Climate Funds Overestimated by €34.5 Billion: EU Auditors Sound the Alarm
Europe’s investments to support member states after the pandemic are far less “green” than they appear. Climate action funds have been overestimated by more than 12.5%. A total of €34.5 billion has been incorrectly labeled as contributing to the EU’s green recovery out of the €275 billion designated by the Commission. This means that over 42% of the total resources mobilized under the Recovery and Resilience Facility (RRF) were wrongly classified.
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What’s Wrong with the Recovery and Resilience Facility?
The €700 billion financial instrument at the heart of the Next Generation EU plan is under scrutiny in a critical report by the European Court of Auditors, published on September 11. In the 56-page document, the auditors highlight five key issues related to one of the Recovery and Resilience Facility’s (RRF) main objectives: supporting the transition and combating the climate crisis.
- Overestimation of climate-related RRF resources
- Weaknesses in climate-related milestones (intermediate targets)
- Uncertainty in assessing the final objectives of climate actions
- Lack of transparency in reporting actual expenditures
- Opacity in the environmental compatibility of some projects labeled as “green”
“The RRF represents a significant investment across the EU and, if properly implemented, should greatly accelerate the achievement of the EU’s ambitious climate goals,” said Joëlle Elvinger, the Court member responsible for the report. “However, it currently suffers from a high level of approximation in the related plans, as well as discrepancies between planning and execution, and ultimately offers little clarity on how much of the money is truly being used for the green transition.“
What went wrong? Despite being designed to support recovery, the plan has faltered. One of the underlying issues, according to the Court, is how the European Commission assigns the “green” label to actions funded by the RRF. The Commission attributes a “climate coefficient” to each action—100%, 40%, or 0%—depending on its relevance to combating the climate crisis.
However, EU auditors point out that “for many measures, there was no clear distinction,” “the respective contributions to climate goals were overestimated” in some cases, and many projects “lacked a direct link to the green transition.” In other instances, the coefficient was assigned based on an impact assessment that later proved inadequate.