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.

Greening national budgets is key for climate action and the green transition. Budgets are one of the main expressions of how a government intends to implement its political ambition. The 2019 European Green Deal Communication highlights that “a greater use of green budgeting tools will help to redirect public investment, consumption and taxation to green priorities and away from harmful subsidies”.

Following the Technical Support Instrument (TSI) 2024 call, two European regions requested for specific and tailored technical support from DG Reform for the development of transparent and easily applicable method for climate tagging, as well as its integration in the budget cycle. The Regional Ministry of Environment and Climate of Lombardy (Italy) as well as the Ministry of Finance of Baden-Württemberg (Germany) requested this specific support to achieve climate neutrality by 2040. These two regions are members of the interregional network “Four Motors for Europe” .

In the framework of the TSI 2024 call, the Greek Ministry of Economy and Finance expressed interest in technical support and continuing the exchange of best practices to strengthen the current green budgeting tools and linking these tools with further green reforms at state level, e.g., green bonds and sustainability. In the Framework of the EU Green Budgeting training project, officials from the Greek General Accounting Office (GAO) at the Ministry of Economy and Finance strengthened their knowledge of green budgeting by participating in the training modules 1 and 2, and peer-learning module 4. Particularly through module 4, the officials from GAO benefited significantly from feedback and best practices shared by peers from Austria, Cyprus, Denmark, Estonia, France, Ireland, and Portugal. Given the constraints to extend the TSI national level Green Budgeting training project, DG REFORM proposed to include Greece as a beneficiary of the project Green Budgeting practices at regional level.

In line with the request of the Greek Ministry of Economy and Finance on further exchanges of best practices among peers, the project will particularly support GAO through activities in the inception, capacity building and dissemination phase.   

The Greek Ministry of Economy and Finance states that the next steps mainly include further developing the methodology/guidelines by exchanging expertise and identifying possible common approaches at the EU level. In this regard, the Ministry has requested support to continue the exchange of experience with peers from EU Member States for identifying common practices and receiving expertise in topics as:

•Linking green budgeting with other green reforms at the state level, such as green bonds: in this area of expertise, exchanges with Member States with experience issuing green bonds, as Austria, France, Ireland, and Poland are foreseen.

•Reporting on green budgeting (end of year report- state budget documentation) in the EU: exchanges with DG ECFIN and the French Budget Directorate will potentially support this request.

•Linking green budgeting with the SDGs: GAO will benefit from exchanges of best practices with the Spanish Ministry of Finance, which has rich experience in this area.

• Revenue- tax expenditure tagging: TBD in the inception phase

• Commonly used indicators at the EU level with regards to green budgeting: TBD in the inception phase

•Recovery and Resilience Facility- EU Funded projects- linking with green budgeting tagging: TBD in the inception phase

The successful completion of the EU Green Budgeting training project has generated a strong knowledge base that shall be applied in the activities of the present project, namely Green Budgeting for EU Regions. Particularly, by incorporating elements from the previous training on methods for identifying public expenditure that contributes to climate change mitigation or adaptation, as well as from the peer-to-peer exchanges approach. In addition to the output of recommendations by local experts; this type of output contributed to the development of green budgeting methodologies in Slovenia, Romania and Latvia. These are the three key knowledge areas generated during the Green Budgeting training project that will be beneficial to apply in the project Green Budgeting for EU Regions.