Ahead of the European Commission's proposal for the next EU budget 2021-2027, published on 2 May. Climate action in the EU budget has been on the agenda of Brussels institutions, Member States and industry – all calling for more and better climate action post-2020.
Over the last months a number of stakeholders have been vocal on how the EU’s own financing resources could serve its climate policies. At a sustainable finance conference in Brussels in early April, Commission President Juncker set the tone for the upcoming negotiations on the one-trillion Euro MFF: the post-2020 EU budget would spend at least 20% on climate action.
This was topped only by French president Emmanuel Macron who emphasised the necessity of EU financing being coherent with sustainability requirements. He called for a 40% spending target in the next EU budget for climate action and the ecological transition.
Earlier this month, the Green Growth Group (GGG), made up of 17 EU Environment Ministers, signed a statement calling for more and better climate action in the next EU budget. Germany’s Minister also states that “subsidies that are not in line with the Paris Agreement should be discontinued as quickly as possible."
The European Parliament also adopted its position. MEPs are calling for significantly more financial support to tackle climate change, with a 30% climate action spending target, and for the phase out of fossil fuel subsidies in future EU spending. They also emphasise the need for CO2 reduction when investing EU funds in the transport sector, and for explicit support for carbon-intensive regions in their just transition to the zero-carbon economy.
Finally the business community are also taking a stance on higher climate ambition in the EU budget, with the ‘Corporate Leaders Group’, ‘Electrification Alliance’, ‘European Alliance to Save Energy’, ‘Renovate Europe’ or the ‘Coalition for Energy Savings’, and trade unions (ETUC) sending their green EU funding demands.
This is the high-level talk needed to prepare the ground for upcoming proposals and negotiations. However, the devil is in the legislation: the European Commission’s proposal on the next EU budget expected in May must now ensure words are put into action. We expect the legislative proposals pinning down each fund's funding priorities and conditionalities to be put on the table on 29 May.
For the post-2020 EU budget to serve higher climate ambition and deliver on the objectives of the Paris Agreement, we need a 40% spending target for climate action, respectively 50% for climate action and the ecological transition, and a climate proofing system to ensure no more fossil fuel or carbon and resources intensive projects receive funding. EU funds also need to visibly increase the ambition of upcoming National Energy and Climate plans (NECPs).