Climate spending by the EU has been substantially lower than reported, according to a special report released today by the European Court of Auditors (ECA), which found that the European Commission’s amount of reported expenditures on climate action between 2014-2020 has been overstated by at least €72 billion. The report also found that the EU’s reporting on climate spending was unreliable, and did not evaluate the contribution of spend to the EU climate goals.

The report evaluates the climate spending from the EU between 2014-2020, during which time the EU had committed to spend at least 20% of its budget on climate-relevant measures. The European Commission announced in 2021 that it had met its target, with climate spend reaching 20.1% of the budget, or €216 billion. The ECA found, however, that reported spending was not always relevant to climate action, and that the Commission overstated the climate contributions in some areas.

The report stated:

“We found that in some cases, there was no evidence to justify the climate contribution made by EU spending, while in others the contribution was overstated.”

The findings are particularly relevant as the EU has committed to ramp climate spending further to a new target of 30% of the EU’s more than €2 trillion budget between 2021-2027, and while acknowledging that some improvements in reporting methodology have been made, “most of the issues identified for 2014-2020 still remain.”

The area contributing most significantly to the overstatement, according to the ECA, is agriculture, which accounts for half of the EU’s reported climate spending. While half of reported EU climate spending was in agriculture, the report found that “the Commission likely overestimated contributions from agricultural policy by almost €60 billion.” Despite the significant amount of reported spend, however, greenhouse gas (GHG) emissions from farming have not decreased over the past decade.

The auditors also found that the Commission overestimated the climate contributions of infrastructure and cohesion funding in areas including such as rail transport, electricity and biomass.

As the EU prepares to ramp climate spending further, the ECA report provides a series of recommendations to improve reporting on climate spending, including initiatives to justify the climate relevance of agricultural funding, enhancing climate reporting, including reporting on the potential negative impacts of spending on climate, and reporting on the contribution made by climate spending to the EU’s climate and energy objectives, with a particular focus on how to measure the impact of the budget on mitigating climate change.

In its response to the ECA audit, the European Commission said that it does not share the auditors’ view that its climate reporting is unreliable, stating that many of the weaknesses identified in the report “are necessary features of a methodology that aggregates expenditure across different programmes, implemented over different time horizons and through different management modes.” The Commission accepted most of the ECA’s recommendations, but did not accept the proposal to “identify EU spending with potential negative effects/contributions,” noting that the existing “do no harm” principal and EU Climate Law already requires assessment of actions with the EU’s climate targets.

ECA member Joëlle Elvinger, who led the audit, said:

“Addressing climate change is a key priority for the EU, which has set itself challenging climate and energy objectives. We found that in 2014-2020, not all the reported climate-related spending under the EU budget was actually relevant to climate action. That is why we make several recommendations to better link the EU’s expenditure to its climate and energy objectives. For instance, we recommend that the Commission should justify the climate relevance of agricultural funding.”

Click here to access the ECA report and the European Commission’s response.