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EU provides €265bn funding for green transition in Covid-19 recovery plan

Photo: Guillaume Perigois/Unsplash

The EU has given prominence to climate-friendly measures in the €672.5bn Recovery and Resilience Facility Fund (RRF) – the centrepiece of the EU’s pandemic recovery fund, Next Generation EUvoted through the European Parliament on February 9th. The fund is aimed at helping Europe to “build back better” from the Covid-19 pandemic in the form of grants (€312.5bn) and loans (€360bn) allocated to member states.

The package was agreed by EU leaders in December and reached the parliamentary vote stage this week where it was approved by 582-40 with 69 abstentions. The EU Commission President, Ursula von der Leyen said: “Defeating the virus thanks to vaccines is essential but we also need to help citizens, businesses and communities exit the economic crisis”.

Navigating the green and digital transition has been placed at the centre of plans for the fund. 20% of the money will be allocated to digital spending but the 37% (or €265bn) which has been made available for green projects is an eye-catching figure. The news has been hailed by Green MEPs as “a game changer….an unprecedented sign of EU solidarity”.

Damien Boeselager, a German MEP and negotiator for the Greens during negotiations said: “For the first time ever, funds are raised collectively…and directed to member states based on the economic impact of the Covid-19 pandemic crisis. This money will allow countries to respond to the fiscal pain caused by the pandemic [and] channel €250bn into the green transition”.

Countries have to submit their recovery plans to the EU by April at the latest. The EU Commission has received drafts from 19 countries with Austria, Estonia, Ireland, Lithuania, Luxembourg, Malta, Netherlands and Poland yet to submit. Within the plans which have been submitted, however, there are concerns. Research from CEE Bankwatch, the green NGO, indicates that “almost no one is opening the plans to public scrutiny [or] strategic environmental assessments, both of which are required by EU law”.

Foremost amongst these concerns is the worry that there is no exclusion on allocating funding to “transition” technologies such as natural gas or roads. Investment in coal and lignite is excluded but the difficulties of moving a country’s energy system from fossil-based to renewables will, in some cases, require the involvement of energy sources such as natural gas.

It is encouraging that the EU is cognisant of the implications of this and is preparing a guidance document on the application of the Do No Significant Harm principle which decrees that EU money is prevented from being directed to polluting technologies. This guidance document will establish the conditions attached to gas investments stipulating that they are part of a wider transition to renewables. It will also ensure that the ensuing infrastructure is suitable for clean gases as well as natural gases.

Close scrutiny of the usage of funding from the RRF is endemic in the EU plans and member states may be requested to appear before the EU Parliament every other month to report on progress against targets and milestones met. The information provided will be available to other member states for comparative purposes and the plans must be implemented before 2026.


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