By Peter Sweatman and Adriana Rodriguez
Published in December 2024
This report sets out to develop an efficiency-first approach to structuring the next EU budget to help to part-fill the climate investment gap, boost the EU's green industrial competitiveness, and ensure there are sufficient public funds for those who need them. The approaches proposed here can also be trialled during the last years of the current Multiannual financial framework (MFF) and can be implemented after the mid-term reviews. The analysis builds upon a review of the existing instruments of the current programming period (2021-27) for relevant climate investments in mature technologies and solutions.
Recognising the significant investment gap in climate R&I, and the need for increased grant-based public funding to develop early-stage, clean technologies, much of the climate investments needed to meet the EU 2030 targets, and reduce emissions by 90% by 2040, is in technologies which are market-ready. Efficiency as a principle can only work for technologies that generate some revenues, or savings. Therefore, this report focuses on the efficient use of EU funds for deploying mature clean technologies and solutions, without prejudice to the critical importance of doubling European R&I funding, via a successor to Horizon Europe.
In integrating an “efficiency first” approach in the EU budget, there is no need to reinvent the wheel. The operationalisation of an efficient EU budget can be based on best practices from existing EU instruments, such as InvestEU and the Innovation Fund, and EU Financial Instruments as a Service (FIaaS) should be actively tested in the current programming period. This report proposes a set of sector and asset-specific funding strategies based on the type of asset deployments and end-beneficiaries to determine when EU FIaaS should be considered and where grants can be prioritised. Sectoral analysis points at potential avenues for integrating asset-specific EU FIaaS in existing EU instruments, such as:
Milestones include:
The report was presented on December 5th 2024 during a European Parliament roundtable organised by the Member of Parliament Niels Flemming Hansen and supported by Eufores. The roundtable featured Members of the EU Parliament, the European Commission, EIB officials, and leading experts on climate and sustainable finance.
The report was referenced in the following media outlets:
Euractive: December 5th 2024: “Filling the EU’s climate investment gap more efficiently” OpEd by our CEO Peter Sweatman. Read it here.
“We are convinced that there is “enough money identifiable” to deploy the climate assets Europe needs, fairly and in an orderly fashion. Enrico Letta saw that savers have over five times the cash stored in their current accounts, than is needed to finance all the extra climate assets required in the EU by 2030. Most of these assets come with savings and/or revenues, so this cash can be returned to savers in green interest and loan repayments.”
FT’s Sustainable Views: December 5th 2024: “Editor’s note, policy works: EU clean energy investment gap” Read it here.
“Elsewhere, Florence has dug into a study by European policy advisory company Climate Strategy and Partners based on data from the recent report on European competitiveness by former European Central Bank president Mario Draghi showing the EU must close an annual investment gap of between €340bn and €477bn to decarbonise its highest emitting sectors by 2050. Climate Strategy and Partners chief executive Peter Sweatman outlines three ways he believes the EU can close the investment gap, including by “eliminating waste” and inefficiencies in the delivery of EU funds and by not reinventing the wheel as far as financial instruments are concerned.”
