eu 2011 unlocking the potential of the eu budgetawsassets.panda.org/downloads/lr_volume1.pdf ·...

Unlocking the Potential of the EU BudgetFinancing a greener and more inclusive economy

Smarter Spending

REPORT

2011EU

Volume One

AuthorSebastien Godinot, Economist, WWF European Policy Office Tel: +32 (0)2 740 0920 email: [email protected]

CoordinationWWF European Policy Office - Communication DepartmentAlexandra BennettFlorence Danthine

Contributions from the WWF networkAndreas BaumuellerIoli ChristopoulouAimee GonzalesIsabelle LaudonTony LongIrene LuciusMatthias MeissnerSergey MorozSally NicholsonCelsa PeiteadoSam Van Den PlasArianna Vitali Roscini

Graphic DesignLies Verheyen - Mazout.nu

Language EditingDerek McGlynn - Writeaway

Published in March 2011 by WWF-World Wide Fund for Nature (Formerly World Wildlife Fund), Brussels, Belgium. Any reproduction in full or in part must mention the title and credit the above-mentioned publisher as the copyright owner. © Text 2011 WWF. All rights reserved.

WWF presents two volumes focusing on two complementary approaches to the EU Budget. The present one, Volume One - Smarter Spending - focuses on how to mainstream an environmental approach in the next EU budget which would foster a green economy delivering jobs, strengthen the overall European economy and improve the well-being of citizens. WWF has identified success factors for the overall EU budget and for each specific EU fund. Therefore this report should be considered in conjunction with the Volume Two - Intelligent Investments - which focuses on how to allocate and increase EU investment in specific areas and sectors that stimulate the green economy.

COnTEnTSExECUTiVE SUmmaRyinTROdUCTiOnPaRT 1 - UnlOCk win-win-win SOlUTiOnS

1. Enabling a smart Europe2. Ensuring a sustainable Europe3. Building an inclusive Europe4. Enhancing EU legitimacy and leadership5. Preparing for the future

PaRT 2 - TOOlS TO EnaBlE ThE EU BUdgET TO dEliVER kEy EUROPEan 2020 TaRgETS

1. Multi-Annual Financial FrameworkTool 1: Ensure environmental requirements in the MFF regulation

2. Common Strategic FrameworkTool 1: Develop a Common Strategic Framework ensuring environmentalintegration for the 5 funds co-managed by the European Commission andMember States

Tool 2: Set the framework for rewarding best environmental performancewith financial incentives

Tool 3: Calibrate the framework for mandatory green public procurementto boost eco-innovation and save public funds

Tool 4: Set the framework for mandatory financing plans for Natura 2000

Tool 5: Strengthen public partnership and transparency to improve scrutinyand quality of spending

3. Common Agricultural Policy (CAP)Tool 1: Implement a mandatory greening of Pillar 1

Tool 2: Strengthen agri-ecological measures in Pillar 2

Tool 3: Increase support for training and guidance for farmers to enhancesustainable farming

Tool 4: Set environmental targets and performance indicators to measureprogress

Tool 5: Reward best environmental performance with financial incentives

Tool 6: Implement mandatory green public procurement

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4. Cohesion PolicyTool 1: Ensure an appropriate environmental focus in the regulatoryframework

Tool 2: Set mandatory thematic priorities in the regulation and reformcategories of expenditures to align with investment priorities

Tool 3: Set environmental targets and performance indicators inPartnership Contacts and Operational Programmes


Tool 5: Increase technical assistance for guidance to improveenvironmental integration in Operational Programmes and projects

Tool 6: Improve project selection criteria: implement eco-conditionalitythroughout the full project life-cycle

Tool 7: Strengthen transparency and public partnership in planning andimplementation to improve scrutiny and quality of spending

5. Research and innovation fundsTool 1: Ensure appropriate environmental requirements in financialregulation and in the Common Strategic Framework

Tool 2: Set environmental targets and performance indicators


Tool 4: Ensure eco-conditionality in research and innovation projects based mon best practice

6. External dimensionTool 1: Strengthen environmental integration in all development policies

Tool 2: Increase the use of Strategic Environmental Assessments

Tool 3: Improve Policy Coherence for Development

Tool 4: Develop targeted support for climate and biodiversity

Tool 5: Enhance reporting, governance and participation to improvescrutiny and quality of spending

7. European Fisheries FundTool 1: Design support that does not increase overcapacity

Tool 2: Link the support to the achievement of sustainable fisheries and good environmental status


Tool 4: Implement mandatory green public procurement to boost eco-innovation and save public funds

8. Apply the success factors to other EU funds and activities

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Unlocking the Potential of the EU Budget - Volume One - Smarter Spending |

ExECUTiVE SUmmaRyThe severe financial and economic crisis, coupled with the systemic environmental failure of the European development model - as epitomised by our unsustainable ecological footprint - provides a gloomy outlook for Europe. Business-as-usual is no longer an option: Europe will have to strongly react and radically transform its economy if our future is going to be bright.

The good news is that the best solution, a radical move towards a green economy1, has become a realistic alternative, as the most recent UNEP report shows2. Such an approach will create more jobs without harming the global economy, i.e. without the risks, shocks, scarcities and crises which are becoming inherent in our existing resource-depleting, high carbon, “brown” economy.

According to Pavan Sukhdev3, “governments have a central role in changing laws and policies, and in investing public money in public wealth to make the transition possible. By doing so, they can also unleash the trillions of dollars of private capital in favour of a green economy”4. The next seven-year European budget, the Financial Perspective 2014-2020, provides a huge opportunity to take action. WWF is working for a greener, fairer, more inclusive and more effective EU budget, providing green jobs. In building a sustainable Europe, the three key priorities which must be enhanced are:

• increased energy saving and climate change mitigation and adaptation;• greater protection and restoration of ecosystems and biodiversity; and• more sustainable and highly efficient use of resources.

The EU needs to ensure that its budget will strongly contribute to and not undermine the achievement of key European targets by 2020, notably the environmental targets of: improving energy efficiency by 20%; sourcing 20% of energy needs from renewables; reducing greenhouse gas emissions by 20 (or 30% if conditions are met); and stopping biodiversity loss. This requires environmental proofing of the EU budget:

1 Defined as an economy that improves well-being of citizens while staying within the ecological limits of the planet

2 UNEP (2011), Towards a Green Economy: Pathways to Sustainable Development and Poverty Eradication3 Head of UNEP’s Green Economy Initative and on secondement from Deutsche bank4 UNEP (2011), Towards a Green Economy: Pathways to Sustainable Development and Poverty Eradication

| Unlocking the Potential of the EU Budget - Volume One - Smarter Spending

• to ensure that it is not used for projects that undermine the achievement of these targets, by mainstreaming environment throughout the whole budget; and

• that allocations are increased for EU investments in areas and sectors that stimulate the green economy and will be the lead markets of the future.

PaRT 1 - UnlOCk win-win-win SOlUTiOnS

Enabling a smart EuropeGreen technologies quickly become lead markets of the future. Fostering eco-innovation, unlocking smart infrastructures and boosting low carbon innovation with a 30% climate target by 2020 are paths to a smart Europe.

Ensuring a sustainable EuropeOur ecological footprint now overshoots the world’s resources by 40%: we are exhausting the Earth’s natural resources. Reaching the 20% energy efficiency target, investing in ecosystems and biodiversity protection and improving resource efficiency are the ways to put Europe on a sustainable path.

Building an inclusive EuropeThere is a huge employment opportunity in the green economy’s business case. It will require a re-skilling of the workforce: the good news is that case studies5 strongly suggest that it will be a matter of ‘up-skilling’ or adding to existing core skills, making it easier to achieve. Cutting consumers’ energy bills will also deliver a more inclusive Europe.

Enhancing EU legitimacy and leadershipPutting a green economy at the heart of the EU budget would help to improve the EU’s reputation internally as well as make EU international leadership of the green economy more credible.

Preparing the future2020 is only a first step: a European green economy policy should aim at making our societies fully sustainable by 2050.

5 Cedefop (European Centre for the Development of Vocational Training) (2010), Skills for green jobs


PaRT 2 - TOOlS TO EnaBlE ThE EU BUdgET TO dEliVER kEy EUROPEan 2020 TaRgETS

According to Pavan Sukhdev, “misallocation of capital is at the centre of the world’s dilemmas and there are immediate actions than can be taken starting today – such as phasing out environmentally harmful subsidies”6. There is a growing European consensus on the need to eliminate harmful subsidies. The EU budget reform provides a key opportunity to phase out subsidies that do not comply with EU environmental acquis and are inconsistent with European 2020 environmental targets. Importantly, in such currently austere times, this would free-up public funds to be reallocated to better activities.

To simply and practically ensure that EU budget allocation is environmentally robust, WWF recommends the use of an integrated set of complementary tools in the overarching regulation and strategic framework of the EU budget as well as in each specific fund:

Multi-Annual Financial Framework (MFF)The MFF should integrate explicit environmental requirements.

Common Strategic FrameworkFor this newly proposed framework applied to the five funds co-managed by the European Commission and the Member States, WWF has identified five tools to help deliver the European 2020 targets which:

• ensure environmental integration;• set the financial incentives for rewarding best environmental performance - the two

options are modulating EU co-financing rates or using a performance reserve;• calibrate the framework for mandatory green public procurement to boost eco-

innovation and save public funds;• set the mandatory financing plans for Natura 2000; and• strengthen public partnership and transparency to improve scrutiny and quality of

spending.

Common Agricultural Policy (CAP)Six tools are recommended to ensure that the future CAP will help farmers to engage in an innovative agro-ecological transition toward sustainable farming which would:

6 UNEP (2011), Towards a Green Economy: Pathways to Sustainable Development and Poverty Eradication


• implement a mandatory greening payment in Pillar 1 (direct payments);• strengthen agri-ecological measures in Pillar 2 (rural development);• increase support for training and guidance for farmers to enhance sustainable

farming;• set environmental targets and performance indicators to measure progress;• reward best environmental performance with financial incentives; and• implement mandatory green public procurement in rural development.

Cohesion PolicyEnvironmental proofing of the Cohesion Policy can be achieved with seven tools which:

• ensure environmental requirements in financial regulation and the strategic framework;

• set mandatory thematic priorities in the regulation and reform expenditure categories accordingly;

• set environmental targets and performance indicators in Partnership Contacts and Operational Programmes;

• reward best environmental performance with financial incentives;• increase technical assistance and guidance for environmental integration in

Operational Programmes and projects;• improve project selection criteria by implementing eco-conditionality throughout

the full life-cycle of the project; and• strengthen transparency and public partnership in planning and implementation to

improve scrutiny and quality of spending.

Research and innovation fundsEU research funds can foster eco-innovation in four complementary ways by:

• ensuring appropriate environmental requirements in financial regulation and in the Common Strategic Framework;

• setting environmental targets and performance indicators;• rewarding best environmental performance with financial incentives; and• ensuring eco-conditionality in research and innovation projects based on best

practice.

External dimensionThe EU budget has great potential to improve its contribution to poverty eradication and sustainable development in developing countries. WWF has identified five tools which:


• strengthen integration of environmental concerns in all development policies;• increase the use of Strategic Environmental Assessments;• improve coherence of development policy;• develop targeted support for climate and biodiversity; and• enhance reporting, governance and participation so as to improve scrutiny and

quality of spending.

European Fisheries FundTo ensure that the EU budget contributes to a sustainable fisheries policy, four tools have been identified to:

• ensure that budget support does not increase overcapacity of the fishing fleet;• link the support to the achievement of sustainable fisheries and good environmental

status;• reward best environmental performance with financial incentives; and• implement mandatory green public procurement to boost eco-innovation and save

public funds.

Apply the factors of success to other EU funds and activitiesLeading by example is important to ensure that commitments and guidance are taken seriously. All EU institutions, including the European Investment Bank and EU funds that are not part of the EU budget, should set environmental targets and performance indicators for their specific activities, implement mandatory green public procurement and be exemplary in terms of transparency and public partnership in all EU-related activities.

Putting a green economy at the heart of the next EU budget will deliver environmental, social and economic results that are consistent with the EU 2020 Strategy, increase the budget’s added value and improve its cost effectiveness. In this way, the EU budget can be used as one of the EU’s most important tools for delivering policy commitments, rather than be seen as a mere redistributive mechanism.

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inTROdUCTiOn“We must show that we are capable of spending (…) our expenditure in a more intelligent way” (European Commission President Barroso)7

The severe shocks of the financial and economic crisis gave way to a massive rise in unemployment, and forced Europe to open its eyes to several market failures. Harsh austerity measures and cuts in public expenditure have resulted. Added to the crisis, the systemic environmental failures which are endemic to the current European development model, epitomised by Europe’s unsustainable ecological footprint, provide a gloomy outlook for Europe’s future. Business-as-usual is no longer an option: Europe has to strongly react and radically transform its economy.

The good news is that the best solution, a radical move towards a green economy8, has become a realistic alternative, as the most recent UNEP report shows9 . Such an approach will create more jobs without harming the economy, i.e. without the risks, shocks, scarcities and crises which are increasingly inherent in our existing resource-depleting, high carbon, “brown” economy. A green economy is not about stifling prosperity: it is about reconnecting with real wealth, reinvesting in rather than simply mining natural capital and favouring the many over the few.

According to Pavan Sukhdev10, “governments have a central role in changing laws and policies, and in investing public money in public wealth to make the transition possible. By doing so, they can also unleash trillions of dollars of private capital in favour of a green economy”11. The European Union should put the green economy at the heart of its ambitions. European citizens, consumers and companies are aware of the environmental challenge and could embark on an ambitious path for a sustainable Europe. They are waiting for strong political leadership in this direction, which could give a new impetus to European integration.

7 José Manuel Durão Barroso, President of the European Commission, Speech in the 5th Cohesion forum, 31 January 2011

8 Defined as an economy that improves well-being of citizens while staying within the ecological limits of the planet

9 UNEP (2011), Towards a Green Economy: Pathways to Sustainable Development and Poverty Eradication10 Head of UNEP’s Green Economy Initative and on secondement from Deutsche bank11 UNEP (2011), Towards a Green Economy: Pathways to Sustainable Development and Poverty Eradication


The forthcoming seven-year European budget, the Financial Perspective 2014-2020, provides a huge opportunity to take action. The current EU budget 2007-2013 doesn’t deliver what it could and should: it still allocates massive subsidies that contribute to environmental damage and economic inefficiency. The status quo is not a viable option for the future budget. On the contrary, spending public funds on public goods and a greater focus on common European and global challenges would deliver clear measurable results, both environmentally and socially.

Together with a coalition of environmental NGOs12, WWF is working for a greener, fairer, more inclusive and more effective EU budget that will provide green jobs and will tackle the three core environmental challenges of our time: climate change; biodiversity loss; and resource inefficiency. Reallocating subsidies that currently provoke environmental damage would generate multiple benefits while freeing up resources to finance transition to a green economy, a key double dividend in a time of austerity in Europe.

The EU needs to ensure that its own budget will strongly contribute to and not undermine the achievement of key European targets by 2020, notably the environmental targets of: improving energy efficiency by 20%; sourcing 20% of energy needs from renewables; reducing greenhouse gas emissions by 20 (or 30% if condition are met); and stopping biodiversity loss. This requires environmental proofing of the EU budget:

• to ensure that it is not used for projects that undermine the achievement of these targets, by mainstreaming environment throughout the whole budget; and

• that allocations are increased for EU investments in areas and sectors that stimulate a green economy and will be the lead markets of the future.

12 Including Birdlife, CEE Bankwatch Network, Conservation International, European Environmental Bureau, Friends of the Earth Europe, Transport and Environment and WWF. See Changing perspectives – How the EU budget can shape a sustainable future, November 2010

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PaRT 1 - UnlOCk win-win-win SOlUTiOnSTelling society that austerity measures are needed “to save the euro”, to rebalance public sector accounts or to rescue the banks will not work: there has to be the promise of a sustainable long-term future for all. WWF believes that putting the transition to a green economy at the heart of the EU budget 2014-2020 is the best way to successfully exiting the current crisis. It will prepare Europe for a sustainable future, provide green jobs and strengthen the European economy.

The European Union’s Europe 2020 Strategy13 for the next decade is to replace the failing Lisbon strategy. A green economy has the potential to deliver on the three key areas of the 2020 strategy: making Europe smarter, more sustainable and more inclusive. In addition, it would strengthen European internal credibility and international leadership, while preparing the path for the achievement of the European 2050 long-term goals.

In the short-term, investing in a greener economy will have immediate social, economic and environmental benefits by unlocking win-win-win solutions, such as much larger scale energy savings in the building sector. Win-win-win solutions are projects that benefit the economy and conserve biodiversity while actively contributing to climate mitigation and adaptation and ensuring further ecosystems services.

In building a sustainable Europe, the three key priorities which must be enhanced are:

• increased energy saving and climate change mitigation and adaptation;• greater protection and restoration of ecosystems and biodiversity; and• more sustainable and highly efficient use of resources.

13 European Commission, Europe 2020 – A European strategy for smart, sustainable and inclusive growth, COM(2010)2020


1. EnaBling a SmaRT EUROPE

Green technologies quickly become the lead markets of the future

Global markets for environmental goods and services are becoming leading sectors worldwide. They are projected to grow from today’s €950 billion to more than €2,000 billion in 202014.

Clean energy technology is on track to become the world’s third largest industrial sector, behind automobiles and electronics15: by 2020, the industry would be worth €1,600 billion annually. In 2007, clean energy technology had a turnover of €630 billion and was already bigger than the global pharmaceutical industry.

Figure 1: World market estimates for sustainable resource management

World Market Estimate Job GrowthYear € Billion Period Percent

Renewable Energy 2005 100 2004-06 30

2020 280 2007-09 22

Energy Efficiency 2005 450 2004-06 15

2020 900 2007-09 16

Sustainable Mobility 2005 180 2004-06 9

2020 350 2007-09 18

Solid Waste Management and Recycling

2005 30 2004-06 9

2020 46 2007-09 7

Sustainable Water Management

2005 190 2004-06 8

2020 480 2007-09 12Source: Green Inc., Kate Galbraith, “In Europe, Wind and Solar Feel Financial Crisis”.

Fostering eco-innovation and enabling green public procurement

At the core of the EU 2020 Strategy is the need to transform the European economy into an economy based on knowledge and innovation. Three flagship initiatives of the EU 2020 Strategy are to foster eco-innovation and green technologies:

14 German Federal Ministry for the Environment (bMU) and Federal office for the Environment (UbA) (2009), Umweltwirtschaftbericht 2009, Berlin and Dessau-Roßlau

15 WWF (2009), Clean Economy, Living Planet


• “Innovation Union”, aiming to re-focus R&D and innovation policy “on the challenges facing our society, such as climate change, energy and resource efficiency”;

• “Resource efficient Europe” (see below); and• “An industrial policy for the globalisation area”, to adjust “production processes

and products to a low-carbon economy”16.

