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The threat to the EU’s LIFE programme in the next budget

This article was published as an opinion piece in EUobserver on 26 June 2025. 

The EU’s new priorities are at a major crossroads. The once cutting-edge European Green Deal is now ditched in favour of defence, security and competitiveness. These discussions are taking place against the backdrop of the much-anticipated future EU budget, the financial resource responsible for driving forward the EU’s goals.

Competitiveness in particular has become the new buzzword. It now appears everywhere, there’s even a commissioner responsible for a competitive circular economy.

What we hear is that investing in clean technology, industry, and simplifying legislation, particularly for private companies, is key to achieving this.

But what we don’t hear is what forms the very foundations of our economy: nature.

It’s what provides us with clean drinking water, clean air, helps protect against disasters such as floods, droughts and landslides, stores carbon and pollinates the food we depend on — all services that not just our economies, but our lives depend on.

But nature is far from being in a healthy state. 81 per cent of habitats are in poor status in the EU and the situation appears to only be getting worse.

One of the key ways the EU can address this is by financing measures to protect what we still have and restore what has been lost.

There is already a dedicated programme — albeit modest — to finance such activities.

‘Best-performing’ EU fund

For more than three decades, the EU’s LIFE programme has done just that. Directly financing innovative, ambitious projects to halt biodiversity loss and restore vital habitats. In fact, it is widely deemed to be the best-performing EU fund.

The EU needs to continue this programme, which has proven its worth for several decades, and increase its funding, which currently makes up just 0.5 per cent of the EU budget.

But as more details emerge about the new EU budget, it seems increasingly likely that the LIFE programme will be swallowed by a new ‘mega-funds’ focusing on financing competitiveness.

No separate, standalone fund for the environment would exist.

Critics argue that spending scarce public resources to save butterflies or protect trees from being cut down is not viable.

But a quick look at some facts and figures is enough to see the importance of nature and what’s at stake.

According to the European Commission’s own Joint Research Centre, between 19 and 36 per cent of the EU’s gross value added is highly dependent on ecosystem services.

Pollination services alone are currently valued by the European Environment Agency at around EUR 10-15bn yearly in the EU. While investment into nature restoration generates EUR 8-38 in economic value for every euro spent, from the various ecosystem services provided.

The commission, in its current attempts to chase competitiveness is failing to see the wood for the trees.

Even a modest level of economic activity depends on a healthy environment, so if the ultimate goal is human wellbeing and prosperity, we need to invest in the resources that support us: nature.

Electrification of Riga’s heat supply brings balance to national grid

RĪGAS SILTUMS is the main supplier of heat energy in Riga, covering around 76 per cent of the city’s total heat energy demand. The company produces 32 per cent of this heat itself, with 54 per cent of its own production sourced from biofuels – primarily woodchips and pellets – and 46 per cent from fossil gas. The remaining heat is purchased from Latvenergo – one of the largest energy utilities in the Baltic region – as well as from other independent producers. However, fossil gas still dominates these external sources, accounting for 64 per cent of the purchased heat energy, with woodchips making up the rest. 

In April of this year, an electrode boiler was delivered to the Imanta heating plant (located in the western part of the city) to support frequency balancing of the electricity system. The project is expected to generate considerable additional income, marking a major step towards electrifying Riga’s heat supply. It’s also the first boiler of its kind in Latvia, with others expected to follow suit. 

Balancing Latvia’s power grid 

In February, Latvia and the other Baltic states disconnected from the BRELL network – the joint electricity grid connecting Belarus, Russia, Estonia, Latvia, and Lithuania power grid previously controlled by Moscow – and synchronised with the European energy system via the LitPol Link transmission line. 

This means that Latvia is now fully responsible for maintaining the stability of its electricity grid and ensuring that frequency remains within required limits at all times. This shift has significantly increased the importance of the Baltic electricity balancing reserve market, which had previously been more formal than functional. The market’s role is to maintain the stability of network frequency, preventing it from dropping too much due to insufficient electricity supply and from sharp rises when in excess. 

