When the European Recovery programme was announced on May 27, many were awed by the allocation of funds — €750 billion for the “Next Generation” recovery fund, and more than €1 trillion in total EU budget.
So it might have been easy to miss the fact that all of this funding is subject to the so-called Green Deal.
The EU is not just supposed to get back to normal; it is supposed to get better, more green, more sustainable than it was before.
“Make no mistake, these funds will be used for ‘green and digital transitions,’ as the Commission puts it,” comments Antigoni Pafiti, Advocate / Associate with the Brussels office of law firm Elias Neocleous & Co. “The Green Deal will rhythm the EU in the upcoming five years.”
Like all of the Member States, Cyprus will receive an allocation of Green Deal funding through regional development mechanisms and existing EU programmes.
“Priorities, however,” Pafiti explains, “will be determined according to:
- A massive renovation wave of buildings and infrastructure and a more circular economy, bringing local jobs;
- Rolling out renewable energy projects, especially wind, solar and kick-starting a clean hydrogen economy in Europe;
- Cleaner transport and logistics, including the installation of one million charging points for electric vehicles and a boost for rail travel and clean mobility in our cities and regions;
- Strengthening the Just Transition Fund to support re-skilling, helping businesses create new economic opportunities.”
Cyprus is already beginning to see Green-Deal driven changes, as Nikolaos Korogiannakis, a partner with Elias Neocleous in Brussels explains.
“The government announced in early February that the island had to increase the price of gas in order to comply with Directive 2018/2001 on the promotion of the use of energy from renewable sources.”
“The national target set is the increase of the use of renewable energy sources from 2.9 per cent in 2005 to 13 per cent by January 2020. For the transport sector the goal was to reach 10 per cent of renewable energy, and the most effective way, according to Ministry of Energy, Commerce and Industry, was to blend biofuels into fossil fuels, which will automatically increase the price of petrol by 2 to 2.5 cent per liter,” he notes.
Biofuels, however, reduce carbon dioxide emissions, and the effect on air pollution should be noticeable in time.
As part of the Green Deal, Cyprus will soon have to enforce the terms of Directive 2019/904, with upcoming restrictions for single – use plastic products. Member states have agreed to achieve a 90 per cent collection target for plastic bottles by 2029, and plastic bottles will have to contain at least 25 per cent of recycled content by 2025 and 30 per cent by 2030, Korogiannakis continues. Certain single-use plastic plates, cutlery, straws, balloon sticks and cotton buds will be completely banned from the EU already by next year, 2021.
“Even in sectors where no one would expect any direct effect of the Green Deal, such as financial institutions and regulations, we can now observe its influence,” he adds.
Climate –related risks are being treated as physical and transitional risks for the financial sector.
“Central banks, supervisors, and policymakers are undertaking various ‘green banking’ initiatives. The European Banking Federation is promoting ‘Green Finance’ such as “Green Bonds” and the adoption of green lending principles. The goal is to have the banking sector aligned with the long-term EU sustainable finance developments by enhancing the appropriate industrial strategy.”
All of this means that Green Deal initiatives and regulations will soon begin to accelerate, and businesses in Cyprus should make ready.
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