The EU budget: lean and green

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV Media network.

With a significant rise of climate-related spending, the European Commission's proposed next EU budget demonstrates a clear commitment to sustainable growth and transforming Europe into a low-carbon society, argues EU Climate Action Commissioner Connie Hedegaard.

Connie Hedegaard is the European commissioner for climate action.

"How do we best spend taxpayers' money in the European Union? This has been the core question in the preparation of the proposal for a new multi-annual budget which the European Commission presented last week.

In a time where several member states are struggling with severe fiscal challenges and tough austerity measures it is crucial that we focus European co-operation on areas that bring benefits to most member states and challenges that cannot be solved by individual countries alone – in other words where there is a clear EU added value.

Where is that? Well, if we ask the Europeans, they are in no doubt: a recent survey shows that almost nine out of ten Europeans favour allocating more EU funding for environmental and climate-related activities.

In the current EU budget, funds have already been devoted to climate-related investments and activities such as erecting wind turbines, improving grid connections, making our cities more climate-friendly and the like. Still, however, only around 5-7 % of the current EU budget is climate-related today.

While keeping the overall budget for 2014-20 stable in real terms, our proposal suggests boosting the share of climate-related spending to at least 20% of the total EU budget.

This significant increase reflects that it is a key political priority for Europe to tackle climate change by transforming Europe into a clean, competitive low-carbon economy. But it also marks a paradigm shift.

Although the benefits of the transition to a low-carbon society – such as reduced energy bills, improved energy security, cleaner cities, better health and new jobs – will clearly outweigh the costs, substantial up-front investments are needed to get going. Also, the transition requires changes in all major economic sectors.

To succeed we therefore have to integrate – or mainstream – climate aspects across the whole spectrum of policies and sectors, from energy, transport and industry to agriculture, regional development, research, innovation and external action. This way we can maximise synergies between climate action and other European policies and ensure that the EU budget delivers real value for money.

With the current budget proposal we are taking important steps to do just that. Instead of parking climate spending in some distant corner of the budget, we are moving it into the big spending areas.

On agriculture, our proposal suggests that 30% of all direct payments to farmers be conditioned on environmentally sound and climate-friendly practices, for example reducing emissions from manure and use of fertiliser. And in addition, the new rural development policy will be more focused on supporting climate-friendly investments by farmers. In other words, farmers increasingly have to deliver public goods in order to receive public money. This is a significant step forward.

In the field of European regional policy, our proposal also has a clear climate mark as energy efficiency will be a key priority. In the so-called transitional and competitiveness regions – the ones with a GDP over 75% of the European average – we propose that at least 20% of the total envelope be spent on energy efficiency and renewable investments.

The new 'Connecting Europe' facility, which earmarks 40 billion for infrastructure projects within transport, energy and ICT, will also have a strong focus on climate-friendly investments. On the transport side, rail, inland waterways and maritime will have priority. And within energy, project plans include electricity grids for renewables and interconnections throughout Europe.

The climate focus is also evident in the budget for research and innovation which is considerably increased in our proposal – from €54 billion to €80 billion. Climate change is one of the six societal challenges that are prioritised in the new research framework, while increased funding for promoting industrial leadership in low-carbon and adaptation technologies will be granted.

Another important element of the proposed budget is that it recognises the need to significantly scale up external funds to meet our international commitment on climate finance. Our future development policy will place climate action at the centre of its priority and guarantee the right level of funds by 2020. And we aim to spend no less than 25% of the programme for 'Global Public Goods' on climate change and environmental objectives. 

Last but not least, we are almost tripling the budget for specific small-scale climate projects – from around 300 million today to 800 million under the next multi-annual perspectives. This money is key to support SMEs, NGOs and local/regional activities in the area of climate mitigation and adaptation but also awareness-raising activities.

How to ensure that we deliver down to the cent on what we promise for climate-related spending? We suggest a clear cross-cutting obligation to identify where EU programmes promote climate action or energy efficiency and that specific targets for climate are included in the measuring of their performance. Based on a robust method developed by the OECD, we will then be able to track and monitor climate-related spending. 

In sum, what the Commission has presented is a budget which strikes the right balance between lean and green. While curbing expenditure we show strong ambition and a clear commitment to delivering on our climate goals. On our side, we will continue working on the details of each of the specific policy instruments to ensure these adequately reflect the course we have set out. Now it is up to the member states and the European Parliament to maintain the ambition."

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