European money for post Covid-19 recovery: citizens must have a say

By Barbara Mariani, Senior Policy Officer at the European Environmental Bureau (EEB), and Andras Lukacs, Director of Clean Air Action Network

As EU economies are struggling to recover from the impacts of the Covid pandemic, fundamental decisions are being taken at European level on how the money borrowed on international markets by the European Union will be spent in the national Recovery Plans.

EU institutions have reached this week an agreement on the EU Budget and are still negotiating the Recovery and Resilience Facility, the main legal instrument for allocating the resources under the Next Generation EU Recovery Package proposed by the European Commission. EU negotiators are deciding on the rules and conditions that will allow the 27 Member States to receive loans and grants, for a total amount of €750bn.

Recovery money will have to support a country’s long-term economic recovery. It is an unprecedented opportunity for the European Union to help address the manifold challenges we are facing and to fix some unaddressed inefficiencies.

Where do European citizens want such money to go?

No government seems to want to face this unsettling question. The pandemic crisis has shown that we need stronger communities, greater accountability, a healthy natural world and genuine economic resilience – with human wellbeing at the heart of our policies. But there is a risk that this will not happen: Money could be allocated to industries that continue to heavily rely upon fossil fuels and that are a serious obstacle to addressing the climate emergency. This has already happened during the Covid crisis, with governments spending an enormous amount of taxpayers’ money on subsidizing obsolete, climate-wrecking industries. There is an even great danger that state funding could in the future unduly focus on propping up corporations that effectively damage the environment, instead of supporting working people and the SMEs that drive much of our economy and that are responsible for significantly contributing to job creation.

The funding focus must address basic needs in order to ensure that nobody is left behind. Good living and working conditions, equal access to health care, nutritious food, clean food, water, air and clean consumer articles, a safe natural world, a safe climate for the next generation, and strong and functioning democracies, that will continue to protect us in times of need – this is a non-exhaustive list of the areas requiring our attention.

The European Recovery Plan raises further questions, e.g. how is European money spent under the EU Budget and does civil society have a say on it? 

The EU Budget covers a seven-year period and supports investments to finance EU policies under different EU funds. A new budget has just been negotiated for the 2021-2027 period. The EU policy that receives the largest share of money (one third of the EU Budget)  is  the Common Agriculture Policy  (CAP), which is heavily criticized, by civil society and scientists alike, for its failure to tackle the negative environmental impacts of agriculture. Despite the European Commission’s recent commitment to sustainability in the ‘food chapter’ of the European Green Deal, the Farm to Fork Strategy, an ongoing reform of the CAP is largely going down a ‘business as usual’ path.

To receive the money under the EU Budget, each Member State needs to prepare and sign a legally binding document with the European Commission, called ‘Partnership Agreement’ (PA). The PA clarifies how and on what this money would be spent. Importantly, according to the European Commission, money allocated under the EU post-Covid Recovery Plan should be consistent with the Partnership Agreements which regulate the allocation of funds under the EU budget. The Partnership Agreements for the period 2021-2027 are currently being prepared by the national governments. 

At least 40% of EU Recovery money should contribute to climate actions and environmental sustainability. The conditions for allocating money will determine to a large extent whether the EU will achieve or miss the 2030 greenhouse gas emissions reduction target and other environmental objectives set in the European Green Deal. These targets aim to achieve a climate neutral, zero pollution and toxic-free economy by 2050, where nature restoration and protection are at the core for a more sustainable and resilient future. These are also the founding principles of future private investments under the sustainable finance legislation being adopted by the European Commission, known as ‘Taxonomy’. 

It is a crucial moment to make the right investments for the environment and for society. Achieving all these goals is possible, as shown by a  recent study undertaken by the EEB and CAN Europe on a ‘Paris Agreement compatible’ energy scenario, which shows that by investing in renewable energy and energy efficiency, we can reach a climate-neutral and environmentally sustainable economy by 2040.   

Civil society must be at the core of important decision-making. Yet, this is not happening. Across Europe, national governments, which are due to submit their National Recovery and Resilience Plans to the European Commission by 30 April 2021, are either not consulting their citizens, or not consulting them properly. Fundamental decisions on Europeans’ future behind closed doors, amid a worrying lack of transparency and a push of strong vested business interests by some of the most polluting industries. 

Our future is at stake. This money must be well-used for projects aligned with our climate and environmental objectives. The Partnership Agreements and the National Recovery and Resilience Plans need to include robust conditions to compel the Member States to grant public money (not only EU money but also national money) only to support sustainable projects and activities. No money should go to subsidising fossil fuels-based activities (coal, oil, gas), which are the main source of carbon emissions and the cause of climate change, nor should it go to environmentally damaging activities such as nuclear power, or intensive agriculture. In addition, countries should engage in economic reforms to help improve the incentives for investments, e.g. by promoting carbon pricing and green public procurement, and the systematic reform of environmentally harmful subsidies.  We must invest in a climate-neutral and pollution-free future and guide such investments. Finally, nature restoration must be part of the recovery efforts through restoration of ecosystems and their services on which our economy, our food and our health depend, and which can have long-lasting benefits to society.