Unlocking smart infrastructures

According to the European Commission’s Communication on the EU Budget Review, “cross-border infrastructure is one of the best examples of where the EU can plug gaps and deliver better value results.”17 The path towards a green economy has three types of smart infrastructures:

• highly efficient and smart grids for renewable electricity;• a decarbonised and highly efficient mobility infrastructure, “shifting freight and

passenger flow towards more sustainable transport modes” as the Commission notes in its Communication, and mitigating adverse impacts on biodiversity and ecosystem fragmentation; and

• highly efficient communication networks ensuring high-speed broadband availability in Europe to support home-based work and reduce the need for transport.

Large scale infrastructure often has a massive and sometimes irreversible impact. To foster innovative infrastructures only the projects based on best practices and meeting the highest sustainability criteria should be supported (e.g. in the field of transport, every project should contribute to reducing greenhouse gas - GHG - emissions).

Boosting low-carbon innovation with a 30% climate target by 2020

Low-carbon technologies are one of the main areas of green innovation. However the current EU target of a 20% reduction in emissions by 2020 is not ambitious enough as the 2009 EU27 emissions were already approximately 17,3 % below the 1990 level18. The draft 2050 Climate Roadmap appears to confirm that the existing commitments will allow Europe to exceed that level. Therefore, there is a real risk of stalling low-carbon innovation between 2010 and 2020 if the target is not raised.

16 COM(2010)202017 European Commission, The EU Budget Review, COM(2010)700 final18 European Environmental Agency, Recession accelerates the decline in EU greenhouse gas emissions, 10

September 2010


On the other hand, a new authoritative report commissioned by the German Federal Ministry for the Environment19 shows that raising the bar to 30% would bring multiple benefits, ranging from increased prosperity thanks to a €842 billion increase in the EU economy, to 6 million additional jobs Europe-wide to improved energy security through a cut in oil imports and better respiratory health. Therefore, the EU regulation should set a target of at least 30%, to stimulate low-carbon innovation and make the European economy stronger globally. This approach has been recently supported by the United Kingdom and Denmark, which presented “radical and transformative plans to decarbonise (their) energy supplies and support new green innovation” and asked Europe to “take the decisions that will stimulate low-carbon investment and take it beyond the cul-de-sac that is the current 20% target”20.

It is also interesting to note that the world’s largest global investors, totalling over $15 trillion (more than one quarter of global market capitalisation), sent a strong message before the UN climate negotiations in Cancun in November 2010, demanding determined policy action on climate change. “A basic lesson to be learned from past experience in renewable energy is that, almost without exception, private sector investment in climate solutions has been driven by consistent and sustained government policy. Experiences from countries such as Spain, Germany and China show how structured policies can bolster investor confidence and help drive renewable energy investments”, said Ole Beier Sørensen, Chairman of the Institutional Investor Group on Climate Change and chief of Research and Strategy at the Danish pension fund AT21. At a time of public sector austerity, when EU institutions and Member States are actively looking to leverage private finance, this should be taken into account.

19 Oxford University, Potsdam Institute for Climate Impact Research (PIK), National Technical University of Athens, Université Paris 1 Panthéon-Sorbonne, European Climate Forum, Study commissioned by the German Federal Ministry for the Environment, A new Growth Path for Europe, February 2011

20 ENDS, Joint statement by Chris Huhne, UK Secretary of State for Energy and Climate Change, and Dr. Lykke Friis, Danish Minister for Climate and Energy, 25 February 2011

21 Institutional Investor Group on Climate Change, The world’s capital markets demand determined policy action on climate change, 16 November 2010. The statement was signed by 259 investors from Asia, Africa, Australia, Europe, Latin America and North America


2. EnSURing a SUSTainaBlE EUROPE

As European Commission President Barroso said22, “we saw in the 20th Century, globally, a four-fold growth in population accompanied by a 40-fold growth in economic output. But in the same period, we also increased our use of fossil fuels 16 times, our fishing catches 35 times, our water use 9 times. And our carbon emissions increased 17 times”.

Our ecological footprint now overshoots the world’s resources by 40%, which means that we are in the process of exhausting the Earth’s natural resources provided to us by healthy ecosystems23. We cannot afford the cost of inaction: by 2050 the cost of climate change is estimated to rise to 20% of world GDP24, and the loss of biodiversity would total 7% of world GDP25.

The 2011 UNEP report on the green economy presents a path to reducing the ecological footprint by nearly 50% by 2050, as compared to business-as-usual. To get there, ten priority sectors have been identified: agriculture, buildings, energy supply, fisheries, forestry, industry (including energy efficiency), tourism, transport, waste management and water. These must be the sectoral priorities in the EU budget which fosters a green economy and delivers the goal of a sustainable Europe.

Reaching the 20% energy efficiency target

The most important means of achieving climate, energy, economic and security of supply goals is through energy savings. Europe is becoming increasingly dependent on imported fossil fuels: reliance on gas imports is expected to increase from 58% to 84% by 2030, and oil import dependence will rise from 82% to 95%. The EU is increasingly exposed to the effects of price volatility and price rises on international energy markets26. At the European level, we export annually an estimated €350 billion of the EU’s wealth, mainly to countries rich in oil and natural gas according to the Commission27. Analysis from the International Energy Agency shows that the European Union has seen its import bill rise by $70 billion during 2010, an amount equal to the combined budget deficits of Greece and Portugal: the increase, due to high crude oil prices, is equivalent to a loss of about 0,5% of total European income28.

22 José Manuel Durão Barroso, President of the European Commission, State of the Union 2010, 07 September 201023 WWF, The Living Planet Report 200824 Nicholas Stern, The Economics of Climate Change (Stern review), October 200625 The Economics of ecosystems and Biodiversity (TEEB), November 200926 European Commission (2008), Staff Working Document, Regions 2020 – An Assessment of Future

Challenges for EU Regions27 Euractiv 07 October 2010, Oettinger values EU 2020 energy goals at €1 trln28 Financial Times, Oil prices soaring, 05 January 2011


Yet Europe is not even half way to reaching its 20% energy savings target: an HSBC study shows that current measures would only reduce energy consumption by 9% by 202029. Such a massive failure is equivalent to the energy imported through 7 Nabucco gas pipelines.

European industry is increasingly asking for ambitious action, as other parts of the world are scaling up their efforts while Europe is losing time and opportunity. “We simply don’t see the same levels of ambition for energy efficiency in Europe as does China,” says Luigi Meli, the Director General of the European Committee of Domestic Equipment Manufacturers, an industry group30. It criticises the call by the European Commission to invest €1 trillion in projects to build new grids and pipelines over the next decade while setting aside a relatively meagre sum, of about €150 billion, for energy efficiency.

Energy savings represents one of the best, most cost-effective solutions, especially building insulation in the construction sector. To catch this profitable, low-hanging fruit, a mandatory 20% energy efficiency target is required and it is already supported by the European Parliament. Accordingly, the EU budget should make energy savings a high priority.

Investing in ecosystems and biodiversity protection as a basis of our livelihood

“We are standing at a crossroads: either we take concerted action to reverse biodiversity loss as soon as possible, or we compromise our own future and that of generations not yet born” (European Commission President Barroso)31

Biodiversity and ecosystems services constitute the underlying basis for most social and economic activities and provide ample opportunities for employment. For example, about 16,8% of European jobs are indirectly linked to natural assets32 and the estimated value of insect pollination for European agriculture is €22 billion per year33.

The EU target of stopping biodiversity loss by 2010 has been missed, letting the degradation and overexploitation of our natural capital worsen: 65% of habitats

29 La Tribune, L’efficacité énergétique mauvaise élève du paquet énergie-climat, 4 February 201130 New York Times, Energy Efficiency Proves Unattractive for Policy Makers in Europe, 16 January 201131 José Manuel Durão Barroso, speech in the High Level Meeting of the UN General Assembly, 22 September

201032 TEEB – The Economics of Ecosystems and Biodiversity for National and international Policy Makers –

Summary: Responding to the Value of Nature 200933 Gallai et al. (2009)


and 52% of species in Europe are under serious threat. At the international level, the situation is even worse and the loss of biodiversity and ecosystems services is estimated to have resulted in annual costs of €50 billion over the period 2000-2010 and to reach the astonishing cost of €275 billion per year in 2050, or 7% of total world GDP34.

In March 2010, the European Council endorsed a new ambitious objective of “halting the loss of biodiversity and the degradation of ecosystem services in the EU by 2020, and restoring them in so far as feasible, while stepping up the EU contribution to averting global biodiversity loss”35. EU ministers more recently committed to “mainstreaming and sectoral integration of biodiversity, especially in financial-economic systems”.36 This is exactly what greening the economy requires.

The maintenance and creation of ecological networks and corridors, where Natura 200037 already represents the essential building block with more than 25,000 sites and 21% of the total EU terrestrial area, should be a key area for support in the next EU budget. Indeed Natura 2000 is acknowledged to be one of the world’s most modern and ambitious approaches to halting the loss of biodiversity. Green infrastructure, consisting of spatially or functionally connected natural, semi-natural and man-made elements, can help adaptation to climate change and provide essential features for the maintenance of ecosystem services. They lead to win-win-win solutions, i.e. projects that benefit the economy and conserve biodiversity while actively contributing to climate mitigation and adaptation and ensuring further ecosystems services.

Best practice: green infrastructure more efficient than technical solutions (Ireland)

in anne Valley, an integrated constructed wetland was created instead of installing a traditional water treatment plant. Not only is the wetland more efficient in clearing mostly livestock wastewater than a traditional plant, it also offers multiple benefits like flood control or climate regulation. Capital costs were €715,000 for the project: this is half of what an equivalent traditional plant was estimated to cost, at €1,530,000. In addition €220,000 was spent on new tourism facilities which are creating economic value (impossible with a traditional plant). annual maintenance costs are also lower.

34 TEEB (2009)35 European Council of Heads of States, Final conclusions, 25-26 March 201036 Euractiv 4 January 201137 Created under the Birds and habitats Directives


Improve resource efficiency and stop wasting resources

A specific flagship initiative of the EU 2020 Strategy is devoted to resource efficiency: “Resource efficient Europe”. Accordingly, it aims to “support the shift towards a resource efficient and low-carbon economy that is efficient in the way it uses all resources.” This is a new and crucial move in the right direction for a green economy.

It is a key opportunity to reduce our ecological footprint, reduce our dependency on imported resources and create European jobs. An absolute decoupling should be achieved, which means that our consumption of resources must decrease in absolute terms whatever the economic growth is. This is a realistic target: according to UNEP, “there is abundant evidence that the economy has still untapped opportunities to produce wealth using less material and energy resources”.38

Best practice: recycling 70% of waste (Flanders)

only a few countries have managed to stabilise or reduce their municipal waste, or to achieve good recycling and composting targets. the best performing region in europe, Flanders, has achieved a recycling rate of more than 70%39, while the eu recycling target for 2020 is only 50%. Achieving a 70% target for Europe by 2020 would create more than 500,000 additional jobs and save €5 billion a year in resources that are currently being buried or burnt40: europe should mainstream existing best practice and set a 70% target for recycling by 2020.

Mobilising the EU budget and pulling together EU and national public and private funding will be needed. In addition, a framework should be implemented for the use of market-based instruments to foster resource efficiency (such as emissions trading, revision of energy taxation, state-aid frameworks, mandatory use of green public procurement, etc).

38 UNEP (2011), Towards a Green Economy: Pathways to Sustainable Development and Poverty Eradication39 OVAM(2006), Jaaverlag 2005, page 6940 Friends of the Earth Europe (2010). More jobs, less waste


3. BUilding an inClUSiVE EUROPE

An environment-centric EU budget would improve European solidarity, cohesion and inclusiveness. Two main dimensions have to be taken into account:

• the massive positive impact a green economy would have in terms of quality job creation; and

• the positive impact on reduced energy poverty and lower consumer bills.

The huge business case for a green economy: jobs

President Barroso stated “jobs in the eco-industry have been increasing by 7% a year since 2000. I want to see 3 million “green jobs” by 2020”41. ‘Environment-related’ jobs, which is a conservative definition42, totalled 8.67 million jobs in the EU27 in 2006, equivalent to 6% of total jobs. The EU environmental industry alone was estimated to employ some 3.4 million people in 2005: that is more than those employed in the car or chemical industries43.

Meeting the EU objective of 20% of energy from renewable sources would mean 600,000 jobs and adding in the 20% target for energy efficiency could result in well over one million new jobs in the EU according to the Commission44. A new report commissioned by the German Federal Ministry for the Environment45 shows that committing to a 30% reduction in emissions by 2020 will provide 6 million additional jobs Europe-wide.

Most studies confirm that employment gains far outweigh losses in a shift to a green economy46 for two main reasons:

• higher average labour intensity of production; and• greater domestic content (more jobs are situated in Europe and less abroad).

41 José Manuel Durão Barroso, President of the European Commission, State of the Union 2010, 07 September 201042 Core definition: organic farming, sustainable forestry, renewable energy, water supply and environment-

related tourism43 European Communities, The EU Eco-Industry (Luxembourg, 2007)44 European Commission, Staff working document of Regional Policy contributing to sustainable growth in

Europe 2020, COM(2011) 1745 Oxford University, Potsdam Institute for Climate Impact Research (PIK), National Technical University

of Athens, Université Paris 1 Panthéon-Sorbonne, European Climate Forum, Study commissioned by the German Federal Ministry for the Environment, A new Growth Path for Europe, February 2011

46 Notably two high-quality studies: ILO, Policy Integration Department, David Kucera (2009), Green Economy and Green Jobs: Myth or Reality?, and GHK Consulting (2007) “Links between the environment, economy and jobs” (in EU27)


For the energy sector, a review of a dozen studies in the United States and Europe concluded that renewable energy projects generate a multiple of the number of jobs generated by fossil fuel projects per megawatt of capacity47. In the United States, money invested in energy efficiency and renewable energy is estimated to produce between 2,5 and 4 times as many jobs per dollar invested in producing energy from oil48. In the renewable energy sector, 2.3 million people were employed worldwide in 2006: this will rise to 20.4 million by 2030, an increase of 775% according to ILO49: but how many will be based in Europe?

A more in-depth study realised by WWF France in 2009 analysed the impact of cutting CO2 by 30% by 2020 and concluded that some 316,000 ‘renewables’ jobs and 564,000 energy efficiency jobs will be created in France, while 138,000 jobs in the conventional energy sector and 107,000 in the automotive industry could be lost. Redirected spending on energy savings could create an additional 48,000 jobs should oil prices be at $100 per barrel (and rising to 467,000 jobs at $150 per barrel), leading to a net employment gain of 684,000 jobs50.

Re-skilling the workforce for green and quality jobs

The recent UNEP report on green economy51 states that the move toward a green economy requires an investment in re-skilling, re-training and re-educating the workforce. The case for government support to drive this forward is clear – industry cannot do it alone.

The good news is that case studies52 strongly suggest that the skills development required to enable a person to fulfil a new occupation are often a matter of ‘up-skilling’ or adding to existing core skills. For example, workers with experience in shipbuilding and in the oil and gas sector are highly sought after in the wind-turbine industry for their skills in welding, surface treatment and outfitting. Figure 2 illustrates how existing occupations can up-skill to fulfil new green occupations, mainly through knowledge “add-ons”.

47 Daniel M. Kammen, Kamal Kapadia, and Matthias Fripp, Putting Renewables to Work: How Many Jobs Can the Clean Energy Industry Generate? RAEL Report (Berkeley, CA: Renewable and Appropriate Energy Laboratory, University of California, Berkeley, 2004).

48 Pollin et al., 200949 International Labour Organisation (2008), Green jobs, Facts and Figures50 WWF France (2009), 30% CO2 Off = +684,000 Jobs 51 UNEP (2011), Towards a Green Economy: Pathways to Sustainable Development and Poverty Eradication52 Cedefop (European Centre for the Development of Vocational Training) (2010), Skills for green jobs


Figure 2: Examples of up-skilling to new occupations

Occupation (s) Core training

Upskilling New occupation

Industry electrician/energy technologist

VET qualifications/tertiary engenieering qualifications

Knowlegde of energy sources, ability to integrate energy systems, project management

Manager in renewable energy

Industrial operator/industry electrician

VET qualifications/upper secondary qualifications

Assembly, installation of parts, use of tools

Wind-turbine operator

Construction worker

No professional standard

Knowledge of energy systems, data analysis, project management

Energy auditor

Recycling sector worker

General certificate of vocational qualification (CQP)

Sorting and reception techniques, knowledge of conditioning and storage

Waste-recycling operator

Product design and services

22 initial training courses with varying specialisation

Integrating environmental criteria in design process, integrated assessment and life cycle analysis

Ecodesigner

Electronic/mechatronic

Initial vocational training

Electronics and hydraulic systems, safety procedures, operation and services

Wind power service technician

Plumber/electrician and heating installer

Initial vocational training

Technical training, knowlegde of administrative procedures, entrepreneurial skills

Solar-energy entrepreneur/installations project designer

Engineer in energy sector

Tertiary engineering qualifications

Installation and maintenance of low-carbon technologies, customer service skills

Smart-energy expert/smart-energy manager

Source: Cedefop (2010)

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Regional governments lead the way in both identifying the skills needed and providing comprehensive and organised responses. Creating networks of regional training centres, coordinated nationally to create synergies and disseminate best practice would improve course design and mobility of workers between regions.

Cutting consumers’ energy bills

According to the Coalition for Energy Savings, meeting the 20% energy efficiency target by 2020 will lower energy bills for consumers by €78 billion annually in 202053. Average energy savings for a household can amount to €1,000 per year according to the Energy 2020 report.

This is especially important in the current economic crisis, where one European in six says that they are constantly in difficulty with regard to paying their household bills54. The most vulnerable social groups are exposed to rising levels of poverty in Europe. Energy poverty relates to the affordability of energy supply and the proportion of household expenditure allocated to energy consumption. Some households spend almost 30% of their income on energy. According to the European Environment Agency, a key element in tackling energy poverty is to improve levels of household energy efficiency to reduce heating demand and its associated cost. Cutting the energy consumption of houses by up to 90%, as is now possible with best practice retrofitting of buildings (deep renovation), is not only very cost-effective but also yields a huge social dividend.

