1.1.4. EU international cooperation instruments

NDICI-Global Europe and IPA III regulations: green highlights

The NDICI-GE regulation states that ‘funding allocated in the context of the Instrument should be coherent with the long-term temperature goal of holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C. It should also be coherent with the objective to increase the ability to adapt to the adverse effects of climate change and foster climate resilience. Particular attention should be given to actions that create co-benefits and meet multiple objectives, including for climate, biodiversity and the environment.’ (Recital 49).

The NDICI-GE regulation establishes that programmes and actions under the instrument shall mainstream the fight against climate change, the promotion of environmental protection and, where relevant, disaster risk reduction. These must also address interlinkages between the SDGs and promote integrated actions that can create co-benefits and meet multiple objectives in a coherent way (Article 8.8).

Programmes and actions shall be guided by the principle of ‘do no harm’ (Art. 8.8).

Article 29 of the NDICI-GE Regulation (on excluded activities) indicates that no actions or measures can be supported which:

✅ are incompatible with the recipient country's Nationally Determined Contribution (NDC) under the Paris Agreement; or

✅ promote investments in fossil fuels; or that,

✅ according to the environmental screening and impact assessment, cause significant adverse effects on the environment or the climate.

In selected, narrow cases, if ‘such actions or measures are strictly necessary to achieve the objectives of the Instrument’, such activities may be allowed but must then be ‘accompanied with appropriate measures to avoid, prevent or reduce and, if possible, off-set these effects, including support to phase out environmentally harmful fossil fuel subsidies’.

The IPA III Regulation defines an objective to reinforce environmental protection, to increase resilience to climate change, to accelerate the shift towards a low-carbon economy, to develop the digital economy and society and to strengthen sustainable connectivity in all its dimensions. Environmental sustainability and climate change mainstreaming, as well as the DNH principle are referred to in Recital 26.

Window 3 of the IPA III instrument represents the Green Agenda and sustainable connectivity, but a number of cross-cutting themes, such as climate change and environmental protection, are mainstreamed throughout the instrument and therefore have to be implemented under all five windows. In addition, horizontal provisions of the NDICI-GE Regulation are also applicable to IPA III assistance, such as in relation to environment and climate risk screening (Art. 25.5) and excluded activities (Art. 29)^[2].

The “do no harm” and "do no significant harm” principles

Do no harm (DNH) is mentioned as a principle under the NDICI-Global Europe Regulation (Art. 8) and is referred to as the ‘Green Oath’ in the European Green Deal, whereas the ‘do no significant harm’ (DNSH) principle was introduced in the context of EU sustainable finance by the Sustainable Finance Disclosure Regulation and first defined in Art. 17 of the EU Taxonomy Regulation.

In practice, the Green Deal DNH oath is being operationalised in EU programmes largely under the form of the DNSH principle, in most cases by relying on the definitions in Art. 17 of the Taxonomy Regulation, and/or more granularly, by relying on the detailed DNSH thresholds (technical screening criteria) defined in the EU taxonomy delegated acts. The DNSH principle is already applicable to the Recovery and Resilience Facility and has to be taken into account for cohesion policy funds under the Common Provision Regulation (e.g. for the European Regional Development Fund, Cohesion Fund and Just Transition Fund). The InvestEU Fund uses ‘sustainability proofing guidance’ to operationalise the DNSH principle. In addition, the DNSH principle will be applicable in different forms to the Modernisation and Innovation Fund from 2025 and the Social Climate Fund from 2026. Finally, the provisionally agreed amendment of the Financial Regulation applicable to the general budget of the Union provides in Art. 33(2) that the next multi-annual financial framework will be subject to the DNSH principle, where feasible and appropriate.

The EC is currently preparing guidance on the application of the DNSH principle to the upcoming Social Climate Fund (SCF). Recognising the need to harmonise the application of the principle, the Commission plans to develop a DNSH single guidance applicable across EU instruments, where appropriate, subject to their respective legal provisions. However, experience shows that sector-specific criteria and thresholds defined for investments in the EU are not expected to be applicable unchanged to investments outside the EU, in different contexts and regulatory environments. Further work on DNH guidance applicable outside the boundaries of the EU will be aligned as far as possible to the general approach and principles of the above referred-to guidance.

