The EU Must Triple Down on Green Investment

Summary

Before Putin’s invasion of Ukraine, European policy-makers already faced tough choices. They needed to provide support to the incomplete recovery from the pandemic, and contain the increasingly stubborn inflation that was spreading from energy and some industrial goods to more and more sectors. Policy-makers also had to re-draft the EU’s fiscal rulebook to account for much higher public debt while making fiscal room for climate investment to reach Europe’s 2030 climate goals. The war makes Europe’s economic problems even more difficult to handle, especially inflation, with further energy and food price hikes underway. But Europeans now realise the fight against climate change is a national security issue, and shifting away from fossil fuel use could help limit inflation. EU governments should triple down on climate spending, and at the very least shield it from the fiscal adjustments to come.

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