POLICY
Tackling climate change is one of the great challenges facing the EU and its global partners. The need for urgent action is reflected clearly in the Europe 2020 Strategy and the EU’s ambitious 20/20/20 targets, namely
–to cut greenhouse gases by 20% (30% if the conditions are right);
–to reduce energy consumption by 20% through increased energy efficiency; and
–to meet 20% of energy needs from renewable sources.
Building a low-carbon and climate-resilient economy will enhance Europe’s competitiveness, create new, greener jobs, strengthen energy security and bring health benefits through cleaner air.
To achieve the climate and energy targets for 2020 and beyond, sustained effort and investment will be required. The EU has played a central role in monitoring and pursuing these targets. For example, efforts need to be significantly stepped up to reach the 20% energy efficiency target (with current estimates predicting that less than 10% will be achieved), which can lead to 25% reduction in greenhouse gas emissions. The Commission has mapped out the actions that could enable the EU to deliver greenhouse gas reductions of 80-95% by 2050. 3)
The EU budget has an important role to play in promoting climate action in all sectors of the European economy and in catalysing the specific investments that will be needed to meet the climate targets and to ensure climate resilience. These investments relate to a wide range of technologies that improve energy efficiency, to renewable energy sources and related infrastructures, and to investments for adaptation to climate change.
The cost of mitigation investments, estimated to be in the order of €125 billion per year 4), during the period 2014-2020 should be borne primarily by private investors, but the EU budget can act as a stimulus for national spending and offer long term predictability for private investors. The most promising areas include the renovation of buildings, innovation in transport and the deployment of new technologies, such as smart grids as well as renewable energy.
Such investments have huge potential to boost competitiveness and growth throughout the EU. The EU budget can bring particularly strong EU added-value by facilitating investments in Member States with high potential for cost-effective emissions reductions, but which have a relatively low capacity to invest. Investing in energy efficiency in all Member States will also increase overall productivity and contribute to resolving energy security and energy poverty issues. By supporting these investments, the EU budget can help to reduce significantly the overall cost of achieving the EU’s climate and energy targets.

INSTRUMENTS
>Mainstreaming of climate action
Today, climate action is integrated into many policy areas and implemented through a range of instruments that support multiple EU objectives, for instance both biodiversity and climate change mitigation policies. Already today, a proportion of the EU budget is related to climate mainstreaming and thus contributes to Europe’s transition to a low carbon and climate resilient society. The Commission intends to increase the proportion to at least 20%, with contribution from different policies, subject to impact assessment evidence.
In order to reach the Europe 2020 objectives, and to help other parts of the world to step up their efforts to combat climate change, the climate-related share of the future EU budget must be significantly increased, including investments in projects that are not exclusively climate-related but which have a significant climate component.
To achieve this aim, climate mitigation and adaptation actions will be mainstreamed into all the major EU programmes.
•Cohesion, energy and transport policies are highly climate-relevant. With respect to cohesion policy, a strong focus on results and strengthened conditionality will ensure that the projects supported by the EU budget contribute actively to the EU’s climate objectives. The Partnership Contracts with Member States will be used to stimulate and monitor progress of investments contributing towards the 20/20/20 objectives. Mainstreaming should aim at “climate-proofing” of investments. Through its operational programmes throughout the EU, cohesion policy has a crucial role to play in stepping up efforts to reach the 20% energy efficiency target.
•Research and innovation: climate action will be a key pillar in the future Common Strategic Framework for Research and Innovation, which will support actions with a direct or indirect positive climate impact, in areas such as transport, energy, materials research and sustainable bio-economy. The Strategic Energy Technology Plan estimates the 2010-2020 needs at €50 billion for technology development to address climate change, to secure the EU’s energy supply and ensure competitiveness. A substantial part of the budget should be invested via financial instruments (debt and equity) to address shortfalls in the market uptake of innovative low carbon and adaptation technologies. 5)
•The greening of direct payments to farmers will be one of the major elements of the reform of the Common Agricultural Policy (CAP). Beyond the existing cross-compliance requirements, 30% of the payments to farmers will be contingent on compliance with a number of sound environmental practices which will contribute to more climate-friendly agriculture. In this way, the reformed CAP will make an important contribution to the achievement of the EU’s climate objectives, both on mitigation (e.g. increase soil organic matter, reduce emissions from the use of fertilizer and manure) and on adaptation (e.g. increasing resilience against pests, coping with lower water availability).
•In addition, rural development policy will increasingly be linked to climate action. Through the mainstreaming of climate and environment, strong incentives will be created for farmers to deliver EU public goods and improve the up-take of efficient technology for a greener and more climate-friendly and resilient agriculture sector.

