German Chancellor Angela Merkel called the COVID-19 pandemic and the subsequent economic crisis “the biggest challenge in the history of Europe”. On 27 May 2020, the European Commission proposed an updated EU budget for 2021 to 2027 of 1.100 billion Euro and a dedicated EU recovery budget for 2021 to 2024 of 750 billion Euro. The Commission’s expressed intention is to "recover better", that is to both boost the economy and to accelerate climate action. Does the proposed budget live up to this promise? What improvements seem important?
This project, undertaken in cooperation with Climate & Company, analyses the EU budget proposals and provides suggestions for specific climate-safeguards. At the core of the project is an analysis of the amount and focus of climate-funding in the different budget proposals against climate-related investment needs in the buildings, transport, power and industry sectors. The analysis shows that under pessimistic assumptions the future budget will close only 3 percent of the calculated climate-related investment gap. While a higher contribution of the budget to closing the investment gap is possible - up to one-third of the gap under most optimistic assumptions -, a detailed analysis of the budget proposals shows that such higher contribution is by no means certain. This creates a very high political risk for EU climate policy and the success of the European Green Deal.
We therefore recommend three safeguards for strengthening the climate dimension of the proposed budget and narrowing the gap in climate-related investments.
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