EU Likely Exaggerating Climate-Friendly Spending, Auditors Claim

By Kate Abnett

BRUSSELS – The European Union is potentially overstating its expenditure on climate-friendly initiatives by billions of euros, according to a recent report from the bloc’s auditors. They highlighted instances where countries have classified expenses related to IT systems and personnel salaries as green investments.

The EU has committed to allocate at least 37% of its €700 billion COVID-19 recovery fund, which includes loans and grants, toward actions that combat climate change. By February, EU member states reported having allocated approximately €275 billion, corresponding to 42.5% of the total funds designated so far, toward green projects. However, auditors suggest this figure might inflate the EU’s actual green spending by at least €34.5 billion.

The analysis from the European Court of Auditors revealed that EU nations have labeled various initiatives as environmentally beneficial, despite having only a loose connection to climate impact. For example, Croatia classified an IT system aimed at modernizing its water supply as having a 40% contribution to climate goals, a rating that the auditors deemed should be 0%.

Another example cited by the auditors involved Slovakia, which categorized the salaries of its staff managing the COVID-19 fund as climate-friendly expenditures. Additionally, some projects did not clearly demonstrate climate benefits. A public transport investment in Portugal, marked as fully green, failed to account for emissions generated during construction, complicating the assessment of net savings post-completion. Similarly, a Greek hydropower initiative lacked an evaluation of its potential negative effects on biodiversity.

In response to these findings, a spokesperson for the European Commission stated that the COVID-19 fund has significantly invested in green projects and emphasized that thorough checks of the spending plans submitted by member states had been conducted.

The auditors did recognize positive examples, such as a Greek initiative worth €1.25 billion aimed at improving energy efficiency in over 100,000 homes, alongside other genuine green investments like renewable energy projects, railway infrastructure, and electric vehicle charging stations.

However, the auditors criticized the EU’s ranking system for assessing projects’ climate contributions—which assigns rankings of 0%, 40%, or 100%—as insufficiently detailed, leading to inflated claims regarding green expenditures. Joelle Elvinger, the auditor who led the report, remarked that this approach "ultimately provides little indication of how much money goes directly to the green transition."

The European Commission defended its methodology, asserting that it offered adequate accuracy, and warned that stricter rules could result in complicated bureaucracy in the management of future funds.