>LIFE + Programme
In addition to the mainstreaming of climate action and environment objectives, the Commission proposes to continue the LIFE+ programme and to align it more closely to the Europe 2020 objectives, including a larger share of climate actions. LIFE+ will continue to act as a platform for the exchange of best practice among Member States and as a catalyst for more effective investments. It will contribute to bottom-up climate action, both for developing capacity building projects at local/regional levels and for supporting private actors in testing small-scale low carbon and adaptation technologies, especially by SMEs.
Seed money is needed both for adaptation and mitigation pilot projects to ensure policy learning and further policy development for these new EU priorities. The Climate Action sub-programme will focus on pilot projects and small-scale demonstration projects. Integrated projects will also be used, for example, to promote cross border adaptation strategies in areas prone to flooding.
The Climate Action sub-programme will, in particular, support efforts contributing to the following objectives:
(1)Mitigation: Support for the reduction of greenhouse gas emissions. Actions for setting up pilot projects, which can be used to test innovative approaches including through support to SMEs, to improve the knowledge base and to facilitate the implementation of the climate acquis.
(2)Adaptation: Support to efforts leading to increased resilience to climate change. Actions to support the development or implementation of national/regional/local adaptation strategies. Actions enabling decision makers to effectively use knowledge and data about climate change impacts in particular for adaptation related planning.
(3)Governance and Awareness: support for efforts leading to increased awareness, communication, cooperation and dissemination on climate mitigation and adaptation actions. Actions for awareness-raising amongst EU citizens and stakeholders including on behaviour changes.

>The global dimension
The Lisbon Treaty made combating climate change on an international level a specific EU objective. The EU, as the world’s largest aid donor and a forerunner in market based mechanisms, has unique expertise to contribute. Financial contributions and participation in the governing bodies of the international instruments and funds will ensure the EU continues to be a major player in shaping future international climate policy. The EU is determined to deliver on its international climate finance commitments.
Climate policy will be mainstreamed and scaled up in the geographical external action instruments with the aim of significantly scaling up climate-related funding under the external action heading; regarding the thematic instruments of the DCI, the EU should aim to spend no less than 25% of the programme for “Global Public Goods” on climate change and environmental objectives. The EU budget will contribute to the international climate finance funding foreseen for developing countries by 2020 ($100 bn yearly) in the UNFCCC negotiations.
In addition to the mainstreaming of climate action into the external action budget, the Commission is considering the creation of a mechanism/fund outside the budget to pool together contributions from the Member States and the EU budget.

IMPLEMENTATION
>Mainstreaming
Mainstreaming maximises synergies between climate policies and other areas but it must be visible and robust. It will be accompanied by a clear cross-cutting obligation to identify where programmes promote climate action or energy efficiency so that the EU is able to set out clearly how much of its spending relates to climate action.
It is proposed to establish clear benchmarks, monitoring and reporting rules for all relevant EU policy instruments. The framework should be simple and pragmatic and be built on two strands: 1) common tracking procedures for climate related expenditure; and 2) target setting in all relevant policies and the monitoring of results.
The tracking of climate-related expenditure will be integrated in the existing methodology for measuring performance used for EU programmes. All relevant instruments will include a specific objective related to climate, accompanied by a result indicator.
All expenditures will be marked in one of three categories: climate related only (100%); significantly climate related (40%); and not climate related (0%). This is based on an established OECD methodology (“Rio markers”), but does not exclude the use of more precise methodologies in policy areas where these are available.
Monitoring of delivery of results will ensure the effectiveness of the mainstreaming effort during the next budgetary cycle. This will also help to identify the effectiveness of different spending programmes and the conditionalities attached to them.

>LIFE+
The current LIFE + programme is managed by the Commission in direct centralised management mode. The Commission considers that the future programme should remain centrally managed, but that management tasks could to a large extent be delegated to an existing executive agency. The conditions and terms of the delegation will have to take into account the need for the Commission to maintain strong policy links as regards Integrated Projects.

PROPOSED BUDGET ALLOCATION FOR 2014-2020
Figures in constant 2011 prices. Excludes funds for mainstreaming which are included within the budgetary allocations for sectoral funding instruments.
LIFE + Programme (climate sub-programme) €800 million

3) COM(2011)112: A Roadmap for moving to a competitive low carbon economy in 2050, 8 March 2011.
4) Based on the Impact Assessment of the 2050 Roadmap.
5) Building upon the experience of the “NER 300 programme” which is expected to mobilise around € 10 billion (including €4 to €5 billion from revenues of auctioning of allowances) for the period 2011-2015 to support Carbon Capture and Storage and renewable energy demonstration projects.