The European Union fell far short of its self-imposed target to spend 20% of its pre-pandemic budget on fighting climate change, according to an audit of the bloc’s spending.
Although the EU claimed to have met the target, the block missed its goal of €216 billion by €72 billion ($77.2 billion), a new report by the European Court of Auditors (ECA) found—meaning that a third of the funds the European Commission promised would go to climate action did not end up in emission-limiting investments.
“Not all the reported climate-related spending under the EU budget was actually relevant to climate action,” said Joëlle Elvinger, a member of the ECA, the external investigatory audit agency of the EU.
The EU pledged to spend 20% of its 2014–2020 budget on measures to limit climate change, which the commission claimed it hit squarely. But auditors at the ECA found that the actual figure spent on climate-change-abating investment was likely to have actually been around €144 billion, or around 13% of the total budget.
The auditors fear reliability issues could appear again in the commission’s reporting for the period between 2021 and 2027, where the EU increased its climate spending pledge to 30%. They warn the planned or committed amounts may not be spent, which could further inflate future reported climate spending.
How did the EU miss the mark?
The European Commission tracks its climate spending by assigning coefficients to each action based on its expected contribution to climate action. This methodology is “beset with weaknesses,” the auditors say, because it is based on assumptions and does not evaluate the final contribution made toward the EU climate goal. “There is no system in place for monitoring climate results,” the auditors write in the report.
“Coefficients are not always realistic: In some cases expenditure is deemed to be climate-relevant, even though the projects and schemes that it supports have little to no impact on the climate,” the auditors write.
The commission has hit back at the ECA report and stood by its original assessment that it has met its 20% target. While it agreed with the ECA’s claims that the reporting methodology uses approximations, it said that it “does not share the ECA’s view that climate reporting is unreliable,” and that many issues the ECA pointed out were “necessary features of a methodology that aggregates expenditure across different programs, implemented over different time horizons, and through different management modes.”
The ECA claims the commission overstated its green spending in agriculture—where half of its entire climate budget was allocated—by as much as €60 billion. The auditors claim that while some measures did work to cut emissions—like enriching soil carbon storage and cultivating cover crops—others like crop diversification had little to no impact. They also note that had these measures worked, greenhouse gas emissions from the sector would have decreased by 2.5% to 4.2% based on modeling—which it did not do.
However, the commission called this “weak evidence” to prove it is overstating its spending. It notes agricultural production increased substantially over the same period, and EU agriculture products have one of the lowest levels of emissions per kilogram of production worldwide.
The commission still accepted most of the auditors’ recommendations, including one to use scientific evidence to assess agriculture spending’s climate contribution.
“The commission has accepted most of the ECA’s recommendations, and for the 2021–2027 [multi-annual financial framework], the commission has already significantly strengthened the EU climate tracking methodology,” a commission spokesperson told Fortune.
