Luxembourg, 28 August 2024
In May 2020 as a response to the COVID pandemic, the EU launched the Recovery and Resilience Facility (RRF), a nearly €700 billion euro fund made available to EU countries to address the economic and social impact of the pandemic. In order to advance the green transition and the EU’s climate targets as well, more than a third (37 %) of the money from the RRF must be used for climate-related measures. ECA auditors have examined this aspect of the RRF to establish whether these goals have been met.
The RRF is not like other types of EU funding. Rather than the EU disbursing funds to settle bills from member states, the money is paid out in response to ‘milestones and targets’ reached in national Recovery and Resilience Plans (RRPs). In these plans, EU countries must set out projects and estimated costs, at least 37% of which must contribute to climate action. As of February 2024, €648 billion has been committed to the RRPs. Although EU countries reached and even exceeded climate funding targets on paper (measures in support of these targets are estimated at 42.5 %, or €275 billion), is this so straightforward?
Exactly what constitutes the green transition is more complicated than it seems. The European Commission adopted climate-tracking methodology and assessed the extent to which certain measures proposed in national plans contribute to the green transition. A coefficient was applied to all spending: measures with a substantial climate impact are rated as 100 % climate action; those with a positive impact, as 40%; and measures with no impact at all, as 0%. For example, €100 million spent on a project to modernise the electricity grid would contribute €40 million to the overall climate spending target of the RRP. However, not all measures can be categorised so easily.
In addition, as climate-action spending targets are based on cost estimates contained in plans, there may be differences between theory and practice. The estimated cost of a certain project can differ significantly from the actual final cost and even the nature of a project can change, calling its green credentials into question.
In their upcoming report, ECA auditors assessed whether the climate-tracking coefficient that was applied to various measures accurately reflected their actual climate contribution. They also had a close look at whether measures that seemed to be environmentally friendly actually were, and whether planned spending was reflected in actual spending. The overall questions are: Has the RRF contributed to the EU’s climate goals effectively? Is the EU’s recovery funding helping to bring the EU to zero emissions by 2050? The answers to these questions can be found in our audit report on the Green Transition in the RRF, to be published on the ECA website on 11 September at 17:00.
Source – ECA