EU accused of risking climate goals with ‘no strings attached’ state handouts

The European Union is facing pressure from environmentalists and lawmakers to attach conditions to state aid packages to protect climate goals, as countries pump cash into ailing firms and polluting sectors during the coronavirus pandemic. The EU agreed on Thursday to build a trillion-euro recovery fund to revive economies ravaged by the pandemic and has so far signed off on state aid worth 1.8 trillion euros ($1.94 trillion).

So far, the Commission, the bloc’s executive, has not attached ‘green strings’ to its approvals of aid from national budgets, as the health crisis takes priority. Green advocates say they want guarantees that any upcoming state aid will uphold the bloc’s climate ambitions. Canfin said EU approvals must be tied to a pledge from companies that within six months of receiving state aid, they will produce a plan to shift their business towards alignment with the global Paris Agreement on combating climate change.

The bloc’s chief executive, Ursula von der Leyen, said on Thursday the new trillion euro package being drafted for review around mid-May, would boost her Green Deal plan to cut EU net emissions to zero by 2050, without giving further details. In a letter sent to the Commission on Thursday, seen by Reuters, green groups including WWF, Greenpeace and Transport & Environment called for “strict sustainability conditions” on state aid approvals. High-carbon industries should only get support if they set climate targets, pledge to spend more on low-carbon assets, or shut down polluting ones, they said.

Asked on Friday why it hadn’t attached green strings to state aid approvals, the Commission said its 27 member states already have the option to add extra criteria to their support packages. “It is up to member states to decide if they wish to grant State aid and to design measures in line with EU State aid rules and their policy objectives, such as enabling the green and digital transformation of their economies,” a Commission spokeswoman said.

The Commission plans to review environment and energy state aid rules in 2021 to align them with its Green Deal. Campaigners fear this will be too late. Once Europe’s post-crisis recovery measures are paid for, countries may have little firepower left to deliver the huge investments the Commission had foreseen for its Green Deal – up to 1 trillion euros over the next decade.

Source: Reuters