# EUR-Lex - 52011PC0612 - EN

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# 52011PC0612

**Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the Cohesion Fund and repealing Council Regulation (EC) No 1084/2006 /* COM/2011/0612 final - 2011/0274 (COD) */**

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EXPLANATORY MEMORANDUM

1.           CONTEXT OF THE PROPOSAL

On 29 June 2011, the Commission adopted a
proposal for the next multi-annual financial framework for the period
2014-2020: a budget for delivering the Europe 2020 strategy. In its proposal,
the Commission decided that cohesion policy should remain an essential element
of the next financial package and underlined its pivotal role in delivering the
Europe 2020 strategy.

The Commission therefore proposed a number
of important changes to the way cohesion policy is designed and implemented.
Concentrating funding on a smaller number of priorities better linked to the
Europe 2020 Strategy, focusing on results, monitoring progress towards agreed
objectives, increasing the use of conditionalities and simplifying the delivery
are among the major hallmarks of the proposal.

This Regulation sets out the provisions
governing the Cohesion Fund, and repealing Regulation (EC) No 1084/2006. It
draws on the work undertaken since the publication of the Fourth Cohesion
Report in May 2007 which outlined the main challenges facing regions in the
next decades and launched the debate on the future cohesion policy. On 9
November 2010, the Commission adopted the Fifth Cohesion Report which provided
an analysis of social and economic trends and outlined orientations for the
future cohesion policy.

Cohesion policy is an important expression
of solidarity with the poorer and weakest regions of the EU – but it is more
than that. One of the greatest successes of the EU has been its capacity to
raise living standards for all its citizens. It does this not only by helping
poorer Member States and regions to develop and grow but also through its role
in the integration of the Single Market whose size delivers markets and
economies of scale to all parts of the EU, rich and poor, big and small. The
Commission's evaluation of past cohesion policy spending has shown many
examples of added value and of growth and job creating investment that could
not have happened without the support of the EU budget. However, the results
also show the effects of dispersion and lack of prioritisation. At a time when
public money is scarce and when growth enhancing investment is more needed than
ever, the Commission has decided to propose important changes to cohesion
policy.

The Cohesion Fund
helps Member States whose GNI per inhabitant is less than 90% of the EU27
average in making investments in TEN-T transport networks and the environment.
Part of the Cohesion Fund allocation (€10 billion) will be ring-fenced to
finance core transport networks under the "Connecting Europe" Facility.
The Cohesion Fund can also support projects related to energy, as long as they
clearly present a benefit to the environment, for example by promoting energy
efficiency and the use of renewable energy.

2.           RESULTS OF CONSULTATIONS WITH THE
INTERESTED PARTIES AND IMPACT ASSESSMENTS

2.1. Consultation and expert advice

Results of the public consultations of 5th
Progress Report on Economic and Social Cohesion; the EU Budget Review[1],
the proposals for the multi-annual financial framework[2],
the Fifth Cohesion Report[3] and consultations
following the adoption of the report have all been considered when making the
proposals.

The public consultation on the Conclusions of
the Fifth Cohesion Report was held between 12 November 2010 and 31 January
2011. A total of 444 contributions were received. Respondents included Member
States, regional and local authorities, social partners, European interest
organisations, non-governmental organisations, citizens and other stakeholders.
The public consultation asked a series of questions about the future of
cohesion policy. A summary of the results was published on 13 May 2011[4].

A public consultation was also held on the future
Trans-European Transport Network from 4 May 2010 to 15 September 2010. The
majority of stakeholders, especially at Member State and regional level,
support better coordination between different financial instruments that fund
TEN-T at EU level, namely cohesion policy, research and innovation funding, the
TEN-T programme and the EIB's interventions.

The results of the ex-post evaluations
carried out on the 2000-2006 programmes; and a broad range of studies and
expert advice were used as input. Expert advice was also provided through the
High Level Group reflecting on future Cohesion Policy, composed of experts from
national administrations, with 10 meetings held between 2009 and 2011.

2.2. Impact assessment

Options were assessed in particular in
relation to the Cohesion Fund contribution to investing in basic infrastructure
in transport and environment. The Cohesion Fund is aimed at supporting projects
in Trans-European transport networks in accordance with Articles 171 and 177 of
the Treaty on the Functioning of the European Union.

Various ways of making funding conditional on
a sound macro-fiscal framework were assessed, including the status quo, with a
weak ex-post conditionality which has never been applied, a strengthened ex post
conditionality, and ex ante conditionality, which would require the
fulfilment of preconditions before the adoption of the programmes.

