MEDIA BRIEFING: Economy Ministers’ Summit must ensure recovery is sustainable and transparent

EU Ministers will meet on 18 June for the Economic and Financial Affairs Council (ECOFIN Council). They will exchange views on Member States’ Recovery and Resilience Plans (RRPs), and discuss the future of the European Fiscal Framework. Before the Recovery and Resilience Plans are approved in July, this meeting of Economy Ministers will be the last chance for improvements and make clear commitments in terms of transparency and participation for the implementation of the Plans. Markus Trilling, Finance and Subsidies Policy Coordinator at Climate Action Network (CAN) Europe said: “Draft Recovery plans bode ill. Despite the “Do No Significant Harm” principle and climate spending target, many of them still foresee putting money on fossil fuels, unsustainable transport measures and nature destruction projects. This is the last chance for ministers to commit EU recovery funding to a profound transition towards climate neutrality. Decarbonisation of all sectors of the economy and investments in clean and sustainable energy must be at the center of each Recovery Plan, if the EU is serious about tackling the climate crisis.”

Why is this ECOFIN Council so important?

The European Commission is currently holding a structured dialogue with the European Parliament, as part of the process of assessing the Recovery and Resilience Plans. Following that and once the Commission is satisfied with the Recovery Plans, an implementing decision will be issued to allow the first disbursements. This implementing decision is expected to be adopted by Economy and Finance Ministers in the July Council. The approval in July will kick off the first payments to Member States to start implementing the Recovery Plans. Therefore, this June ECOFIN Council is the last opportunity for Member States to substantially improve the climate action and environmental integrity of the Recovery Plans and make additional commitments on transparency and participation.

What are the remaining problematic measures in the Recovery Plans?

Climate Action Network (CAN) Europe members and partners identified good, bad and ugly measures in 16 countries’ draft Recovery Plans. Some of the ugly measures highlighted by NGOs included: France’s € 2.5 billion worth blank check to oil and gas companies as well as carbon-intensive industries, Polish and Bulgarian investments in polluting waste incinerations, Romania and Bulgaria’s investment plans for gas distribution and Slovenia’s bailout for aviation companies. More recently, Climate Action Network (CAN) Europe, CEE Bankwatch, EuroNatur and the European Environmental Bureau published an updated overview of Recovery and Resilience Plans from 14 member states, highlighting cases of greenwashing to achieve the 37% climate action target, problematic measures breaching the ‘do no significant harm’ principle and misalignments with EU law and policies. This more in depth analysis underlined:

over-reliance on hydrogen in many countries, including fossil-hydrogen
support to gas boilers – even counted as contributing to the 37% climate target,
inclusion of projects that risk harming biodiversity and thus contribute to climate change
continued focus on road building and support for combustion-engined cars.

It thus clearly shows a lack of alignment with the new and enhanced EU greenhouse gas emission reduction targets.

How can there still be so many disruptive measures if the “Do No Significant Harm” principle should be applied?

The European Commission has provided clear guidance on how to interpret the “Do No Significant Harm Principle”, which should rule out investments and reforms not compatible with the EU environmental and climate goals. The “Do No Significant Harm” Principle requires a robust and evidence-based analysis of the investments and reforms. However this was either neglected or not evident in the Plans made publicly available. Not complying with the “Do No Significant Harm” Principle must be an absolute no-go for the Commission. In addition, most of the Recovery Plans have been elaborated without adequate public participation and consultation with civil society organisations, trade unions, environmental groups, women’s rights and youth organisations. If they had been adequately involved, many disruptive measures could have been spotted at an early stage and the Plans would probably have been very different.

Do Member States meet the 37% climate spending target in their Recovery Plans?

All member states pretend that they meet the target. However, in our recent analysis, we have identified many measures tagged as “climate action” investments that should not be part of this target. For instance, fossil gas boilers, or production of hydrogen from fossil fuels and nuclear energy are tagged as climate action measures in some Recovery Plans. Accounting fossil gas under the climate action target is pure “greenwashing”.

Will there be a possibility to get rid of disruptive measures after they are approved by the ECOFIN Council in July? What are the next steps in terms of implementation?

The Recovery Plans need to include information on monitoring and implementation, including the timeframe, milestones, targets and indicators. The disbursement of the successive instalments of the funds to Member States will depend on how these milestones and targets are met. In order to capture progress, the Commission will elaborate a scoreboard by the end of this year. The Commission will then publish annual reports on the Recovery and Resilience Facility progress. Civil society organisations will have a crucial role to play in the implementation phase, scrutinising how reforms announced in the Recovery Plans are operated in practice and whether they are delivering to protect nature and climate. By scrutinising investments, they will also be able to flag possible harm to the environment and non-achievement of the targets and milestones. Which may ultimately result in a suspension of the payments. Therefore, it is extremely important that in the ECOFIN Council, Economy Ministers commit to full transparency and accountability. ENDS NOTE TO THE EDITOR: CAN Europe Letter to the Economy and Finance Ministers can be found HERE Good, Bad and Ugly Measures from the Recovery and Resilience Plans can be found HERE Climate Action Network (CAN) Europe, CEE Bankwatch, EuroNatur and the European Environmental Bureau’s joint assessment of 14 Member States’ Recovery and Resilience Plans can be found HERE CONTACT: Goksen Sahin, Climate Action Network (CAN) Europe, goksen@caneurope.org