On May 15, the European Parliament Committees on Budgets and on Economic and Monetary Affairs in Strasbourg voted on a proposed extension of the European Fund for Strategic Investments (EFSI 2.0), also known as the Juncker investment plan, and on the opening of inter-institutional negotiations. They also voted on the report on the EFSI implementation so far.
The committees have endorsed a 40% target on climate action. They also empowered the EFSI steering board, a governance body led by the European Commission and the European Investment Bank overseeing the strategic direction of the fund, to develop a climate test which all eligible projects and the overall EFSI portfolio have to pass, Climate Action Network (CAN) Europe said.
In a previous vote on the prolongation of the EFSI in the industry, research and energy committee, MEPs agreed to even higher climate protection targets and the introduction of earmarking for energy efficiency.
However, (CAN) Europe noted that the Economy and Budget Committees has not picked up those more ambitious climate action elements.
“Overall, this position of the European Parliament does not go much further than what the European Commission and Council proposed earlier,” CAN Europe said in a press release.
In September 2016 the European Commission published its proposal for the prolongation of the EFSI until 2020 – two and a half years beyond its initial term – with the aim to leverage €500 billion in additional investments across the EU. The Commission’s proposal offered some positive climate action provisions, such as setting a 40% target for projects with climate relevance or providing for technical assistance to beneficiaries to develop clean energy projects, though it still allows for financing of fossil fuel infrastructure, CAN Europe said.
In December 2016 the Economic and Financial Affairs Council supported the positive climate protection provisions of the Commission’s proposal. However, they still did not exclude financing for fossil fuel infrastructure from the EFSI.
CAN Europe Finance and Subsidies Policy Coordinator Markus Trilling said, “By introducing a climate proofing tool for the entire EFSI the European Parliament finally acknowledges the obligations stemming from the Paris Climate Agreement, namely to shift financial flows and investments in order limit climate change to 1.5C.”
“However, the European Parliament missed out on the most straightforward way to achieve compliance with the climate protection requirements, namely to ban fossil fuel subsidies. Now it is on the Steering Board to develop and, even more important, to enforce climate impact assessment tools which guarantee the EFSI is fit for future and contributes to catalyse the low-carbon and clean energy transition,” Trilling added.
Xavier Sol, Director at Counter Balance noted that reinforcing climate action as part of the Investment Plan for Europe is a welcome step. “Indeed, EFSI has been supporting numerous fossil fuel infrastructure, namely gas projects, as well as high-carbon transport infrastructure. Therefore, we hope the changes brought forward by the Parliament will contribute to reverse this trend and force the European Investment Bank to rule out such investments,” he said.
Anna Roggenbuck, Policy Officer at CEE Bankwatch Network said that endorsing a 40% target on climate action was awaited and necessary step given the EFSI disappointing climate action record in 2016. “Perhaps this will finally give the Fund a boost to direct financial guarantees towards this type of investments. We hope that this will also be an incentive for financing renewables and energy efficiency projects in countries where so far EFSI has not been utilized,” she said.
Meanwhile, Sébastien Godinot, senior economist at WWF European Policy Office, accused MEPs of failing to improve Commission’s proposal on climate change.
“The Juncker plan should be used for climate action, not for climate destruction. With today’s vote, the European Parliament has proved useless on climate change: they rejected a target for energy efficiency projects while maintaining support for fossil fuel projects incompatible with the Paris climate agreement they loudly supported,” Godinot said in a WWF press release.
“EU institutions must wake up to the new reality of the Paris Agreement, and understand that it means putting an end to fossil fuel support. Haemorrhaging piles of public cash in unsustainable projects like gas infrastructure while the EU gas consumption is going down is absolutely nonsense,” he added.