What is the EU cohesion policy?
Cohesion policy is the EU’s main investment policy, representing about a third of the EU budget - close to EUR 352 billion for the 2014-2020 period. For this period, the policy has been profoundly reformed, making an important contribution to key EU priority areas as the biggest EU source for investments in smart, sustainable and inclusive growth. The support also goes beyond funding as it offers capacity building, technical assistance and cross-border cooperation opportunities.
The policy is delivered through three main funds: the European Regional Development Fund (ERDF), the Cohesion Fund (CF) and the European Social Fund (ESF). All EU Member States and regions can profit from these funds, with the bulk concentrated on the less developed regions. Based on a shared management approach and with the operational support of the European Commission, Member States and regions will lead the uptake of the funds to foster the decarbonisation process in their territories.
What support for sustainable energy projects?
Under the reform of the EU cohesion policy agreed at the end of 2013, the shift towards a low-carbon economy has gained significant support under the 2014-2020 investment programmes, due to its importance for citizens, regional development, competitiveness, growth as well as geopolitical leverage. The cohesion policy investments aim at becoming a crucial tool assisting Member States and regions to achieve the 2020 energy and climate objectives and to boost the security of energy supply. A new mandatory earmarking of ERDF funds for investments in low-carbon projects has resulted in the following ERDF and CF allocations:
- EUR 13.4 billion will be invested in energy efficiency in public and residential buildings, leading to 875 000 families living in homes that have been renovated to reduce energy use and to public buildings using 5.2 TWh/year less energy than they did at the end of the previous funding period. EUR 3.3 billion will support energy efficiency in over 57 000 companies, mainly SMEs, and EUR 1.7 million will be invested in supporting high-efficiency cogeneration.
- EUR 4.8 billion will be invested in renewable energy, contributing to around 7 670 MW of additional renewable energy capacity.
- EUR 1.1 billion from the ERDF and the CF for investments in smart distribution grids will result in 3.3 million additional energy users connected to smart grids.
875000 households will live in buildings that have been renovated to reduce energy use.
Around 7670 MW of additional capacity of enewable energy production.
3.3 million additional energy users connected to smart grids
Public building will use 5.2 TWh/year less energy than they do now
Energy efficiency will be supported in over 57000 companies, maintly SMEs.
The above funds will be complemented with national public and private co-financing. Indeed, the investment needs are much higher than the available EU and national public support and there is a necessity to achieve a much higher leverage of public funds through a more extensive use of financial instruments. In this regard, Member States have indicated their political commitment through the planning of financial instruments of about EUR 3.8 billion of ERDF and CF funding for low-carbon investments, mainly for energy efficiency. This is about an eight-fold increase compared to the 2007-2013 period, but further opportunities are available.
The significant cohesion policy funding allocations for sustainable energy are in complementarity with the European Fund for Strategic Investments (EFSI). This was highlighted in the June 2016 Communication on the state of play of the Investment Plan for Europe and in the November 2016 Communication on Clean Energy for All Europeans. The Commission is working closely with the European Investment Bank (EIB) and Member States in order to support the further development of such schemes or projects.
Energy research and innovation in the framework of the Smart Specialisation Strategies
Furthermore, there are also significant opportunities for research and innovation investments, including in the energy sector. For the 2014-2020 period, the cohesion policy funding for research and innovation – which now amounts to EUR 41 billion in total – is based on the so-called Smart Specialisation Strategies (‘S3P’) that are developed in a bottom-up process with the involvement of key stakeholders across different value chains. Energy is placed on the top of the list of smart specialisation priorities, with more than 100 regions having chosen energy-related priorities (S3P-Energy).
Investments based on pre-conditions and alignment with national action plans
The pre-conditions for the funding, the so called ‘ex ante conditionalities’, ensure efficiency and effectiveness of the investments, providing the best possible framework for the preparation and implementation of high quality projects. They have also shown to be drivers for faster transposition of the EU acquis, for example for the relevant parts of the Energy Performance of Buildings Directive in several Member States.
A better alignment with national strategies is also part of this process. More precisely, investments should be planned according to the national action plans on energy efficiency and renewable energy. Such a strategic planning results in differing investment allocations among Member States, ensuring that the funding is adapted accurately to national and regional needs and priorities.
Additional support
The Commission services are also undertaking a number of initiatives to help Member States implement low-carbon investments, including:
- The Smart Specialisation Platform on Energy supports regional energy innovation and the broad adoption of cohesion policy energy projects, including with policy advice and analysis as well as by bringing regions together in partnerships to deliver innovative projects in key areas.
- The Energy and Managing Authorities (EMA) network brings together national energy and cohesion policy managing authorities and provides implementation support by acting as an informal platform for exchange of information and sharing of good practices, experiences and latest developments, to ensure the best possible use of the significant funding.
- fi-compass, a knowledge hub and advisory tool, supports managing authorities and other interested parties by providing practical know-how and learning tools on financial instruments.
- Off-the-shelf financial instruments provide standard terms and conditions to facilitate the use of financial instruments by the managing authorities; this includes the ‘renovation loan’ for energy efficiency and renewable energy in the residential building sector.
Furthermore, European Territorial Cooperation plays an important role in promoting and supporting low-carbon projects, contributing actively in terms of networking and the development of joint initiatives. Cross-border programmes incentivise better cooperation among different actors in different Member States and establish partnerships for low-carbon investments. EU Macro-Regional Strategies provide ‘tailor-made’ responses to specific challenges in wider geographic areas, beyond the national borders, thereby placing the investments in a wider framework.
Cities and urban areas have a key role in the energy and climate challenge. The Urban Agenda for the EU focuses on concrete chal lenges in cities, including topics such as energy transition, and defining concrete actions on which the Commission, Member States, cities and stakeholders work together, in synergy with the European Innovation Partnership on Smart Cities and Communities.
Delivering the Energy Union Strategy
In all these ways, the EU cohesion policy makes a key contribution to delivering the Energy Union objectives on the ground – in Europe’s regions and cities. It helps bridge the gap between the ambitious EU framework and the changes needed on the ground to effectively accomplish the shift towards a low-carbon economy and the implementation of the Energy Union. By involving stakeholders at all levels and supporting capacity-building, it builds ownership and commitment at regional and local level. Indeed, the cohesion policy funds destined for sustainable energy projects serve the broader EU objectives of regional development and cohesion through growth and job creation while also tackling energy poverty and enhancing energy security.
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Dr Gergana Miladinova
Gergana leads a team at the European Commission that oversees the integration of sustainable growth issues into Cohesion Policy funding. Previously she worked on the development and implementation of several key Directives (including the Energy Efficiency Directive and the Energy Performance of Buildings Directive) and of various strategic documents. She also served as a Member of Commissioner Piebalgs Energy Cabinet. She did her Doctoral research on policies for distributed electricity generation at Central European University and at the University of Oxford.
Maud Skäringer
In the Commission since 1995, Maud Skäringer is currently working as a policy analyst in the field of regional policy, focusing on promoting the Energy Union and sustainable energy investments in a regional development context. She has also been working on promoting an innovation-friendly business environment, in particular for SMEs. Prior to this, she encouraged Member States to improve their national research policies and also contributed to economic analysis to further the European Research Area. She holds a degree from Stockholm School of Economics.