Mainstreaming environment in economic policy key to Green Deal success

A historical moment. When Ursula von der Leyen took the floor in the European Parliament, she described how the environment is at the core of the proposed Recovery Plan and the revised EU budget. This would not have happened with the Juncker Commission.

Negotiations in the Council and views from the European Parliament will be decisive for how green the recovery measures will finally be. Clearly, the Commission is sticking to its ambitions regarding the Green Deal. In the revised work program for 2020, also presented yesterday, there are minor adjustments to the timetables for legislative proposals, but no major changes in the level of ambition.

There will be many reasons to discuss the content of future environmental proposals. However, the success of the Green Deal depends to a large extent on how environment is mainstreamed in all policy areas, including the massive financial measures proposed yesterday. Will for example finance ministers in ECOFIN respect the Treaty provisions of integrating environment in their decisions (article 11 TFEU)?

“Support should be consistent with the Union´s climate and environmental objectives”, states the Commission in its Communication on the EU budget. This is to some extent specified in the Communication on the Recovery Plan. For example, the Commission states that “Public investments in the recovery should respect the green oath to ´do no harm´.” It is positive that the need for mainstreaming has been clearly recognised. However, the devil is as usual in the details. 

Money from the Recovery and Resilience Facility will be closely linked to the European Semester recommendations. Designing the “pre-defined benchmarks” for such support mentioned by the Commission will be crucial. There is a need for swift analysis how such benchmarks best can promote green transitions. Earlier studies on greening the Semester are relevant in this regard, including this one from IEEP. In addition to the Commission, ECOFIN deliberations on the benchmarks and recommendations will be of great importance. So far, finance ministers have not been very keen on a stronger role for environment in the Semester process. This would have to change. (A positive sign is that the statement from France and Germany last week included a requirement that all sectors develop roadmaps for green recovery).

The Solvency Support Instrument is a radical new proposal. If the EU subsidies private capital buying shares in companies, this should come with environmental requirements and not be “targeted solely and strictly at addressing the economic impact of the pandemic” as stated in the Communication on the EU budget. In the other Communication, there is a sentence saying that the investment guidelines for this new instrument “will also reflect the need to prioritise green investments”. This is good, but there is a need to be more concrete, and in particular to mainstream environmental aspects in all actions under the Solvency Support Instrument. This is also important regarding the new Strategic Investment Facility, supporting strategic value chains across the EU.

Strict environmental criteria are needed for increased expenditure on cohesion, agriculture and fisheries. As pointed out by others, there also needs to be environmental conditionality in state-aid decisions on national recovery measures.

In addition, it is important that the requirement for at least 25% of MFF spending to contribute to climate action is not undermined when total expenditure increases, for example through weakened definitions. On the contrary, the percentage could be higher and criteria need to be strict. Similarly, the EIB needs to keep its promises even if co-financing of green projects from member states becomes more difficult. 

Finally, it should be repeated that the Commission has taken a number of positive steps. Now is the time for progressive governments to elaborate on the environmental aspects in Council negotiations, and for the European Parliament to add its weight to the discussion. Green benchmarks and conditionalities should not be weakened, on the contrary they need to become stronger.

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