Having released its 2020-21 investment report on Thursday, the EIB makes the case that there’s a growing gap between actual climate investment versus Europe’s climate objectives. 

Although there was a 2.7% increase from 2018 to 2019 in climate change mitigation investment, to €175b across the EU27, the report’s authors cite concerning trends. 

“Since 2016, climate change mitigation investment has declined marginally as a percentage of GDP and overall investment, a trend that is likely to continue in 2021,” the authors write. 

“According to the European Commission’s latest impact assessment, investments in the continent’s energy system would need to rise from an average of 1.3% of GDP per year over the last decade, to 2.8% of GDP over the next decade if the European Union is to meet its goal of cutting greenhouse gas emissions by 55% by 2030.”

EIB president Werner Hoyer had expressed his own concerns about the consequences of the covid-19 pandemic with regards to investment in the climate crisis during the EU bank’s annual press conference on Tuesday, calling for a “massive investment in a green recovery”, which was echoed on Thursday. 

“We have witnessed a massive economic shock and an impressive policy response. Investment was hit hard. Now it is crucial to adapt to the new normal and deal with pre-existing gaps, both in the public and in the private sector,” said Debora Revoltella, EIB chief economist.

The bank estimates firms across the EU had to reduce investments by minimum 25% as a direct result of the pandemic, and in its latest survey only 6% of EU-wide businesses anticipated increasing investments, compared to 45% expected to reduce them. A whopping 81% of firms said the biggest obstacle to investment was uncertainty, undoubtedly linked to the economy as a result of the covid-19 crisis. 

Although the EU remains a world leader in greentech--registering 50% more patents in this domain than the US--its investment in climate change mitigation, while being ahead of the US, is currently behind China. Moreover, the bank expresses concerns that the covid-19 pandemic has put at risk the investment required to continue in the green transformation. 

EIB VP Ricardo Mourinho Félix said this year’s report “recognises the strong policy response to the crisis and points to the green and digital transition as an opportunity to gain competitiveness, recover from the pandemic, fight the climate emergency and create the jobs of the future. However, the uncertainties and financial strains created by the pandemic risk are preventing Europe’s economy from embarking on the necessary transformation. Patient investors such as the EIB can help the European Union reignite investment and enact a long-term vision on the green and digital transformation.”