Regulatory Briefing: EU overstated climate spending by €72bn, says ECA

The EU missed its self-imposed target of spending at least 20 per cent of its 2014–2020 budget on “climate action”, according to the European Court of Auditors.

A special report issued on 30 May by the ECA, which audits EU finances, suggests that despite the EU claiming it had met its 20 per cent target and had spent €216bn on climate initiatives, it had in fact “overstated” its spending for this purpose by at least €72bn.

The ECA’s auditors, applying its own methodology, put EU spending on climate action at around 13 per cent of the 2014–2020 budget, at around €144bn.

Following the publication of the ECA report, the European Commission has said it stands by its calculations.

Unreliable reporting. The ECA said reported spending was “not always relevant to climate action”, and described overall reporting on climate spending as “unreliable”. It said reporting involved “significant approximation and tracked only the potential positive impact on climate without evaluating the final contribution to EU climate goals”.

The main areas of EU public spending programmes reported as being climate-relevant are agriculture, infrastructure and cohesion (reducing economic, social and territorial disparities within the EU), according to the report.

Agriculture funding was highlighted as the biggest culprit for overstated spending, at almost €60bn, according to the auditors. Similarly, they believe the European Commission overestimated the climate contribution of infrastructure and cohesion funding in areas such as rail transport, electricity and biomass.

The report also highlights concerns that “reliability issues” could persist in the EC’s reporting for 2021–2027, a period in which the target will have increased to 30 per cent.

“Addressing climate change is a key priority for the EU, which has set itself challenging climate and energy objectives,” said Joëlle Elvinger, the ECA member who led the audit, adding: “We make several recommendations to better link the EU’s expenditure to its climate and energy objectives. For instance, we recommend that the commission should justify the climate relevance of agricultural funding.”

Other recommendations in the report include enhancing climate reporting and linking the EU budget to climate and energy objectives.

Commission defends record. The European Commission said it did not share “the ECA’s view that [EU] climate reporting is unreliable” and considers its own methodology to be “solid and reliable”. The commission also pointed out improvements it has already made to the methodology for measuring the 2021–2027 period, such as moving from “an ‘intent-based’ methodology” to “an ‘effect-based’ methodology” (a methodology that looks at expected effects).

The commission also stood by its assessment that its spending on climate action had exceeded its 20 per cent target.