Green projects struggle to access €724bn EU funds

EU auditors today raised concerns about the ability of member states to make full use of the €724bn pot allocated to climate-related objectives under the Recovery and Resilience Facility (RRF) — designed to mitigate the economic impact of the Covid pandemic — by the 31 August 2026 deadline.

Auditors also highlighted significant compliance challenges facing hydrogen and renewable energy projects. Romania, for instance, had to remove a sub-measure for a hydrogen-ready and renewable gas distribution network, as it became evident the project would not be completed within the RRF's tight timeline. And Italy withdrew a project for offshore electricity generation infrastructure, including wave-based energy, over deadline concerns.

"We are flagging risks, as EU countries had drawn down less than a third of the planned funds at the halfway point and made less than 30pc progress towards reaching their predefined milestones and targets," European Court of Auditors (ECA) member Ivana Maletic said. Maletic told Argus that no specific data are available yet on the progress of green deal, as opposed to other RRF projects, such as digitalisation.

By the end of 2023, the ECA calculates that the European Commission had disbursed just €213bn, including €56.5bn in pre-financing. Beyond the challenge of meeting the 31 August 2026 completion deadline, some countries' administrative bottlenecks have also hindered progress. For example, Romania's failure to submit contracts for projects with a combined generation capacity of at least 300MW led to the partial suspension of a measure for combined heat and power generation in district heating systems.

Another obstacle for projects is the 'do no significant harm' principle — a key component of EU sustainable finance legislation. The principle imposes strict criteria, typically excluding funding for companies deriving 1pc or more of their revenues from hard coal and lignite, 10pc from oil fuels, or 50pc from natural gas. Companies generating more than 50pc of their revenue from power generation with a greenhouse gas intensity exceeding 100g of CO2 equivalent/kWh would also normally be excluded from funding.

By Dafydd ab Iago