Photo: Rimidolove / Envato
Key points
- Caroline Henry and Clara Calipel from the Institute for Climate Economics explain that, to achieve its 2030 climate and energy targets, the EU must mobilise significantly more public and private investment, as current funding levels fall well below the estimated €840bn required annually.
- Upcoming revisiosn to the energy union governance regulation present an opportunity to transform the existing national energy and climate plans into robust national investment strategies, creating a vital bridge between decarbonisation goals and delivery.
- Accelerating the fossil fuel phase-out through clear NECP investment plans is essential for boosting Europe’s energy security, enhancing economic resilience to external shocks, and reinforcing the bloc’s competitiveness and credibility.
Recent political tensions in the Middle East and their impact on energy prices are yet another reminder that the EU’s dependence on imported fossil fuel remains a structural vulnerability. More than four years after the last energy crisis, this dependency has not fundamentally changed.
In this context, accelerating the EU’s phase out of fossil fuels, particularly through electrification, is not only a climate imperative. It is also the only viable path to protect its energy supply, consumers’ purchasing power and, ultimately, its resilience to external shocks.
The EU’s medium- to long-term climate and energy objectives are already well defined: reducing its greenhouse gas emissions by 55% by 2030, 90% by 2040, and reaching net zero by 2050. However, achieving these goals will require mobilising a sufficient level of public and private investment as it currently falls short: the Institute for Climate Economics has estimated that public and private climate investments in the EU reached €500bn in 2023, well below the €840bn needed every year on average to reach the EU 2030’s targets.
As 2030 is fast approaching, the focus of member states’ climate and energy governance needs to shift from ambitious goals to long-term investment planning. The 2026 revision of the energy union governance regulation (EUGR) provides an opportunity to transform the national energy and climate plans (NECPs) into genuine national investment plans. It would make operational investment strategies a reality, aligning climate and energy priorities and investment needs with public policies and public investment.
What are NECPs, and what’s missing?
Since 2018, member states have been required through the EUGR to develop 10-year integrated plans – the NECPs – outlining their contributions to EU energy security, energy efficiency and climate targets. These plans describe the sectoral measures to be implemented in each member state and act as an important tool for tracking progress at the EU level.
However, the European Commission’s assessment of the latest NECPs highlighted two caveats. Firstly, while their full implementation could, in principle, put the EU on track to meet its 2030 targets, this is conditional on sufficient investment actually materialising.
Secondly, the assessment indicated that most plans still lack clear identification of the investment needed, as well as credible strategies to mobilise the necessary public and private funding. Without this clarity, there is no real guarantee that investments will flow at the required level and within the appropriate timeframe.
Making NECPs investable
Turning NECPs into real investment planning tools could not only increase the probability of delivering the EU’s objectives in due time. It could also ensure mobilisation of some investments which are required to modernise the bloc’s industry in a context of strong global competition and, ultimately, drive economic prosperity. An investment plan has the capacity to actively steer economic transformation and guide public and private investment.
However, to be effective the revised NECPs will need to go beyond a simple compliance exercise and be supported by real national political ambition. They will need to reflect national priorities, which differ in each member state and will therefore require the involvement of national institutions. They also need to remain flexible enough to integrate existing investment strategies.
Yet if backed by political ambition and properly operationalised, these investment plans could become essential tools to keep the transition on track while making Europe more resilient in the face of future crisis. This would also serve to meet investors’ demand for clear and predictable national investment strategies in the medium term.
Four key building blocks for an energy and climate investment plan
To make investment planning a reality in the EU, we have identified four key building blocks that will need to be integrated into the NECPs revision.
1. Translating energy and climate goals into a sectoral investment roadmap
Member states should first identify their specific priority sectors and quantify the level of investment required to meet sectoral targets. To ensure an estimation of investment needs as close as possible to real-economy conditions, this implies translating priorities into measurable volume targets and identifying the technological costs associated.
2. Defining public policies and spendings to meet climate investment needs
Based on these investment needs, the climate and energy investment plan should define a clear public policy and financing roadmap. Notably, this includes estimating the current public contributions to climate investment and their effectiveness. This assessment should help identify where public intervention is necessary and how to make it efficient to support private project holders. The resulting strategy should then detail, per sector, the public funding allocated to each priority, how member states intend to fund these spendings, and the period in which it will apply.
3. Accounting for macroeconomic implications
The investment roadmap should be considered in the light of current and potential macroeconomics forecast: should it be mindful of inflation, public revenues, sectoral job creation or trade balance. Analysing how new flows of climate investments could impact the economy beyond the initially targeted sectors is crucial for designing the structural policies needed to support project holders in their adaptation to a new economic equilibrium.
4. Completing a biennial plan assessment and review
Finally, these investment plans should remain an agile tool, able to adapt to changing circumstances and be revised accordingly. Although the investment planning exercise requires member states to choose an investment strategy and adhere to it in the long term, regular policy adjustments through ex-post evaluation may support efforts of reaching targets while minimising costs to public finances.
A timely opportunity for the EU to demonstrate its credibility
This year’s revision of the energy union governance regulation represents a critical opportunity for the EU. As time passes, the cost of climate inaction increases, particularly through the EU’s exposure to volatile imported fossil fuel prices.
Unless the EU can bridge the gap between planning and investment, it risks undermining its ability to reach its energy and climate targets, but also its economic positioning in a highly competitive global environment. Ultimately, investment planning is a central tool to reinforce the EU’s credibility and thereby attract greater public and private investment.
This page was last updated May 13, 2026
Written by
Caroline Henry works as research analyst on EU climate investment at the Institute for Climate Economics (I4CE). Previously, she worked on the French Recovery Plan evaluation at France's High Commission for Stategy and Planning, and on the EU budget at the European Commission.
Clara Calipel works as a research fellow at the Institute for Climate Economics (I4CE). Her expertise focuses on European climate policies and EU climate investment. She previously worked as a financial analyst at PwC and Natixis, before joining I4CE to combine her expertise in finance with climate-related issues.
