EN Official Journal of the European Union C 143/116

Opinion of the European Economic and Social Committee on the ‘Proposal for a Regulation of the European Parliament and of the Council establishing the Connecting Europe Facility’

COM(2011) 665 final — 2011/0302 (COD)

2012/C 143/23

Rapporteur: Mr HENCKS

On 17 November 2011 the Council, and 13 December 2011 the European Parliament decided to consult the European Economic and Social Committee, under Articles 172 and 304 of the Treaty on the Functioning of the European Union, on the

Proposal for a Regulation of the European Parliament and of the Council establishing the Connecting Europe Facility

COM(2011) 665 final – 2011/0302 (COD).

The Section for Transport, Energy, Infrastructure and the Information Society, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 3 February 2012.

At its 478th plenary session, held on 22 and 23 February 2012 (meeting of 22 February), the European Economic and Social Committee adopted the following opinion by 132 votes in favour, with 3 abstentions.

This opinion is part of a 5-opinion package prepared by the EESC on the "Connecting Europe Facility" (CEF) and its guidelines which were issued by the European Commission in October 2011. This package contains opinions TEN/468 on the CEF (rapporteur Mr Hencks), TEN/469 on the Guidelines for Telecom Networks (rapporteur Mr Longo), TEN/470 on the Guidelines for Energy Infrastructure (rapporteur Mr Biermann), TEN/471 on the Guidelines for Transport Infrastructure (rapporteur Mr Back) and TEN/472 on the Project Bond Initiative (rapporteur Mr Duttine).

1. Conclusions

1.1 The EESC welcomes both the European Commission plan to earmark EUR 50 billion from the next multi-annual budget 2014-2020 to improve connections in the European Union's transport, energy and digital communications networks and the principle of EU project bonds for infrastructure projects which should trigger a multiplier effect by leveraging public and private capital required for investment needs estimated at EUR 1 000 billion.

1.2 Targeted investment in these key infrastructures will help trade recovery, growth, competitiveness and job creation at a time when Europe stands in acute need of them.

1.3 Since the traditional financing of investment from public funds is proving increasingly difficult in the present crisis, using financial instruments of a type new to the European Union with the close cooperation of the European Investment Bank will, subject to certain reservations (see opinion TEN/472), offer a complementary and innovative solution for attracting capital from pension funds, insurance companies and other operators on the capital markets interested in investing in long-term projects.

1.4 Whilst the EESC welcomes the Commission's stated intention to come up with innovative formulae to leverage an increased share of private savings, it feels these formulae should not only target large-scale capital but be managed in such a way as to raise awareness amongst small savers too.

1.5 The importance of sufficient investment in infrastructure networks which are suitable, modern, flexible, sustainable and accessible (particularly for people with disabilities) is, however, not just monetary: these investments must also be considered in the light of social and territorial cohesion, ecology and security of supply.

1.6 It will only be possible to attain the objectives set for connecting infrastructure networks if public national, regional and local funding and private financing are pooled with Union resources.

1.7 This means that when selecting projects to co-fund, the Commission, whilst taking into consideration projects with strong European added value, will have to take into account infrastructure development needs as dictated by national and regional factors.

1.8 Infrastructure investments also represent significant EU and national security aspects which should be taken into account when projects are being drawn up and approval processes initiated. They are pre-requisites for the physical integration of the "islands" which exist in the Union even today.

1.9 The Union will therefore have to continue to allocate funds to the Member States to combat social and geographic divides with regard to access to national network infrastructures through the European Structural Funds.

1.10 The EESC welcomes the proposal for the centralised management of projects connecting trans-European networks in transport, energy and digital infrastructure. Exploiting the synergies between these three sectors and improving operational rules, in particular by streamlining procedures for the granting of authorisations for projects of common interest to reduce their completion times, will help to cut project costs and make them more effective.

1.11 The EESC calls on the Member States to support the Commission initiatives in this area and to raise awareness on the capital markets and amongst other investors, encouraging them to participate actively in the success of this measure.

2. Introduction

2.1 The Commission has proposed specific measures to promote European integrated infrastructures in the transport, energy and digital communications sectors as part of the proposal for the next multi-annual financial framework 2014-2020.

