Lack of funds risks Europe missing climate goals, auditors say

The European Union is at risk of failing to meet its 2030 climate change targets, owing to uncertainty over whether sufficient funds are being invested in the low-carbon transition, auditors said on Monday.

The European Court of Auditors (ECA) flagged the finance gap in a report on the 27-country EU’s progress towards green goals – including its binding commitment to cut greenhouse gas emissions 55% by 2030, from 1990 levels.

“There is no sign of sufficient financing being made available to reach the more ambitious 2030 targets, particularly from the private sector, which is expected to contribute significantly,” the ECA said.

Despite the EU passing a raft of CO2-cutting measures and earmarking 30% of the bloc’s 2021-2027 budget for climate-related spending – yielding around 87 billion euros ($95 billion) per year – the auditors said a substantial funding gap remained unaccounted for in governments’ plans for meeting climate goals.

Estimates by consulting firm McKinsey suggest roughly 1 trillion euros per year in investments are needed to hit Europe’s climate goals, including its 2050 pledge to have net zero emissions. Around 800 billion euros of that would come from shifting investments in polluting technologies to clean industries.

The EU significantly over-achieved its 2020 target, for a 20% emissions cut, but has set far more ambitious 2030 goals.

The ECA also pointed to risks that countries do not deliver promised green spending. A previous ECA audit found the EU had overstated climate spending in its pre-2020 budget.

In response, the Commission said it recognized information provided by national governments “is insufficient regarding the volume of investment, gaps and sources, as well as financing measures able to further mobilize investment.”

The Commission said it would provide guidance to governments on unlocking private investments in energy savings – an area where the auditors said EU countries are off track for their 2030 target.

A separate report by the research consortium European Climate Neutrality Observatory on Monday warned that EU finance was “far off track” from climate goals, and hampered by the 46.2 billion euros EU countries spent on fossil fuel subsidies in 2020. [Reuters]