Auditors say EU green spending is not as green as it looks

EU’s spending on climate-related projects is not as green as the European Commission has reported it to be, according to a European Court of Auditors assessment on climate mainstreaming.

The auditors’ report looked into EU’s green spending between 2014 and 2021, of which 20% was meant to be committed to climate-related projects across different EU programmes for agriculture, cohesion, research and others.

The Commission reported it reached the target, spending €216 billion on climate mainstreaming, but after a closer look the auditors found a large chunk of the spending was not as ‘green’ as it was reported to be.

Around €72 billion marked as climate spending was ‘unduly recorded’, according to the auditors, bringing down the actual share of climate spending from 20% to 13%. A €60 billion overestimation on agricultural spending was found to be the largest culprit.

The seven-year Horizon 2020 research programme was among the programmes where auditors found faults in reporting, such as inconsistencies between which projects count as green and weak justifications for their ‘greenness’.

The auditors looked at a sample of 24 projects and found nine of them were not as relevant to the climate as they had been made out to be. In this sample alone, the contribution had been overestimated by around €300 million, or 1% of Horizon 2020 climate-related spending.

“We found that sometimes the coefficient was not entirely justified because the description or topic lacked relevance to climate,” one of the auditors behind the report told Science|Business.

The other problem flagged by the auditors concerned reporting on bottom-up projects. While top-down calls are marked as green from the get-go and any projects funded under them fall in the category, projects funded under bottom-up calls are assessed individually. This means they are given a climate mainstreaming mark on a case by case basis and the spending is added to the climate mainstreaming total later.

“[The Commission] makes an additional evaluation of all bottom up calls and this number increases without a specific indication where it comes from,” said the auditors. One year, for example, reported climate spending jumped by 41% after the Commission added its assessment of bottom-up projects. 

The recommendations

Under Horizon 2020, the goal was to spend at least 35% of the budget on climate mainstreaming and the Commission reported achieving this, putting €20.3 billion into climate-related research projects, which equates to around 9% of total EU climate spending.

Part of this came from a last-ditch move at the end of 2020, when the Commission launched a €1 billion Green Deal call, which moved climate mainstreaming spending past the 35% threshold. Before the call, the total contribution stood at 31%.

The auditors’ report shows at times the Commission overestimated how much money had gone into green projects, but the overall scale of over-reporting is impossible to judge. The way the reporting rules are, the numbers the auditors found assessing small samples of projects cannot be extrapolated to the entire budget.

But the auditors have advice for the Commission for the new EU budget, which again foresees 35% of the €95.5 billion Horizon Europe budget for research going into climate-related projects. They want more consistency on how the projects are assessed and climate reporting to be improved across the board.

While the climate mainstreaming for the new budget is welcome, the auditors say “what ultimately counts is whether EU spending can effectively contribute to achieving climate and energy objectives.” Right now, it is unclear whether the targets do lead to fewer greenhouse gas emissions.