EU unveils long-term budget proposal, opening the door to nuclear subsidies

The European Commission has unveiled a proposal for the EU's long-term budget for 2028–2034, worth nearly €2 trillion, equivalent to approximately 1.26% of the GDP of all EU countries. The proposal significantly strengthens the position of energy and climate policy as key areas of European funding.

Around 35% of budget expenditure will be directed towards climate targets and research, including the modernisation of energy infrastructure, the development of renewable sources, improved energy efficiency and stronger cross-border interconnections within the single energy market. Particular emphasis is placed on the EU's energy security and self-sufficiency in the context of geopolitical risks, especially the ongoing war in Ukraine and instability in the Middle East.

Decarbonisation funding will be secured through so-called own resources, meaning revenue paid directly into the EU budget without being channelled through member states. This will mainly involve proceeds from the European Emissions Trading System (EU ETS), which are expected to bring approximately €9.6 billion a year into the European budget.

In addition, the EU will receive revenue from the Carbon Border Adjustment Mechanism (CBAM), which is scheduled to become fully operational from 2026 and is expected to contribute a further approximately €1.4 billion annually to the budget. The introduction of these instruments has a dual purpose: to strengthen the EU's financial autonomy and to encourage deeper decarbonisation both within the Union and among its trading partners.

A major new feature is the possibility of using part of national budget allocations, i.e. subsidies, to build new nuclear power plants. This option is intended to accommodate differing national energy strategies and accelerate the decarbonisation of electricity systems, particularly in countries that rely on nuclear energy. However, this shift in EU strategy has prompted reactions particularly from Germany and Austria, which have long rejected the inclusion of nuclear power among sustainable technologies. The proposal may therefore still be amended during negotiations.

Beyond carbon allowances and tariffs, taxes too

In the area of own resources, the Commission proposed five new revenue streams for the European budget. In addition to the aforementioned ETS and CBAM, these include a tax on electronic waste, an excise duty on tobacco and a new corporate contribution (known as CORE), which would apply to companies with annual turnover above €100 million. Together, these revenues are expected to generate approximately €58.5 billion annually.

The aim is to reduce dependence on national contributions from member states and strengthen the EU's fiscal sovereignty. However, the proposal faces opposition from some countries that disagree with transferring further tax powers to the European level and point to potential impacts on the competitiveness of European industry.

Rising revenues from emissions allowances and newly introduced proceeds from the carbon border levy are intended to further support decarbonisation through a more stable financial framework.  The possibility of supporting nuclear energy indicates a shift towards a more pragmatic view of low-emission technologies and their role in achieving climate neutrality. Nevertheless, it remains uncertain whether a compromise can be found between climate ambitions, energy security and acceptance of new tax instruments.