EUROPEAN COMMISSION Brussels, 1.6.2018 SWD(2018) 292 final COMMISSION STAFF WORKING DOCUMENT



IMPACT ASSESSMENT

Accompanying the document Proposal for a Regulation of the European Parliament and of the Council on the establishment of a Programme for the Environment and Climate Action (LIFE) and repealing Regulation (EU) No 1293/2013 {COM(2018) 385 final}

{SEC(2018) 275 final}

{SWD(2018) 293 final}



Table of contents 1.Introduction: Political and legal context 1.1.Scope and context 1.2.Lessons learned from the previous LIFE+ programme (2007-2013) and the current LIFE programme (2014-2020) 1.2.1.Consultation activities 2.The Objectives 2.1.Challenges for the LIFE programme for the next MFF 2.1.1.Key features of the current LIFE Programme 2.1.2.Key challenges and opportunities facing LIFE 2.1.3.Potential gaps and synergies with other EU programmes 2.2.Expected impacts of an unchanged LIFE programme (baseline) 2.3.Objectives of the LIFE programme post 2020 General and specific objectives for the future LIFE programme Seizing opportunities for optimising the performance of the LIFE programme 3.Programme structure and priorities 3.1.Programme priorities

3.2.Critical mass 3.3.The EU added value of LIFE 3.4.Possible enhancements to the scope and structure of the future LIFE programme 3.4.1Extend the scope of the LIFE programme to include capacity-building projects related to clean energy by adding a sub-programme on Clean Energy Transition 3.4.2.Extend the scope of the LIFE programme to improve mainstreaming for nature and biodiversity 3.4.3.Extend eligibility of LIFE to the EU's Overseas Countries and Territories (OCTs) specifically for nature and biodiversity actions within the Environment sub-programme 3.5.Conclusions 4.Delivery mechanisms of the intended funding 4.1.Possible enhancements to funding mechanisms 4.1.1.Expand the scope and scale of Strategic Integrated Projects (SIPs) 4.1.2.Targeted support to upscale and replicate successful projects 4.1.3.Address the unbalanced participation of candidates from some Member States to LIFE calls for proposals through a reinforced network of LIFE contact points and targeted capacity-building actions 4.1.4.Increase the co-financing rate 4.1.5.Systematically define and develop synergies with other instruments 4.1.6.Financial Instruments delivered through a central fund. 4.1.7.Improving the strategic focus of the programme by simplifying the Regulation and the MAWP. 4.2.Conclusions 4.3.Programme management 4.3.1.Package of measure to reduce the administrative burden for the applicants/beneficiaries

4.3.2.Streamlined procedures for the implementation of the EU budget 5.How will performance be monitored and evaluated? 5.1.Lessons learned related to the existing monitoring and evaluation framework 5.2.Monitoring and evaluation framework for post 2020 indicators 5.2.1.How the outcomes and impact/catalytic role of the programme will be assessed 5.2.2.The timetable and the evaluations of the LIFE Programme 2021-2027 ANNEXES 47 Glossary Term or acronym Meaning or definition BaU Business as Usual scenario BEST Initiative Voluntary Scheme for Biodiversity and Ecosystem Services in Territories of European Overseas CAP European Common Agricultural Policy Transition to Clean Energy Programme The part of Intelligent Energy Europe which could be transferred into LIFE CF Cohesion Fund COSME Europe’s programme for small and medium-sized enterprises DG General Directorate of the European Commission EAFRD European Agricultural Fund for Rural Development EASME European Agency for Small and Medium Enterprises EFSI European Fund for Strategic Investments EIB European Investment Bank EIC European Innovation Council EIT European Institute of Innovation and Technology EMFF European Maritime and Fisheries Fund ERDF European Regional Development Fund Horizon Europe The 9th (post 2020) Research and Innovation (R&I) Framework Programmes- GHG Green House Gases IEE Intelligent Energy Europe IMPEL European Union Network for the Implementation and Enforcement of Environmental Law IPs Integrated projects (LIFE 2014-2020) LIFE+ Programme Financial Instrument for the Environment (LIFE+) – years 2007-2013 - Regulation (EC) No 614/2007 of the European Parliament and of the Council of 23 May 2007 concerning the MAWP Multi Annual Work Programme MFF Multi-annual Financial Framework MTE Mid-term Evaluation of the LIFE Programme 2014-2020 NCPs National Contact Points N2000 Natura 2000 Nature Directives Birds Directive: Directive 2009/147/EC of the European Parliament and of the Council of 30 November 2009 on the conservation of wild birds and Habitats Directive: Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of wild fauna and flora NEC Directive National Emission Ceilings (NEC) Directive (2016/2284/EU) NGO Non-governmental organisations OCTs Overseas Countries and Territories ORs Outermost Regions SDGs Sustainable Development Goals SF Structural Funds SIPs Strategic Integrated Projects (post 2020 LIFE) R&I Research and Innovation TFEU Treaty on the Functioning of the European Union. 1. Introduction: Political and legal context 1.1. Scope and context This impact assessment accompanies the Commission proposal for the future LIFE Programme for the Environment and Climate Action 2021-2027 and satisfies the requirements of the Financial Regulation in respect of preparing an ex-ante evaluation. All current and future EU generations are affected by environmental and climate problems, which impact on health, quality of life, and the availability and status of natural resources, implying social and economic costs. The EU is a global leader for environmental protection and climate action and - as confirmed in the President Juncker's 2017 State of the Union address - wants to enhance this role. As highlighted in the Commission communication on the "Next steps for a sustainable European future", the 2030 Agenda on Sustainable Development and the 17 Sustainable Development Goals constitute an essential guiding principle and the contribution provided by the EU policies shall be assessed during the future EU multi-annual financial framework (MFF). The Commission communication on "A new, modern Multiannual Financial Framework for a European Union that delivers efficiently on its priorities post-2020" acknowledges the citizens' expectations for their health, the environment and the climate. It identifies the European added value, enhanced performance, simplification and flexibility as the keys to a modern and effective EU budget.