An evolution of the current system best
fulfils the criteria of ownership, transparency and predictability, while at
the same time ensuring that the effectiveness of growth-enhancing investments
is not undermined by the pursuit of unsound fiscal policies. Such a procedure
implies suspension of part or all of commitments in the case of repeated
breaches, and allows some flexibility, but this is limited to exceptional
economic circumstances. It also ensures full alignment between the provisions
for macro-fiscal conditionality of the Cohesion fund/Structural Funds and the
new rules of budgetary surveillance of the Stability and Growth Pact.

3.           LEGAL ELEMENTS OF THE PROPOSAL

European regional policy has an important
role to play in mobilising local assets and focusing on the development of
endogenous potential.

Article 174 of the Treaty on the Functioning
of the European Union (TFEU) calls for action by the European Union to
strengthen its economic, social and territorial cohesion and promote overall
harmonious development by reducing disparities between the levels of
development of regions and promoting development in least favoured regions.

The TFEU states that the Cohesion Fund shall
be set up with the aim of contributing to projects in the fields of environment
and trans-European networks in the area of transport infrastructure. Article
192 of the TFEU also refers to the use of the Cohesion Fund for environment in
cases where the polluter pays principle cannot be applied due to
disproportionate costs for the public authorities of a Member State. Protocol
No 28 to the TFEU states that the Cohesion Fund will provide support to
projects in Member States with a per capita GNI of less than 90% of the Union
average.

The timing of the review of EU funding to
promote cohesion is linked to the proposal for a new Multiannual Financial
Framework, as contained in the Commission Work Programme.

As the EU Budget
Review has highlighted, the "EU budget should be used to finance EU public
goods, actions that Member States and regions cannot finance themselves, or
where it can secure better results".[5] The legal
proposal will respect the principle of subsidiarity as the tasks of the ERDF
are set out in the Treaty and the policy is implemented in accordance with the
principle of shared management and respecting the institutional competencies of
Member States and regions.

The legislative instrument, and the type of
measure (i.e. funding) are both defined in the TFEU, which provides the legal
basis for the Cohesion Fund, and states that the tasks,
priority objectives and the organisation of the fund shall be defined in
regulations.

4.           BUDGETARY IMPLICATION

The Commission's proposal for a Multi-Annual
Financial Framework includes a proposal of EUR 376 billion for the period
2014-2020.

Proposed budget 2014-2020 || EUR billion

Convergence regions Transition regions Competitiveness regions Territorial cooperation Cohesion fund Extra allocation for outermost and sparsely populated regions || 162,6 39 53,1 11,7 68,7 0,926

Connecting Europe Facility for transport, energy and ICT || EUR 40 billion (with an additional EUR 10 billion ring fenced inside the Cohesion Fund)

*All figures in
constant 2011 prices

5.           SUMMARY OF CONTENT OF THE PROPOSED
REGULATION

The proposed Regulation determines the scope
of intervention of the Cohesion Fund. It includes an article on scope defining
the general areas for intervention within the area of transport and
environment. The scope of intervention is also defined by a negative list of
activities which will not be eligible for support, and a list of investment
priorities.

In the field of environment, the Cohesion
Fund will support investment in climate change adaptation and risk prevention,
investment in the water and waste sectors and the urban environment. In line
with the Commission's proposals on the Multi-Annual Financial Framework,
investment in energy is also eligible for support, provided it has positive
environmental benefits. Therefore investment in energy efficiency and renewable
energy are also supported.

In the field of transport the Cohesion Fund
will contribute to investments in the Trans-European Transport Network, as well
as low-carbon transport systems and urban transport.

2011/0274 (COD)

Proposal for a

REGULATION OF THE EUROPEAN PARLIAMENT
AND OF THE COUNCIL

on the Cohesion Fund and repealing Council
Regulation (EC) No 1084/2006

THE EUROPEAN PARLIAMENT AND THE
COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the
Functioning of the European Union, and in particular the second subparagraph of
Article 177 thereof,

Having regard to the proposal from the
European Commission,

After transmission of the draft legislative
act to the national Parliaments,

Having regard to the opinion of the
European Economic and Social Committee[6],

Having regard to the opinion of the
Committee of the Regions[7],

Acting in accordance with the ordinary
legislative procedure,

Whereas:

(1)
Article 174 of the Treaty provides that the Union
should develop and pursue its actions leading to the strengthening of its
economic, social and territorial cohesion. The Cohesion Fund should therefore
provide a financial contribution to projects in the field of the environment
and to trans-European networks in the area of transport infrastructure.

