Critics hit out at ‘stupid’ cuts to EU’s green transition fund

EU leaders’ decision to cut tens of billions of euros from a fund to help Europe’s green transition risks undermining Brussels’ attempts to accelerate emissions-cutting goals over the next decade, experts warned. 

During its marathon summit that ended on July 21, EU27 leaders took the axe to a proposed “Just Transition Fund” for the most polluting regions of Europe, scaling it back from a planned €40bn to €17.5bn in an attempt to strike a deal on the union’s €750bn response to the coronavirus pandemic. 

The JTF supports the green shift in the poorest and most polluting regions in Europe and is aimed at convincing fossil-fuel dependent countries such as Poland and the Czech Republic that they will not suffer disproportionately as the EU seeks to become the first carbon-neutral continent by 2050.

But drastic cuts to the JTF mean beneficiaries have further reason to resist attempts to speed up carbon-cutting targets. Poland was in line to suffer at least a 50 per cent cut in aid under the smaller JTF, an EU official said, down from a projected €8bn from the previous proposal.

“The decrease in the JTF is not helpful — it is stupid,” said Bas Eickhout, a Green MEP from the Netherlands. He warned that the scale of the cuts — pushed for by the “frugal” alliance of Austria, Denmark, the Netherlands and Sweden to reduce the final volume of a coronavirus spending package — would give an “easy argument” to countries who oppose higher emissions goals. “It was stupid prioritisation from the frugals,” he said. 

Brussels has promised to upgrade its 2030 emissions goals from a current 40 per cent reduction to 50-55 per cent, with the precise target dependent on a European Commission assessment of the economic costs. A final decision, expected in the autumn, needs the backing of the majority of the 27 member states. 

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Poland was the only member that failed to back the EU target for net zero emissions by 2050 at a summit in December. Warsaw’s ruling Law and Justice party said it needed more time but has since said it does not oppose the goal of carbon neutrality for the bloc as a whole. The leaders’ draft agreement states that half of the JTF funds are conditional on a member state signing up to the climate law.

The Polish economy relies on coal to produce 74 per cent of its electricity, posing huge challenges for its fossil-fuel heavy regions.

The head of PGE, Poland’s biggest energy utility, said 55 per cent emission cuts by 2030 would be prohibitively expensive for the country. If Poland’s current level of emissions was maintained, it would cost €68.5bn to buy up the necessary emissions permits, Wojciech Dabrowski added.

“This cost would be unacceptable in light of the very high prices for households and industry. This amount is four-times the capital that PGE is planning to spend on low-emission investments by 2030,” said Mr Dabrowski.

Johannes Hahn, EU budget commissioner, said the €17.5bn JTF was still higher than the €7.5bn proposed before the pandemic struck. “It’s still significant”, he said, adding that the amount would be enough for Poland’s government to sign up to the bloc’s 2030 and 2050 goals. 

A final deal on the EU’s next long-term budget must be signed off by the European Parliament. It will now enter into negotiations with the commission and member states to finalise the terms of the spending plan which is worth €1.07tn from 2021-27.

Sebastian Mang, climate and energy policy adviser at Greenpeace, said MEPs were likely to push for the most ambitious 2030 emissions goal and more spending for the green transition in the EU budget. “With the European Parliament playing hardball there is still lots to play for,” said Mr Mang.