Crunchtime for MEPs to ‘green’ the EU recovery fund

A decision on whether to ban fossil fuel investments from the EU’s economic recovery fund hangs in the balance as lawmakers have given mixed signals on how, and to what extent, the fund should be ‘greened’. Earlier this month, lawmakers on the environment committee called for 47% of the bloc’s €670 billion recovery fund to be invested in projects that won’t exacerbate climate change or the nature crisis. They also voted for fossil fuels to receive no cash from the recovery fund.

However, the economy and budgetary committees are considering reversing these positions, according to leaked documents seen by T&E. MEPs could vote to keep the share of the Recovery and Resilience Facility earmarked for climate friendly projects at or near 37%, a difference of €67 billion. 

The economy and budgetary committees are also resisting a proposal to use the EU’s new sustainable finance law as the methodology to classify what investments are ‘climate friendly’. The Taxonomy Regulation and its technical criteria would replace the current classification, the Rio Markers, which are outdated, inadequate, and count fossil gas for transport as a climate friendly fuel - despite it delivering no emissions savings compared to diesel.

Luca Bonaccorsi, T&E’s sustainable finance director, said: ‘The Next Generation EU fund is supposed to rebuild an EU economy ravaged by the pandemic, and will be entirely paid by the next generation of taxpayers. It’s only fair that their money is invested in a sustainable economy. MEPs have rightly voted for the blanket exclusion of fossil fuels from the recovery fund, and their colleagues on the economic and budgets committees should follow suit.’

Pressure is increasing on MEPs to ‘green’ the recovery ahead of the two committees voting jointly on 9 November. In Italy, 100 major Italian companies wrote to the country’s EU lawmakers to demand the climate criteria proposed by the environment committee. Power giant Enel, biomaterials Novamont and Illy Caffé were among the major brands to call for half the fund to be ring fenced for climate friendly projects. They also demanded the stronger methodology and ‘polluters list’ proposed by the environment committee.

If the vote fails to deliver the necessary environmental safeguards, the only option for environmental organisations will be to try to take the fight to the parliament’s plenary. There it may be possible to build an alliance for a green recovery across the political groups.