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€100bn EU funds has not made farming more climate-friendly

Author: ICAEW Insights

Published: 19 Oct 2021

Funding destined for climate action has not contributed to reducing greenhouse gas emissions from farming, says the European Court of Auditors. We speak to Peter Welch, the Director of Sustainable Use of Natural Resources.

More than 25% of 2014-2020 EU agricultural spending was set aside for climate change, yet greenhouse gas emissions from agriculture have not decreased since 2010. “This is because most measures supported by the Common Agricultural Policy (CAP) have a low climate-mitigation potential, and the CAP does not incentivise the use of effective climate-friendly practices,” says the European Court of Auditors (ECA). These findings were revealed in Special report 16/2021: ‘Common Agricultural Policy and climate – half of EU climate spending but farm emissions are not decreasing’.

It is vital that this changes. The EU sets both environmental standards and co-finances most of Member States’ agricultural spending, points out Viorel Ștefan, the member of the European Court of Auditors responsible for the report that revealed these findings. “We expect our findings to be useful in the context of the EU’s objective of becoming climate-neutral by 2050. The new Common Agricultural Policy should have a greater focus on reducing agricultural emissions and be more accountable and transparent about its contribution to climate mitigation.”

Welch points out, however, that the EU Commission is trying to make farming more planet-friendly – there is the European Green Deal, the Farm to Fork Strategy and the Biodiversity Strategy – but there is still a long way to go. He reminds us that when the Commission proposed the new CAP, farming revenue was a top priority, not climate or biodiversity, so the challenges are immense, and policymaking has not yet caught up.

In fact, the ECA points out that food production is currently responsible for 26% of global greenhouse gas emissions, and farming – especially the livestock sector – is responsible for most of these emissions. The EU’s 2021-2027 Common Agricultural Policy, which will involve around €387bn in funding, is currently under negotiation at EU level. Once the new rules are agreed, Member States will implement them through “CAP Strategic Plans” designed at national level and monitored by the European Commission. Under the current rules, each Member State decides whether its farming sector will contribute to reducing agricultural emissions.

It is Welch and his team’s role to scrutinise the sustainable use of natural resources and reveal through collating and studying the data what is happening throughout the EU. In practice, this means the team focuses on the whole of the CAP on the one hand, and what the EU is doing to meet its international obligations under the Paris Agreement and other climate change agreements on the other.

“We have a strategic plan, which is renewed periodically, and this identifies the themes that we are going to be particularly interested in, but climate change is absolutely one of those,” he says. “About €60bn per year is spent in the EU on agriculture. We audit where the money goes, and whether they've met the conditions for receiving that support. Then we put forward proposals for work on issues that we think are going to be interesting.”

The ECA is not a policymaking body, but its special reports with recommendations do go to the European Parliament and the Council of Ministers. “There is a lot of the value in the transparency we bring – we deliver an external and impartial view on how things are working,” says Welch.

Apart from the CAP report, the ECA also produced a biodiversity report at the end of 2020 which told a similar story. Special report 26/2020: ‘Marine environment: EU protection is wide but not deep’ said that while a framework is in place to protect the marine environment, EU actions have not restored seas to good environmental status nor fishing to sustainable levels in all seas. 

The ECA says: “EU protection rules have not led to the recovery of significant ecosystems and habitats; Marine Protected Areas provide limited protection; provisions to coordinate fisheries policy with marine protection policy are little used in practice; and relatively few of the available funds are used for conservation measures.” Fish stocks in the Atlantic are up, but not in the Mediterranean. Again, the ECA made recommendations to the Commission to address these issues, together with the Member States. 

In fact, this ECA report was published just before the UK government’s Dasgupta Review on biodiversity was published. Although the ECA report came first, Dasgupta was still influential on the ECA’s thinking.

Perhaps another message the ECA has pushed out over the Summer of 2021 has been similarly hard for some to swallow. Special report 12/2021: ‘The polluter pays principle: inconsistent applications across EU environmental policies and actions’, pointed out that European taxpayers too often have to pay instead of the polluters, and that the polluter pays principle is not being met. “While the principle is generally reflected in the EU’s environmental policies, its coverage remains incomplete and it is applied unevenly across sectors and Member States,” says the ECA. “As a result, public money – instead of polluters’ – is sometimes used to fund clean-up actions.”

While the audience for the ECA’s work is largely the EU institutions, its reports are also influential across academia, think tanks and other organisations. Welch points out, however, that the ECA does not always say what some cohorts wish to hear, especially farmers. “At the ECA we need to produce something that people on all sides of the argument will take seriously, which will have credibility for everyone involved,” he says.

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