Monday

5th Dec 2022

Stronger green conditions urged for EU recovery money

  • Only about 15 percent of 2008 financial stimulus money injected into the global economy focused on green projects (Photo: Stay Grounded)

Top economists and civil society organisations on Tuesday (16 June) called on the European Commission and member states to set more ambitious climate actions and put green conditions on the EU recovery plan.

The commission unveiled last month a €1.1 trillion revised long-term budget for 2021-2027 and a €750bn coronavirus recovery package.

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However, tensions have deepened as member states now discuss the next steps for the EU recovery and plunge into this week's budget negotiations.

"The good news is that the green dimension of this massive recovery plan is there and it clearly remains a backbone. This good news must now be confirmed in the decision-making process," Pascal Lamy, former EU commissioner for trade, told reporters on Tuesday.

"But there are still problems about how this money will be allocated [in sectors and countries] and it is not clear if there will be 'green conditionality'," Lammy said.

During the financial crisis in 2008, only about 15 percent of stimulus money injected into the global economy focused on green projects.

So far, the commission decided that all public investment of the €750bn recovery fund must respect the green oath to "do no harm" - which would exclude any subsidies to activities such as fossil-fuels industries, nuclear energy or incineration of waste.

However, there are new calls to strengthen these conditions in the EU budget - especially after nearly two trillion euros of state aid already used to support all type of industries across the bloc were allocated unconditionally.

According to professor of economics at the Universidad Carlos III in Madrid, Natalia Fabra, "it does not make any sense to push in the green direction here and in brown direction there".

Likewise, Fabra stressed that green conditionality could be powerful leverage to shape national legislation targeting climate action, such as the circular economy and renewables energies - setting up standards for public expenditure.

'Must be spent'

Meanwhile, the co-founder of the Italian Alliance for Sustainable Development and former minister of labour Enrico Giovannini pointed out that "the money must be spent".

"It is not so much about the ability of states to make promises, but about the ability of states to make investments and the right ones," said Giovannini.

The commission has been using conditionality requirements for many years, especially for cohesion policy.

However, the director of the Brussels-based NGO Climate Action Network, Wendel Trio, said on Tuesday that "the commission should be much more strict to control whether the money spent is aligned with the EU Green Deal".

"While countries are looking for a vaccine for Covid-19, there is no vaccine for climate change," he said, calling on the commission to scale up its climate ambition.

Additionally, the director of WWF Europe Ester Asin said that "what's on the table will allow polluters to carry on as usual, funded by public money. This is unacceptable."

Parliament vs Commission?

Later this year, it is expected that the EU's current 2030 emission-reduction target will increase from 40 percent to between 50 percent and 55 percent.

However, civil society organisations claimed that this approach is not aligned with the EU's commitment to the 2015 Paris Agreement - namely limiting global temperature raises to below 1.5 degrees.

The European Parliament lead negotiator for the climate law MEP Jytte Guteland recently backed increasing to 65 percent emission reduction target for 2030.

"While there is a strong discussion in the parliament, it is sad to see that the commission is completely opposing it," Trio said, adding that Europe should increase its emission reduction target by the end of the year - to influence other global players.

"If Europe does not move, the rest of the world does not move. If Europe moves, then this is a great incentive for the rest of the world," he said.

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