A European Finance-Climate Agreement to Fight Global Warming Gets Proposed

Spotlight Activity: A European Finance-Climate Agreement to Fight Global Warming Gets Proposed

On January 23, climate specialist, Jean Jouzel, and economist, Pierre Larrouturou, presented their European Finance-Climate Agreement. They are French activists and not EU officials. This project aims at limiting the rise of temperatures to below 1.5°C above pre-industrial levels, the least-cost scenario by the Paris Agreement. The two specialists developed two tools to fight against global warming.

The first one is the creation of a European Climate Bank that has the objective of according interest-free loans to Member States annually equal to 2% of the country’s GDP. For instance, in the case of France that would represent €45 billion per year to finance the climate transition. According to Pierre Larrouturou the European Climate Bank could be a subsidiary of the European Investments Bank.

The second tool is the creation of a European budget for the climate, financed by a tax on corporate profits equal to 5%.

Status: Standing Still

The European Finance-Climate Agreement raises hopes in the fight against climate change by highlighting the fact that if the European Central Bank has been able to put €1,100 billion to help the bank sector to overcome the financial crises then, the €1,115 billion per year from 2021 necessary in order to reach climate objectives according to the European Court of Auditors, is not a utopia.

However, the European Finance Agreement is still a project to date. The EU has not officially endorsed it neither countries. Regarding the EU’s divided position on the question of raising its objectives for reducing gas emissions during the last COP, there is little chance that this project wins unanimous approval of EU countries. But, the two specialists think that if they can have at least 12 countries adopting the agreement, there is then a legislative mechanism called the enhanced cooperation. It allows a go ahead in the project although only 12 countries endorsed it, in which case it would send a strong message to the world.

The establishment of a European Climate Bank will require a binding framework in order to ensure that 100% of the money loaned is used to finance the climate transition.

Moreover, there is a risk that the creation of a European budget for the climate financed by a tax on corporate profits will affect SMEs much more than big companies.

Take Action

Write to Miguel Arias Cañete, Commissioner in charge of climate Action & Energy the following message:

Dear Mr. Arias Cañete,

We would like to express our support to the European Finance-Climate Agreement project. The European Finance-Climate Agreement raises hopes in the fight against climate change by highlighting the fact that if the European Central Bank has been able to put €1,100 billion to help the bank sector to overcome the financial crises then, the €1,115 billion per year from 2021 necessary in order to reach climate objectives according to the European Court of Auditors, is not a utopia.