53 Coalition for Energy Savings, Call for action on energy efficiency, 06 December 201054 Eurobarometer, June 2010, http://ec.europa.eu/public_opinion/flash/fl_289_en.pdf


4. EnhanCing EU lEgiTimaCy and lEadERShiP

Improving the EU’s reputation in Europe

The EU’s legitimacy has been severely undermined in the last decade. An increasing proportion of European citizens do not understand or adhere to the EU project anymore. This growing disconnection between citizens and Europe is dangerous and threatens the whole European integration project. The current economic crisis is also jeopardising social cohesion within the Member States, testing the solidarity and political trust between them. In addition, the severe austerity measures implemented throughout Europe have led to criticism from several Member States regarding the EU’s added value and proposals to cap the budget, one of the EU’s main operational tools.

Putting a green economy at the heart of the EU budget reform is the best way to achieve the European 2020 environmental targets while creating green jobs and strengthening the European economy. Successfully supporting the green economy, with its resultant, visible improvements in the daily life of millions of European citizens, would help improve solidarity between Member States, and their desire to engage further in the European integration project, and restore, at least partly, the confidence of EU citizens.

Making EU international leadership credible

Internationally, the current crisis could undermine EU engagement and solidarity with the rest of the world, aggravating a general trend of gradual global marginalisation of Europe. The EU’s ability to act effectively at the multilateral level has been weakening, as the Copenhagen climate negotiations have shown for an area in which the EU claimed leadership but was unable to forge a deal.

The pressure to reform international institutions has become incontestably clear since the financial and economic crisis, as demonstrated by the rise of the G20 on economic and financial issues. The enlargement, functioning, responsibilities, participation, rules and principles of international institutions are all set for substantial review. The EU’s participation in these structures is still to be defined, but is based on its experience with multilateralism.

Although it will not be enough alone, meeting the key European 2020 targets by fostering a green economy would contribute to the enhancement of Europe’s credibility internationally, by demonstrating that Europe’s commitments are achieved and realised in a sustainable way and not at the expense of other parts of the world - notably the poorest countries.


5. PREPaRing ThE FUTURE

2020 is just a relatively small step on the path to a fully sustainable economy that must be reached at the latest by 2050. The EU has already set crucial targets for 2050: the almost absolute decarbonisation of our economy, by 80-95% compared to 1990 levels, and the full restoration of EU biodiversity and the ecosystems services it provides55. Other targets will have to be set, notably on energy, resources and land use.

The great advantage of the green economy route is that it gives clear direction, with measurement of the progress made and the efforts still to be accomplished. Citizens are increasingly aware of the ecological limitations of the planet and the social costs provoked by our current economic development model that has often polluted or overexploited the very basis of our livelihood – the environment around us, the water we drink, the air we breathe. Citizens are not inspired by dry economic goals, such as balance of payments objectives, economic growth targets, increased productivity or more aggressive competitiveness. Rather, they are increasingly concerned with issues such as well-being, quality of life and legacy for future generations.

The green economy model provides a global framework that answers the challenges which have resulted from our current and unsustainable development model, and it proposes practical ways to reconcile environment and development.

55 European Council, 25-26 March 2010

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PaRT 2 - TOOlS TO EnaBlE ThE EU BUdgET TO dEliVER kEy EUROPEan 2020 TaRgETS“More than ever we need to justify every kind decision in terms of added value, in terms of cost-effectiveness, in terms of result-oriented policy”56.(European Commission President Barroso)

As the first chapter shows, there are multiple benefits of a green economy. Putting a green economy at the centre of the EU budget would deliver environmental, social and economic results consistent with the EU 2020 Strategy, increase the EU budget’s added value and improve its cost-effectiveness. That way, the budget would become one of the most important tools available to the Union in delivering policy commitments, rather than be a mere redistributive mechanism.

There are many economic studies showing that environmental policy means not just expenditure but also efficiency, notably concerning energy and natural resources. Good environmental policy lowers costs instead of making them more expensive. Therefore, increasing the integration and the level of priority afforded to the environment in the EU budget (environmental proofing) does not mean increasing the total budget; it means using the money better.

According to Pavan Sukhdev, “misallocation of capital is at the centre of the world’s dilemmas and there are immediate actions than can be taken starting today – such as phasing out environmentally harmful subsidies”57. There is a growing European consensus on the need to eliminate harmful subsidies:

56 José Manuel Durão Barroso, President of the European Commission, Speech in the 5th Cohesion Forum, 31 January 2011



• the Europe 2020 Strategy emphasises that “at national level, Member States will need to phase out environmentally harmful subsidies, limiting exceptions to people with social needs”58;

• in December 2010, the Council renewed their longstanding request to the Commission for a roadmap to eliminate environmentally harmful subsidies59;

• the European Parliament has urged “the Commission to put forward, in keeping with the EU Sustainable Development Strategy and as a matter of urgency, a roadmap for the sector-by-sector reform of subsidies that have a considerable negative impact on the environment, with a view gradually to eliminating them”60;

• the Renewed EU Sustainable Development Strategy requested in 2006 that the Commission put forward a roadmap for the sector-by-sector elimination of such subsidies by 200861. The Commission reiterated this commitment in the mid-term review of the Sixth Community Environment Action Programme in 200762; and

• at the international level, the EU has repeatedly committed to removing environmentally damaging subsidies63.

The EU budget reform provides a key opportunity to phase out subsidies that do not comply with the EU environmental acquis and are inconsistent with European environmental targets for 2020. Importantly in the current time of austerity, this would free-up public money for reallocation to better activities.

To environmentally proof the EU budget in a simple and practical way, WWF recommends an integrated set of complementary tools. One single tool can not be effective for all of the EU funds focused on different issues; in addition, there are many different environmental issues. Therefore, WWF’s proposals concentrate on transversal requirements of fostering low-carbon emissions, energy savings, biodiversity protection and resource efficiency.

58 COM(2010)202059 Council conclusions, 3061st Environment Council, 20 December 201060 INI/2009/2152, 6 May 201061 EC (2006): Renewed EU Sustainable Development Strategy62 COM(2007)225 final63 For instance in the Strategic Plan for Biodiversity 2011-2020, agreed by the Parties to the Convention on

Biological Diversity in Nagoya, Japan in October 2010, and the G20’s declaration in Pittsburgh in 2009 on fossil fuels subsidies

ChaPTER 1:mUlTi-annUal FinanCial FRamEwORkWWF has identified the Multi-annual Framework (MFF), which is the overarching regulation for the EU budget, as a key factor in successfully fostering the green economy.

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TOOl 1: EnSURE EnViROnmEnTal REqUiREmEnTS in ThE mFF REgUlaTiOn

The MFF regulation should:

• Include explicit requirements in the financial regulation to integrate environment throughout the whole EU budget and state that protecting the environment is an objective of the EU budget, to be consistent with the Lisbon Treaty64. In addition, it should also state that the EU budget should strongly contribute to the achievement of the key European 2020 environmental targets. In addition, to improve the consistency of EU policies, it is important to specify that EU-funded activities must align with the EU Strategy for Sustainable Development65, comply with the EU environmental acquis and respect the principles of polluter pays, precautionary, prevention, no net loss and full cost recovery. Three issues should be clearly prioritised: climate change, biodiversity loss and resource inefficiency.

• Set a clear framework defining mandatory targets in EU-funded activities that is consistent with European 2020 environmental targets (20-30% greenhouse gas emissions reduction, 20% energy efficiency improvement, 20% renewable energy production and halting biodiversity loss). This approach logically follows the result-oriented approach enshrined in the Commission’s communication on the EU Budget Review: “defining a specific set of targets on which disbursement of the funds would depend”.

• Accordingly, the framework should require EU-funded activities to integrate some eco-conditionality related to climate mitigation (low-carbon emissions) and adaptation (resilience), energy savings, biodiversity protection and resource efficiency (e.g. water and land use)66.

64 Article 191 of the Lisbon Treaty states that protecting the environment and improving the quality of life for European citizens are integral aims and purposes for the European Union. EU public spending must be consistent with those objectives

65 European Commission (2001), A Sustainable Europe for a Better World: A European Union Strategy for Sustainable Development, COM(2001)264 final, and (2005) Review of the Sustainable Development Strategy – A platform for action, COM(2005)658 final

66 See also European Network of Environmental Authorities – Managing Authorities (ENEA-MA), Answer to the Consultation on the 5th Report on Cohesion, January 2011


• Prepare for the use of expanded Strategic Environmental Assessments (SEA) of EU-funded strategic frameworks, partnership contracts and programmes and Environmental Impact Assessments (EIA) of relevant EU-funded projects. The EIA Directive is currently under review, and the SEA Directive will be reviewed later. Both SEA and EIA should be strengthened so that they include assessments of greenhouse gas (GHG) emissions, ecosystems and biodiversity impacts and energy and resource efficiency, and requirements providing clear solutions to avoid degradation in the first place or to mitigate it adequately. SEA should also address compliance with EU environmental legislation67. It is important that the reviews are made operational prior to the adoption of the next EU budget. The provision of operational guidelines on applying SEA and EIA are also important to make the best use of these instruments.

• Provide a framework for the needed improvements in the monitoring and evaluation processes for EU-funded activities, notably the measurement of results by using environmental indicators, such as carbon footprint (GHG emissions), renewable energy production, energy consumption, land consumption, water consumption, environmental status of freshwater areas and protection of Natura 2000 sites.

67 Key EU legislation includes Environmental Impact Assessment, Strategic Environmental Assessment Directives, Environmental Liability, Birds and Habitats, Waste Framework, Water Framework, Flood Risk Management, and potentially soil protection and invasive species in the near future

ChaPTER 2:COmmOn STRaTEgiC FRamEwORkWWF identified five factors for the success of the strategic planning of the EU budget in the Common Strategic Framework proposed by the Commission.

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TOOl 1: dEVElOP a COmmOn STRaTEgiC FRamEwORk EnSURing EnViROnmEnTal inTEgRaTiOn FOR ThE 5 FUndS CO-managEd By ThE EUROPEan COmmiSSiOn and mEmBER STaTES

The Commission’s communication on the EU Budget Review introduces a Common Strategic Framework (CSF) to translate “the targets and objectives of EU 2020 into investment priorities”. It will include the five EU funds that are co-managed by the Commission and the Member States: the Cohesion Fund, the European Regional Development Fund (ERDF), the European Social Fund (ESF), the European Agricultural Fund for Rural Development (EAFRD) and the European Fisheries Fund (EFF).

The commissioners in charge of these funds requested this framework in an open letter to President Barroso in August 2010, underlining the need “that the implementation of the (EU 2020) Strategy be based on a stronger policy framework at EU level”. The CSF “would ensure greater complementarity between them in line with the EU 2020 priorities. It would also help limit the fragmentation of the different instruments and to allow for better prioritisation of EU funding”.68

Case study: Lost funding opportunities for housing retrofits

a review done by CeCodHas Housing europe69 of eu funding for energy savings in housing concludes that too often operations that could be eligible for both erdf and ESF are treated sub-optimally. The two reasons identified are the lack of information about the possibilities offered by the regulation and the complexity of applying to two different managing authorities with two different programmes. this finding clearly indicates that better coordination between the Funds is desirable.

68 Letter of Commissioners Johannes Hahn, Maria Damanaki, Laszlo Andor and Dacian Ciolos, to President Barroso, 31 August 2010

69 CECODHAS Housing Europe, A mid-term review of the use of Structural Funds for energy efficiency and renewable energy measures in existing housing, October 2010


A lack of synergy can also exist between Cohesion Policy and the European Fisheries Fund, or Cohesion Policy and the rural development fund – resulting in loss of opportunities, and inefficiency. In addition, these funds sometimes support projects that are inconsistent with EU environmental policies and undermine 2020 environmental targets.

Therefore, WWF is in favour of such a CSF provided that it has the four following objectives:

• result-oriented: The CFS should contribute to ensuring the transversal integration of the environment into the five EU funds - a key requirement of the EU environmental acquis and for the successful delivery of the EU 2020 Strategy. More precisely, it should require EU-funded activities to respect some eco-conditionality related to climate mitigation (low-carbon emissions) and adaptation (resilience), energy savings, biodiversity protection and resource efficiency (e.g. water and land use).

• concentration on priorities, including the three key environmental challenges: climate change, biodiversity loss and resource inefficiency.

• synergy: The CSF should improve the coherence between the funds, so that they complement each other better and maximise every opportunity. The CSF should also provide guidelines for linking national policy targets with EU funding.

• simplification: The CSF should align (as much as possible) the administrative and financial procedures of each fund, in order to reduce the administrative burden and make the funds more understandable and accessible for applicants.


TOOl 2: SET ThE FRamEwORk FOR REwaRding BEST EnViROnmEnTal PERFORmanCE wiThFinanCial inCEnTiVES

The Commission’s communication on the EU Budget Review is rightly focused on improving the effectiveness and delivery of the EU budget, based on a result-oriented and more focused approach. In addition to defining specific targets on which disbursement of the funds would depend, it proposes two other approaches: “setting aside an EU-wide reserve in most programmes, or modulating co-financing rates to performance.”

The Common Strategic Framework should set the framework for making this rewarding approach possible in all relevant EU funds, notably Cohesion Policy, rural development, research funds and the fisheries fund. Given that the EU 2020 Strategy targets include environment, it is imperative that results are not measured in economic terms only, but also in environmental and social terms. Environmental performance of EU-funded activities must therefore be taken into account, and funding should logically benefit activities having the best environmental results or contributing the most to achieving EU environmental targets by 2020. Two following two approaches can be used.

Modulate EU co-financing rates

Modulating co-financing is already current practice in several EU funds. The objective is to make them more attractive and accessible in some areas or for some beneficiaries. These incentives should be developed on the basis of their environmental contribution, and must be consistent with 2020 environmental targets in all cases. Co-financing requires the use of state-of-the-art methodologies with a hierarchy of measures, to ensure that the target is achieved in the most cost-effective and environmentally-friendly way and that only truly necessary investments are made.

Such an approach is already explicit in water policy and mandatory for the waste sector70: waste prevention forms the highest level of the hierarchy, followed by recycling, then incineration and finally landfill. Accordingly, EU-funded projects supporting waste prevention or recycling waste should have a higher co-financing

70 Water Scarcity and Droughts policy and Waste Framework Directive


rate than those supporting incineration of landfill that are lower in the hierarchy, and also because they contribute to the EU recycling target for 2020 (while there is none for landfill). Such an approach should be extended to other sectors, notably transport (see tool 4 in Cohesion Policy), energy, agriculture, and ecosystems and biodiversity management, with co-financing rates depending on their environmental performance.

Use a performance reserve

According to the Commission’s communication on the EU Budget Review, setting aside a limited share of a given EU-fund in a performance reserve open to all eligible Member States would “introduce some form of qualitative competition”. It would be “allocated on the basis of progress made by national and regional programmes towards Europe 2020 objectives”, including environmental ones.

WWF believes that it would also foster best practices. Therefore, it is recommended that a performance reserve of 10% of the funds is kept at the EU level to reward best approaches, based on the ex post assessment of their environmental performance and the achievement of their environmental targets. Rewarding the best environmental performance should apply, at least, to the ten key sectors underpinning a green economy, as mentioned by the 2011 UNEP report: agriculture, buildings, energy supply, fisheries, forestry, industry (including energy efficiency), tourism, transport waste management and water.


TOOl 3: CaliBRaTE ThE FRamEwORk FOR mandaTORy gREEn PUBliC PROCUREmEnT TO BOOST ECO-innOVaTiOn and SaVE PUBliC FUndS

“GPP is an obvious win-win situation that EU Member States cannot afford to miss”71.

Requirement for Green Public Procurement (GPP) should be stipulated in the Common Strategic Framework and made compulsory in the implementation of EU-funded projects, so as to stimulate public authorities and project promoters to opt for more environmentally-friendly products and services. Built on existing best practice, the effective implementation of GPP will also need practical tools and information and training and cooperation between authorities and clear guidance at the European level.

An underused tool

GPP is “a process whereby public authorities seek to procure goods, services and works with a reduced environmental impact throughout their life-cycle when compared to goods, services and works with the same primary function that would otherwise be procured.”72 It is defined by the Procurement Directives and the Remedies Directive73.

Public authorities are major consumers in Europe: they spend approximately €2 trillion annually, equivalent to some 17% of the EU’s gross domestic product. By using their purchasing power to choose goods and services having a lower impact on the environment, they can make a strong threefold contribution by:

• improving sustainable consumption and production which is needed to meet the key 2020 environmental targets (energy savings, low-carbon products, resource efficiency) 74;

71 Janez Potocnik, European Commissioner for Environment, Green Dot 2010 – Green Economy in Action, 7 October 2010

72 Communication (COM (2008) 400) “Public procurement for a better environment”, 16 July 200873 Procurement Directives 2004/17/EC and 2004/18/EC and Remedies Directive 2007/66/EC74 According to the Commission, “GPP allows public authorities to achieve environmental targets” (http://

ec.europa.eu/environment/gpp/benefits_en.htm)


• positively influencing the market with real incentives to develop green technologies and products. In some sectors, public purchasers command a large share of the market (e.g. transport and construction) and so their decisions have considerable impact; and

• saving public money at a time of austerity (see below).

The concept of GPP relies on having clear, verifiable, justifiable and ambitious environmental criteria for products and services, based on a life-cycle approach and a scientific evidence base. Common GPP criteria have been developed since 2008, that considerably reduce the administrative burden for economic operators and for public administrations implementing GPP75. A Training Toolkit on GPP has also been realised to facilitate the introduction and use of GPP by public authorities throughout Europe. By the time the next EU budget will enter into force (1 January 2014), the guidance will have further improved.

Time to mainstream best practice in Europe

In 2003, the Communication on Integrated Product Policy (IPP) encouraged Member states to draw up publicly available national action plans for greening their public procurement. Targets and criteria have been adopted in 21 Member States (and the 6 remaining Member States are preparing theirs). 18 Member States have a mandatory policy obligation and GPP is already legally binding in 3 countries: portugal, germany and the Czech republic. in the seven best performing Member States, on average 50% of public purchases are green (Austria, Denmark, Finland, germany, the netherlands, sweden, and the united kingdom).

