The Green Budgeting for EU Regions and Greece project (GBER)

Beneficiary Authorities:

This project will support at the regional level Lombardy and Baden Württemberg, and at the national level Greece. The project builds on the European Commission's efforts to help member states to align public financial management with climate objectives. It follows the EU Green Budgeting Training Project, which supported Member States in implementing green budgeting frameworks through training. This new phase shifts focus to the regional level, providing tailored technical assistance for developing green budgeting methodologies while continuing to foster training and peer learning.

GBER project aligns with the European Green Deal's goal of making Europe the first climate-neutral continent by 2050. Green budgeting tools are central to this transition, helping to evaluate the environmental impact of budgetary policies, redirect resources toward sustainable priorities, and phase out harmful subsidies.ms at state level, e.g., green bonds and sustainability.

EU Green Deal and Green Budgeting

The European Union has set 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.

At the subnational level, regional authorities are directly confronted with climate change, biodiversity loss and increasing air, water and soil pollution issues in their respective perimeters. With increasingly stressed budgets and gradually rising energy and fuel prices, it is a major challenge for cities and regions to finance and implement measures and projects for mitigation and adaption to climate change. At the subnational level in the European Union (EU), the European Committee of the Regions adopted in its Commission for the Environment, Climate Change and Energy an opinion on “the implementation of green budgets at local and regional levels” (2022/C 375/07) in September 2022. The opinion calls for exempting green investments from the regional public deficit calculation and from the debt limit "golden rules".

Regional and local governments have jurisdictions and competences over crucial ecological-related policy areas such as housing development, land-use planning, transportation, wastewater treatment, and waste management. Therefore, subnational governments have a strong ability to mitigate and adapt to the negative impacts of climate-change through their local regulations and policies. This includes environmental protection policies, and more generally, mainstreaming environmental and climate considerations throughout the entire subnational policy framework and policy decision-making processes.

Subnational governments play a key role through their budget, whose share represents, on average, 37% of all public spending, 55% of all public investment and 32% of all tax revenue in the OECD in 2022. Subnational governments have therefore strong means that they can leverage to achieve carbon neutrality and climate resilience. Budget allocations made by subnational governments have an environmental and climate impact, be it positive, neutral, or negative.