Why do we need InvestEU for the post-coronavirus recovery?
InvestEU is the EU’s proposed flagship investment programme to kick-start the European economy. It is well-placed to provide long-term funding and to support Union policies in the recovery from a deep economic and social crisis. This has been shown with the successful implementation of the European Fund for Strategic Investments and other EU financial instruments in the wake of the past financial crisis.
In the current coronavirus crisis, the market allocation of financial resources is not fully efficient and perceived risk impairs private investment significantly. Deep uncertainty currently compromises the quality of financial market information and lenders’ ability to assess the viability of companies and investment projects. If left unchecked, this can create pervasive risk aversion towards private investment projects and contribute to a ‘credit crunch’. Under such circumstances, the key feature of InvestEU of de-risking projects to crowd in private finance is particularly valuable and should be utilised.
An enhanced InvestEU programme thanks to Next Generation EU will be able to provide crucial support to companies and to ensure a strong focus of investors on the Union’s medium- and long-term policy priorities, such as the European Green Deal and the digitalisation transition and greater resilience. To address all of these challenges, the Commission is updating its original InvestEU proposal from 2018 to make sure it can better respond tothe current economic crisis.
What are the main changes to InvestEU?
The new proposal contains two main changes to the InvestEU Programme as partially agreed between co-legislators in April 2019:
- An increase of the InvestEU budget to reflect the higher investment needs and an environment of increased risk. The financial envelope for the sustainable infrastructure window is doubled, in line with the President’s Communication “Europe’s moment: Repair and Prepare for the Next Generation”.
- A broadened scope through the addition of a fifth window – the strategic European investment window – in order to cater for the future needs of the European economy and to promote and secure EU strategic autonomy in key sectors.
What will the new strategic European investment window finance?
The outbreak of the pandemic has shown the interconnectivity of global supply chains and exposed some vulnerabilities, such as the over-reliance of strategic industries on non-diversified external supply sources. Such vulnerabilities need to be addressed, to improve the Union’s emergency response as well as the resilience of the entire economy, while maintaining its openness to competition and trade in line with its rules. The new strategic European investment windowwill focus on building stronger European value chains in line with the strategic agenda of the Union and the New Industrial Strategy for Europe, as well as supporting activities in critical infrastructure and technologies
This reinforcement is of particular importance in the post-crisis situation, as some Member States might not have sufficient financial capacity to support these projects with national State aid. Moreover, many of these projects are cross-border and require a European approach.
How will the new window complement the pre-existing windows?
In the current context, the strategic European investment window would bring value added to the original windows, as it focuses on recipients or projects based on their high European strategic importance.
The new window would both target specific projects (e.g. supporting large consortia or public-private partnerships aimed at developing a specific technology and building critical infrastructure) and provide diffused financing, for instance by supporting the emergence of whole ecosystems of entrepreneurs active in the targeted sectors (e.g. innovative SMEs working on technologies of potential relevance to industrial biotechnology and pharmaceuticals).
The additionality requirements under this window would also differ from those envisaged for the other windows. For instance, the additionality of the support under the new window to large corporates would be in maintaining and developing their production within the Union or under the control of European investors and in scaling up the deployment of innovative technologies, rather than in purely risk-related considerations of the InvestEU support.
What are the changes in budgetary terms?
The new proposal foresees an increase of the original financial envelope. This includes a doubling of the guarantee amount allocated to the sustainable infrastructure window under the InvestEU Fund as well as the allocation of an additional guarantee amount to the new window. More concretely:
- Sustainable infrastructure window: €20 bn
- Research, innovation and digitisation window: €10 bn
- SME window: €10 bn
- Social investment and skills window: €3.6 bn
- Strategic European investment window: €31 bn
The new proposal also foresees an increase of the financial envelope allocated to the InvestEU Advisory Hub by an amount of €200 million to cater for the needs of the new window as well as the increasing needs of the other four windows.
How will InvestEU work?
The main principle of how InvestEU will function does not change. The InvestEU Fund will mobilise public and private investment through an EU budget guarantee of €75 billion that will back the investment projects of implementing partners such as the European Investment Bank (EIB) Group and others, and increase their risk-bearing capacity.
