Climate Risk Management in the 2021-2027 EU Budget

           Carbon and Climate

Climate think tank E3G has published analysis of the post-2020 EU budget’s ability and potential to incorporate climate risk management. The €1.3 trillion budget for 2021-2027 impacts all of the EU’s policy instruments. It is formulated using the EU’s Multi-annual Financial Framework (MFF), which, alongside promoting budgetary discipline and adding predictability to finances, aligns the Union’s spending with its political priorities. Its structure reflects an overall narrative in the Union’s approach to climate risk. E3G’s recommendations for the budget and approach by the MFF also reflect a changing rationale with which discussions of climate risk are approached.

E3G’s recommendations for the budget are that it should: (1) provide more funding for climate resilience, (2) climate-proof all investment, and (3) change the EU’s natural disaster management strategy from one that currently only responds to one that better anticipates, prevents, and responds to natural disasters. The recommendations are similar in that they emphasise climate change adaptation and resilience. The EU has had a dedicated adaptation strategy since 2013, which aims to mainstream adaptation into the development plans for its member states. The 2014-2020 MFF had a 20% climate-related expenditure target, including several programs for adaptation. The next MFF increases the climate-related expenditure target of its budget to 25%. However, no specific target for the balance between mitigation and adaptation spending is proposed.

Over the past decade, adaptation and resilience have become more prominent alongside mitigation in discussions of climate change policy. Adaptation and resilience are now more salient for two important reasons: repeated underestimations of the severity of the problem of climate change and the failure of international climate diplomacy to produce effective action on mitigation. Climate adaptation and resilience are broader concepts than mitigation. While successful mitigation depends on coordinated global action, successful adaptation and resilience can be defined within a country’s borders or economy, with policies for them developed domestically and unilaterally. E3G’s recommendations may tilt the balance between action for mitigation and action for adaptation and resilience further towards adaptation and resilience.

Nick Fedson MEng MSc

Nick is an analyst with an interest in energy, climate, and sustainability. Nick maintains both technical and policy interest in these areas, with an undergraduate background in mechanical engineering from the University of Bristol and a recently completed Master’s degree in Global Energy and Climate Policy from SOAS, University of London. He has completed internships in a solar energy consultancy in Brighton, a not-for-profit independent think tank in New Delhi, and in data analysis at a software company in Cambridge.