Five clever ways of using EU funds for climate neutrality

As EU money for the green transition flows into national and municipal coffers, fears of misuse and squandering are mounting. Together with local civil society watchdogs, we looked at the lessons learned from the use of EU funds in Central and Eastern European countries to draw out a list of ‘dos and don’ts’ on climate spending.

Alberto Vela reports.

The European Union has unleashed unprecedented financial power to support its Member States in the race towards net zero emissions. The initial €800 billion recovery instrument unveiled during the pandemic was followed by the RePowerEU financing, aimed at weaning Europe off the Russian fossil fuels, and is now continued by the Green Deal Industrial Plan to gain strategic independence in the global race for clean technology.

In this flurry of EU financing, Central and Eastern European (CEE) countries stand out as some of the largest beneficiaries. For these countries, still heavily tied to the consumption of coal, oil and gas, targeted EU funding represents a unique opportunity to break the vicious circle of fossil fuels. A well-targeted financial stimulus could unlock a new sustainable development culture in the region based on energy savings, building renovation, clean energy sources, electrification of transport and citizens’ empowerment in the green transition.

However, the use of EU budget lines has not yet necessarily translated into progress towards the climate goals in the CEE region. Civil society organisations have reported a tendency to finance oversized, overpriced, and unnecessary investments with EU money. Often, money earmarked for the ecological transition has ended up being squandered on ineffective, or even harmful, projects with regard to the EU’s environmental and climate goals.

To keep track of EU taxpayers’ money and gauge its impact, non-profit organisations working in the CEE territory have launched a database of both exemplary and avoidable practices in the spending of EU resources towards climate neutrality. With more than 100 case studies from different 8 countries, the platform captures a number of lessons learnt on how governments could make efficient use of EU money to reduce emissions.

Drawing on success stories, we have highlighted five directions that all administrations should follow in the spending of EU taxpayers’ money on projects towards climate neutrality.

Involve citizens

The EU has a serious problem if the green transition ends up perceived as the cash cow of the few.

Large corporations and local elites have been taking the lion’s share of EU funding when it comes to climate and energy projects. This is often justified by the size and technical complexity of the tasks. However, the reality indicates that public entities, cooperatives and energy communities tend to be left out of the equation simply because their added value to EU-funded projects is largely overlooked. Yet, as some projects in the CEE region are attesting, social benefits multiply when citizens become an active part of the ecological transition

In Slovenia, the small municipality of Loški Potok used EU finance opportunities to purchase a solar power plant and an electric vehicle to provide solar-powered mobility service for the elderly population. Instead of relying on the country’s large energy companies, the administration decided to involve the local energy cooperative in the project, which was already running the village’s district heating system. Thanks to this decision, the cooperative has become one of the main energy actors in the village, and the municipality is now planning to extend the collaboration with a new wind power project.

Aware of the potential benefits of involving citizens in green projects, the municipality of Trnava, Slovakia, has created a social platform for local community members and private investors to plan green investments together. The Slovak municipality aims to unlock further emission reductions and green investments by stimulating interaction, knowledge sharing and co-creation among different local actors.

Beef up the public muscle

A meaningful green transition not only requires ownership by citizens, but also by regional and local governments. The administration plays a crucial role in preventing EU funds from being delayed, blocked or short-sighted.

The lack of administrative capacity to properly manage EU funds and programmes is a persistent headache for governments in Central and Eastern Europe. Many of them decided to tap into European funding precisely to turn the situation around and increase their resources and staff in order to assist citizens, businesses and small administrations in their efforts towards climate neutrality. 

One-stop shops, which are information hubs that bring together different administrations in a single office to provide better public advice, have proved crucial for decarbonising sectors that are predominantly private, such as buildings. In Hungary, RenoHub offices offer individual assessments and technical advice to boost energy efficiency and building renovation of residential buildings. This one-stop shop was fully created out of EU funding.

Creating cooperation channels between institutions and administrations can also help in reaching national climate goals. Poland relied on EU funds to build a new public body under the Ministry of Environment to support authorities and local administration in coordinating activities to adapt to the impacts of climate change in several dozen cities at the same time.  

