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July 15, 2020

EU cheating on spending for climate protection

We note that the European Court of Auditors is becoming increasingly nervous about the European Commission's overblown claims about its programmes. The auditors are now criticising the Commission's climate-change claims as a case of creative book-keeping. The court has published a review of the Commission's climate-change allocations. This not a full audit report, but an update of a previous analysis on whether the climate tracking claimed by the EU about its spending on climate change under its 2014-2020 budget is for real. The answer is that the EU substantially overestimates the amounts it spends on climate change through book-keeping tricks. 

The auditors specifically looked at agricultural policies and structural funds, and concluded that the proportion of funds earmarked for climate change is almost comically exaggerated. The worst offender is agriculture. The plan had been to reserve half of the €100bn spent on agriculture for climate protection. The Commission counts subsistence payments to farmers as climate spending, so long as the farmers fulfil some nominal climate standards which almost every farmer does. 

On spending programmes, the EU uses an old-fashioned rounding trick, as FAZ pointed out in an article. The OECD has recommended a simplified category whereby governments count the climate-protection share of their expenditures in steps of 0, 40% or 100%. What the Commission does is to round expenditures up to the next level. The court does not object to the use of this model, but criticises the Commission for not handling it in a conservative way. 

We reported previously that the court of auditors also criticised the Juncker investment fund on the grounds that the Commission exaggerated the amounts of investments this exercise has raised. 

Over the years, we have noted an increasing tendency by the Commission to make dishonest claims about its programmes. This is also why we have become very sceptical about any headlines coming out of Brussels. The headline numbers usually conflate different categories of money, and do not translate into reality. We understand that this is 21st century politics, but we think the EU is setting itself up for failure to meet its 30% CO2 reduction target. As, and when, that reality becomes clear, people will associate the EU in general, and the European Commission in particular, with that failure. 

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