Under the new proposal, the guarantee will be provisioned at 45%, meaning that €34 billion of the EU budget is set aside in case calls are made on the guarantee. The size of the provisioning is based on the type of envisaged financial products and the riskiness of the portfolios, taking into account the experience under the EFSI and current financial instruments, as well as the likely changes in market circumstances following the coronavirus crisis.
What is the role of the EIB Group in the new proposal?
Given its role under the Treaties, its capacity to operate in all Member States and the existing experience under the current financial instruments and the EFSI, the European Investment Bank Group will remain a privileged implementing partner for the InvestEU. It will implement 75% of the EU guarantee.
The EIB Group will also play a central role in implementing advisory support under the InvestEU Advisory Hub. Moreover, it will advise the Commission and perform operational tasks in relation to the Hub.
Is the new window open to other implementing partners than the EIB Group?
Yes. The new window is open to other implementing partners than the EIB Group, including national promotional banks and institutions, as well as international financial institutions such as the European Bank for Reconstruction and Development or the Council of Europe Development Bank.
The Commission will continue the discussions with potential implementing partners to ensure a swift and efficient deployment of the instrument, which is even more crucial under the current circumstances.
Are there any changes to the InvestEU governance?
An Investment Committee composed of independent experts will remain responsible for approving the individual requests. As the Investment Committee will operate in different configurations corresponding to the InvestEU policy windows, a fifth configuration has been added to the proposal.
Are there any changes to the InvestEU eligibility criteria?
The policy areas eligible for financing and investment operations under the existing four windows remain the same as proposed and negotiated in annex II to the InvestEU Regulation. However, for the strategic European investment window, new intervention areas are introduced, as referenced above.
In case a financing or investment operation proposed to the Investment Committee falls under more than one policy window, it will be attributed to the policy window under which its main objective or the main objective of most of its sub-projects falls. The Investment Guidelines will specify the criteria for the allocation of financial products (under which financing and investment operations will be submitted) to specific windows.
Youth Employment Support: a bridge to jobs for the next generation
European Commission is taking action to give young people all possible opportunities to develop their full potential to shape the future of the EU, and thrive in the green and digital transitions. The coronavirus pandemic has emphasised the often difficult start many young people face in the labour market. We need to act fast. Now is the time to direct our attention towards the next generation.
The Commission is using this opportunity to ingrain the green and digital transitions in the DNA of the EU’s youth and employment policies. With NextGenerationEU and the future EU budget, the Commission already proposed significant EU financing opportunities for youth employment. It is now for the Member States to prioritise these investments. At least €22 billion should be spent on youth employment support.
Executive Vice-President for an Economy that Works for People, Valdis Dombrovskis, said: “It is more important than ever that we help the next generation of Europeans to thrive and get on the jobs ladder, especially at this time of crisis. We are proposing clear and specific ways forward for our young people to get the professional chances that they deserve. Today’s proposals also set out what EU funding is available to support Member States in boosting youth employment. By investing in the youth of today, we will help to create a competitive, resilient and inclusive labour market for tomorrow.”
Nicolas Schmit, Commissioner for Jobs and Social Rights, said: “Now is the time to carry out much-needed reforms of the support measures we offer to young people. We owe it to the millions of graduates and those taking their early steps on the labour market to mobilise all the support we can. Our youth deserve the very best opportunities possible to develop their full potential.”
Youth Employment Support: a bridge to jobs for the next generation
The Youth Employment Support package is built around four strands that together provide a bridge to jobs for the next generation:
- The EU created the Youth Guarantee in 2013 and has since built bridges to the labour market for some 24 million young people. The Commission’s proposal for a Council Recommendation on a Bridge to Jobs reinforces theYouth Guarantee and steps up the outreach to vulnerable young people across the EU, now covering people aged 15 – 29. The Recommendation keeps the pledge that if you sign up to the Youth Guarantee, you will receive an offer of employment, education, apprenticeship or training within four months. Bridge to Jobs will be more inclusive to avoid any forms of discrimination, with a wider outreach to more vulnerable groups, such as youth of racial and ethnic minorities, young people with disabilities, or young people living in some rural, remote or disadvantaged urban areas. It will link in with the needs of companies, providing the skills required – in particular those for the green and digital transitions – and short preparatory courses; and it will provide tailored counselling, guidance and mentoring.
