Background

Taxes and public expenditure are powerful drivers for low-carbon transition and climate change adaptation. Direct action, when the Government invests, for example, in low-carbon transport infrastructure or reforestation projects; indirect action, when national taxes and spending change the choices of private economic actors. As awareness of this responsibility grows, finance ministers are committing themselves to taking a leading role in environmental action, as shown for example by the recent Coalition of Finance Ministers for Climate Action around the Helsinki Principles, or the OECD Paris Collaboration on Green Budgeting.

Environmental Budget Assessments (EBAs) are part of the new green budgeting tools. These assessments highlight all budget measures related to one or more dimensions of environmental action, such as climate change, biodiversity or land degradation. They started more than ten years ago in several South East Asian countries (Nepal, Bangladesh, Cambodia, Thailand) and have since been implemented in more than 50 countries. As environmental ambitions increase, these tools are gaining renewed interest, particularly in Europe: the European Commission’s post-Covid recovery and resilience mechanism only supported national recovery plans when they included more than 37% environmental spending, making their assessment almost mandatory.

 

Objective

The objective of this project, supported by the European Commission, is to offer a training programme to Member States who wish to test or deploy a Environmental Budget Assessment framework at national level.

This training programme consists of three complementary modules: (1) an introduction to green budgeting frameworks and practices; (2) a case study on identifying green revenues and expenditures; (3) a self-assessment on the governance and institutional framework of green budgeting.

These three modules are implemented by the Institute of Economics for Climate (I4CE) and Expertise France. The aim of these three training modules is to provide registered Member States with

 

  • Knowledge of Environmental Budget Assessment frameworks and practices;
  • An understanding of the main methodological challenges in identifying environmentally friendly and unfriendly expenditures, tax expenditures and revenues;
  • Advice on the conditions and entry points needed to set up a Environmental Budget Assessment framework, or to strengthen and improve the national green budgeting framework to achieve different levels of development.

Period

May 2021 – December 2022

 

Partners

The Institute of Economics for Climate (I4CE), Expertise France and the support of the European Commission (DG Reform)