### 3. welcomes the intention of the court of auditors (the “court”) to move towards an attestation methodology by which the auditor gathers sufficient and appropriate evidence to provide a conclusion on assurance expressed by the responsible entity; recalls the finding of the court that the quality and reliability of national authorities needs to be improved; ### 3. welcomes the intention of the court of auditors (the “court”) to move towards an attestation methodology by which the auditor gathers sufficient and appropriate evidence to provide a conclusion on assurance expressed by the responsible entity; recalls the finding of the court that the quality and reliability of national authorities needs to be quickly improved;


### 4. welcomes the adoption of an amendment to the cef multi-annual work programme on 19 april 2018 , making available a total indicative amount of eur 450 million for the 2018 call for proposals under the general envelope of cef transport to support projects of common interest related to the cross-cutting objectives of transport digitalisation , road safety and multimodality; welcomes the adoption of a financing decision establishing the cef annual work programme , allowing inea to launch the 2019 cef transport call concerning financial assistance through grants for projects of common interest regarding cross-border sections , connections to and the development of maritime ports and mitigation of the impact of rail freight noise and vibrations , with the indicative amount of eur 100 million made available; ### 4. welcomes the adoption of an amendment to the cef multi-annual work programme on 19 april 2018 , making available a total indicative amount of eur 450 million for the 2018 call for proposals under the general envelope of cef transport to support projects of common interest related to the cross-cutting objectives of transport digitalisation , road safety and multimodality; reminds the importance of coordination of work programmes , in order to exploit synergies between the sectors of transport , energy and telecom; welcomes the adoption of a financing decision establishing the cef annual work programme , allowing inea to launch the 2019 cef transport call concerning financial assistance through grants for projects of common interest regarding cross-border sections , connections to and the development of maritime ports and mitigation of the impact of rail freight noise and vibrations , with the indicative amount of eur 100 million made available; recalls that in order to achieve concrete benefits in the transport sector the budget needs to be managed soundly and spent on relevant and suitable investment projects which are then implemented on a timely basis;


### 4. welcomes the eca's analytical review on european defence and supports its recommendations; calls on the commission as guardian of the treaties to ensure the coherence of all union defence efforts carried out for the implementation of a union activity under the csdp (pesco , edidp , edf , card etc.) and to ensure synergies with nato; considers that a competitive european defence technological and industrial base , enhancing member states’ military capabilities and framing a european defence union must be the key objectives of the union under the next mff; ### 4. takes note of the eca's analytical review on european defence; undertakes to ensure the coherence of all union defence efforts carried out for the implementation of a union activity under the csdp (pesco , edidp , edf , card etc.) and to ensure interoperability with nato; considers that a competitive european defence technological and industrial base , enhancing member states’ military capabilities and framing a european defence union must be the key objectives of the union under the next mff;


### 4. calls on the commission to monitor closely trade agreements with third countries in respect of quality , health and animal welfare requirements; ### 4. fully supports the union's ambition to conclude ambitious , balanced and fair free trade agreements with third countries; urges the commission to make sure that there is a strong sustainability chapter in all trade agreements and that trade partners comply fully with those requirements; calls also on the commission to continue to closely monitor ongoing trade agreements with third countries with respect to the application of food safety , environmental and animal welfare standards;


### 4. calls on the commission to monitor closely trade agreements with third countries in respect of quality , health and animal welfare requirements; ### 4. calls on the commission to monitor closely trade agreements with third countries in respect of quality , health and animal welfare requirements along with environmental degradation associated with lower environmental standards;


### 5. notes that by the fifth year of the current programming period 2014-2020 only around 23% of the funds initially awarded had resulted in payments by january 2019 , putting into question the full implementation of cef; reiterates that there is a risk that payment delays , decommitments and reflows will build up significantly by the end of the programming period and leaving insufficient time to reroute funds to other projects; reiterates the recommendations of the court to the commission and inea to ensure greater coherence and transparency of the project selection procedures , to set better conditions for timely programme implementation and to redesign the performance framework to better monitor project results; ### 5. notes that by the fifth year of the current programming period 2014-2020 only around 23% of the funds initially awarded had resulted in payments by january 2019 , putting into question the full implementation of cef; reiterates that in order to avoid payment delays , decommitments and reflows by the end of the programming period , leaving insufficient time to reroute funds to other projects , it is essential for inea to monitor the technical and financial implementation of projects closely , so that effective corrective measures can be taken in time; reiterates the recommendations of the court to the commission and inea to ensure greater coherence and transparency of the project selection procedures , to set better conditions for timely programme implementation and to redesign the performance framework to better monitor project results;


### 5. is concerned by alleged cases of high-level conflicts of interest and land-grabbing by oligarchs with possible facilitation by governments and public authorities; calls on the commission to increase efforts to prevent and detect fraud; urges the commission to be extra vigilant on rule of law matters; ### 5. is concerned by recent reports of alleged cases of high-level conflicts of interest and land-grabbing in some member states; notes that with reference to land ownership , it is first and foremost for the relevant authorities of the member states to act and to put the necessary systems in place to prevent and avoid fraud; highlights that all allegations or suspicions concerning fraud and the misuse or mismanagement of union funds should be addressed to olaf; in this regard notes the importance of a transparent and strong governance system and further calls on the commission to increase efforts to prevent and detect fraud;


### 6. reiterates the request of the court to improve coherence , clarity and effectiveness of the eu passenger rights framework , take action to promote awareness campaigns and provide national enforcement bodies with further tools for enforcing passenger rights; ### 6. welcomes the eca special report 30/2018 which concludes that the main modes of public transport are covered by eu regulations , making the eu framework for passenger rights unique globally; however , regrets the eca conclusion that many passengers were not sufficiently aware of their rights and frequently could not benefit from them , due to problems with enforcement; therefore , reiterates the request of the court to improve coherence , clarity and effectiveness of the eu passenger rights framework , take action to promote awareness campaigns and provide national enforcement bodies with further tools for enforcing passenger rights;


### 6. highlights that increased flexibility of member states in allocating cap subsidies risks further aggravating abuses , and urges therefore the commission to avoid renationalisation of the cap; ### 6. welcomes the fact that the future performance-based cap will continue to require the legality and regularity of payments; stresses that the shift from compliance to the performance-based model must be reflected in changes in the way in which measures are monitored; notes with satisfaction that commission is proposing the transition to a single audit as part of the new cap;


### 6. highlights that increased flexibility of member states in allocating cap subsidies risks further aggravating abuses , and urges therefore the commission to avoid renationalisation of the cap; ### 6. highlights that without a strong , measurable , fully developed and common set of output and result indicators and milestones , the increased flexibility of member states in allocating cap subsidies may lead to an increase in the error rate;


### 8. reiterates its request that the commission , in view of the multiple sources of funding , provides an easy access to projects , in form of a one-stop-shop to allow citizens to clearly follow the developments and funding of infrastructures co-financed by union funds and by the efsi; notes that in the fifth year of the 2014-2020 multi-annual financial framework the absorption of efsi funds has continued to be slower than planned; stresses that the errors detected are at the level of the beneficiary , so more guidance is needed as regards cost eligibility; ### 8. reiterates its request that the commission , in view of the multiple sources of funding , provides an easy access to projects , in form of a one-stop-shop to allow citizens to clearly follow the developments and funding of infrastructures co-financed by union funds and by the efsi; these one-stop-shops shall have extensive coordinating powers , with eu rules prevailing , with a multilingual dimension , facilitating the management of all environmental impact assessments; notes that in the fifth year of the 2014-2020 multi-annual financial framework the absorption of efsi funds has continued to be slower than planned; stresses that the errors detected are at the level of the beneficiary , so more guidance is needed as regards cost eligibility; highlights the need for simplification of administrative procedures;


### 8. reaffirms the clear need for more cooperation between customs services in the member states to avoid harm to union and national budgets; in particular as regards vat losses and counterfeit products; ### 8. reaffirms the clear need for more cooperation between customs services in the member states to avoid harm to union and national budgets; in particular as regards vat losses , e commerce and counterfeit products;


### 11. welcomes the addition of a pillar of military mobility to ten-t policy with the adoption of the action plan in march 2018 and the proposal by the commission to include a new envelope dedicated to military mobility needs of eur 6 ,5 billion under the cef budget for 2021-2027; stresses the importance of analysis of gaps between the military and the ten-t requirements for generating the pipeline for dual-use infrastructure projects that could be supported under the cef 2021-2027 and strengthen ten-t; reiterates that this development reflects the strategic role played by the ten-t in integrating the union’s infrastructure in order to achieve rapid and seamless mobility across the continent , thus further developing the internal market; ### 11. highlights that the transport infrastructure policy offers a clear opportunity to increase synergies between defence and civil needs and ten-t; welcomes the addition of a pillar of military mobility to ten-t policy with the adoption of the action plan in march 2018 and the proposal by the commission to include a new envelope dedicated to military mobility needs of eur 6 ,5 billion under the cef budget for 2021-2027; stresses the importance of analysis of gaps between the military and the ten-t requirements for generating the pipeline for dual-use infrastructure projects that could be supported under the cef 2021-2027 and strengthen ten-t; reiterates that this development reflects the strategic role played by the ten-t in integrating the union’s infrastructure in order to achieve rapid and seamless mobility across the continent , as well as strengthening our capacity to respond to emergency situations such as humanitarian crises , natural disasters or civil emergencies , thus further developing the internal market;


