European Green Deal

The European Green Deal is the roadmap for making the EU's economy sustainable, by turning climate and environmental challenges into opportunities, and making the transition just and inclusive for all.

Recognising that climate change and environmental degradation are existential threats to Europe and the world, the EGD provides an ambitious package of measures, followed by EU Green Deal Action Plan. These measures include cutting greenhouse gas emissions, investing in cutting-edge research and innovation, and preserving Europe's natural environment.

Fighting climate change and achieving the transition to a climate-neutral society requires significant investments, research and innovation, new ways of producing and consuming, managing waste, and changes in how we work, use transport and live together.

Since solid waste, wastewater, water supply, energy efficiency, air pollution – all these things affect climate change, the EGD addresses environment (waste and recycling) among the key action areas also towards being climate neutral in 2050

Increasing EU’s Climate ambition for 2030 and 2050

Supplying Clean, affordable and secure energy

Mobilising industry for a clean and circular economy

Building and renovating in an energy and resource efficient way

A zero-pollution ambition for a toxic free environment

Preserving and restoring ecosystems and biodiversity

From “Farm to Fork” : a fair, healthy and environmentally friendly food system

Accelerating the shift to sustainable and smart mobility

The EU as a global leader

A European Climate Pact

The European Green Deal

Transforming EU’s economy for a sustainable future

Financing the Transition

Leave no one behind (Just Transition)

Sustainable Europe Investment Plan

European Growth Model for a green resilient economy (1/3)

“The green transition is an opportunity to put Europe on a new path of a sustainable and inclusive growth”

• On March 2022, EC published the COM(22)83 final Communication: Towards a green, digital and resilient economy: our European Growth Model
• EGD sets out the framework for making EU’s economy sustainable in a fair and inclusive manner, tackling climate and environmental-related challenges.
• There is need to increase the annual investments by around EUR 520 billion till 2030 to ensure EGD is delivered

European Growth Model for a green resilient economy (2/3)

A breakdown of the additional investments needed is provided below:

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European Growth Model for a green resilient economy (3/3)

How to ensure a fair and inclusive economic transformation and growth

• A strong policy response
• Labour reallocation within and between sectors
• Reforms and large-scale investments in reskilling and upskilling
• Education and skills must be at the centre of all actions, as per the Porto Declaration
• Careful design of measures and incentives to support the shift to climate neutrality

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Greening taxation (1/3)

Taxation has a crucial role in the transition towards a greener and more sustainable European growth. EGD is built on the “polluter pays” principle to ensure that taxation is aligned with climate and environmental objectives. Well-designed tax reforms:

• boost economic growth
• reduce greenhouse gas emissions
• ensure an effective carbon pricing

Two main initiatives are under way:

• Revision of the Energy Taxation Directive (ETD)
• Development of a Carbon Border Adjustment Mechanism (CBA)

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Greening taxation (2/3)

Revision of the Energy Taxation Directive (ETD)

Following the evaluation of the ETD in September 2019, the conclusion is clear: the EU Energy Taxation Directive is no longer in line with the EU climate objectives, since:

• It does not promote emission reductions, energy efficiency, or alternative low carbon / sustainable fuels.
• It does not provide sufficient incentives for investments in clean technologies
• Is not in line with other climate EU policies (EU Emission Trading System, Renewables Directive, Energy Efficiency Directive).

Greening taxation (3/3)

Development of a Carbon Border Adjustment Mechanism (CBA)

In the EU, the carbon price for energy-intensive industry sectors is determined by the market through the EU Emission Trading Scheme (EU ETS), based on the 'cap and trade' principle.

In this context, the CBA is an instrument that will support EU’s policy objectives to reduce greenhouse gas emissions, since it will ensure that the price of imports reflects more accurately their carbon content.

In terms of timing, the CBA being linked to the pricing of carbon, it may be proposed in parallel with the revision of the ETS.

Green budgeting (1/4)

Green budgeting is defined as a form of ‘priority budgeting’, aimed at aligning resources and incentives towards a government’s specific priorities. Green budgeting includes all efforts to align the budgetary process with environmental goals.

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• Greening the national budgets is an important part of the ecological transition, thus delivering the European Green Deal agenda
• National budgets are the key expression of how a how a government will implement its missions and objectives.

Green budgeting (2/4)

• The overall “greenness” of a budget is a necessary step to promote consistency vis-à-vis environmental objectives.
• Green budgeting also includes evaluating environmental impact of budgetary or fiscal policies and assessing their coherence towards the delivery of national, European and International commitments.
• For the budgetary process of green budgeting the environmental contributions of budgetary items are identified and assessed with respect to specific performance indicators, with the objective of better aligning budgetary policies with environmental goals.

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Green budgeting (3/4)

In December 2017, France, Mexico and the OECD launched the Paris Collaborative on Green Budgeting that puts forward eight principles:

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Green budgeting (4/4)

The assessment of the greenness of budgetary items is a challenging task. The ‘greenness’ can be considered based on the below distinctions:

• The impact of a budgetary item on the environment through an ex-ante estimation or an ex-post analysis with specific quantitative indicators examined over a specific period. For example, the CO2 emissions over a ten-year period of an investment in a new building complex.
• The contribution of a budgetary item to the environment results from a prediction of how the specific item could impact an environmental objective. Differently from the impact, such prediction would not rely on the estimation of specific quantitative indicators, but rather on an ex-ante assessment of what could be green or brown. For example, the positive expected contribution of a fuel tax on climate change or pollution. An assessment of a contribution faces challenges related to specific nature of the environmental goals, as discussed in section 2.2.
• The purpose of a budgetary item, instead, identifies the reason and overriding objective underpinning that item. For example, a fuel tax has an environmental purpose, as well as an environmental contribution and an expected impact. However, a tax on cigarettes has health as the main purpose but contributes to the environment with a specific impact, as it reduces pollution from smoke and cigarette-related waste.

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State aid for climate, environmental protection & energy

Competition policy and State aid rules are key elements to be considered in enabling and supporting the EGD policy objectives' fulfillment.

• In February 2022 EC published the Communication (2022/C 80/01) on Guidelines on State aid for climate, environmental protection and energy
• The guidelines apply to State aid granted for the development of economic activities related to environmental protection, as well as activities in the energy sector. They do not apply to:
• State aid for the design and manufacture of environmentally-friendly products, machinery, equipment etc
• State aid for research, development and innovation
• State aid covered by the rules on State aid in the agriculture and forestry sector and in the fishery and aquaculture sector
• State aid for nuclear energy.

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