FussilFuelSubsidies

Shifting Financial Flows


'Public finance in Europe should catalyse the transition away from fossil fuels and towards 100% renewables
and fully energy efficient economies'

In 2016, the EU and its Member States ratified the Paris Agreement, demonstrating their ambition to limit global temperature rise to 1.5°C. The Paris Agreement stipulates that financial flows need to be made “consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.” The Paris Agreement requires major overhaul of not just climate and energy policies in the EU, but also financial policies and investments to ensure a shift in support away from fossil fuels and instead towards a renewable energy, energy efficiency and climate resilience. 

CAN Europe works to ensure public financial flows in Europe are shifted away from fossil fuels and towards renewable energy and energy efficiency. This entails ending fossil fuel subsidies, making sure that the EU budget catalyses the transition away from fossil fuels and that EU’s financing facilities, policy tools and development banks undergo ambitious reforms that lead the way in the transition of the EU economy away from fossil fuels.

Ending fossil fuel subsidies 

Fossil fuel subsidies represent one of the biggest barriers to short-term and long-term climate action. Without cutting off financial support for one of the causes of climate change – fossil fuels – it will be extremely difficult to effectively overcome the climate crisis. Unfortunately, the financial support to the fossil fuel industry continues to flow. This trend stands in the way of increasing support for climate action across Europe, and potentially increasing Europe’s international support for mitigation and adaptation in developing countries.

What are fossil fuel subsidies?

Fossil fuel subsidies – public financial support for fossil fuels – come in many forms and through many methods. In the EU, it has been hard to capture the level and extent of fossil fuel subsidies, mainly for two reasons: subsidies can be facilitated and applied through numerous policy processes and tools, and subsidies vary in their form across different EU Member States. 

CAN Europe believes that any form of government action or intervention which lowers the cost of fossil fuel energy production can be defined as a subsidy; this includes tax exemptions and direct funding, as well as the use of State Aid and capacity mechanism, loans, guarantees, and even favourable access to resources and land.

To learn more about fossil fuel subsidies, what the political situation is and what  the EU must do, click here.

Avenues for change: The EU budget 

The EU’s long-term budget, the so called Multiannual Financial Framework, sets the structure and defines the spending priorities for the annual EU budgets over a seven-year period. It greatly contributes to translating the EU policy objectives into action and at the same time it defines future objectives, priorities and conditions of EU funding respectively the policies EU funds are supposed to finance.

The current 2014-2020 EU budget has some important climate relevant features such as “climate mainstreaming”, the strategic link to the EU 2020 climate and energy framework or the political target to spend 20% of the EU budget on climate action. However, fossil fuels still receive support from the EU budget, and competing priorities and incoherent implementation of climate action are sweeping off the climate credits of the EU budget. Overall its full potential to catalyse the clean energy transformation in Europe remains largely untapped.

While the review/revision of the current MFF 2014-2020 is underway, the accordant legal adjustments are of rather technical nature. More important for the required shift of the EU budget are the discussions on the next financial period 2021-2017. These discussions are about to start. The post-2020 MFF will be critically important to deliver the long term climate goals of the EU, including the 2030 climate and energy targets and the (80%-)95% GHG reduction by 2050.

Read our pdf CAN Europe Post-Paris Briefing on the Multi-annual Financial Framework (315 KB)

For more information about other avenues of change within the EU, click here

For all CAN Europe publications related to 'shifting financial flows' click here

 

Learn more

 

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Avenues for change to shift financial flows

Within the EU and across the wider Europe, financial support for fossil fuels has gained increasing attention in recent years, both at country level and across the EU’s financial institutions and policy processes. But the EU is yet to tie together all the separate strands of how financial support for fossil fuels can be equitably and quickly phased out across EU Member States and neighbouring countries. Read More

   
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European development banks need to get out of fossil fuels

Financial institutions, including development banks are important actors in the global effort to speed up the transition towards zero carbon economies. But rather than meeting the potential to achieve global climate action objectives, these financial actors are still providing unbalanced support for fossil fuels. Read More

   
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Here you find a range of useful external fossil fuel subsidy phase out resources from governmental or intergovernmental bodies. Read More

   
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NGO reports and publications

Here you find NGO reports and publications related to the issue of shifting financial flows and fossil fuel subsidies. Read more

   
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Visual material: Shifting financial flows

On this page you can find visual material produced by CAN Europe on the topic of fossil fuel subsidies phase out and shifting financial flows. Read more

 

 

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Media coverage of shifting financial flows and fossil fuel subsidies

Here we collect a sample of the media coverage of shifting financial flows and fossil fuel subsidies. Read more 

 

 

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Contact

 

MAEVE

Maeve McLynn
Finance and Subsidies
Policy Coordinator
maeve/at/caneurope.org
+32 2893 0950

MARKUS

Markus Trilling
Finance and Subsidies
Policy Coordinator
markus/at/caneurope.org
+32 2894 46 88

CAROLINE

Caroline Westblom
Communications Officer
caroline/at/caneurope.org
+32 2894 4673

MARTIN

Martin O'Brien
Network Outreach Officer
martin/at/caneurope.org
+32 2893 0827