# IMMC.EESC-2018-03271-AC.ENG.xhtml.EESC-2018-03271-00-00-AC-TRA-EN.docx

EN

European Economic and Social Committee

European Economic and Social Committee

TEN/672

TEN/672

Connecting Europe Facility (2018)

Connecting Europe Facility (2018)

OPINION


  European Economic and Social Committee


  Proposal for a Regulation of the European Parliament and of the Council establishing the Connecting Europe Facility and repealing Regulations (EU) No 1316/2013 and (EU) No 283/2014
  [COM(2018) 438 final – 2018/0228 (COD)]

OPINION

European Economic and Social Committee

Proposal for a Regulation of the European Parliament and of the Council establishing the Connecting Europe Facility and repealing Regulations (EU) No 1316/2013 and (EU) No 283/2014
  [

COM(2018) 438 final – 2018/0228 (COD)]

Rapporteur: Aurel Laurenţiu PLOSCEANU

Rapporteur: Aurel Laurenţiu PLOSCEANU

Co-rapporteur: Graham WATSON

Co-rapporteur: Graham WATSON

Referrals

| Referrals | European Parliament, 14/06/2018


  Council of the European Union 03/07/2018 |
| --- | --- |
| | |
| Legal basis | Articles 172, 194 and 304 of the TFEU |
| | |
| Section responsible | Transport, Energy, Infrastructure and the Information Society |
| Adopted in section | 06/09/2018 |
| Adopted at plenary | 19/09/2018 |
| Plenary session No | 537 |
| Outcome of vote (for/against/abstentions) | 144/0/1 |

Referrals

European Parliament, 14/06/2018

European Parliament, 14/06/2018

Council of the European Union 03/07/2018

Council of the European Union 03/07/2018

Legal basis

Legal basis

Articles 172, 194 and 304 of the TFEU

Articles 172, 194 and 304 of the TFEU

Section responsible

Section responsible

Transport, Energy, Infrastructure and the Information Society

Transport, Energy, Infrastructure and the Information Society

Adopted in section

Adopted in section

06/09/2018

06/09/2018

Adopted at plenary

Adopted at plenary

19/09/2018

19/09/2018

Plenary session No

Plenary session No

537

537

Outcome of vote (for/against/abstentions)

Outcome of vote (for/against/abstentions)

144/0/1

144/0/1

1.Conclusions and recommendations

1.

Conclusions and recommendations

1.1The European Economic and Social Committee (EESC) advocates for a stronger budget for the Connecting Europe Facility (CEF) for after 2020, with grants remaining the major component. There are a number of transport, energy and digital infrastructure projects which are vital for the EU's competitiveness but do not generate the necessary return on investment in order to attract private investors. A strong commitment from the EU and national public authorities in this regard is needed.

1.1

The European Economic and Social Committee (EESC) advocates for a stronger budget for the Connecting Europe Facility (CEF) for after 2020, with grants remaining the major component. There are a number of transport, energy and digital infrastructure projects which are vital for the EU's competitiveness but do not generate the necessary return on investment in order to attract private investors. A strong commitment from the EU and national public authorities in this regard is needed.

1.2The EESC recommends that the European Commission and the Member States further encourage synergies at project level between the three sectors, which are currently limited because of the rigidity of the budgetary framework as regards the eligibility of projects and of costs.

1.3The EESC recommends that the Commission continue providing the technical support (CEF Programme Support Action) to promote the eligibility of mature and high-quality projects and support continuity in providing this type of assistance, together with an update of the evaluation criteria to make it easier to identify projects' added value. Further steps should be taken to simplify administrative requirements, not only for small grants.

1.4The EESC urges the co-legislators to maintain the commitment in the previous CEF regulation to spend "the major part" of the energy budget on electricity projects. This is essential to ensure that the CEF is in line with the EU's climate and energy policy and to avoid the CEF becoming a major source of funding for fossil energy projects within the Multiannual Financial Framework (MFF). It is important that this commitment is strengthened rather than weakened in the CEF 2021-2027.

