"APPLYING THE EU TAXONOMY": LESSONS FROM THE FRONT LINE

  • "Applying the EU Taxonomy": Lessons from the Front Line

    By Peter Sweatman (Lead) and Malte Hessenius
    * Este documento y sus materiales de apoyo se encuentran disponibles solo en inglés

    The EU intends to conduct historic investment in its economy through a EUR 1.85 trillion budget, with around a third earmarked for climate expenditure. Hence, the EU Taxonomy should be always applied to identify green investments in the EU’s next long-term budget and recovery package.

The EU Taxonomy is a science-based methodology for transparent reporting and monitoring on climate spending that has been defined by technical experts. This unequivocal tool is urgently required as public and private sector promoters, project-financiers, companies and Government officials work together to identify investment projects to align recovery investments with the objective of achieving climate neutrality by 2050.

The study provides strong evidence of the EU’s Taxonomy robustness as a mechanism for monitoring for climate-relevant spending:

  • EU Member States can already use the EU Taxonomy to ensure that the climate share of their projects in all EU and co-funded areas will fulfil the European Court of Auditors’ call for a credible climate action tracking methodology and to avoid green washing.
  • The Rio Markers – the existing climate tracking system used for EU funds – are imperfect, can inflate climate action percentages and doesn’t align with the definitions for green increasingly used in the private sector, whose money is required for co-investments.
  • No climate tracking system can allow for green-wash, nor include fossil fuel projects that will quickly become stranded assets as Europe moves to a net-zero emissions economy.

"Applying the EU Taxonomy": Lessons from the Front Line shines a light on the practical exercises and evidence for applying the EU Taxonomy to define climate contribution across all EU Funds. Its findings are based on a review of 1,000 shovel-ready investment projects across the 27 EU Member States, and through a line-by-line analysis of the investment categories identified in the European Structural and Investment Funds

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