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Undeterred by pandemic, Europe continues climate policy push

European policymakers have pushed ahead with climate-focused policies despite the impact of the coronavirus crisis on their economies, partially dispelling concerns that the pandemic could derail efforts to rein in global emissions and slow investment in clean technologies.

Despite being consumed by efforts to contain the health crisis, national governments and the European Commission, the EU's executive arm, have put forward spending plans that heavily emphasize environmental sustainability and clean energy.

A quarter of both the EU's €750 billion stimulus proposal and its €1.1 trillion budget for the coming decade is earmarked for climate action and designed to steer member states towards green investments. The proposal has been widely hailed as the most sustainable stimulus proposal to date.

Meanwhile, European countries are also taking action of their own accord: Germany's latest recovery proposal, worth €130 billion, allocated roughly €40 billion to climate measures, including production of renewable hydrogen and support for electric vehicles. And Spain and Denmark both unveiled national climate and energy strategies in May, raising targets for cutting emissions and vowing to build vast amounts of renewable energy.

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"There is a general momentum in Europe about keeping up the climate promise," Simone Tagliapietra, a research fellow focusing on energy and climate issues at Bruegel, a think tank, said in an interview. "The European Commission has been very clear that the European Green Deal should represent the engine of the economic recovery."

Although most of the EU money will be channeled through member states' national budgets, Tagliapietra said they will have a strong incentive to design plans that put climate and environmental investments first.

"There is a clear advantage in getting the European funds if you present a recovery plan that is green," he said.

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Green strings

The EU's emphasis on climate-friendly spending in the aftermath of the pandemic comes on the heels of pressure from both environmental groups as well as a growing number of large companies and major investors.

A group of more than 100 institutional investors with €11.9 trillion in assets under management wrote to EU leaders in early June to press the case for a green recovery, emphasizing that "accelerating the net zero emissions transition can create significant new employment and economic growth."

According to analysts, they have a more compelling argument now than after the financial crisis over a decade ago.

"The big difference to 2008 is economics and popularity," Kingsmill Bond, energy strategist at the Carbon Tracker Initiative, said in an email. "If you compare green with brown solutions now, the green ones are cheaper, faster, cleaner, more popular and create more jobs."

But the green strings attached to spending plans in place across Europe contrast with stimulus packages in other parts of the world.

An analysis by Vivid Economics, a consultancy, found that the vast majority of stimulus measures across 17 major economies worth a combined $11.4 trillion allocated more funds to areas that could be harmful in relation to climate change, biodiversity and other environmental impacts.

The only four whose stimulus proposals leaned on the greener side were the European Commission, France, the U.K. and Canada. Germany's latest recovery proposal was not included in the analysis.

By contrast, efforts by some lawmakers in the U.S. to include renewable energy provisions in recovery aid have fallen flat to date and the Trump administration is instead using the pandemic to relax environmental regulations. In China and some other Asian countries, stimulus spending could even boost construction of new coal-fired power plants.

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'Things are changing'

Still, some European countries have received mixed reviews for their climate plans. Germany was widely panned for its no-strings-attached bailout of airline Deutsche Lufthansa AG, but won plaudits from environmental groups for not giving in to the country's massive car industry.

Its recovery package allocates €2.2 billion for a buyer's premium on electric cars and billions more that will benefit the automotive sector's push into battery-powered models, but the government chose not to include a controversial purchase premium for modern combustion engines.

Although expectations for the stimulus package were "very low" to begin with among environmental advocates, that step was still significant, said Pieter de Pous, senior policy adviser at climate think tank E3G.

"It's definitely a sign of how things are changing," he said.

The pandemic has claimed at least one climate-related casualty: The United Nations' COP26 summit, meant to rally countries to raise their commitments to cut greenhouse gases in line with the Paris Agreement on climate change, has been postponed by a year.

But de Pous said the EU will need the extra time to reach an agreement about the scope of its own 2030 cuts, and will be able to use the rest of the time to lobby other countries on stepping up their game.

In the meantime, the recovery packages proposed in Brussels and Berlin suggest that initial worries about a slowdown in green measures has been proven wrong.

"Climate has remained high on the agenda," de Pous said. "The whole response is driven by [it]."