18 February 2011: The EU budget 2014 – 2020

There is already substantial debate – much of it heated – about the EU’s Budget from 2014 to 2020, the Multiannual Financial Framework.  Around 40 per cent of current EU spending goes on the Common Agricultural Policy (CAP), and around 37 per cent on Cohesion Funds, so these two budget lines inevitably dominate discussion.

Agriculture accounts for about 10% of total EU greenhouse gas emissions.  Most of CAP spending supports intensive fertilser and pesticide (so oil-based) agriculture. CAP spending on this should fall. Money for rural development should be protected or even increased. Central and eastern European member states should receive full CAP payments. This will mean less money going to farmers in western Europe.

The fundamental objective of cohesion spending is redistribution of income and wealth from richer parts of the EU to poorer parts. That must remain absolutely central. Poor regions of all countries need to get some money, though there is no reason or justification for all that money going through Brussels. If the UK wants to give money, as it should, to poor regions of the UK, that could be done by the UK government more effectively. However, poor regions of poorer countries need money from EU funds. So Cohesion Funds should be protected, or even increased. More of the money must be spent on energy efficiency. Member state governments can choose to do this, but most have not done so, so it should be made obligatory. The social and economic benefits, on top of the climate benefits, make this fully justifiable.

There should also be an increase in expenditure on controlling climate change and adapting to its now-inevitable effects. Climate change covers many policy areas, so the definition of what constitutes climate spending is the subject of much debate. In an ideal world, a dedicated climate funding stream, or more than one, would be best. Failing that, climate proofing – assessing whether any proposed EU expenditure is good or bad for climate protection – is essential.

Not all money for climate protection will come from public funds. The private sector will have to play the major role in decarbonising, both in providing the money and then in building the equipment. For example, it is ultimately going to be up to the private sector to demonstrate carbon capture and storage (CCS) and then deploy it. The public sector needs to provide some sort of financial assistance upfront, because CCS is proven at small scale but not at large scale and is not integrated throughout the process of electricity generation.

The research budget should also be increased. It could be streamlined and be made easier for applicants. One example is that you have to say how many person hours a piece of research is going to take before you apply. That is not a particularly useful box-ticking exercise, but you have to tick the box. So the administration of research spending could be made more effective.

Where should EU money come from? Should there be European taxes? Anything that the EU does on tax requires unanimity, so all 27 governments need to say “yes”. That means that anything agreed would not be a supranational EU tax; it would be intergovernmental co-operation among 27 governments, who will decide to have a certain tax policy.  The Commission has proposed some new EU taxes – ‘own resources’ – including a carbon tax and an aviation tax. The German and UK governments have come out against all ‘European taxes’ already. This is regrettable.  Both taxes could play a valuable role in climate policy. The debate about taxes needs to move beyond general stances on subsidiarity, and onto evaluation of specific proposals.

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1 Comment

  1. Thanks for letting me know

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