### 11. notes with concern that , due to limitations in its monitoring , fead’s contribution to reducing poverty has not been established , and deplores in particular that the commission does not have data which demonstrates the relative importance of fead in overall support to deprived people in the union; ### 11. believes that eu committed action for the most deprived is of paramount importance having in mind that , on average , more than one out of five persons and one out of four children are still at risk of poverty or social exclusion in the european union; notes that , due to limitations in its monitoring and lack of eu-wide data , fead’s contribution to reducing poverty has not yet been quantitatively demonstrated; nonetheless recalls that available data presented in the european court of auditors' special report1a indicate that this fund represents a significant share of the total social support activities in some member states and that , according to food banks , one third of the food they provide is financed by fead , and that fead allows to be less dependent on the irregular flow of donation and therefore enables to better plan the redistribution of specific foods;


### 13. reiterates its request to add a budget line in future budgets of the union dedicated to tourism in order to support actions for the development of a sustainable tourism sector; ### 13. believes that the tourism sector is extremely related to the transport sector; therefore , reiterates its request to add a budget line in future budgets of the union dedicated to tourism in order to support actions for the development of a sustainable tourism sector; stresses its importance and economic impact on growth , competitiveness , employment and social development;


### 2. recalls that article 61 of the financial regulation , which entered into force on 2 august 2018 , has enlarged the definition of conflicts of interests; calls on the commission , as guardian of the treaties , to fight all forms of conflict of interests and to evaluate the preventive measures taken by the member states to avoid them; ### 2. recalls that article 61 of the financial regulation , which entered into force on 2 august 2018 , has enlarged the definition of conflicts of interests; calls on the commission , as guardian of the treaties , to fight all forms of conflict of interests and to evaluate on a regular basis the preventive measures taken by the member states to avoid them;


### 2. notes that most rural development actions which were audited produced the expected results; asks the commission and member states to improve their performance framework where needed and to introduce further simplification measures , such as simplified cost options; regrets that the court of auditors identified weaknesses in the use of result indicators; ### 2. notes that most rural development actions which were audited produced the expected results but regrets that the court of auditors identified weaknesses in the use of result indicators; asks the commission and member states to improve their performance framework where needed and to introduce further simplification measures , such as simplified cost options; notes that a common , measurable and fully developed set of result and output indicators and milestones will be the basis for the proposed new delivery model;


### 10. recalls the findings of eca special report no 05/2019 (‘fead-fund for european aid to the most deprived: valuable support but its contribution to reducing poverty is not yet established’) , in particular the eca conclusion that , in addition to alleviating poverty through food aid (which represents 83 % of fead budget) , the innovative social policy elements of fead offer possibilities to member states to foster social inclusion; ### 10. recalls the findings of eca special report no 05/2019 (‘fead-fund for european aid to the most deprived: valuable support but its contribution to reducing poverty is not yet established’) , in particular the eca conclusion that fead is a significant instrument in ensuring the provision of food and material support and , in addition to alleviating poverty through food aid (which represents 83 % of fead budget) , the innovative social policy elements of fead offer possibilities to member states to foster social inclusion;


### 14. insists that the commission propose to introduce a specific mechanism into the cap rules to support the farmers confronted with land-grabbing malpractices , giving them , in particular , the opportunity to lodge a complaint with the commission; ### 14. insists that the commission propose to introduce a specific mechanism into the cap rules to support the farmers confronted with land-grabbing malpractices , giving them , in particular , the opportunity to lodge quickly and easily a complaint with the commission;


### b. whereas the european parliament has repeatedly asked the commission to promote and implement the use of gender mainstreaming , gender budgeting and gender impact assessment in the relevant union policy areas and the court of auditors to incorporate a gender perspective , including gender-disaggregated data , into its reports on the implementation of the union budget; ### b. whereas the european parliament has repeatedly asked the commission to promote and implement the use of gender mainstreaming , gender budgeting and gender impact assessment in all union policy areas and the court of auditors to incorporate a gender perspective , including gender-disaggregated data , into its reports on the implementation of the union budget;


### - define key performance indicators (kpis) that reflect the achievements of union spending programmes and policies rather than the performance of the authorities implementing them; ### - define stronger key performance indicators (kpis) that reflect the impact and the achievements of union spending programmes and policies rather than the performance of the authorities implementing them;


### 29. is surprised that the court decided that natural resources should make up the largest share of the court’s overall audit population for its das examination whilst the cap direct payments are not prone to errors; ### deleted


### 34. deplores the fact that the court has not audited the annual management and performance report (ampr); points out , however , that the court examined some annual activity reports (aars) , and , in particular , those of dg agri , dg devco , dg echo , dg near , dg empl and dg regio; ### 34. regrets the fact that the court has not audited the annual management and performance report (ampr); points out , however , that the court examined some annual activity reports (aars) , and , in particular , those of dg agri , dg devco , dg echo , dg near , dg empl and dg regio;


### 56. calls on the commission to simplify and better harmonise the practices and methods of the dgs in order to be able to fully respect the requirements of article 247 of the financial regulation and , in particular , paragraph 1b thereof) which stipulates that: “... the annual management and performance report includes information on key governance arrangements in the commission as well as: (i) an estimation of the level of error in union expenditure based on a consistent methodology and an estimate of future corrections;...“ ### 56. calls on the commission to simplify and harmonise the practices and methods of the dgs in order to be able to fully respect the requirements of article 247 of the financial regulation and , in particular , paragraph 1b thereof) which stipulates that: “... the annual management and performance report includes information on key governance arrangements in the commission as well as: (i) an estimation of the level of error in union expenditure based on a consistent methodology and an estimate of future corrections;...“


### 57. calls on the commission , in accordance with article 247 of the financial regulation , to align its methodology to the one used by the court and to provide the budgetary control authority with only one error rate corresponding to the risk at payment; calls on the commission to disclose separately an estimate of the future corrections; ### 57. calls on the commission , in accordance with article 247 of the financial regulation , to align quickly its methodology to the one used by the court and to provide the budgetary control authority with only one error rate corresponding to the risk at payment; calls on the commission to disclose separately an estimate of the future corrections;


### 58. calls on the commission to take the necessary measures to obtain reliable data from the member states concerning the error rate at payment; ### 58. calls on the commission to take all the necessary measures to obtain reliable data from the member states concerning the error rate at payment;


### 79. stresses that the aim of performance information is to provide an indication as to whether union policies and programmes , are achieving their objectives efficiently and effectively; suggests that , if improvements are needed , performance information be used to inform the process of designing necessary corrective measures , and their implementation be monitored; ### 79. stresses that the aim of performance information is to provide an indication as to whether union policies and programmes , are achieving their objectives efficiently and effectively; performance information should be used to inform the process of designing necessary corrective measures , and their implementation be monitored;


### 83. welcomes the intention of the court to update its assessment of performance of the union spending in its annual report and , in particular , to present for each mff heading a chapter on compliance and performance; ### 83. welcomes with great interest the intention of the court to update its assessment of performance of the union spending in its annual report and , in particular , to present for each mff heading a chapter on compliance and performance;


### 84. welcomes the fact that the court inserted in chapter 3 of its annual report for 2018 , under the heading , “getting results from the budget”. a summary of the main special reports published in the year by mff headings; notes that in 2018 , the published replies to the court’s reports show that the auditees fully accepted 78 % of the 388 recommendations issued by the court (compared to 68 % in 2017) and that n 18 % of cases recommendations were implemented only in some respects , with significant weaknesses remaining; notes that only 6 % of the recommendations were not been implemented; is concerned that in some member states the administrative capacity may be insufficient; ### 84. welcomes the fact that the court inserted in chapter 3 of its annual report for 2018 , under the heading , “getting results from the budget” a summary of the main special reports published in the year by mff headings; notes that in 2018 , the published replies to the court’s reports show that the auditees fully accepted 78 % of the 388 recommendations issued by the court (compared to 68 % in 2017) and that 18 % of cases recommendations were implemented only in some respects , with significant weaknesses remaining; notes that only 6 % of the recommendations were not been implemented;


### 85. points out with concern that overall , the data included in the programme statements suggest that progress towards the performance targets is moderate which can be explained by the late , slow start for both the cohesion and rural development programmes; notes that this is also due to the lack of administrative capacity in some member states; ### 85. points out with concern that overall , the data included in the programme statements suggest that progress towards the performance targets is moderate which can be explained by the late , slow start for both the cohesion and rural development programmes;


### 95. notes that for the third year in a row , dg budget set a reservation on the value of tradition own resource collected by the united kingdom , due to the country’s failure to make available to the union budget evaded customs duties on textiles and footwear imports; ### 95. notes that for the third year in a row , dg budget set a reservation on the value of traditional own resources collected by the united kingdom , due to the country’s failure to make available to the union budget evaded customs duties on textiles and footwear imports;