Time to boost eco-innovation

The EU Competitiveness Council of September 2008 highlighted the role which GPP can play in facilitating a highly competitive and innovative European knowledge economy76. The EU 2020 Strategy77 largely refers to public procurement, including the three flagship initiatives “Innovation Union”, “Resource efficient Europe” and “An industrial policy for the globalisation era”. In addition, the Commission’s Energy 2020 Communication underlines that “public procurement rules should

75 A first set of common GPP criteria was established in 2008 covering 10 sectors (including high impact sectors like Construction, Transport, Electricity, Food and Catering services). A second set of GPP criteria for 8 new sectors was made available in July 2010, including Thermal insulation, Combine Heat and Power, Windows, Glazed Doors and Skylights, Wall Panels, Road construction and traffic signs. See http://ec.europa.eu/environment/gpp/gpp_criteria_en.htm

76 Competitiveness Council of the EU on the (SCP/SIP) Action Plan and the Communication Public procurement for better environment, 25-26 September 2008 views on the (SCP/SIP) Action Plan and the Communication Public procurement for better environment.

77 COM(2010) 2020 final, Europe 2020


78 European Commission, Communication Energy 2020 – A strategy for competitive, sustainable and secure energy”, http://ec.europa.eu/energy/strategies/2010/2020_en.htm

79 José Manuel Barroso, President of the European Commission, speech on growth and economic governance – orientation debate on energy and innovation, 5 January 2011

80 PriceWaterHouseCoopers, Ecofys and Significant (2009), Collection of statistical information on Green Public Procurement in the EU. Study within the seven best performing Member States (Austria, Denmark, Finland, Germany, the Netherlands, Sweden, and United Kingdom). On average for 10 priority product groups/services

insist on efficiency conditions to increase energy savings and spread innovative solutions, notably in buildings and transport”78.

Commission President Barroso went further in an orientation debate on energy and innovation, saying: “we believe the time has come for governments to set aside dedicated budgets from existing money for public procurement of innovative products and services. This should create a procurement market worth at least €10 billion a year for innovation that improves public services”. He added: “we consider further partnerships like water quality and use, resource-efficient use of raw materials and development of substitutes, unleashing the bio-economy, and accelerating the number of ‘smart cities’”79.

Time to save public money

Green products are wrongly perceived as costing more – a misconception which arises by focusing solely on the purchase price when evaluating offers, rather than the full life-cycle cost of the product or service. In most cases the overall costs of green goods and services are lower, as the often slightly higher purchasing prices are more than compensated for by lower operating, maintenance or disposal costs.

This has been shown by an authoritative study80 carried out in 2008 in seven Member States revealing that in general GPP does not increase costs but actually helps the purchasing organisation to cut costs. The study used a Life-Cycle Costing approach to calculate the financial impact of GPP, and concludes that the result was -1,2% in 2006-2007. Applied to all Member States, GPP could therefore save more than €20 billion a year. In the current financial climate, ignoring GPP corresponds to a waste of public money.


TOOl 4: SET ThE FRamEwORk FOR mandaTORy FinanCing PlanS FOR naTURa 2000

The crucial need for a mandatory financing approach

Natura 2000 is Europe’s biggest success story regarding biodiversity protection and the main tool to help meet the target of halting biodiversity loss by 2020, through its network of 25,000 sites all over Europe which protect habitat types and plant and animal species of particular importance. There is an increasing number of cases demonstrating that a fully functional Natura 2000 network would deliver many vital ecosystem services, including those directly relevant to climate change mitigation and adaptation, such as flood conveyance of wetlands, natural coastal protection of dune systems, carbon sequestration of peatlands and the ability of forested mountain areas to prevent erosion and land slides. In addition, numerous Natura 2000 sites pay off in economic terms, be it through green tourism or through the delivery of ecosystems services.

Underlining their importance in its Spring 2010 conclusions, the Council stated that “protected areas and ecological networks are a cornerstone of efforts to preserve biodiversity” and in relation to Natura 2000 stressed “the need to (…) put in place adequate finance and effective management and restoration measures”. A authoritative study from the European Commission and Member States has concluded that the overall costs of Natura 2000 are around €6 billion per year for all 27 EU Member States81. While this amount is extremely modest (0,05% of the EU GDP), the EU and Member States have failed to match it: it is estimated that only 20% of the total financing needs for managing protected areas in Europe are currently being met82.

Experience from the current Financial Perspective has shown that a voluntary approach to integrate Natura 2000 support into non-environmental funding instruments is not sufficient to cover the core costs. The uptake of funding for biodiversity is very diverse and dependent on the willingness of each Member State. An obligatory method to integrate Natura 2000 into non-environmental funding lines is needed. This would be the most effective measure to reach the 2020 target to halt biodiversity loss.

81 Coordination Group for Biodiversity and Nature (meeting 02/03/2010), Financing natura2000 – State of Play, Agenda item, and European Commission (2004), Financing Natura 2000, COM(2004)431 final

82 According to a study by the Institute of European Environmental Policy


The current “integration approach” ensures that Natura 2000 can be financed through different EU funding lines, namely rural development, Cohesion Policy, LIFE+ and European Fisheries Fund. Current EU funds provide a number of opportunities to finance Natura 2000 but Member States have not taken up many of these opportunities. The key factor for success in delivering what Natura 2000 needs is to include it as part of a more strategic planning basis, covering the period of the next EU budget. Article 8 of the Habitats Directive already foresees the need to develop “a prioritized action framework” (PAF). While it would not be realistic at the level of each site, it is feasible at the level of the Member States to establish national Natura 2000 prioritised action frameworks.

Figure 3: Elements to include in national financing plans for Natura 2000

National Natura 2000 funding strategies for the next Financial Perspective, explaining key priorities which need to be addressed over the whole periodDescription of Natura 2000 measures to be financed

Contribution of each EU fund (budget and measure) to the national Natura 2000 network for the Financial PerspectiveContribution of Member State fund(s)

Implementation planMonitoring and evaluation plan

It is important to note that much of the information needed is already available and therefore would not require additional preparatory work. The PAFs would have multiple benefits: they would provide transparency and monitoring, facilitating much better effectiveness and delivery, in line with the goal of stopping biodiversity loss by 2020. To maximise their influence the PAFs should be established before the end of 2012; financial support from the LIFE+ fund to support authorities developing such PAFs is already possible.


TOOl 5: STREngThEn PUBliC PaRTnERShiP and TRanSPaREnCy TO imPROVE SCRUTiny and qUaliTy OF SPEnding

Increased civic engagement and participation of environmental stakeholders will help to improve the quality, relevance and effectiveness of EU spending, and ensure that socio-environmental concerns are better addressed. In addition, a more inclusive approach is likely to create more confidence in the funding allocation, providing much higher public acceptance and facilitating implementation.

The regulation of EU funds for the next period should set minimum standards for access to information, the role of stakeholders and the procedures for their involvement in all phases.

General access to information

In order to inform taxpayers and citizens, full disclosure should be provided about the EU budget’s use. Member States should post all relevant information on the use of EU funds on a central website, including project selection criteria, selected projects, beneficiaries, and monitoring and evaluation reports. Processes leading to decisions, and their implementation and enforcement, should be clear and accessible to all.

Partnership in programming, implementation and monitoring

• In the programming phase, minimum standards include clear rules and timelines for programming, partnership-based working groups, drafts of programming documents being made publicly available for comments, feedback from authorities explaining the acceptance / rejection of comments, and the coupling of programming with Strategic Environmental Assessment processes starting at an early phase.

• In the implementation phase, minimum standards include providing support for stakeholder capacity building (including NGOs and civil servants), providing assistance, consultation and training to potential applicants, providing information about the implementation of projects on the internet, ensuring


the involvement of environmental authorities, networks and NGOs in project evaluation and selection of teams, and providing financial support for partners’ direct costs (e.g. travel).

• In the monitoring phase, minimum standards include enhancing the scope of competence of monitoring committees, ensuring the even representation of all partners in monitoring committees with a transparent selection process, and transparency of the operations of the monitoring committees, including the regular publication of meeting documents.

The EU should be lead by example. Together with NGOs, the Commission should develop and disseminate guidelines and benchmarks for Member States on how to strengthen participation at national and regional levels. These guidelines should be based on existing best practice, peer reviews and the 2009 Commission study on governance and participation. The Commission should simultaneously be stricter on the implementation of the partnership principle by Member States. In order to achieve even better results, the principle of partnership should be coupled with that of subsidiarity, i.e. promoting decision-making which happens as close to affected communities as possible.

ChaPTER 3:COmmOn agRiCUlTURal POliCy (CaP)According to EU citizens, the CAP is viewed as performing negatively when it comes to protection of the environment.

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67% of EU citizens think that EU farmers need to change the way they work in order to fight climate change, and 87% are supportive of a link between financial support for farmers and compliance with rules regarding environmental protection83. Indeed, despite improvements made during previous reforms, today’s CAP is still not adequately encouraging farmers to adopt more sustainable practices, as the European Environment Agency’s report shows84. Europe is now faced with the challenge of tackling the degradation of ecosystems and the services they provide, such as clean water, healthy soils and rich biodiversity, all of which are vital to securing our long-term food production capacity, the future of European farming activity and our environmental sustainability.

As a consequence, the CAP is the most controversial part of the EU budget and is fragile, given the mounting budget constraints and with many other sectors clamouring for help. The Commission’s communication on the CAP towards 202085 is clear about the need to delivery environmentally-sound public goods and, if interpreted ambitiously, is a welcomed step towards a greener and more sustainable CAP. The CAP should become public money for public goods, as this is the only way to legitimise it in the short, middle and long-term.

“Greening” the CAP is not just about the environment, it is also about ensuring a future for EU farming by decreasing oil dependency (and vulnerability to price shocks), reducing climate vulnerability (resilience) and helping farmers to ensure farm sustainability. CAP could also deliver crucial rural vitality, by supporting rural communities, landscapes and High Nature Value farmlands. The new CAP reform should ensure that farmers get real incentives to deliver the public goods that European citizens want and are ready to pay for.

WWF has identified six factors for successfully ensuring that the future CAP will actively encourage farmers to engage in an innovative, agri-ecological transition toward sustainable farming:

83 European Commission, Special Eurobarometer 336, Europeans, Agriculture and the Common Agricultural Policy, March 2010

84 European Environment Agency, The European Environment – State and Outlook 201085 European Commission, The CAP towards 2020 : meeting the food, natural resource and territorial

challenges of the future, 18 November 2010, COM(2010) 672 final


TOOl 1: imPlEmEnT a mandaTORy gREEning OF PillaR 1

The Commission’s communication on the future CAP introduces a “mandatory greening component of direct payments” to enhance the CAP’s environmental performance. It relates to “actions that go beyond cross-compliance and are linked to agriculture (e.g. permanent pasture, green cover, crop rotation and ecological set-aside)”, but the communication falls short of proposing a clear and concrete mechanism. Such a mandatory greening payment is of the utmost importance.

Define simple components of the greening payment

The mandatory greening component is a much-needed first agronomic step. It should be a package of practices at farm level, applicable across the whole EU territory, such as:

• 10% of green infrastructure at farm level (including hedges, patches of semi-natural habitat, etc);

• crop rotation (forbidden to cultivate the same crop in the same place two years in a row) of at least three crops and 50% maximum of the dominant crop, with the possibility of adaptation due to natural constraints. Legume crops integrated in rotation systems may have a positive effect on the European protein production, but need to be adopted to regional natural constraints and have to follow strict sustainability criteria;

• prohibition of ploughing of grasslands; and• nutrient balance.

These measures take the form of “simple, generalised, non-contractual and annual environmental actions”, as the Commission’s communication proposes. In addition, they are all feasible: they are easy to implement, simple to report and can largely be monitored through remote sensing (satellite use would easily improve control with no administrative burden).

The mandatory greening component should be a package (and not a menu) linked to the basic income payment: farmers who do not want to abide by it would lose the whole payment. Many farmers across Europe already implement these measures. The new element in the greening component is that it would make farmers’ efforts for the environment more visible and clearly rewarded by a part of the income support (a link which is very unclear today). In the long-term, the greening component would become the only element justifying the CAP. All together, these


mandatory at farm level measures, will drive all EU farming systems towards the agro-ecological transition that will be essential in stopping the depletion of our natural resources and ensuring our long-term food security.

Support other more targeted environmental measures

Other elements should be included in Pillar 1, whether in the mandatory greening component or in other schemes:

• a payment for Natura 2000 farmland sites, to ensure the fulfilment of annual conservation requirements (general restrictions); and

• a support for High Nature Value (HNV) farming.

With the greening component and these measures, direct payments would be clearly linked to the delivery of public environmental goods that are not properly rewarded by the market, such as biodiversity protection, climate mitigation and adaptation, carbon storage and sustainable water management. It is therefore a key element to re-legitimize the CAP.

Reinforce and simplify cross compliance

Cross compliance is currently the only mandatory requirement establishing a link between agriculture and the environment. It obliges farmers to respect mandatory Statutory Management Requirements (SMR) and Good Agricultural and Environmental Conditions (GAEC). SMR is about the respect of EU directives (Nitrates, Birds, Habitats and the needed, forthcoming Water Framework Directive…). GAEC includes 15-20 measures, some mandatory and some optional, that have proven difficult to implement.

Encouraging the greening component should obviously not weaken the existing requirements of the GAEC. Considering the complexity of the challenges we are facing, we need targeted payments and also control and sanctions. The European Court of Auditors (2008) made clear that the lack of efficiency of the cross-compliance system is linked to the weakness of the current controls and sanctions. Controls and sanctions – which unavoidably involve administrative costs - are the legitimate counterpart of a targeted CAP that can be accepted by the taxpayer. That said, WWF supports a simplification of the CAP system as long as the payments are targeted and sufficient control is guaranteed. For example, certain obligations not having a meaningful environmental impact could be removed.

In addition, the Water Framework Directive should be introduced in SMR, building on the already existing water-related Good Agricultural and Environmental Conditions.


TOOl 2: STREngThEn agRi-ECOlOgiCal mEaSURES in PillaR 2

Figure 4: Proposed structure for the second pillar

Agri-environmental measures:

• Priority agri-environmental measures: 90-100% EU co-financing (Organic farming, High Nature Value farming, Natura 2000, Water Framework Directive)

• Other agri-environmental measures: 50-75% EU co-financing (depending on the specific situation of each Member State)

Other environmental measures (current in Axis 2):

• Agri-forestry, non-productive investments, animal welfare

Investments on infrastructure and for farming modernisation

• According to environmental criteria (e.g. modernisation of irrigation, slurry tanks, etc.)

Others • LEADER approach• Support to young farmers

Farm Advisory Systems

• To enhance farm sustainability

Cross compliance (pillars 1 and 2)

• Revised GAEC (Good Agricultural and Environment Condition) to include requirements regarding Water Framework Directive and remove certain useless GAEC

• Statutory Management Requirements (SMR) including Water Framework Directive

The Commission’s communication on the CAP towards 2020 sets three priorities for rural development: innovation and competitiveness, sustainable management of natural resources and balanced territorial development. “Within this framework, environment, climate change and innovation should be guiding themes that steer policy more than ever before.”


Increase the support for the agro-ecological transition

The key priority of Pillar 2 should be to provide strong support to farmers engaging in agro-ecological transition toward a systemic approach (organic farming86, HNV farming, low input farming, integrated crops and livestock farms – mixed farms). In addition, Pillar 2 should enhance support for Natura 2000 sites having special management requirements and compensate farmers for the implementation of the Water Framework Directive. All Pillar 2 measures should fit in one global approach. Indeed isolated measures like the creation of water reservoirs as a climate change adaptation measure, or the production of renewable energy as a climate change mitigation measure can have counter-productive effects if, for example, they do not give incentives to save energy or freshwater.

On climate change, a conventional, “grey” infrastructure approach in the agricultural sector risks impairing conservation goals, impeding the shift toward sustainable agriculture, and of, consequently, being short-lived. The first prerequisite for climate change adaptation is to have environmentally sound, robust and resilient agro-ecosystems. Again, the CAP should support transition toward these systems and progressively phase out support of unsustainable systems, implementing the principle of preventive action. Climate change mitigation measures should be extremely targeted and carefully monitored to avoid counter-productive impacts, notably on biodiversity or water; they could include carbon stock restoration (peatland87) as a flagship for projects that can show short-term concrete results.

Energy-related payments should first go to low external input (fertilizer, pesticides, fuel…) practices such as associated crops and larger rotation (with legumes). Indeed, the two most important types of emission are N2O and CH4, followed by CO2. Payments supporting biomass production should be capped and real and significant GHG emission reductions need to be proven by life-cycle analysis, taking into account direct and indirect land-use, changes and effects on biodiversity and water resources.

Forestry support should focus on biodiversity. Measures to support agro-forestry systems of high environmental value, such as cork or dehesas (Mediterranean forests), are extremely useful. Many of these systems are at risk of abandonment

86 84% of EU citizens agree that farmers should be encouraged to produce more organic products. European Commission, Special Eurobarometer 336, Europeans, Agriculture and the Common Agricultural Policy, March 2010

87 Peatlands hold 1450 tons of carbon per hectare on average, making peatlands one of the most carbon dense stores among all ecosystems. Cultivating on drained peatlands has a significantly negative impact on the global carbon balance, hence their conservation is required


due to the lack of public support, even though they are key to achieving rural development objectives such as biodiversity protection or maintenance of landscapes and valuable cultural practices.

Support eco-innovation

Investment in innovation, new technologies, new products and processes to achieve green and smart objectives need to be targeted correctly, e.g.:

• innovation must be based on sustainability principles (eco-innovation), so that it contributes to environmental targets and is not counterproductive;

• innovation should not only be understood in technological terms but refer to the knowledge-based approach, in particular better dissemination of best agro-ecological practices;

• increased focus on innovation should target agro-ecological practices and sustainable system approaches that have proven their economic, social and environmental benefits and are in need of more research, training, and promotion;

• innovation should be accompanied by more emphasis on knowledge transfer, capacity building and training within the CAP; and

• expensive technology makes farmers more dependant financially, while agro-ecological innovation makes farmers more financially and technically autonomous. Autonomy is an important criteria for young farmers and, hence, for employment in the agricultural sector and for rural vitality. It is a key criterion for innovation.

Improve the balanced territorial development through local markets

The Commission recognises the added-value of farmers’ products that are locally processed and distributed on local markets. The future CAP should support the development of local markets selling sustainable, local and seasonal products through Pillar 2: investment, advisory system, etc. Strengthening the local added-value chain (local marketing and processing) will also foster rural vitality.


