'Public finance in Europe should catalyse the transition away from fossil fuels and towards 100% renewables and fully energy efficient economies'

 
In 2016, the EU and its Member States ratified the Paris Agreement, demonstrating their ambition to limit global temperature rise to 1.5°C. The Paris Agreement stipulates that financial flows need to be made “consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.” The Paris Agreement requires major overhaul of not just climate and energy policies in the EU, but also financial policies and investments to ensure a shift in support away from fossil fuels and instead towards a renewable energy, energy efficiency and climate resilience. 

CAN Europe works to ensure public financial flows in Europe are shifted away from fossil fuels and towards renewable energy and energy efficiency. This entails ending fossil fuel subsidies, making sure that the EU budget catalyses the transition away from fossil fuels and that EU’s financing facilities, policy tools and development banks undergo ambitious reforms that lead the way in the transition of the EU economy away from fossil fuels.

 

 

Ending fossil fuel subsidies in Europe

 

Fossil fuel subsidies represent one of the biggest barriers to short-term and long-term climate action. Without cutting off financial support for one of the causes of climate change – fossil fuels – it will be extremely difficult to effectively overcome the climate crisis. Unfortunately, the financial support to the fossil fuel industry continues to flow. This trend stands in the way of increasing support for climate action across Europe, and potentially increasing Europe’s international support for mitigation and adaptation in developing countries.

 

 

Fossil fuel subsidies distort markets and dis-incentivise investments in renewable energy and energy efficiency. They impose large fiscal costs on governments and drain scarce financial resources away from key sectors such as education and health care. In addition, these subsidies negatively impact local environments and water sources and cause illness and premature deaths due to local air pollution and heightened congestion. Despite the overwhelming evidence against fossil fuel subsidies, governments around the world continue to pump approximately EUR 520 billion per year into polluting fuels such as coal, oil, gas and diesel. The figures speak louder than words: billions of euros of public finance are still being provided to polluting industry, superseding all support for renewable energy and international climate finance which protects our communities against the very impacts of burning fossil fuels. 

Click here to learn more about fossil fuel subsidies, what the political situation is and what the EU must do.

 

 

Avenues for change to shift financial flows and the political state of play

 

Within the EU and across the wider Europe, financial support for fossil fuels has gained increasing attention in recent years, both at country level and across the EU’s financial institutions and policy processes. But the EU is yet to tie together all the separate strands of how financial support for fossil fuels can be equitably and quickly phased out across EU Member States and neighbouring countries. Here you find more information about the political state of play and which processes are relevant to influence, both internationally and in the EU.

 

• Delivering on climate goals: The EU budget

The EU’s long-term budget, the so called Multiannual Financial Framework, sets the structure and defines the spending priorities for the annual EU budgets over a seven-year period. It greatly contributes to translating the EU policy objectives into action and at the same time it defines future objectives, priorities and conditions of EU funding respectively the policies EU funds are supposed to finance.

The current 2014-2020 EU budget has some important climate relevant features such as “climate mainstreaming”, the strategic link to the EU 2020 climate and energy framework or the political target to spend 20% of the EU budget on climate action. However, fossil fuels still receive support from the EU budget, and competing priorities and incoherent implementation of climate action are sweeping off the climate credits of the EU budget. Overall its full potential to catalyse the clean energy transformation in Europe remains largely untapped.

While the review/revision of the current MFF 2014-2020 is underway, the accordant legal adjustments are of rather technical nature. More important for the required shift of the EU budget are the discussions on the next financial period 2021-2027. These discussions are about to start. The post-2020 MFF will be critically important to deliver the long-term climate goals of the EU, including the 2030 climate and energy targets and the (80%-)95% GHG reduction by 2050.

Information and intelligence on the EU Budget: 

Read our  pdf CAN Europe position on the EU Budget post 2020 September 2017 (1.66 MB)  and view our  pdf An EU budget for a sustainable and clean Energy Union (1.58 MB)  infographic. You can also read our briefing on the  pdf EU budget - Incentives for higher climate ambition (1.11 MB) .

Watch our 40 minutes everything-you-always-wanted-to-know-but-never-dared-to-ask webinar on the EU budget: 

EU budget timeline

 

• European development banks need to get out of fossil fuels

Financial institutions, including development banks are important actors in the global effort to speed up the transition towards zero carbon economies. But rather than meeting the potential to achieve global climate action objectives, these financial actors are still providing unbalanced support for fossil fuels. Read More  

Click here to learn more about the avenues for change.

 

 

 

Learn more

	Data on fossil fuel subsidies Here you find a range of useful external resources and data on fossil fuel subsidies. Read More
	CSO reports and publications Here you find civil society organisations' reports and publications related to the issue of shifting financial flows and fossil fuel subsidies. Read more
	Visual material: Shifting financial flows On this page you can find visual material produced by CAN Europe on the topic of fossil fuel subsidies phase out and shifting financial flows. Read more
	Media coverage of shifting financial flows and fossil fuel subsidies Here we collect a sample of the media coverage of shifting financial flows and fossil fuel subsidies. Read more

 

  

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