1.5The EESC considers that the award criteria for projects listed in Article 13 should be expanded to include the security of supply of all energy types (electricity, gas, heat, etc.) and the specific carbon emission reductions delivered by each project.

1.6The EESC emphasises that CEF has to target energy projects able to ensure greater energy independence and security for the EU. New electricity storage facilities also have to be generated with CEF support.

1.7The EESC recommends that the financial capacity of the CEF programme under the next MFF should be increased. Concerning the distribution of grants among the three sectors, the EESC recommends to consider the financial requirements of each sector, such as capital intensity and return on investment, giving preference to investments that cannot be funded by the market, in order to maintain high credibility and attractiveness for investors.

1.8The EESC recommends, therefore, that the total CEF budget allocation should be increased, given the critical nature of these sectors for the internal market.

1.9The EESC emphasises that both the Commission and the Member States must remain committed to the CEF’s main transport policy objectives: completion of the Trans-European Transport Network (TEN-T) core network by 2030 and the transition towards clean, competitive, innovative and connected mobility, including an EU backbone of alternative fuels charging infrastructure by 2025. Multimodal and cross-border connections are extremely important in this regard.

1.10The EESC urges that the co-legislators ensure broad and fair competition for projects benefitting from CEF funds by respecting reciprocity in practice and by using contract conditions which combine efficiency and a fair allocation of risks.

1.11The EESC recommends that the co-legislators ensure that participation in the corresponding tender procedures is open only to companies from countries in which the corresponding markets are open, respecting real reciprocity, and that the standard form of contract used is appropriate to the project’s objectives and circumstances. Contract conditions should be drafted so as to fairly allocate the risks associated with the contract, with the primary aim of achieving the most economic price and efficient performance of the contract. This principle should apply irrespective of whether national or international standard forms of contract are used (based on Article 3.21 of EBRD Procurement Policies and Rules dated 1 November 2017).

1.12The EESC strongly supports the proposal to include in the CEF 2021-2027 cross-border cooperation on renewable energy generation. The EESC suggests that the overall vision of the actions on renewables in the CEF should be to create a Europe-wide renewable electricity network allowing for a more effective integration of renewable energy technologies and to better reflect the available potential of technologies across the continent.

1.13The EESC welcomes the inclusion of renewable installations amongst the eligible projects in the energy portion of the CEF and recommends that this should be amended to include both large-scale projects and portfolios of small-scale projects in order to allow all technologies to compete fairly for funds.

1.14The EESC recommends that the objectives of the CEF listed in Article 3 should be expanded to include not just the facilitation of cross-border cooperation in the fields of renewables, but also explicitly mention the deployment of renewables.

1.15The EESC notes that land purchase is excluded from eligible costs in Article 15(c) and urges the co-legislators to consider whether this could advantage or disadvantage certain projects and technologies. For sectors such as transport and renewable energy, land purchase is a not negligible part of the investment.

1.16The EESC reminds the Commission that cross border energy inter-connectors are key factors in the integration of renewables, not just because they permit the long distance transmission of renewable electricity, fostering the use of cleaner and cheaper sources of electricity across Europe, but also because they act as a source of essential system flexibility.

1.17The EESC recommends that the opportunities that arise from the digitalisation of energy grids and networks and the creation of smart grids to integrate renewables be fully seized and recommend that the Commission looks into how synergies between the Digital and Energy sectors of the CEF can be exploited on this point. The EESC notes the lack of smart-grid projects in the 2014-2020 CEF, due in part to barriers to funding lower distribution grid level projects, as opposed to high-voltage transmission grid projects.

1.18The EESC recommends that CEF should also ensure that mechanisms are in place to certify where renewable electricity is used in transport applications, for example with the use of renewable Guarantees of Origin certificates.

1.19The EESC highlights the need to give priority to large-scale EU-wide projects to digitise transport such as ERTMS (European Railway Traffic Management System), SESAR (Single European Sky ATM Research) and autonomous driving. In order to equip with ERTMS the Core Network by 2030 EUR 15 billion need to be invested. An EU-wide large scale project shall be financed with grants from the different CEF clusters, private funds and blending components from InvestEU.

1.20The EESC calls for 5G coverage of the TEN-T network which is fundamental.

