On July 16, 2025, the European Commission presented its proposal for a new, ambitious, and dynamic Multiannual Financial Framework (MFF), currently estimated at nearly €2 trillion.

The new MFF covers the period from 2028 to 2034 and will be structured into three main headings aligned with the EU’s key areas of activity. A fourth heading will be dedicated to covering the expenses of the European public administration.

The Commission also put forward a revised proposal for a Council decision on the EU’s system of own resources. The aim of the upcoming MFF is to strike a better balance between investment stability and the flexibility needed to adapt to shifting priorities and respond to crises.

Financial envelopes for various programmes and instruments will remain the cornerstone of long-term planning, but the budgetary authority will have the flexibility to redirect spending priorities each year, as necessary.

The EU does not plan to use borrowed funds from capital markets to cover operating expenses. An exception may be made in the event of a serious crisis or imminent threat, in which case the Council may authorize emergency borrowing under Article 311(4) of the Treaty on the Functioning of the European Union (TFEU).

New Own Resources Aligned with Common Ambitions

The proposed budget aims to support Europe in achieving its climate goal for 2040 and reaching climate neutrality by 2050. To make this possible, the European Commission plans to diversify its streams of revenue. This will provide the necessary funding for key policy priorities, help repay loans under the NextGenerationEU programme, and reduce the burden of national contributions to the EU budget. Five new own resources have been proposed:

• EU Emissions Trading System (ETS): 30% of the revenue generated from ETS will be allocated to the EU budget. This is expected to bring in approximately €9.6 billion annually on average. For now, only the revenues from the existing ETS1 are included—those from the new system covering transport and buildings (ETS2) are excluded.

• Carbon Border Adjustment Mechanism (CBAM): A share of CBAM revenues will also flow into the EU budget. According to Commission estimates, this will generate around €1.4 billion per year. Closely linked to the ETS, CBAM is designed to level the carbon cost between domestic and imported goods.

• An own resource based on non-collected e-waste : A uniform rate of €2 per kilogram will be applied to uncollected electronic waste, using existing data reported by Member States to Eurostat. Estimated revenue stands at around €15 billion annually, with yearly adjustments based on inflation.

• A tobacco excise duty own resource: This resource will be based on the minimum excise rate applied by Member States to tobacco products. It is expected to generate roughly €11.2 billion per year.

• A Corporate Resource for Europe (CORE): An annual lump-sum contribution from large companies operating in the EU with a net turnover exceeding €100 million. Projected annual revenue is approximately €6.8 billion.

What is the Commission proposing?

• A 35% climate and environment spending target for the overall budget mobilising over EUR 700 billion

‒ to support climate and environmental objectives, climate mitigation, adaptation and resilience; sustainable growth, innovation and strategic independence.

‒ to make sure that climate resilience and environmental measures are better aligned.

• The ’Do No Significant Harm’ principle:

‒ to be applied through a single, simple and proportionate approach, ensuring that EU funded activities do not cause significant harm to climate and environmental objectives.

• The “Climate resilience by design” principle:

‒ to be applied to protect people and investments from the increasingly devastating impact of climate change.

‒ to prepare for and better manage climate risks, limit economic and social costs, and promote innovative technologies.

• An enhanced system to monitor EU spending and results on green objectives:

‒ Simple and robust system to better track actions supported related to the budget for environment and climate mitigation, adaptation and resilience

What does it mean in financial terms?

How will the budget make a difference in this area?

• National and regional partnership plans will link reforms with clean investments, supporting the EU 2040 climate and energy targets and supporting local communities and businesses in the clean transition. These plans will help take better account of the needs of each territory, as regions are at the core of the transition.

• The European Competitiveness Fund will strengthenstrengthen the EU’s economy through investments aiming to decarbonise the European economy, both small and big. This will strengthen the development of clean technologies and the circular economy, drive forward sustainable transport and the energy transition while protecting the climate and the natural environment.

‒ The Innovation Fund will reinforce the European Competitiveness Fund, boosting support to industrial decarbonisation and innovation of clean technologies.

‒ The Industrial Decarbonisation Bank, announced in the Clean Industrial Deal, will be placed within the governance of the Competitiveness Fund.

• Horizon, together with the 10th Framework Programme for Research and Innovation, will work with the European Competitiveness Fund and Innovation Fund to provide research applications and innovation supporting the decarbonisation efforts.
• The Connecting Europe Facility will boost investments in key cross-border infrastructure projects in the energy and transport sectors, that are crucial to complete the Energy Union and complete trans-European network for transport.
• The Global Europe Instrument will empower partner countries fostering partnerships and alliances to increase financial support for enhanced climate, energy, environmental and sustainability action.
• Several other funds, such as ERASMUS+, Creative Europe, and the Union Civil Protection Mechanism, will also contribute to climate action through their investments.