Climate action — already at the forefront of EU policy making for a decade
The European Commission has developed an increasingly prominent and horizontal role in climate action over the last decade. DG Climate Action, which celebrates its 10th anniversary this year, is in the frontline of the fight against climate change at EU and international level, for example developing and implementing the European Emissions Trading System. It also coordinates the Commission’s efforts to meet multiple European and international commitments regarding the climate. Mauro Petriccione has been the Director General of DG Climate Action since early 2018. In this article, he reflects on the Commission’s past role in addressing these climate challenges, as well as outlining the key opportunities and challenges for the future under the European Green Deal. Moreover, he considers how the ECA helps to make the EU’s climate action more effective.
By Mauro Petriccione, Director-General for Climate Action (CLIMA), European Commission
Clear timeframe set towards climate neutrality
EU climate action has entered an important stage of development. The long-term goal of climate neutrality in the EU by 2050 has been agreed by the European Council, and the announcement of the European Green Deal in November 2019 has projected the issue to the forefront of European policymaking (Figure 1). The 2050 climate neutrality target, which the European Commission has proposed to enshrine in EU law, now means that the green transition, one of the twin flagship initiatives of the Von der Leyen Commission, has a clear timeframe and the Commission is working hard to implement the appropriate short-, medium- and long-term policy instruments to achieve this.
Figure 1- Key elements of the European Green Deal
The European Court of Auditors provides valuable input for the implementation process of EU legislation, and it will continue to do so as the Union moves ahead with its ambitious climate agenda. Through its audits, the ECA has been providing independent assessments of the performance of EU climate policies to ensure the Union delivers and that citizens benefit from these, thus improving public accountability in the EU. The ECA’s role will become no less important as we move forward; in this case, by assessing the EU’s contribution to the delivery of a clean and healthy planet for all, combined with a modern, efficient and competitive green economy.
I will take this opportunity to take stock of our achievements so far, as well as to discuss the developing role of public audit as the transition to a climate-neutral economy is progressing. This reflection is particularly pertinent at the time of publication, as the EU looks at ways to revive the Single Market following the shocks caused by the global Covid-19 pandemic. Short- and medium-term measures are already being put in place, but money must also be invested in a smart and sustainable manner, in innovative research, digital infrastructure, clean energy, a smart circular economy and transport systems of the future to ensure that Europe comes out stronger in the long term. We are indeed well placed in this sense, given our considerable patent assets in green technologies, and we should capitalise on this momentum to ensure our economic recovery is a green one.
Taken together, these considerations will allow us to apply the lessons we have learnt to the future opportunities and challenges presented by the transition to a climate-neutral society, in line with the UN sustainable development goals directly related to climate change.
Being a pioneer by creating a transformative framework
In the past 5 years, the EU has established a transformative framework that will reduce our emissions by at least 40% by 2030. This experience taught us how to better integrate climate and other policies into the Energy Union and send coherent policy signals that drive real investments.
In 2015, before the Paris Agreement was reached, the EU had already started to deliver ambitious climate policies at home. It established an economy-wide framework of climate and energy policies to achieve greenhouse gas (GHG) emissions reductions of at least 40% by 2030 compared to 1990 levels. This included revising the EU Emissions Trading System (EU ETS) for the period 2021–2030 and an agreement on the Market Stability Reserve to address the surplus on the EU carbon market and improve its operations.
The EU’s position at the forefront of international climate and energy policy allowed us to play a decisive role in paving the way for the Paris Agreement. Since then, we have worked with major economies, e.g. China and Canada, to maintain high levels of political support for implementation, as well as helping to negotiate a robust ‘rulebook’ for countries to deliver upon their Paris goals.
We also set national Green House Gas (GHG) emissions reduction targets for non-ETS sectors such as transport, buildings, agriculture and waste management, incentivising Member States to take action on the other economic sectors, allowing for reductions of up to 30% by 2030 compared to 2005. These are based on the principle of fairness, with Member States’ targets ranging from 0% to -40% from 2005 levels depending on individual capacity.
A regulation on land use, land use change and forestry was adopted, placing the onus on Member States to ensure that the overall absorption of GHG emissions by these sectors is maintained and improved when compared to a ‘business as usual’ scenario in the period 2021 to 2030.
The EU also addressed emissions from transport, a key source of emissions in Europe and worldwide and the only EU sector where emissions are rising significantly. We approved an ambitious proposal to set CO2 emission standards for cars and vans for the period after 2020, where emissions from new cars will have to be 37.5% lower in 2030 compared to 2021 and emissions from new vans will have to be 31% lower.
By 2018, the EU had already reduced its emissions by 23% compared to 1990 levels, while the economy grew by 61%. Not only did this benefit the climate and the environment and therefore citizens, but also helped to create the four million ‘green jobs’ that currently exist in the EU. This shows that decoupling emissions from economic growth is possible, proving that reducing emissions and economic prosperity are mutually beneficial policy objectives.
The EU has put in place all the necessary EU policies to deliver the existing 2030 climate and energy objective of reducing emissions by at least 40%, domestically, compared to 1990. However, scientific research shows it is clear that this will not be sufficient for the long-term. (1)
For this reason, the EU has decided to go significantly further and undertake an economy-wide transition to achieve climate neutrality by 2050. In November 2018, the Commission released its long-term strategy, A Clean Planet for All, as a blueprint for action, recommending that the EU should pursue efforts in line with the 1.5°C temperature goal agreed in Paris and deliver an economy-wide transformation, within a generation, to modernise and green our economy whilst bringing prosperity to citizens. Following an extensive stakeholder debate, the objective was endorsed by the European Parliament and European Council in 2019.
