In a report endorsed by Green EU lawmakers, research indicates that the European Union will require 1.5 trillion euros ($1.6 trillion) annually to achieve its 2050 net zero emissions target. The European Commission is poised to propose a 90% cut in net emissions by 2040 from 1990 levels, accompanied by a substantial upfront increase in investments to propel Europe towards zero net emissions by 2050.
The research, conducted by the Institut Rousseau think-tank at the behest of Green EU lawmakers, reveals that a significant portion of the funding needed for net zero (1.16 trillion euros per year) could be sourced by reallocating existing expenditures, much of which currently supports environmentally detrimental activities. This reallocation would necessitate substantial divestment from sectors like combustion engine cars, fossil fuel production, and new airports, with a corresponding surge in investments directed towards public transport, building renovations, and the expansion of renewable energy.
Philippe Lamberts, Co-President of the Green lawmakers group in the European Parliament, underscored the viability of obtaining the required funds. However, he emphasized the imperative for substantial divestment from projects contributing to climate change, stating, “Much of the money needed is out there, but we need massive divestment from climate killing projects.”
As the impacts of climate change become increasingly evident through extreme weather events, EU policymakers are preparing for elections where climate policy is anticipated to be a central issue. Some governments have expressed concerns about the costs associated with the EU's green agenda, and signs of resistance to ambitious climate policies have emerged.
A draft of the Commission's internal modeling for the 2040 climate target suggests a similar scale of investment requirement, approximately 1.5 trillion euros per year in less polluting energy systems.
The researchers highlighted that while the private sector would be the primary source of investments for achieving net zero emissions, public spending on the green transition would also need to double, reaching 490 billion euros per year. To provide context, the current EU spending on fossil fuel subsidies amounts to 359 billion euros per year. The research underscores the substantial financial commitment required for the EU to fulfill its ambitious climate targets.