At EU level, large investments in environmental and climate actions are primarily funded by major funding programmes (mainstreaming), in particular the cohesion funds, agriculture and rural development funds, maritime and fisheries funds, the research & innovation programme as well as external policy instruments. The LIFE programme is the only EU fund entirely dedicated to environmental and climate objectives, addressed at present through two sub-programmes. With its modest budget (currently amounting to EUR 3.5 billion for the period 2014-2020 – 0.3% of the EU budget), it targets a niche between EU programmes supporting research and innovation on the one hand and EU programmes financing large-scale deployment of measures on the other hand (see Figure 1 below). As Figure 1 illustrates, the first stage, research/innovation, involves primary research that enhances scientific knowledge and technical demonstration to prove viability of innovations. LIFE does not cover this area apart from small-scale research activities that support other objectives in projects. LIFE mainly finances actions that come under: ­the demonstration/best practice stage, including testing, demonstrating and piloting the effectiveness of new technologies, approaches or policies as methods for policy implementation. ­the facilitating exploitation/upscaling/awareness stage to prepare the ground for the large-scale deployment of appropriate technical and policy-related solutions. LIFE also contributes to the large-scale funding of green solutions, where access to funding constitutes the main barrier for the large-scale deployment of a technology, approach or policy, which has already proved to be effective. Its contribution is via two currently pilot financial instruments Private Finance for Energy Efficiency (PF4EE) and Natural Capital Finance Facility (NCFF), that only operate at a relatively small scale. Source: European Commission While LIFE activities tackle certain problems directly on the ground, the programme's main impact is indirect through its catalytic role: the support for small-scale actions intended to initiate, expand or accelerate sustainable production, distribution and consumption practices by supporting: ­the development and exchange of best practice and knowledge; ­the building up of the capacities and speeding up the implementation of environmental and climate legislation and policies; ­stakeholders in testing small-scale technologies and solutions; and ­the mobilisation of funding from other sources. On 2 May 2018, the European Commission adopted its proposals for a new Multiannual Financial Framework (MFF) for 2021-2027. Under these proposals , the LIFE programme will have a budget of EUR 5 450 million over this period. This impact assessment report reflects the MFF proposals and focuses on the changes and policy choices which are specific to this instrument. Among other things, it analyses the integration of part of the Intelligent Energy Europe (IEE) programme into the future LIFE Programme as a separate window on ''Clean Energy Transition'' (see option 3.4.1 in chapter 3). Moreover, it provides an assessment of the option for the establishment of dedicated envelopes for biodiversity and the management of the Natura 2000 network. 1.2. Lessons learned from the previous LIFE+ programme (2007-2013) and the current LIFE programme (2014-2020) The final evaluation of the LIFE+ Programme (2007-2013) concluded that the programme was successful in promoting the implementation of the EU’s environmental policy and legislation with significant EU added value. However, it also identified a number of shortcomings. The vast majority of these were addressed by introducing changes to the design of the current LIFE Programme (2014-2020). For example, the need to ensure that the projects supported had sufficient strategic focus was addressed in the new programme by shifting from a pure bottom-up approach to a more flexible approach, with specific thematic priorities and project topics defined for the Environment sub-programme. Likewise, the need for further simplification in the application process and reporting obligations was addressed by introducing a two-step application procedure for the integrated projects, waiving the requirement to submit an external audit certificate and/or a VAT certificate and streamlining the system to enable applicants to submit their proposals electronically (e-proposal). Further details on these changes and their rationale are provided in Annex 3.

