Brussels is still sifting through the wreckage of the budget bombshell the European Commission dropped in July. As the dust settles, one question looms large: who wins, and who’s left behind? In this ARC2020 mini-series, we unpack the ripple effects — and collateral damage — of the EU’s radical budget proposal, this time diving into the potential environmental impact.
Re-CAP
If you’re thinking, “Help! What in the MFF-ing hell is this all about?” — you’re not alone.
In July, the European Commission unveiled a sweeping proposal to reshape the EU’s long-term budget (the Multiannual Financial Framework, or MFF, in EU-speak) and another to overhaul its flagship farm policy, the Common Agricultural Policy (CAP). The reforms will shape how Europe’s food system, farms, and rural regions evolve over the next decade.
This reform is being sold as a balancing act: less red tape, more flexibility for farmers, and sustainability still in sight. In reality, the proposal landed more like an earthquake; merging funding pots across agriculture, cohesion, migration, and infrastructure into a single, centralised structure.
It’s far from a done deal — in fact, Parliament looks ready to reject it and the Commission is already scrambling to appease them — but this is still the blueprint Brussels is working from.
And it’s one that has green experts seeing red.
From bad to bad, or bad to worse?
While the CAP may never have been a poster child for environmental action, many now fear this proposal is the first to actually send the CAP backwards, bucking the (albeit, slow) greening trend.
For Gregorio Dávila Díaz, Deputy Head of Environmental Sustainability Unit at the Commission’s DG AGRI, this proposal maintains the status quo. “I wouldn’t say that it’s an increase in environmental ambition,” he said during a recent webinar. Instead, Dávila Díaz says this new proposal “maintains the current level” while “opening the possibility for better targeting to where it’s most needed”.
But that’s not the reading of most environmental experts. “It’s a clear step backwards in terms of environmental ambition, unfortunately,” researcher David Baldock, senior fellow at the Institute for European Environmental Policy, told ARC.
So, why is that? Let’s dive into the nitty gritty.
Maths not mathing
In the budget proposal, there’s less money guaranteed overall to the agrifood sector – and the money that is there is not going towards the environment.
Instead, the bulk of this thinner budget is taken up by income support for farmers and other mandatory measures, such as payments for young farmers. But crucially, unlike past cycles, there is no dedicated budget line for climate and environment.
As CAP guru Alan Matthews put it in a recent blog post: “Ultimately, in the absence of regulatory changes, the success of environmental and climate action will come down to the resources made available to support such action”.
Meanwhile, he notes that maintaining even the existing funding for environmental and climate action in the next CAP seems “highly unlikely”. He notes that the Commission estimates somewhere around €98 billion has been earmarked for the environment over the five years 2023-2027. Yet around €137 billion would be required just to maintain climate and environmental ambition (in terms of nominal expenditure) over the following seven year period.
Meanwhile, the CAP’s current “conditionality” system — which tied farmers’ payments to meeting environmental standards — has been swapped for a new “farm stewardship” scheme. On paper, it still includes “minimum environmental and social requirements.” In practice, it’s a “much weaker, less ambitious” setup, according to the European Environmental Bureau’s CAP expert Theo Pacquet. “There are exemptions all over the place,” he notes.
Yet this has not stopped the Commission from counting these payments towards climate spending.
Under its goal to “mainstream” climate funding across the EU budget, the Commission uses a (complex) weighting system to decide how much of each policy counts as climate-relevant. Spending is classified as fully climate-related (100%), significantly climate-related (40%), or not at all (0%).
The CAP’s direct payments — loosely linked to green objectives — are currently rated at 40%. But Pacquet says this accounting “is very hard to justify” under the new reform, arguing that the weakened rules hardly warrant such a generous climate label. “It’s done nothing to reassure the environmental side that there’s real ambition here,” he added.
No carrot, no stick
Complicating matters further is a radical change in funding structure. By folding farm funding into a new ‘mega’ fund, member states would have considerable power to steer funding how they see fit.
And while they could theoretically choose to direct funds towards environmental actions, there is little in the way to encourage them to do so, according to IEEP’s Baldock.
“This is supposed to be about less regulation and more incentives, but everything we look at shows that there’s actually an increase in reasons for member states not to spend money on environmental ambition,” he said.
Pointing out that environmental and climate goals are missing from the mega-fund’s headline objectives, Baldock called the reform a “clear step backwards in terms of environmental ambition”.
Race to the bottom?
Under the new proposal, Brussels would still hold the purse strings, but member states would design their own national plans based on their own particularities and priorities.
On paper, that allows for a more tailored, localised approach. In practice, it risks creating a patchwork of national agendas with little co-ordination – something that Ariel Brunner, Regional Director of Birdlife Europe, warns could be a recipe for disaster when it comes to environmental ambition.
“It risks a race to the bottom, as countries compete to water down requirements and keep farmers happy.” The result, he says, is “bad for the EU, bad for governance, and obviously bad for the environment.”
“The political signal is that we don’t really care about achieving any of the EU objectives,” he said, warning against a “backstabbing competitive spirit” between member states.
Ghost of CAP’s past
If that wasn’t enough, one of the CAP’s old ghosts is back to haunt us: mandatory coupled income support, or payments tied to specific production, like livestock.
It’s part of the Commission’s push to prop up struggling sectors, such as livestock farming and sensitive border areas. But for Birdlife’s Brunner, this sets the sector on the “road to disaster”.
“This will lock farmers into unsustainable farming models,” he said, warning against the intensification of a “bloated livestock sector that is already collapsing under its own contradictions”. “Even from a farm economy point of view, it’s really the worst type of subsidy you can come up with,” he stressed.
While some argue that coupled payments in all circumstances can be used for environmental benefits in specific circumstances, experience shows that the voluntary coupled support under previous CAPs can often be “far too elastic,” as Alan Matthews notes. “There is simply no justification for the fact that every second dairy cow in the Union receives a coupled payment,” he pointed out in his 2020 blog post on the matter.
Reform or retreat?
In a time of record droughts, floods, and farmer frustration, many see Brussels’ blueprint as less of reform so much as a retreat.
Negotiations are still to come — and one of the two lawmakers has already set out in no uncertain terms that it cannot move forward with what is currently on the table. But the soil into which the seeds of this new CAP have been sown is looking worryingly thin to weather the storms ahead.
This article is produced in cooperation with the
Heinrich Böll Stiftung European Union.
More
EU Budget: How Brussels’ New Plans Put Regions Out to Pasture
A Not So Common Agricultural Policy and A Mega MF(F)ing Fund – What’s Cooking in the New CAP?
The EU’s New Big Budget Bombshell – Here’s What We Know So Far
This Farmer Says He’s Not Drowning in Paperwork – He’s Swimming in EU Money
Pruning the EU’s Farming Policy: Have CAP’s Green Shoots Survived the Shears?
LEAK – Sneak Peek At New EU Farming Policy Simplification Shake-Up
LEAK: A sneak peek at the EU’s new blueprint for agrifood policy
