Dutch spell out green ideas for EU recovery fund

According to the Dutch proposal, decisions on how to spend EU recovery funds should be guided by an EU-wide green finance taxonomy which aims at rewarding investments in clean technologies. [David Evers / Flickr]

The Netherlands has floated proposals to ensure a green recovery from the COVID-19 crisis, suggesting an “exclusion list” of economic activities like nuclear power, which the Dutch believe should be banned from receiving EU funds.

The “Outline for an EU Green Recovery” plan, published on Wednesday (22 April), is meant to feed into an EU-wide recovery strategy due to be presented by the European Commission in the second or third week of May, Dutch diplomats in Brussels told EURACTIV.

The paper was floated ahead of an EU summit last week and before the Commission is due to unveil its “recovery fund” as part of an updated proposal for the EU’s next seven-year budget (2021-2027).

It describes, among other things, how Europe could set criteria for “an exclusion list” of economic activities which would be banned from receiving EU money.

“No expenditure should harm the EU’s climate and environmental objectives,” the Dutch paper says, echoing earlier statements from EU climate chief Frans Timmermans, who told MEPs last week that “every euro we invest must flow into a new economy rather than old structures”.

According to the proposal, decisions on how to spend EU recovery funds should be guided by an EU-wide green finance taxonomy which aims at rewarding investments in clean technologies.

To qualify for the green investment label, an economic activity needs to make “a significant contribution to at least one” of six pre-defined environmental objectives – such as climate change mitigation – and automatically disqualifies if it does “significant harm” to any of the other five.

For instance, it excludes coal and gas power from being labelled “green” unless plants are fitted with carbon capture and storage technology enabling them to lower their emissions below a certain threshold.

But the “do no harm” principle has triggered intense debates on whether nuclear power should be excluded or not, a question that has been left open for decision at a technical level later this year.

EU seals deal on green finance in breakthrough for climate goals

Lawmakers in the European Parliament have approved a compromise on the EU’s proposed sustainable finance rulebook, ending a bitter fight with EU member states on whether to recognise nuclear power as “green”.

“The taxonomy and the sustainability proofing guidance made by the Commission can be used to determine the criteria,” the Dutch paper suggests. And “the exclusion list proposed for the Just Transition Fund should be used as the starting point,” it adds.

The Just Transition Fund excludes nuclear power from receiving EU money – whether for construction of decommissioning of plants – but goes further than the taxonomy because it excludes any fossil fuel investments, even those with a low emission threshold.

Green activists commended the Dutch contribution, which comes on the back of calls from 17 environment ministers who signed a joint appeal for a green recovery from the COVID-19 crisis.

“The Dutch paper…must now spark a conversation on how this commitment is materialised,” said Ester Asin, Director of the WWF European Policy Office. “However, for the green recovery to succeed, it will be important that more solidarity is found at EU level by putting forward a substantial EU recovery fund,” she added.

Accelerating investments in green projects

To kick-start the recovery, the Dutch suggest accelerating investments in clean infrastructure projects already in the pipeline, pushing forward an EU-wide building “renovation wave” as well as “projects to increase human capital for green sectors”.

The paper also proposes to “design demolition programmes for household appliances, heating and cooling systems, polluting cars, and stimulate the introduction of more energy efficient, climate-friendly and circular produced products”.

Hydrogen projects receive particular attention in the paper, mirroring Dutch ambitions in this field.

Meanwhile, it says state aid should be permitted “more swiftly” for clean technologies, and – “where necessary and proportional” – be reserved in priority for “companies that are willing to adopt low-carbon, circular and sustainable investments.”

The Dutch also call for bigger spending on climate change, with “at least 25%” of the EU’s next long-term budget dedicated to climate-related expenditures, a percentage that would go up to 50% when it comes to development aid programmes.

To ensure these targets are met, “climate expenditure shall be tracked” using either the taxonomy or the EU budget tracking methodology, the paper states.

(Edited by Frédéric Simon)

> Read the full paper below or download here.

Netherlands non paper on Green Recovery - 21 April 2020

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