The European Commission to meet ambitious climate goals, will begin to assess the green transition of EU states this year, reports Reuters.
National budgets monitored
The European Commission this year will begin to assess the green transition of EU states as part of its monitoring of national budgets. And this is a new sign of the bloc’s commitment to meet ambitious climate goals.
The commission is:
- responsible for making sure member countries do not overspend public resources,
- annually assesses whether governments’ spending, revenues and investments are reasonably balanced and
- do not excessively flout debt and deficit ceilings set in EU rules.
Governments’ fiscal positions
As the environmental and other climate-related costs may contribute to worsen governments’ fiscal positions, the commission will now check governments’ transition pace toward a carbon-neutral economy by 2050.
Green variable in budget
EU economics commissioner Paolo Gentiloni said, “For the first time in the commission’s economic monitoring of national budgets we will have a green variable, which is very important.”
Results and pace of the green transition
He added, “It’s a change of perspective. When we assess budgets we need to look at expenditures, investments, but also at the results and pace of the green transition.”
Pressure on states fiscal policies
It is unclear how this new attention to the fiscal impact of climate policies could change the way Brussels puts pressure on states to correct their fiscal policies.
Carbon emissions reduction
The commission could adopt a more benign approach to countries’ investments in renewable energies or other measures to reduce carbon emissions.
Low-growth, high-debt Italy is asking for that spending to be allowed even when a country’s deficit or debt is already above EU limits.
Green investments decision
Gentiloni, a former socialist prime minister of Italy who became EU commissioner in December, is heeding that call. But a decision on how to treat green investments has not been made yet, an EU official said.
That could come as part of a review of EU fiscal rules that Brussels plans to unveil in February.
Steps to favor green transition
France, Italy and other southern countries of the bloc are keen to soften the rules, seen by many as excessively rigid and complicated. That could spur growth and favor the green transition, supporters of the move say.
But Germany has so far resisted changes, fearing fiscal leeway could make way for uncontrolled spending in some countries and cause financial crises.
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Source: Reuters
