EU Budget and Climate Change

Environment |  Long before the Copenhagen Conference begun, it was obvious that climate change has an inevitable price tag to it. Both when it comes to tackling climate change and handling its effects that will strike us in the future. In order to cope with this price tag without increasing the EU budget, spending on agricultural subsidies need to be cut, writes Birgitta Resvik and Helena Strigård.

The Copenhagen Conference has come to an end and unfortunately no legally binding deal was sealed. Such a deal is crucial and hopes are now attached to the following COP16 meeting next fall. However, for a disappointed European Union, there are still lots to be done, not least in the upcoming negotiations on future priorities of the EU budget. Although it could only play a limited role by itself in reducing global GHG emissions, there are new technologies which are essential for the world market and that would be reasonable to finance through the EU budget.

Enhanced action on technology development and transfer to developing countries is one of them. According to the actual paper from the Working Group on Long-term Cooperative Action, which is an outcome of the Conference, private and public energy-related research, development and demonstration should increase towards at least a doubling of current levels. Investments in European R&D for development of cost-efficient low carbon technologies and support for large scale deployment of new technologies to European recipients are important as well. This is emphasised in the Commission’s Strategic Energy Technology Plan (the so called SET-plan). Adding to that, a CEPS taskforce on climate change recently made a compelling case on how infrastructure investments such as smart grids and Trans-European Networks need to be prioritised in order to tackle climate change. Such investments could build up economies of scale and create value for money, thus motivated to be financed through the EU budget.

In the light of the economic crisis though, there is simply not room for increasing the overall budget in the next financial perspective. Consequently financial coverage needs to be found by other means if the equation is to add up. Resources would be available if agricultural subsidies were cut.

Currently over 40 procent of the EU budget is allocated to common agricultural policy (CAP) and rural development. This should be compared to the less than 6% allocated to R&D and innovation. Clearly, the EU is not walking the talk when it comes to the big money.

Ironically, climate change has been put forward as an argument to conserve the current structure of CAP subsidies.

The case is made that since agriculture stands for a large share of GHG emissions, this sector needs support to reduce its carbon footprint, and thus, more subsidies would be necessary.

This would only make sense if articulated as an argument for increasing the rate by which direct support in the first pillar is transferred to the second, i.e. reducing direct support to farms in favor of increasing support to rural development. In the best-case scenario, the second pillar could form a blunt tool for achieving an effect on climate change. However, if tackling climate change is the target, inefficient detours sought in order to legitimise historical systems of subsidies should be avoided.

The debate on how joint resources of the EU should be spent has already started. In the two years to come, important negotiations towards the next financial perspective will take place. These negotiations cannot be isolated from the outcome of the Copenhagen conference. Ambitions expressed on tackling climate change should be acknowledged as arguments in favour of decreasing first pillar agricultural subsidies – not the opposite.

The Climate conference has come to an end, but the tackling of climate change will continue. Will the Parliament, Commission and European leaders follow suit on the ambitions initially expressed? By the priorities made in the next financial perspective, they will have to show.

(This article is also published on the Eurosience webpage)

Birgitta Resvik