

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