Germany’s six-month-long stint at the helm of the EU Council Presidency will see it preside over talks on the Commission’s planned €750 billion recovery fund. Stef Cornelis explains why Berlin should ensure those talks result in a green agreement between member states.
Stef Cornelis is Germany Director at sustainable transport group Transport & Environment.
Next month, Germany will take over the EU Council presidency, only for the fourth time in its history.
It’s remarkable that the number one economic power of the European Union will hold the Presidency at a time when Europe is facing the biggest economic crisis since the Second World War.
But as with every crisis, this one is an opportunity to relaunch our society and economy. It is for this reason that in May, the European Commission presented the biggest financial recovery package Europe has ever seen.
Next Generation EU is a financing programme totalling €750 billion, with an objective to get Europe back on its feet. It is the first time in the EU’s history that the Commission is planning to borrow money on the financial markets.
Under the plan, €500 billion would be spent via grants, meaning that member states will not have to pay these back – contrary to the remaining €250 billion which would be loans.
Countries that are hit hardest by the COVID crisis are meant to receive the most financial aid. Italy and Spain, for example, will get approximately €62 billion each in grants, Germany receives €22 billion while other countries like Belgium or the Netherlands or Sweden get €3 billion to €6 billion.
How green the plans?
Intense discussions between the European member states in the Council will dominate Germany’s presidency: How much of the grants and loans different countries get; whether we split the pie differently; but also under what criteria countries can get these funds.
A member state wishing to receive support must submit a plan to the Commission outlining their proposal in which they have to meet several criteria in order to get the grants.
In the run-up to the proposal, Commission President Ursula von der Leyen stated that the EU recovery should be a green one, using the European Green Deal as a compass.
However, a closer look at the Next Generation EU proposal shows that these green safeguards are very weak and rather optional. Countries could get the financial support if their plans are green or digital, and there are no further details about what green means.
In other words, this current package leaves the door wide open for money flowing to unsustainable and non-future-proof solutions too.
It is, however, essential that Europe uses this momentum to invest in measures that will build a green economy. These will create more jobs and at the same time safeguard the future of our planet and that of younger generations.
The industries and infrastructures that Europe and countries will invest in now will largely determine what our economy will look like in the coming decades. The Commission’s own analysis estimates that about €850 billion in annual investment is needed for the transport sector to make Europe climate neutral by 2050, so there is a big challenge ahead of us.
Why should Germany push for a Next Green Generation EU?
The Presidency is a unique opportunity for Germany to strengthen these criteria when discussed between the EU countries and ensure that this programme will become a Next Green Generation EU.
The German national recovery package that was just published has a clear green focus, giving no premiums to diesel and petrol cars, investing in batteries, e-charging, railways and energy efficient buildings.
In the coming months, Germany has a strategic interest in making sure that their national plan will serve as the blueprint for Next Generation EU.
All German carmakers are in the midst of a transformation to electro-mobility. Selling more electric cars is the best way for carmakers to meet their long-term CO2 targets and stay globally competitive.
But in order to achieve this, the VW Group, Daimler and BMW need to start selling electric cars in other European member states as well, have seamless charging infrastructure for their drivers, and a strong and reliable European battery supply chain.
German car manufacturing depends on intra-EU exports so a strong e-mobility market in Europe is good news for the industry.
Around 40% of cars produced in Germany are exported to other EU countries (including the UK), which is in total almost two million cars annually. Earlier this month, the European Automobile Manufacturers Association (ACEA) called for a rapid increase of charging infrastructure in Europe, which is currently lacking.
Ensuring that key markets such as Italy, Spain and France can only spend European grants on electric charging rather than gas infrastructure, and can only give premiums to emissions-free cars instead of diesel and petrol, will serve the long-term interests of the German carmakers and the German economy as a whole.
A Next Green Generation EU can lay the foundations for the European Union, as well as for an e-mobility hub, and create markets for German electric vehicles entering the market for years to come.