### 102. regrets the fact that the commission’s 2018 inspection programme as to efficiency of the member states systems to collect , report and make available the correct amount of tor was not sufficiently supported by a structured and documented risk assessment , and that it did not rank member states by level of risk or present the impact and probability of risks; ### 102. regrets the fact that the commission’s 2018 inspection programme as to efficiency of the member states systems to collect , report and make available the correct amount of tor was not sufficiently supported by a structured and documented risk assessment;


### 108. regrets that as to the five recommendations made by the court in its 2015 annual report the the commission had only implemented one in full , one recommendation in some respects and three in most respects; ### 108. notes that as to the five recommendations made by the court in its 2015 annual report the the commission had only implemented one in full , one recommendation in some respects and three in most respects;


### 127. welcomes the fact that , on the basis of the 31 errors , the court estimated the level of error for the whole mff 1a area to be 2 ,0 % and that this figure is lower than that for the previous two years , when the estimated level of error was slightly above 4 %; ### 127. welcomes the fact that the court estimated the level of error for the whole mff 1a area to be 2 ,0 % and that this figure is lower than that for the previous two years , when the estimated level of error was slightly above 4 %;


### - revise the ex-ante verification for large research infrastructure with the view to speeding up the process and render the results more reliable; ### - rethink the way that the ex-ante verification for large research infrastructure are done with the view of making them more efficient;


### 178. notes that dg rego , for the accounting year 2016/2017 , confirmed rers reported by audit authorities (including in some cases after introducing adjustments without a material impact) below materiality for 135 operational programmes , 29 had to be revised above 2 %; ### 178. notes that dg regio , for the accounting year 2016/2017 , confirmed rers reported by audit authorities (including in some cases after introducing adjustments without a material impact) below materiality for 135 operational programmes , 29 had to be revised above 2 %;


### 184. welcomes the fact that the commission has informed its competent committee that dg regio intends to recover more than eur 1 billion from programmes , in which it discovered irregularities and that this amount affects the following operational programmes: ### 184. acknowledges the fact that olaf and dg regio imposed financial corrections more than eur 1 billion from hungarian programmes , in which it discovered irregularities and that this amount affects the following operational programmes


### - 2007hu161po001 economic cooperation eur 130 million ### - 2007hu161po001 economic development eur 130 million


### - 2007hu161po002 environment eur 157 million ### - 2007hu161po002 environment and energy eur 157 million


### - pay particular attention to member states , whose management and control systems are only partially reliable; ### - pay increased attention and allocate increased staff and budget of the commission to member states , whose management and control systems are only partially or not reliable , where there is an increased risk of fraud and corruption related to funds and especially those member states who did not join to the european public prosecutor’s office;


### - specify in the aars how ex-post financial corrections imposed by member states and by the commission were reused; ### - specify in the aars how the amounts effected by ex-post financial corrections imposed by member states and by the commission were reused , particularly in those cases where fraud , corruption or other criminal activity was involved;


### - encourage all member states to use the arachne it programme to identify and remedy risks of fraud; ### - make arachne it programme as a pre-condition for member states of the use of union funds; invites the commission to use the data of arachne to create a “eu black list” by adding those companies and their beneficial owners or individuals against whom national authorities , eppo has raised charges in relation of fraud or corruption or other criminal activities related to union funds , or olaf made recommendations; suspend all payment of union funds to those companies or individuals until the procedures are closed;


### 210. points out with deep concern that. according to dg agri’s aar for 2018 , tje labour force in cap has steadily declined from 11 595 (1 000 annual work unit) in 2008 to 9 363 (1 000) annual work in 2017 ( , at page 22); ### 210. points out with deep concern that. according to dg agri’s aar for 2018 , the labour force in cap has steadily declined from 11 595 (1 000 annual work unit) in 2008 to 9 363 (1 000) annual work in 2017 (at page 22);


### fair-cap allocation ### fairer cap allocation


### 215. insists that larger farm incomes do not necessarily need the same degree of support for stabilising farm incomes as smaller farms in time of income volatility crisis since they may benefit of potential economies of scale , which are likely to be resilient; ### 215. points out that in time of extreme market volatility , smaller farms may not be as resilient as larger farms due to the potential economies of scale and calls on the commission to ensure responsive use of the cap tools available to support these farms;


### 217. calls on the commission to ensure that the cap is fairly allocated to active farmers and do not result in land deals that benefit a select group of political insiders often called the oligarchs; ### 217. calls on the commission to ensure that the cap is fairly allocated to active farmers and notes the importance of a transparent and strong governance system and further calls on the commission to increase efforts to prevent and detect fraud;


### 260. requests the commission to develop guidance and criteria to identify ngos in its accounting system and to verify the self-declared data submitted by the applicants; ### 260. requests the commission to develop quickly guidance and strong criteria to identify ngos in its accounting system and to verify the self-declared data submitted by the applicants;


### 280. endorses the reservations issued by the director general for dg home in the dg home’s aar (at page 108); ### 280. notes the reservations issued by the director general for dg home in the dg home’s aar (at page 108);


### - promote the use of sis ii and vis training environments; ### - promote quickly the use of sis ii and vis training environments;


### 307. welcomes the fact that the commission carried out a spending review covering all major programmes under the mff for the programming period 2014 to 2020 and that this review aimed to combine a strategic review (focused mostly on prioritising programmes according to their added value and coherence with union objectives) with an efficiency review (seeking how to improve the delivery of existing programmes by examining opportunities for streamlining and synergies , simplifying rules , improving flexibility , and focusing more on performance); ### 307. welcomes the fact that the commission carried out a spending review covering all major programmes under the mff for the programming period 2014 to 2020 and that this review aimed to combine a strategic review (focused mostly on prioritising programmes according to their added value and coherence with union objectives) with an efficiency review (seeking how to improve the delivery of existing programmes by examining opportunities for streamlining and synergies , simplifying administrative rules , improving flexibility , and focusing more on performance); the commission should make periodic reviews with better kpis


### 310. notes that the spending review also gives examples of unnecessarily complex , inconsistent rules; ### 310. notes that the spending review also gives examples of unnecessarily complex , inconsistent rules often leading to misunderstandings and ineligible costs;


### 315. is convinced that to genuinely achieve simplification , the single rulebook should eliminate all unnecessary rules , requirements and procedures; is of the opinion that it should not simply be a consolidation of the existing separate rulebooks into a single large volume; ### 315. is convinced that to genuinely achieve simplification , the single rulebook should eliminate all unnecessary and complex rules , requirements and procedures; is of the opinion that it should not simply be a consolidation of the existing separate rulebooks into a single large volume;


### 316. considers that simplification is not a goal in itself but a means to increasing the efficiency of union action; calls on the commission , therefore , when designing rules for union programmes , to strike a balance between ease of implementation and effectiveness in achieving union objectives and transparency; ### 316. considers that simplification is not a goal in itself but a means to increasing the efficiency of union action giving that way a better opportunity for small entities to be beneficiaries; calls on the commission , therefore , when designing rules for union programmes , to strike a balance between ease of implementation and effectiveness in achieving union objectives and transparency;


### 7. stresses that support to young farmers from the cap is essential; encourages the commission to move towards a greener cap in line with the paris agreement. ### deleted


### 7. stresses that support to young farmers from the cap is essential; encourages the commission to move towards a greener cap in line with the paris agreement. ### 7. stresses that support to young farmers from the cap is essential; encourages the commission to move towards a greener cap in line with the paris agreement and union biodiversity strategy.


### 7. stresses that support to young farmers from the cap is essential; encourages the commission to move towards a greener cap in line with the paris agreement. ### 7. stresses that support to young farmers from the cap is essential and notes the importance of a clear definition of active or genuine farmer;


### 4. notes that the agency cooperates with the european fisheries control agency and the european border and coast guard agency for what concerns the european coastguard function; ### 4. notes that the agency cooperates closely with other union agencies such as the european fisheries control agency and the european border and coast guard agency for what concerns the european coastguard function;


### 1. welcomes the finding of the court of auditors that the accounts of the european aviation safety agency ('the agency') for the 2018 financial year are legal and regular in all material respects; ### 1. welcomes the finding of the court of auditors that the accounts of the european union aviation safety agency (before 11 september 2018: european aviation safety agency) ('the agency') for the 2018 financial year are legal and regular in all material respects;


