It warned that money was handed out without proper environmental and health issues being taken into account — at a time when production in countries like Ireland was experiencing a decline in salmon stocks because of disease.
The report by the EU Court of Auditors said that, in future, EU money should go only to countries where proper national strategies are in place.
Kevin Cardiff, Ireland’s representative at the court, said the six countries it looked at did not have a coherent strategy for the development of aquaculture in place and that, in some, it took up to five years to get a licence.
The report should be a wake-up call to the Government, according to Friends of the Irish Environment, which has been campaigning for environmental studies for fish farms and new licence rules.
Because of a loophole in Irish law where environmental studies are limited to land-based activities with no such requirement for marine-based developments, no impact assessments are carried out, said FIE spokesman Tony Lowes.
An EU report last year found that Irish licences were “held up by red tape”, but Mr Lowe said the government in 2006 scrapped the need for licences to be renewed after 10 years, which would necessitate an environmental assessment.
The Department of the Marine said it is assessing the country’s marine bays as quickly as possible to comply with a European Court of Justice ruling in 2007 to assess if they are special areas of conservation before they can accept an application for an aquaculture licence.
Each year, the EU produces about 1.3m tonnes of fish from aquaculture worth €4bn. The European Fisheries Fund provided around €400m to encourage sustainable development, including environmental, and health measures.
The auditors looked at 60 projects in six member states that, between them, provide more than half of the EU’s farmed fish products. They found that money was often given to the wrong projects, that in some cases the amount was far too much for the expected return, and that most did not show any benefit from the funds.
The report said in Spain, for instance, only four of the 604 projects approved for EU funding had certified environmental management systems. In Italy, environmental certification was not part of the selection procedure, while in Romania, only three out of 100 points were given for environmental criteria.
Neither individual countries nor the European Commission had proper plans in place to develop the sector and this, together with complicated licensing procedures and other issues, acted as a break on developing the industry.
Mr Cardiff said: “We hope that our observations and recommendations will be used as lessons learned for the implementation of the new EMFF measures for aquaculture starting this year.”