TOOl 3: inCREaSE SUPPORT FOR TRaining and gUidanCE FOR FaRmERS TO EnhanCE SUSTainaBlE FaRming

In 2005, according to the Commission, only 20% of farmers in EU27 had a basic or full training in agriculture, ranging from less than 1% in Malta to 71% in Netherlands88. According to UNEP and Cedefop, the requirement for skilled agricultural (and fishery) workers in Europe will be about 2,2 million people in 2015 already89. Simultaneously, the existing advisory service is very poorly implemented, as the actual figures in rural development show: only 0,5% of the 2007-2013 planned expenditures (€131 million) on farm advisory systems had been spent by August 2010.

In addition, within the CAP reform “environment, climate change and innovation should be guiding themes that steer the policy more than ever before”90. This means that training, guidance and lifelong education will become more important than ever as farmers adapt to the new challenges. The CAP will fail to tackle these challenges without reform of it advisory system. Its focus on sustainable practices is extremely poor, instead it concentrates on farm productivity growth without considering issues such as the delivery of public goods like water (both quality and quantity), GHG emissions reduction, carbon storage, soil fertility and biodiversity. Hence, the advisory and training system has to be revised, reinforced and adapted to the challenges ahead.

The Farm Advisory System (FAS) needs to become a key element supporting farmers to achieve sustainability. The FAS should be revised to accompany farmers along their agro-ecological transition, which means investing in human resources (training of farmers and farm advisors on systemic approaches as organic and HNV farming, management of Natura 2000 land, etc.). Training and advisory systems should be independent and not purely focused on economic growth. They should accompany farmers in:

• agro-ecological transition toward systemic approaches;• implementation of the greening component in Pillar I;• implementation of more and better agri-environmental measures in rural

development; and• providing more advice on agro-ecological practices.

88 European Commission, Rural Development in the EU – Statistical and Economic Information Report 200989 Cedefop, Future Skill needs in Europe. Focus on 2020, 2008. UNEP et al, Green Jobs: Towards decent work

in a sustainable low-carbon world, 200890 COM(2010) 672 final


Advisory systems improve the knowledge of farmers on the ground. A certified EU-wide rural network “Farmers train farmers” should be created where innovative farmers train other to facilitate exchange of best practice, and to raise the acceptance of advisory systems amongst the farming community. Accordingly, an EU database on sustainable practices that best deliver public goods should also be created.

TOOl 4: SET EnViROnmEnTal TaRgETS and PERFORmanCE indiCaTORS TO mEaSURE PROgRESS

The Europe 2020 Strategy is determined to improve the results of EU policies and sets several targets including environmental targets. In addition, the Commission’s communication on the CAP towards 2020 states that “the current strategic approach would be strengthened by setting quantified targets at EU and then at programme level.” These targets are the effective delivery mechanisms needed to translate policy objectives into results into the ground. In addition, the CAP will have to be much more focussed on the sustainable management and protection of the environment.

WWF very much supports this more outcome-based approach. Accordingly, environmental targets become imperative – otherwise the effectiveness of the EU funds used in reaching the EU 2020 targets cannot be judged - and the use of the EU budget remains ‘blind’. The mandatory CAP targets must be consistent with European environmental targets, including the 2020 objectives for ecosystems and biodiversity protection, sustainable water management, energy and resource efficiency and climate mitigation and adaptation.

In order to ensure payments are allocated to projects having a measurable, positive environmental impact, the common monitoring and evaluation framework, although simplified, should include clear environmental indicators on the scope of the environmental objectives of the CAP, such as support of HNV farming, improving the status of water bodies, controlling soil erosion or reducing desertification risk.

These criteria will apply both to direct payments and rural development, as the Commission clearly states in its communication. They should include the full extent of sensitive areas for water, climate and biodiversity, e.g. indicators for the quantity and quality of water in agrarian areas; indicators for the quality of soils (content


of organic matters and compaction); quantity and quality of Natura 2000 sites; a birds indicator; HNV Farmland indicators; levels of imported fodder (dependency of imported proteins); creation of employment on agricultural holdings; poverty levels in rural areas; level of inputs with fossil fuel origins (e.g. fertilisers); number of organic farms; level of production; level of food wastage; domestic crops and breeding conservation status; livestock census.

TOOl 5: REwaRd BEST EnViROnmEnTal PERFORmanCE wiTh FinanCial inCEnTiVES

See Tool 2 in the Common Strategic Framework chapter. The Commission’s communication introducing targets adds that they can be possibly “coupled with incentives to be studied, such as for example performance reserve”. It would be very beneficial for farmers and rural stakeholders to reward best environmental performance with a financial incentive. This will develop best practices, mainstream them and boost effectiveness of the CAP to improve results.

WWF also supports the modulation of the EU co-financing rate. A higher rate (90%) for measures of high community-wide relevance (transversal measures such as agri-environmental measures, organic farming or HNV systems) would make them more attractive for Member States and would facilitate their implementation.


TOOl 6: imPlEmEnT mandaTORy gREEn PUBliC PROCUREmEnT

See Tool 3 in the Common Strategic Framework chapter. Regarding sustainable farming and rural development, green public procurement relates to purchases made by public authorities (notably in rural regions, counties and municipalities, schools, etc.) and all kinds of public authorities acting in rural areas (e.g. to manage lands, forests, etc).

In order to strengthen the link between consumer and producer, mentioned as an objective of the Commission’s communication, it is important to assess the role and current constraints of public procurement. Public canteens in schools, hospitals, administrations, etc. could and should have a massive impact on the demand for locally and sustainably grown products. So far European public procurement rules have been used in a very narrow way, prioritising short-term, least cost options at the expense of more sustainable and long-term cost-effective solutions. This is what green public procurement needs to change.

ChaPTER 4:COhESiOn POliCyCohesion Policy seeks to reduce the gap between poor and the rich EU regions by promoting economic, social and territorial cohesion. It consists of three specific funds, the Cohesion Fund and the two structural funds, the European Regional Development Fund and the European Social Fund.

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Cohesion Policy has the potential to make a much greater impact on the green economy, because it targets key sectors underpinning the economy, such as buildings, transport, energy, industry, waste management and water. It could invest significantly in ecosystems and biodiversity. In addition, it can address the concrete needs of a territorial approach.

WWF identified seven factors for success if the future Cohesion Policy is to deliver better results and strongly contribute to the fostering of a green economy91. They are presented below in the recommended architecture of the future Cohesion Policy. These recommendation should also apply as much as possible to the future instrument for Pre-Accession Assistance (IPA), benefiting accession countries, and, where relevant, to the European Neighbourhood and Partnership Instrument (ENPI).

91 See also the recommendations from Keti Medarova, Institute of European Environmental Policy (2010): How Climate proofing the EU budget: Structural and Cohesion Funds and European Network of Environmental Authorities-Managing Authorities (ENEA-MA) (2009), Improving the Climate Resilience of Cohesion policy Funding Programmes, November 2009


Figure 5: The architecture of the future Cohesion Policy

Architecture of the future Cohesion Policy

Common Strategic Framework(EU levels, covering 5 funds: Cohesion

policy, rural dev. fund, fish. fund)

General regulation Cohesion Policy

Regulation European Regional

Development Fund

Regulation European

Social Fund

Regulation Cohesion Fund

(EU level: codecision European Parliament + Council)

Development and Investment Partnership Contract

(Commission / Member State / Stakeholder)

Operational Programmes(Planning: Member State, regional and

local levels / approval: Commission)

Projects(Member State, regional and local levels /

Managing authorithies, CSOs)

Mechanisms required

Tool 1

Ensure an appropriate environmental focus in the regulatory framework

Tool 2

Set mandatory thematic priorities in the regulation and reform categories of expenditures to align with investment priorities

Tool 3

Set environmental targets and performance indicators

Tool 4

Reward best environmental performance with financial incentives

Tool 5

Increase technical assistance and guidance for environmental integration

Tool 6

Improve project selection criteria: implement eco-conditionality throughout the full project life-cycle

+

Cross-cuttingTool 7

Strengthen transparancy and public partnership in planning and implementation


TOOl 1: EnSURE an aPPROPRiaTE EnViROnmEnTal FOCUS in ThE REgUlaTORy FRamEwORk

Environmental mainstreaming

Improvements of Cohesion Policy regulation (the General regulation and the three fund-specific regulations) are needed to require clear environmental mainstreaming in all funded activities, notably climate mitigation (low-carbon emissions) and adaptation (resilience), energy savings, biodiversity protection and resource efficiency (e.g. water and land use).

Set the framework for mandatory green public procurement to boost eco-innovation and save public funds

To see more details on this tool, please refer to Tool 3 in the Common Strategic Framework chapter. The Commission (DG Regio) will publish a Green Public Procurement (GPP) guide for public authorities in 2012. It will also be needed to provide financial support for the introduction of GPP, for capacity building, training and cooperation between authorities.

Best practice: the Green Public Procurement action plan in the Basque Country (Spain)

A GPP regional action plan was initiated in 2008. It is especially innovative, and shows the relationship between procurement activities and climate change. it presents real results (in CO2 and euros) of the environmental relief provided through GPP. Successful elements include the central coordination of the programme (one message from all regional public authorities), training courses and support in greening tender documents, and support and preparation of the region’s producer companies (supply side).

Implement a more coherent and consistent Cohesion Policy architecture

The architecture of the current Cohesion policy is complex and sometimes supports projects that are inconsistent with EU environmental policy and inhibit progress towards the 2020 environmental targets. Strategic coherence should be provided by a smart alignment of Cohesion Policy financial regulation (and the three specific funds), the Common Strategic Framework, strategic guidelines at EU level, partnership agreements and Operational Programmes on national and regional levels.


The Commission’s communication on the EU Budget Review introduces a Common Strategic Framework for the five EU funds in shared management between the Commission and the Member States. For more detail, see Tool 2 in the Multi-annual Financial Framework chapter.

The Commission has also put forward a “development and investment partnership contract” between the Commission, the Member States and the regions to better define investment priorities92. It would endow the Cohesion Policy with a more strategic negotiating and monitoring process, in order to achieve more targeted results, best addressing the Member States’ development challenges while respecting the EU’s sustainable development commitments. To have a positive impact, the partnership agreements must be as mandatory and as focused as possible. They will need to include key elements highlighted by Figure 6:

92 The partnership contract is introduced for Cohesion Policy, but it would be very relevant to use it for other EU funds, to improve synergy and effectiveness and reduce the administrative burden


Figure 6: Elements required in the partnership contracts

Priorities Example

Measurable targets By 2020: 30% GHG emissions reduction in a region / 20% energy savings in a region / adequate biodiversity protection through full support of Natura 2000 sites and development of a network of green infrastructures

Allocation of EU resources 20% for buildings retrofit / 10% for ecosystems’ protection

National co-financing guarantees to avoid lack of financing for more innovative projects

Commitment to fund green innovative projects

Measurable performance indicators, including environmental indicators

Carbon footprint (GHG emissions) / renewable energy production / energy consumption / land consumption / water consumption / good environmental status of freshwater bodies / protection of Natura 2000 sites

Reforms needed to achieve compliance with EU environmental acquis and avoid infringement procedures

National action plan to comply with the Water Framework Directive

Elimination of environmentally harmful subsidies

Strategy to shift support towards fully sustainable decarbonised transport

Mechanism for changing contract targets and introducing amendments

Change once a year in a multi-stakeholder process

WWF believes that the Commission should become a more pro-active partner in Cohesion Policy, notably in establishing the Common Strategic Framework, the partnership contracts and the Operational Programmes and for giving clear guidance to national, regional and managing authorities with much more targeted recommendations to take a holistic approach to the environment.


TOOl 2: SET mandaTORy ThEmaTiC PRiORiTiES in ThE REgUlaTiOn and REFORm CaTEgORiES OF ExPEndiTURES TO align wiTh inVESTmEnT PRiORiTiES

Focus on priorities fostering the green economy

The review of Cohesion Policy concluded that a greater concentration of resources is required to achieve critical mass and make a tangible impact. “This could be achieved by establishing, in the Cohesion Policy regulations, a list of thematic priorities linked to the priorities, Integrated Guidelines and flagship initiatives of Europe 2020. (…) Certain priorities would be obligatory,” according to the Commission’s conclusions of the 5th report on cohesion. It is important to note that several regions support the approach of concentrating the funds on a limited number of priorities93.

The mandatory priorities should be:

• climate mitigation, including energy savings, renewable energies and smart grids, sustainable decarbonised transport;

• climate adaptation and green infrastructures, ecosystems and biodiversity protection (with the emphasis on Natura 2000), ecosystem-based risk prevention;

• resource efficiency, including sustainable water and waste management; and• eco-innovation, green technologies (especially support for SMEs) for a more

energy and resource-efficient economy

For WWF, all priorities need to have a strong link to the EU’s 2020 targets and should be essentially part of the key sectors underpinning a green economy, as according to UNEP: buildings, energy supply, industry, tourism, transport, waste management and water94.

Ensure minimum earmarking for each priority

Selecting priorities without devoting financial resources to them would be meaningless. Therefore, earmarking should serve the achievement of priorities. In order to avoid unnecessary restrictions, flexibility should be given to implement these priorities. In addition, some flexibility should also be given to regions so that they can address their specific regional challenges, e.g. achieving compliance with the environmental acquis.

93 Contribution of French Regions (2011): “We approve the Commission’s intention to strengthen the leverage effect of European funds across our regions by concentrating these funds towards a limited number of themes”

94 UNEP (2011), Towards a green economy - A synthesis for Policy Makers


Reform categories of expenditures to ensure coherence and consistency with targets and priorities

There are 86 categories of expenditures in the current Cohesion Policy used by Member States to voluntary earmark funding and report back to the Commission. But they will not fit the priorities of an EU budget focused on meeting the EU 2020 Strategy targets. In addition, some categories currently suffer from a lack of clarity and overlap, some are almost not used at all and a few important categories are missing (e.g. green infrastructure).

WWF therefore proposes a new set of expenditure categories for the Cohesion Policy, based on the former but updated to take the following elements into account. The categories should:

• integrate the new structure of the EU 2020 strategy, as suggested by the Commission’s Communication on the EU Budget Review;

• increase the thematic concentration by introducing subgroups of categories;• simplify by merging categories that are not very different; and• redefine or specify the scope of the categories where relevant, to ensure eco-

conditionality of climate mitigation (low-carbon emissions) and adaptation (resilience), energy savings, biodiversity protection and resource efficiency (e.g. water and land use).

Future Cohesion Policy categories of expenditures.The new set of categories is presented in Annex 1.


TOOl 3: SET EnViROnmEnTal TaRgETS and PERFORmanCE indiCaTORS in PaRTnERShiP COnTaCTS and OPERaTiOnal PROgRammES

The precondition of compliance with EU environmental acquis

Even before setting targets, the first obvious condition for EU funding is to demonstrate compliance with the EU environmental acquis relevant to the Partnership Contract and the Operational Programmes (in the same field or sector: water, transport, biodiversity, etc).

If environmental legislation is breached by a Member State, the Commission should withhold funding this area until compliance is achieved. To help Member States and regions identify the conditions needed to successfully implement projects, EU funding should be linked to the implementation of reforms in the related areas. For example, if a Member State wants to invest in wastewater treatment plants, a condition would be that the country must transpose all relevant EU legislation into national law, to avoid facing an infringement procedure

The Commission, at the same time as it better supports Member States and regions, has a responsibility to strictly apply the rules, such as making funding approval conditional on positive environmental impact assessments. The Commission should systematically resist political lobbying and pressure to approve weak projects, because they will not deliver good results, they jeopardise the EU budget’s effectiveness and are counter-productive to meeting the EU 2020 targets.

Mandatory targets to be consistent with EU 2020 environmental targets

Mandatory targets are required in the Partnership Contracts and Operation Programmes to ensure the best possible delivery of results. There Cohesion Policy targets must be consistent with and strongly contribute to achieving the EU’s environmental targets by 2020: 20-30% emissions reduction, 20% energy efficiency improvement, 20% renewable energy production and halting the biodiversity loss by 2020. Environmental targets should be required at least for the key sectors underpinning a green economy as identified by UNEP: buildings, energy supply, industry, tourism, transport, waste management and water.


Best practice: the Renewable Energy and Energy Efficiency Operational Programme (Italy)

this multiregional op has been entirely dedicated to energy measures for the four Italian regions of Apulia, Campania, Calabria and Sicily. It has a total budget of €1,6 billion for 2007-2013. Measurable targets have been set, such as: to increase the share of renewables in energy consumption from 4.7% in 2006 to 6.1% by 2013; to reach energy conservation of 1250 Tonnes Equivalent of Petroleum (TEP) to reduce GHG emissions by 1 million tons of CO2 per year and to create 4,700 jobs.

Use environmental performance indicators

To adequately monitor and ensure achievement of environmental targets, environmental indicators are needed in Partnership Contacts and Operational Programmes (where relevant): they could include monitoring of: the carbon footprint (GHG emissions); renewable energy production; energy consumption95; land consumption; water consumption; environmental status of freshwater areas; or protection of Natura 2000 sites.

Time to mainstream best practices: NECATER carbon assessment (France)96

according to the Commission, nearly half of the Member states have integrated greenhouse gas emissions indicators into their Cohesion policy programmes97. france has developed the tool neCater: it is the most elaborate and commonly used software tool in the eu for estimating the carbon footprint of programmes at the regional level.

95 The European Commission, in a draft version of its forthcoming energy strategy for the next ten years, says that energy efficiency criteria should be used in “all spheres, notably for allocating public funds”. ENDS, Europe facing €1trn bill to upgrade electricity grids, 20 October 2010

96 This example and some others are taken from European Network of Environmental Authorities-Managing Authorities (ENEA-MA) (2009), Improving the Climate Resilience of Cohesion Policy Funding Programmes

97 European Commission, Cohesion Policy backs “green economy” for growth and long-term jobs in Europe, 9 march 2009. Member States using climate indicators are Austria, Bulgaria, the Czech Republic, France, Germany, Hungary, Italy, Poland, Portugal, Romania, Slovakia, Slovenia and the United Kingdom


it has been developed by consultants and the Ministries of economy and of environment together with environmental public bodies (adeMe). it is offered free-of-charge to regions. in addition to the evaluation of gHg emissions in programmes, it is used to support the decision-making process and provide environmental monitoring. france has adopted a concept of carbon neutrality that neCater can monitor: project applicants must justify and minimise the impacts of any project that generates carbon emissions. these emissions must be compensated by low-carbon projects (e.g. public transport, renewable energy). Carbon neutrality means setting short-term objectives but also adhering to the long-term factor 4 process which aims to reduce emissions in France by four by 2050.

Use of expanded Strategic Environmental Assessments (SEA) and Environ-mental Impact Assessments (EIA)

See Tool 1: Ensure environmental requirements in the MFF regulation in the MFF chapter.