### 2. notes that the agency’s annual budget for 2018 was eur 197 ,8 million , of which eur 36 ,9 million came from eu subsidy , eur 102 ,9 million from fees and charges and eur 2 ,2 million from third countries contributions; is pleased that budget implementation rate remained very high at 98 % , significantly above the 95 % threshold set by the commission;; notes that the rate of cancellations of carry-over remains low at 1 ,8 % , below the 5 % limit set by the commission; welcomes the fact that achievement of budget implementation and cancellation of amounts carried over targets means that no penalties will be applied to the 2020 eu subsidy; ### 2. notes that the agency’s annual budget for 2018 was eur 197 ,9 million , of which eur 36 ,9 million came from eu subsidy , eur 103 ,0 million from fees and charges and eur 2 ,0 million from third countries contributions , 1 ,1 million of other revenues and eur 54 ,9 million from fees and charges accumulated surplus; is pleased that budget implementation rate remained very high at 98 % , significantly above the 95 % threshold set by the commission;; notes that the rate of cancellations of carry-over remains low at 1 ,8 % , below the 5 % limit set by the commission; welcomes the fact that achievement of budget implementation and cancellation of amounts carried over targets means that no penalties will be applied to the 2020 eu subsidy;


### 3. stresses that 2018 was a landmark year for the agency , with the entry into force of the new regulation on 11 september 20181 ; recognises that increased responsibilities and workload of the agency were accompanied by relatively stable resources , which created significant challenges to fulfil its tasks and objectives in 2018 , and lead to postponement or deprioritisation of certain activities; reiterates that the agency should be provided with adequate financial resources and staff in order to perform the important tasks entrusted to it; ### 3. highlights the agency's vital role in ensuring the highest possible level of aviation safety and environmental protection in a fast growing aviation market; stresses that 2018 was a landmark year for the agency , with the entry into force of the new regulation on 11 september 20181 ; recognises that the increased responsibilities and workload of the agency were not accompanied by a proportionate increase in resources , which created significant challenges to fulfil its tasks and objectives in 2018 , and lead to postponement or deprioritisation of certain activities; reiterates that the agency should be provided with adequate financial resources and staff , which registered a reduction to 767 staff employed on 31 december 2018 (compared with 771 staff in 2017) , in order to perform the important tasks entrusted to it;


### 4. notes that the undertaking ran its operations in full accordance with four different frameworks: the horizon 2020 , the connecting europe facility (cef) programme for drone u-space demonstration activities , as well as two specific frameworks for the active geo-fencing service (ags) call and the study to develop a proposal for the future architecture of the european airspace; recognises that these different legal frameworks mean a high degree of complexity for the undertaking; ### 4. notes that the undertaking ran its operations in full accordance with four different frameworks: the horizon 2020 , the connecting europe facility (cef) programme for drone u-space demonstration activities , as well as two specific frameworks for the active geo-fencing service (ags) call and the study to develop a proposal for the future architecture of the european airspace; recognises that these different legal frameworks mean a high degree of complexity for the undertaking and therefore commends the undertaking for successfully implementing innovation projects;


### 11. notes that the absence of established key performance indicators (kpis) is no longer an issue under horizon 2020; regrets that information on some of kpis is not yet available due to nature of the projects; takes note that the experts call for further monitoring activity and analysis , making a clear distinction between the actually achieved kpis at the end of each year and the projected kpis; ### 11. notes that information on some of kpis is not yet available due to nature of the projects; welcomes that most of the specific kpis are either achieved or on track; takes note that the experts call for further monitoring activity and analysis , making a clear distinction between the actually achieved kpis at the end of each year and the projected kpis;


### 9. notes that the absence of established key performance indicators (kpis) is no longer an issue under horizon 2020; regrets that information on third set of kpis is not yet available due to the nature of the projects; in addition , takes note that the joint undertaking continued the development of a kpi model to measure the contribution of the research and innovation activities to its regulation; notes that this work is still ongoing and the first results have been presented to the governing board in december 2018; ### 9. notes that the third set of kpis will be developed on the basis of first horizon 2020 results due to the nature of the projects; in addition , takes note that the joint undertaking continued the development of a kpi model to measure the contribution of the research and innovation activities to its regulation; notes that this work is still ongoing and the first results have been presented to the governing board in december 2018;


### (47) the regulated entities falling within the scope of the emissions trading in the sectors of buildings and road transport should be subject to similar greenhouse gas emissions permit requirements as the operators of stationary installations. it is necessary to establish rules on permit applications , conditions for permit issuance , content , and review , and any changes related to the regulated entity. in order for the new system to start in an orderly manner , member states should ensure that regulated entities falling within the scope of the new emissions trading have a valid permit as of the start of the system in 2025. ### (47) the regulated entities falling within the scope of the emissions trading in the sector of both commercial and governmental buildings should be subject to similar greenhouse gas emissions permit requirements as the operators of stationary installations. it is necessary to establish rules on permit applications , conditions for permit issuance , content , and review , and any changes related to the regulated entity. in order for the new system to start in an orderly manner , member states should ensure that regulated entities falling within the scope of the new emissions trading have a valid permit as of the start of the system in 2025. for those regulated entities falling within the scope of the second trading period (i.e. emissions trading in the road transport and residential buildings sectors) , the commission should establish , through its evaluation report , the emissions trading , the conditions of the greenhouse gas emissions permit requirements for these sectors. to this end , the commission should issue guidelines for public competent authorities towards the preparation , implementation and running of the system , as well as a potential helpdesk function;


### (50) in order to ensure a smooth start to emissions trading in the buildings and road transport sectors and taking into account the need of the regulated entities to hedge or buy ahead allowances to mitigate their price and liquidity risk , a higher amount of allowances should be auctioned early on. in 2026 , the auction volumes should therefore be 30 % higher than the total quantity of allowances for 2026. this amount would be sufficient to provide liquidity , both if emissions decrease in line with reduction needs , and in the event emission reductions only materialise progressively. the detailed rules for this front-loading of auction volume are to be established in a delegated act related to auctioning , adopted pursuant to article 10(4) of directive 2003/87/ec. ### (50) in order to ensure a smooth start to emissions trading in the commercial and governmental buildings sectors and taking into account the need of the regulated entities to hedge or buy ahead allowances to mitigate their price and liquidity risk , a higher amount of allowances should be auctioned early on. in 2026 , the auction volumes should therefore be 30 % higher than the total quantity of allowances for 2026. this amount would be sufficient to provide liquidity , both if emissions decrease in line with reduction needs , and in the event emission reductions only materialise progressively. the detailed rules for this front-loading of auction volume are to be established in a delegated act related to auctioning , adopted pursuant to article 10(4) of directive 2003/87/ec.


### (52) the introduction of the carbon price in road transport and buildings should be accompanied by effective social compensation , especially in view of the already existing levels of energy poverty. about 34 million europeans reported an inability to keep their homes adequately warm in 2018 , and 6 ,9 % of the union population have said that they cannot afford to heat their home sufficiently in a 2019 eu-wide survey60 . to achieve an effective social and distributional compensation , member states should be required to spend the auction revenues on the climate and energy-related purposes already specified for the existing emissions trading , but also for measures added specifically to address related concerns for the new sectors of road transport and buildings , including related policy measures under directive 2012/27/eu of the european parliament and of the council61 . auction revenues should be used to address social aspects of the emission trading for the new sectors with a specific emphasis in vulnerable households , micro-enterprises and transport users. in this spirit , a new social climate fund will provide dedicated funding to member states to support the european citizens most affected or at risk of energy or mobility poverty. this fund will promote fairness and solidarity between and within member states while mitigating the risk of energy and mobility poverty during the transition. it will build on and complement existing solidarity mechanisms. the resources of the new fund will in principle correspond to 25 % of the expected revenues from new emission trading in the period 2026-2032 , and will be implemented on the basis of the social climate plans that member states should put forward under regulation (eu) 20…/nn of the european parliament and the council62 . in addition , each member state should use their auction revenues inter alia to finance a part of the costs of their social climate plans. ### (52) the introduction of the carbon price in road transport and buildings should be accompanied by effective social compensation , especially in view of the already existing levels of energy poverty. about 34 million europeans reported an inability to keep their homes adequately warm in 2018 , and 6 ,9 % of the union population have said that they cannot afford to heat their home sufficiently in a 2019 eu-wide survey60 . to achieve an effective social and distributional compensation , member states should be required to spend the auction revenues on the climate and energy-related purposes already specified for the existing emissions trading , but also for measures added specifically to address related concerns for the new sectors of road transport and buildings , including related policy measures under directive 2012/27/eu of the european parliament and of the council61 . auction revenues should be used to address social aspects of the emission trading for the new sectors with a specific emphasis in vulnerable households , micro-enterprises and transport users. in this spirit , a new social climate fund will provide dedicated funding to member states to support the european citizens most affected or at risk of energy or mobility poverty. the social climate fund should be an integral part of the union budget in order to preserve the unity of the budget and the coherence with union policies , and to ensure that there is effective control by the budgetary authority , composed of the parliament and the council. this fund will promote fairness and solidarity between and within member states while mitigating the risk of energy and mobility poverty during the transition. it will build on and complement existing solidarity mechanisms. the resources of the new fund will be implemented on the basis of the social climate plans that member states should put forward under regulation (eu) 20…/nn of the european parliament and the council62 . the programmed baseline allocation in the eu budget should be increased annually by a supplementary reinforcement in case there is an increase in the carbon price , as it would raise the burden on the vulnerable households and traffic users. such annual reinforcements should be accommodated within the mff by means of an automatic ‘carbon price fluctuation adjustment’ of the ceiling of heading 3 and the payment ceiling , the mechanism for which is to be provided for in the mff regulation according to article 312 tfeu. in addition , each member state should use their auction revenues inter alia to finance a part of the costs of their social climate plans.


