PROPOSALS FOR A GREEN ECONOMIC STIMULUS

Source: Notre Europe (Jacques Delors Institute)

Summary

1. Renovating schools and other educational buildings

2. Renovating the dwellings of energy poor households

3. Rolling out a large network of charging points

4. Accelerating the uptake of cycling

5. Boosting European battery production

6. Encouraging the purchase of electric cars

7. Investing in clean economy start-ups and SMEs

8. Boosting investment in clean economy demonstration projects

9. Accelerating the transition towards a circular economy

10.Accelerating the transition towards circularity

11. Collecting, treating and recycling waste

12. Waste

13. Wastewater Treatment

14. Sustainable tourism

Proposals

1. Renovating schools and other educational buildings: There are 780,000 educational buildings in the EU26. With an average of 1400m2 per school an early estimate would suggest that the deep renovation of half of educational buildings in Europe would require a total investment of an estimated €300 billion –a total investment level that can be reduced if well-crafted pooling of similar projects lead to economies of scale. As public authorities are solvent organisations, EU action can mostly rely on near-zero-interest loans to those Member States, regions or cities that request it. Countries and cities with ample fiscal space may not require EU financial support to finance such projects, while other public authorities may rely on it, with some needing grants as an additional incentive

2. Renovating the dwellings of energy poor households: The cost of housing renovation differs greatly depending on the type and size of buildings and on their location as construction labour costs vary significantly across the continent. As an early estimate, if one were to consider that a deep renovation costs around €50,000 per house, then, by investing €200 billion by 2024, the EU could lift 4 million families out of energy poverty. At the same time, it would create a sufficiently large supply to structure a solid deep renovation sector, to innovate and to achieve economies of scale, which would strengthen its price competitiveness, thus allowing market uptake of innovative deep renovations by the private sector in the second half of the 2020 decade. As part of its “renovation wave”, the European Commission should engage building renovation companies to assess if EU firms are able to deliver more than 4 million deep renovations in the coming four years, and if so, then the level of ambition (and funding) could be increased accordingly. Here it should be possible to create a European-wide programme open to all interested companies based on the optimisation of energy savings, duly measured between the start of the renovation and the completion of the works. This would also ensure that the public money spent reduces energy bills and emissions and at the same time improves comfort for people.

Those two recommendations can be implemented either through ad hoc decisions, as part of the European Commission’s proposal for a “renovation wave”, and/ or the creation of a ‘Renovation Fund for All Europeans’ already supported by key industry players.

3. Rolling out a large network of charging points: The EU should invest around €10 billion to deploy at least one million electric charging points by 2024 along the lines of the flagship ‘Recharge EU’ proposed by Transport & Environment (T&E). Before the crisis, the NGO estimated that about €80 billion of investments would be needed by 2030 to deploy public and private infrastructure for EV charging in the EU to support the growing electric mobility market. In terms of public infrastructure, T&E modelled that 3 million charging points would require around €20 billion in total investment by 2030.

4. Accelerating the uptake of cycling:  The EU can further stimulate the expansion of bike networks in Europe. It should start by increasing EU investments related to cycling and providing grants and preferential loans to projects, cities and regions willing to roll out cycling infrastructure. The European Cyclists’ Federation argues for a Cycling Strategy that would rely on €3 billion of investment in the next MFF. A postcrisis economic stimulus could here consist of at least €3 billion over the next 4 years to place cycling on an equal footing with other transport modes and incentivise cities to become bike-friendly, e.g. by including cycling infrastructure in road maintenance works

5. Boosting European battery production:  A European battery value chain is essential to support the transition to electric vehicles and to ensure that key parts of the production and hence employment are located in the EU. Considering the market move to electrification throughout the world, demand for batteries is growing and it is in the interest of manufacturers to rely on geographically close cell manufacturing. As part of the European Battery Alliance, the EU could accelerate the set-up of battery gigafactories and support the development of its value chain (e.g. raw material extraction) by providing additional grants and loans to support them, e.g. through the EIB. According to the European Battery Alliance network EBA250, demand for batteries in Europe will require €70 billion in investment by 2023.