Improve monitoring and evaluation accordingly

Monitoring and evaluation of the life-cycle of a programme or project need to use environmental indicators. For example, a climate proofing strategy would involve setting-up carbon accounting reporting and monitoring systems. Member States, regions and managing authorities need to be held accountable for not reaching targets with consequences for failing in their commitments.

TOOl 4: REwaRd BEST EnViROnmEnTal PERFORmanCE wiTh FinanCial inCEnTiVES

See Tool 2 in the Common Strategic Framework chapter. Rewarding best-in-class performance is particularly relevant for Cohesion Policy, as it deals with a high number of projects and programmes. All of the high-impact sectors should benefit from this approach: buildings, energy supply, industry, tourism, transport, waste management and water.

Among them, transport is particularly challenging, as transport emissions in Europe have grown by 34% since 1990 whereas those of all the other sectors have decreased. Every single EU-funded transport project should therefore contribute to the reduction of greenhouse gas emissions. But this approach will not be precise


98A solid basis already exists for such a carbon proofing methodology, including well-to-wheel calculations and the HEATCO study (2006)

enough to allocate EU funding in the best way: a hierarchy of measures is needed, based on a state-of-the-art methodology taken from best practice98, and then used to set different rates of co-financing depending on the environmental impact of each option. In the figure below, the different categories should benefit from different EU co-financing rates: in the Dutch case, categories 1-2 could receive a high co-financing rate (85% or even more), categories 3-5 could receive a medium rate, category 6 a low rate and category 7 should not be eligible for EU funding.

Figure 7: Best practice in the transport sector (Netherlands and Sweden)

The Netherlands: ‘Seven stages of Verdaas’

Sweden: ‘four-stage principle’ hierarchy

1. Optimise spatial planning - prevent transport from happening

2. Optimise pricing - Internalise external costs

3. Exploit options for mobility management

4. Optimise public transport

5. Optimise use of existing capacity

6. Adapt existing infrastructure

7. Underpin need for new capacity

1. Influence demand for transport and the choice of transport mode

2. Improve use of existing network

3. Improving existing infrastructure

4. New investment and major rebuilding measures

Source: Transport & Environment, 2010

A second criterion should be included: cost-effectiveness. Article 55 of the General Regulation of Cohesion policy requires the use a funding gap methodology, to calculate the amount of funding revenue-generating projects can receive. The expected revenues are deducted from the grant value, as they will cover part of the investment. For such projects the EU co-financing rate is lower, and it saves public resources. The user charging principle should be strengthened and made obligatory for all transport projects, including roads and motorways, as gaps in the current regulation favour motorways at the expense of more sustainable modes of transport, as shown by the example below.


Controversial practice: greater subsidies for motorways than for rail

Under the current Cohesion Policy (2007-2013), Polish railway upgrade projects receive EU co-financing of 50-60% which is considerably lower than the maximum possible of 85%. This is because the infrastructure manager, a state-owned company, charges operators for using the tracks and this revenue must be deducted from the grant value.

but in the case of motorways, the state agency responsible for their construction is not a company. expressways are toll-free and motorways can remain free for years after construction. freight transport charges are not taken into account when calculating the co-financing rate. Therefore road projects can enjoy the maximum 85% co-financing rate – distorting competition with rail, at the expense of sustainability.

TOOl 5: inCREaSE TEChniCal aSSiSTanCE and gUidanCE TO imPROVE EnViROnmEnTal inTEgRaTiOn in OPERaTiOnal PROgRammES and PROjECTS

Develop capacity building of authorities and beneficiaries

A key aspect in environmentally proofing Cohesion Policy instruments is the capacity of authorities to promote, manage and report on environmental issues. Technical assistance plays an important role in strengthening their knowledge of how to integrate environment into programmes and projects.Investment in best practices can include:

• designating personnel to provide support (e.g. an environmental sustainability manager or an environmental coach);

• consultation with environmental authorities during the application phase of a project;

• as is already the case in some countries, leveraging experience with environmental networks that maintain active dialogue with managing authorities and project applicants and assist with the integration of environmental aspects into programmes and projects proposals: and

• joint capacity building involving all stakeholders (auditors, beneficiaries, managing authorities, etc).


In addition to technical assistance, the European Social Fund is tasked with improving employment opportunities, as well as strengthening human capital and institutional capacity. It is very well placed to support initiatives such as:

• providing training and support services to workers, or vocational education and training which supports eco-innovation;

• networking between relevant stakeholders including civil society; and• supporting programme development through evaluations, studies, expert device99.

Best practice: Swedish Network of Municipalities on Climate Change

several municipalities and county councils have a shared commitment to reduce local gHg emissions. one of the network’s services is the climate coach, a phone service providing assistance in initiating climate work and developing climate strategies. It is free- of- charge for municipalities. Just 18 months after the launch of the project, half of the municipalities that received help from a climate coach have a climate strategy, which is fully adopted or in preparation, and half have begun the process. the climate coach shows that by combining various skills from several municipal administrations, the necessary competence is often already available100.

Develop guidance from the Commission

The Commission should play a stronger role in catalysing efficient and sustainable programmes and projects. It could bring significant change at several key stages of the programme/project cycle, such as:

• providing guidelines for Operational Programmes’ early stage development, to ensure environmental integration and thorough consideration of alternatives, is very likely to be more effective than just negotiating or approving final programmes. The Commission should make advice available when programmes and projects are conceived, develop a manual for local authorities and combine it with concrete advice for management authorities;

• ensuring access to information and quality public participation should also significantly improve the quality of spending. By checking carefully that Member States’ truly implement the partnership principle, the Commission can ensure much stronger added-value.

Instruments like JASPERS and ELENA should also be considerably scaled-up and expanded:

99 For more detail, see Institute for European Environmental Policy (2010), Strategies and instruments for Climate Proofing the EU Budget – Interim Report

100Journal Nordregio, 2008


• JASPERS (Joint Assistance in Supporting Projects in European Regions): managed by DG Regional Policy and the European Investment Bank (EIB), provides technical assistance to new Member States in the preparation of big infrastructure projects. Its mandate should be expanded to include climate, energy, biodiversity and resource proofing expertise at the level of individual investment projects (as project proponents often lack this expertise). For instance, it could be involved in assessing the carbon intensity of different alternatives as part of feasibility studies or it could advise on integrating mitigation measures at the design stage. JASPERS is already involved in some cases in the preparation of ‘groupings’ of smaller scale energy projects, a good step in the right direction.

• ELENA (European Local ENergy Assistance) is a technical assistance facility to facilitate the mobilisation of investment funds for sustainable energy at a local level, created by the European Commission and the EIB. It covers a share of the cost of the technical support needed to prepare the projects, such as feasibility and market studies, business plans, energy audits, preparation for tendering procedures, etc - to make them ready for potential EIB funding. ELENA helps public entities by offering specific support for the implementation of investment programmes and projects, such as retrofitting of public and private buildings, sustainable building, energy-efficient district heating and cooling networks, or environmentally-friendly transport. ELENA should be developed to reach more regional and local authorities and should encourage deep renovation in the construction sector to save as much energy as possible.

Best practice:Using JASPERS and JESSICA101

JASPERS has been used by the city of Warsaw to elaborate an energy efficiency scheme for public buildings. JessiCa has been used in lithuania and estonia to establish holding funds promoting use of renewable energies in the housing sector. With JessiCa, the city of berlin developed a collaboration with esCos (energy Service Companies) to refurbish about 1,300 public buildings. ESCOs provide the upfront financing for the energy investment and recovered the incurred costs through the obtained energy savings.

101 JESSICA (Joint European Support for Sustainable Investment in City Areas) is a financial instrument used within Cohesion Policy to promote sustainable investment in urban areas; it provides loans, guarantees and equity investments


Incentivise sectoral Operational Programmes to foster environmental projects

Sectoral Operational Programmes and thematic calls for proposals can stimulate environment-related projects. They can also be tailored more specifically to climate change, renewable energies, sustainable management of ecosystems and biodiversity or natural resources. As there is often insufficient knowledge among project applicants of the opportunities offered by climate-related projects, providing technical assistance to them is important.

Best practice:Thematic calls for proposals (Finland)

In 2008, the North Ostrobothnia region applied the theme ‘climate change adaptation and mitigation’ to a round of proposals and the results were rather good. In 2007, the environmental theme under the operational programme for southern finland was launched. the call received huge interest from project applicants, which led to the reopening of the environmental theme in 2010.

TOOl 6: imPROVE PROjECT SElECTiOn CRiTERia: imPlEmEnT ECO-COndiTiOnaliTy ThROUghOUT ThE FUll PROjECT liFE-CyClE

Improve the integration of environment in project application docu-ments

It is important that environmental aspects are integrated from the beginning of project development. This can be achieved by highlighting the environmental requirements of the programme, providing sufficient information to project proponents on how to comply with these requirements and outlining environmental evaluation criteria.

Project application documents are also a key element. Applications forms could, for example, contain the following:


• a question on compliance with relevant environmental legislation;• a separate section for applicants to describe the potential environmental impacts

of the project;• an opportunity to state the environmental targets to be achieved by the project;

and• information about any incentives to proactively encourage project proponents

to consider environment, such as higher grant or co-financing rates, etc.

Best practice: The Berlin Operation Programme (Germany)

in this operational programme, a system of environmental indicators was introduced in the application process. in investment projects, applicants are required to specify the energy consumption and gHg emissions associated with the project implementation. in the event of negative environmental impacts, the project can only be approved subject to modification of the proposal or by introduction of an environmental management system. in the service sector, applicants need to demonstrate that the business has an environmental management system in place or apply climate-friendly practices.

Criteria for project assessment, scoring and selection play an important role in ensuring that projects adequately address environmental considerations. In general they should refer to the potential impact of the project on energy and resource consumption, GHG emissions and biodiversity. Sound environmental management practices can also be introduced as a criterion.

Identify and mainstream the best standards

The forerunner principle should be introduced: good practice, based on experience should be used to identify the best possible standards which should then apply to all similar projects. The forerunner principle is particularly important for energy savings, sustainable infrastructure and decarbonised transport modes.

The European Parliament has called for energy saving to be a condition of Cohesion Policy funding102, and it is important to note that several regions and municipalities are in favour of it.103

102 European Parliament resolution of 15 December 2010 on Revision of the Energy Efficiency Action Plan (2010/2107(INI)): “81. In the light of the expected revision of the cohesion and regional policy and of the EU Financial Perspective, calls for energy saving to be integrated into the conditionality for granting EU assistance”

103 Capital Cities, Regions and Cities for Cohesion, Response to the 5th Report on the future of Cohesion Policy, 2011: “We welcome incentive-based conditionality as long as it is directly linked to the content and effectiveness of the Cohesion Policy”


Project conditionality should take into account:

• the best available technologies, sector by sector, in terms of reducing climate impact, increasing energy savings, preserving biodiversity and reducing resource efficiency;

• the existing EU and national standards and labels. Eco-design and energy labelling regulations already in place will likely be reviewed in order to move towards an approach with minimum standards based on recent technological development.

This will facilitate their integration in Cohesion Policy projects. In addition, a common certification system will likely be adopted at the EU level for all buildings, excluding the housing sector104;

• project conditionality will also benefit from high environmental quality standards (e.g. energy and resource efficiency)105. The Commission should accelerate and modernise standardisation procedures, by turning industry-developed standards into European standards, under certain conditions; and

• a company putting an innovative product on the market should include a life-cycle analysis to show that the product is beneficial for the environment over the duration of its existence.

Case study: incentivising best standards in retrofitting

if the highest energy standards are applied to the thermal refurbishment of buildings, the employment boost would be significant: 1 million man-years would be needed by 2030, or, an additional 10% of EU employment in the sector, according to UNEP and al. (2008)106

Use of WWF environmental sustainability Check-List

WWF has provided a strategic Check-List107 to be used for projects submitted for EU Regional Funding (see annex 2). It is relevant to use for project assessment: it raises 10 questions about the general sustainability of the project, then proposes 11 questions for sectoral projects including: transport, water transport, water infrastructure, flood protection, business investments, construction (buildings and housing), renewable energies, energy efficiency, waste, nature protection and technical assistance.

104 La Tribune, L’efficacité énergétique mauvaise élève du paquet énergie-climat, 4 February 2011105 On standardization, see Centre for European Policy Studies (2011), A new Approach to Innovation Policy in

the European Union – report of a CEPS Task Force106 UNEP et al. (2008). Green Jobs: Towards decent work in a sustainable low-carbon world and European

Commission (2007), Facts and Figures, the links between EU’s economy and environment107 WWF (2007), Environmental Sustainability Check-List


TOOl 7: STREngThEn TRanSPaREnCy and PUBliC PaRTnERShiP in Planning and imPlEmEnTaTiOn TO imPROVE SCRUTiny and qUaliTy OF SPEnding

Make the partnership principle a condition of funding

See Tool 5 in the Common Strategic Framework chapter. In Cohesion Policy specifically, the partnership principle should be made mandatory at all levels, notably for the establishment of Partnership Contacts and Operational Programmes, with minimum requirements set in the regulation. The Commission should play a stronger and much more proactive role as guardian of the partnership principle, according to the European Economic and Social Committee108.

Make technical assistance available for civil society organisations

The Cohesion Policy is often perceived as a bureaucratic machine for EU experts and insiders. Many civil society organisations, working at grassroots level and having precious expertise and experience, often report difficulties in getting involved. To increase their participation provisions are needed to empower them to take part in monitoring committees or other activities supporting the preparation and implementation of the policy. Support should be available via technical assistance, vocational training and capacity building under the European Social Fund. Likewise, the possibility of exchange of know-how or building expertise networks via interregional cooperation projects should be encouraged. Such a demand is backed by the European Economic and Social Committee: “continuous capacity building of the partners is crucial: technical assistance resources should be made available to social partners and civil society in all operational programmes.”109

Best practice: support for environmental NGOs in Hungary, Germany, Slovenia

experts from the ngo, national society of Conservationists, have cooperated with the managing authority for structural funds to ensure that environmental sustainability is part of the project selection basis. regional development agencies have adapted their pre-selection and scoring criteria and the managing authority adopted new guidance on environmental aspects for applicants. other examples include the german region Mecklenburg-Vorpommern, where ngo participation in monitoring committees is ensured through technical assistance. in slovenia, money from the european social fund is used for capacity building in ngos.

108 European Economic and Social Committee (2010), Opinion – Efficient partnership in Cohesion Policy109 Ibid

ChaPTER 5:RESEaRCh and innOVaTiOn FUndSThe EU 2020 Strategy puts a strong emphasis on the need to foster research and innovation. According to the Commission’s communication on the EU Budget Review, “future research and innovation funding must contribute directly to the achievement of Europe 2020.” The Seventh Framework Programme (FP7) and the Competitiveness and Innovation Framework Programme (CIP) are the two EU funds devoted to research and innovation.

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Research and innovation do not automatically lead to low carbon emissions, energy savings or increased resource efficiency throughout the life-cycle of products. For example, a total of 7 billion cell phones had been sold in the world by 2009; these innovative products have a very short lifetime (18 months) and a very low recycling rate (e.g. 14% in France). On average cell phones emit 22 kg CO2 (in the production phase mostly)110 and increasingly they require rare earth elements (notably for smart phones). It is debatable as to whether they have a positive impact on resource and energy consumption or not, given that they tend to complement rather than replace other phones.

There are solutions to solve this dilemma: WWF identified four success factors needed to maximise synergies between innovation and sustainability (eco-innovation) and which can simultaneously contribute to the smarter and more sustainable Europe the EU 2020 is looking for. Importantly, these tools should also help to improve synergy between the EU research funds and Cohesion Policy ‘s support for innovation.

TOOl 1: EnSURE aPPROPRiaTE EnViROnmEnTal REqUiREmEnTS in FinanCial REgUlaTiOn and in ThE COmmOn STRaTEgiC FRamEwORk

Driving environmental mainstreaming

Improvements in research funds’ regulation are needed to require clear environmental mainstreaming in all funded activities and notably for climate mitigation (low carbon emissions) and adaptation (resilience), energy savings, biodiversity protection and resource efficiency (e.g. water and land use). In addition, thematic priorities should be defined that support the environmentally relevant lead markets and the technologies of the future, including inter alia, renewable energy technologies and infrastructures, sustainable mobility technologies and energy and material efficiency111.

110 Date from Factor X111 For more information, see WWF (2010), Smarter ideas for a better environment – ERDF funding and eco-

innovation in Germany, Executive Summary. The report analysis how Germany spends its EU Cohesion Policy funding in innovation and formulates recommendations, that also apply to EU research and innovation funds


A framework for mandatory green public procurement, boosting eco-innovation and saving costs

“Governments should use the crisis as an opportunity to foster the demand for innovation, given that it has until now been neglected and considering its attractiveness in the age of fiscal consolidation. This requires a greater and smarter use of public procurement” (demosEuropa)112

For more details about this tool, please refer to Tool 3 in the Common Strategic Framework chapter. The Flagship Initiative “Innovation Union” and the Commission’s Green paper on research funding113 both call for the unleashing of the public sector’s purchasing power to spur innovation through public procurement, including pre-commercial procurement. The United States has a long tradition on this114, whereas in the EU it is an opportunity that is largely unexploited. To improve this situation, the Commission adopted a Green Paper in January 2011 on the modernisation of EU public procurement policy115, to consult as to whether public procurement rules should be modified to include other policy objectives, such as promotion of innovation. WWF believes that procurement rules should foster eco-innovation as a priority. For example, building a reliable procurement framework is considered important in developing climate-related technologies, according to the Centre for European Policy Studies116.

Implement a more coherent and consistent architecture of research funds

The Commission’s Green Paper on research funding117 proposes a new Common Strategic Framework for the research funds. Strategic coherence should be provided by a smart alignment of research fund regulation and the Common Strategic Framework with the targets of the EU 2020 Strategy. Hence the proposed Common Strategic Framework should also require environmental mainstreaming.

112 demosEuropa – Centre for European Strategy (2010), Making Innovation Work: Towards a Smart Demand-Oriented Innovation Policy in Europe

113 European Commission, From Challenges to Opportunities: Towards a Common Strategic framework for EU Research and Innovation funding, COM(2011)48

114 E.g. the Small Business Innovation Research initiative, http://www.sbir.gov115 European Commission, Towards a more efficient European Procurement Market, COM(2011)15116 Centre for European Policy Studies, A new Approach to Innovation Policy in the European Union, report of

a CEPS task force, February 2011117 European Commission, From Challenges to Opportunities: Towards a Common Strategic framework for

EU Research and Innovation funding, COM(2011)48


TOOl 2: SET EnViROnmEnTal TaRgETS and PERFORmanCE indiCaTORSSet mandatory targets consistent with 2020 targets

Mandatory targets should be agreed to ensure the best possible delivery of results. These targets must be consistent with and strongly contribute to achieving the EU’s 2020 environmental targets: 20-30% emissions reduction, 20% energy efficiency improvement, 20% renewable energy production and halting biodiversity loss. Environmental targets should be required at least in the key sectors underpinning a green economy as identified by UNEP: buildings, energy supply, industry, tourism, transport, waste management and water.