### (52) the introduction of the carbon price in road transport and buildings should be accompanied by effective social compensation , especially in view of the already existing levels of energy poverty. about 34 million europeans reported an inability to keep their homes adequately warm in 2018 , and 6 ,9 % of the union population have said that they cannot afford to heat their home sufficiently in a 2019 eu-wide survey60 . to achieve an effective social and distributional compensation , member states should be required to spend the auction revenues on the climate and energy-related purposes already specified for the existing emissions trading , but also for measures added specifically to address related concerns for the new sectors of road transport and buildings , including related policy measures under directive 2012/27/eu of the european parliament and of the council61 . auction revenues should be used to address social aspects of the emission trading for the new sectors with a specific emphasis in vulnerable households , micro-enterprises and transport users. in this spirit , a new social climate fund will provide dedicated funding to member states to support the european citizens most affected or at risk of energy or mobility poverty. this fund will promote fairness and solidarity between and within member states while mitigating the risk of energy and mobility poverty during the transition. it will build on and complement existing solidarity mechanisms. the resources of the new fund will in principle correspond to 25 % of the expected revenues from new emission trading in the period 2026-2032 , and will be implemented on the basis of the social climate plans that member states should put forward under regulation (eu) 20…/nn of the european parliament and the council62 . in addition , each member state should use their auction revenues inter alia to finance a part of the costs of their social climate plans. ### (52) the introduction of the carbon price in phase i (i.e. commercial and governmental buildings) , and at a later stage in phase ii (i.e. road transport and residential buildings) , should be accompanied by effective social compensation , especially in view of the already existing levels of energy poverty. about 34 million europeans reported an inability to keep their homes adequately warm in 2018 , and 6 ,9 % of the union population have said that they cannot afford to heat their home sufficiently in a 2019 eu-wide survey60 . to achieve an effective social and distributional compensation , member states should be required to spend the auction revenues on the climate and energy-related purposes already specified for the existing emissions trading , but also for measures added specifically to address related concerns for the new sectors of road transport and buildings , including related policy measures under directive 2012/27/eu of the european parliament and of the council61 . auction revenues should be used to address social aspects of the emission trading for the new sectors with a specific emphasis in vulnerable households , micro-enterprises and transport users. in this spirit , a new social climate fund will provide dedicated funding to member states to support the european citizens most affected or at risk of energy or mobility poverty. this fund will promote fairness and solidarity between and within member states while mitigating the risk of energy and mobility poverty during the transition. it will build on and complement existing solidarity mechanisms. the resources of the new fund will in principle correspond to 25 % of the expected revenues from new emission trading in the period 2026-2032 , and will be implemented on the basis of the social climate plans that member states should put forward under regulation (eu) 20…/nn of the european parliament and the council62 . in addition , each member state should use their auction revenues inter alia to finance a part of the costs of their social climate plans.


### (55) regulated entities covered by the buildings and road transport emissions trading should surrender allowances for their verified emissions corresponding to the quantities of fuels they have released for consumption. they should surrender allowances for the first time for their verified emissions in 2026. in order to minimise the administrative burden , a number of rules applicable to the existing emissions trading system for stationary installations and aviation should be made applicable to emissions trading for buildings and road transport , with the necessary adaptations. this includes , in particular , rules on transfer , surrender and cancellation of allowances , as well as the rules on the validity of allowances , penalties , competent authorities and reporting obligations of member states. ### (55) regulated entities covered by buildings and road transport fuels emissions trading should surrender allowances for their verified emissions corresponding to the quantities of fuels they have released for consumption. they should surrender allowances for the first time for their verified emissions in 2026. in order to minimise the administrative burden , a number of rules applicable to the existing emissions trading system for stationary installations and aviation should be made applicable to emissions trading for buildings and road transport , with the necessary adaptations. this includes , in particular , rules on transfer , surrender and cancellation of allowances , as well as the rules on the validity of allowances , penalties , competent authorities and reporting obligations of member states.


### (56) for emissions trading in the buildings and road transport sectors to be effective , it should be possible to monitor emissions with high certainty and at reasonable cost. emissions should be attributed to regulated entities on the basis of fuel quantities released for consumption and combined with an emission factor. regulated entities should be able to reliably and accurately identify and differentiate the sectors in which the fuels are released for consumption , as well as the final users of the fuels , in order to avoid undesirable effects , such as double burden. to have sufficient data to establish the total number of allowances for the period from 2028 to 2030 , the regulated entities holding a permit at the start of the system in 2025 should report their associated historical emissions for 2024. ### (56) for emissions trading for fuels in the buildings and road transport sectors to be effective , it should be possible to monitor emissions with high certainty and at reasonable cost. emissions should be attributed to regulated entities on the basis of fuel quantities released for consumption and combined with an emission factor. regulated entities should be able to reliably and accurately identify and differentiate the sectors in which the fuels are released for consumption , as well as the final users of the fuels , in order to avoid undesirable effects , such as double burden. to have sufficient data to establish the total number of allowances for the period from 2028 to 2030 , the regulated entities holding a permit at the start of the system in 2025 should report their associated historical emissions for 2024.


### (58) the application of emissions trading in the buildings and road transport sectors should be monitored by the commission , including the degree of price convergence with the existing ets , and , if necessary , a review should be proposed to the european parliament and the council to improve the effectiveness , administration and practical application of emissions trading for those sectors on the basis of acquired knowledge as well as increased price convergence. the commission should be required to submit the first report on those matters by 1 january 2028. ### (58) the application of emissions trading in phase i (i.e. the commercial and governmental buildings sectors) should be monitored by the commission , including the degree of price convergence with the existing ets , and , if necessary , a review should be proposed to the european parliament and the council to improve the effectiveness , administration and practical application of emissions trading for those sectors on the basis of acquired knowledge as well as increased price convergence. the commission should be required to submit the first report on those matters by 1 january 2028. . the same should apply to the application of emissions trading in phase ii (i.e. the road transport and the residential buildings sector) , after its full implementation given the conditions established by the commission in its evaluation report.


### (66) in order to mitigate the risk of supply and demand imbalances associated with the start of emissions trading for the buildings and road transport sectors , as well as to render it more resistant to market shocks , the rule-based mechanism of the market stability reserve should be applied to those new sectors. for that reserve to be operational from the start of the system , it should be established with an initial endowment of 600 million allowances for emissions trading in the road transport and buildings sectors. the initial lower and upper thresholds , which trigger the release or intake of allowances from the reserve , should be subject to a general review clause. other elements such as the publication of the total number of allowances in circulation or the quantity of allowances released or placed in the reserve should follow the rules of the reserve for other sectors. ### (66) in order to mitigate the risk of supply and demand imbalances associated with the start of emissions trading for the commercial and governmental buildings sectors in phase i and residential buildings and road transport in phase ii , as well as to render it more resistant to market shocks , the rule-based mechanism of the market stability reserve should be applied to those new sectors. for that reserve to be operational from the start of the system , it should be established with an initial endowment of 600 million allowances for emissions trading in the road transport and buildings sectors. the initial lower and upper thresholds , which trigger the release or intake of allowances from the reserve , should be subject to a general review clause. other elements such as the publication of the total number of allowances in circulation or the quantity of allowances released or placed in the reserve should follow the rules of the reserve for other sectors.


### 1. this directive shall apply to the activities listed in annexes i and iii , and to the of greenhouse gases listed in annex ii. where an installation that is included in the scope of the eu ets due to the operation of combustion units with a total rated thermal input exceeding 20 mw changes its production processes to reduce its greenhouse gas emissions and no longer meets that threshold , it shall remain in the scope of the eu ets until the end of the relevant five year period referred to in article 11(1) , second subparagraph , following the change to its production process. ### 1. this directive shall apply to the activities listed in annexes i and iii , and to the of greenhouse gases listed in annex ii. where an installation that is included in the scope of the eu ets due to the operation of combustion units with a total rated thermal input exceeding 20 mw changes its production processes to reduce its greenhouse gas emissions and no longer meets that threshold or no longer emits greenhouse gases , it may decide to remain in the scope of the eu ets.


### in addition , 2 ,5 % of the total quantity of allowances between [year following the entry into force of the directive] and 2030 shall be auctioned for the modernisation fund. the beneficiary member states for this amount of allowances shall be the member states with a gdp per capita at market prices below 65 % of the union average during the period 2016 to 2018. the funds corresponding to this quantity of allowances shall be distributed in accordance with part b of annex iib. ### in addition , at least 2 ,5 % of the total quantity of allowances between [year following the entry into force of the directive] and 2030 shall be auctioned for the modernisation fund. the beneficiary member states for this amount of allowances shall be the member states with a gdp per capita at market prices below 65 % of the union average during the period 2016 to 2018. the funds corresponding to this quantity of allowances shall be distributed in accordance with part b of annex iib.


