The possibility of exempting “green” investments from EU deficit calculations will form part of discussions when EU budget rules are revised, European Commission Vice President Valdis Dombrovskis said on Saturday.
The idea to exempt investments that would help prevent climate change is to support the bloc’s ambition to cut net CO2 emissions to zero by 2050. The exemption of investments in such projects has been nicknamed by EU officials as the “golden rule”.
“Obviously, the question of a golden rule, in one way or another, will be part of the discussion of the EU fiscal framework,” Dombrovskis told reporters after a second day of EU finance ministers’ talks in the Slovenian town of Brdo.
During the two-day summit, finance ministers from the 27-nation bloc have debated how to amend budget rules to better fit changed economic realities once EU budget rules, now suspended until the end of 2022, are reinstated from 2023.
Some, like French Finance Minister Bruno le Maire said the green exemption idea was worth discussing because it would help generate the very large funds needed to transform their economies over the coming years.
Others, like Austrian Finance Minister Gernot Bluemel, expressed concern over how such a rule could be made to work in practice, given the difficulty in precisely defining what constitutes “green” investment.
“From an economic, scientific point of view, that can make sense,” he said.
“But I have repeatedly seen in the past that such exceptions in budgeting practice – because the idea of a golden rule is nothing new – that this is often used as an excuse when the political will is lacking to obey the rules. And of course it shouldn’t be,” he said.
“Mechanisms must be built in to ensure that they are not misused,” he said.
The idea of an exemption for green investments was presented by the Bruegel think tank in a paper commissioned the ministers.
The paper also suggested the EU’s requirement for governments to cut public debt every year by one-twentieth of the excess over 60% of GDP was too ambitious in a post-pandemic economy.