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Paris-proofing the next Multiannual Financial Framework

Paris agreement / DISCUSSION PAPER
Marco Giuli

Date: 25/06/2019
A carbon-neutral future, as envisioned by the European Commission in its recent communication A Clean Planet for All, will require unprecedented changes to the EU’s economy and society. The Multiannual Financial Framework for the 2021-2027 cycle, which is currently under negotiation, has an important role to play: overall, the EU budget supports regional development and research in areas that are critical to achieving climate goals, including transport, energy and agriculture.

In this Discussion Paper, Marco Giuli draws lessons from the current EU budget cycle and investigates how it has hampered, and even undermined climate efforts, including continued support for practices that contribute to global warming. He also takes a closer look at the European Commission’s 2018 MFF proposal and concludes that, although several innovations concerning climate spending were introduced, there’s still a considerable risk that the new MFF will turn into a missed opportunity. In order to defuse this risk, Giuli recommends to:

- adjust the tracking methodology for climate expenditure by introducing a uniform system across the budget to avoid inconsistencies in and overestimations of the budget’s contribution to climate action;

- exclude the support for fossil fuel investment across the whole budget;

- adopt a clear definition of ‘climate proofing’ across the whole budget, to ensure that the portion of the MFF outside of the climate mainstreaming target does not support climate-harmful practices;

- ensure full strategic alignment between the MFF and National Energy and Climate Plans and employ the former as an instrument to reward the level of ambition and/or performance of the member states and make the most of the instruments created during the 2014-2019 EU political cycle.

It is important that the EU gets the next budget cycle right: it will cover the bulk of the promising, but trying period leading up to 2030, which is the deadline for several objectives the EU has committed to under the Paris Agreement. Furthermore, investments approved within the next decade will have an impact on the Union’s ability to achieve its own 2050 climate ambitions. If the EU and its member states are serious about tackling climate change, and want to maintain and strengthen the Union’s credibility as a global leader in climate action, they need to start backing up their promises with concrete actions, and put their money where their proverbial mouth is.

Read the full paper here

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