6. Encouraging the purchase of electric cars:  The European Commission should propose a coordinated approach of purchase incentives (or scrappage schemes) for Member States to financially support the purchase of electric vehicles. While several Member States already have such schemes in place, it is important that incentives only support the transition to clean and light vehicles (excluding for instance SUVs, gasoline and diesel cars) and provide amounts high enough to make them affordable for low-income households. At the same time, the removal of old cars from the market should respect strict environmental rules. The EU could propose a range of €2,000 - €15,000 for the purchase of an electric car with conditions that Member States can adapt to their national context. It should be launched once lock down measures are relaxed and production resumes with sufficient EV supply. If an average €7,000 bonus was given for the purchase of 10 million electric cars over the next four years, this would require an overall public subsidy of €70 billion. Such a measure would provide more certainty for car-makers to increase EV production and an incentive to stimulate the battery gigafactories planned in the EU.

7. Investing in clean economy start-ups and SMEs: The EU and its Member States should ensure that new clean economy companies, notably start-ups and SMEs, have access to the patient capital they need to continue to develop the solutions of tomorrow. To make a difference for clean economy start-ups, on top of already existing and planned funding, the EU should provide a one-off additional contribution of €20 billion to four existing EU tools: the European Investment Fund, the European Innovation Council, InvestEU, and the European Institute of Innovation and Technology. This money should be targeted only to clean economy startups and SMEs. It could however be part of larger schemes that also benefit other key innovative sectors like digital and health start-ups and SMEs.

8. Boosting investment in clean economy demonstration projects: The EU or its Member States should furthermore provide a one-off contribution of €10 billion to the EU Innovation Fund. This already existing fund invests in clean economy demonstration projects, usually carried out by private SMEs or corporates to test innovative methods of production and business models. The Innovation Fund is currently funded by the sale of quotas on the EU carbon market (EU-ETS) and, before the economic crisis hit, the European Commission expected those revenues to allow the Innovation Fund to invest €10 billion. As a result of the current economic crisis, the carbon price on this market has decreased, creating a risk that the Innovation Fund will need to decrease its investments in clean innovation projects in the coming years. Today, Europe does not need an Innovation Fund that invests less, it needs one that can invest more. This is why granting the Innovation Fund an exceptional one off contribution will ensure it invests in demonstration projects in the next five years, thus providing a boost to the economy while strengthening its productivity and green transformation in the long run.

9. Accelerating the transition towards a circular economy: The structural transformation from a linear to a circular economy is integral to all recommendations laid out so far. A more circular economy enables Europe to become more autonomous with regard to the supply of raw materials, thereby decoupling our wellbeing from the exploitation of natural resources and increasing our society’s resilience to future crises.

10. Accelerating the transition towards circularity : Avoiding waste through reuse, repair and remanufacturing offers significant economic stimulus and job creation potential with major environmental benefits. When waste cannot be avoided, managing it properly through separate collection, processing and quality recycling also has major job potential compared to incineration and landfilling, and it brings on stream valuable secondary raw materials. The sorting, recycling or reuse of waste is highly labour intensive. Calculations made by the Reuse and Recycling EU Social Enterprises (RREUSE) network show that traditional reuse centres dealing with multi-materials can create on average about 70-80 jobs for 1000 tons of collected and reused materials. In this context, the reuse of used household products alone could allow for the creation of nearly 300,000 jobs by 2030. Beyond creating jobs, this activity makes available refurbished products at a fraction of the new price, increasing wellbeing for those who cannot afford to buy new. To date, only 12% of secondary materials and resources are being brought back into the EU economy. According to the European Commission’s estimates, reaching 70% recycled waste in all EU Member States alone could create almost half a million jobs across Europe.

