The COVID recovery plan for Europe: Why MEPs are our last chance to make it work for the climate – FERN

The €1.8 trillion pandemic recovery plan and long-term budget deal agreed by EU heads of government on 21 July 2020, after nearly five days of haggling, is widely seen as a political and economic landmark. But from an environmental perspective, the package is an opportunity missed. It fails to deliver on the Commission’s earlier promises that action on climate change would be at the heart of the EU’s pandemic response.

The €1.8 trillion pandemic recovery plan and long-term budget deal agreed by EU heads of government on 21 July 2020, after nearly five days of haggling, is widely seen as a political and economic landmark. But from an environmental perspective, the package is an opportunity missed. It fails to deliver on the Commission’s earlier promises that action on climate change would be at the heart of the EU’s pandemic response.

 

On the plus side, the budget package includes a commitment that climate action will be 'mainstreamed’, with a target that 30 per cent of spending on EU policies and programmes should contribute to achieving climate objectives (up from an earlier 25 per cent target). However, the 30 per cent objective is not backed up with robust enforcement or monitoring mechanisms and so may turn out to be little more than a vague aspiration. Meanwhile, plans for extra EU spending on the climate and forest priorities that were set out in the Commission’s pandemic recovery proposal in May have been scaled back or abandoned in order to win political support for a slimmed down financial package at the July European Council meeting.

 

If the deal goes ahead as agreed by the Council, it will be the wasted opportunity of the decade. This is a large injection of public finance across all sectors at once: a chance to re-imagine our economy, making it more resilient to future shocks - like COVID and climate change. But the recovery package looks more like business as usual.

 

The budget package agreed at the European Council is made up of two elements. The first is the Multiannual Financial Framework (MFF), the EU’s overall budget for 2021-27, which at €1,074 billion is slightly smaller in real terms than the previous seven-year MFF. The second is a €750 billion pandemic recovery plan, known as Next Generation EU. It provides additional resources on top of those in the MFF specifically to address the economic and social crisis caused by the pandemic.

 

Next Generation EU will be financed by borrowing money on the financial markets (the first time the EU has done this). €390 billion of the recovery plan funding will take the form of grants. The rest will be made up of loans. The lions’ share of the grant funding (€312.5 billion) goes to Member States, for the period 2021-23. To access it, Member States must draw up national ‘resilience and recovery’ plans, which take account of EU priorities. While there is provision for further monitoring to be introduced later, this is not defined, meaning that the only chance the Commission presently has to question the level of climate ambition is at the moment of approving the national recovery plans. After that, there is no real check: no mechanism for deciding what will really benefit the climate, no need to set binding or even voluntary targets on specific areas of policy, and no process to ensure the plans were actually implemented. Left to themselves, many Member States may only pay lip service to environmental objectives, but not actually put the money behind it.

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