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Subject: Opinion on the form of a letter on the general budget of the European Union for the financial year 2025-all2025- all sections (2024/0176(BUD))

Dear Mr Chair,

Under the procedure referred to above, the Committee on Industry, Research and Energy has been asked to submit an opinion to your committee. At its coordinators meeting of 24 July 2024, the committee decided to send the opinion in the form of a letter.

The Coordinators of the Committee on the Environment, Public Health and Food Safety (ENVI) decided on 24 July 2024 that ENVI would provide an opinion on the general budget of the European Union for the financial year 2025 - all sections (2024/0176(BUD))) in the form of a letter. Therefore, as both ENVI Chair and Standing Rapporteur for the Budget, let me provide you with ENVI’s contribution in the form of resolution paragraphs, which was adopted by ENVI at its meeting of 12 September 2024 and which I kindly request will be taken into account by your committee:

The Committee on Industry, Research and Energy considered the matter at its meeting of 12 September 2024. At that meeting, it decided to call on the Committee on Budgets, as the committee responsible, to incorporate the following suggestions into its motion for a resolution.

- underlines that the 2025 Union budget incorporates the impacts of the mid-term revision of the expenditure ceilings in the multiannual financial framework (MFF) which took place in February 2024, addressing the various challenges facing the Union including the imminent climate and environmental emergency, Russia’s war of aggression against Ukraine, migratory pressures and their root causes, responding to the crisis in the Middle East and reinforcing our capacity to respond to natural disasters;

- calls to ensure the necessary human and financial resources for the fast implementation of the legislation adopted in the last legislative cycle in the areas of climate, environment, food safety and health, and focusing on a range of key priorities, such as climate mitigation and adaptation, biodiversity, just transition and circular economy;

- stresses the importance of strengthening the Union’s role on the international stage by increasing the funding for the Union’s actions ensuring environment protection and tackling climate change globally;

- reminds that the European Green Deal is a growth strategy and that its implementation policies should complement, support and enhance the Union’s competitiveness through the appropriate funding;

- recalls that over the course of the 2021-2027 period, the EU is set to spend at least 30% of its budget on climate-relevant objectives; welcomes the fact that the 2025 draft budget outperforms this objective, with 33,5% dedicated to climate mainstreaming;

- recalls that biodiversity should be mainstreamed in EU programmes to allocate at least 7,5% of annual spending to biodiversity objectives in 2024 and 10% in both 2026 and 2027; regrets that these objectives will not be met, since biodiversity mainstreaming amounts to 7,3% of the budget in 2024, and to 7,8% in 2026 and 7,9% in 2027; therefore, calls the Commission and other involved actors to ensure that remedial measures are put rapidly in place to reach the biodiversity mainstreaming targets; notes the importance of Common Agriculture Policy (CAP) for reaching biodiversity objectives;

- notes that the commitments under the Environmental and Climate Action policy cluster in Heading 3 ‘Natural Resources and Environment’ are planned to decrease by EUR 7,1 million, while the payments will increase by EUR 28,3 million between 2024 and 2025; considers, given the Union objective of climate neutrality by 2050 at the latest, that the budget devoted to this cluster should be increased;

- reminds that the Recovery and Resilience Facility (RRF) was designed to support a sustainable recovery from the COVID-19 pandemic and build resilience against future shocks, notably by supporting the green and digital transition; consequently, Member States are called to devote at least 37 % of their total expenditure to investments and reforms in support of climate objectives;

- emphasises the need to allocate sufficient funding for each individual budget line that contributes to the achievement of the green transition, with a particular focus on sustainability, climate change and biodiversity conservation, such as attention to bees and pollinators’ protection and their role as indicators for healthy ecosystems;

- stresses the need to allocate sufficient funding to the LIFE programme, which supports the protection of nature and biodiversity, the protection and quality improvement of the Union’s air and water, and the transition towards an energy efficient, renewable energy-based, circular, climate neutral and climate resilient economy;

- underlines the importance of the financial means in the Just Transition Fund to support those regions and sectors that are most affected by the Union’s transition away from fossil fuels;

- welcomes the approach of the Commission to start the preparatory activities of the new Social Climate Fund (SCF), established to mitigate the social impacts on vulnerable groups in the Union arising from the extension of the EU Emissions Trading System (EU ETS) to buildings, road transport and additional types of fuels; underlines the need to monitor the proper implementation of national social climate plans and the national ETS 2 revenue and calls on the Commission to assess whether these are sufficient to fully mitigate the economic impact of ETS 2 on these households and whether stronger protections are needed to prevent increased costs from disproportionately affecting those who are least able to afford them; notes that part of the revenues from the auctioning of emission allowances in ETS2 will supply the SCF;

- welcomes the allocation of funding for the set-up of the Carbon Border Adjustment Mechanism (CBAM) that addresses the risk of carbon leakage, ensuring that domestic production and imports are subject to similar levels of carbon pricing, and encourages producers in third countries to adopt decarbonisation technologies;

