The European Commission is banking on a novel system of “nature credits” to finance ambitious restoration targets across the bloc, signaling a shift towards market-based solutions amidst growing concerns about funding gaps and the potential for greenwashing. Environment Commissioner Jessika Roswall emphasized the need for innovative mechanisms that incentivize private sector investment alongside existing public funds, particularly in projects like wetland regeneration and upstream habitat restoration benefiting downstream communities.
While the EU has committed to allocating at least 35% of its budget to climate and environmental objectives starting in 2028, Roswall acknowledged that this alone is insufficient. The proposed nature credit system, which would generate tradeable certificates for ecological restoration efforts, aims to bridge this shortfall and align with international biodiversity commitments.
The implementation of the EU’s Nature Restoration Regulation is currently underway at the national level, with Germany expected to present its plan by early 2026. A previously scheduled assessment of the anticipated funding shortfall, intended to highlight the severity of the financial challenge, has been indefinitely postponed, raising questions about the Commission’s commitment to transparency regarding the regulation’s feasibility.
Roswall addressed potential skepticism surrounding the approach, conceding that many questions remain unanswered but reiterating the need for credible structures to prevent the emergence of ‘greenwashing’ practices. She underscored the broader benefits of ecological restoration, citing improved climate resilience, healthier soils and water sources, beyond the immediate restoration of biodiversity.
The Commissioner also signaled a broader push towards circular economy principles, announcing plans to present a landmark Circular Economy Law next year. This legislation, driven by concerns over unsustainable consumption patterns outpacing the planet’s regenerative capacity, will initially focus on plastic recycling to address pressure on European recycling industries from cheaper imports and safeguard domestic capacity. The aim is to create a level playing field and bolster the viability of European recycling initiatives, a critical step in enhancing overall economic resilience and environmental sustainability.