2.2 Infrastructure expenditure in Europe has declined as a whole over the last ten years whereas targeted investments of this kind constitute an important element in recovery from the economic crisis and are vital to Europe's economic future.

2.3 In order to boost the development of the infrastructures mentioned above and to meet the growth priorities set out as part of the new strategy for the Single Market, the Commission is proposing a new instrument, the Connecting Europe Facility.

2.4 It is obvious, and has been highlighted by the EESC in many of its opinions, that state of the art, smart and sustainable networks providing seamless interconnection for road, rail, inland waterways, air routes, multi-modal transport, electricity, oil and gas pipelines and broadband electronic communication are of vital importance to the integrated economic area. Missing links and bottlenecks in European network connections severely undermine the completion of the Internal Market, exacerbating regional divides and making Europe dependent on third countries in the energy sector especially.

2.5 Targeted investment in these key infrastructures will help trade recovery, growth, competitiveness and job creation at a time when Europe stands in acute need of them.

2.6 Investments in major infrastructure network projects are, however, by their nature long-term projects requiring huge amounts of investment, and the financial return on them, especially during the construction phase and in the initial stages of operation, is subject to substantial risk (underestimated costs, overestimated levels of traffic and risks connected with the complexity of the financial package).

2.7 Since public budgets at national, local or European level will not be able to fund these projects alone, the Commission is proposing a new budgetary instrument, the Connecting Facility, in addition to revised guidelines for transport, energy and ICTs, in order to attract other public and private funding which will enhance the credibility of infrastructure projects, reducing their risk profile for private investors.

2.8 In order to do this, the Commission has presented a series of proposals which may be found in the: — Proposal for a Regulation establishing the Connecting Europe Facility (EESC opinion: TEN/468); — Proposal for a Regulation laying down general rules for the granting of Community financial aid in the field of the trans-European transport and energy networks (EESC opinion: TEN/472); — Proposal for a Regulation on guidelines for the development of the Trans-European Transport Network – (EESC opinion: TEN/471); — Proposal for a Regulation on guidelines for trans-European energy infrastructure (EESC opinion: TEN/470); — Proposal for a Regulation on guidelines for trans-European telecommunications networks (EESC opinion: TEN/469).

3. Content of the Communication on integrated European infrastructures and the Proposal for a Regulation establishing the Connecting Europe Facility

3.1 In order to accelerate investment in trans-European transport, energy and digital communications networks and to leverage the financing required from both the public and the private sector, the Commission proposes the following for the period 2014-2020: — to provide for investment needs of approximately EUR 1 000 billion in European connection networks and to allocate it as follows: Energy Electricity EUR 140 billion Gas EUR 70 billion CO2 EUR 2,5 billion Oil For the record Transport (Road, rail, maritime, inland waterways and air routes) EUR 500 billion EUR 250 billion of which is for the central network; allocation of funding needs for various modes of transport to be undertaken as projects are adopted Broadband communications EUR 270 billion — to make available EUR 50 billion for investment projects connecting pan-European networks, of which EUR 40 billion is provided by the European Union budget and EUR 10 billion is earmarked in the Cohesion Fund for transport infrastructure. These funds will be allocated as follows: Energy EUR 9,1 billion Transport EUR 31,7 billion Telecommunications/Digital EUR 9,2 billion — to co-fund trans-European connection projects of common interest selected by the Commission (on proposal by the Member States) at rates varying between 20 and 75% of the eligible cost, or even 80 or 100% of the cost in exceptional cases; — to increase the potential for attracting private-sector funding by introducing EU project bonds for infrastructure projects so as to reduce the risk for third-party investors. The EU budget will thus be used to provide the European Investment Bank (EIB) with the capital to cover part of the risk it incurs when funding eligible projects. EIB financing of the projects concerned will therefore be in some way guaranteed by the EU budget, but the EIB would have to assume the residual risk. There will be a pilot phase (2012-2013) involving five to ten projects. During this phase, the funds thus transferred by the EU to the EIB may not exceed a maximum amount of EUR 230 million, and are to be financed entirely by the re-use of credits not taken up in current investment programmes. The Commission estimates that these funds should leverage other investors and provide up to EUR 4.6 billion: — to maximise synergies between the energy, transport and ICT programmes, so that funding responds to a coherent policy strategy, and projects are selected by the Commission according to clear, harmonised criteria and to ensure follow-up and monitoring so that EU funding is well targeted and effective; — to introduce measures designed to simplify current rules, particularly the alignment of indicators with Europe 2020 objectives, the shortening of authorisation procedures, centralised management for the three sectors, the possible establishment of an executive agency, common award criteria, common annual work programmes, the setting-up of a Coordination Committee of the Facility, and granting the Commission the power to adopt delegated acts.

