Building a #ClimateNeutral EU economy

13th March 2019 by Emma Goring

In the last stretch to a deal on EU innovation funding, we explore four criteria for a future-compatible Horizon Europe fund, writes E3G Researcher Lea Pilsner.

European negotiators are expected to conclude negotiations on ‘Horizon Europe’, the EU’s main source of research and innovation (R&I) funding, on 14 March. E3G highlights four benchmarks the final deal must meet for the fund to accompany the EU through its next big innovation challenge – building a climate neutral economy.

As demonstrated in the Commission’s recently released EU long term climate strategy, climate-related innovation is a major opportunity for the EU’s future competitiveness and the best way to protect European security and prosperity. The Horizon Europe programme is critical to accelerate Europe’s decarbonization, while creating lasting economic opportunities for industries and citizens alike.

Last May, the European Commission released its proposal for the Horizon Europe programme as part of the next Multiannual Financial Framework (2021-2017). With negotiations between the Council and the European Parliament now coming to a close, lawmakers have the opportunity to make sure the Programme fulfils its potential. Here are four criteria to evaluate whether they have succeeded.

  1. Horizon Europe contributes to a minimum share of 35% climate mainstreaming

Climate is not a sector-based issue: it underpins every policy area from industry to digitalization to food to basic research. The climate mainstreaming principle – dedicating a share of the overall budget to climate-related spending – ensures this is reflected across the EU budget and each budget instrument plays its part. To make sure European R&I will take centre stage in decarbonizing our economy and achieve competitive benefits, Horizon Europe must dedicate a sufficient share of spending for climate-related R&I activities. It is therefore important to uphold as an absolute minimum a 35% climate mainstreaming target in Horizon Europe, in line with Commission’s 25% target for the overall budget.

For efficiency of EU spending, keeping track of the programme’s climate impact will be essential. This can be done by making sure indicators that track funding impact also include metrics on climate change, as already voted by Parliament.

  1. A sufficient share of Horizon Europe budget is dedicated to the climate, energy and mobility cluster

Without sufficient budget allocated to climate-specific R&I activities, Europe’s decarbonization goals are at risk and so are its market shares in the global clean tech sector. The Commission suggested devoting close to €15 billion for climate, energy and mobility in its proposal as part of a €94 billion-large Horizon Europe programme. The EU’s investment in R&I is small in comparison to other players and will be reduced due to Brexit. Guaranteeing sufficient funds support Europe’s excellent climate and energy research is critical. Without doing so, we risk undermining Europe’s chance to create its own innovative solutions for a green economy. At the very least this means not going below the Commission’s proposed budget share for the climate, energy and mobility cluster of €15 billion. It also implies keeping mobility within the cluster to reap the large decarbonization opportunities in the transport sector.

  1. The rest of the Horizon Europe programme is ‘climate-proofed’ by removing any support to fossil fuels

Financing fossil fuel research through the first budget following the Paris Agreement would be a step backwards and against the EU’s own G7 commitment to phase out fossil fuel subsidies by 2025. Efficiency of spending means the EU should avoid subsidising R&I in stranded assets and instead mobilise funds for productive, climate-friendly investments.

  1. Missions are designed to deliver carbon neutrality

Missions – a goal-oriented and time-bound approach to research and innovation centred around measurable impact for society – are a welcome new addition to the Horizon Europe programme. They are a cost effective and high impact measure which accelerate the transition to a decarbonized economy in a tangible way for EU citizens. Mission areas must therefore explicitly take on the climate change challenge to ensure they can deliver large scale deployment of clean technology, change the amount of energy people consume, and the way they consume it. The Parliament’s role in the governance of missions should be upheld to ensure citizens’ interests remain at the heart of missions.