Pledging a record sum of money to slow climate change is one thing, but spending it wisely is another.
After 90 hours of intense negotiations, European Union leaders reached a recovery deal that included devoting nearly €550 billion to green projects over the next seven years, the largest single climate pledge ever made.
The money represents a 30 per cent share of a mammoth package, comprising a €1.074 trillion EU budget for 2021-27 and a €750 billion coronavirus recovery fund.
Reuters Newsagency reports leaders also agreed that even those parts of the overall package not specifically earmarked for climate spending must “do no harm” to the EU’s goal to become climate neutral by 2050.
Hundreds of potential projects could benefit, from low-carbon steel production in Sweden to an electric vehicle battery factory in Poland.
However, a lack of precise guidelines on how the money can be spent left some uneasy.
Bas Eickhout, a Dutch Green member of the European Parliament, said clear criteria were needed to ensure it was used to wean the continent off coal, oil and natural gas, saying a good start would have been a “no money to fossil fuels” pledge.
“The fact that they didn’t do that, that says a lot,” Mr Eickhout told Reuters.
Ursula von der Leyen, president of the EU’s executive European Commission, moved to allay such concerns, telling Reuters after the deal was struck that: “There will be milestones you have to achieve as a member state before there is disbursement of the money.
“The overarching goals of the European level have to be visible throughout the whole national recovery plan.”
The huge sums on offer gave the EU “a strong leverage” to ensure countries make these plans green, she said.
The EU plan includes more climate funds than the combined green spending, of roughly €494 billion in today’s money, from all major economies’ recovery plans after the 2008-9 financial crisis, said Brian O’Callaghan, a researcher at the University of Oxford.
“The EU’s recovery deal includes the largest climate funding pledge in history,” Mr O’Callaghan told Reuters.
That money may not be enough, however, as some €2.4 trillion in low-carbon investments are needed by 2027 to meet the EU’s emissions goals, according to an analysis by the consultancy Climate & Company and think-tank Agora Energiewende, both German-based, published last week.
Under the new EU deal, the EC will assess and report annually on climate spending, but some campaigners said they were worried by reports of inaccuracies in its methodology.
Earlier this month, the European Court of Auditors found the EC had overstated the current EU budget’s contribution to tackling climate change, particularly in relation to EU-backed agriculture schemes.
“The examples from the past do not bode well,” said Joanna Flisowska, head of climate and energy at Greenpeace Poland.
Some green advocates say one danger is that funds will go to natural gas projects.
While supporters have touted gas as a cleaner source of power generation than coal, scientists point out that it is still a fossil fuel and could lock in emissions of planet-warming carbon dioxide and methane for decades.
Some investors, EU politicians and campaigners have urged the EC to use planned EU green finance rules to guide spending, a move that would prevent money going to gas power plants unless they were fitted with carbon capture technology.
“If you invest or you give a grant for fossil fuel infrastructure, then you’re making more difficult the EU goal of carbon neutrality,” said Helena Viñes Fiestas, Deputy Global Head of Sustainability at BNP Paribas Asset Management.
With the package due to face scrutiny from the European Parliament from today, politicians are facing calls to introduce more stringent controls before approving it.
“It’s up to Parliament now to amp up the ambition on climate spending,” said Manon Dufour of climate think tank E3G.
“There’s still lots to play for.”
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