EU proposes 25% ‘climate quota’ in new long-term budget

Jean-Claude Juncker, President of the European Commission, presents the EU’s post-2020 long-term budget proposals in the European Parliament in Strasbourg, 2 May 2018. [© European Union, 2018 / Source: EC - Audiovisual Service]

The clean energy transition and other initiatives to decarbonise Europe’s economy will represent 25% of EU spending under a seven-year EU budget plan put forward by the European Commission on Wednesday (2 May).

Climate action will be mainstreamed across all EU programmes, with a target of 25% of all expenditure contributing to climate objectives, said Miguel Arias Cañete,‏ the EU Commissioner in charge of climate action.

This is up from 20% in the current budget, which covers the years 2014-2020, the Commission said.

The climate effort will span policies on regional integration, energy, transport, research and innovation, agriculture as well as development aid, “making the EU budget a driver of sustainability,” the EU executive said in a statement.

Brussels will follow up at the end of the year with a “Reflection Paper” to address “possible ways” of further integrating UN Sustainable Development Goals in EU policy-making.

Plastic tax and ETS

The headline 25% figure is a “key earmark”, said Jonathan Gaventa, director of E3G, a climate and energy think tank, which broadly welcomed the Commission’s budget announcement.

But the way it’s counted also matters, he cautioned. “If you tighten up the way it’s counted, the 25% could represent a substantial increase or it could be watered down,” he told EURACTIV before the announcement was made official. For example, the 25% might end up being actually lower if the Commission decides to exclude spending on immigration and security from the total, he said.

Another key aspect is EU funding for infrastructure projects such as gas pipelines, which environmentalists claim risk locking Europe into fossil fuels.

“Continuing to fund fossil fuels will present a huge liability to the European taxpayer,” Gaventa said in a statement reacting to the budget proposals. “It sends misleading signals to investors as to what represents the bloc’s vision for the future,” he said.

Other parts of the budget could prove controversial, like a proposal to allocate 20% of revenue from carbon trading to the EU budget, as well as a plastic tax. The national contribution will be calculated on the amount of non-recycled plastic packaging waste in each member state (0.80 € per kilo), the Commission said in a statement.

Plastic tax and ETS tinkering could plug Brexit hole, suggests EU budget chief

EU Budget Commissioner Günther Oettinger has revealed that the European Commission will propose taxing plastic and shifting emissions trading income to EU level, in an attempt to balance the bloc’s coffers once the United Kingdom leaves the EU.

14 EU countries back greener budget

Still, many EU member states – including Europe’s paymaster Germany, France, Italy and Spain – appear ready to back the European Commission’s push for a greener EU budget.

The so-called ‘Green Growth Group’ of 14 EU environment ministers has earlier called for “at least” 20% of EU budget to be spent on climate-friendly policies and infrastructure, better reporting and transparency of how the “climate quota” EU funds are being spent.

They also called for pulling out support from carbon-intensive projects that are contrary to the Paris goals. “Subsidies that are not in line with the Paris Agreement, such as for carbon-intensive projects, should be phased out as quickly as possible and have no place in the EU budget,” the ministers wrote in a joint statement earlier this year.

Notably absent from the group of 14 are Central and Eastern EU countries like Poland, the Czech Republic and Hungary, most of which are heavily reliant on coal for electricity and heating.

Their concerns are chiefly related to the social policy aspects of the energy transition. While new jobs are being created in the green economy – 19 million worldwide by 2050, according to the International Renewable Energy Agency (IRENA) – other jobs will also be destroyed, meaning workers there will need re-skilling.

In the automotive sector, jobs in the maintenance and repair market will be wiped off as a result of the push for electro-mobility. Electric vehicles have on average 300 parts compared to 1,300 for traditional vehicles, which means “the supply chain will be absolutely impacted” as a consequence, warned the EU Climate Commissioner Cañete.

Canete defends ‘balanced’ EU proposal on car emissions

The EU Commissioner in charge of Climate Action, Miguel Arias Cañete, has fought back accusations that Brussels lacked ambition in setting new CO2 limits on cars for 2030, saying the proposal “strikes the right balance” between environmental, social and industrial policy objectives.

European Parliament backs 30%

Central and Eastern EU states will find backing from the European Parliament, which stressed the social policy aspects of the energy transition.

“Following the Paris Agreement, climate-related spending should be significantly increased compared to the current [budget] and reach 30% as soon as possible and at the latest by 2027,” MEPs said in a March resolution.

In its resolution, the European Parliament called for 30% of the EU budget to be spent on low-carbon technologies like renewables but also on preparedness for natural disasters – floods and storms – which are set to increase as a consequence of global warming.

Lawmakers called for the EU to establish “a comprehensive fund” to support “a just transition” to low-carbon energy, “notably in coal-dependent regions and countries” – a call that is likely to find support in Poland and Germany, both relying heavily on coal for electricity.