Indeed, climate neutrality is a central tenet of the European Green Deal, itself a flagship policy initiative of the Von der Leyen Commission. Within the first 100 days of the new mandate, we had already formulated a series of strategies with the aim of aligning EU law and policy with the climate neutrality goal. Following the presentation of the European Green Deal in December 2019, the Commission announced the Green Deal Investment Plan and Just Transition Mechanism in January 2020, followed by proposals in March for the first-ever European Climate Law enshrining climate neutrality in EU legislation, a new Industrial Strategy and Circular Economy Action Plan.
Example of one of the key parts of the climate proposals of the current European Commission. In addition, by September 2020, we will present an impact-assessed plan to increase the EU’s GHG emission reductions target for 2030 to at least 50% and towards 55% compared to 1990 levels in a responsible way. Following the assessment, the Commission will amend its Climate Law proposal to include the new 2030 target. Similar assessments will be undertaken to support the update of other key pieces of legislation that underpin our climate policy, including the EU Adaptation Strategy.
In other words, European climate policymakers are pursuing the objective of increasing medium-term ambitions for 2030, as well as paving the way for the long-term goal of climate neutrality by 2050. The Commission is currently engaging with co-legislators to enshrine these two objectives in law by the end of the year, thus fulfilling an obligation to European citizens to fulfil these goals.
The Executive Vice-President for the European Green Deal, Frans Timmermans, has made it clear that he intends to go ahead with this agenda in spite of the difficulties resulting from the Covid-19 pandemic. Specifically, the EU still intends to submit its enhanced Nationally Determined Contribution for 2030, despite the postponement of the COP26 climate summit due to the spread of the coronavirus.
EU’s climate action has intensified…and so has public audit of it
Public audit is, quite correctly, paying increased attention to EU climate policymaking as it undergoes these significant developments. Indeed, the Commission has observed a steady increase in the ECA’s interest in climate-related policies and their integration in other policy areas. In its more recent reports, the ECA has gone beyond financial performance audits and provision of assurance for the annual budget discharge exercise, toward assessments of policy coherence between different policies, within a single policy, as well as assessing whether the mainstreaming of climate and environmental aspects has been sufficient.
It has gradually shifted from compliance-based audits to performance-related audits, a positive progression that ensures we do not only achieve the bare minimum, but also seek to perform to the best of our ability. Equally, tools such as the 2017 climate and energy landscape review and specialised policy briefs have proven valuable instruments for our policymaking.
Examination of the EU’s GHG emission reductions was the subject of a recent audit by the ECA, published as special report 18/2019 that has increased the visibility of reporting on GHG emissions, and we appreciate its acknowledgement of the Commission’s and the European Environment Agency’s work to ensure and improve the quality of EU reported GHG emissions. The reporting of emissions, climate policies and measures is a collective effort of the EU, where the Commission relies on close collaboration with Member States.
The ECA also scrutinises the different implementation phases of the EU ETS. As the ETS has evolved, progressive audits are being carried out. The ETS has already been assessed for the initial two phases, set-up and implementation, in the ECA’s special report 6/2015, and is currently being audited for Phase III (2013–20) and IV (2021–30) regarding free allocations.
The ECA is also currently undertaking an assessment of what is known as ‘Climate Expenditure Tracking,’ in order to estimate the financial needs arising from the necessary energy and climate investments. This aspect is covered by two ongoing reviews, one with clear reference to the mainstreaming audit (special report 31/2016), and another, newer review named ‘sustainable finance for climate action’.
The qualitative shift in approach has proven constructive, providing useful suggestions for our policy development. Its value can be observed in the 2018 New Entrants Reserve (NER300) audit (special report 24/2018), where the ECA recommended steps to be taken to clarify the ownership and to monitor the accounts and the balance sheet of NER300’s successor programme, the Innovation Fund, despite the fact that funds for the latter will not stem from the EU budget. To the extent possible, these recommendations were factored into the governance process of the Innovation Fund.
Mainstreaming climate into EU’s long-term budget to live up to commitments made
Recommendations by auditors can make a difference. For example, at the behest of the EU’s external auditors and others, the Commission is seeking increased mainstreaming of climate-related expenditure into the EU’s long-term budget, the Multiannual Financial Framework (MFF). In 2018, it proposed raising budgetary expenditure on climate from 20% of the 2014–2020 MFF to 25% for 2021–2027. President von der Leyen has been clear in her aim, following the example of her predecessor, of mainstreaming climate action and climate finance into all EU policy areas (2).
This increase in ambition is supported by Commission proposals to strengthen climate action in key areas, such as agriculture and rural development and external action, and increase dedicated funding for climate action under the LIFE programme.
To conclude, I would like to highlight the importance of a constructive, open and fair interaction between public auditor and auditee, and of ensuring that good planning remains in place. Good timing of the audits and of the publication of the reports is essential to ensure that the Commission derives utmost benefit in its legislative work from the recommendations of its independent auditor. In this way, together, we can ensure effective delivery of our world-leading commitments to EU citizens.
(1) See for example https://www.ipcc.ch/sr15/
(2) See for example in section 2.2, “Mainstreaming sustainability in all EU policies”, European Green Deal Communication
This article was first published on the 2/2020 issue of the ECA Journal. The contents of the interviews and the articles are the sole responsibility of the interviewees and authors and do not necessarily reflect the opinion of the European Court of Auditors.
