European countries need to rapidly step up efforts and define their investment needs and plans to match their objectives in shifting to a low-carbon, climate-resilient economy, according to a new briefing from the European Environment Agency.

This is the key finding of the stocktaking briefing which also stresses the need for clear information on investment needs and priorities to attract private finance.

The EEA briefing ‘Financing Europe’s low carbon, climate resilient future,’ says that the smooth transition to a low-carbon future poses a major investment challenge that depends on a substantial redirection of finance flows towards more sustainable investments.

The briefing is based on a new study prepared for the EEA, ‘Assessing the state-of-play of climate finance tracking in Europe’ which found that only a few European countries have turned their climate and energy objectives into concrete investment needs and plans to date.

The study says that only Belgium, the Czech Republic, Estonia, France, and to some extent, Germany, appear to have a national approach or strategy in place to track spending related to climate mitigation and adaption.

The background study is a first Europe-wide stocktaking to capture the current status of climate finance tracking across the EEA’s 33 member countries. The main focus was to identify data and knowledge gaps involved in tracking domestic climate finance.

The study identifies a lack of country-level preparedness and information regarding estimated total investment needs, as well as their current and planned expenditure volumes for climate and energy purposes. As a result, European Union estimates of total climate finance investment needs are not matched by complementary national assessments.

The briefing identifies the need for national and EU efforts to strengthen the tracking of domestic climate finance efforts, building on Member State experiences. It also calls for the development of forward looking national capital-raising plans related to their climate and energy objectives to strengthen investor confidence, boost investment attractiveness and enhance policy certainty.

Meeting climate and energy targets is an investment challenge

The EU has estimated there will be a need to invest around an additional €177 billion per year from 2021-2030. To close this gap, substantial funding — a doubling of current investments in renewable energy and energy efficiency — will be needed which will require mobilising both public and private funds.

On the remaining finance gap on RES-electricity investments in Member States, the report suggests that current investment levels outweigh the future investment needs. The gap was found present in 15 countries where needs were estimated higher than the 2015 investments.The gap was largest in Spain, Italy and Romania. However, in the UK and Germany current levels alsofar outweigh what is required annually between 2020 and 2030.

The analysis of the National Climate Adaptation Strategies shows that many of the reports do not include financial data. Of those that report any financial data, the most widely reported climate adaptation investment needs concern flood protection, and logically take place in the most vulnerable coastal countries, such as the Netherlands, Denmark- or islands – the UK and Malta.

The study says that one of the important shortfalls even of the Member States that do provide investment needs estimations is that they do not give an indication on how much of the burden the private financing sources should carry.

Only the UK’s National Adaptation Plan at least emphasises the importance of thinking about how to mobilise the private sector financing sources more for adaptation purposes, the report says.

Click here to download Assessing the state-of-play of climate finance tracking in Europe

Click here to access the EEA briefing paper