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The EU has been under pressure to help Europe’s economies recover from the pandemic, but NGOs campaigned not to return to the ‘old normal’ and instead promote climate-friendly rescue funding. Last month ministers and MEPs reached agreement on the Recovery and Resilience Facility, a six-year emergency budget measure designed to run from now until 2026.
The agreement means 37% of the fund must now be spent on investments and measures that support climate objectives, mainly the EU’s commitment to be carbon neutral by 2050. Pascal Canfin, the European Parliament’s environment committee chair, said: “Only investments that are truly favourable to the fight against climate change will be taken into account.”
However, T&E has highlighted a number of areas which it says amount to fake green investments. They include ‘alternative fuels’ such as gas and biofuels, some of which lead to a net increase in greenhouse gas emissions and to the destruction of natural habitats.
T&E director of sustainable finance, Luca Bonaccorsi, said: “In theory this is the biggest green stimulus plan ever. Sadly, the EU institutions have failed to provide detailed guidelines. This means that, in practice, the sustainability of the spending is entirely dependent on the goodwill and good intentions of member states. Judging from the draft national recovery plans seen so far, that is not reassuring.”
The agreement includes scope for a ‘do no harm’ test, which T&E says will prevent fake green investments if it is taken seriously by the Commission and member state governments. However, the absence of a firm definition of ‘do no harm’ worries may be a way for polluting activities to slip through the net.
But all is not lost as the national recovery plans must still be assessed by the EU. Luca Bonaccorsi said: “Here the Commission, which has the last word on whether member states receive funding or or not, can properly enforce the do no harm principle and reject fake green spending.”
The legislation must now be approved by the 27 national governments before coming back to MEPs and ministers for final approval. The first payouts from the recovery package could be available by the summer.