### in addition , 2 ,5 % of the total quantity of allowances between [year following the entry into force of the directive] and 2030 shall be auctioned for the modernisation fund. the beneficiary member states for this amount of allowances shall be the member states with a gdp per capita at market prices below 65 % of the union average during the period 2016 to 2018. the funds corresponding to this quantity of allowances shall be distributed in accordance with part b of annex iib. ### in addition , 2 ,5 % of the total quantity of allowances between [year following the entry into force of the directive] and 2030 shall be auctioned for the net-zero fund established in accordance with article 10a(8) to support to the transition to innovative decarbonised technologies and processes , and to the upscaling of relevant technologies across the union , in a way that contributes to mitigating climate change in line with the objectives set out in regulation (eu) 2021/1119.


### in addition , 2 ,5 % of the total quantity of allowances between [year following the entry into force of the directive] and 2030 shall be auctioned for the modernisation fund. the beneficiary member states for this amount of allowances shall be the member states with a gdp per capita at market prices below 65 % of the union average during the period 2016 to 2018. the funds corresponding to this quantity of allowances shall be distributed in accordance with part b of annex iib. ### in addition , 1.25 % of the total quantity of allowances between [year following the entry into force of the directive] and 2030 shall be auctioned for the modernisation fund. the beneficiary member states for this amount of allowances shall be the member states with a gdp per capita at market prices below 65 % of the union average during the period 2016 to 2018. the funds corresponding to this quantity of allowances shall be distributed in accordance with part b of annex iib.


### 3. member states shall determine the use of revenues generated from the auctioning of allowances , except for the revenues established as own resources in accordance with article 311(3) tfeu and entered in the union budget. member states shall use their revenues generated from the auctioning of allowances referred to in paragraph 2 , with the exception of the revenues used for the compensation of indirect carbon costs referred to in article 10a(6) , for one or more of the following:; ### 3. member states shall determine the use of revenues generated from the auctioning of allowances , except for the revenues established as own resources in accordance with article 311(3) tfeu and entered in the union budget as general income. the revenue accruing to the union budget shall respect the principle of universality in accordance with article 7 of council decision (eu , euratom) 2020/2053. member states shall use their revenues generated from the auctioning of allowances referred to in paragraph 2 , with the exception of the revenues used for the compensation of indirect carbon costs referred to in article 10a(6) , for one or more of the following:;


### 3. member states shall determine the use of revenues generated from the auctioning of allowances , except for the revenues established as own resources in accordance with article 311(3) tfeu and entered in the union budget. member states shall use their revenues generated from the auctioning of allowances referred to in paragraph 2 , with the exception of the revenues used for the compensation of indirect carbon costs referred to in article 10a(6) , for one or more of the following:; ### 3. member states shall determine the use of revenues generated from the auctioning of allowances , except for the revenues established as own resources in accordance with article 311(3) tfeu and entered in the union budget. member states shall use their revenues generated from the auctioning of allowances referred to in paragraph 2 for one or more of the following:


### in the case of installations covered by the obligation to conduct an energy audit under article 8(4) of directive 2012/27/eu of the european parliament and of the council(*) [article reference to be updated with the revised directive] , free allocation shall only be granted fully if the recommendations of the audit report are implemented , to the extent that the pay-back time for the relevant investments does not exceed five years and that the costs of those investments are proportionate. otherwise , the amount of free allocation shall be reduced by 25 %. the amount of free allocation shall not be reduced if an operator demonstrates that it has implemented other measures which lead to greenhouse gas emission reductions equivalent to those recommended by the audit report. the measures referred to in the first subparagraph shall be adjusted accordingly. ### deleted


### in the case of installations covered by the obligation to conduct an energy audit under article 8(4) of directive 2012/27/eu of the european parliament and of the council(*) [article reference to be updated with the revised directive] , free allocation shall only be granted fully if the recommendations of the audit report are implemented , to the extent that the pay-back time for the relevant investments does not exceed five years and that the costs of those investments are proportionate. otherwise , the amount of free allocation shall be reduced by 25 %. the amount of free allocation shall not be reduced if an operator demonstrates that it has implemented other measures which lead to greenhouse gas emission reductions equivalent to those recommended by the audit report. the measures referred to in the first subparagraph shall be adjusted accordingly. ### by january 2025 , economic operators in sectors or sub-sectors eligible for free allocation of emissions allowances pursuant to article 10a and 10b shall establish industrial decarbonisation plans. these plans shall be carried out at company level and cover measures and related investments for each installation owned by the company. the decarbonisation plans shall be consistent with the objective to achieve carbon neutrality by 2050 at the latest as laid down in regulation (eu) 2021/1119. the plan shall be consistent with any sectoral roadmaps prepared in accordance with article 10 of regulation (eu) 2021/1119.


### no free allocation shall be given to installations in sectors or subsectors to the extent they are covered by other measures to address the risk of carbon leakage as established by regulation (eu) …./.. [reference to cbam](**). the measures referred to in the first subparagraph shall be adjusted accordingly ### deleted


### no free allocation shall be given in relation to the production of products listed in annex i of regulation [cbam] as from the date of application of the carbon border adjustment mechanism. ### free allocation at benchmark level shall be given in relation to the production of products listed in annex i of regulation [cbam] until the effectiveness of the cabm in tackling carbon leakage both on eu and global markets has been demonstrated after a test period between 2026-2028.


### no free allocation shall be given in relation to the production of products listed in annex i of regulation [cbam] as from the date of application of the carbon border adjustment mechanism. ### no free allocation shall be given in relation to the production of products listed in annex i of regulation [cbam] once the carbon border adjustment mechanism has proved its effectiveness as to be reported by the commission before the end of the transitional period for the introduction of this new carbon leakage prevention tool under [cbam regulation].


### no free allocation shall be given in relation to the production of products listed in annex i of regulation [cbam] as from the date of application of the carbon border adjustment mechanism. ### free allocation at benchmark level shall be given in relation to the production of products listed in annex i of regulation [cbam] until the full effectiveness of the cbam in tackling the carbon leakage risk both on the eu market and on export markets is assessed and positively verified.


### by way of derogation from the previous subparagraph , for the first years of operation of regulation [cbam] , the production of these products shall benefit from free allocation in reduced amounts. a factor reducing the free allocation for the production of these products shall be applied (cbam factor). the cbam factor shall be equal to 100 % for the period during the entry into force of [cbam regulation] and the end of 2025 , 90 % in 2026 and shall be reduced by 10 percentage points each year to reach 0 % by the tenth year. ### deleted


### by way of derogation from the previous subparagraph , for the first years of operation of regulation [cbam] , the production of these products shall benefit from free allocation in reduced amounts. a factor reducing the free allocation for the production of these products shall be applied (cbam factor). the cbam factor shall be equal to 100 % for the period during the entry into force of [cbam regulation] and the end of 2025 , 90 % in 2026 and shall be reduced by 10 percentage points each year to reach 0 % by the tenth year. ### for this purpose , in 2029 the commission shall present to the european parliament and the council a report pursuant to regulation (cbam) regarding the effectiveness of the cbam. the report shall also include the selected option to address the carbon leakage risk on export markets.


### by way of derogation from the previous subparagraph , for the first years of operation of regulation [cbam] , the production of these products shall benefit from free allocation in reduced amounts. a factor reducing the free allocation for the production of these products shall be applied (cbam factor). the cbam factor shall be equal to 100 % for the period during the entry into force of [cbam regulation] and the end of 2025 , 90 % in 2026 and shall be reduced by 10 percentage points each year to reach 0 % by the tenth year. ### by way of derogation from the previous subparagraph , for the first years of operation of regulation [cbam] , the production of these products shall benefit from free allocation in reduced amounts. this phase out should be gradual , starting from a low level and accelerating thereafter once the cbam has proven its effectiveness.


### by way of derogation from the previous subparagraph , for the first years of operation of regulation [cbam] , the production of these products shall benefit from free allocation in reduced amounts. a factor reducing the free allocation for the production of these products shall be applied (cbam factor). the cbam factor shall be equal to 100 % for the period during the entry into force of [cbam regulation] and the end of 2025 , 90 % in 2026 and shall be reduced by 10 percentage points each year to reach 0 % by the tenth year. ### by way of derogation from the previous subparagraph , for the first years of operation of regulation [cbam] , the production of these products shall benefit from free allocation in reduced amounts. a factor reducing the free allocation for the production of these products shall be applied (cbam factor). the cbam factor shall be equal to 100 % for the period from the entry into force of [cbam regulation] until 31 december 2024 , 90 % in 2025 , 80 % in 2026 , 70 % in 2027 , 50 % in 2028 , 25 % in 2029 and reach 0 % in 2030.


### the reduction of free allocation shall be calculated annually as the average share of the demand for free allocation for the production of products listed in annex i of regulation [cbam] compared to the calculated total free allocation demand for all installations , for the relevant period referred to in article 11 , paragraph 1. the cbam factor shall be applied. ### deleted


### the reduction of free allocation shall be calculated annually as the average share of the demand for free allocation for the production of products listed in annex i of regulation [cbam] compared to the calculated total free allocation demand for all installations , for the relevant period referred to in article 11 , paragraph 1. the cbam factor shall be applied. ### the report by the commission shall be accompanied by a legislative proposal to amend this article in view of gradually phasing out free allocation after 2030 proportionally to the proven level of effectiveness of the cbam.


