Format: Impulse
Date: 14 July 2020

Recovering better!

Climate safeguards for the EU’s proposed 1.85-trillion-Euro budget

#Financing and investing in the transition

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Preface
Key findings

Preface

On 27 May, the EU Commission proposed an updated EU budget for 2021-2027 of 1.100 bn EUR and a dedicated EU recovery budget for 2021-2024 of 750 bn EUR. The Commission’s express intention is to help Europe “recover better”, by boosting the economy and by accelerating climate action.

To check whether these claims live up to reality, we asked Climate & Company to assess the amount and focus of climate-funding in the budget proposals against the investment needed into the transition. Herewith you find our conclusions and recommendations based on their analysis.

The uncomfortable truth is, the proposed budget is far from what is needed to enable accelerated climate action in the 2020-2030 decade. We therefore recommend adding concrete climate safeguards to the future budget.

Key findings

The EU’s 1.85-trillion-euro budget proposal pretends to be green, but it is not.

It is uncertain whether the 750 billion NextGen EU recovery budget will be used for clean investment; and only a very limited part of the 1.1-trillion Multiannual Financial Framework is reserved to that end. The proposal fails to meet the stated commitment of the European Commission and Europe’s heads of state to an economic recovery in line with climate neu-trality by 2050.
The 1.85 trillion euros must help Europe reach the proposed increases to its 2030 climate targets – amounting to a 50 or 55% reduction of carbon emissions – by ramping up massive clean in-vestment in the buildings, power, transport and industry sectors.

Priorities are tripling the speed for creating new solar and wind energy, tripling the rate of energy efficiency retrofits of building, greening district heating networks, an EU-wide EV-charging infrastructure, a high-speed EU railway system, a clean hydrogen economy and a climate-neutral industry.
Three climate safeguards can ensure that the future EU Budget is really green:

(1) Stipulating a climate share of 40% across all budget lines in both the NextGen EU budget and the multiannual financial framework; (2) establishing dedicated EU facilities to accelerate climate action in critical areas; (3) setting out a clear exclusion-list of climate-negative activi-ties that will not be eligible for EU funding.
Europe must develop budget governance mechanisms that combine flexibility with climate integrity.

We need (1) to ensure that spending activities are consistent with the National Energy and Climate Plans, the Territorial Just Transition Plans, the Recovery and Resilience Plans, and other planning processes; (2) to devise a role for the EU Green Taxonomy in determining na-tional spending priorities; and (3) to conduct a budget review in early 2024, when EU legisla-tors will have just finished updating the EU’s 2030 climate and energy framework.

Bibliographical data

Authors: Matthias Buck
Publication number: 184/04-I-2020/EN
Version number: 1.0
Publication date: 14 July 2020
Pages: 22
Suggested Citation: Agora Energiewende (2020): Recovering Better! Climate Safeguards for the EU’s Proposed 1.85-Trillion-Euro Budget.
Project: This publication was produced within the framework of the project Recovering Better! - Climate-safeguards for the proposed EU’s 1.85 trillion Euro budget.