- The Commission’s proposal for a Council Recommendation on vocational education and training aims to make systems more modern, attractive, flexible and fit for the digital and green economy. More agile, learner-centred vocational education and training will prepare young people for their first jobs and gives more adults opportunities to enhance or change their careers. It will help vocational education and training providers to become centres of vocational excellence, while supporting diversity and inclusiveness.
- A renewed impetus for apprenticeships will benefit both employers and young people, adding a skilled labour force to a wide range of sectors. The European Alliance for Apprenticeships has made available more than 900,000 opportunities. The renewed Alliance will promote national coalitions, support SMEs and reinforce the involvement of social partners: trade unions and employers’ organisations. The goal is to sustain the apprenticeship offers now, as apprentices we train now will be highly skilled workers in a few years’ time.
- Additional measures to support youth employment include employment and start-up incentives in the short term, and capacity building, young entrepreneur networks and inter-company training centres in the medium term.
The Commission urges Member States to step up youth employment support by making use of the significant funding available under NextGenerationEU and the future EU budget. For example, the EU can help fund:
- Start-up grants and loans for young entrepreneurs, mentoring schemes and business incubators
- Bonuses for SMEs hiring apprentices
- Training sessions to acquire new skills needed on the labour market
- Capacity-building of public employment services
- Career management training in formal education
- Investments in digital learning infrastructure and technology
During the aftermath of the global 2008 financial crisis, youth unemployment went up from 16.0% in 2008 to a peak of 24.4% in 2013. The figures went down since, with record lows of 14.9%, just before the pandemic hit. Nevertheless, youth unemployment has always remained more than twice as high as general unemployment. The latest figures show that youth unemployment stood at 15.4% across the EU in April 2020. Many fear that a spike is just in front of us.
Significant EU funding is available for Member States to implement reforms spearheaded by the initiatives presented today. The European Social Fund Plus will be a key EU financial resource to support the implementation of the youth employment support measures. As part of the Recovery Plan for Europe, the Recovery and Resilience Facility and REACT-EU will provide additional financial support for youth employment.
Most EU Member States not on track to reduce air pollution by 2030
The assessment of Member States’ first programmes of measures to control air emissions finds that the implementation of the new European clean air rules needs improvement. Member States need to step up efforts across all sectors to make sure their citizens can breathe clean air, preventing respiratory diseases and premature death caused by breathing polluted air.
EU Commissioner for the Environment, Fisheries and Oceans Virginijus Sinkevičius said: “This report sends a clear message. All across Europe, too many citizens are still at risk from the air they breathe. We need more effective measures to cut pollution in numerous Member States and to tackle air emissions across sectors, including agriculture, transport and energy. There has never been a better time to make these changes: investing in cleaner air means investing in citizens’ health, in our climate, and it’s the kick-start our economy needs. That’s the thinking behind the European Green Deal, and it’s the logic the environment needs.”
According to the first Commission report to assess the implementation of the National Emission reduction Commitments Directive (NEC Directive) published today, most Member States are at risk of not complying with their 2020 or 2030 emission reduction commitments. While some Member States show good practices that should be inspiring for others, the Report demonstrates the need for additional measures in order to reduce air pollution. The Commission will continue to monitor and support national efforts in this regard, through financial and non-financial tools. Efforts are especially needed in agriculture to reduce ammonia emissions, which is the most common and severe implementation challenge across the EU.
Effective implementation of clean air legislation forms an essential contribution to ‘a zero pollution ambition for a toxic-free environment’ announced by the Commission in the European Green Deal and related initiatives. Synergies with climate and energy policies need to be enhanced and further assessed, also in line with the European Green Deal approach.
Alongside this implementation report, the Commission has also released today its consultants’ analysis of each Member State National Air Pollution Control Programme and emission projections, as well as an EU-wide horizontal report bringing together this information.
The National Emission reduction Commitments Directive, which entered into force on 31 December 2016, is the main legislative instrument to achieve the 2030 objectives of the Clean Air Programme. When fully implemented, the Directive would reduce by almost 50% the negative health impacts of air pollution by 2030, and bring substantial benefits for the environment and climate.
