Last week, the Council of the EU and the European Parliament announced their negotiating mandates regarding changes that will be made to the EU’s Common Agricultural Policy (CAP) under the new budget that will run from 2021 to 2027. While these two mandates have important differences, they seem to be united in how they have failed to meet expectations that the new and reformed CAP would be adjusted to become more aligned with the European Green Deal.
The Green Deal lays out the Commission’s commitment to have the EU become climate neutral by 2050. Still, it also goes beyond this, including stipulations regarding binding reductions in the use of pesticides and fertilizer by 2030, to strengthen biodiversity.
The CAP is seen as a critical part of reaching these goals, given that the agricultural sector accounts for approximately 10% of the EU’s total greenhouse gas (GHG) emissions. Critics of the CAP also point out that such a high proportion of emissions is particularly problematic given that the sector contributed just 1.1% to the EU’s GDP in 2018.
The overarching obstacle in bringing together the CAP and the Green Deal seems to be that the CAP, as the EU’s largest subsidy scheme, has the fundamental aim of bolstering the productivity of farms, which may clash with environmental concerns, such as being able to use more land to sequester carbon. Moreover, these environmental concerns have only recently begun to be included within the CAP framework, posing yet another challenge.
As such, it was hoped that the outcome of the ongoing CAP reform would address these difficulties. However, the emerging deal’s main elements between the various EU stakeholders may not live up to expectations.
The focus of the main debates regarding the emerging deal can be divided into four elements: eco-schemes, loopholes and derogations, governance, and biodiversity targets.
Eco-schemes refer to ring-fencing a certain amount of EU funds for green projects in agroecology, agroforestry, and carbon farming, which are meant to be mandatory for the EU Member States, though farmers get to choose whether or not they will join them. While the Council has proposed 20% of the direct payments budget for these eco-schemes, the Parliament’s proposal is set at 30%.
Though a compromise may be found at around 25%, the issue lies in the debate’s second element: loopholes and derogations. The idea of a long transition seems to be gaining consensus. Under such an arrangement, the eco-schemes will not be in effect during the first two years of the CAP, which will be treated as a ‘transitional period.’ This means that these measures will be delayed until at least 2023. Even after that, in the next two years (2023 and 2024), funds that are not spent on these eco-schemes by the end of 2024 will be diverted back to conventional (non-green) projects.
Furthermore, there is another loophole in the making for the 2024-2027 period. The structure of the CAP has two pillars, the core (pillar 1) direct payments budget, which these eco-schemes are being linked to at the moment, and the smaller rural development funds (pillar 2). In this loophole, the Member States that spend upwards of 30% of their pillar two rural development funds on green projects would be able to include that spending in their 20% (or 25%/30%) eco-scheme spending target in pillar 1. This, in effect, would reduce the actual level of ambition in the central pillar of one project.
Another derogation that is emerging, particularly in the Parliament’s position, is the stipulation that eco-schemes need to contribute to environmental and climate objectives of the CAP, as well as guarantee its “economic objectives,” which may limit the scope and potential environmental impact of these schemes.
The Parliament’s mandate also includes an accounting trick. While the Parliament has stated that 35% of the pillar two rural development budget should contribute to environmental and climate objectives, it also states that 40% of spending in “areas of natural constraint” that are difficult to farm in, like mountains and remote moors, should be counted toward this 35%. The ecological value of such areas is questionable and thus allowing spending on them to count toward the overall minimum spending of 35% risks undercutting potential environmental and climate benefits.
The third element, governance, relates to how much oversight there will be by the Commission concerning the national strategic plans of the Member States. The Commission had put forth a structured dialogue wherein it would review the Member States’ plans for how farm subsidies would be spent and be able to make recommendations prior to approval, especially bearing in mind environmental objectives. This idea, however, was rejected by the Council in its mandate.
Biodiversity targets, the fourth and last element of the debate, relate to the watering down of the Commission’s proposed target where 10% of the agricultural land in the EU would be safeguarded as nature-friendly havens. The Council, instead, is furthering its proposal of safeguarding 5% of arable land, which constitutes a much smaller area than agricultural land. There are further derogations. This minimum of 5% can further decrease to 3% if “productive features,” such as catch crops or nitrogen-fixing crops (grown without pesticides), are cultivated in the other 2%. The Parliament mostly accepts the Council’s position with some additions of its own that also water-down the Commission’s proposal.
The positions reached by the two EU institutions, especially that of the Parliament, have received heavy criticism. Indeed, efforts to bring the Green Deal and the CAP closer in line seem to have encountered the obstacle that is the agri-industry lobby, one of the EU’s most powerful interest groups, as well as the push back from large agricultural countries.
Though the negotiation process is not over, with the Member States in the Council, the Commission, and the Parliament needing to come to a final deal, nobody seems to be keeping their hopes up for a last-minute environmental reorientation of the CAP.
As Senior Green MEP, Bas Eickhout, stated following the vote in the Parliament, “As far as agriculture is concerned, you can already say that the Green Deal has failed.”
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