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Aligning EU Investment and Climate Targets

How the EU Budget can help Member States in reducing emissions

Executive Summary

The Commission presented proposals relating to the post-2020 EU budget in May and June 2018. The next EU budget spans from 2021 to 2027 and the revenue streams, as well as where the money will be invested, are both topics of discussion for MEPs and Member States ahead of 2020.

The EU budget has the potential to be a positive driving force in reducing emissions across all sectors. It can also help Member States meet their climate targets and encourage smarter public investment. There are a number of fiscal measures relevant to the EU budget that can help the EU play an important role in mitigating climate change:

Connecting Europe Facility and the European Regional Development Fund – The EU budget should prioritise zero-emission investment post-2020 by giving such projects preferential treatment when considering applications. Such investments should help EU countries meet their national climate targets.

Emissions Trading System – If 20% of the ETS auctioning revenues are to become Own Resources for the EU budget then it’s imperative that 100% of this revenue is invested in climate projects.

European Tax Directive – The ETD must be revised to redefine minimum tax levels for various transport fuels. As the Directive has not been revised since 2003, the current minimum rates do not adequately reflect the climate impact of such fuels. A portion of fuel tax revenues could become new own resources for the EU budget as recommended in the Monti report.

The infrastructure that the EU invests in between 2021-2027 will be maintained for decades once constructed. Therefore, it is vital for the EU to invest in infrastructure that helps the Member States meet the climate targets. Such investment would help improve energy sovereignty, improve EU competitiveness, and reduce emissions from all sectors. This is the kind of EU that the EU budget should be helping to build.

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