4. General comments

4.1 The EESC approves the Commission's initiatives to promote and coordinate investment in strategic projects with European added value and on proposing an alternative to traditional grant funding for the 2014-2020 period.

4.2 The EESC welcomes the proposal for a common funding and centralised management mechanism in addition to joint working plans for projects connecting trans-European networks in transport, energy and digital infrastructure to be directly managed by the Commission, possibly assisted by an executive agency. Exploiting the synergies between these three sectors and improving operational rules, in particular by streamlining procedures for the granting of authorisations for projects of common interest to reduce their completion times, will help to cut project costs and make them more effective.

4.3 The EESC therefore supports the proposal to prioritise projects which offer added value and respond to a need in Europe for connecting trans-European networks to infrastructure networks in the Member States. It would nevertheless note that territorial and social cohesion will require the Union to continue to allocate funds continuously and proportionately to the Member States to combat social and geographic divides with regard to access to national network infrastructures and to ensure security of supply through the European Structural Funds.

4.4 The EESC notes that the need for infrastructure networks which are suitable, modern, flexible, sustainable and accessible (particularly for people with disabilities) is, however, not simply monetary: these investments are also indispensable in the light of social and territorial cohesion and environmental protection, which the Commission must take into consideration when selecting projects to co-fund.

4.5 Infrastructure investments also represent significant EU and national security aspects which should be taken into account when projects are being drawn up and approval processes initiated. They are pre-requisites for the physical integration of the "islands" which exist in the Union even today.

4.6 Whilst Union funding of EUR 50 billion is undoubtedly significant, it nonetheless represents only a fraction of the investment needs identified by the Commission.

4.7 Most of the investment will, in any case, have to be provided by the Member States and private investors, the Union's financial contribution functioning as "start-up capital" designed to encourage the Member States and the market to invest further.

4.8 Budgetary problems and the rationalisation of public finances which is needed mean, however, that most Member States are considering scaling back or suspending their investment programmes. This can only impact negatively on investment flows from private sources.

4.9 It will only be possible to attain the objectives set for connecting infrastructure networks if public national and local funding and private financing are pooled with Union resources.

4.10 Infrastructure investments will have to aid the transition to a low-carbon economy and society.

4.11 In line with the Commission commitment to mainstream the Europe 2020 objectives, with regard to the sphere of climate change in particular, into Union programmes and to direct at least 20 % of the Union budget to these objectives, the EESC welcomes the Commission approach of using the EU budget for investment and to create a multiplier effect leveraging private financing. In order to reduce the regulatory risks and capital costs for third-party investors seeking new long-term investment opportunities, and since the traditional financing of investment from public funds is proving increasingly difficult in the present crisis, using financial instruments of a type new to the European Union with the close cooperation of the European Investment Bank will, subject to certain reservations (see Opinion TEN/472), offer a complementary and innovative solution for attracting capital from pension funds, insurance companies and other operators on the capital markets interested in investing in long-term projects.

4.12 Whilst the EESC welcomes the Commission's stated intention to come up with innovative formulae to leverage an increased share of private savings, it feels these formulae should not only target large-scale capital but be managed in such a way as to raise awareness amongst small savers too.

4.13 In the absence of any other prospective solution, the EESC can only regret the reservations, indeed objections, expressed by some Member States with regard to project bonds for infrastructure projects. It hopes that the pilot phase, set for the period 2012-2013, which will use up to EUR 230 million of the current EU budget, will be able to encourage capital markets, pension funds, insurance companies etc to invest over the long term and demonstrate the soundness of the measures proposed.