11. Collecting, treating and recycling waste: The transition towards a circular economy offers the advantage of tackling the ecological problem of waste from both ends of the production chain. By turning waste into a raw material, it allows for an incremental exit from an economic model based on extraction. Moreover, by collecting, treating and recycling waste, it avoids massive CO2 emissions and the alteration of land and ecosystems resulting from their destruction. In 2017, solid waste disposal, wastewater treatment and incineration and open burning of waste were responsible for about 140 million tonnes of GHG emissions, making waste the 4th largest source sector of emissions. Moreover, marine litter is a major threat to marine ecosystems and biodiversity. More than 80% of marine litter in European waters is composed of plastics which are particularly damaging due to their longevity. According to WWF, between 150,000 and 500,000 tonnes of macroplastics and 70,000-130,000 tonnes of microplastics are dumped into European waters every year. Ineffective waste and wastewater management is further contributing to the degradation of European waters. The Baltic Sea, the Black Sea, the Mediterranean and the North-East Atlantic Ocean are heavily contaminated, while pollution from urban wastewater and, in particular, agriculture continues to cause the eutrophication of European coastal areas.

12. Waste:  With the transition towards a circular economy at its heart, the post-COVID-19 recovery package can significantly accelerate necessary infrastructure developments and promote the innovation of alternative materials and new technologies. First, to avoid waste, the EU should support initiatives to establish start-ups and social enterprises in repair and reuse, and support relevant (re)training for those losing jobs in the economic downturn. This could be focused particularly on Just Transition areas, enabling the transformation from mining to “urban mining” regions. Second, separate collection of municipal waste is a key condition to viably extracting value from waste through recycling. The EU should therefore support local authorities to bridge the estimated investment gap of €12 billion for municipal waste collection, separation and recycling infrastructures over the next five years. Third, the European Union has put forward a pioneer legislation with regard to plastics. According to the European Plastics Strategy, all plastic packaging on the European market must be either reusable or recyclable by 2030. Recycling all plastics within the EU would require an additional 12 million tonnes of capacity by 2027. Under the recovery plan, the EU should support infrastructure developments aiming to increase the reuse and recycling rate of plastics by covering the estimated investment gap of €8 billion over the next five years. These infrastructure investments should be accompanied by investments into the development of chemical recycling technologies and the innovation of promising alternative materials, like biodegradable plastics.

13. Wastewater Treatment: With regard to wastewater, the lack of substantial investments in infrastructure by the EU Member States continues to represent a major barrier to the implementation of the EU Urban Waste-Water Treatment Directive. According to the OECD, Member States face an investment gap of €253 billion until 2030. The EU should therefore step up its investments into infrastructure allowing the advanced treatment and reuse of water, significant reduction of water losses and the recovery and recycling of raw materials from wastewater and other water-based waste. As part of the EU recovery package, the EU should therefore make enhanced water treatment a priority and support Member States with €30 billion per year over the next five years. Thereby, infrastructure investments on islands as well as in densely populated coastal areas and major cities located on rivers should be prioritised.

14. Sustainable tourism: Investments made under the EU recovery package should  preserve and step-up positive trends, while mainstreaming a structural transition to sustainable consumption and production models of the tourism value chain (distribution, international transport and local mobility, lodging, recreational activities). Simultaneously, investments into sustainable tourism should foster renovation and higher quality standards, in line with circular economy principles, zero pollution, energy efficiency, biodiversity preservation and recovery while using the full potential of digital technologies. The recovery package should target coastal communities most hardly hit by the crisis and entail a large financial investment combining structural funds (incl. EMFF, EIB, LIFE and national investment banks) and accelerating their transition towards sustainable tourism. To this end, we propose a €80bn investment plan for coastal tourism, notably in the Mediterranean:

