EU Member States look set to demand that 37% of Europe’s €312bn recovery budget be invested in green projects guided by the EU’s taxonomy, according to a document seen by RI.
The Council of the European Union, under the Presidency of Germany, has drawn up proposals on what should be required under new regulation governing the Recovery and Resilience Facility (RRF) – the key instrument of the EU recovery fund.
Under the regulation, member states must outline national investment plans showing how they will spend the money to deal with the fall-out from the Covid-19 crisis, and to spur on the digitalisation and decarbonisation of their economies.
If the Council gets its way, Member States will have to explain “how the measures in the [national investment] plan are expected to contribute to the green transition or to the challenges resulting from it, and whether they account for an amount that represents at least 37% of the plan’s estimated total cost”.
The RRF was first proposed by European policymakers in May, and both Council and Parliament have been thrashing out their positions over the summer, ready to enter negotiations with each other on the final regulation. There have been a number of versions of the proposals, including two previous iterations by the Council, but none have put a target on green spending until now.
In addition, the leaked document shows that the Council wants member states to ensure “that no measure for the implementation of reforms and investments projects included in the plan makes a significant harm to environmental objectives within the meaning of Article 17 of Regulation (EU) No 2020/852” – in other words, the €312bn should be allocated using the Do No Significant Harm Principles of the EU green taxonomy, which prevents projects from being classed as sustainable if they cause notable damage to water and marine resources, the circular economy, pollution control or biodiversity.
The position will be officially finalised in October, ahead of negotiations with European Parliament and the European Commission. On green issues, Council has so far been consistently less ambitious than its counterparts, so – if these proposals survive the discussions over coming weeks – they would be likely to make it into regulation.
The RRF will be funded by bonds issued by the European Commission. It will be disbursed between 2021 and 2026.