The Directive sets national emission reduction commitments for the periods 2020-29 and more ambitious ones for 2030-onwards for five important air pollutants: nitrogen oxides (NOx), non-methane volatile organic compounds (NMVOC), sulphur dioxide (SO2), ammonia (NH3) and fine particulate matter (PM2.5).
Compliance with the 2020 emissions reduction commitments will be checked in 2022, when the emission inventories for 2020 become available.
The NEC implementation report will be complemented later this year by the Second Clean Air Outlook which will present up-to-date modelling results on the extent to which the EU and its Member States are on track to meet their clean air objectives for 2030 and later.
Green Deal: Commission launch the European Just Transition Platform
On Monday 29 June, the Just Transition Platform (JTP) will be launched to help Member States to draw up their territorial Just Transition Plans and access funding from the over €150 billion Just Transition Mechanism. This online Platform will provide technical and advisory support for public and private stakeholders in coal and other carbon-intensive regions, with easy access to information on funding opportunities and sources of technical assistance.
The Platform will ensure that the €40 billion (in 2018 constant prices) proposed under the Just Transition Fund is channelled to the right projects and that no region is left behind. It will also support access to the dedicated scheme under InvestEU and the public sector loan facility, which together with the Just Transition Fund form the three pillars of the Just Transition Mechanism. The platform will provide:
- Technical and advisory support to Member States and regions, including on the operationalisation of the territorial Just Transition Plans and the building of pipelines of projects for the Just Transition Mechanism;
- A web-based single access point, including the possibility to contact the Commission with technical and administrative questions related to just transition;
- Sharing of information, experience and knowledge for fossil fuel and carbon-intensive regions, with dedicated project and expert databases;
- A forum for dialogue on just transition involving local and national stakeholders, social partners, public authorities and EU institutions.
Executive Vice-President for the European Green Deal Frans Timmermans, Commissioner for Cohesion and Reforms, Elisa Ferreira, and Commissioner for Energy, Kadri Simson, will launch the Just Transition Platform during an online event starting on Monday 29 June at 09:30.
This will kick-start a week of online events dedicated to coal, lignite, peat and oil shale regions as well as carbon-intensive regions, organised under the Coal Regions Virtual Week and a Carbon-Intensive Regions Seminar. These events will inform stakeholders of the latest EU policy developments and provide an opportunity for good practices sharing.
The Platform will host a projects and experts database towards the end of 2020.
Members of the College said:
Executive Vice-President for the European Green Deal, Frans Timmermans, said: “Our Green Deal ambition is to demonstrate a new model for inclusive transformation based on a just transition. As we rebuild our economies and societies, we owe it to our children and grandchildren to grasp the opportunity to build a more sustainable future. With the Just Transition Platform we can start making this a reality”
Commissioner for Cohesion and Reforms, Elisa Ferreira, said: “The Just Transition Platform is a firm step towards a climate-neutral Europe. I encourage authorities from all Member States to make full use of it when developing and implementing territorial just transition plans that promote economic renewal, new skills and new job opportunities. I am determined that no one is left behind and that all regions and all Europeans are able to tap the benefits of a greener, fairer more digital future.”
Commissioner for Energy, Kadri Simson, said: “The Just Transition Platform will provide tailor-made support to regions that will be most affected by the green transition. It will bring together expertise from all relevant Commission services to make sure that fossil fuel and carbon intensive regions have all the information, tools and assistance they need to transform their economies in a fair way.”
The Just Transition Mechanism (JTM) is part of the European Green Deal effort to create a climate-neutral economy in Europe by 2050. The Mechanism will seek to overcome the economic and social costs of the climate transition in the most vulnerable coal and carbon-intensive regions. The Mechanism consists of three pillars of financing: the Just Transition Fund, proposed on 14 January 2020 and strengthened by the 27 May Recovery Package; a dedicated just transition scheme under InvestEU; and a public sector loan facility. The three pillars are expected to mobilise more than €150 billion of investments in the EU regions most vulnerable to the climate transition over the period 2021-2027.
Announced with the European Green Deal Investment Plan, the Just Transition Platform builds on and expands the work of the Initiative for Coal Regions in Transition, and is part of the Just Transition Mechanism. It will have three work streams: coordinated technical assistance from the European Commission and the EIB group, a web-based single access point and helpdesk, and events promoting stakeholder involvement and the exchange of best practices.
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