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PRESS RELEASE: A substantial funding gap for climate action under the next EU Financial Framework, new report warns

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A substantial funding gap for climate action under the next EU Financial Framework, new report warns

The next 2014-2020 EU Multi-annual Financial Framework (MFF) represents an important opportunity to accelerate the public and private investment needed to tackle climate change, potentially €270 billion a year in the EU.1 European Heads of State and Government called for ‘rapid progress on the low-carbon 2050 strategy’,2 highlighting the need to mobilise spending on climate change. The next EU MFF will play an important role in this regard. The European Commission has proposed that at least 20 per cent (or some €200 billion over 7 years) should be spent on climate relevant activities.3 With political negotiations gaining speed in the Council and the European Parliament on the next EU spending cycle, a new report from IEEP analyses whether the Commission proposals on the future Cohesion Policy and Connecting Europe Facility (CEF), together a sizeable and strategic slice of the MFF, are fit for purpose.

‘The Commission proposals contain a number of progressive elements, but the scale of resources identified seem to fall well short of the 20 per cent commitment. The Council and the European Parliament need to keep the progressive elements but also improve substance otherwise this will be a serious missed opportunity to kick-start EU’s transition to a low-carbon economy’, urges David Baldock, Executive Director of IEEP.

Better mainstreaming of climate change concerns into EU funding will be key to delivering the proposed commitment to spend 20 per cent of the EU budget. IEEP’s report finds that Commission proposals introduce a number of positive developments and novel governance mechanisms in this regard, especially compared to the past. However, the report also identifies a number of challenges threatening the effectiveness of the climate mainstreaming approach. Until now there has not been a clear and coherent approach to establish the contribution of each EU funding instrument to the 20 per cent spending commitment. This report delivers a preliminary estimate and identifies a substantial funding gap. Cohesion Policy and CEF would deliver approximately €30 billion for climate change related activities, representing only 15 per cent of the aspirational commitment of €200 billion.4 The contribution of the future Cohesion Policy, keeping in mind its share of the total MFF, is particularly low.

The report also recommends how to improve the proposed methodology for tracking climate change expenditure (Rio Markers). It argues that while tracking can provide a transparent account of climate change spending, it is only one option from the mainstreaming toolbox. Improving the quality and results of future EU spending also requires robust performance indicators, safeguards and proper institutional capacities to ensure that the remaining 80 per cent of the budget is not counterproductive to climate change objectives.

The report provides a timely and critical analysis which can create a momentum in the on-going political negotiations on the 2014-2020 EU MFF. The legislative packages for both EU Cohesion Policy and the Connecting Europe Facility will be the subject of discussion at the next General Affairs Council, scheduled for 24 April.

This report is prepared with the financial support of the Dutch Ministry of Infrastructure and the Environment.

Full text of the report can be found here:

Medarova-Bergstrom, K. and Volkery, A. (2012) Walking the talk – practical options for making the 2014-2020 EU MFF deliver on climate change. IEEP, Brussels, http://www.ieep.eu/assets/919/Walking_the_talk_-_options_for_EU_MFF_to_deliver_on_climate_change.pdf

For more information, please contact Keti Medarova-Bergstrom at 0032 2 7387479 or [email protected]

Notes:

1. According to the European Commission, EU’s transition to a low-carbon economy by 2050 requires approximately €270 billion additional investments per year. While the majority of funds will come from the private sector, public budgets remain an important source of funding.

2. European Council (2011) Conclusions 1/2 March 2012, Brussels

3. European Commission (2011) A budget for Europe 2020, Commission Communication, COM(2011)500, 29.6.2011, Brussels

4. The proposed earmarking within Cohesion Policy should result in approximately €17 billion for renewable energy and energy efficiency projects in all regions of Europe. It should be noted that this could be topped up by additional allocations under both the ERDF and the Cohesion Fund in CEE countries but the final figures will not be known until the approval of the national and regional Operational Programmes (due at the end of 2013). There are other opportunities for climate change related expenditure particularly under the 2014-2020 Horizon 2020, rural development and development cooperation but based on the proposed earmarking they do not seem to be able to fill in the gap.

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