Another good example was provided by the “Regional Energy Centres” (RCUEs) in Slovakia. They will support the transposition of the Slovak national climate and energy goals at both regional and local levels from 2024. These public bodies will also support drafting low-carbon strategies and provide technical support, examples of good practice and transfer of experience.

Save energy first

Governments often rush to invest EU funds in shiny new constructions rather than renovating the existing ones — while 75% of buildings in Europe are considered energy inefficient.

Only by refurbishing buildings and replacing fossil fuel boilers with heat pumps, will Europe be able to cut the huge energy waste in its infrastructures. The available EU budget lines provide a great opportunity for EU states to unlock all their untapped energy-saving potential. Reducing energy demand should be the first priority of any government seeking to tackle emissions and high energy bills.

Local councils such as Ljubljana, in Slovenia, have already taken the initiative by channelling EU funds into the renovation of public buildings such as kindergartens, primary schools, sports halls and municipal administrations. The project has been the largest public-private partnership project in Slovenia in the field of energy and has contributed to annual savings of more than one million euros and 3,000 tonnes of CO2. In Romania, the village of Negrești-Oaș used EU financing to insulate its high school, install a new heating system, and renew the electricity network. Annual non-renewable energy use and GHG emissions were reduced respectively by 87% and 67% in the building.

Invest in climate adaptation

Droughts, floods and other climate extreme events are expected to get more frequent and more intense in Europe – and administrations must be ready for it.

Resilience is more than a buzzword among EU officials. To deliver long-term sustainable results for citizens, the allocation of EU funds must be done with due consideration of the potential adverse effects of climate change. More green spaces, cooling spots and nature restoration are needed to make towns and regions resilient to global warming.

The city of Trenčín, in Slovakia, revitalised the urban elements and green infrastructures in a local park, improving the resilience of the built environment to the negative impacts of climate change and reducing the urban heat island effect. In Trnava, Slovakia, EU funds ease the construction of a series of shade structures, climbing vegetation and wooden slats that could help residents move during periods of intense heat.  In Warsaw, Poland, a non-functioning pond was transformed into a green spot, including feeding and breeding grounds for migratory birds and a water turbine which generates 3 kW of electrical energy.

Boost zero-emissions transport

If there is one sector reliant on large public investment, given its infrastructural needs, it’s transport. Under current EU funding, governments can really make a difference in steering the sector towards zero emissions.

Rail must be a priority investment as it is the modality that can contribute the most to the decarbonisation of medium and long-distance transport in Europe. In Czechia, a large part of EU recovery funds was devoted to the electrification of national railway lines and the supply of traction power at substations to ensure the capacity to handle a higher volume of rail traffic. The overall objective of the project is to develop energy-saving rail infrastructure.

Local administrations must seize EU funding opportunities to electrify their public transport systems. A good example of this is the city of Vratsa, which has become the first city in Bulgaria to have a fully environmentally friendly public transport system, thanks to a clever use of EU funds The municipality has invested not only in a fleet of new electric buses and trolleybuses, but also in the development of an integrated transport management system (for electronic recharging and real-time passenger information).

Last but not least, EU funds can play a crucial role in promoting what is the most efficient and cleanest mode of transport over short distances: cycling and walking. Slovakia provides a number of good examples of how to encourage active mobility by combining safe infrastructure and education. The municipality of Trenčín has invested in a comprehensive network of interconnected bike paths to link the city districts with neighbouring municipalities and thus reduce the use of private cars. Meanwhile, the city of Trnava has increased its bike-parking capacity at train and bus stations and throughout the country a school awareness-raising campaign was launched to get more citizens into the habit of cycling.

Firm hand against malpractice

Whereas the principles outlined above are based on a set of best practices, good projects with meaningful climate impacts are the exception, not the rule in Central and Eastern Europe.

Corruption, speculation and wrongful use of EU funds in countries have caused significant harm to the environment and jeopardised EU climate goals in countries such as Hungary. As civil society organisations are calling for: it’s essential that the European Commission increases its vigilance over member states’ spending of EU funds. As the dispenser of EU taxpayers’ money, the Commission must be the guardian of the principle of ‘non-regression’ and ‘do not significant harm’. It is not enough to promote good practice; a heavy-handed approach against bad practices is also needed.

Find these and more good examples in our policy briefing.