The effectiveness of these changes was explored in the recent mid-term evaluation of LIFE (MTE) . While the evaluation was undertaken at an early stage of the programme implementation, when only the 2014 and 2015 projects had started, it confirmed that the programme is on track to be effective, efficient and relevant and that it is providing a contribution to the Europe 2020 strategy. Furthermore, most stakeholders see LIFE as being a very important instrument for addressing environmental and climate priorities. The lessons learned from the MTE and, where relevant, recommendations from other reviews of the LIFE programme, are summarised below. They concern three aspects: programme relevance, coherence and coverage; effectiveness and catalytic effect; and efficiency and simplification. Some of the conclusions have already been taken into account in the implementation of the current programme. 1. Relevance, coherence and coverage ·The LIFE programme and its general objectives are relevant and are targeting the EU’s existing environmental and climate policy priorities. Also, the six Priority Areas defined in the LIFE Regulation are responding to the needs. ·Around 13% of the LIFE projects impact more than one thematic area. These 'overlaps' are synergetic: taking into account the interdependence of natural resources, multipurpose projects are more effective. Their expected combined impact is rewarded with bonus points during the evaluation of proposals. ·The small budget, the breadth of policy objectives targeted and the new challenges imply that not all the thematic areas could be addressed adequately by the end of the programming period. A critical mass to trigger a change on all environmental and climate issues would require a substantial increase of the budget. ·Reducing the thematic scope of the programme would have critical consequences in addressing one or more of the programme’s priorities (e.g. resource efficiency, the quality of water and air, greenhouse gas emissions reduction, marine conservation, etc.). ·Synergies have been found between the projects financed by LIFE grants and projects financed by grants from other EU programmes (e.g. demonstration projects under Horizon 2020), as the programmes, while having distinct goals and being different in size and nature have inter-related activities. In some areas (i.e. nature and biodiversity including marine ecosystems) the Programme plays a unique and essential role. Synergies and complementarities have been observed in particular with research and rural development programmes. Still, the systematic development of synergy mechanisms could offer space for improvement. 2. Effectiveness and catalytic effect What the Programme is delivering: ·In general, the various types of grants (for standard projects, integrated projects, technical assistance for integrated projects, preparatory projects and NGO support) appear to be effective delivery mechanisms. ·The integrated projects, which coordinate the implementation of actions on a large territorial scale, have shown a significant potential to enhance the catalytic effect of LIFE. LIFE financing of EUR 251.7 million to integrated projects under the present programme in the period 2014-2016 is expected to mobilise investments on environmental and climate action of about EUR 5.7 billion in total, thus for each LIFE euro spent a further 22 euros from other sources is expected to be used in a coordinated way for environment and climate objectives. ·The pilot financial instrument for energy efficiency, Private Finance for Energy Efficiency instrument (PF4EE) is aimed at building up the capacity of financial institutions to develop and test specific loan products targeting private sector’s investments in energy efficiency measures. It has shown a good uptake and the possibility, after the pilot phase, to enable up-scaling of the piloted energy efficiency loans via relevant financial instruments mobilised by EU programmes, in particular under the future EU Invest Fund. The Committee of the Regions has called on the LIFE programme to achieve greater complementarity between PF4EE and other relevant financial instruments. ·The pilot financial instrument for natural capital, Natural Capital Financing Facility (NCFF), provides loans, equity and guarantees to nature and climate adaptation measures that can generate revenues or save costs. It is intended to establish a pipeline of replicable, bankable operations that will serve as a "proof of concept" to demonstrate to potential investors the attractiveness of operations directly addressing biodiversity and climate adaptation objectives. It has registered a slow uptake because of the need to adapt banking practices for assessing the returns of such investments combined with the need to improve the quality of the project applications. Several adjustments have been made as a follow-up of the LIFE mid-term evaluation to increase the visibility of the instrument and to operationalise the technical assistance facility. The project pipeline has improved as a result. One of the recommendations still to be addressed is to complement this financial support with targeted grants (blending). ·Public procurement contracts are considered a valuable delivery mechanism for providing targeted support for the preparation of environmental and climate legislation and policies and their implementation/enforcement. They have an important catalytic effect. What more could be done: ·More targeted steering of projects towards key priorities could enhance the focus and performance, in particular for the Environment sub-programme, where thematic priorities are defined in the Regulation for a period of seven years. This may pose a challenge for new priorities emerging during the seven-year programming period (such as have been in the current programming period the Circular Economy and the related sectors, for example plastics), or other priorities which are not adequately targeted by projects (selected following a calls for proposals on the basis of a bottom-up approach). ·There is a low participation of beneficiaries from some Member States which risks weakening the catalytic effect of the programme (see Annex 8). The use of national allocations has proven not to be effective in targeting this problem: it resulted in a reduced participation from the countries which had participated more before without improving the participation of the others. It has been discontinued since 2018.The capacity-building grants introduced in 2014 seem to have mixed results but it is too early to reach any firm conclusion. New ways of mitigating an uneven participation of Member States should be sought. ·The greater the replication of project results, the greater the catalytic effect of LIFE. A 2016 report on LIFE + projects observed that, although about three quarters of projects have good potential for replication, there is space for improvement in actual replication. The beneficiaries mention that the main barriers to replication are a lack of: financial means, decision makers’ interest and sense of urgency, specific information and communication of transferable solutions, and investment-planning capacity. 3. Efficiency and simplification

