The clean energy transition and other initiatives to decarbonise Europe’s economy will represent 25% of EU spending under a seven-year EU budget plan put forward by the European Commission on Wednesday (2 May).

Climate action will be mainstreamed across all EU programmes, with a target of 25% of all expenditure contributing to climate objectives, said Miguel Arias Cañete,‏ the EU Commissioner in charge of climate action.

This is up from 20% in the current budget, which covers the years 2014-2020, the Commission said.

The climate effort will span policies on regional integration, energy, transport, research and innovation, agriculture as well as development aid, “making the EU budget a driver of sustainability,” the EU executive said in a statement.

Brussels will follow up at the end of the year with a “Reflection Paper” to address “possible ways” of further integrating UN Sustainable Development Goals in EU policy-making.

A modern #EUbudget for a modern, low-carbon EU economy: climate to be mainstreamed across all EU programmes, with a target of 25% of EU expenditure contributing to climate objectives. https://t.co/cdGfcFEZVY #ParisAgreement ??? pic.twitter.com/4rvU5SO7XK — Miguel Arias Cañete (@MAC_europa) May 2, 2018

Plastic tax and ETS

The headline 25% figure is a “key earmark”, said Jonathan Gaventa, director of E3G, a climate and energy think tank, which broadly welcomed the Commission’s budget announcement.

But the way it’s counted also matters, he cautioned. “If you tighten up the way it’s counted, the 25% could represent a substantial increase or it could be watered down,” he told EURACTIV before the announcement was made official. For example, the 25% might end up being actually lower if the Commission decides to exclude spending on immigration and security from the total, he said.

Another key aspect is EU funding for infrastructure projects such as gas pipelines, which environmentalists claim risk locking Europe into fossil fuels.

“Continuing to fund fossil fuels will present a huge liability to the European taxpayer,” Gaventa said in a statement reacting to the budget proposals. “It sends misleading signals to investors as to what represents the bloc’s vision for the future,” he said.

Other parts of the budget could prove controversial, like a proposal to allocate 20% of revenue from carbon trading to the EU budget, as well as a plastic tax. The national contribution will be calculated on the amount of non-recycled plastic packaging waste in each member state (0.80 € per kilo), the Commission said in a statement.

Plastic tax and ETS tinkering could plug Brexit hole, suggests EU budget chief EU Budget Commissioner Günther Oettinger has revealed that the European Commission will propose taxing plastic and shifting emissions trading income to EU level, in an attempt to balance the bloc’s coffers once the United Kingdom leaves the EU.

14 EU countries back greener budget

Still, many EU member states – including Europe’s paymaster Germany, France, Italy and Spain – appear ready to back the European Commission’s push for a greener EU budget.

The so-called ‘Green Growth Group’ of 14 EU environment ministers has earlier called for “at least” 20% of EU budget to be spent on climate-friendly policies and infrastructure, better reporting and transparency of how the “climate quota” EU funds are being spent.

They also called for pulling out support from carbon-intensive projects that are contrary to the Paris goals. “Subsidies that are not in line with the Paris Agreement, such as for carbon-intensive projects, should be phased out as quickly as possible and have no place in the EU budget,” the ministers wrote in a joint statement earlier this year.

Notably absent from the group of 14 are Central and Eastern EU countries like Poland, the Czech Republic and Hungary, most of which are heavily reliant on coal for electricity and heating.

Their concerns are chiefly related to the social policy aspects of the energy transition. While new jobs are being created in the green economy – 19 million worldwide by 2050, according to the International Renewable Energy Agency (IRENA) – other jobs will also be destroyed, meaning workers there will need re-skilling.

In the automotive sector, jobs in the maintenance and repair market will be wiped off as a result of the push for electro-mobility. Electric vehicles have on average 300 parts compared to 1,300 for traditional vehicles, which means “the supply chain will be absolutely impacted” as a consequence, warned the EU Climate Commissioner Cañete.

Canete defends ‘balanced’ EU proposal on car emissions The EU Commissioner in charge of Climate Action, Miguel Arias Cañete, has fought back accusations that Brussels lacked ambition in setting new CO2 limits on cars for 2030, saying the proposal “strikes the right balance” between environmental, social and industrial policy objectives.

European Parliament backs 30%

Central and Eastern EU states will find backing from the European Parliament, which stressed the social policy aspects of the energy transition.

“Following the Paris Agreement, climate-related spending should be significantly increased compared to the current [budget] and reach 30% as soon as possible and at the latest by 2027,” MEPs said in a March resolution.

In its resolution, the European Parliament called for 30% of the EU budget to be spent on low-carbon technologies like renewables but also on preparedness for natural disasters – floods and storms – which are set to increase as a consequence of global warming.

Lawmakers called for the EU to establish “a comprehensive fund” to support “a just transition” to low-carbon energy, “notably in coal-dependent regions and countries” – a call that is likely to find support in Poland and Germany, both relying heavily on coal for electricity.

What follows is a shopping list of technologies that Parliament said should receive support in the next EU budget:

“Renewable energy sources, energy efficiency solutions, energy storage, electro-mobility solutions and infrastructure, modernisation of power generation and grids, advanced power generation technologies, including carbon capture and storage (CCS), carbon capture utilisation (CCU) and coal gasification, modernisation of district heating, including high-efficiency cogeneration, early adaptation to future environmental standards and restructuring of energy-intensive industries, as well as addressing social, economic and environmental impacts.”

Five steps for a climate-friendly EU Budget The EU’s next Multi-Annual Financial Framework (MFF) must reflect the commitment the EU has made to decarbonise its economy, in line with the aims of the Paris Agreement. Strong overall coherence to ensure that funds are spent in targeted and intelligent ways is the key to its success, writes Jonathan Gaventa.

For more on EURACTIV’s EU Budget 2021-2017 coverage, read also:

EU budget proposal 2021-2027 – as it happened The European Commission unveils its proposal for the EU’s long-term budget for 2021-2027 today (2 May), setting the stage for a bruising and long negotiation with member states and parliament.