Rapid action needed on climate financing to meet low-carbon targets

The EEA briefing ‘Financing Europe’s low carbon, climate resilient future,’ says that the smooth transition to a low-carbon future poses a major investment challenge that depends on a substantial redirection of finance flows towards more sustainable investments. The briefing is based on a new study prepared for the EEA, ‘Assessing the state-of-play of climate finance tracking in Europe’ which found that only a few European countries have turned their climate and energy objectives into concrete investment needs and plans to date. Only Belgium, the Czech Republic, Estonia, France, and to some extent, Germany, appear to have a national approach or strategy in place to track spending related to climate mitigation and adaption.

The background study is a first Europe-wide stocktaking to capture the current status of climate finance tracking across the EEA’s 33 member countries. The main focus was to identify data and knowledge gaps involved in tracking domestic climate finance.

The study identifies a lack of country-level preparedness and information regarding estimated total investment needs, as well as their current and planned expenditure volumes for climate and energy purposes. As a result, European Union estimates of total climate finance investment needs are not matched by complementary national assessments.

The briefing identifies the need for national and EU efforts to strengthen the tracking of domestic climate finance efforts, building on Member State experiences. It also calls for the development of forward looking national capital-raising plans related to their climate and energy objectives to strengthen investor confidence, boost investment attractiveness and enhance policy certainty.

Meeting climate and energy targets is an investment challenge

The EU has estimated there will be a need to invest around an additional €177 billion per year from 2021-2030. To close this gap, substantial funding — a doubling of current investments in renewable energy and energy efficiency — will be needed. This will require mobilising both public and private funds. These investments will also provide significant additional benefits, in terms of new jobs, reduced energy poverty, increased energy security and improved air quality, according to the EEA briefing.