What follows is a shopping list of technologies that Parliament said should receive support in the next EU budget:

“Renewable energy sources, energy efficiency solutions, energy storage, electro-mobility solutions and infrastructure, modernisation of power generation and grids, advanced power generation technologies, including carbon capture and storage (CCS), carbon capture utilisation (CCU) and coal gasification, modernisation of district heating, including high-efficiency cogeneration, early adaptation to future environmental standards and restructuring of energy-intensive industries, as well as addressing social, economic and environmental impacts.”

Five steps for a climate-friendly EU Budget

The EU’s next Multi-Annual Financial Framework (MFF) must reflect the commitment the EU has made to decarbonise its economy, in line with the aims of the Paris Agreement. Strong overall coherence to ensure that funds are spent in targeted and intelligent ways is the key to its success, writes Jonathan Gaventa.

For more on EURACTIV’s EU Budget 2021-2017 coverage, read also: 

EU budget proposal 2021-2027 – as it happened

The European Commission unveils its proposal for the EU’s long-term budget for 2021-2027 today (2 May), setting the stage for a bruising and long negotiation with member states and parliament.

Positions

Jonathan Gaventa, Director of E3G, a climate and energy think tank:

“The Commission has proposed that 25% of the next EU budget goes towards responding to climate change, an increase of €114 billion over the last budget. This will provide welcome resources for green innovation, infrastructure, agriculture and overseas aid. However the European Parliament, NGOs and progressive businesses have called for this to be increased even further.

"The remaining 75% of spending must also be brought in line with EU climate goals. Continuing to fund fossil fuels will present a huge liability to the European taxpayer. It sends misleading signals to investors as to what represents the bloc’s vision for the future. The European Commission has proposed to increase funds for budget programmes such as the Connecting Europe Facility which have provided billions of Euros in funding to gas pipelines and other fossil fuel infrastructure, with no commitment to stop funding projects that contradict EU climate goals.”

Stephanie Pfeifer, Chief Executive of the ‎Institutional Investors Group on Climate Change (IIGCC):

“The new EU budget proposal represents a significant opportunity for the EU to signal their support for investment into the low carbon transition. Tackling climate change must remain a key feature of the budget, and it is vital that EU funding structures are coherent with the EU’s mid- and long-term climate and energy objectives.

"Such direction within the budget will ensure that new investments avoid physical risks and stranded assets, as well as maximising the huge investment potential of new, low carbon markets, technologies and business models.

"This will help to send the right signals that will boost investor confidence that the EU wishes to maintain and step up its global leadership role in implementing the Paris Agreement”.

Kathleen Van Brempt, a Belgian lawmaker in the European Parliament (Socialists and Democrats): 

“We need a budget capable of turning global challenges into opportunities, with a sufficient amount of own resources, independent of Member States' goodwill and frenzies. With this European money, only future oriented investments should be supported, in line with our Sustainable development goals and climate commitments.”

Colin Roche, Fossil Free Campaigner for Friends of the Earth Europe, an environmental NGO:

"Two years after the Paris Climate Agreement the EU Commission is still leaving the way open to fund new fossil fuel infrastructure beyond 2020 despite the rapidly closing window to keep to the Paris climate targets.

"The Commission’s proposal includes €8.65 billion for energy projects in the Connecting Europe Facility. Today, the Connecting Europe Facility Energy projects support gas and electricity projects. The EU has already spent €1.3 billion of the current Connecting Europe Facility backing gas projects. The EU also subsidies fossil fuels through Horizon 2020, the European Regional Development Fund and the European Fund for Strategic Investments.

“It's quite shocking that the European Commission may still be planning to spend taxpayer money on fossil fuels and ultimately on climate destruction. This corporate welfare for fossil fuel companies would waste public money on private pollution and invest in climate failure – while we should be concentrating our resources on climate solutions – including scaling up fossil-free community energy and energy efficiency. The EU now needs to explicitly rule out fossil fuel projects from the next EU budget.”

Jannik Lindbaek, head of EU office for Statoil, the Norwegian energy company:

"The new EU budget lays a foundation for transforming Europe's energy system by increasing the budget for 'Horizon Europe' and the Connecting Europe Facility.

"It is important that the Horizon Europe budget supports solutions for the harder to abate sectors such as trucking, shipping, aviation, steel, cement, chemicals and energy storage. 'Horizon Europe' should replicate the success of renewables for decarbonisation solutions available to these sectors – such as hydrogen and CCS. This is of fundamental importance if Europe is to develop full decarbonisation toolbox by 2030.

"The €8.6 billion for energy projects of Connecting Europe Facility should earmark a sizeable amount to cross border CO2 transport projects included in the 3rd PCI list."

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