Policy Brief | How to pay for green transformation? Outlook for future EU financial instruments

There are several options for securing the currently missing funds, especially to maintain the competitiveness of EU industry. Among them is further joint lending (i.e. building on the EU's Next Generation instrument), which is also called for in the Draghi report, but which appears to lack political will across Member States. Another option is the continued loosening of state aid rules, which, however, will ultimately help mainly countries with large fiscal capacity and may prove disadvantageous for the Czech Republic.

In any case, a reform of public procurement, where so far green criteria are only voluntary at European level, could help to channel finances. Public procurement accounts for up to 15% of European GDP and a roughly similar share of total emissions. In any case, mobilising adequate resources to finance the green transformation cannot succeed without the participation of the private sector, which is responsible for around four-fifths of all investment in the EU. Steps towards the integration of capital markets could help keep private finance in Europe.

The Czech Republic should set its own priorities at the start of the debate on the next IFF, reflecting the structure of its economy or its ability to finance transformation projects from other sources. A principled rejection of any increase in the EU budget is not a sensible step in the current geopolitical and economic situation.

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