No more gifts to polluters: Towards a more inclusive and responsible EU budget

It’s a climate emergency – that much we know. Now, what is Europe going to do about it?

This article first appeared in the printed edition of META.

Forget ‘emissions reduction’. The EU wants to go all in and is stepping up plans to achieve ‘net zero carbon emissions by 2050’. Although the failure to reach a consolidated position has recently delayed the negotiations, EU governments are expected to submit their long-term strategy before the end of the year.

The UK became the first major economy in the G7 to legally commit to such a target in June.

There’s something comforting about seeing these commitments being taken seriously. Only five years ago this sort of language would have been unthinkable.

But despite calls for action and heart-warming tweets, there’s a long way to go. The EU is still financing controversial projects that continue our dependence on fossil fuels, like the controversial Trans-Adriatic Pipeline transporting gas from the Caspian Sea to the Mediterranean.

Steel pipes in Northern Greece, built as part of the Trans-Adriatic Pipeline. Source: TAP-AG

As governments continue to give money to oil, gas and coal companies, they incentivise the use of fossil fuels at the expense of clean and renewable energy. The UK itself hit the headlines in January when a European Commission report found the country has the biggest fossil fuel subsidies in the EU – about €12 billion a year.

Scientists and financial experts agree that if we want to avert climate breakdown, there must be a change of direction in the way public money are spent.

Greening the EU budget

The revision of the upcoming EU budget, known as the EU’s ‘Multiannual Financial Framework’ – or MFF for short, will decide how EU money is spent in the next seven years. The Commission wants to increase the money available to address the climate crisis from the current 20% to 25% of the new budget – that means from €206 billion in previous years to €320 billion for 2021-2027.

But that’s not enough, according to the European Parliament and NGOs, who have proposed respectively a 30% and 40% minimum spending on projects supporting climate neutral energy and business models. The Parliament and NGOs also support the exclusion of support to fossil fuels from the budget. 

The negotiations are ongoing and EU governments are expected to reach an agreement on this by the end of the year, but they have so far delayed talks and shown much less urgency than the Parliament and Commission.

Environmental groups, backed by financial analysts, want lawmakers to redirect investments towards cleaner energy, transport, agriculture and business models. “This means no more gifts to industries that are literally destroying the climate and killing people, but investments in clean solutions and financial support for those regions that still rely on fossil fuels,” said Roland Joebstl, a policy officer with the European Environmental Bureau (EEB). “No one must be left behind in the transition to a green economy,” he added.

Any agreement will have to clearly spell out what percentage of the overall budget will be allocated to the climate crisis; how much money each government should put in the pot; and clearer guidelines as to what the money are going to be spent on and what definitely shouldn’t be spent on.

This last point is expected to be the subject of a heated debate, as the largest single share of the EU budget is currently used controversially to support unsustainable agriculture. Intensive farming is responsible for 10% of the total carbon emissions in the EU and is the third biggest source of primary particulate matter – a harmful air pollutant. NGOs have called for public money to be used exclusively to keep food production at safe levels that our planet can handle and to support farming that’s based on sustainable practices.

All eyes are now on Finland, which is holding the rotating presidency of the EU Council and will coordinate work on behalf of all governments to come up with a final budget proposal before the end of the year. The government has just announced it will go climate neutral by 2035, spurring hope that an ambitious deal could be struck soon.