Why economic revival should be based on green growth

In brief

• One thousand green projects have been identified in Europe that have the potential to create significant social, environmental and economic value.
• Equivalent projects are available across the globe, providing an opportunity for a “green recovery” from the COVID-19 pandemic.
• The economic recovery from the crisis has the potential to accelerate a socially just transition to a sustainable future.

When the European Commission announced the Green Deal in December 2019 it was described as “Europe’s man on the moon moment.” Setting a goal to become the first carbon-neutral continent by 2050, the ambitious package involved investment in green technologies and sustainable solutions to make Europe the leader in tackling climate change.

The economic impact of the COVID-19 crisis has subsequently prompted calls for prioritization of business recovery with less emphasis on sustainability and carbon neutrality. However, these calls have been resisted and EU environment ministers agreed in October 2020 to make the 2050 net-zero emissions target legally binding.

Moreover, an EU Summit in July 2020 proposed a €750b “Next Generation” fund to aid economic recovery from the pandemic. Thirty percent of this has been pledged for climate action, while a do-no-harm clause rules out investments that are deemed to be environmentally damaging.

There is work still to do before the funds can be deployed, as the package needs to be ratified by the European Parliament and national parliaments across the EU. But it is clear this has the potential to be very much a green recovery.

Turning the green recovery from ambition to reality

Given this level of ambition, the question has to be asked as to whether there are enough green projects available. Historically, environmental projects have not always been considered “shovel-ready” – those that are at an advanced stage of development – and so not identified as a priority in recovery packages.

The EY report on a European green recovery (pdf) commissioned by the European Climate Foundation demonstrates that this is not the case, and there are a large number of green schemes – projects with a positive social and environmental impact – that could be launched within two years if they were to receive funding. It shows that policy makers should not lack ambition when it comes to environmental initiatives.

EY teams across the 27 EU member states undertook more than 150 interviews with external stakeholders including government representatives, project developers, investors and manufacturing companies. They identified 2,000 projects using the EU taxonomy and, of these, selected 1,000 shovel-ready green projects that have the potential to create significant social, environmental and economic value as Europe recovers from the COVID-19 pandemic.

According to the report, these projects will require around €200b of public and private investment but, crucially, they could support close to three million jobs. With a higher job-intensity ratio than traditional and fossil-based industries, the low-carbon projects identified can have a major contribution to a green recovery in Europe.