How “frugality” hurts the climate cause – and how to undo the damage

It feels a long time since mass protests rocked cities across the world demanding greater urgency in combating the climate crisis. From Fridays for Future to Extinction Rebellion, in Europe the movement brought hundreds of thousands of people out onto the streets. With the onset of the coronavirus crisis, the visibility of the climate demonstrations diminished – although some groups have been creative in developing physically distanced forms of protest.

For the European Union and its member states, however, climate action remains a top priority. Among the 20 policy areas examined in ECFR’s new EU Coalition Explorer, climate policy is the only one that makes it into each and every member state’s top ten. The study shows that it is the most important consideration in Belgium, Denmark, Finland, and Sweden. Across all EU27 countries, climate is the third most important issue (up from tenth place in 2018), right after fiscal policy and migration.

When the new European Commission took office at the end of last year it set out to implement an ambitious agenda: to increase the EU’s geopolitical clout, to make Europe fit for the digital age, and to achieve climate neutrality by 2050. The European Green Deal was to provide the toolbox for the last of these.

Then came the coronavirus. The pandemic derailed the commission’s workplan and led many Europeans to doubt the EU. What good is Brussels if it cannot protect Europeans and muster an effective and joint response against a virus? While this narrative has always been misplaced, it nevertheless struck a chord with many. Climate action provides an opportunity for the EU to recover its standing with European citizens – not least as 85 per cent of Europeans support EU legislation to protect the environment, expectations are high.

In this regard, however, the EU’s recently agreed €1.8 trillion package to boost the post-pandemic recovery is a disappointment. While EU leaders committed to updating the 2030 emissions reduction target and reaffirmed the 30 per cent climate target for EU spending, the Just Transition Fund received a hefty downgrade. The fund is supposed to promote the socio-economic transformation of those European regions that most rely on fossil fuels and carbon-intensive industries. Successful transformation is a necessary condition for Europe’s climate neutrality. The deal cut the fund from €40 billion to €17.5 billion.

This most hurts those member states that, unlike Germany, do not have the fiscal capacity to enact a €40 billion national transition fund. EU structural and cohesion funds could compensate for the cuts. These, however, have fewer “green strings” attached. So, when allocating their share of EU cohesion funds, member states are less likely to invest them in a socially just and green transition.

European leaders, too, prevented the EU’s principal research and innovation programme, Horizon Europe, from becoming a true vehicle for change. While the original proposal devised by the commission foresaw a €13.5 billion increase for the programme, the eventual deal slashed it to just €5 billion. This represents a significant loss for European health and climate-related research and innovation, and it will stifle Europe’s long-term competitiveness.

During the negotiations, as in the past, the Green Deal came under fire from two sides. The “frugals”, represented by Dutch prime minister Mark Rutte (in whose country climate policy ranks second), fought for strict conditionality and to deflate the grants portion of the recovery plan. When it came down to the numbers, the frugals were willing to sacrifice joint climate action for fiscal stringency. Poland, meanwhile, rejected specific commitments on climate neutrality but was happy enough to take money from the shrunken Just Transition Fund. Under these conditions, the recovery plan will fail to generate the momentum necessary to reach climate neutrality by 2050. Instead, the likely result is a ‘nationalisation’ of climate (in)action, with progress depending on a melange of national spending plans.

Slashing Horizon Europe will harm health and climate research, and stifle Europe’s long-term competitiveness

The European Parliament immediately announced that it would withhold consent until the plan no longer runs “counter to the EU’s Green Deal agenda”. So it could yet see substantial revisions.

But even inside the confines of the current plan, the European Commission and member states have significant leeway to promote ambitious climate action. Together with the European Parliament, the commission should provide clear guidance on the operationalisation of the 30 per cent climate target and the “do no harm” principle. When it comes to the national spending plans, the European Commission must help member states avoid contradictions with and between green objectives. Articulating straightforward expectations and creating a consultative process can work wonders here. But even the best strategy does not guarantee implementation. So the commission must insist on compliance with agreed-upon targets and principles.

The member states also have a role to play. Beyond drafting ambitious national spending plans, they should work together to turn climate spending into a race to the top. Belgium, Denmark, Finland, and Sweden are the four countries that assign the greatest importance to climate policy according the EU Coalition Explorer. But their exaltation of “frugality” hurts joint climate action. They should move now to form a European climate coalition and commit to spending a much greater proportion of their EU funding on climate action than the required 30 per cent.

France and Germany, which rank climate policy second, should also jump on board. With the French and German Green parties both doing well at the polls recently, Emmanuel Macron and Angela Merkel’s governing coalition might have an interest in demonstrating certain ambition and leadership on climate. With their clout and new-found mutual appreciation they could bring others along, too. For the laggards, it should be an embarrassment to barely clear the bar on climate spending.