(2)
Regulation (EU) No [...]/2012 of [...] laying down
common provisions on the European Regional Development Fund, the European
Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural
Development and the European Maritime and Fisheries Fund covered by the Common
Strategic Framework and laying down general provisions on the European Regional
Development Fund, the European Social Fund and the Cohesion Fund and repealing
Regulation (EC) No 1083/2006[8] [Common Provisions
Regulation - CPR] establishes a new framework for the action of the Structural
Funds and the Cohesion Fund. It is necessary to specify the objectives of the
Cohesion Fund in relation to the new framework for its action and in relation
to the purpose assigned to it in the Treaty.

(3)
The Union may, through the Cohesion Fund,
contribute to actions in pursuit of the Union's environmental objectives
specified in Articles 11 and 191 of the Treaty.

(4)
Trans-European transport network projects
financed by the Cohesion Fund are to comply with the guidelines adopted by
Decision No 661/2010/EU of the European Parliament and of the Council of 7 July
2010 on Union guidelines for the development of the trans-European transport
network[9]. In order to concentrate
efforts, priority should be given to projects of common interest as defined in
that Decision.

(5)
Specific provisions concerning the type of
activities which may be supported by the Cohesion Fund under the thematic
objectives defined in Regulation (EU) No [...]/2012 [CPR] should be laid down. At
the same time, expenditure outside the scope of the Cohesion Fund should be
defined and clarified, including as regards the reduction of greenhouse gas
emissions in installations falling under Directive 2003/87/EC of the European
Parliament and of the Council of 13 October 2003 establishing a scheme for
greenhouse gas emission allowance trading within the Community and amending
Council Directive 96/61/EC[10].

(6)
In order to address the specific needs of the
Cohesion Fund, and in line with the Europe 2020 strategy that cohesion policy
should support the need to deliver smart, sustainable and inclusive growth[11],
it is necessary to set out investment priorities within the scope of the
thematic objectives laid down in Regulation (EU) No [...]/2012 [CPR].

(7)
A common set of indicators to assess progress of
programme implementation should be set out before the Member States draft their
operational programmes. These indicators should be complemented by programme-specific
indicators.

(8)
This Regulation replaces Council Regulation (EC)
No 1084/2006 of 11 July 2006 establishing the Cohesion Fund and repealing
Regulation (EC) No 1164/94[12]. In the interest of
clarity, Regulation (EC) No 1084/2006 should therefore be repealed,

HAVE ADOPTED THIS REGULATION:

Article 1
Subject-matter

This Regulation establishes the tasks of
the Cohesion Fund and the scope
of its support with regard to the Investment for growth and jobs goal referred
to in Article 81 of Regulation (EU) No [ ]/2012 [CPR].

Article 2
Scope of support from the
Cohesion Fund

1.           The Cohesion Fund shall, while ensuring an appropriate balance and according to the investment and
infrastructure needs specific to each Member State,
support:

(a)
investments in the environment, including areas
related to sustainable development and energy which present environmental
benefits;

(b)
trans-European networks in the area of transport
infrastructure, in compliance with the guidelines adopted by Decision No
661/2010/EU;

(c)
technical assistance.

2.           The Cohesion Fund shall
not support:

(a)
the decommissioning of nuclear power stations;

(b)
the reduction of greenhouse gas emissions in
installations falling under Directive 2003/87/EC;

(c)
housing.

Article 3
Investment priorities

In accordance with Article 16 of Regulation
(EU) No [...]/2012 [CPR], the Cohesion Fund shall support the following
investment priorities within the thematic objectives set out in Article 9 of Regulation
(EU) No [...]/2012 [CPR]:

(a)
supporting the shift towards a low-carbon
economy in all sectors by:

(i)      promoting the production and
distribution of renewable energy sources;

(ii)     promoting energy efficiency and
renewable energy use in small and medium-sized enterprises;

(iii)     supporting energy efficiency and
renewable energy use in public infrastructures;

(iv)    developing smart distribution systems
at low voltage levels ;

(v)     promoting low-carbon strategies for
urban areas;

(b)
promoting climate change adaptation, risk
prevention and management by:

(i)      supporting dedicated investment for
adaptation to climate change;

(ii)     promoting investment to address
specific risks, ensuring disaster resilience and developing disaster management
systems;

(c)
protecting the environment and promoting resource
efficiency by:

(i)      addressing the significant needs for
investment in the waste sector to meet the requirements of the Union's
environmental acquis;

(ii)     addressing the significant needs for
investment in the water sector to meet the requirements of the Union's
environmental acquis;

(iii)     protecting and restoring
biodiversity, including through green infrastructures;

(iv)    improving the urban environment,
including regeneration of brownfield sites and reduction of air pollution.

