European governments approved the most ambitious climate change plan to date, agreeing to pour more than €500 billion into everything from electric cars to renewable energy and agriculture. 

At a marathon five-day summit in Brussels, heads of government reached a deal on an unprecedented economic rescue plan and seven-year budget for the region worth €1.8 billion (US$2 billion). Almost a third of that is earmarked for climate action, offering the bloc’s 27 nations a chance to develop clean energy resources, stimulate the market for emissions-free cars, invest in budding technologies, and promote energy efficiency.

“There is no doubt this is the world’s greenest stimulus plan,” said Simone Tagliapietra, researcher at Bruegel, a Brussels-based economic think tank. “Member states should now put forward sensible green national recovery plans, prioritizing those policies that have a triple dividend: economic growth, greening, equity.”

The bid to become the world’s first climate-neutral continent puts Europe ahead of other major emitters such as the U.S., China, and India in the fight against global warming. The extensive recovery package was constructed in sync with the EU’s ambitious Green Deal strategy to zero-out greenhouse gas emissions by the middle of the century, a project that will require hundreds of billion of euros of annual investment.

The environmental clean-up is already under way. The European Commission, the EU’s executive arm, is considering raising the bloc’s 2030 emissions-reduction target to as much as 55 per cent from its current 40 per cent, a move that would affect every sector of the economy from energy to agriculture and trade. Under the deal struck early Tuesday morning, the objective will be revised by the end of this year.

Other green provisions of the EU stimulus deal include:

• The rescue fund and the 2021-2027 budget must comply with the EU goal of climate neutrality and contribute to the new 2030 emissions target
• The European Investment Bank will become the EU’s climate bank; its board will review a capital increase by the end of this year
• In order to make farming more sustainable, 40 per cent of the EU’s agriculture budget will be dedicated to climate
• The Commission will develop a methodology for monitoring climate spending to detect and prevent greenwashing, and will report annually on green expenditure

The deal didn’t come easy, and talks came close to collapse at several points because of clashing national interests. In a final compromise, the €750 billion (US$858 billion) rescue fund contained fewer grants and more low-interest loans. That impacted the size of some investment programs in areas such as health and climate, triggering criticism from some lawmakers and green activists.

One loss was the Just Transition Fund, a tool to help the most affected regions bear the costs of transitioning toward eliminating emissions. Its value was slashed to €17.5 billion from €40 billion (US$46 billion). The aid can be used to retrain workers or put small and medium-sized companies on a more sustainable track.

“This agreement is at the expense of the climate,” said Michael Bloss, a German member of the Greens group in the European Parliament.

The European Union’s chief Brexit negotiator Michel Barnier tweeted Sunday that talks with Britain over a post-Brexit trade deal reached a “crucial moment”, stressing the negotiations were in full swing.

“The EU remains committed to a fair, reciprocal and balanced agreement. We respect the sovereignty of the UK. And we expect the same,” he stressed, arguing both parties “must have the right to set their own laws and control their own waters”.

The head of the European Commission’s Task Force for Brexit stressed the importance of the UK and the bloc being equally able to act “when our interests are at stake”.

The EU and the UK are “widely expected” to wrap up Brexit trade deal talks “one way or another” before Christmas, but a no-deal scenario is still on the table, a number of UK government sources told the Daily Mail.

Downing Street is ostensibly disappointed by Michel Barnier’s ultimatum with regard to the fisheries issue – something that was described as something that would potentially enable Brussels to slap “lightning tariffs” on London should it put curbs on the bloc’s access to UK fishing waters.

Late last week, Boris Johnson and European Commission President Ursula von der Leyen agreed to extend negotiations on the UK-EU trade deal beyond the initial self-imposed 13 December deadline, which couldn’t be met: additional time had to be earmarked not only for the sides to discuss the arrangements, but for the parliaments of the 27 EU countries and the UK to ratify them.

As the talks proceeded, the British prime minister stressed that London has “done a lot to try and help” resolve the Brexit limbo and it is the EU that should “see sense and come to the table with something themselves”. EU chief Brexit negotiator Michel Barnier, for his part, warned that time is almost up for the bloc and the UK to strike an accord, adding that the possibility of a Brexit deal “is here”.

“It’s the moment of truth. We have very little time remaining, just a few hours to work through these negotiations in a useful fashion if we want this agreement to enter into force on the first of January. There is a chance of getting an agreement but the path to such an agreement is very narrow”, Barnier told the European Parliament.

Trade talks have been stuck for months over wide divergences over fishing quotas, the so-called level playing field — a set of commonly accepted rules designed to prevent businesses in one country from acting unfairly with regard to their rivals in others — as well as governance issues.

If no trade deal is inked before 1 January, the World Trade Organisation’s rules will take effect starting in 2021, including customs tariffs and full border checks for UK goods travelling across the English Channel.