On Wednesday 16 July, the European Commission proposed to allocate 35% of the new 2028-2034 Multiannual Financial Framework (MFF) to action for the environment, climate and industrial transition, representing around €700 billion of the €2 trillion announced for all EU priorities (see EUROPE 13682/1).
Although the environment and climate will not be the priorities of this new long-term budget, the European Commission assured that the objectives linked to the green transition will be pursued throughout the budget.
A cross-cutting approach will be applied across all the activities financed in the budget, applying the principle of ‘Do No Significant Harm’ to the climate and the environment in each one.
The Commission is also presenting a “climate resilience by design” principle for projects, which it wants to apply systematically in order to protect people and investments affected by the consequences of climate change.
The President of the European Commission, Ursula von der Leyen, preferred to mention the major boost given to clean technologies, the bioeconomy and decarbonisation - “thanks to a six-fold increase in the funds in the EU budget earmarked to finance these themes” - rather than action in favour of the climate and the environment, which were the big absentees from her speech.
In line with the priorities of her mandate Ms von der Leyen has therefore placed considerable emphasis on strengthening European competitiveness through the fund of the same name.
The ‘Competitiveness Fund’ is expected to strengthen the EU economy through investments aimed at decarbonising all types of actors and should play a key role in developing clean technologies, the circular economy and in promoting sustainable transport and the energy transition, while protecting the climate and the environment.
The remainder of the budget earmarked for ‘climate action’ will be distributed across other programmes, such as the new national and regional partnership plans, the Horizon Europe research programme, the ‘Global Europe’ Fund and the Connecting Europe Facility (see other news).
How will nature protection be funded? Some environmental organisations have already warned that the proposed budget for climate and environmental protection will be insufficient.
The NGO coalition CAN Europe regretted, first of all, that this €700 billion, once adjusted to inflation, actually represents a reduction in funding compared to the current EU budget period.
In addition, the dilution of objectives across all the programmes is of concern to these environmental NGOs, who are not reassured by the principle of ‘climate resilience by design’. Olivier Vardakoulias, CAN Europe’s senior policy coordinator for finance and subsidies, regretted that this principle was “ riddled with exceptions”.
Responding to the risk of biodiversity targets being sidelined, the Commission assured that the 7.5% to 10% biodiversity target had been linked to the 30% climate target, since half of the spending on the former in fact also counts towards the latter.
The Commission has also stated that Member States will be explicitly asked to include dedicated nature funding in their national plans (through the implementation of the Nature Restoration Law for example).
The LIFE programme expenditure on the environment will be reflected both in the national and regional partnership plans and in the Competitiveness Fund (bottom-up projects, demonstration projects and projects to bring innovative solutions to market).
The European Commission has decided to take an integrated, rather than compartmentalised, approach to funding for nature and water protection, which mainly comes from cohesion policy, agricultural policy and the LIFE programme.
“By grouping all environmental spending under a single objective, there is a real danger that biodiversity will be sidelined in favour of industrial priorities presented as green investments”, said Ester Asin, Director of the WWF’s European Policy Office.
How can we monitor the achievement of these objectives? The European Commission intends to use the 0%, 40% and 100% coefficients of the RIO methodology to ensure that the projects financed contribute to climate and environmental objectives.
At 0%, the project has no significant environmental or climate objectives.
At 40%, this is a secondary objective.
At 100%, the environmental or climate objective is the very raison d'être of the project.
Nuclear fission power scored 100% for climate change mitigation. Its inclusion as an “area of intervention” to receive funding is already a novelty in itself in the monitoring and performance framework for budget expenditure published with the MFF.
However, this openness to nuclear financing should be seen as a desire on the part of the European Commission to offer “flexibility”, explained a European official. “That’s part of the negotiation. This does not mean that fission will be taken into account, but that it is one of the potential areas that could be”, the official explained.
Revenue section. The European Commission wants its environmental and climate priorities to be reflected in both the expenditure and revenue sides of the Multiannual Financial Framework.
Own resources will be able to contribute to this. Created in 2021 with the aim of financing the reduction of plastic pollution, the ‘plastic tax’ brought in just over €7 billion to the EU budget in 2023 (see EUROPE 13626/20). The levy of €0.80 per kilo of non-recycled plastic produced in Member States will be increased to €1 per kilo, to take account of inflation since the last MFF.
The European Commission is still calling for the adoption of own resources based on the Emissions Trading System (ETS1) and the Carbon Border Adjustment Mechanism (CBAM), but also for the adoption of a new resource based on electronic waste (E-waste), which would feed the EU budget while encouraging companies to recycle. (Original version in French by Pauline Denys and Florent Servia)