Factbox: How the next EU budget will tackle climate change

Environment

BRUSSELS (Reuters) – EU leaders meet in Brussels on Thursday to haggle over the bloc’s next seven-year budget, a hole of up to 80 billion euros ($86.3 billion) created by Brexit, and the need to finance initiatives including the 1 trillion euro European Green Deal.

FILE PHOTO: European Union flags fly outside the European Commission headquarters in Brussels, Belgium, February 19, 2020. REUTERS/Yves Herman

Here are the key climate change elements of the 2021-27 budget proposal that European Council President Charles Michel has put on the table as a starting point for the 27 leaders:

25% OF SPENDING FOR CLIMATE

Michel wants at least a quarter of 2021-27 spending to further climate goals, including the ultimate ambition to make the EU “climate neutral” by 2050. That would equate to 274 billion of his proposed total budget of 1.095 trillion euros – an increase from the 2014-20 budget, in which 20% of spending was earmarked for climate.

Michel also wants all EU spending to be consistent with the Paris Agreement goals which aim to cap global warming at 1.5 degrees Celsius above pre-industrial levels this century.

PRESSURE ON POLAND

Michel’s proposal sets aside 7.5 billion euros for a “Just Transition Fund” to help emissions-intensive regions and sectors shift away from fossil fuels. But this comes with a caveat: member states that have not signed up to a national objective of climate neutrality by 2050 will only get half of their share.

This is aimed at Poland, the only member state that refused to commit to the 2050 climate neutrality goal at an EU summit in December but which had been set to get 2 billion euros of the 7.5 billion on offer, making it by far the biggest beneficiary.

AGRICULTURE

Agriculture spending would become greener as Michel wants 40% of the Common Agricultural Policy (CAP) budget to be dedicated to climate action. The CAP would make up nearly a third of the total 2021-27 budget under Michel’s proposal.

To deliver this, the EU will launch a “new environmental architecture” for farming subsidies, while rural development projects with a climate angle will get access to a higher co-financing rate from the bloc.

CARBON TRADING, PLASTICS TAX

Michel wants the EU budget to be part-funded by a tax on plastic waste and funds from the EU carbon market. The tax on plastics would be 0.8 euro per kilogram of non-recycled plastic packaging waste, while a chunk of revenue from the EU Emissions Trading System (ETS) would be redirected to EU coffers.

ETS revenues currently go to European countries, which together received 14.5 billion euros from selling EU carbon permits last year.

EUROPEAN INVESTMENT BANK

The subscribed capital of the EIB would increase by 100 billion euros, helping mobilize 500 billion euros of additional investment to meet climate targets and digitize its economy.

Reporting by Kate Abnett; Editing by John Chalmers and David Holmes

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