In CEE countries only 7 per cent of the 178 billion euros in European Regional Development and Cohesion Funds will be invested into renewables, energy efficiency and smart grids.
Whatever happened at the climate talks in Paris, we’re seeing EU funds being spent across central and eastern Europe for coal, gas and dated transport systems – locking countries into fossil-fuel dependency, at the expense of renewables and energy efficiency.
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HIGHLIGHTS from the findings >>
POLAND | CZECH REPUBLIC | LATVIA | ESTONIA | HUNGARY | SLOVAKIA | ROMANIA | CROATIA | LITHUANIA
European Union Member States in central and eastern Europe (CEE) misspend billions of EU funds that are destined to transform the carbon-intensive, inefficient energy systems of their countries.
New report: Misguided spending by enfants terribles is undermining Europe’s transition to a fossil-free future
Press release | January 26, 2016
Misuse of EU funds holds back Europe’s clean energy transition
Opinion piece in Euractiv.com | January 26, 2016
It is hard to overstate the significance of EU-funded investments for economies in CEE countries, with EU funds projects constituting up to 85 per cent of public investments. (Graph 2: Share of European Regional Development Fund (ERDF), European Social Fund (ESF) and Cohesion Fund (CF) and national co-financing in total public investment, average 2011-2013)
The overarching tendency for EU funds in CEE countries is a preference for transport and general support for business and industry. About half of the EU funded transport spending will be going to roads. (See below and country chapters for more details.) (Graph 3: Investment areas of total ERDF, ESF and CF)
The nine CEE countries spend EUR 30.5 billion on climate action, which includes a range of measures. Investments into clean energy infrastructures such as energy efficiency, renewable energy, smart distribution electricity grids and electricity storage will receive little more than one third of all climate action funding, around EUR 12.6 billion or 7 per cent of all Cohesion Policy funding. (Graph 5: Share of clean energy infrastructure of total Cohesion Policy)
The lack of investments by CEE governments for climate action is particularly worrisome, given how energy intense and inefficient the economies of the region are, especially in relation to the rest of the EU. (Graph 6: Energy intensity of the economy 2013 – Gross inland consumption of energy divided by GDP (kg of oil equivalent per 1 000 EUR), CEE and EU 28 average)
Examining the support for renewable energy sources reveals some worrying details. The majority of the support for this support is planned for biomass. And even support for coal and gas through the back-door is included. (Graph 9: Split of renewable energy sources in the investments)
It is business-as-usual in the transport sector – most of the countries spend around 50% of funds on roads, while rail receives generally less. CO2 emissions considerations are absent in transport planning and project selection. (Graph 11: Share of transport modes in total transport funding per country)
What EU money can’t buy: the green energy transformation just out of reach
Despite the sizeable allocations and a formal narrative on achieving climate targets, the goal of the European funds in Poland will be to sustain, and not to transform, the current coal-based economy.
The prevailing investment and development model still favours high-emissions transport over low-carbon solutions, hard infrastructure over natural methods of climate adaptation, tourism over biodiversity protection and, finally, a traditional fossil fuel-based energy system over innovative, decentralised solutions where energy efficiency is always put first and citizens can actively participate in shaping the energy market.
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Bring on the money, don’t ask for results
Despite EU funds’ investment plans in the Czech Republic describing the shift to a low-carbon economy and offering record levels of support for energy efficiency, EU funding will not change the carbon intensive pathway that the country is bound to.
This is due to little coordination and inappropriate planning and monitoring. Support for fossil fuels, low levels of climate mainstreaming and negligible support for a limited number of renewables make the transition to the low-carbon economy from EU funds unattainable.
A ‘green’ veneer, but at what cost?
Latvia’s sustainable development plans have so far not been translated into long-term investment plans. EU Cohesion Policy investments will therefore remain fragmented, with climate change mitigation being poorly implemented as a horizontal principle in the planning documents.
Investment in the energy sector is mostly determined by political debate on gas import diversification, therefore not enabling energy sector transformation. With a focus on the further promotion of bio-mass (fuel-wood), the development of sustainable renewables like wind power and solar power is left neglected.
EU Cohesion Policy Funds’ allocations for energy efficiency are not much more than a patch for the poor situation of energy inefficiency in residential buildings. And investment in the transport sector does not meet GHG reduction objectives even though it is declared as a strategic objective.
The long and rocky path away from shale oil towards green energy
Estonia is still among the top three per capita and per GDP GHG emitters in Europe, mainly due to the carbon and energy intensive oil shale-based energy production sector, rapid growth in road freight transport and car use, low energy efficiency of the new vehicle fleet and high-energy consumption of buildings.
The country’s shale oil dependency is not at all addressed by the EU funds and an existing long-term decarbonisation strategy has not been implemented. Transport funding dedicated to road construction omits emissions considerations, and climate change mitigation in project selection and as a horizontal principle is flawed.
The dark side is in the details
EU funds do pursue Hungary’s national energy objectives, however, the full potential for energy efficiency and renewables is still not deployed. While European Structural and Investment Funds may contribute to the transformation towards a greener energy system to a small extent due to some progressive efforts and planned interventions, funding from other sources is likely to reverse this development and lock the country into unsustainable energy production and consumption patterns.
Horizontal mainstreaming of climate considerations is insufficient and challenging due to its complexity, even though energy efficiency is one of the national priorities.
Finance for the energy transition – where’s it at?
Slovakia has missed the opportunity to bind Cohesion spending to decarbonising its carbon intensive energy sector that is highly dependent on imported fossil fuels.
Among the obstacles to transform Slovakia’s energy system are the largely monopolistic ownership structure of the energy sector and the state administration’s strong influence on other areas crucial for transforming Slovakia’s energy system such as research and development, education, business support or regional development.
The Cohesion Policy Partnership Agreement – although formally acknowledging the low carbon agenda as a priority – does not create any space for changing the way Slovakia produces, distributes and consumes energy.
Going ‘super-green’, but not right now
Romania’s climate action is, in effect, driven by EU targets and funded by EU funds. The government does not envision additional or complementary policies to address climate change. This is also reflected in the country’s planning for EU funds spending.
Transport sector plans, one third of all EU funds, do not make any reference to climate considerations. 90% of renewables funding goes to biomass, no funds are allocated for wind or solar.
Land of unfulfilled clean energy potential
With the current trend of decreasing energy consumption and GHG emissions making Croatia’s 2020 energy targets obsolete, EU funds spending plans are at least going beyond national ambitions. The National Action Plan for Renewables does not foresee new installations by 2020 for solar and wind, while planned fossil fuel installations block a clean energy development pathway.
Yet, the EU funds’ planning documents fall short on horizontal integration of climate considerations, neglecting obligatory requirements. Funding for electricity transmission is not in line with the stated priorities to match the existing and future interest in RES investments.
The missing pathway to long-term decarbonisation objectives
Despite progress in the development of a national climate change policy, climate change mitigation efforts are driven by sectoral policies and are therefore fragmented, a pathway to the long-term decarbonisation objective is missing and funds from the EU are not aligned with long-term climate change mitigation strategies.
Whereas EU 2020 targets are in reach, the EU funds do not address the GHG emissions increase from the transport and agriculture sectors.
Many measures accounted for under the climate action earmarking have no or little relevance to climate change objectives. Investment in energy infrastructure basically targets energy efficiency in multi apartment building blocks; support for renewables is limited to solid biomass based heating plant installations.