### allowances resulting from the reduction of free allocation shall be made available to support innovation in accordance with article 10a(8).; ### deleted


### allowances resulting from the reduction of free allocation shall be made available to support innovation in accordance with article 10a(8).; ### allowances resulting from the reduction of free allocation shall be made available to support innovation and to scale up zero- and low-carbon technologies contributing significantly to climate neutrality in the union in accordance with article 10a(8).;


### allowances resulting from the reduction of free allocation shall be made available to support innovation in accordance with article 10a(8).; ### allowances resulting from the reduction of free allocation shall be made available to support innovation in relation to the production of products listed in annex i of regulation (cbam) in accordance with article 10a(8).;


### 365 million allowances from the quantity which could otherwise be allocated for free pursuant to this article , and 85 million allowances from the quantity which could otherwise be auctioned pursuant to article 10 , as well as the allowances resulting from the reduction of free allocation referred to in article 10a(1a) , shall be made available to a fund with the objective of supporting innovation in low-carbon technologies and processes , and contribute to zero pollution objectives (the ‘innovation fund’). allowances that are not issued to aircraft operators due to the closure of aircraft operators and which are not necessary to cover any shortfall in surrenders by those operators , shall also be used for innovation support as referred to in the first subparagraph. ### 425 million allowances from the quantity which could otherwise be allocated for free pursuant to this article , and 75 million allowances from the quantity which could otherwise be auctioned pursuant to article 10 , as well the allowances referred to in article 10(1) , fourth subparagraph , and all the allowances resulting from the reduction of free allocation referred to in article 10a(1a) shall be made available to a fund with the objective of supporting innovation and the scaling up of technologies contributing significantly to the decarbonisation of the sectors covered by this regulation (the ‘net-zero fund’). allowances that are not issued to aircraft operators due to the closure of aircraft operators and which are not necessary to cover any shortfall in surrenders by those operators , shall also be used for innovation support as referred to in the first subparagraph. the ocean fund established under article 3gdb shall operate as part of the innovation fund.


### in addition , 50 million unallocated allowances from the market stability reserve shall supplement any remaining revenues from the 300 million allowances available in the period from 2013 to 2020 under commission decision 2010/670/eu(*) , and shall be used in a timely manner for innovation support as referred to in the first subparagraph. furthermore , the external assigned revenues referred to in article 21(2) of regulation (eu) [fueleu maritime] shall be allocated to the innovation fund and implemented in line with this paragraph. ### in addition , 50 million unallocated allowances from the market stability reserve shall supplement any remaining revenues from the 300 million allowances available in the period from 2013 to 2020 under commission decision 2010/670/eu(*) , and shall be used in a timely manner for innovation and decarbonisation support as referred to in the first subparagraph. furthermore , the external assigned revenues referred to in article 21(2) of regulation (eu) [fueleu maritime] shall be allocated to the ocean fund as part of the net-zero fund and implemented in line with this paragraph.


### the innovation fund shall cover the sectors listed in annex i and annex iii , including environmentally safe carbon capture and utilisation (“ccu”) that contributes substantially to mitigating climate change , as well as products substituting carbon intensive ones produced in sectors listed in annex i , and to help stimulate the construction and operation of projects aimed at the environmentally safe capture and geological storage (“ccs”) of co2 , as well as of innovative renewable energy and energy storage technologies; in geographically balanced locations. the innovation fund may also support break-through innovative technologies and infrastructure to decarbonise the maritime sector and for the production of low- and zero-carbon fuels in aviation , rail and road transport. special attention shall be given to projects in sectors covered by the [cbam regulation] to support innovation in low carbon technologies , ccu , ccs , renewable energy and energy storage , in a way that contributes to mitigating climate change. ### the net-zero fund shall cover the sectors listed in annex i and annex iii , including environmentally safe carbon capture and utilisation (“ccu”) that contributes substantially to mitigating climate change , as well as products substituting carbon intensive ones produced in sectors listed in annex i , and to help stimulate the construction and operation of innovative renewable energy and energy storage technologies , and of projects aimed at the environmentally safe capture and geological storage (“ccs”) of co2 , including direct air capture ("dac"). the net-zero fund shall also support decarbonisation in the maritime sector , through the ocean fund , and provide support for the production of zero-carbon fuels in aviation , rail and road transport. support from the fund shall include projects in sectors covered by the [cbam regulation] to support innovation and implementation of low carbon technologies , renewable energy , energy storage , as well as ccu and ccs , in a way that contributes to mitigating climate change in accordance with the objectives set out in regulation (eu) 2021/1119 for 2030 and 2050.


### projects in the territory of all member states , including small-scale projects , shall be eligible. technologies receiving support shall be innovative and not yet commercially viable at a similar scale without support but shall represent breakthrough solutions or be sufficiently mature for application at pre-commercial scale. ### projects in the territory of all member states , including small-scale projects , shall be eligible. technologies receiving support shall be innovative and not yet commercially viable at a similar scale without support but shall represent breakthrough solutions or be sufficiently mature for application at pre-commercial scale , and/or contribute significantly to the objective of climate neutrality and could not be deployed at large scale without support.


### the commission shall ensure that the allowances destined for the innovation fund are auctioned in accordance with the principles and modalities laid down in article 10(4). proceeds from the auctioning shall constitute external assigned revenue in accordance with article 21(5) of the financial regulation. budgetary commitments for actions extending over more than one financial year may be broken down over several years into annual instalments. ### the commission shall ensure that the allowances destined for the net-zero fund are auctioned in accordance with the principles and modalities laid down in article 10(4). proceeds from the auctioning shall constitute external assigned revenue in accordance with article 21(5) of the financial regulation. budgetary commitments for actions extending over more than one financial year may be broken down over several years into annual instalments.


### projects shall be selected on the basis of objective and transparent criteria , taking into account , where relevant , the extent to which projects contribute to achieving emission reductions well below the benchmarks referred to in paragraph 2. projects shall have the potential for widespread application or to significantly lower the costs of transitioning towards a low-carbon economy in the sectors concerned. projects involving ccu shall deliver a net reduction in emissions and ensure avoidance or permanent storage of co2. in the case of grants provided through calls for proposals , up to 60 % of the relevant costs of projects may be supported , out of which up to 40 % need not be dependent on verified avoidance of greenhouse gas emissions , provided that pre-determined milestones , taking into account the technology deployed , are attained. in the case of support provided through competitive bidding and in the case of technical assistance support , up to 100 % of the relevant costs of projects may be supported. ### projects shall be selected on the basis of objective and transparent criteria , taking into account the extent to which projects provide a significant contribution to the union´s climate targets , and , where relevant , the extent to which projects contribute to achieving emission reductions well below the benchmarks referred to in paragraph 2. projects shall have the potential for widespread application or to significantly lower the costs of transitioning towards a climate neutral economy in the sectors concerned. projects involving ccu shall deliver a net reduction in emissions and ensure avoidance or permanent storage of co2. in the case of grants provided through calls for proposals , up to 60 % of the relevant costs of projects may be supported , out of which up to 40 % need not be dependent on verified avoidance of greenhouse gas emissions , provided that pre-determined milestones , taking into account the technology deployed , are attained. in the case of support provided through competitive bidding and in the case of technical assistance support , up to 100 % of the relevant costs of projects may be supported. projects whose reduction in emissions benefit the decarbonisation of other actors in nearby geographical areas , such as the construction of relevant energy infrastructures , shall have a preferential treatment in the criteria used for the selection of projects.


### the commission is empowered to adopt delegated acts in accordance with article 23 to supplement this directive concerning rules on the operation of the innovation fund , including the selection procedure and criteria , and the eligible sectors and technological requirements for the different types of support. ### the commission is empowered to adopt delegated acts in accordance with article 23 to supplement this directive concerning rules on the operation of the net-zero fund , including the selection procedure and criteria , and the eligible sectors and technological requirements for the different types of support. the commission shall aim for a timetable that frontloads the support from the fund to the beginning of the period.


