The memo, which EurActiv has seen, proposes ending funding for local climate-related projects from an €864 million environmental protection programme called LIFE, and using the lion’s share of it as public seed money to leverage private sector cash instead.
“The shift to focus on private loans is very worrying, and if this is the direction the LIFE programme is taking, it could mean the end of conservation for Europe as we know it,” Ariel Brunner, the head of EU policy at BirdLife Europe told EurActiv.
Among the first in line for a funding cut could be ventures aimed at: preserving forests and peatlands, reducing greenhouse gas emissions from Europe’s dairy sector by 20% by 2020 and protecting the 250-300 remaining Saimaa ringed seals in a fragmented chain of Finnish freshwater lakes.
If the new funding regime is extended to environment-related programmes, it could cause the axing of other projects for building urban lakes, improving forest diversity, reintroducing endangered species to the countryside, building wildlife crossings, and ensuring ecological corridors.
Local authorities, academic institutes and NGOs are the major recipients of such funds.
But “no small scale action grants (i.e. Traditional Projects) will be supported” after 2014, says the note to the EU’s climate commissioner, Connie Hedegaard, from the head of the EU’s climate directorate, Jos Delbeke.
“This is very likely to be at odds with the expectation of many Member States' representatives in the LIFE Committee,” the memo warns. Getting qualified majority support from EU states will be a “particular challenge,” it adds, “because the traditional projects, which have been the backbone of the programme for the past 20 years, will not be offered through the sub-programme for climate action.”
Beneficiary nations such as Spain and Italy are most likely to rebel in a LIFE committee meeting that begins today (23 October) to discuss “more concrete ideas” for the proposed new work programme, which will be finally submitted for approval early next year.
LIFE but not as we know it
Since 1992, the Commission’s LIFE programme has co-financed over 3,700 pilot or demonstration projects for environmental protection across the EU, to the tune of €2.8 billion. But from next year, it will become a sub-programme of the Commission’s climate directorate, with an increased climate budget of €864 million out of a total €3.46 billion spend, that is shared with the environment directorate and spread across the EU’s 2014-2020 Multi-annual Financial Framework.
Under the new regime, at least 70% of the LIFE funds will be redirected to supporting financial instruments, while up to 30% could be allocated to integrated funds for larger projects.
Over the next six years, priority for these will be given to implementing climate adaptation strategies in vulnerable regions, supporting renewables and energy efficiency schemes, and developing low carbon strategies.
But “in 2014 the only allocation of funds under the WP (working programme) for LIFE would be for financial instruments” managed by the Climate directorate, with an “outsourcing of implementation to the EIB [European Investment Bank].”
Campaigners though say that multilateral banks already have license to fund smaller-scale programmes, but choose not to. The stress on innovative financing mechanisms is thus just a cover for cuts to existing projects, they say.
“We are in disbelief that DG Clima (the EU’s climate department) would propose to replace local, successful and concrete actions on the ground, with private loans that are a drop in the bucket when competing with the European Investment Bank and commercial banks,” said Bruna Campos, Birdlife’s EU financial perspectives officer.
“Instead of trying to fix something that isn’t broken, DG Clima should build on the success and effectiveness of the last 20 years of the LIFE small project grants, as applauded by the Court of Auditors, and support a variety of local actors, including local authorities, to drive their innovative ideas.”
Curious email exchange
Curiously the email exchange in which the EU document was revealed, dated August 29, took place between Peter Wehrheim, head of the EU’s climate finance and deforestation unit and Artur Runge-Metzger, the bloc’s chief international climate negotiator.
EU climate negotiators have pushed for public sector funds to be used for leveraging private sector capital for a planned $100 billion-a-year Green Climate Fund for the developing world. So far it only has only raised around $7.5 million.
But the use of innovative financing mechanisms in EU projects is part of a wider trend to use public seed money as risk capital for the private sector, evident everywhere from the UK government’s nuclear plans for Hinkley to the EU’s energy infrastructure proposals.
Announcing this year’s list of projects three months ago, the environment commissioner Janez Potočnik said that “the LIFE programme continues to provide vital funding for innovative projects. These new projects will make a big contribution to protecting, conserving and enhancing Europe’s natural capital”.
The climate action commissioner, Connie Hedegaard, added that she was "happy to see confirmed this year that an ever rising share of LIFE projects is going to contribute to climate action. And we want to improve this even more!”
The next month, her climate directorate proposed a radical redirecting of the programme’s trajectory.