Following the disconnection from BRELL, Latvia has joined the European balancing energy exchange platform, where companies contribute to grid stability by either consuming excess electricity or supplying additional capacity. These balancing services must respond within seconds or minutes and are compensated through a market-based system. Similar to regular electricity auctions, companies predict their availability and costs in advance. 

Interest in this market has grown as a result of the expansion of renewable electricity capacity. Since generation from wind and solar sources varies and may not reflect actual demand, the need for a flexible balancing system has increased. 

RĪGAS SILTUMS’ goal is to become an active participant in the electricity balancing market. The new electrode boiler will help reduce network frequency when it rises above the standard 50 hertz (Hz), stepping in when electricity is produced in excess. The boiler is capable of responding rapidly, reaching peak electricity consumption in just 90 seconds. 

While its primary function will be to provide frequency balancing when needed, the boiler will also take advantage of moments when electricity prices on the exchange drop very low or close to zero, allowing the company to generate heat in a more cost-efficient way. 

Innovations in heat storage and future planning 

Another promising technological solution that RĪGAS SILTUMS is exploring is the use of a sand-based heat accumulator, which can store thermal energy for several months. A successful small-scale pilot project using this technology has already been implemented in Finland. However, if deployed in Riga, the system would be rolled out on a much larger scale. 

The technology work as follows: an insulated tank is filled with sand and fitted with air ducts. Electrodes are inserted within these ducts and used to heat the air with an electric current. The heated air then transfers its energy to the sand, storing the heat for future use. 

This system could help with frequency balancing in both directions – consuming excess electricity when supply is high and converting stored heat back into electricity to feed the grid when needed. The economic viability of the project largely depends on its role in the balancing market, as well as potential support from EU funds to assist with implementation. 

Regarding the high-power compression-type heat pumps, which run on electricity, RĪGAS SILTUMS has so far adopted a cautious approach. The technology remains on hold until average electricity prices in Latvia decrease and the high capital costs associated with this type of heat production become more economically feasible. However, with new wind and solar parks expected to boost local renewable energy production over the next five years, this option could become more attractive. 

Over the past decade, Latvian heating companies have significantly reduced their reliance on fossil gas by switching to forest biomass, particularly woodchips. However, there are concerns about overreliance on forest biomass in the long run. Over the next 10 years, there’s a risk that woodchips may no longer be officially recognised as a renewable resource under EU rules. This is because the Renewable Energy Directive requires that, for forest biomass to count as renewable in a given country, emissions from the land use, land-use change, and forestry sector must not exceed removals.  

RĪGAS SILTUMS is financing the electrode boiler project from its own resources. Yet, for smaller heating companies in Latvia, investing in large-scale electrification or heat storage projects without passing on the cost to consumers through higher heating tariffs. As Maksis Apinis, head of the board at Latvian environmental organisation Green Liberty, points out: ‘It’s vitally important that sufficient EU funds are available for projects of this type, both in the current and next long-term EU budgets.’

Watch the video to find out more.

Montenegro’s stop-start spatial plan set to greenlight harmful hydro projects

A national spatial plan may sound mundane, but it’s crucial for preventing clashes between infrastructure projects, people and nature. So when a public consultation was held on Montenegro’s draft plan last year, it sparked massive public debate.

The draft included a slew of problematic projects such as a liquified gas (LNG) terminal at the port of Bar and highly damaging hydropower plants in sensitive locations, such as Komarnica and Kruševo. No Strategic Environmental Assessment (SEA) has been carried out on the plan, despite being legally mandatory.

After more than a year’s delay, last week Montenegro’s government suddenly approved the plan and submitted it to the Parliament for adoption.

The new version at least has no LNG terminal in, but it remains highly problematic due to the Komarnica and Kruševo hydropower plants. It also mentions hydropower plants on the Morača and Ćehotina rivers, though in less detail. All these locations are highly sensitive and stunningly scenic, needing effective legal protection and low-impact enjoyment, not dams!