(d)
promoting sustainable transport and removing
bottlenecks in key network infrastructures, by:

(i)      supporting a multi-modal Single
European Transport Area by investing in the Trans-European Transport Network;

(ii)     developing environment-friendly and
low-carbon transport systems including promoting sustainable urban mobility;

(iii)     developing comprehensive, high
quality and interoperable railway systems;

(e)          enhancing institutional capacity
and an efficient public administration by strengthening of institutional
capacity and the efficiency of public administrations and public services
related to implementation of the Cohesion Fund.

Article 4
Indicators

1.
Common indicators, as set out in the Annex to
this Regulation, shall be used where relevant and in accordance with Article 24(3)
of Regulation (EU) No [...]/2012 [CPR]. For common indicators, baselines shall be
set at zero and cumulative targets shall be set for 2022.

2.
For programme-specific output indicators,
baselines shall be set at zero and cumulative targets shall be fixed for 2022.

3.
For programme-specific result indicators, baselines
shall use the latest available data and targets shall be fixed for 2022, but
may be expressed in quantitative or qualitative terms.

Article 5
Transitional provisions

1.           This Regulation shall not
affect either the continuation or modification, including the total or partial
cancellation, of assistance approved by the Commission on the basis of
Regulation (EC) No 1084/2006 or any other legislation applying to that
assistance on 31 December 2013, which shall consequently apply thereafter to
that assistance or the projects concerned until their closure.

2.           Applications to receive
assistance made under Regulation (EC) No 1084/2006 shall remain valid.

Article 6
Repeal

Regulation (EC) No 1084/2006 is hereby
repealed.

References to the repealed Regulation shall
be construed as references to this Regulation.

Article 7
Review

The European Parliament and the Council
shall review this Regulation by 31 December 2022, in accordance with Article
177 of the Treaty.

Article 8
Entry into force

This Regulation shall enter into force on
the day following that of its publication in the Official Journal of the
European Union.

This Regulation shall be binding
in its entirety and directly applicable in all Member States.

Done at Brussels,

For the European Parliament                       For
the Council

The President                                                 The
President

ANNEX

List
of Common Indicators for the Cohesion Fund

|| UNIT || NAME

Environment || ||

Solid waste || tons || Additional waste recycling capacity

Water supply || persons || Additional population served by improved water supply

|| m3 || Estimated reduction of leakage in water distribution network

Wastewater treatment || population equivalent || Additional population served by improved wastewater treatment

|| ||

|| ||

Risk prevention and management || persons || Population benefiting from flood protection measures

persons || Population benefiting from forest fire protection and other protection measures

Land rehabilitation || hectares || Total surface area of rehabilitated land

Soil sealing || hectares || Change in land sealed due to development

Nature and biodiversity || hectares || Surface area of habitats in better conservation status

Energy and climate change || ||

Renewables || MW || Additional capacity of renewable energy production

Energy efficiency || households || Number of households with improved energy consumption classification

|| kWh/year || Decrease of primary energy consumption of public buildings

|| users || Number of additional energy users connected to smart grids

GHG reduction || tons of CO2eq || Estimated decrease of GHG in CO2 equivalents

Transport || ||

Railway || km || Total length of new railway line

|| km || Total length of reconstructed or upgraded railway line

Roads || km || Total length of newly built roads

|| km || Total length of reconstructed or upgraded roads

Urban transport || passenger trips || Increase of passenger trips using supported urban transport service

Inland waterways || tonne-km || Increase of cargo transported on improved inland waterways

[1]               Communication from the Commission to the European
Parliament, the Council, the European Economic and Social Committee, the
Committee of the Regions and the national parliaments: The EU Budget Review,
COM(2010) 700 final, 19.10.2010.

[2]               Communication from the Commission to the European
Parliament, the Council, the European Economic and Social Committee and the
Committee of the Regions: A Budget for Europe 2020, COM(2011) 500 final,
29.6.2011.

[3]               5th Report on Economic, Social and
Territorial Cohesion, November 2010.

[4]               Commission Staff Working Paper: Results of the public
consultation on the conclusions of the fifth report on economic, social and
territorial cohesion, SEC(2011) 590 final, 13.5.2011.

[5]               COM(2010) 700 final, 19.10.2010.

[6]               OJ C , , p. .

[7]               OJ C , , p. .

[8]               OJ L , , p. .

[9]               OJ L 204, 5.8.2010, p. 1.

[10]             OJ L 275, 25.10.2003, p. 32.

[11]             Communication from the Commission: Europe 2020 - A
strategy for smart, sustainable and inclusive growth, COM(2010) 2020 final,
3.3.2010.

[12]             OJ L 210, 31.7.2006, p. 79.