EU money for clean energy transition is being spent on fossil fuels, says report

Less than 10 per cent of the EU regional funding money earmarked for decarbonisation projects in nine Central and Eastern European countries will be invested into renewables, energy efficiency and smart grids, according to a new report.

EU money is still being earmarked for fossil fuel industries, with EU funds mainly employed to maintain a carbon intensive energy mix. This is locking countries into fossil fuel dependency. “We see an investment approach that mostly maintains the fossil fuels-based, energy-intensive economy that threatens the long-term sustainability of European societies,” the report says.

EU regional funding rules for 2014-2020 require member states for the first time to put a mandatory minimum proportion of money towards the shift to the low-carbon economy. However, the report claims climate change mitigation strategies appear mainly as rhetoric in these spending plans.

The report, written jointly by the pressure groups Friends of the Earth Europe and the Central and Eastern Europe Bankwatch Network, spotlights nine countries – Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia – where funds from the EU make up the vast majority of public infrastructure investments.

The analysis shows that in several countries allocations for renewable energy are stagnant or even in decline.

One example of carbonising the future is the replacement of old coal boilers with new coal boilers in Poland and Czech Republic. “It is correct that investments could relate to boilers fuelled by any type of fuel, including fossil fuels, as long as they follow a number of strict requirements,” said European Commission spokesman for regional policy Jakub Adamowicz. “This is for reasons related to social considerations – high levels of energy poverty – as well as current air pollution levels.”

There is also a business-as-usual approach in the transport sector, the report maintains, with the countries in question planning to build more roads than railways.

An author of the report, Markus Trilling, described this as, "close your eyes and drive spending.”

“[These] countries are prioritising energy intensive transport and fossil fuels over solutions to climate change,” he said. “Energy efficiency goals have been reduced to footnotes, and the potential for citizens to shape the energy sector – through innovative community-owned and managed renewables – has been side-lined."

The Commission defended member states’ spending plans, with Adamowicz saying, “The contribution to rail will increase in both relative and absolute terms. It should be pointed out that in many regions of Central and Eastern Europe some road investments are still required to tackle major infrastructure bottlenecks and to provide the basis for a balanced development of the transport system that includes low-carbon modes.”

Sustaining a coal-based economy

Poland will receive approximately €80 billion in EU regional money in the next seven years, making it the biggest beneficiary in Europe. The report claims a high proportion of the money will be used, “to sustain, and not to transform, the current coal-based economy.” The vast majority of Polish electricity is currently produced from coal.

Meanwhile in Estonia, “allocation of only 4.78 per cent of all EU funds to clean energy will not make a serious contribution to the transition towards a more sustainable and decarbonised energy system,” the report says.

The harshest criticism is reserved for the Czech Republic, a country where the report says, continued support for fossil fuels, low levels of climate mainstreaming and negligible support for a limited number of renewables, “make the transition to the low-carbon economy from EU funds unattainable.”

In terms of greenhouse gas emissions, the Czech economy is the third worst in the EU. Despite this, the partnership agreement approved by the Commission on 26 August 2014 makes no mention of a low-carbon economy, nor any single reference to anything vaguely related to the environment, the use of materials and natural resources or energy efficiency, according to the report.

Big investment needed

By signing the Paris agreement in December, EU countries have undertaken to reduce emissions by 80-95 per cent, compared to 1990 levels, by 2050. Achieving this goal will essentially require the full decarbonisation of European economies.

The EU has said at least 20 per cent of its budget for the next seven years – as much as €180 billion − should be spent on climate change-related action.

But the investment required is much higher than the EU or national public support available, said Adamowicz. “As stressed in the Energy Union Strategy, the private sector should bear the costs of much of the investments needed for the transition towards a more secure and sustainable energy system. EU funds should be used to attract the much needed private investments and to help establish viable markets,” he said.