In any case, building more hydropower in a country that is up to 60 per cent dependent on it already makes no sense in an era of climate chaos. Montenegro’s electricity generation already fluctuates wildly from year to year due to its climate vulnerability.

The Parliamentary legal committee is due to discuss the plan on 26 June, but Montenegrin civil society groups are asking for a freeze, to allow for proper public consultations and an SEA on the current version of the document.

Since adopting the plan is part of Montenegro’s Reform Agenda under the Reform and Growth Facility, the European Commission has a key role to play here. It must insist on Montenegro truly meeting EU standards, not just ticking boxes on having implemented ‘reforms’. The temptation of finally having an accession ‘success story’ must never be allowed to come at the expense of people, nature and EU law.

Navigating the complexities of EU funds: Bulgaria’s struggle

For over three decades, Bankwatch has been deeply involved in the programming and monitoring of European Union (EU) funds at both the EU and national levels. As Bankwatch’s national coordinator in Bulgaria since 2020, my specific role has been to represent environmental non-governmental organisations on the monitoring committee for Bulgaria’s national transport programme. Beyond this, I’m also responsible for overseeing other programmes, partnership agreements, and relevant strategic documents and processes.

When the European Parliament and Council of the European Union adopted the 2021–2027 legislative package for cohesion policy, including the Common Provisions Regulation, no one could have foreseen the series of crises Europe would go through during this period. However, predicting that policy and development challenges, as well as their solutions, might evolve from those identified in 2020, the Regulation anticipated a time for reflection in the form of a mid-term review of national spending plans.

As set out in Article 18 of the Regulation, the managing authorities of each EU Member State are required to submit a mid-term review report. The purpose of this exercise is to assess progress and correct course if necessary. In theory, this provision offers an opportunity to respond to emerging challenges, integrate the European Commission’s country-specific recommendations, and advance progress towards reaching the EU’s climate and social targets. In practice, however, this task has proved to be a considerable challenge – particularly in Bulgaria. 

The disconnect between national implementation and EU policy goals 

After many years observing the implementation of EU funds in Bulgaria, it’s clear that the national approach applied by managing authorities is not fit for purpose. Programmes rarely align with overarching EU policy goals, and the operations underlying them frequently lack the necessary level of project maturity. In fact, many of the deficiencies flagged in the country-specific recommendations and independent evaluations often go unaddressed – which is what we’re seeing now for the third programming period in a row. By allowing these recurring problems to persist, managing authorities have placed themselves in an extremely difficult position. Under Article 73 of the Regulation, they’re expected to ensure operations are consistent and align with EU policy objectives. But that’s a tall order when the foundations are so shaky. 

A tool for reform or reinforcing the status quo?  

The mid-term review was intended as a mechanism to address implementation issues and reallocate resources to priority areas. In reality, however, it has taken a very different turn. Instead of using the review to raise ambition and improve programming quality, Bulgaria’s managing authorities have used it to quietly lower expectations, scaling down large-scale strategic investments into smaller-scale fragmented projects just to ensure funds don’t go unused. 

Even before the Commission announced its new mid-term review proposal in April 2025, it was already clear to many of us that the current framework was falling short, especially in countries like Bulgaria. The Commission’s proposal includes revisions to cohesion policy and Just Transition Fund allocations, which would shift resources towards dual-use defence infrastructure, water resilience, affordable and social housing, and decarbonisation support for large enterprises. And while these adjustments may create new opportunities, they also risk diverting and delaying critical funding away from the just transition, social cohesion, and climate action – policies so crucial for modernising central and eastern European economies. This potential shift requires careful scrutiny to ensure the EU stays true to its long-term goals. 

Unfortunately, our attempts to improve the mid-term review process in Bulgaria, which have seen us submit recommendations to both the responsible managing authorities and the central coordination unit for EU funds, have been largely ignored. In addition, the monitoring committees tasked with overseeing the use of these funds have not provided the necessary counterbalance we had hoped for. Instead of demanding better planning, stronger performance, and more transparency, they’ve remained passive, offering support to the managing authorities rather than holding them to account. 

