2030 and Beyond: Budgeting Europe’s Climate Transition
The next long term EU budget will take us through the 2030 goal posts, by when GHG emissions should be down by 55%. It will also lay the groundwork for investing in a climate-neutral future for the continent towards the yet-to-be agreed objectives for 2040. So, when the European Commission presented its proposal for a €2 trillion multiannual financial framework (MFF) just before the summer break, there was good reason to carefully study the details from the perspective of closing the EU’s climate investment deficit.
Meeting the EU’s 2030 climate targets requires an investment of €842 billion annually across the European economy. I4CE’s flagship report, The State of Europe’s Climate Investment, finds that we are far off that pace, with a current investment gap of €344 billion. Similarly, the European Climate Neutral Observatory (ECNO) concludes in its 2025 report that more effort is needed on the essential enabling conditions for the climate transition, especially finance.
With a redesigned architecture of the MFF, the Commission sends a clear message of moving beyond “business-as-usual”. The proposed National and Regional Partnership Plans (NRPPs) will require Member States to develop reform and investment plans, aligning with the National Energy and Climate Plans (NECPs). This points towards an increased emphasis on joining up policy ambition with investment needs assessment and plans.
The highly anticipated new Competitiveness Fund offers a much-needed simplification of the EU funding landscape. Still, beyond research and a few promising instruments, the Fund’s size remains limited relative to its ambitions. Europe’s weakening position in cleantech manufacturing and the need to accelerate industrial decarbonisation demand more.
As Member States and EU institutions head into lengthy negotiations on the MFF, Europe’s climate investment needs will likely continue to grow. If the EU budget cannot act as an investment shock in itself, it can still serve as the tip of the spear – guiding national and private investment toward sectors critical for the clean transition. Whether it can live up to this potential now depends on the Member States.