- strongly regrets the redeployment from the EU4Health programme of 1 billion EUR over the 2025-2027 period, which is a decrease of almost 20% in the total budget, agreed during the MFF mid-term revision, which includes a reallocation EUR 189 million in 2025 to other budget lines and threatens the programme's ability to achieve its critical objectives; calls on the Commission, Member States and other involved actors to find practical modalities to compensate this cut to ensure that the goal of the fund of building stronger, more resilient and more accessible health systems can be achieved and increase the EU4Health’s funding via different channels, such as through the Flexibility Instrument; furthermore, in the context of the next MFF, strongly advocates a significant increase in funding for healthcare; stresses the need to also allocate sufficient funding for the European Health Data Space (EHDS) to ensure its proper implementation;

- calls, furthermore, for an increase in the budget for the Health Cluster under HorizonEU to support medical research and development in critical areas where market failures exist such as addressing antimicrobial resistance (AMR), and strengthening Europe’s research and development capabilities to tackle emerging, re-emerging, neglected, and rare diseases; stresses that it is imperative to protect health budget lines for the remainder of the MFF by reversing the proposed cuts;

- regrets the cuts of EUR 37 million (commitments) and EUR 154,9 million (payments) in the budget lines for the Union Civil Protection Mechanism (RescEU), especially considering the need to ensure appropriate financing for this instrument in tackling ever worsening extreme weather conditions and the consequential natural disasters such as, inter alia floods and wild fires in the Union; urges that increased funding be allocated for the relevant budget lines;

- welcomes the increase of resources to the European agencies under ENVI’s remit, such as the European Environment Agency (EEA), the European Chemicals Agency (ECHA), the European Food Safety Authority (EFSA) and the European Medicines Agency (EMA) as a mean to ensure that they can fully carry out their important functions in European policymaking in response to the challenges the Union has been facing; stresses the need for sufficient funding in the long term to enable their proper and effective functioning;

- deplores the cuts made by the Council on various lines affecting actions falling under the ENVI Committee remit, such as cluster “Health”, ECHA, support expenditures for the EU4Health and LIFE programmes as well as lines regarding nature and biodiversity, circular economy and quality of life, climate change mitigation and adaptation, and clean energy transition; and

- reiterates the importance of ensuring an enhanced EU own resources system which is capable of meeting the challenges and contributing to the Union’s health, environment and climate goals.

I have sent a similar letter to Mr Victor Negrescu, general rapporteur for the 2025 budget.

Yours sincerely,

Borys Budka Christian Ehler

Antonio Decaro

Chair Rapporteur

ANNEX: entities or persons

SUGGESTIONS

from whom the rapporteur for the OPINION has received input

1. Recalls the ITRE committee opinion on the guidelines for the 2025 EU budget, and calls for an ambitious budget that focuses on strengthening Europe’s competitiveness in the global economy, supporting the open strategic autonomy of the Union and reducing dependencies on unreliable non-EU countries in key industrial sectors; fully supports the twin digital and green transition and the pathway to climate neutrality by 2050 as set out in the European Green Deal; calls for sufficient and reliable resources for the ramp up of renewable energy sources, reinforcement of electricity grids and boosting interconnections of the EU energy market in order to ensure the secure supply of affordable energy security and the achievement of our climate and energy targets; stresses that providing sufficient funding to implement all EU programmes set up under the MFF will be paramount in achieving these goals in the fields of industrial, digital and energy policy; emphasises the need to provide strong funding to Ukraine as it continues to suffer from the Russian war of aggression, and with a view to its post-war reconstruction and EU integration;

The Chair in his capacity as rapporteur for the opinion declares under his exclusive responsibility that he did not receive input from any entity or person to be mentioned in this Annex pursuant to Article 8 of Annex I to the Rules of Procedure.

2. Strongly rejects the approach taken by the Council in its position (17 July 2024) on the Commission’s draft EU budget for 2025 and its focus on cutting funds for strategic EU programmes; believes these latest cost cutting attempts directly contradict the Strategic Agenda 2024-2029 and the Political Guidelines for the new Commission, which has to implement the 2025 Union budget; maintains that the Council position does not reflect the growing challenges facing Europe from an economic, social, environmental and geopolitical perspective, and is dismayed that the proposed cuts focus once again on Heading 1 of the MFF (Single Market, Innovation and Digital), which is the part of the EU budget most crucial to Europe’s global competitiveness, the twin digital and green transition and our road to climate neutrality;