Strategic funds, missed opportunities 

The 2021–2027 Transport Connectivity Programme – with a budget exceeding EUR 2 billion – is Bulgaria’s largest EU-funded initiative under the current Multiannual Financial Framework. The programme included a strategic road rehabilitation project – the Ruse–Veliko Tarnovo motorway – intended to enhance Bulgaria’s integration into the Trans-European Transport Network (TEN-T) and strengthen links to NATO corridors. Yet during the mid-term review process, this flagship project was considered high-risk due to significant delays. As a result, two of its sections were cancelled. In their place, the government redirected funds to another route: European route E85 to the Serbian border, channelling traffic towards a non-EU country. This has increased costs for citizens and businesses in the form of border controls and rising motorway tolls. 

Witnessing for so long the same mistakes repeated in Bulgaria, we strongly recommend the following changes for the next EU funding cycle: 

  1. Set stronger obligatory standards for the mid-term review process, including standardised questions and assessment criteria; 
  2. Ensure these are discussed not only with the European Commission and relevant monitoring committees, but also shared with citizens through open consultation; 
  3. Reassess the impact of EU funding in Bulgaria under shared management and how it has contributed to EU policy objectives in Bulgaria over the last three programming periods; 
  4. Identify systemic issues and propose concrete reforms to ensure alignment with the EU’s policy framework and improve the quality of planning and implementation;
  5. Reform the national programming model given the complete inadequacy of the current model, which fails to fully realise the potential of EU funds in supporting the Union’s long-term strategic goals. 

As we cannot expect any drastic changes to the national administration’s approach, my personal conviction is that, under the current circumstances, more inclusive and meaningful public participation is one of the most effective ways of improving how EU funds support the implementation of EU policies and how national programmes adapt to the real needs of Bulgarian citizens.

Bulgaria’s opportunity to address energy and transport poverty: The Social Climate Fund challenge

To access funding under the Social Climate Fund, the Bulgarian government must submit a draft of its national social climate plan by 30 June 2025. The European Commission will then provide comments on the draft and, following a series of consultations, approve the final version by the end of the year. 

There is much at stake. In Bulgaria, energy and transport poverty are the result of a complex mix of economic, social, and cultural factors. But the task of addressing these issues is complicated by a lack of reliable data and clear definitions, making it difficult to target vulnerable groups and select the most effective measures.  

The preparation of the national social climate plan marks Bulgaria’s first serious attempt to respond to these challenges in a comprehensive and strategic way, with expectations understandably high. 

 

Civil society recommendations 

Over the past year, a coalition of Bulgarian civil society organisations – including Za Zemiata, WWF Bulgaria, and Habitat Bulgaria – as well as associations representing small businesses in energy efficiency and building renovation, has been actively engaging in the process.  

The coalition has already submitted three formal statements to the Bulgarian government, expressing their concerns about the organisation and coordination of the plan. Regrettably, the first two statements were disregarded, and the prospects for meaningful cooperation remain uncertain. 

In its most recent communication, submitted in March 2025, the coalition put forward a series of recommendations to various government ministers and parliamentary committees. These proposals aim to ensure that the reforms and investments underpinning the plan are delivered on time, and result in social and climate benefits. The coalition urged the government to: 

  • create an open and transparent platform for dialogue that brings together the national coordination bodies responsible for drafting the plan and managing the fund, regional and municipal authorities with on-the-ground knowledge of local challenges, and civil society organisations and small businesses, whose close ties with communities offer valuable insights into citizens’ needs; 
  • engage scientific institutions in these discussions at the earliest possible stage to ensure the data informing the plan is robust and reliable; 
  • identify vulnerable groups and their specific needs through an inclusive and evidence-based process, ensuring that relevant measures and reforms are oriented to regional and local contexts; and 
  • ensure that all proposed measures contribute clearly and measurably to emissions reductions in line with the goals of the Social Climate Fund.

