Thread by @seb_mang

Excited to share our new @NEF report co-authored with @DominicCaddick on green industrial policy & how the EU is to plug green spending gaps

Conclusion: Proposed fiscal rules stand in the way of sufficient and inclusive green spending

Read it here: neweconomics.org/2023/04/beyond…
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The Commission estimates an additional €520bn is needed to achieve the #EUGreenDeal objectives

To achieve emission reductions of 65% by 2030 and align EU climate action with Paris @feps estimates an additional €855bn would be needed

This investment gap includes public & private finance

But public finance is crucial to speed up the transition, crowd in finance, finance investments without a business case and invest in climate justice incl. more collectivised public goods that require less energy & materials

Based on estimates by @AgoraEW @Bruegel_org et al we suggest 2 scenarios reflecting public investment needs to achieve #EUGreenDeal. The 3% scenario reflects 65% cuts by 2030

We break down spending needs by country by scaling as share of CO2 to reflect different efforts needed

Comparing investment needs with proposed fiscal rules and leaked COM debt sustainability analysis we conclude that only 4 EU countries can increase investment enough to speed up emission cuts to achieve our high emission cuts scenario

A breakdown by country in tweet 1

If some invest much more than others or have to cut spending a lot to afford green investments fiscal policy & GIP could increase economic divergence & lead to insufficient climate action

Good paper by @SFL_nl on EU divergence of economic performance
sustainablefinancelab.nl/wp-content/upl…

The EU should make greater green investments to avoid #climate catastrophe, and increased competition for green manufacturing adds to this need. There will be significant economic costs in an environment where the next two biggest economies are spending much more

The #fiscalmatters coalition suggests giving explicit flexibility for necessary increases in green investments, fresh EU borrowing & to phase out subsidies for dirty sectors

Progressive tax & monetary-fiscal coordination are also central

neweconomics.org/uploads/files/…

Our research also goes into Green Industrial Policy and how the EU is to design an inclusive transition, but more on this in a second twitter thread

A pleasure to work with @DominicCaddick, get challenged and receive great feedback from @JeevunSandher & @alfie_stirling and great collaboration with @margaretlwelsh & @KatrinaGaff on all things comms