As we approach the end of 2020, we have collectively decided to reduce our greenhouse-gas (GHG) emissions in Europe to at least 55% by 2030 by a record 20 – Europe’s hottest year. The European Commission is now pursuing drastic policy changes through this commitment, and the European Investment Bank (EIB) is backing the initiative with its financial strength.
The current decade is the moment that prepares or breaks for our planet. To address the immediate challenges ahead, our two organizations convened Governments, International Organizations and Investors on 24 March 2021 for a landmark event: ‘Investing in Climate Action.’ The program brought together world leaders and shared their plans to implement the necessary policies at home and ensure international coordination. It sought to help investors and business leaders at least improve their understanding of the policy environment in which they operate over the next decade.
Climate change requires far-reaching structural change and tremendous investment around the world. In Europe alone, reaching the new 2030 emission-reduction target will require an additional investment of $ 350 billion ($ 417 billion) per year. However, this number will increase compared to the costs of doing nothing.
To address the investment challenge, EIB, the world’s largest multilateral lender, has become the EU Climate Bank, balancing all its operations with the objectives set out in the Paris Agreement. Among other things, EIB is committed to supporting $ 1 trillion in investment in climate action and environmental sustainability over the next decade.
But funding alone will not get us where we need to go. We also need a roadmap, so the European Commission introduced the European Green Deal in December 2019. As Europe’s new growth strategy, it aims to transform the EU into a better, more prosperous society by paving the way for more resource – efficient transition. , Competitive economy. Ultimately, the goal is to achieve net-zero GHG emissions by 2050.
However, the EU represents less than 10% of global emissions, so European action alone is not enough to slow global warming. To keep global warming as close to 1.5 Celsius as possible, we need to support decarbonization efforts beyond our borders. That’s why we need a global green deal.
To this end, we have established three investment priorities. First, we need to make sure that the most advanced cleaning technologies are being adopted everywhere. Despite good progress on renewable-energy expansion, 40% of world electricity is still generated by coal. With economic development comes greater demand for electricity, so it is a responsibility to adopt green-tech solutions and bring the world into clean grids.
Europe is ready to invest in everything from green electrification programs in Africa and industrial decarbonization projects in Asia to battery expansion in Latin America. We have the climate-adaptation expertise to share with flood-control technologies, advanced weather forecasting tools and resilient infrastructure. With both financial avenues and knowledge to support climate-adaptation efforts, EIB will use its resources to achieve more private sector investment in this critical area.
Our second priority is to invest in progressive green technologies like never before. Such research and development is both necessary and an enormous market opportunity. Already, a group of countries representing half the world’s GHG emissions have adopted ‘net-zero’ targets, while others must follow. All of them need European technology and investment to get there. Clean hydrogen, offshore renewable energy and energy storage solutions are all becoming powerful EU export sectors.
Finally, we must embrace the idea of a ‘circular economy’. When things stand, we take more than we can give from our planet, and the effects of this overreach become dramatic and devastating as each year passes. We urgently need to reduce the environmental and carbon footprint of the goods we consume.
To do so, we need to invest in circular technologies that recycle resources rather than constantly producing or importing new goods and extracting more raw materials. The circular economy not only reduces our dependence on scarce resources, but also has a huge potential to create jobs. As Europe shows, the Green Deal is not just an environmental policy; It is an economic and geopolitical necessity.
Five years ago, 196 countries signed the Paris Agreement, which is committed to keeping the average global temperature within 2 Celsius — but 1.5 ° C to its industrial pre-level. So far, this commitment has not yet matched enough action. It is time to raise our ambitions and accelerate progress. That is our message to the world on March 24 in ‘Investing in Climate Action’.
Not only governments but also businesses, cities, financial institutions and civil society must all come together to tackle the climate challenge. Europe has tools, skills and knowledge driven by example. We need to translate our climate-policy leadership into market leadership in order to achieve a global green deal.
Ursula van der Leyen & Werner Hoier are chairs of the European Commission and President of the European Investment Bank, respectively.