At least half of it would cover investments in: Reduction of energy consumption of touristic accommodation buildings. An early estimate would suggest that the deep renovation of 30% (60,000) of hotels in Europe would require a total investment of around €35 billion; capacities for waste and water treatment; as far as wastewater is concerned, as stated above, islands and coastal areas should be given priority in the allocation of the €30 billion per year investment required at EU level; scaling-up collection and recycling of plastics all along the EU coast and on islands (in particular Mediterranean). The other part would cover the implementation of Maritime Spatial Planning to reduce the impacts of tourism on marine habitats and expansion of marine protected areas as opportunities for nature-based tourism. Mass tourism is a major threat to Marine Protected Areas (MPAs). By contrast, recent case studies confirm that fully protected MPAs can bring a wide spectrum of benefits for the local economic operators and communities, including for ecotourism. As already demonstrated by pilot projects launched in 2013-2015 under Intereg schemes in the Mediterranean, at a local level, ecotourism can even be more profitable than conventional tourism. Investing in the restoration of coastal and seabed habitats will therefore represent double wins for nature and economic activity, including tourism.

Quantification Summary

1. Renovating schools and other educational buildings:  The deep renovation of half of educational buildings in Europe would require a total investment of an estimated €300 billion

2. Renovating the dwellings of energy poor households: By investing €200 billion by 2024, the EU could lift 4 million families out of energy poverty.

3. Rolling out a large network of charging points: The EU should invest around €10 billion to deploy at least one million electric charging points by 2024 along the lines of the flagship ‘Recharge EU’ proposed by Transport & Environment (T&E). Before the crisis, the NGO estimated that about €80 billion of investments would be needed by 2030 to deploy public and private infrastructure for EV charging in the EU to support the growing electric mobility market. In terms of public infrastructure, T&E modelled that 3 million charging points would require around €20 billion in total investment by 2030.

4. Accelerating the uptake of cycling:  The European Cyclists’ Federation argues for a Cycling Strategy that would rely on €3 billion of investment in the next MFF. A postcrisis economic stimulus could here consist of at least €3 billion over the next 4 years to place cycling on an equal footing with other transport modes and incentivise cities to become bike-friendly, e.g. by including cycling infrastructure in road maintenance works

5. Boosting European battery production:  According to the European Battery Alliance network EBA250, demand for batteries in Europe will require €70 billion in investment by 2023.

6. Encouraging the purchase of electric cars:  If an average €7,000 bonus was given for the purchase of 10 million electric cars over the next four years, this would require an overall public subsidy of €70 billion.

7. Investing in clean economy start-ups and SMEs: The EU should provide a one-off additional contribution of €20 billion to four existing EU tools: the European Investment Fund, the European Innovation Council, InvestEU, and the European Institute of Innovation and Technology.

8. Boosting investment in clean economy demonstration projects: The EU or its Member States should furthermore provide a one-off contribution of €10 billion to the EU Innovation Fund.

9. Waste: The EU should support local authorities to bridge the estimated investment gap of €12 billion for municipal waste collection, separation and recycling infrastructures over the next five years. Under the recovery plan, the EU should support infrastructure developments aiming to increase the reuse and recycling rate of plastics by covering the estimated investment gap of €8 billion over the next five years.

10. Wastewater Treatment: According to the OECD, Member States face an investment gap of €253 billion until 2030. As part of the EU recovery package, the EU should therefore make enhanced water treatment a priority and support Member States with €30 billion per year over the next five years.

14. Sustainable tourism: The recovery package should target coastal communities most hardly hit by the crisis and entail a large financial investment combining structural funds (incl. EMFF, EIB, LIFE and national investment banks) and accelerating their transition towards sustainable tourism. To this end, we propose a €80bn investment plan for coastal tourism, notably in the Mediterranean.  An early estimate would suggest that the deep renovation of 30% (60,000) of hotels in Europe would require a total investment of around €35 billion; capacities for waste and water treatment; as far as wastewater is concerned, as stated above, islands and coastal areas should be given priority in the allocation of the €30 billion per year investment required at EU level.