EU recovery fund has ‘green strings’

Europe proposes €1.1tr budget for 2021-27, €750b recovery fund

BRUSSELS: The European Commission pledged on Thursday to attach climate conditions to its massive funding package to save Europe’s coronavirus-battered economies, but stopped short of banning support for all fossil fuels.

The European Union’s executive on Wednesday proposed a €1.1-trillion EU budget for 2021-27 and a new €750-billion economic recovery fund while doubling down on its goal to become “climate neutral” by 2050.

The proposal earmarks 25% of the budget for climate-related spending. All money from the recovery fund, including cash not going to green projects, must meet climate conditions.

Countries seeking support must design spending plans that the Commission will assess against a principle to “do no harm” to the bloc’s green goals. “If the plans do not conform with that, they will not get financial support from the European Union,” EU Climate Chief Frans Timmermans said on Thursday.

“There’s one thing I have to acknowledge, that in some areas of the transition the use of natural gas will probably be necessary to shift away from coal to sustainable energy.”

Natural gas produces roughly 50% less emissions than coal when burnt, but it is not zero carbon and campaigners say new gas infrastructure could lock in emissions for decades, thwarting EU climate goals.

Some parts of the EU package, including a €40-billion “just transition fund”, will explicitly exclude gas. This fund “restricts any kind of investment into fossil fuels, also for natural gas,” EU Energy Chief Kadri Simson told Reuters.

Planned EU definitions for green finance will also guide investment, the Commission said. These rules would stop gas investments from being labelled green, although they would not ban companies from investing in them.

Rules blocking EU gas funding could face pushback from eastern countries, eight of which wrote to EU leaders last week seeking support for the fuel to help them stop burning coal. The Commission funding proposals need approval from all member states.

Published in The Express Tribune, May 29^th, 2020.

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