December 2021
The time to reform the European Semester is NOW At Climate & Company, we believe now is the perfect moment to restructure the European Semester and transform it into a governance tool to effectively drive the European Green Deal. Here is why we think so. The European Union has recognized the urgency of climate action by adopting the European Green Deal, raising the 2030 emissions reduction target to 55% and aiming for a carbon-neutral EU by 2050 Fit for 55 implementation and monitoring of the EU climate targets across Member States is not yet in sight. This is where the European Semester, the governance structure for economic coordination and surveillance across EU Member States, could play a key role in delivering the EU climate targets.
But WHY is NOW the best possible time to rethink the Semester? After the European Council launched the European Semester in 2010, Member States considered the usefulness of its central structure and elements. However, to date, climate-relevant indicators are largely missing from the Semester framework. Yet, the Covid-19 pandemic brought some significant changes to the European Semester, which signals considerable potential for longer-term reforms. In 2021, the Semester process was temporarily adjusted to serve as an assessment and monitoring framework for the Recovery and Resilience Facility (RRF), a EUR 672.5 billion package in response to the impact of the major health and economic crisis on EU Member States. Linking the RRF to the Semester marks its fundamental shift from a (mostly) non-binding policy coordination structure to a vehicle for the roll-out of a major economic instrument across the EU. Plus, the RRF has a clear climate focus with its 37% climate investment requirement and the application of the "do no significant harm" principle to measures planned by Member States. This offers a new window of opportunity to rethink the European Semester and, instead of returning to business as usual, permanently expanding its annual macroeconomic analysis with the inclusion of climate and environment-related factors as well as crosslinking it with National Energy and Climate Plans (NECPs) and the Multiannual Financial Framework (MFF). Particularly, with the relaunch of the EU Economic Governance Review until 31 December 2021, the Commission is re-opening the debate on how to improve the current economic governance framework. This is an excellent opportunity to voice our concerns and provide clear recommendations on how the Semester can serve as a mechanism to create and enhance the link between climate and economic policies and structural reforms.
How can we turn this window into actual change? The European Semester already has some structures to build on, such as: • •
A continuous and repetitive process anchored in the political calendar of the EU and Member States; Regular monitoring and the ability to respond quickly to country-specific challenges;
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Finance ministers give weight to policy decisions at national level, ensuring political visibility and ownership.
December 2021
Curious about our proposals to reform the European Semester? Find out more: At Climate & Company, we understand the unique potential of the European Semester for the climate and sustainability transition in the EU. With our project "Greening the European Semester", funded by the European Climate Foundation, we are exploring how the Semester can become a key tool for achieving the European Green Deal and the EU's sustainability goals. Stay up to date by visiting our project page and browsing our knowledge hub and its many valuable resources. For any questions or comments, get in touch with us:
Contact
Climate & Company
Oliver Herrmann - Oliver@climcom.org
Ahornallee 2,
Ingmar Juergens Ingmar@climcom.org
12632 Berlin, Germany
Laura Kaspar - Laura@climcom.org
www.climateandcompany.com
Louise Simon Louise@climcom.org