Green conditionality and the coronavirus pandemic: a step backwards?

Earlier this month, the European Commission has decided to remove the climate-related conditionality clause according to which European firms with liquidity and solvency issues caused by the COVID-19 outbreak would receive state aid only upon EU approval.

Although being still in the obligation to report their expenditures to taxpayers, companies facing financial shortage will be therefore able to receive financial help from public resources without being bound to spend it to become greener. From now on, not the EU but its Member States will decide whether green conditions will be imposed on coronavirus-hit companies when providing them with public funds.

Nonetheless, just a few days ago, the European Commission Vice-President in charge of the European Green Deal, Frans Timmermans, encouraged national governments to take lead on green state aids by ensuring that companies receiving public funds will use them in line with the EU’s green goals.

Private companies across all Member States will thus need to keep a close eye on the evolution of the EU green conditionality and rely on well-guided policy advice to overcome the financing pressures of the current coronavirus pandemic.