ECA: “Recovery fund less ‘green’ than claimed”

Brussels – The Recovery Fund, the special financial instrument embedded in the NextGenerationEU post-pandemic recovery mechanism that finances national recovery plans (NRRP), “is not as green as claimed.” The European Court of Auditors rejects the “green” aspirations of the European Commission, which had also wanted to mandatorily allocate more than a third of resources (37 per cent) to sustainability measures. “Not all measures labelled as “green” have been judged as such,” notes the special report of the Luxembourg auditors. Thus, there are “shortcomings in the design of the device and the implementation of green transition measures.” In addition, “there is not full knowledge” of the amounts actually spent on climate action in EU countries.

In light of these “weaknesses” identified in the design and implementation of the Recovery Fund, the report’s conclusion “calls into question the achievement of the climate and environmental goals of
the latter.” Accordingly, the ECA thinks that “the contribution of the recovery facility to the green transition is unclear“.

Auditors do the math, and it doesn’t add up for them. The European Commission has estimated that, as of February 2024, measures to support the climate goals under the Green Deal as part of the Green and Sustainable Transition have reached about €275 billion in Recovery funds. However, the Court warns that these contributions could be overestimated by at least €34.5 billion, partly due to the discrepancy between declared measures and their implementation. In short, the use of the Recovery appears to be a bit of a mess. 

The Recovery Fund “currently suffers from a high level of approximation” in its implementation plans, “as well as discrepancies between planning and practice, and ultimately provides little guidance as to the extent to which the money is being used directly for the green transition,” summarizes Joëlle Elvinger, Member of the Court responsible for the report.

In light of these findings, the European Commission is urged to correct its course. The outgoing von der Leyen team is being asked to “improve the reporting of climate expenditures under the facility for recovery and resilience” and “enhance” the performance of green transition measures right away. For the future, and thus to the von der Leyen team to come, it is urged to “ensure that future financing instruments aimed at supporting target values and climate and environmental goals are appropriately designed.” A call that nails the community executive to its responsibilities.

This is not the first time the ECA has raised concerns about the response strategy to the crisis produced by the COVID-19 pandemic. A previous report had already called out the burden passed on to the next generation, turning the spotlight on future fallout.