8. Making Green Public Investments a Reality in the EU Fiscal Framework and the EU Budget

Abstract

Additional green public investment at the Member-State level will be needed to address the climate emergency as a central priority in the EU. This chapter discusses two paths to enable increased green public investments in the EU: through possible amendments to the current EU fiscal framework or through funding from the EU budget. The Commission’s proposal from November 2022 regarding orientations for a reform of the EU-governance framework widens the leeway for debt-financed public investment. However, existing green public investment needs are not considered sufficiently. Therefore, we discuss several options to enable the flexibility of national budgets to ensure a level of green public investment which―together with private resources―is sufficient to close the existing green investment gaps. In addition, the use of the lever the EU budget theoretically offers to contribute to green public investment in the EU needs to be intensified. At about 1% of EU GNI (1.7% of EU GNI including NGEU) the overall volume of the EU budget is limited. The more important are steps to strengthen spending in policies that create EU value added, inter alia green public investment.