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Private sector must fund bulk of EU's climate change projects: CLC CEO
The bulk of financial investments to combat climate change in the EU will need to come from the private sector, while public funding accelerates the pace of emissions cuts, Climate Leadership Coalition (CLC) CEO Jouni Keronen told OPIS 7 May.
"Dedicating 37% of the €750 billion ($912 billion) Next Generation EU Recovery Fund, which initially was meant to be a fiscal stimulus, for post COVID-19 recovery and spending it on green objectives is not enough," he said. "Additional investments will be needed for the next decade."
Based in Finland, the CLC says it is the largest non-profit climate-based business network in Europe. It was founded in 2014 by the Finnish Innovation Fund and Finnish corporations Fortum, Kone, Neste, St1, Outotec, and Caverion.
The EU recovery fund is a one-off fiscal stimulus that was approved by EU leaders in July 2020 to help member states recover from the effects of the pandemic. But overall, it will take €3.5 trillion over the next 10 years to meet the EU's 2030 emissions reduction target of 55% compared with 1990 levels, Keronen said.
The investment figures are based on data released in the European Commission plan on investing in a climate-neutral future published September 2020, he said.
The private sector's investment will be critical to filling the gap, said Keronen, and governments can help with pro-active policies and programs to support international cooperation. Market-based policies like the Emissions Trading System (ETS) are important as well, he said.
The EC is working on a review of the bloc's carbon market, including an expansion of its ETS policy and the introduction of a carbon border tax. New proposals are expected to be announced 14 July.
"Today about 22% of global greenhouse gases are covered by an effective carbon price, so we really need to expand the scope of our ETS system and give it a fair market-based price," a senior official at the EC said.
The EU ETS is the world's first major carbon market policy, based on the cap-and-trade principle.
As reported by OPIS, offset prices in the ETS have been rising steadily in 2021, topping €50/mt of CO2-equivalent on occasion.
Original reporting by Benita Dreesen, OPIS.
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