Use of environmental performance indicators

To measure progress realised by research and innovation projects, environmental indicators are necessary. They should notably relate to the key areas of climate and energy (e.g. carbon footprint, renewable energy production, energy consumption), biodiversity and ecosystems and resource efficiency (e.g. land consumption, water consumption).

TOOl 3: REwaRd BEST EnViROnmEnTal PERFORmanCE wiTh FinanCial inCEnTiVESSee Tool 2 in the Common Strategic Framework chapter.


TOOl 4: EnSURE ECO-COndiTiOnaliTy in RESEaRCh and innOVaTiOn PROjECTS BaSEd On BEST PRaCTiCE

See Tool 6 in the Cohesion Policy chapter. There are two main ways to foster eco-conditionality in projects:

• improve the integration of environmental aspects in project calls and documents. The framework conditions should be improved: private investment in innovative products and services should be encouraged with clearer guidance and criteria; and

• identify and mainstream the best standards: to save time and effort and to improve effectiveness, it is important to identify best practices and standards in Europe and to apply them to all similar projects. Existing EU standards and labels should be used, and standardisation of high environmental quality standards (e.g. energy and resource efficiency) should be accelerated. A company putting an innovative product on the market should provide a life-cycle analysis to demonstrate that the product is beneficial for the environment.

ChaPTER 6:ExTERnal dimEnSiOnThe European Union is committed to the eradication of poverty through the Millennium Development Goals (MDG). The seventh MDG is about ensuring environmental sustainability. Development Commissioner Piebalgs, at a European Parliament hearing118, strongly underlined that the EU strategic orientation post-2013 should support “EU leadership in addressing the major challenges such as climate change, sustainable development and protection of global public goods worldwide”.

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Commissioner Piebalgs118 also insisted also insisted on the “enormous potential for stronger efficiency, effectiveness, economies of scale and visibility”. WWF has identified five success factors with which the next EU budget could improve European Overseas Development Assistance (ODA) and better contribute to our international commitments.

TOOl 1: STREngThEn EnViROnmEnTal inTEgRaTiOn in all dEVElOPmEnT POliCiES

Sustainable development remains a fundamental objective of the European Union under the Lisbon Treaty. Furthermore, the Treaty confirms that development cooperation policy shall have as its primary objective the reduction, and in the long-term eradication, of poverty in the context of sustainable development. As noted by the European Council in December 2009119, institutionally, the EU Sustainable Development Strategy will continue to provide a long-term vision and constitute the overarching policy framework for all Union policies and strategies.

Environmental integration

The European Consensus on Development120 recognises the environment and the sustainable management of natural resources both as an objective and a cross-cutting issue to strengthen the impact of development cooperation. Through the Consensus, the EU has already committed to greater mainstreaming including through capacity, dialogue, and technical support. Mainstreaming environment in development cooperation and internationally implies taking full account of the management of natural resources, biological diversity, climate and associated ecosystem services in plans, programmes, policies and sectoral and regional priorities.

Mainstreaming and its benefits for aid effectiveness

Environmental sustainability, along with gender equality and human rights, is a cross-cutting issue for aid effectiveness. The Accra Agenda for Action121 empha-sises that these issues are cornerstones to the achievement of enduring change for the lives of poor women, men and children and it is vital that all policies address

118 Hearing by the European Parliament special Committee on the EU budget, 01 February 2011119 European Council, 10/11 December 2009 120 The European Consensus on Development (2006/C 46/01)121 Accra Agenda for Action, 3rd High Level Forum on Aid Effectiveness, Accra, September 2008


these issues in a more systematic and coherent way. Within EU policy, these is-sues are essential to the achievement of the MDGs and should be mainstreamed through development policy and programming. Mainstreaming is not an end in itself but the means to achieve socially just, economically sustainable and environ-mentally-sound development.

Mainstreaming cannot be a one-off exercise during programming or planning; it has to be maintained. It is often the case that environmental departments or agencies in many partner countries are amongst the weakest and most poorly resourced. The strengthening of institutional capacity in national and local gov-ernments will support not only the integration of environment at the planning, programming and budgeting stages but also the development of environmental policies, legislation and good environmental management on a regular and sus-tained basis.

Since the consequences of climate change are no longer avoidable, adapting to the adverse impacts of climate change is not a choice but a necessity for an increasing number of people and societies. As well as new, additional and targeted resources for climate change adaptation and mitigation, most donors are exploring meas-ures to mainstream climate change within development programming. Such ef-forts should be more than risk-proofing against the impacts of climate change, they should approach the issue of how to ensure that aid activities, development policies and external actions reduce climate change vulnerability. Programmes that invest in the sustainable management of natural resources and enhance the resilience of ecosystems will provide a stronger basis for adaptation now and in the future. This is particularly important for the local communities that rely most directly on natural resources and ecosystem services for their health and livelihoods and are the most vulnerable, including women and children.

Again, in the context of climate change, addressing all of the cross-cutting themes together - environmental sustainability, gender equality, human rights and HIV/AIDs etc – offers opportunities for synergies rather than trade-offs and reduces vul-nerabilities to external shocks.

The European Council in June 2009 called upon the Commission to prepare an am-bitious EU-wide environment integration strategy to be presented to the Council in late 2011. It also proposed the establishment of an appropriate framework, involv-ing the Commission and Member States, to prepare and monitor the implementa-tion of the EU approach to environmental integration and to ensure consultation with relevant civil society actors. The new EU strategy should therefore be in place


by the end of 2011 and it provides an ideal opportunity to strengthen mainstreaming and to include the recent and critical commitments to the international environ-ment which the EU has made since the last integration strategy in 2001.

TOOl 2: inCREaSE ThE USE OF STRaTEgiC EnViROnmEnTal aSSESSmEnTS

Policy appraisal tools such as Strategic Environmental Assessments can help give environmental considerations due weight in strategic decision-making. The European Consensus notes the need to systematically strengthen the use of such tools to support mainstreaming. The experience gained so far by both developed and developing country governments, indicates the value of such tools in making development choices at the policy and programme levels, both nationally and regionally.122

The 2005 Paris Declaration on aid effectiveness already suggests promoting a harmonised approach to environmental assessment: “donors and partner countries jointly commit to strengthen the application of Environmental Impact Assessments (EIAs) and deepen common procedures for projects, including consultations with stakeholders; and develop and apply common procedures for ‘strategic environmental assessment’ at the sector and national levels”.

The Paris Declaration also highlights that harmonisation of approaches to environmental assessment needs to be deepened in addressing the implications of global environmental issues such as climate change, desertification and loss of biodiversity.

122 Applying Strategic Environmental Assessment: Good practice guidance for development cooperation (DAC guidelines and reference series, OECD 2006).


TOOl 3: imPROVE POliCy COhEREnCE FOR dEVElOPmEnT

Coherence for Development (PCD) is a critical tool used to increase the value and effectiveness of EU development cooperation. The EU has an impact on development around the world through both its internal and external policies. EU development policy coherence123 requires much stronger emphasis in order to achieve more effective and long lasting results. This implies moving from an individual policy focus to a holistic approach which takes into account the multiple linkages between policy areas and cumulative impacts in partner countries.

EU institutional improvements

Improving policy coherence should be the collective responsibility of the EU institutions and Member States. Ideally, the President of the European Commission should be responsible within the College of Commissioners for policy coherence for development, supported by the High Representative/Vice-President and by the Commissioner for Development. At the Council level, the High Representative and Foreign Affairs Ministers across the EU should regularly review progress at national and European level on PCD, following the example of the European Parliament which has undertaken to monitor this Treaty requirement. A complaint mechanism should be introduced in order to improve accountability, potentially through the existing mechanism of the European Ombudsman.

Importantly, during policy dialogues with partner countries, (whether in the context of development cooperation, foreign policy or trade negotiations), the EU should invite opinions and debate on the coherence of the EU’s policies as perceived by the partner country.

Focus on five priorities issues

The Commission and Member States should ensure that there are sufficient resources available to tackle the PCD work programme including the five current priority “lenses” - trade and finance, climate change, food security, migration and security – and to deepen the approach in future to better harness development potential.

123 Article 208 of the Treaty requires policy coherence particularly in terms of the policies it implements which are likely to affect developing countries


For example, the current PCD work programme addressing climate change in a development context emphasises the need for a comprehensive approach fully integrating interlinked environmental concerns such as loss of biodiversity, degradation of ecosystems, deforestation, desertification, production and consumption. It also aims to seek synergies between climate change, energy and development policies and facilitate developing countries’ access to low-carbon and carbon resilient technologies. At the same time, the EU will need to address its own consumption of natural resources from other parts of the world as it considers sustainability, resource efficiency and equity concerns. This concept of ‘joined-up’ policy making would contribute to the EU’s leadership in environment and sustainable development as well as ensure that development objectives, such as food security and access to energy can be delivered.

TOOl 4: dEVElOP TaRgETEd SUPPORT FOR ClimaTE and BiOdiVERSiTy

A twin-track approach

The EU should take a twin track approach to the environment in development cooperation: along with a systematic and strengthened approach to mainstreaming environmental issues in development cooperation, targeted support for the environment and the provision of global public goods will be required for clearly identified problems which may be of a trans-boundary nature or where support is needed to tackle drivers of environmental degradation and the loss of ecosystem services. The existence of Multilateral Environmental Agreements (MEAs) to which the majority of governments worldwide have signed up, demonstrates the universal understanding of the value of environmental resources and a healthy environment for economic development and human wellbeing. Through both geographic and thematic programming, the EU could support implementation of MEAs where support is identified and required by partner countries.


Biodiversity

The UN Convention on Biological Diversity COP outcomes in Nagoya in 2010 recognised the important links between biodiversity, ecosystems and climate change and invited governments to consider the guidance124 on ways to conserve, sustainably use and restore biodiversity and ecosystem services. Climate and biodiversity financing can be effectively and efficiently used to support poverty and biodiversity goals in a holistic manner which aims to ensure that tackling one environmental limit or challenge does not exacerbate another.

The holistic approach of the Joint Africa-EU Strategy (JAES)

the most recent Communication125 on the Jaes underlines the important role biodiversity and ecosystem services play in combating climate change and environmental degradation. the great green Wall for the sahara supported through the Jaes climate change partnership demonstrates the potential links between addressing climate change and reversing environmental degradation and also the strong potential to support rural livelihoods through agriculture and sustainable land use management.

To understand the benefits of functioning and healthy natural systems and the negative economic costs of degrading the environment consider that natural capital constitutes a quarter of total wealth in low-income countries according to the World Bank126. Preserving healthy ecosystems can be much cheaper than dealing with the consequences of over-exploitation.

Case study: Restoring mangroves, the cheapest way to tackle floods127

a case study taken from the economics of ecosystems and biodiversity (teeb) shows that potential damage from storms, coastal and inland flooding and landslides can be considerably reduced by a combination of careful land-use planning and the maintenance or restoration of ecosystems to enhance buffering capacity. planting and protecting nearly 12,000 hectares of mangroves would cost $1.1 million but would save annual expenditures on seawall maintenance of $7.3 million. Mangroves also provide for other human needs such as breeding grounds for fish.

124 Set out in COP10 Decision X/33 Biodiversity And Climate Change125 1.5 billion people, 80 countries, two continents, one future, COM(2010)634 final126 World Bank (2006), Where is The Wealth of Nations?127 Brink et al, (2009), The Economics of Ecosystems and Biodiversity for National and International Policy

Makers – Summary: Responding to the Value of Nature


TOOl 5: EnhanCE REPORTing, gOVERnanCE and PaRTiCiPaTiOn TO imPROVE SCRUTiny and qUaliTy OF SPEnding

Ensure transparent reporting

Transparency is crucial to demonstrate how donors are responding to the requirements and expectations of international environmental agreements and to developing countries’ needs and priorities. The EU should take the lead in ensuring that reporting, tracking and verification of ODA and climate finance is carried out in the most consistent and transparent manner possible. Climate finance commitments must be reported separately from ODA. It is also important to define a common baseline for additionality – over and above which climate finance will be made available as a new, additional and separate commitment to EU ODA pledges. There must also be separate accounting of public and private sector funding. The EU should also set standards for regular reporting on the share of finance for adaptation, mitigation and REDD+ (reductions of emissions from avoided deforestation), the sources, the financing channels, the geographical distribution, the use of loans or grants and the loans’ concessionality.

Donor harmonisation and aid effectiveness

The financial contributions of the EU Member States to the bilateral and multilateral funding mechanisms set up to address global environmental challenges should be systematically assessed to strengthen the coherence of the European response. Assessments should provide clearer guidance and distinction between the different types of financial mechanisms which are appropriate to the major environmental conventions and in the context of development policy objectives. In the division of labour amongst EU donors, the mainstreaming requirement for cross-cutting issues, such as environmental sustainability, gender and human rights, should not be neglected. Therefore donors should put in place shared mechanisms to ensure effective mainstreaming.

Governance and conflict

Governance of natural resources needs to be strong and effective to ensure that re-sources are used sustainably and that benefits reach the poor. Good governance of natural resources underpins wealth creation at national and household levels. The protection and management of forests, freshwater, soils, coasts and the seas requires


effective governance which involves the users of these resources as well as civil soci-ety, local and national governments and the private sector. Where there is weak envi-ronmental governance conflict can result. UNEP estimates that 40% of all intra-state conflicts since 1960 have a link to natural resources. Climate change is increasing the likelihood of conflict over key environmental resources, particularly freshwater.

Governance and the private sector

For the private sector to be a genuine contributor to poverty reduction and equitable and sustainable development there must be a policy framework in place that both en-courages responsible financing and addresses market failures, such as the externali-sation of environmental costs. Social and environmental safeguards should be of the highest standard and include complaint-mechanisms and corrective actions. There are instances of development and environment sectors where private capital is un-likely to be forthcoming or suitable – e.g. human rights, democracy, health and some climate adaptation initiatives – or where governance conditions are not conducive to attracting, maintaining and using private sector investment for the national benefit, particularly in the natural resources sector.

The EU should also help developing countries to establish tools to mobilise domestic resources effectively, including through tackling capital flight, corporate tax evasion and avoidance and transfer pricing. The EU should champion the creation of a global multilateral information exchange and a country by country financial reporting stand-ard for multinational corporations.

Participation of civil society

Civil society is an important actor in sustainable development and has a critical role in the development process both with donors and partner governments. Civil society can provide expertise and knowledge which contributes to the planning of development activities, encourages outreach to other sectors of society and grassroots organisa-tions, and encourages empowerment and a voice for marginalised groups and which can play a watchdog and advocacy role. In terms of development effectiveness, civil society groups provide a critical function in holding governments and donors to ac-count for their expenditure and activities. In terms of environmental governance, the monitoring by civil society of the extraction, use and management of natural resources can encourage sustainability and transparency in the collection and use of revenues.

Therefore the EU should enhance the participation of civil society organisations in the decision-making processes for EU development cooperation, including in the reviews and evaluations and earmarking of funds specifically for civil society organisations, so as to bring their particular added-value to development.

ChaPTER 7:EUROPEan FiShERiES FUndThe 2011 UNEP report on the green economy estimates that fisheries subsidies at being around $27 billion a year, which is believed to be a quarter of the annual revenues of the global fishing sector128. These subsidies helped generate a fishing capacity which exceeds, by a factor of two, the ability of fish to reproduce. Overall such subsidies damage national economies and social welfare in the medium and long-terms.

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In Europe, the European Fisheries Fund (EFF) provides the bulk of subsidies for the fisheries sector. It is the financial mechanism that helps implement the Common Fisheries Policy (CFP), which is currently under review. The EFF design and implementation has always been controversial, especially when they allocate funds to fisheries with poor fisheries management and enforcement capabilities. Experience has shown that they contribute to increased fishing and overcapacity.

The current reform process provides us with an opportunity for positive reform of the way Europe funds its fisheries sector. Under the umbrella of the Integrated Maritime Policy, a single fund integrating the many funding sources should be established and should contribute to:

• the CFP goal of sustainable fisheries and recovery of fish stocks, putting in place mandatory Long Term Management Plans for all fisheries by 2015 and effective regionalisation mechanisms; and

• the achievement of good environmental status for the marine environment. In this regard, the support for marine Natura 2000 sites should be fully coherent with the mandatory financing plans for Natura 2000 (see Tool 5 in Multi-annual Financial Framework chapter).


The figure below presents WWF recommendations for the future fund:

Figure 8: Proposed structure for the future Maritime and Fisheries Fund

Axis A Axis B Axis C Axis D Axis E

Maritime Policy

Environment Sustainable fishing & aquaculture

Local development

Technical assistance

Planning (Marine Spatial Planning, etc), etc

Management of protected areas

Research and development of new improved selective gears

Bottom-up, similar to current Axis 4

Similar to current Axis 5

Data and knowledge exchange

Marine Natura 2000 mapping, planning

Training for using more selective /environmentally friendly gears

Local projects involving coastal communities

Defining borders to economic activities

Habitat restoration (coastal areas, wetlands, seabirds or fish breeding sites, etc.)

Support for cameras and observers on board, real-time reporting and real-time selling

Transitioning to sustainable energy infrastructures (e.g. offshore wind farms)

Support to management/ monitoring of disaster response plans

Clean-up activities: garbage retrieval, ghost-nets, eradication of invasive species, etc

Permanent diversification

Cross-cutting eligible activities: (emphasis on soft and collective measures)- Data collection and monitoring- Monitoring, enforcement, control- Training and capacity building- Stakeholder participation and involvement, inter-stakeholder dialogues


WWF has identified four success factors needed to ensure that the future maritime and fisheries fund supports transition to sustainable and responsible fisheries practice:

TOOl 1: dESign SUPPORT ThaT dOES nOT inCREaSE ThE OVERCaPaCiTy

The first step is to ensure that the future fund will not aggravate the structural failings of European fisheries: the overcapacity of the fleet. The following fishing subsidies should be phased out:

• aid for construction and engine replacement, and vessel-scrapping that shows poor results129;

• subsidies for gear that cause destructive fishing practices; and• aid to temporary cessation of activities. and• subsidies to vessel modernisation.

