This report supports the European Union’s (EU) 2030, 2040 and 2050 climate goals by identifying the changes needed in private finance flows, the barriers that constrain those changes, and the policy options available to help bridge the estimated EUR 477 billion annual financing gap for climate transition investments1. Looking ahead, the Commission’s impact assessment for the 2040 climate target estimates average annual investment needs of approximately EUR 660 billion in the energy system and EUR 870 billion in the transport sector between 2031 and 20502. To guide this transformation, the report addresses three several core questions: (i) how do private finance flows need to change to achieve climate goals; (ii) what barriers exist to mobilising and redirecting finance to needed areas, and away from harmful areas; and (iii) which policies, tools, regulations can help unblock barriers and mobilise/redirect finance?

The report’s objectives are to:

1. Indicate how private finance could be reallocated across the economy to meet climate targets;
2. Identify key barriers and EU policy tools to support this shift; and
3. Recommend policy actions to scale up low-carbon finance and reduce high-carbon investments,while addressing potential social impacts.

David Papp
Principal Consultant