13th Aug 2022

Ministers fail to agree on climate financing

  • Swedish finance minister Anders Borg (centre) struggled to get EU states to agree on Tuesday (Photo: Swedish Presidency)

Discord reigned supreme at a meeting of EU finance ministers in Luxembourg on Tuesday (20 October), with the most notable failure in the area of climate financing.

The Swedish EU presidency had hoped to reach an agreement on individual member state contributions towards a EU pot of funding, destined to help developing countries tackle climate change.

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"It is a disappointing outcome, that we weren't able to reach an agreement," said Swedish finance minister Anders Borg after the meeting.

Greenpeace EU climate policy director Joris den Blanken described the meeting as a "fiasco", adding that the likelihood of failing to secure a global deal in Copenhagen this December to replace the Kyoto protocol was now "very real."

A European Commission communication last month said developing countries will need €100 billion a year by 2020 to mitigate the effects of climate change and limit their CO2 emissions, and that the EU contribution should be in the range of €2-15 billion.

It also says the EU should provide €5bn-7bn of ‘fast track' funding between 2010 and 2013 to help developing countries ‘front-load' measures to tackle climate change.

But member states are divided over whether national contributions should be based on ability to pay or on current emission levels, a question Poland and eight other members want resolved before the EU announces how much it will contribute to the global fund.

The group of central and eastern EU countries also called for contributions to the ‘fast-track' funding to be "voluntary".

"We had a good opportunity today," said UK chancellor of the exchequer Alistair Darling. "Unfortunately, a number of countries wanted two things that the majority found unacceptable."

The failure of finance ministers to reach an agreement on individual contributions means EU leaders meeting in Brussels next week will now have to turn more attention to the issue if a common negotiating position is to be reached before December's crunch meeting.

Financial regulation and tax

On the question of financial regulation, the UK held off from a final agreement on a pan-European risk board, which will now need approval at a December summit of EU leaders.

The European Commission came forward with legislative proposals for the risk board and three micro-level supervisory authorities last month.

Austria and Luxembourg proved to be the stick-in-the-muds over a commission-negotiated agreement with Liechtenstein on "tax fraud, evasion and avoidance".

It was hoped that a successful deal would lead to the opening of similar negotiations with Switzerland, Andorra, Monaco and San Marino, regarding the sharing of depositors' data with EU governments.

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