Green budgeting

The Commission uses green budgeting to enhance the transparency of the EU funding and support the achievement of climate and environmental objectives, in line with the Paris Agreement and the European Green Deal.

To underscore its commitment to its climate and environmental goals, the EU has set quantitative spending targets for its 2021-2027 multiannual financial framework and NextGenerationEU funding. In particular, the EU has committed to dedicating at least 30% of its multiannual financial framework and NextGenerationEU budget to climate-relevant expenditure, and 7.5% of the 2024 annual budget and 10% of the 2026 and 2027 annual budgets to protecting and enhancing biodiversity.

Expected climate and biodiversity contribution (budgetary commitments) in the 2021-2027 period (million EUR)

^{NB: As the same action can contribute to more than one objective, it is important to recall that horizontal priorities (e.g., climate and biodiversity figures) cannot be summed up to avoid double counting.}

The data available for the 2021-2027 period show that the EU budget, including NextGenerationEU, is on track to reach its 30% target for climate mainstreaming over the period, thanks to the strong contribution from the Recovery and Resilience Facility and the repowerEU plan. The figures presented in this report use past commitments for the years 2021-2025 and expected commitment appropriations for 2026-2027 ⁽¹⁾.

The Innovation Fund, financed by revenues from the Emission Trading System and channelled through the EU budget, provides important impetus to the climate objectives. The Modernisation Fund, an off-budget instrument financed by the Emission Trading System, also contributes to the climate efforts of Member States.

For biodiversity mainstreaming, while the 2024 ambition was achieved, the 2026 and 2027 targets are projected to fall below the initial ambitions. More details are available in the dedicated biodiversity section below.

The climate and biodiversity contributions are calculated based on commitment appropriations, as shown below.he amounts above are calculated based on commitment appropriations, as shown below.

For direct management, estimates are prepared by each service based on the most updated data available. For future estimates, work programmes, sectoral targets and historical values are used.
For shared management, past and future figures are presented on the basis of the programmes and CAP strategic plans agreed with the Member States, and updated in accordance with the annual reports.
For indirect management, the figures are based on the existing targets and agreements with implementing partners, along with their annual reports.
Past expenditure is revised annually following a quality review conducted by Commission departments, incorporating additional information available on the selected project.

^{(1) Data on budget programming for 2026 and 2027 presented in this report reflect information available as of 31 May 2026.}

Focus on results (*)

49 gigawatt-hours
of estimated energy efficiency savings per year from private and public buildings.
124 million tonnes of carbon dioxide equivalent avoided per year,
of which more than half was through NextGenerationEU green bond investment. Additionally, 452 million tonnes of carbon dioxide reduction are expected from the Innovation Fund over the first 10 years of operation.
543 additional gigawatt-hours
of renewable energy capacity installed.

^{(*) Aggregated data of core performance indicators reflecting estimated and expected impact from the EU budget programmes during the 2014-2025 period (contributions from the regional policy, the LIFE programme, the InvestEU programme, the Innovation Fund, the Just Transition Mechanism and the Recovery and Resilience Facility).}

A clear focus on results is essential for effective green budgeting and EU budget implementation in general. The results stemming from available indicators can be used to achieve more targeted spending and to improve steering of the EU budget. It can also make the green transition more efficient by improving accountability. The latter is also important in view of the need to contribute to multiple international commitments.

The focus on emission reductions through energy efficiency and renewable energy expansion is crucial for achieving the EU’s climate neutrality goals and achieving the 2030 targets. The above results show that the EU budget is helping Member States to diversify their energy mix and gradually reduce their reliance on fossil fuels. This results in lower energy costs and decreased emissions of greenhouse gases and air pollutants, helping combat climate change.

Measuring the actual impact of NextGenerationEU investments

In December 2025 the Commission published the third annual impact report for NextGenerationEU green bonds. The reports mark a major achievement in transparency, enabling the measurement of the concrete climate impact of the investment financed by these bonds.

Building on the robust EU green bond framework, the report is based on detailed analyses of the milestones and targets for green-bond-financed investment under the Recovery and Resilience Facility. This provides the basis for calculating their climate impact, allowing the measuring of progress on the path to a sustainable future and ensuring a direct link between funding and climate impact.

The analysis shows that after full implementation, NextGenerationEU green bond investment has the potential to avoid greenhouse gas emissions by a total of 53.4 million tonnes of carbon dioxide equivalent per year – equivalent to 1.5% of the EU’s total emissions in 2022. The report estimates a current annual reduction of 14.0 million tonnes of carbon dioxide equivalent, a figure that represents 26.2% of the total projected amount and continues to increase as the implementation of the Recovery and Resilience Facility accelerates (compared with 2.7% in 2024).

EU-supported activities and the EU taxonomy for sustainable finance

For the third consecutive year, the ‘programme performance statements’ (Annex 4 to this report) of several key EU budget programmes include an analysis of how their supported activities relate to the EU taxonomy for sustainable activities. This addition provides an important starting point for future analyses of how EU spending contributes to a greener future ⁽¹⁾.

While the analysis of the relationship between the supported activities and the taxonomy in the Recovery and Resilience Facility has been detailed previously in the context of NextGenerationEU green bond reporting, the scope covers additional programmes that may invest in activities covered by the EU taxonomy. This approach offers a more comprehensive view of the EU’s commitment to sustainable financing across its various initiatives.

^{(1) Taxonomy alignment is not a prerequisite for funding.}

Support to climate and environmental objectives in the 2028-2034 long-term budget

The impact assessment ⁽¹⁾ underpinning the Commission proposal for a Performance Regulation highlighted the lessons learned from the current programming period. It identified a number of positive developments and challenges, such as the lack of a harmonised methodology to track contributions to green objectives across EU budget programmes, overlaps in tracking between climate and biodiversity and a lack of programme-specific targets for biodiversity.

As a result, for the 2028-2034 multiannual financial framework, the Commission proposed a spending target of 35% of the EU budget, covering all climate and environmental objectives, including circular economy, water and clean air, in addition to climate change mitigation and adaptation, and biodiversity, while avoiding risks of double counting. The proposal further includes programme-specific spending targets for national and regional partnership plans, the European Competitiveness Fund, Horizon Europe, the Connecting Europe Facility and Global Europe. The contribution of all EU budget programmes to climate and environmental policies will be tracked according to a harmonised methodology set out in the Performance Regulation, allowing to track contributions relevant for the European Green Deal.

The proposed Performance Regulation further introduces, for the first time, a harmonised set of output and result indicators applicable across all EU budget programmes. This would allow the aggregation of performance data at the EU budget level and strengthen monitoring of climate action and environmental protection. The framework includes indicators such as ‘annual GHG emissions avoided (tCO2e)’, ‘new or additional energy capacity installed in electricity production (MW)’ and ‘hectares of protected or restored areas’.

The Commission also proposed a horizontal and systemic approach to integrate the do no significant harm principle across all EU programmes. Guidance on do no significant harm will define environmental and climate conditions, building on the lessons learned from the implementation of the do no significant harm principle in existing programmes.
^{(1) Commission staff working document – Impact assessment report accompanying the document Proposal for a Regulation of the European Parliament and of the Council establishing a budget expenditure tracking and performance framework and other horizontal rules for the Union programmes and activities, SWD(2025) 590 final of 16 July 2025,}^{https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52025SC0590}^.

Green budgeting

Green budgeting

Focus on results (*)

Measuring the actual impact of NextGenerationEU investments

EU-supported activities and the EU taxonomy for sustainable finance

Support to climate and environmental objectives in the 2028-2034 long-term budget

Read more