Cohesion policy: Watch out for the steps back

17 November 2011, EurActiv

The European Commission’s proposals that urge member states to invest part of their regional development fund on low-carbon and energy-efficiency measures sounds very encouraging, argues to Markus Trilling of the CEE Bankwatch Network. The question that remains though is whether these proposals will be sufficient enough to secure the conditions for a sustainable regional development.

In early October, the European Commission published its proposals for Cohesion Policy regulations setting out the way in which one-third of the next (2014-2020) €1 billion EU budget going to regional development should be allocated. The legal proposals now have to be negotiated between the European Parliament and the Council, and need to be adopted by the end of 2012.

According to the Commission’s proposals, Europe’s “less developed” regions – the 10 countries in central and eastern Europe, southern Italy and Portugal, and bits of Greece and Spain – and the UK, will be required to invest at least six percent of their regional development funding for “low-carbon” measures to combat climate change. For the period 2014-2020, this amounts to an estimated €7.4 billion.

The same figure, €7.4 billion, was invested in the recently inaugurated Nord Stream pipeline that brings gas from the north of St. Petersburg through the Baltic Sea to Germany. Considering the hypothetical sum of money needed to modernise EU’s economies, the proposal for climate ring-fencing an amount that equals the construction costs of a 1,220-kilometre-long under water pipeline does put things into perspective, a perspective that perhaps doesn’t bode too well for addressing urgent climate change activities in central and eastern Europe any time soon.

Still, the Commission has also put some promising initiatives on the bargaining table. In order to concentrate the next cycle of funding towards the Europe 2020 objectives, the richer regions and the regions in transition are being requested to set aside 20% of their regional funding for energy efficiency measures and the installation and distribution of renewable energy sources including “smart” local energy infrastructure.

Another welcome new focus is being put on sustainable urban development strategies that shall receive 5% of regional funding. In addition, the Cohesion Fund issued for member states with a per capita GDP lower than 90% of the EU average and nowadays being tapped to finance road infrastructure or heavy investment waste or water treatment facilities, will include climate change mitigation and adaptation measures, such as support for sustainable energy or the restoration of biodiversity.

Furthermore, a set of ex-ante conditionalities should ensure the full implementation of the EU’s environmental acquis. These provisions give hope that the relevance of existing environmental assessment mechanisms, the EIA for projects and the SEA for programmes, will be strengthened to make them better functioning tools for environmental proofing, which has been deficient in past and current funding periods.

All of this is good news. Alas, some fundamental questions remain as to whether this proposal is sufficiently strong to guarantee that the next round of Cohesion Policy funding provides incentives and conditions to catalyse the regions’ transformation with ecological balance at the core. The need for targets and indicators guiding sustainable regional development.

The Commission’s proposal in fact shows a vulnerability when it comes to the oft-mentioned “mainstreaming sustainable development”. Member states are obliged to track their climate related investments, and strategies and priorities should address how environmental concerns are taken into account. However, precise methods and requirements are missing.

The new proposal does emphasise the need for result-oriented spending of the EU funds, and so a performance framework is established, including a set of so called ‘common indicators’.

Yet the proposed common indicators tend to favour simple ‘output’ figures (for example, the number of projects financed, the number of kilometres of road constructed, the number of households with improved water supply etc.) that are not suitable for measuring actual policy results related to agreed targets on sustainable development.

The proposed indicators also fail to provide for an appropriate linkage to environmental pressure stemming from non-environmental interventions. For example, the indicators under the energy and climate chapter tend to capture the estimated decrease of GHG emissions. But the same category “GHG emissions” is missing for investments within the transport sector.

In this context the formation of ‘partnership contracts’ (agreements made by each government with the EC setting out the ways in which each country plans to spend the funds) will be crucial, as member states will have to set out their specific national targets and with these a supporting set of indicators to measure progress made on these targets.

At the end of the day, as the Commission proposal stands today, it is still largely in the hands of the member states how and where they choose to prioritise these regional development investments. For this reason, the most important European green NGOs working on the EU budget will start discussing the untapped green potential of Cohesion Policy money with national and regional representatives as early as this month.