 

Missed opportunities and unacceptable delays  

Unfortunately, instead of pursuing an inclusive, science-based approach, the process has fallen short – with less than a month remaining before the draft plan is due.  

In 2024, the Bulgarian government declined invitations from the European Commission’s Directorate-General for Climate Action to apply for technical assistance – support specifically designed to help national governments prepare and finance the development of their social climate plans. 

Much of that year was then consumed by internal governmental debates about which ministries should lead the process and which should play supporting roles. These discussions were further disrupted by multiple changes to institutional structures and civil-servant positions. 

Finally, in April 2025, the government published a framework document for public consultation, outlining the governance structure for developing the national social climate plan. Regrettably, this process failed to meet the minimum standards for transparency and participation. There were no open working groups for interested or affected members of civil society, no clear pathways for exchanging information or expertise, and no information on the application of data standards. 

 

Institutional resistance and poor strategic planning 

This is not the first time the Bulgarian government has resisted inclusive processes and shown reluctance to engage in meaningful reform and strategic dialogue on the root causes of the environmental and social challenges facing the country.  

Too often, the government has avoided adopting transparent procedures, clear timelines, and well-defined responsibilities for planning and implementation. Instead, decision-making has favoured the interests of entrenched ‘business-as-usual’ lobbies and centralised, state-controlled operations. 

The public is frequently left in the dark about missed opportunities for financial support that could enable greener, more progressive measures to improve their lives. This inertia has already resulted in inadequate planning and implementation across several EU investment and reform instruments, including the national energy and climate plan (currently the subject of a Commission infringement procedure), the Just Transition Fund, and the Modernisation Fund. It has also contributed to the effective shutdown of Bulgaria’s access to funds via the Recovery and Resilience Facility, with the second payment suspended for well over a year now. 

 

Short-sighted planning threatens long-term outcomes 

Public engagement in the planning process has been minimal. The first stakeholder consultation meeting took place on 5 February 2025, organised by the Directorate-General for Climate Action. However, this was not followed by a structured or inclusive process. 

The second consultation meeting, held on 13 May 2025 at the Council of Ministers, confirmed many of the concerns already raised by civil society. At the session, representatives from the responsible ministries acknowledged the systematic lack of data. And although several draft measures were presented – most of which broadly align with the requirements outlined in the Social Climate Fund Regulation – there was still no clear identification of vulnerable groups or their geographic distribution. 

At this meeting, officials also explained that all justifications would be elaborated further. However, deciding on measures before clearly defining the problems they are meant to address or identifying the groups of citizens and businesses most susceptible to energy and transport poverty is a clear sign of flawed planning.

 

Looking ahead 

There’s still time to prepare and submit an adequate, targeted plan that delivers social and climate benefits for Bulgarian citizens. Constructive input from interested partners and citizens remains essential. Equally important will be the role of the European Commission in upholding the standards set out in the Social Climate Fund Regulation, particularly regarding the quality of public consultation and the overall coherence of the plans.  

If used effectively, the Social Climate Fund could substantially improve the lives of Bulgaria’s most marginalised citizens. To ensure these people are not left behind, Bulgarian civil society will continue to propose constructive solutions and communicate them to national and regional authorities, as well as the relevant services of the European Commission. 

Concerns raised over new coal mining project in light of North Macedonia’s decarbonisation goals

In 2018 and 2019, during the preparation of its Energy Development Strategy until 2040, North Macedonia decided to go in a direction that was revolutionary for the Balkans – to phase out coal use for electricity generation in 2027. This was delayed by a couple of years in the country’s National Energy and Climate Plan (NECP), mostly because of the Covid pandemic. However, compared to its neighbours, this was still very ambitious. Serbia was in the process of building a new coal-fired power plant and Bosnia and Herzegovina had several plants planned. 

North Macedonia’s ambition was hailed by the European Commission and attracted the interest of international financing institutions. The EBRD was the first to support practical projects that support these goals, such as the conversion of the Oslomej coal mine to a utility-scale PV plant. Significant contributions started coming in, such as EU technical support for the preparation of a Just Transition Roadmap, Climate Investment Fund support for an Investment Plan for Accelerated Transition, and additional EU grants for more solar projects.  