### the investments supported shall be consistent with the aims of this directive , as well as the objectives of the communication from the commission of 11 december 2019 on the european green deal (*) and regulation (eu) 2021/1119 of the european parliament and of the council (**) and the long-term objectives as expressed in the paris agreement. no support from the modernisation fund shall be provided to energy generation facilities that use fossil fuels.”; ### the investments supported shall be consistent with the aims of this directive , as well as the objectives of the communication from the commission of 11 december 2019 on the european green deal (*) and regulation (eu) 2021/1119 of the european parliament and of the council (**) and the long-term objectives as expressed in the paris agreement. no support from the modernisation fund shall be provided to energy generation facilities that use solid fossil fuels.”;


### 2. at least 80 % of the financial resources from the modernisation fund shall be used to support investments in the following: ### 2. 100 % of the financial resources from the modernisation fund shall be used to support investments in the following:


### in order to provide further incentives for reducing greenhouse gas emissions and improving energy efficiency , the determined union-wide ex-ante benchmarks shall be reviewed before the period from 2026 to 2030 in view of potentially modifying the definitions and system boundaries of existing product benchmarks.; ### in order to provide further incentives for reducing greenhouse gas emissions , improving energy efficiency and promote innovative decarbonised products , the determined union-wide ex-ante benchmarks shall be reviewed by ... [6 months of the entry into force of this directive] in view of modifying and broadening the scope of the definitions and system boundaries of existing product benchmarks ensuring that , depending on the benchmark , free allocation for the production of a product is independent of the feedstock or the type of production process , accounts for the circular use potential of materials , and avoids that installations with partially or fully decarbonised processes producing products with similar or equal characteristics as conventional installations in the benchmark are excluded from or cannot participate in the benchmarks.


### where the annual reduction rate exceeds 2 ,5 % or is below 0 ,2 % , the benchmark values for the period from 2026 to 2030 shall be the benchmark values applicable in the period from 2013 to 2020 reduced by whichever of those two percentage rates is relevant , in respect of each year between 2008 and 2028.; ### where the annual reduction rate exceeds 1 ,6 % or is below 0 ,2 % , the benchmark values for the period from 2026 to 2030 shall be the benchmark values applicable in the period from 2013 to 2020 reduced by whichever of those two percentage rates is relevant , in respect of each year between 2008 and 2028.;


### in paragraph 6 , the first subparagraph is replaced by the following: ### paragraph 6 is deleted;


### (13) in article 10c , paragraph 7 is replaced by the following: ### (13) article 10c is deleted;


### measures intended to improve energy efficiency , district heating systems and insulation , or to provide financial support in order to address social aspects in lower- and middle-income households , including by reducing distortive taxes;; ### measures intended to improve energy efficiency , district heating systems , including introduction of renewable heating and cooling and renewable cogeneration , insulation , or to provide financial support in order to address social aspects in lower- and middle-income households , including by reducing distortive taxes;;


### 2. notes that the agency’s final annual budget for 2021 was eur 32.83 million (eur 27.06 million from eu subsidy , eur 4.38 million from fees and charges) and that the implementation rate for current year appropriations was 99.81% in commitments; ### 2. notes that the agency’s final annual budget for 2021 was eur 32.83 million (eur 27.06 million from eu subsidy , eur 4.38 million from fees and charges) and that the implementation rate for current year appropriations was 99.81% in commitments; strongly welcomes the increase of the hourly rate for authorities task activities from eur 130 to eur 239 pursuant to the adoption of implementing regulation (eu) 2021/1903;


### 8. recalls that the agency has the smallest budget among the transport agencies despite the outstanding environmental performance and other benefits of rail transport which the commission established as one of its priorities with the action plan to boost long distance and cross-border passenger rail; calls for an increase of the budget of the agency in order to provide it with the necessary means to enable it to act as an efficient authority and to fulfil its tasks , particularly those with regard to increasing competitiveness , improving safety and cross-border interoperability; ### 8. recalls that the agency has the smallest budget among the transport agencies despite the outstanding environmental performance and other benefits of rail transport which the commission established as one of its priorities with the action plan to boost long distance and cross-border passenger rail; calls for an increase of the budget of the agency in order to provide it with the necessary means to enable it to act as an efficient authority and to fulfil its tasks , particularly those with regard to increasing competitiveness , improving safety and cross-border interoperability; notes that the european year of rail 2021 has allowed to identify a number of areas where more resources are required for the agency to effectively deliver on its policy objectives;


### 5. commends the strong sme involvement in terms of participation (29% of the total number of participations in funded projects - 555 out of 1887) and the high level of success of sme applicants (43%); ### 5. commends the strong sme involvement in terms of participation (29% of the total number of participations in funded projects - 555 out of 1887) and the high level of success of sme applicants (43%); recalls that the undertaking creates new opportunities for smes;


### 8. salutes the progress of the undertaking in r&d related to technologies for engine manufacturing and saf and calls to further intensify the research in order to contribute to the greening of aviation by technological advancements; calls on the commission to provide sufficient funding to implement those new technologies via retrofitting and renewal schemes. ### 8. salutes the progress of the undertaking in r&d related to technologies for engine manufacturing and saf and calls to further intensify the research on the electrification of aviation but also on the use of hydrogen in order to contribute to the greening of aviation by technological advancements; calls on the commission to provide sufficient funding to implement those new technologies via retrofitting and renewal schemes.


### (6) the porto declaration of 8 may 2021 reaffirmed the european council’s pledge to work towards a social europe , and its determination to continue deepening the implementation of the european pillar of social rights at eu and national level , with due regard for respective competences and the principles of subsidiarity and proportionality. ### (6) the porto declaration of 8 may 2021 reaffirmed the european council’s pledge to work towards a social europe ensuring a fair transition , and its determination to continue deepening the implementation of the european pillar of social rights at eu and national level , with due regard for respective competences and the principles of subsidiarity and proportionality.


### (8) those amendments have differing economic and social impacts on the different sectors of the economy , on the citizens , and the member states. in particular , the inclusion of greenhouse gas emissions from buildings and road transport into the scope of directive 2003/87/ec of the european parliament and the council31 should provide an additional economic incentive to invest into the reduction of fossil fuel consumption and thereby accelerate the reduction of greenhouse gas emissions. combined with other measures , this should , in the medium to long term , reduce the costs for buildings and road transport , and provide new opportunities for job creation and investment. ### (8) those amendments have differing economic and social impacts on the different sectors of the economy , on the citizens , and the member states. in particular , the inclusion of greenhouse gas emissions from buildings and road transport into the scope of directive 2003/87/ec of the european parliament and the council31 should provide an additional economic incentive to invest into the reduction of fossil fuel consumption and thereby accelerate the reduction of greenhouse gas emissions. combined with other measures , this should , in the medium to long term , reduce the costs for buildings and road transport , and provide new opportunities for job creation and investment , fully aligned with the european green deal goals.


### (10) the increase in the price for fossil fuels may disproportionally affect vulnerable households , vulnerable micro-enterprises and vulnerable transport users who spend a larger part of their incomes on energy and transport , who , in certain regions , do not have access to alternative , affordable mobility and transport solutions and who may lack the financial capacity to invest into the reduction of fossil fuel consumption. ### (10) the increase in the price for fossil fuels may disproportionally affect vulnerable households , vulnerable micro-enterprises and vulnerable transport users who spend a larger part of their incomes on energy and transport , who , in certain regions , including in rural , insular , mountainous , remote and less accessible areas or for less developed regions or territories , including the outermost regions and less developed peri-urban areas do not have access to alternative , affordable mobility and transport solutions and who may lack the financial capacity to invest into the reduction of fossil fuel consumption.


### (13) a social climate (‘the fund’) should therefore be established to provide funds to the member states to support their policies to address the social impacts of the emissions trading for buildings and road transport on vulnerable households , vulnerable micro-enterprises and vulnerable transport users. this should be achieved notably through temporary income support and measures and investments intended to reduce reliance on fossil fuels through increased energy efficiency of buildings , decarbonisation of heating and cooling of buildings , including the integration of energy from renewable sources , and granting improved access to zero- and low-emission mobility and transport to the benefit of vulnerable households , vulnerable micro-enterprises and vulnerable transport users. ### (13) a social climate fund (‘the fund’) should therefore be established to provide funds to the member states to support their policies to address the social impacts of the emissions trading for buildings and road transport on vulnerable households , vulnerable micro-enterprises and vulnerable transport users. this should be achieved notably through temporary income support and measures and investments intended to reduce reliance on fossil fuels through increased energy efficiency of buildings , decarbonisation of heating and cooling of buildings , including the integration of energy from renewable sources , and granting improved access to zero- and low-emission mobility and transport to the benefit of vulnerable households , vulnerable micro-enterprises and vulnerable transport users.


### (13) a social climate (‘the fund’) should therefore be established to provide funds to the member states to support their policies to address the social impacts of the emissions trading for buildings and road transport on vulnerable households , vulnerable micro-enterprises and vulnerable transport users. this should be achieved notably through temporary income support and measures and investments intended to reduce reliance on fossil fuels through increased energy efficiency of buildings , decarbonisation of heating and cooling of buildings , including the integration of energy from renewable sources , and granting improved access to zero- and low-emission mobility and transport to the benefit of vulnerable households , vulnerable micro-enterprises and vulnerable transport users. ### (13) a social climate (‘the fund’) should therefore be established to provide funds to the member states to support their policies to address the social impacts of the emissions trading for buildings and road transport on vulnerable households , vulnerable micro-enterprises and vulnerable transport users. this should be achieved notably through income support and measures and investments intended to reduce reliance on fossil fuels through increased energy efficiency of buildings , decarbonisation of heating and cooling of buildings , including the integration of energy from renewable sources , and granting improved access to zero- and low-emission mobility and transport to the benefit of vulnerable households , vulnerable micro-enterprises and vulnerable transport users.