1.21The EESC calls for measures such as effective controls, modern overnight accommodation, and sufficient parking spaces with adequate equipment.

1.22The EESC also believes that consideration should be given to better communication methods regarding the achievements of the CEF. A Communication Budget can be a useful tool in this regard. An enhanced predictability is also to be taken into consideration.

1.23The EESC recommends additional actions to be considered to release full potential of the programme taking into account that CEF intervention was decisive in launching most of the projects and has proven to be a major catalyst for both public and private investment. An improved complementary link between the CEF and other programmes (such as Horizon Europe, InvestEU and the Cohesion Fund) is to be reinforced in order to avoid overlaps and optimise budgetary resources.

1.24The EESC believes that the cohesion envelope is key to the completion of the parts of the core networks in the cohesion Member States and recommends the EC and Member States to maintain the share of the Cohesion Fund under the direct management of the CEF in the next MFF. CEF Transport priorities need to be supported by the European Regional Development Fund. In any case, funds shall remain within the eligible Member State.

1.25The EESC suggests that the evaluation methodology is to be adjusted, because the success of the CEF is not guaranteed solely by the amount of money allocated and the number of projects supported.

The EESC proposes improvements to the CEF evaluation methodology. A real quantitative / qualitative assessment should be performed at the end of the 2014-2020 period for the completed projects and those at an advanced level of construction. The EESC calls for a review, inter alia, of the progress of TEN-T development, as well the changes in passenger and freight traffic flows. The EESC also calls for a socio-economic cost-benefit analysis of TEN-T projects that takes into account the relevant social, economic, climate-related and environmental benefits and costs.

1.26The EESC calls for the conclusion of specific measures on general climate protection objectives.

1.27The EESC calls for metropolises to be taken into account in the main infrastructure projects, whether or not they can receive funding from the Cohesion Fund.

1.28The EESC recommends concrete measures to ensure the attractiveness of the retrofitting, repowering or upgrading of the existing infrastructure which remains the backbone of the existing network and installed capacity.

1.29The EESC supports the development of dual-use civilian-defence infrastructure both on physical and technological infrastructures (such as ERTMS and SESAR) under the CEF framework and recommends an open and pro-active approach in the new geopolitical international context (Three seas Initiative etc.).

1.30The EESC recommends that CEF prioritise investments on TEN-T cross-border infrastructures to achieve coherent capacity and avoid bottlenecks in all modes of transport in order to obtain a fully integrated transport network.

2.Presentation of the Commission proposal

2.1The proposal aims at establishing the legal basis for the CEF for the period beyond 2020 and is presented for a Union of 27 Member States.

2.2The Commission proposal
  1
   of 2 May 2018 for the MFF beyond 2020 includes an amount of EUR 42,265 million for the CEF, listed below:

CEF 2021-2027

| CEF 2021-2027 | Figures in current prices - EUR |
| --- | --- |
| Transport,


  Including:


  -General envelope


  -Contribution from the Cohesion Fund


  -Support for military mobility | 30,615,493,000



  12,830,000,000


  11,285,493,000


  6,500,000,000 |
| Energy | 8,650,000,000 |
| Digital | 3,000,000,000 |
| TOTAL | 42,265,493,000 |

Figures in current prices - EUR

Transport,

Including:

-General envelope

-Contribution from the Cohesion Fund

-Support for military mobility

30,615,493,000

12,830,000,000

11,285,493,000

6,500,000,000

Energy

8,650,000,000

Digital

3,000,000,000

TOTAL

42,265,493,000

2.3The vision for Europe is to move towards zero-fatalities, zero-emissions and zero-paper mobility, to become a world leader in renewable energy and to be a front runner in the digital economy.

2.4CEF supports investment in transport, energy and digital infrastructure through the development of the Trans-European networks (TEN) and also promotes cross-border cooperation on renewable energy generation. Those networks and cross-border cooperation are crucial for the functioning of the Single Market and also strategic to implement the Energy Union, the Digital Single Market and the development of sustainable transport modes.

