EU Structural Funds: ‘Biggest opportunity wasted’

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The EU is set to spend €308 billion between 2007 and 2013 in order to decrease disparities between the EU’s poorer and richer regions. Much of the money will flow into the 12 new EU member states of central and eastern Europe and the Balkans. EURACTIV spoke with an NGO activist about how these funds are potentially being misspent in light of concerns about climate change.

Martin Kone?ný is in charge of a Friends of the Earth Europe (FoEE) and CEE Bankwatch joint project ‘Billions for Sustainability?‘, which argues that the current spending plans for EU structural and cohesion funds will undermine the EU’s stated goal of reducing CO2 emissions by 20% by 2020. 

To read a shortened version of this interview, please click here.

Can you provide background to the report and why you published it?

We have prepared this report mainly because we believe that it is an important political moment when this huge package of money is being prepared, and when the plans for how it is going to be used are being set. We have always seen that the EU funds have a lot of potential benefits. They contribute to solidarity between poor and richer parts of Europe, so in that sense the idea is very positive. 

There is also no reason why the funds could not support sustainable development, but we have also seen that so far they have contributed to unsustainable development, for example in the transport sector and the waste-management sector, and also to a number of problematic projects, which have had direct negative impacts on the ground. 

The Commission has approved more than half of the National Strategic Reference Frameworks, which set the stage for the specific Operational Programmes that detail Structural Funds spending. Do you think these guidelines need to be adjusted to be more climate-change oriented?

If we look at energy efficiency and renewables, the guidelines are not so bad, because energy efficiency and renewables are highlighted as one of the twelve guidelines – one of the twelve priorities. But then the reality does not match this. If you put something as one of the twelve priorities, then you would expect more emphasis on it in the programmes and in terms of the money allocation – but then only 2% of the money is allocated for this.

Why do you think that the Commission is approving this then, if one of these twelve main priorities is not really being promoted?

We are telling them to modify these programmes before they approve it, because we see a big gap between the rhetoric and the reality. At the same time, I have to acknowledge that the Commission is overloaded with 445 of these operational programmes. They do not have much capacity for hard negotiating. There is a lot of political pressure to get it approved as soon as possible. So I think that these are real reasons for why not much is happening. 

But I still think that there should be more political will on the part of the Commission to put climate-change concerns into these operational programmes. They could still require some indicators to be put into these programmes, with targets that say that greenhouse-gas emissions will not be increased – or will be reduced – depending on the member state and operational programme and so on. This would then have to be respected by those countries. 

Or they could say: “We want to make sure that you have criteria, so that all investments in various areas – investments in companies, modernisation of industry, housing, and transport infrastructure – all use the best available energy efficient technologies.” But this is not there – and this is where the biggest opportunity is wasted. 

In these programmes, there is not this horizontal effort to really have the most energy efficient technologies across the board in all these investments. And there is a lack of political will in the Commission to push for that, even though they could still do it this year.    

They just haven’t had the opportunity yet?

The Commission has already had plenty of opportunities to make the programmes more climate-friendly throughout the process. Some of them have been used, most of them not, I would argue.

So right now you are very much focused on putting pressure and trying to seize the moment for the Commission to finalise this decision?

Yes. I would like to say that there are two things that the Commission has to approve. One is the national strategic frameworks which, as you say, have already been approved in more than half these countries. This is the general strategy, which is relatively vague, and the Commission has not discussed it in very much depth. 

Then there are the operational programmes, which are more specific. They are for sectors, and there the Commission will look at them much more closely and negotiate much harder. That is what they told us. So this is where we are pinning most of our hopes, or I should say, this is where we expect that the Commission will apply some pressure to ensure that these programmes are in line with climate-change commitments.

Do you think that, in this context, the Lisbon Strategy is in some ways incompatible with the new direction that the Union seems to be taking in terms of tackling climate change?

At the same time as the Lisbon Strategy there was already a Gothenburg Strategy for Sustainable Development, and we have always asked that the strategic guidelines – when they are prepared – respect and follow not only Lisbon, but Lisbon and Gothenburg equally. In our view, reconciling these strategies would be a reasonable way. The strategic guidelines were prepared in those rather bleak years 2004 and 2005, and they are focused purely on promoting Lisbon and Gothenburg.       

On a more general level, do you think there is broad consensus that economic development can be achieved without excessive harm to environment? Or is this consensus only present in smaller circles such as renewable energy groups and NGOs…

It is definitely not only in the smaller circles. I think that this consensus is really being established on a global level, mainly through things such as the Stern Report in the UK, which was very important. Plus the recent report of the Intergovernmental Panel on Climate Change, and also the Commission’s own strategy for limiting climate change. All these documents point to the same thing. They always have these growth predictions, and calculations of how tackling climate change will have an impact on economic growth. They all lead to the same conclusion. On that level, the consensus is already pretty well established. 

Of course, on a political level – especially on a national level in the new member states – the situation is very different, and this understanding has not fully precipitated and filtered through yet. 