Fuel subsidies must also be phased out. Energy saving measures are very profitable economically (especially now that fuel costs are high) and do not need scarce public money. The most cost-effective way to improve the energy efficiency of vessels is to reform the Energy Tax Directive (currently under review) and remove the permanent exemption on fuel taxes for fisheries.

TOOl 2: link ThE SUPPORT TO ThE aChiEVEmEnT OF SUSTainaBlE FiShERiES and gOOd EnViROnmEnTal STaTUS

The second step to ensuring that the funds are used for measures that contribute to sustainability involves:

• strengthening of control and enforcement measures at the Member State level - notably, this provision should be expanded to include date collection and

129 Only 2% of the fleet has been scrapped despite years of support


reporting obligations (in particular on the balance between fishing capacity and the availability of fish resources);

• the use of environmental indicators is crucial to measure the impact made by EFF funds on the fisheries per se;

• a time restriction or sunset clause linked to the future CFP: subsidies should stop for fisheries that do not have Long Term Management Plans in place by 2015; and

• mandatory non-compliance stipulations should be put in place - if a Member State or beneficiary break a CFP rule they should reimburse the funds received (the whole amount in case of a significant infraction). Conditionality should also be dependent of other regulations such as the Habitat Directive (Natura 2000 sites) and the Marine Strategy Framework Directive (MSFD) where relevant. At the individual level, incentives must be conditional on compliance with legislation.

TOOl 3: REwaRd BEST EnViROnmEnTal PERFORmanCES wiTh FinanCial inCEnTiVES

See Tool 2 in the Common Strategic Framework chapter. The alignment of the fisheries fund with the reformed CFP should require that environmental targets are set. This provides a positive incentive for fishermen who strive to reach the targets.

TOOl 4: imPlEmEnT mandaTORy gREEn PUBliC PROCUREmEnT TO BOOST ECO-innOVaTiOn and SaVE PUBliC FUndS

See Tool 3 in the Common Strategic Framework chapter. This should apply to public authorities’ purchases, notably coastal regions and municipalities and po-tentially authorities involved in maritime and costal activities or in the fisheries sector.


Make EU institutions130 exemplary

Leading by example is important in ensuring that commitments, recommendations and guidance are taken seriously. Therefore EU institutions should:

• set environmental targets and performance indicators for their own activities, in order to reduce their impact and make them more efficient (e.g. energy consumption of buildings, staff transport, food consumption, computer equipment, printing activities);

• implement mandatory green public procurement, as a concrete way to reduce environmental impact, foster eco-innovation and save public money; and

• be exemplary in terms of transparency and public partnership in all EU-related activities.

Include EU funds that are not part of the EU budget

The EU has four funds that are managed at the European level but are not part of the EU budget131:

• the emergency aid reserve, to allow a rapid response to specific aid requirements of third countries following unforeseen events (maximum annual amount of €221 million);

• the European Union Solidarity Fund, to allow rapid financial assistance in the event of major disasters in Member States or candidate countries (maximum annual amount of €1 billion);

• the Flexibility Instrument, to finance ad hoc expenditure which could not be financed within the limits of the EU budget (maximum annual amount of €200 million); and

• the European Globalisation Adjustment Fund, to provide additional support to workers who suffer from major structural changes in world trade patterns (maximum annual amount of €500 million drawn from any existing margins or from cancelled commitments in the EU budget, excluding the Cohesion Policy).

It is very important that these funds, closely liked to the EU budget, apply the same success factors as the EU budget, to ensure better delivery of results and increased quality of spending, namely:

130 EU institutions are the European Commission, the European Parliament and the Council, but also the European Central Bank, the Court of Justice of the European Union, the Court of Auditors, the Economic and Social Committee, the Committee of the Regions, the European Investment Bank, the European Environment Agency, Europol, etc

131 Interinstitutional Agreement between the European Parliament, the Council and the Commission on cooperation in budgetary matters, March 2010, COM(2010)73final


• the mainstreaming of environmental requirements;• the setting of environmental targets and performance indicators;• the implementation of mandatory green public procurement; and• the strengthening of public partnership and transparency to improve scrutiny and

quality of spending.

Ensure the environmental proofing of the European Investment Bank’s portfolio

The European Investment Bank (EIB) is the public bank of the European Union, created in 1958 by the Treaty of Rome. “The EIB furthers the objectives of the European Union by making long-term finance available for sound investment”132. The EU Member States are EIB’s shareholders. The EIB’s portfolio is huge: in 2009 it amounted to €70,5 billion inside the EU and €8,5 billion outside. Since its creation, the EIB has provided around €800 billion for projects.

The EIB is highly involved in long-term and sectors having a high environmental impact, such as energy and transport infrastructures. It is therefore of utmost importance that the environmental proofing recommended for the EU budget also applies to the EIB, notably:

• the mainstreaming of environmental requirements and setting of clear priorities focused on climate, biodiversity and resource efficiency;

• the setting of environmental targets and performance indicators that are consistent with European 2020 environmental targets;

• the implementation of mandatory green public procurement and requirement for the same conditionality to apply to public authorities using EIB funding; and

• the strengthening of public partnership and transparency to improve scrutiny and quality of spending.

Created by the EIB, the Marguerite fund133 (the 2020 European Fund for Energy, Climate Change & Infrastructure) which is tasked with supporting European Union infrastructure policy objectives, should also help ensure environmental proofing.

132 http://www.eib.org/?lang=en133 http://www.margueritefund.eu/


COnClUSiOnIn exiting successfully from the current gloomy crisis in Europe, the status quo is not an option: Europe has to radically transform its economy. Shaping the next EU budget 2014-2020 provides a massive opportunity to invest in a green economy that will improve the well-being of citizens while staying within the ecological limits of the planet. As the 2011 UNEP report on green economy highlighted, a green economy will create more jobs without harming the economy– i.e. without the risks, shocks, scarcities and crisis which are becoming inherent in our existing, resource-depleting, high carbon, “brown” economy.

Many economic studies show that environmental policy means not just expenditure but also efficiency, notably concerning energy and natural resources. A good environmental policy lowers costs instead of making things more expensive. Therefore, increasing the integration and the level of priority given to the environment in the EU budget (environmental proofing) does not mean increasing the total budget, but rather it means using the money smartly.

To environmentally proof the EU budget in a simple and practical way, WWF proposes an integrated set of complementary tools. Transversal requirements fostering climate change mitigation (low carbon emissions) and adaptation (resilience), energy savings, biodiversity protection and resource efficiency (e.g. water and land use) in all EU-funded activities are of the utmost importance.

If these tools are implemented in the next EU budget, WWF believes that Europe will gain multiple benefits. Our approach can help to put Europe on a more sustainable path by 2020 and contribute to the preparation of full sustainability by 2050. In addition, it will provide green jobs, reduce Europe’s vulnerability to external shock and strengthen the European economy. Putting the green economy at the centre of the next EU budget is therefore the optimal solution for Europe.


annEx 1. FUTURE COhESiOn POliCy CaTEgORiES OF ExPEndiTURESWWF is proposing a new set of expenditure categories for the EU’s Cohesion Policy. They are based on the former ones but updated to include the following elements:

• integration of the new structure of the EU 2020 strategy, as suggested by the Commission’s Communication on the EU Budget Review;

• greater thematic concentration by introducing category subgroups;• simplification through the merger of categories that are not very different; and• redefinition and specification of the scope of the categories where relevant, to

ensure eco-conditionality of climate mitigation (low carbon emissions) and adaptation (resilience), energy savings, biodiversity protection and resource efficiency (e.g. water and land use).


New Code Old code New categories of expenditures Modification

Priority 1. Smart Europe

1.1. Research and technological development (R&TD), innovation and entrepreneurship

111 1 Energy and resource efficient R&TD activities in research centres

Scope redefined

112 2 Energy and resource efficient R&TD infrastructure

Scope redefined

113 3 Technology transfer and improvement of cooperation networks between small businesses (SMEs), other businesses and universities

Scope redefined

114 5, 7, 8 Assistance to energy and resource efficient R&TD in firms

Scope redefined / Merge categories

115 4, 9 Assistance to energy and resource efficient R&TD in SMEs

Scope redefined / Merge categories

116 6 Assistance to SMEs for the promotion of eco-friendly products and production processes and environmental management systems

Scope redefined

1.2. ICT Infrastructures

121 10 Telephone infrastructures

122 11, 12 Information and communication technologies

Merge categories (TEN under review)

123 13 Services and applications for the citizen

124 14, 15 Services and applications for SMEs Merge categories

1.3. Energy Infrastructures

131 33, 34 Smart grids and metering Merge categories (TEN under review) / Scope redefined

132 39 Renewable energy: wind

133 40 Renewable energy: solar (former categories 35, 36, 37, 38 deleted: marginal use, on fossil fuels)

134 41 Renewable energy: biomass

135 42 Renewable energy: hydroelectric Split former category for more clarity

136 42 Renewable energy: geothermal

137 42 Renewable energy: other

138 43 Co-generation Split former category for clarity

139 43 Energy efficiency in the energy production and distribution

Scope redefined: energy sector only


1.4. Transport Infrastructures

141 16, 17, 18, 19

Railways and mobile rail assets, with a priority on improving the current networks, to improve transport efficiency, mitigate negative impacts and adapt to climate change

Merge categories (TEN under review) / Scope redefined and precised

142 20, 21, 22, 23

Road rehabilitation and modernisation to improve transport efficiency, mitigate negative impacts like emissions and biodiversity impacts and adapt to climate change

Merge categories (TEN under review) / Scope redefined and precised

143 24 Cycle tracks

144 25, 52 Public Urban transport Merge categories

145 26, 27 Multimodal transport to improve transport efficiency, mitigate negative impacts like emissions and biodiversity impacts and adapt to climate change

Merge categories (TEN under review)

146 28 Intelligent transport systems to improve transport efficiency, mitigate negative impacts and adapt to climate change

(former category 29 “Airports” deleted)

147 30 Ports modernisation to improve transport efficiency and reduce or mitigate negative impacts

Scope redefined

148 31, 32 Modernisation of existing inland waterways to improve transport efficiency, manage flood risk and adapt to climate change

Merge categories (TEN under review) / Scope redefined

Priority 2. Sustainable Europe

2.1. Energy savings in non energy sectors

211 43, 78 Energy savings in housing renovation Split former category / Merge categories / Scope redefined

212 43 Energy savings in public buildings renovation

213 61 Integrated projects for highly energy and resource efficient urban regeneration

Scope redefined

2.2. Ecosystem-based climate change adaptation and risk/pollution prevention

221 47 Air quality

222 48 Integrated prevention and pollution control

223 50 Rehabilitation of industrial sites and contaminated land

224 49, 53, 54 Ecosystem-based risk prevention and climate change adaptation

Merge and redefine categories


324 68 Support for self-employment and business start-up

325 69 Measures to improve access to employment …

326 70 Specific action to increase migrants’ participation in employment …

327 71 Pathways to integration and re-entry into employment for disadvantaged people …

328 72 Design, introduction and implementation of reforms in education and training systems in order to develop employability, improving the labour market relevance of initial and vocational education and training, updating skills of training personnel with a view to innovation, a knowledge based and a fully decarbonised and highly energy and resource efficient economy)

Scope redefined

329 73 Measures to increase participation in education and training …

330 74 Developing human potential in the field of research and innovation, in particular through post-graduate studies and training of researchers, and networking activities between universities, research centres and businesses, with a view to innovation, a knowledge based and a fully decarbonised and highly energy and resource efficient economy)

Scope redefined

3.3. Social infrastructures

331 75 Highly energy and resource efficient education infrastructure

Scope redefined

332 76 Highly energy and resource efficient health infrastructure

Scope redefined

333 77 Highly energy and resource efficient childcare infrastructure

Scope redefined

334 79 Highly energy and resource efficient other social infrastructure

Scope redefined

2.3. Water and waste

231 44 Management of household and industrial waste

232 45 Management and distribution of water (drinking water)

233 46 Water treatment (waste water)

2.4. Ecosystem and biodiversity protection and Green Infrastructures

241 51 Ecosystems and biodiversity protection and restauration in Natura 2000 sites

Scope redefined / split former category

242 new Assistance to green infrastructures and ecosystems connectivity

New category

243 51 Awareness raising on ecosystems and biodiversity protection

Scope redefined / split former category

2.5. Sustainable Tourism

251 55, 56 Protection and preservation of the natural heritage for sustainable tourism promoting natural values of regions

Merge categories / Scope redefined

252 58 Energy and resource efficient protection and preservation of the cultural heritage


253 59, 57, 60 Energy and resource efficient preservation and development of cultural infrastructure and services


Priority 3. Inclusive Europe

3.1. Increasing the adaptability of workers, enterprises and entrepreneurs

311 62 Development of life-long learning systems and strategies in firms…

312 63 Design and dissemination of innovative and more productive ways …

313 64 Development of specific services for employment, training …

Scope redefined

314 new Development of skills of the workforce in the building renovation sector

New category

3.2. Improving access to employment and sustainability

321 65 Modernisation and strengthening labour market institutions

322 66 Implementing active and preventive measures on the labour market

323 67 Measures encouraging active ageing and prolonging working lives


324 68 Support for self-employment and business start-up

325 69 Measures to improve access to employment …

326 70 Specific action to increase migrants’ participation in employment …

327 71 Pathways to integration and re-entry into employment for disadvantaged people …

328 72 Design, introduction and implementation of reforms in education and training systems in order to develop employability, improving the labour market relevance of initial and vocational education and training, updating skills of training personnel with a view to innovation, a knowledge based and a fully decarbonised and highly energy and resource efficient economy)

Scope redefined

329 73 Measures to increase participation in education and training …

330 74 Developing human potential in the field of research and innovation, in particular through post-graduate studies and training of researchers, and networking activities between universities, research centres and businesses, with a view to innovation, a knowledge based and a fully decarbonised and highly energy and resource efficient economy)

Scope redefined

3.3. Social infrastructures

331 75 Highly energy and resource efficient education infrastructure

Scope redefined

332 76 Highly energy and resource efficient health infrastructure

Scope redefined

333 77 Highly energy and resource efficient childcare infrastructure

Scope redefined

334 79 Highly energy and resource efficient other social infrastructure

Scope redefined


Priority 4. Partnership and capacity building

411 80 Promoting partnerships, pacts and initiatives through the networking of relevant stakeholders

412 81 Mechanisms for improving good policy and programme design, monitoring and evaluation at national, regional and local level, capacity building in the delivery of policies and programmes, notably with a view to achieve a fully decarbonised and highly energy and resource efficient economy

Scope redefined

413 85 Preparation, implementation, monitoring and inspection, notably with a view to achieve a fully decarbonised and highly energy and resource efficient economy

Scope redefined

414 86 Evaluation and studies; information and communication, notably with a view to achieve a fully decarbonised and highly energy and resource efficient economy

Scope redefined

(former categories 82,83,84 deleted: marginal use)


annEx 2. EnViROnmEnTal SUSTainaBiliTy ChECk To be used for projects submitted under Cohesion Policy funding

Rationale

The following set of questions tries to capture and assess in how far proposed projects comply with the environmental and sustainable development requirement of EU Regional Funding. The proposed questions serve as a checklist to be applied when managing authorities, in cooperation with the selection or monitoring committees, look at a project pipeline. It should serve all stakeholders in the various committees and it is not only applicable to environment programmes, but to project pipelines of all programmes.

The questions are neither too technical nor too detailed, but nevertheless are able to give an indication of the project’s impact. They can also serve as a guideline for monitoring purposes. Project check-list questions are both procedural as well as content-oriented and have been developed by WWF with the input of people participating in steering and monitoring committees and with the input of the European Commission and national Ministries of Finance as well as the private sector.

How to use the check-list

Step oneThe general questions can be used and applied to any project and any sector. It is at a very general level and includes procedural questions. It can be used as a starting point to be followed by specific questions or as a more general check-list in itself.

Step twoLater, the questions are grouped by topics/sectors and can be applied specifically to a project: if you are not sure about the sector, you may run the proposal through several or even all blocks of questions.

The specific questions can be answered and the results can then be added. Adding up all the points then gives a global score and we propose to visualise the scores


in a traffic light format to assess quickly the sustainability of a project. Please also explain why the traffic light colour has been chosen. Pay attention if there are too many question-marks. This would mean that a proposal needs to deliver more information and also means that this project needs to be revisited by the committee.

Who should use the check-list?

We suggest this list to be used by all stakeholders in the implementation process: in the monitoring, evaluation or steering committees, in project development, management and evaluation. It can be used in project administration and project planning as well as in project management.

We see this check-list as first step in a process and as a flexible instrument to be refined or adapted to the specific national or regional situation.

Important

The questions serve as a tool for transparency as we advise the publication of all evaluation sheets.


STEP OnE: 10 qUESTiOnS TO gEnERal SUSTainaBiliTy

No. Question Yes No ?1 Has this project been developed with the input of

environmental and social stakeholders?

2 Is this project proposal making sure that the smallest possible amount of resources (soil, water, air, energy, etc) is used for this project?

3 Is the proposal including green procurement standards for all required goods, materials and services?

4 Has this proposal considered potential negative environmental and social impacts in mid- and long-term perspective?

5 Will this project support or ensure the provision of environmental services of a certain area (like flood prevention, water purification, air cleaning)?

6 Will this project still be beneficial with the consequences of climate change like more or less rain, flood and drought risks etc.?

7 Will this project lead to a decrease in greenhouse gas emissions?

8 Will this project still be beneficial once the EU funding is used and public funding needs to be used for maintenance?

9 Has the project proposal excluded risks of water, air or soil contamination?

10 Does the project proposal exclude the negative impact of a protected site, a vulnerable area or a highly valuable ecosystem or a nature park?

Final Overall Score

STEP TwO: SPECiFiC qUESTiOnS FOR CERTain PROjECT TyPES

Decide what type of project/measure you want to check and chose amongst the following topics:

1. Water infrastructure 2. Transport 3. Water transport 4. Flood protection 5. Business investments 6. Construction 7. Renewable energies 8. Energy efficiency 9. Waste 10. Nature protection 11. Technical Assistance

(For the full list of questions related to the 11 topics/ sectors, please refer to the full WWF (2007) Environmental Sustainability Check List).


This programme is implemented with the support of the European Union.The contents of this publication are the sole responsibility of WWF and can in no way be taken to reflect the views of the European Union.


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To stop the degradation of the planet’s natural environment andto build a future in which humans live in harmony with nature.

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® “WWf” is a WWf registered trademark.

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