2.5The 2021-2027 MFF sets a more ambitious goal for climate mainstreaming across all EU programmes with a target of 25% of EU expenditure contributing to climate objectives. A major contribution is expected to be provided by CEF, with a target of 60% of its envelope contributing to climate objectives.

2.6The future needs for decarbonisation and digitalisation will imply a growing convergence of the transport, energy and digital sectors. Synergies between all three sectors should thus be harnessed to the full extent, maximising the effectiveness and efficiency of EU support. In order to incentivise and prioritise cross-sectoral proposals, the synergy dimension of a proposed action will be assessed under the award criteria.

2.7CEF aims for transport to contribute to the completion of both layers of TEN-T (the core network by 2030 and the more extensive layer by 2050). It is estimated that the completion of TEN-T core network will generate 7.5 million job-years between 2017 and 2030 with an additional GDP increase of 1.6% in 2030.

2.8For the first time ever the Union funding for the implementation of the civilian-military dual-use transport projects should be implemented by CEF.

2.9For energy, the focus is on completing the trans-European energy networks through of the development of projects of common interest relating to further integration of the internal energy market and interoperability of networks across borders and sectors; sustainable development by enabling decarbonisation in particular through integrating renewable energy sources and security of supply inter alia through the smartening and digitalisation of the infrastructure.

2.10For digital, CEF maximises the benefits that all citizens, businesses and public administrations can get from the Digital Single Market.

2.11Transport, energy and digital infrastructure will be supported to various degrees by a number of EU financial programmes and instruments, including CEF, the European Regional Development Fund (ERDF) and Cohesion Fund, Horizon Europe, InvestEU and LIFE.

2.12The Programme's actions should be used to address market failures or sub-optimal investment situations, in a proportionate manner, without duplicating or crowding out private financing and have a clear European added value.

2.13The results of ex-post evaluations were adopted by the EC on 13 February 2018
  2
  according to five criteria: effectiveness, efficiency, relevance, coherence and EU added value. Some extracts follow:

-CEF is an effective and targeted instrument for investment in TEN, transport, energy and digital sectors. Since 2014 it has invested EUR 25 billion which has resulted in approximately EUR 50 billion of infrastructure investment in the EU;

-CEF brings high European added value for all MS by supporting connectivity projects with a cross-border dimension;

-For the first time, a share of the cohesion budget (EUR 11.3 billion for transport) was executed under direct management within the CEF framework;

-CEF has continued to use and develop innovative financial instruments. However, their deployment has been limited due to the new possibilities offered by EFSI;

-CEF has also tested cross-sector synergies, but has been limited by constraints in the current legal/budgetary framework. The sector policy guide lines and the CEF instrument would need to be made more flexible to facilitate synergies and be more responsive to new technological developments and priorities such as digitalisation, while accelerating decarbonisation and addressing common societal challenges such as cybersecurity.

2.14The Commission proposes to continue the implementation of the new programme, for the three CEF sectors, with direct management by the EC and its Innovation and Networks Executive Agency (INEA).

2.15The proposed budget will cover all the necessary operational expenditure for the implementation of the Programme as well as the cost of human resources and other administrative expenditure in connection with the management of the Programme.

2.16Compared to the CEF 2014-2020, a simpler but more robust performance framework will be put in place to monitor the achievement of the objectives and its contribution to EU policy objectives. Indicators to monitor implementation and progress will relate in particular to:

-Efficient and interconnected networks and infrastructure for smart, sustainable, inclusive, safe and secure mobility as well as adaptation to military mobility requirements;

-Contribution to interconnectivity and integration of markets, security of energy supply and sustainable development through enabling decarbonisation; contribution to cross-border cooperation in the field of renewable energy;

-Contribution to the deployment of digital connectivity infrastructure throughout the EU.

3.General and specific comments

3.1The EESC underlines the strategic importance of the CEF programme from the perspectives of integration of the internal market, smart mobility and the opportunity to deliver tangible added value for citizens, social cohesion and business through this programme, prosperity and added value for EU as a whole.

By the end of 2017 CEF Transport had already allocated EUR 21.3 billion in grants for TEN-T projects triggering EUR 41.6 billion of total investments.

