Double climate investment to meet EU 2030 goals: I4CE

Meeting the EU's 2030 climate targets requires a doubling of real-economy investments across the energy, buildings and transport sectors, a study by think-tank the Institute for Climate Economics (I4CE) published today found.

Combined public and private investment of €813bn/yr is needed over 2024-30 to deliver the climate measures for energy, buildings and transport designed to meet the EU's 2030 target to cut its net greenhouse gas (GHG) emissions by 55pc compared with 1990 levels, the I4CE study found.

This will require €406bn/yr of additional investment, as investment stood at €407bn in 2022 according to I4CE calculations. The figure is a "strict minimum" given the exclusion of sectors such as industry because of data gaps, I4CE emphasised.

Of 22 sectors deemed "critical" to the transition by the think-tank, 20 fell short of required investment levels in 2022. The largest deficit was in passenger battery electric vehicle (EV) investment, which needs to increase by €79bn/yr, followed by electricity grids at €42bn/yr. Closely behind were onshore wind, which needs a €41bn/yr increase in investment, and "medium" — as opposed to "deep" — residential building renovation at €40bn/yr.

At the other end of the scale, marine energy requires only €0.6bn/yr of further investment and new non-residential buildings' energy performance €3bn/yr, while EV charging points, light commercial plug-in hybrid EVs, and new residential building' energy performance need €4bn/yr each.

The two sectors already surpassing annual investment needs in 2022 were hydropower and battery storage, I4CE found.

Overall, the seven transport categories studied required the largest total increase in investment at around €147bn, followed by €137bn across the eight building categories and €122bn for the seven energy sector areas examined.

Further EU funding will likely be needed as part of efforts to close these investment gaps, the study found, both for areas "by nature dependent on a degree of EU-level funding" such as trans-European infrastructure, and more generally given that the bloc's climate funding is falling with the winding down of the temporary NextGenerationEU instrument, set up to help the region recover from the economic impact of the Covid-19 pandemic.

By Victoria Hatherick