Published Wednesday, 05 December 2012

Reforming environmentally harmful subsidies for a resource efficient Europe 

A number of commitments to remove or phase out environmentally harmful subsidies (EHS) have been adopted over the years. At the EU level, commitments to subsidy reform are reiterated in the Resource Efficiency Roadmap with regular reporting foreseen under the European Semester process. At the global level, commitments have been adopted in the context of the Convention on Biological Diversity (CBD) and the G20, while some existing commitments were reiterated at the Rio+20 Conference. However, despite these numerous commitments progress has been slow.

This study led by IEEP and carried out in collaboration with IVM, Ecologic Institute and VITO aims to support the European Commission in implementing the call in the Resource Efficiency Roadmap to phase out EHS by 2020. The study identifies a number of existing EHS in EU Member States across a range of environmental sectors and issues. These subsidies have varying impacts and there are several obstacles to their reform. However, EHS reform is possible and there are a number of examples of successful reform within the EU as examined in this study. These cases provide useful lessons on overcoming barriers, stimulating drivers and engaging champions of reform. A critical first step is the development of transparent inventories of subsidies. A bottom-up approach driven by Member States would be the most pragmatic way of taking this forward, initially focusing on specific priorities. Based on these, reform efforts can be prioritised according to national interests and circumstance. The process needs to be carefully designed, managed and implemented, with regular and transparent reporting. These national efforts can be aided by parallel or linked initiatives at the EU level and supporting activities by other actors.

There is a growing political response and commitment to action on EHS. The information base has developed and there is increasing awareness of the issue, including among the wider public. This reflects recognition of the numerous benefits of reform for the economy and public budgets as well as for environmental and social objectives. New tools have been developed and a number of Member States including Germany, Sweden and Flanders (Belgium) are developing inventories and reports on EHS. These are encouraging first steps and may help generate momentum for change in other countries. However, subsidy reform is still at an early stage and efforts need to be further strengthened and accelerated to achieve progress towards the EU commitment of phasing out EHS by 2020.



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