A greener budget?

27 October 2011, European Voice

Commission plans to allocate much more of the EU budget to climate issues are proving controversial.

If the EU’s much-trumpeted aspiration is to create a ‘low-carbon economy’, surely the EU’s budget should also be ‘low-carbon’? That is the logic of perhaps the biggest innovation in proposals for the EU’s long-term budget for 2014-20: that 20% of EU spending should be related to the EU’s climate-action goals.

This idea – known as ‘climate mainstreaming’ – has been a priority for Connie Hedegaard, the European commissioner for climate action. She faces the challenge of steering the EU towards its target of reducing greenhouse-gas emissions by at least 20% by 2020 (against a 1990 yardstick), improving energy efficiency by 20% and increasing renewable energy’s share of the energy mix to 20%.

On paper and in numerical terms, the budget as outlined would certainly be much greener. Under the Commission’s proposal, around €200 billion of spending would be climate-related, three times the amount allocated for 2007-13.

The plans would inject extra money to budget items traditionally associated with the EU’s environmental policy. The Commission’s LIFE+ programme, for example, would have €3.2bn – up from €2.1bn – to spend on supporting environmental and nature conservation projects. Money would also go to help the EU meet international obligations, such as aid for developing countries to fight climate change.

But the success of mainstreaming will hinge on the interpretation and enforcement of provisions in proposals drawn up by other commissioners. Integration of climate-action priorities will mean, for example, that the EU will devote a greater percentage of its research and innovation funding to projects related to clean energy and green transport.

Those overseeing the EU’s €50bn plan to close the gaps in the EU’s infrastructure network, the Connecting Europe Facility unveiled on 19 October, will have to ensure that money goes to sustainable modes of transport and efforts to extend energy grids to the sometimes remote sources of renewable energy.

But the biggest tests will come in the two largest areas of the EU’s spending: the Common Agricultural Policy (CAP) and cohesion policy.

The CAP reform plan presented by the Commission on 12 October cited integrating climate priorities into agricultural policy as a top goal: under the proposals, 30% of all direct payments to farmers would be conditional on the application of practices deemed to be environmentally sound. Rural development policy will focus more funding on backing environment-friendly investments.

In the cohesion policy proposals outlined on 5 October, investments would have to be ‘climate-proofed’, ensuring that they contribute to meeting climate action targets under the EU’s ten-year jobs and growth plan. Richer regions would face more specific conditions: they would have to spend at least 20% of their aid from cohesion funds on investments in energy efficiency and renewable energy projects. These proposals face a range of general and specific criticisms. Some environmental groups have called for at least 35% of EU spending to be used to meet climate targets.

Some critics believe that the green features of the proposed CAP reforms are too timid. Writing in European Voice last week, Jack Thurston of the campaigning website farmsubsidy.org argued that the proposals barely touch on environmental losses suffered in the past three years, and – more generally – “still blindly follow acreage, when it should be linked to measurable targets for the provision of public benefits”.
Mixed response

At a conference on the EU’s budget convened by the Polish presidency of the Council of Ministers on 20-21 October, the response was lukewarm.

Lucinda Creighton, the Irish minister of state for European affairs, cautioned against measures that would adversely affect small farm holdings – a comment that suggests that the issue of equity will feature prominently in debate about the greener aspects of the CAP reforms.

Eniko Gyori, Hungary’s minister of state for EU affairs, struck a similar note. “Can conditionality really be a fair instrument?” she asked, voicing a concern that the environmental provisions attached to the CAP proposals would add a layer of complexity that would disadvantage smaller farmers.

Doubts were also expressed by Janusz Lewandowski, the European commissioner for financial programming and budget. “I am not a big fan [of ‘mainstreaming’] because it could produce red tape,” he told the conference.

Until the Commission’s proposals are agreed to by the member states and the European Parliament, there will be concerns by environmental groups that Hedegaard’s plans will not be able to withstand pressures to keep climate action outside the mainstream.

Markus Trilling, of Friends of the Earth Europe and CEE Bankwatch, has warned that member states are likely to cite the economic crisis as a reason to “downgrade” environmental priorities put forward in the 2014-20 spending proposals.

“The main priority for member states will be to fill budget gaps. That means there will be spending on fossil-fuelled items (such as big roads or waste incinerators) that will not help transform EU economies in a sustainable way,” he said.