Last Friday's EU budget talks were a success for climate action, with 20% of all EU spending over the budget period to be allocated in some way towards tackling climate change, claims climate commissioner Connie Hedegaard.

While the negotiations on the Multiannual Financial Framework resulted in reduced spending on new transport and energy infrastructure, and neglected to tackle environmental impact of agriculture as part of the Common Agricultural Policy, the horse trading left intact an EU pledge to ring-fence 20% of the budget’s €960bn for climate measures.

The summit document declares that: "Climate action objectives will represent at least 20% of EU spending in the period 2014-2020 and therefore be reflected in the appropriate instruments to ensure that they contribute to strengthen energy security, building a low-carbon, resource efficient and climate resilient economy that will enhance Europe's competitiveness and create more and greener jobs".

This was celebrated by Hedegaard, who called it "a major step forward", and an "incredibly important day for Europe. Rather than being parked in a corner of the EU budget, climate action will now be integrated into all main spending areas," she said.

Parts of the budget, however, were condemned by environmentalists, such as the abolition of the greening of Pillar 1, which covers direct payments to farmers and are based on historic criteria. The push to create Ecological Focus Area, which was supposed to set aside 7% of agricultural land, and a requirement to spend 25% of the rural development budget on environmental measures in the countryside, were significantly watered down.

In addition, the part of the budget that includes the LIFE Programme, the only upfront investment in the natural environment, was reduced, despite its already low budget allocation. Development aid was also reduced.

Ariel Brunner, head of EU Policy at BirdLife Europe, said: "Leaving the fiscal crisis requires a refocusing of our economy on sustainability, not only in financial terms but also socially and ecological rape. Instead, Europe is offered a budget that scales back investment in the environment and caters for the usual fatcats that have been milking the system until now".

Philip Lowe, the EU’s top energy civil servant, said that the cuts to the energy infrastructure budget will harm the European Commission's ambitions for a low carbon economy by 2050. The budget for these projects is now €5.1bn, almost half of the European Commission's original figure of €9.1bn. This was supposed to trigger investment of €200bn from the private sector by using project bonds to secure funding for the grid transmission projects (called the Connecting Europe Facility).

Günther Oettinger, the energy commissioner, said that at least the doors were still open for interconnecting Europe's energy infrastructure, a vital part of the move towards liberalisation of the European energy market. "We need to make the most out of it by using innovative financial instruments," he said, warning however that they “may not be able to co-finance all grids necessary to connect off or onshore wind parks to the big cities".

Philip Lowe, the director of the energy directorate also expressed concern. He said that the cuts to the energy infrastructure package would affect Europe's ability to scale back emissions to 80 to 95% of their 1990 levels by 2050.

“Any decision that fails to recognise the need to make rapid progress now increases the costs for the future of providing this infrastructure, and any decision that delays the planning and implementing of grid infrastructure will certainly frustrate investments,” he said.

The European Grid has serious problems which need tackling. Officials are reportedly worried that investors will see the budget cuts as a retreat into narrow national concerns rather than policymakers having a strategic vision for the whole of Europe.

Regional Funds Commissioner Johannes Hahn, who is responsible for a budget of around one-third of the total EU budget, said he was “relieved” that an agreement has been reached, but said that “the Commission's original proposal would have been a better deal for Europe”.

He also said he regretted that, despite a demand for "better spending", some provisions in the deal risked delaying much-needed investments for growth.

Despite Hedegaard's optimism, many environmentalists are suspicious that some greenwashing will take place to make it look as though money is being spent on climate action, while instead, some unwitting consequences of budget cutbacks will cause an increase in fossil fuel use.

"One perverse consequence of drastically cutting the Connecting Europe Facility could lead to greater pressure on the future Cohesion Policy to prioritise road building and fossil fuel facilities rather than more sustainable modes of transport and cleaner energy supply systems," said David Baldock, director of the Institute for European Environmental Policy.

Another casualty could well be a Europe-wide smart grid, since ambitions to network Europe with broadband connectivity also suffered from cutbacks. Its €9.2bn budget was slashed to just €1bn. "Our 2020 fast broadband targets, agreed by everybody, may be harder to reach but I am not giving up on them. I will keep fighting,” said Commission Vice President Neelie Kroes, who is responsible for the digital agenda.

"I have never seen such a display of national interests playing around with so little discussion about Europe's needs," commented Hans Marten, the director of the European Policy Centre. "How can we talk about smart grids if we don’t have a unified grid?"

The energy infrastructure package, along with all other budgets, will receive its final approval in the European Parliament and the Council of Ministers next month. The list of projects will be finalised by the autumn, with financing beginning next year.

Speaking at the end of the summit, European Commission President José Manuel Barruso said he regretted the reduced ambition reflected by the budget, but recognised "that the political deal made now was the highest possible level of agreement that heads could reach at unanimity”. 

Story: David Thorpe, News Editor