Based on commitments by AD ESM, the state-owned electricity utility, to carry out a swift and just coal phase-out and not to open new coal mining capacity, in 2023 the EBRD also supported the company, with a EUR 100 million liquidity loan. 

During the same period, a completely different parallel process was apparently unfolding in ESM. In May 2019, the company concluded a contract for the main project design and environmental impact assessment (EIA) for the Zhivojno lignite deposit. The project was developed during 2020 and most of the environmental research was completed then as well. After that, an EIA study started periodically appearing and disappearing from the Ministry of Environment’s website, creating confusion as to what was happening with the project – until finally, in May 2025 a public consultation on the EIA was officially announced. 

The EIA is missing the mark on many key issues, but most importantly, it completely disregards the country’s strategic priorities and international obligations. We took part in the public hearing at the Novaci local authority’s premises, in the region where the mine is planned, and submitted extensive written comments. Among the most critical points are: 

  • Strategic conflicts: The project contradicts the Energy Development Strategy until 2040 (2019), the NECP 2021-2030, and the Nationally Determined Contributions (NDCs) for climate change mitigation. These documents state that North Macedonia aims to cease coal use for electricity generation by 2029 at the latest and begin intensive decarbonization of the energy sector. 
  • International commitments: The country has received technical assistance from the European Union to develop a Just Transition Roadmap, with an initial annual plan already prepared. Furthermore, North Macedonia is among the few globally selected participants in the Climate Investment Fund’s Accelerated Coal Transition programme, thanks to its ambitious decarbonization plans. An Investment Plan for Accelerated Transition has also been developed with significant technical support. 
  • Financial obligations: The investor, ESM, has secured substantial loans conditioned on adhering to these strategic commitments and not opening new coal mines. This project, if implemented, could jeopardize the country’s integrity and reputation with the international community and financial institutions, risking loan repayments and the spending of public funds. In the long run, it could severely limit access to further financial aid crucial for the decarbonization and just transition processes. 
  • Timeline discrepancies: The EIA study mentions that the mine’s exploitation will conclude before the energy sector’s decarbonization process, but the precise timing remains unclear. With the current date for coal phase-out set for this decade, and the start of the mine’s operation potentially taking more than two years, the start of exploitation would be very close to this deadline. Other information in the study suggests a 14-year lifespan for the mine, extending operations until around 2040 – a decade past the coal phase-out date.  
  • Scope of assessment: The EIA study evaluates the project as an isolated mining venture, failing to consider its specific purpose and characteristics within the existing Bitola mining and thermal power complex. The project is intended for lignite extraction to fuel the power plant, making it an integral part of the energy system, not just a mining project. This oversight leads to inadequate analysis of alternative ways to achieve the same goal and underestimation of the project’s ultimate climate impacts. 
  • Data concerns: Much of the baseline data was collected in 2020, and is now outdated. North Macedonia’s environmental legislation stipulates that project approval expires after two years if construction has not commenced, unless conditions in the project area remain unchanged. At the very least, the study should have provided an update on the current conditions compared to the 2020 baseline and should preferably have included new data on significant impacts like groundwater and air quality. 

These significant concerns need thorough examination and resolution. It’s crucial for any project to align with national and international environmental commitments, especially those aimed at addressing climate change and ensuring a sustainable future. Open discussions, transparent assessments, and careful consideration of all alternatives are necessary to make informed decisions that benefit both the economy and the environment. 

This situation highlights the importance of consistency between the country’s strategies and individual projects, and integrity in pursuing energy goals, respecting international obligations, and prioritising sustainable development for the long term.  

Ultimately, there is no way the environmental and climate impacts of a new coal mine in North Macedonia can be managed in a way that the country remains true to its commitments. ESM must either withdraw its request for approval of the EIA or the Ministry must reject it. Failing this, the EBRD must require immediate payback of its loan and significantly improve its due diligence on similar liquidity projects in the future.