3.2During 2018 additional grant agreements will be signed for a blending call combining CEF grants with private finance, including from the EFSI (European Fund for Strategic Investment). It is estimated that every EUR 1 billion invested in the TEN-T core network will create up to 20 000 jobs.

3.3The EESC broadly welcomes the European Commission Proposal for a Regulation of the European Parliament and of the Council establishing the Connecting Europe Facility and repealing Regulations (EU) No 1316/2013 and (EU) No 283/2014 for the period 2021-2027.

3.4The EESC recognises that CEF is one of the most successful EU programmes and underlines the strategic importance of CEF as regards the integration of the internal market, the completion of the Energy Union, smart mobility and the opportunity for the EU to deliver tangible added value for citizens, social cohesion and businesses.

3.5The EESC believes that the financial capacity of the CEF programme under the next MFF should be increased and better balanced in order to maintain its high credibility and attractiveness for investors. An insufficient budget would put the completion of the TEN-T and TEN-E networks at risk and this would in fact depreciate investments from public funds already made.

3.6The EESC emphasises that investment in digital, innovative and sustainable transport projects must be accelerated in order to move towards a greener, truly integrated, modern, accessible-to-all, safer and efficient transport system. Social cohesion at EU level is to be enhanced by increasing the public investments in EU and regional added-value projects.

3.7The EESC considers that synergies at project level between the three sectors are currently limited because of the rigidity of the budgetary framework as regards the eligibility of projects and of costs.

3.8The EESC welcomes the technical support provided to promote the eligibility of mature and high-quality projects and supports the continuity in providing this type of assistance together with an update of the evaluation criteria to more easily identify the added value of the projects. Further steps to simplify administrative requirements are to be generated, not only for small grants.

3.9The EESC emphasises that both the Commission and the Member States have to remain committed to the CEF’s main policy objectives: completion of TEN-T core network by 2030 and the transition towards clean, competitive, innovative and connected mobility, including an EU backbone of alternative fuels charging infrastructure by 2025. Multimodal and cross-border connections are of great importance in this regard.

3.10The CEF has to target energy projects able to ensure greater energy independence and security for the EU. Electricity storage facilities also have to be generated with CEF support.

3.11The EESC considers that cross-border energy inter-connectors are key factors in the integration of renewables, not just because they permit the long-distance transmission of renewable electricity, but also because they act as a source of essential system flexibility.

3.12The role of the European coordinators is to be enhanced in order to generate a thorough assessment of the projects completed or at an advanced level of construction, the real achievements and the remaining bottlenecks. The Commission has to ensure that the priority of the calls reflects their assessment.

3.13The EESC believes that the transport sector should take full advantage offered by digital and innovative technologies and acknowledges that new innovative transport infrastructure is more attractive for investment, especially from the private sector.

3.14EESC believes that investing in transport, and in particular in the Trans-European Transport Network (TEN-T), is crucial for Europe's growth and jobs. This is why it advocates for a stronger budget for the Connecting Europe Facility for after 2020, with grants remaining the major component. Indeed, there are a number of transport infrastructure projects which are vital for the EU's competitiveness but do not generate the necessary return on investment in order to attract private investors. They therefore require a strong commitment from the EU and national public on this regard.

3.15EC should preserve the integrity on the CEF financial capacity and not cut anymore in favour of other programmes (EFSI, EDIDP - European Defence Industrial Development Programme).

3.16The EESC highlights the need to give priority to large-scale EU-wide projects to digitise transport such as ERTMS, SESAR and autonomous driving. To realise these projects, a blending of resources is needed: public funds from the CEF and private funds guaranteed by InvestEU. The 5G coverage of the TEN-T would be equally fundamental. Only 8% of 51.000 km of core network corridors have been equipped with ERTMS between 1995 and 2016; at the current pace more than 200 years will be needed to equip the whole Core Network. The completion by 2030 would require EUR 15 billion investment and a huge acceleration of the program and would then provide seamless rail traffic in Europe with an increase of capacity, safety and punctuality.