Basically, there is a gap between this consensus on a scientific and international political level, and real politics on the national level. There is a gap there, and one of the aims of this report is to try to point to this gap and close it. We have a pretty-well established consensus that development and minimising greenhouse-gas emissions can be reconciled. At the same time we are investing money in a way that does not contribute to this kind of development, and this is the basic problem. We are missing the opportunity to put money behind this consensus, behind this strategy of low-carbon development. 

How do you respond to the argument that before we can start to talk about cutting emissions and creating a ‘green’ economy, we first need to build traditional infrastructure such as roads? And that it is unfair to ask the new member states to develop differently from their ‘old’ counterparts?

Well, first of all I should say that what we wrote about the need to use EU funds for reducing greenhouse emissions applies equally to the old and new member states. We focused on the new member states for various reasons, mainly because they will get the most money and so on, but the old member states have to be the first ones to reduce emissions, because they bear the main share of the historical responsibility for greenhouse gas emissions. 

At the same time, in the new member states, you have an opportunity to achieve reductions in greenhouse gases at a lower cost than in Western Europe, because some of the infrastructures that western Europe has developed are still not in existence, or being built. Also, you have much higher energy intensity – that is, use of energy per unit of GDP – in the new member states. So there are these opportunities for substantially reducing the energy intensity of these economies at a relatively low cost if you compare it to Western Europe. So this would be my general answer – that this is actually an opportunity for new member states.

Do you think that an awareness of the opportunities associated with green business is filtering through below the political level to some entrepreneurs in the EU-10, such as company owners? Or is this still seen as a threat because it comes from the West or Brussels as a pre-script, rather than an organic idea from EU10?                

Yes. That is the reality. The clock in the new member states is different from western Europe. It will still take some time for these ideas to be accepted as our own in eastern Europe, I would say, rather than something coming from the West. This is of course the main reason why the programmes that were drafted in the new member states are not very progressive on climate change, because the level of awareness among politicians and the whole of society – among companies, as you said – is relatively low.

As you probably know, the national energy efficiency action plans are delayed. Only three member states have put them forward. Do you think there is a sense in the EU-10 capitals of not wanting to move too ambitiously on this, perhaps not wanting to upset the constituents? 

At the same time, if I cared about my constituency and I was a politician in a new member state, then I would try to make sure that their energy bills wree reduced, for example by supporting the insulation of their houses. If I cared about the companies in my constituency district, then I would also try to make sure that the energy costs of these companies are reduced. If I cared about the competitiveness of that region, then I would be concerned that we are totally lagging behind in the development of renewable energy technologies compared with Denmark, for example. 

I think that it is not automatic that politicians in the new member states should be resistant to change. I think that if they were smart enough, they would take up these initiatives, and some of them do. We do see some positive developments in some countries, definitely. 

Concerning the old Communist-era infrastructure, do you also see it as something problematic that would need to be wiped out? Or do you think it is possible to renovate some of the old factories, for example, to make them more efficient? 

If you look at the companies, then a lot of the ‘wiping-out’ has already happened. You now have companies with foreign direct investment coming from the West, or from Japan or even Mexico or India – setting up businesses. Sometimes these companies are very energy intensive, because they are heavy industries. Also these countries do not push them to have the most energy efficient technologies, so even some of the new industry which is coming in is very energy intensive. 

If we look at transport infrastructure, I would rather see the historical legacy as an opportunity, because there are still extensive railway systems which have been built and are badly in need of modernisation. There are also extensive public transport systems in cities – especially trams. Tram systems in central and eastern Europe are denser than anywhere else in the world. These sectors – railways and urban public transport – have suffered from a lack of investment over the past fifteen years. EU funds in the upcoming seven-year period were looked to as the key chance to modernise these sectors. Now we are very disappointed, and also the stakeholders in the new member states are very disappointed, to see relatively little money, especially for urban public transport. In some countries there is almost none.

In the transport sector, if you want to tackle climate change, you need to do several things. One of them is of course look at the fuel economy and technologies, and the other is what we do about the general demand for transport, and the balance between modes of transport. If you only look at technology, fuel economy and so on, the number of cars and trucks will still increase quickly. It might off-set all the benefits that you achieve there. So EU funds are relevant for this other way of dealing with transport emissions, which is balance between modes and general demand for transport on the part of the economy.

Do you see some kind of tipping point in the near future – a change in people’s outlook on an ‘eco-industrial revolution’ and new markets such as renewables – or do you think it will take another generation for this to really take hold in central and eastern Europe?

We see that it is generally growing, but both in terms of physical installations of renewable energy and general awareness about climate change, all the opinion polls show a real gap between the new member states – eastern Europe – and western Europe in terms of public awareness about the issue. In western Europe, the movie by Al Gore, for example, has been one of the tipping points, I would say. Maybe we need another such movie in a few years which will finally have a similar impact in the new member states. 

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