3. Opposes the Council position to further reduce funding for EU Research and Innovation (R&I) by 450 million Euros in commitments, with the bulk of the proposed reductions (400 million Euros) hitting the budget for Horizon Europe; reminds that the Strategic Agenda sets out the objective to “close our growth, productivity and innovation gaps with international partners and main competitors” through “a significant collective investment effort, mobilising both public and private funding” and that the conclusions of the April 2024 Special European Council meeting included a commitment to increase “investment in research and development to meet the 3% GDP expenditure target” as part of the new European competitiveness deal; notes that even with the originally agreed budget for Horizon Europe, the Union is not reaching the level of contribution needed to achieve the 3% expenditure target; notes that the Political Guidelines for the new Commission include a commitment to “increase our research spending”; believes therefore that these proposed cuts will not only do serious long term damage to Europe’s R&I capacity, they also undermine the credibility of the Union’s research policy ambitions, may contribute to brain drain of leading European researchers and will slow down the EU in the global race for scientific and technological leadership; is convinced that much greater investment in research and innovation is necessary for Europe to advance its technological leadership in those sectors most impacted by the green and digital transitions; finds that the proposed cuts are particularly incomprehensible now as they come on top of a reduction of 2.1 billion euros in funding for Horizon Europe concentrated in the last three years of the current MFF, as agreed by the Council during its recent revision of the MFF; reminds of the importance of allocating sufficient resources to support the priorities covered by the STEP in order to boost investment in critical technologies in Europe; believes the Parliament should take the opposite approach and support an increase in European R&I, through a judicious reallocation of decommitments and the remaining margins under the EU budget to ensure a higher level of funding than was proposed in the Commission’s draft budget for 2025; restates its fervent believe that any decommitments stemming from the research programmes should directly be reused in the research programme and believes that the use of research decommitments for the interest payments through the EURI Instrument is not acceptable.

4. Firmly opposes the Council position to reduce funding for European Strategic Investments by over 147 million euros in commitments, most notably a drastic and completely unjustifiable reduction of 110 Million Euros for the Connecting Europe Facility - Digital, which represents an almost 50% cut to this programme and is following a historically low budget for this programme in 2024; reminds that the Strategic Agenda outlines the need for “cutting-edge digital infrastructure” and the Political Guidelines identify the need for “cutting-edge digital infrastructure” to make the Data Union work, including the urgent need for the rollout of Gigabit infrastructure networks to enable more innovative services for citizens, businesses and public sector in order to respond to the demand for faster, more reliable, data-intense connectivity; concludes therefore that through this cut, the Council is wilfully undermining the future of Europe; further underlines its objection against the proposed reduction of almost 7 million euros to the Digital Europe programme, and the proposed reduction of over 30 million Euros for InvestEU; reminds that the Strategic Agenda sets out the need for “a significant collective investment effort, mobilising both public and private funding” in order to bolster competitiveness; in this regard believes that the Parliament should as a minimum support restoring these budget lines to the levels originally proposed in the Commission’s draft budget for 2025;

5. Strongly opposes the Council position to reduce funding for the EU Single Market by over 10 million euros, including cuts of 5.5 million euros to the Single Market programme (including SMEs) and close to 5 million euros of cuts in funding for the related decentralised agencies; likewise opposes the proposed reduction of close to 35 million Euros in funding for the EU Space Programme, overwhelmingly focused on drastic cuts to the crucial Union Secure Connectivity programme; believes that the Parliament should as a minimum support restoring these budget lines to the levels originally proposed in the Commission’s draft budget for 2025;

6. Highlights that the proposed cuts by the Council will also negatively affect our horizontal spending target on climate, given that these programmes and in particularly Horizon Europe contribute more than most other parts of the Union budget to this target;

7. Calls on the European Commission and the Council to provide adequate funding and staff for all Union agencies and bodies in the policy areas of industry, research, space, energy and cybersecurity, in the light of new regulatory obligations, increasing workloads and operation costs, including those arising from need to ensure the high level of cybersecurity protection invites the Commission to thoroughly consider new regulatory obligations and increased workloads following from legislation in its distribution of resources and staff across its services.

8. Firmly condemns the continued lack of progress and the absence of concrete new ideas on how to develop EU ‘own resources’, which would make the annual EU budget less reliant on contributions from Member States and in a position to repay the common borrowing agreed for NGEU; highlights with grave concern that this lack of progress comes, again, at the expense of research investments considering that in the MFF revision it was agreed to use research decommitments as first source to fund any uncovered interest payments related to the RRF;

9. Requests the Commission to step up its work to simplify Union Programmes from the perspective of the final users, aiming to lower the administrative complexity of applying for and managing Union funds; believes simplifications should be supported by clear evidence of the benefits they will have for the final users of Union funds; underlines that simplifications are about better and smarter ways of working, while maintaining all standards agreed to in the Interinstitutional Agreement on Budgetary Matters as well as the Financial Regulation for the implementation of the Union budget is necessary.

ANNEX: ENTITIES OR PERSONS FROM WHOM THE RAPPORTEUR HAS RECEIVED INPUT

The rapporteur declares under his exclusive responsibility that he did not receive input from any entity or person to be mentioned in this Annex pursuant to Article 8 of Annex I to the Rules of Procedure.