3.17Electric mobility is a core part of the transition towards sustainable transport and also provides the potential for vehicle-to-grid exchanges where the battery storage capacity of electric vehicles is used as a source of flexibility for the grid. Interoperability in vehicle-to-grid interfaces should be a key priority across the EU. The CEF should also ensure that mechanisms are in place to certify where renewable electricity is used in transport applications, for example with the use of renewable Guarantees of Origin certificates.

3.18Synergies are key to the successful implementation of the CEF. Examples of such synergies include electric vehicle charging points powered by renewable electricity, solar PV “car ports” and the development of vehicle-to-grid interface technology.

3.19The electrification of road transport should also be considered. For trucks and buses, EUR 10 billion would be required to electrify around 7 000 km of highways in the reference period.

3.20The development and rehabilitation of transport infrastructures in the EU is still rather fragmented and represents a major challenge in terms of capacity and financing. It is of strategic importance to ensuring both sustainable growth, jobs and competitiveness and social / territorial cohesion in the EU.

3.21In Transport infrastructure, there are 11.2 million employees. In general, the needs and working conditions must also be taken into account in the CEF framework. The EESC calls for measures such as effective controls, modern overnight accommodation and sufficient parking spaces with adequate equipment.

3.22The EESC observes that, as it stands, the Commission proposal represents a weakening of the previous commitment to spend the “major part” of the energy sector on electricity projects. The EESC welcomes the Commission’s expectation that this will be honoured in the current CEF by the end of the programming period. Fulfilling this commitment is essential to ensure that the CEF is in line with the EU’s climate and energy policy.

3.23Regarding the inclusion of renewable installations amongst the eligible projects in the energy portion of the CEF, this is to be amended to include both large-scale and portfolios of small-scale projects. This is a key part of making enhanced use of EU funds for renewables as described in the recast of the Renewables Directive.

3.24We acknowledge that in constant prices, the 2021-2027 allocation to CEF and the contribution from the Cohesion Fund represent cuts of 12-13%. A review of this aspect is needed. At the same time, it is important to fulfil the CEF Transport priorities. The share of European Regional Development Fund not committed by the beneficiary Member States in the first three years shall be allocated in the same country according to these priorities.

3.25The mid-term assessment of the CEF focussed mainly on quantitative aspects, despite the very tangible nature of most of the projects.

3.26A real quantitative/qualitative assessment should be performed at the end of the 2014-2020 period for the completed projects and the ones at an advanced level of construction.

3.27An evaluation of the effectiveness of projects is not included in the draft as the European Court of Auditors (ECA) criticised in its 2018 report. The EESC therefore calls for a review, inter alia, of the progress of TEN-T development, as well the changes in passenger and freight traffic flows. In addition, the EESC calls for a socio-economic cost-benefit analysis of TEN-T projects that takes into account the relevant social, economic, climate-related and environmental benefits and costs.

3.28The EESC suggests that the success of the CEF is not guaranteed solely by the amount of money allocated and number of projects supported. The evaluation methodology is to be adjusted.

3.29The EESC also believes that consideration should be given to better communication methods regarding the achievements of the CEF. An enhanced predictability is also needed.

3.30Europe’s metropolises are those regions within the EU where there is the most traffic; almost all transport has its origin or destination in a metropolis. The EESC calls for agglomerations to be taken into account in the main infrastructure projects, whether or not they can receive funding from the Cohesion Fund.

3.31The EESC welcomes the fact that the CEF will support civilian-military dual-use transport infrastructure with EUR 6.5 billion for the first time ever, in order to improve military mobility in the EU, in accordance with the Joint Communication of November 2017
  3
  and the Action Plan of March 2018
  4
  .

3.32The EESC welcomes the objectives set in the document “Action Plan on military mobility” and supports a Defence Union in terms of both improving infrastructure and enabling synergies. Dual-use civilian-defence infrastructure is to be developed along the TEN-T network and also in the regions most exposed to military risk.

Brussels, 19 September 2018.

Luca JAHIER

The president of the European Economic and Social Committee

_____________

Brussels, 28.3.2018 JOIN(2018) 5 final JOINT COMMUNICATION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the Action Plan on Military Mobility.