In the context of EU international cooperation, basic elements of DNH are the compliance with the national environmental regulations, the mandatory appropriate environmental screening (Art. 25.5 of the NDICI-Global Europe Regulation) and compliance with Art. 29 of the NDICI-Global Europe Regulation on excluded activities. Whilst DNH criteria specific to international cooperation are defined, general definitions of what constitutes ‘significant harm’ can be found in Art. 17 of the EU Taxonomy Regulation, covering its six environmental objectives.

An activity is considered to do significant harm to:

• climate change mitigation if it leads to significant greenhouse gas (GHG) emissions;
• climate change adaptation if it leads to an increased adverse impact of the current climate and the expected future climate, on the activity itself or on people, nature or assets (i.e. maladaptation);
• the sustainable use and protection of water and marine resources if it is detrimental to the good status or the good ecological potential of bodies of water, including surface water and groundwater, or to the good environmental status of marine waters;
• the circular economy, including waste prevention and recycling, if (1) it leads to significant inefficiencies in the use of materials or in the direct or indirect use of natural resources, such as non-renewable energy sources, raw materials, water and land at one or more stages of the life cycle of products, including in terms of durability, repairability, upgradability, reusability or recyclability of products; (2) it leads to a significant increases in the generation, incineration or disposal of waste, with the exception of the incineration of non-recyclable hazardous waste; or (3) if the long-term disposal of waste may cause significant and long-term harm to the environment;
• pollution prevention and control if it leads to a significant increase in emissions of pollutants into air, water or land, as compared with the situation before the activity started;
• the protection and restoration of biodiversity and ecosystems if it is significantly detrimental to the good condition and resilience of ecosystems, or detrimental to the conservation status of habitats and species, including those of Union interest.

When assessing an economic activity against the criteria set out above, both the environmental impact of the activity itself and the environmental impact of the products and services provided by that activity throughout their life cycle shall be taken into account, in particular by considering the production, use and end of life of those products and services. A useful resource for reference to the more granular DNSH thresholds – the technical screening criteria defined under the EU taxonomy delegated acts – is the EU Taxonomy Compass.

The Ukraine Facility and the Reform and Growth Facility for the Western Balkans regulations: green highlights

The Ukraine Facility Regulation establishes that ‘activities under the Facility shall comply, to the extent possible in a war-torn country, with the climate and environmental standards of the EU’; that ‘those activities shall mainstream climate change mitigation and adaptation, environmental protection and biodiversity conservation’; and that the activities ‘shall, to the extent possible, avoid stranded assets, be compatible with the ‘‘do no harm’’ principle, as well as with the sustainability mainstreaming approach underpinning the European Green Deal’ (Art. 4.4). The DNSH principle is referred to in Recital 30.

Moreover, the Facility shall not support activities or measures incompatible with Ukraine’s national energy and climate plan, or with Ukraine’s NDC under the Paris Agreement, which pro- mote investments in fossil fuels or cause significant adverse effects on the environment or the climate or biodiversity. Such activities may only be exempt from this requirement if they are ‘strictly necessary to achieve the objectives of the Facility, taking into account the need to rebuild and modernise infrastructure and rehabilitate natural environment damaged by the war in a resilient way, and are accompanied, where relevant, by appropriate measures to avoid, prevent or reduce and, if possible, offset those adverse effects’. (Art. 4.5).

The Ukraine Plan under the Ukraine Facility’s Pillar 1 is expected to apply a more stringent level of mainstreaming, applying the DNSH principle ‘to the extent possible in a context of war or post-war recovery and reconstruction’.

The general principles under the ‛Reform and Growth Facility for the Western Balkans’ Regulation establish that activities under the Facility shall mainstream climate change mitigation and adaptation, biodiversity and environmental protection; they should avoid stranded assets and be guided by the DNSH principle, as well as by the sustainability mainstreaming approach underpinning the European Green Deal (Art. 4.5). In addition, the Facility shall not support activities or measures that are incompatible with the beneficiaries’ national energy and climate plans, their NDC and ambition to reach climate-neutrality by 2050, or that promote investments in fossil fuels, or that cause significant adverse effects on the environment or the climate (Art. 4.7).

Global Gateway’s green and clean principle

The Global Gateway is a climate-neutral strategy to speed up sustainable development and recovery, create inclusive growth and jobs and transition to a cleaner and more circular global economy. It will invest in developing infrastructures that are clean, climate-resilient and aligned with pathways towards net-zero emissions. Projects will live up to the European Green Deal oath to ‘do no harm’ and ensure the use of Environmental Impact Assessments and Strategic Environmental Assessments.