The European Union has set itself the objective of achieving zero net emissions by 2050, and it launched in December 2019 the European Green Deal as the roadmap to achieve carbon neutrality. This strategic package of policy measures has also provided the basis for the post covid-19 EU Recovery Plan. This led to strict conditions on the use of expenditure from the recovery and resilience facility (RRF), namely that 37% of EU RRF funding should be dedicated to climate projects, and that 100% of expenditure should respect the “do no significant harm” criteria.

This new institutional context reinforces the salience of green budgeting in EU Member States. This was emphasized in a communication from the EU Commission released in December 2019 regarding the European Green Deal: “National budgets play a key role in the transition. A greater use of green budgeting tools will help to redirect public investment, consumption, and taxation to green priorities and away from harmful subsidies”.

Given the fact that green budgeting can facilitate budget steering and support the coherence of budgetary and fiscal policies with national climate objectives, the European Commission strongly supports the adoption of green budgeting tools. However, even though all Member States have introduced policies to address environmental challenges, there is still generally limited coherence across these policies and their coordination and evaluation is poor. Few Member States publicly report on public revenue and expenditure relevant for environmental policies or have an explicit process to consider the environmental performance of policy measures in budget decision-making.

In cooperation with the OECD’s Paris Collaborative on Green Budgeting, the Commission launched a survey on existing and planned practices in green budgeting across their Member States. The results demonstrated that there is scope for introducing more coherent practices in the EU for green budgeting, and that there is strong demand among Member States for technical support inter alia for the development of country-specific plans for introducing green budgeting; the development of international guidance for green budgeting and its tools and processes; country-specific technical support for implementing green budgeting and identifying international best practices in green budgeting (use and results).

In the light of these survey results, the Commission has presented a proposal for a Green Budgeting Reference Framework (GBRF) for EU Member States. The proposed GBRF will provide a toolkit for EU Member States who are willing either to embark upon implementing green budgeting or to upgrade their current practices, thereby serving as guidance for national green budgeting frameworks (GBFs).

GREEN BUDGETING TRAINING PROJECT:

In addition to the development of the GBRF and as part of its efforts to continuously improve the provision of timely support to Member States for institutional, administrative, and growth-enhancing reforms, the Commission is offering technical support for capacity building to requesting Member States to accompany them in their efforts to deploy or test a Green Budgeting Framework at the national level.

Expertise France, in close collaboration with the Institute for Climate Economics (I4CE) and individual experts, is currently providing technical support for capacity building to 23 EU Member States to accompany them in their efforts to deploy or test a Green Budgeting Framework at the national level. Funded by the European Commission at the initiative of the DG Reform, the programme consists of four modules:

Module 1: Introduction to green budgeting frameworks and practices. The objective is that beneficiaries acquire knowledge on green budgeting frameworks and practices.

Module 2: Country-specific case study on green revenue and expenditure. The objective is that beneficiaries gain an understanding of the main methodological challenges in the identification of expenditure, tax expenditure and revenue benefiting or harming the environment.

Module 3: Country-specific guided diagnostic on the national GB framework. The objective is to provide beneficiaries with guidance as to the areas of improvement to provide the necessary conditions and entry points for a green budgeting framework, or to strengthen the national green budgeting framework to achieve different levels of development.

Module 4: through the successful implementation of the three modules, a need to increase further the exchange of knowledge and good practices was identified among beneficiary authority civil servants. Therefore, a decision was made by DG REFORM to introduce a supplementary module allowing peer civil servants to discuss green budgeting best practices. 

The main objective of the pilot on civil servants exchange program is to strengthen the  application and acquired knowledge on green budgeting, of civil servants practitioners in the Member States; to offer them a unique opportunity to gain concrete knowledge and experience on how to develop and implement green budgeting in accordance with their national PFM systems, as well as sharing of EU best practices and policy developments and joint use of tools in this topic.

Indeed, considering the increasing engagement of the Member States in the design and implementation of green budgeting reforms and in light of the Declaration signed by Commissioner Hahn on 9 March 2022, DG REFORM explored the inclusion of this Civil Service Exchange pilot in the TSI21 project Green Budgeting Framework Training Programme.  Furthermore, within the framework of the French Presidency of the EU, European Ministers responsible for public administration, public transformation and the civil service, with the support of the European Commission, adopted on March 17th, 2022 the Strasbourg Declaration  , declaring their intention to support the strengthening of the mobility of public workers in Europe in all its components by “developing on a European scale, with the support of the European Commission, a voluntary exchange program dedicated to public transformation for civil servants between the Member States as well as with the European Commission, in order to bring out new solutions and generate knowledge sharing on priority themes for the European recovery” .

Beneficiary Member States of the Green Budgeting training project: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czechia, Denmark, Estonia, Finland, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Poland, Portugal, Romania, Slovenia, Slovakia, Spain