Greece bets on greening to get out of the crisis

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Since the crisis of the years 2010-2015, we no longer really hear about Greece. During these years, the country was hit by a currency crisis, which almost led to the withdrawal of Athens from the Eurozone. The Greeks call this period the “Great Depression”, and they still feel the consequences.

Last month (April 2022), it was announced that Greece had repaid its €32 billion debt to the International Monetary Fund ahead of schedule. Apparently things are going in the right direction. Nevertheless, Greece still has EU loans amounting to almost 53 billion euros which are still outstanding. The national debt of around 200% also says so. During Innovation Origins’ visit to Athens, we were struck by the level of poverty: widespread homelessness, poor infrastructure, dilapidated housing.

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© E. Kieckens

Loan Components

More important than this subjective view of today are plans for the future. The Greek Corona Recovery and Resilience Plan (RRP) has received the approval of the European Commission. In July 2021, the council gave the green light to the plan, which totals more than 30 billion euros. A month later, Athens received €4 billion in pre-financing.

It should be noted that while Greece receives 17.8 billion in grants from the corona stimulus fund, it also receives 12.7 billion in loans. A number of countries are withdrawing from the lending component of the RRP. Greece, however, is not, as it sees it as a favorable means of financing the private sector. In relative terms (as measured by gross domestic product), Greece is the largest recipient of corona stimulus funds within the European Union.

Climate Change Program

The fund comes at the right time. “Until recently, the political debate was dominated by economic and social issues arising from Greece’s ‘great crisis’,” says Victoria Tsitsoni, economic policy analyst at the World Wildlife Fund (WWF). The Greek division of the WWF is closely following the Greek efforts. In December 2019, shortly before the outbreak of the pandemic, the government published its first national energy-climate plan. In it, a climate change agenda was adopted to act as a catalyst for new investment and job creation.

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© WWF Greece

The first results are already visible. For example, the sun-rich country is producing solar energy at an accelerating rate. The increase in installed capacity has increased from 2.3 GW to 3.6 GW (December 2021) in less than two years. However, the heavy overload of the power grid is a problem. Future network infrastructures must lead to further development of sustainable energy sources.

Greece is continuing on the path it took in its application for European corona funds. More than a third of the fund (38%) can be attributed to measures that support climate objectives. These include investments in the modernization of the electricity network and the strengthening of the support scheme for renewable energy producers. Additionally, the plan supports municipalities that want to build climate resilience in urban areas.

Other measures include support for a national reforestation program and a comprehensive flood mitigation strategy, among others.

Greek housing stock

Like so many Mediterranean countries, such as Italy and Cyprus, Greece is mainly deploying its corona funds to make homes more energy efficient and develop mobile transport infrastructure. The RRP will be used to finance the renovation of more than 100,000 buildings that will reduce their energy consumption by at least 30% by 2025. This is equivalent to around 20% of the Greek building stock. It could perhaps be more comprehensive.

In addition, the Greek government has adopted an extensive regulatory framework to promote the installation and operation of electric vehicle charging stations throughout Greece, putting the country on track to achieve its goal of having a proportion of 30% electric vehicles on the domestic market by 2030. Today, Greece is still largely unplugged.

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© E. Kieckens

Do no significant harm

The Greek WWF is very critical on an issue when it comes to whether RRP investments are actually all “green”. The organization sees a common problem across the European Union. “We are concerned that RRP-funded investments and projects could be falsely labeled as ‘green’ or undermine EU environmental objectives,” says Tsitsoni. “This is due to a lack of clear and strict rules of good governance and verifiable systems to monitor compliance with sustainability objectives.”

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© E. Kieckens

The Greek WWF, along with other environmental organizations, is therefore lobbying Brussels to enforce the rules since 2021. According to the Greeks, the principle of “Do no significant harm” (aka DNSH) is at the origin of the problem. What is meant by this principle is that investments under the FRR (and other funds) must not cause significant damage to the environment.

“How this principle is applied in practice misses the point of the recovery fund.” An example of this is the investments made in gas infrastructure, which Greece is also planning to make. “These are investments that do not comply with the Paris Climate Agreement (2015, ed.). However, these investments are still eligible for a loan within the FRR. This is a flawed approach, as new gas infrastructure could put Greece’s energy system on a high-carbon trajectory for many decades to come,” Tsitsoni said.

Photos: children at the annual Greek National Day parade (first image), street scene in Athens, WWF’s Victoria Tsitsoni, trolley bus in Athens, poster with EU logo on the Acropolis.

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