A permanent EU investment fund to promote the green transition in light of EU fiscal rules

Philipp Heimberger and Andreas Lichtenberger
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Philipp Heimberger: N/A
Andreas Lichtenberger: N/A

European Journal of Economics and Economic Policies: Intervention, 2025, vol. 22, issue 2, 181-188

Abstract: The Recovery and Resilience Facility (RRF), which was adopted to support economic recovery from the COVID-19 crisis, represents the first large-scale EU-wide investment initiative, including decarbonisation goals. Yet temporary RRF spending will not be sufficient to meet the climate targets in the coming decades. Meeting the investment needs will require additional public investment equivalent to at least 1 per cent of EU economic output per year to meet the 2030 and 2050 climate goals. The reform of EU fiscal rules does not enable a sufficient increase in public investment at the national level. Therefore, what is needed is the establishment of a permanent EU climate and energy investment fund to finance public investment. This fund could greatly enhance European sovereignty when it comes to ensuring strategic green investment at the required scale. National budgets of EU member states would be substantially relieved, allowing governments to take an important step in the green transition while making it more realistic to comply with EU fiscal rules.

Keywords: investment; EU; Europe; climate change; energy crisis; financing; Recovery and Resilience Facility 2.0 (search for similar items in EconPapers)
JEL-codes: H54 H63 R42 (search for similar items in EconPapers)
Date: 2025
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