·The delegation of management from the Commission to the Executive Agency for Small and Medium-sized Enterprises ( EASME ) delivered cost savings and improved the efficiency of the programme, because it introduced economies of scale for implementing the large number of homogenous and standardised operations needed to manage grants. ·LIFE is relatively efficient compared to other EU programmes. It costs, in relative terms, significantly less to manage LIFE than other similar programmes (e.g. COSME and Horizon 2020). The management practices characterised by the use of external support for project monitoring has resulted in a very high project success rate and a very low error rate (0.25% in 2017 - the lowest across all the EU programmes). However, there might be a potential for further improving efficiency though adjustments of certain programme management aspects, such as the monitoring of projects. ·A potential risk of lacking continuity and loosing input from projects for policy-making and vice-versa due to the delegation of management from the Commission to EASME was mitigated by transferring key human resources from the Commission to EASME and by defining a strong policy-integration strategy. ·Beneficiaries find administrative burden too high. Thus, there is a need to simplify the application and reporting process. Some simplification measures have already been introduced and others are being tested. 1.2.1. Consultation activities As part of the LIFE mid-term evaluation a wide range of consultation activities were conducted. They included a 12-week public consultation with more than 250 responses, six specific surveys with more than 200 responses, and over 150 interviews (and, where relevant, site visits) of key stakeholder groups, including project beneficiaries, project coordinators, external monitoring experts and financial instruments’ stakeholders. The key messages from these consultation activities, described in more detail in Annex 2, are included in the lessons presented in the previous section and have been taken into account for the definition of the options. ·95% of the respondents to the public consultation confirmed the need to have an EU programme for the environment and climate. ·Stakeholders emphasised that the transnational nature of LIFE plays an important role in the programme’s effectiveness. ·Stakeholders highlighted that LIFE is one of the few EU funds that supports the restoration and maintenance of biodiversity and thus plays an important role in funding nature conservation. ·Stakeholders welcomed the phasing out of national allocations but emphasised the usefulness of national contact points. At the same time, stakeholders highlighted that there are large differences between Member States in terms of their capacity and performance. ·The large majority of respondents to the public consultation considered that all the different types of interventions covered by LIFE are relevant for an EU programme for the environment and climate. ·The majority of stakeholders considered LIFE to be both internally and externally coherent. ·Stakeholders agreed that LIFE acts as a catalyst. Nevertheless, the consultation activities showed that this potential should be further exploited. ·The LIFE Programme was considered to be relevant by stakeholders to address the needs and problems in the area of climate and environment. At the same time, the need for prioritisation and the potential inclusion of a more ‘top-down’ approach was highlighted. ·The majority of the respondents to the public consultation confirmed that the Programme has an important EU added value because it supports the coherent development, implementation and enforcement of EU environment and climate policy and legislation (98 % of respondents); it tackles environmental and climate problems more efficiently (98 % of respondents); it preserves EU environmental resources which, even if unevenly distributed across the EU, benefit the EU as a whole (94 % of respondents); it contributes to EU-wide sharing of 'best practices', knowledge transfer, demonstration, and awareness raising (99 % of respondents). ·Stakeholders had strong views on the need for further simplification, and the excessive administrative complexity of the programme was criticised. ·The high potential of integrated projects was emphasised by stakeholders. ·With regards to financial instruments, stakeholders highlighted the need for grant blending and further technical assistance. Some stakeholders also questioned the relevance and effectiveness of the NCFF. ·The importance of the involvement of NGOs in environmental and climate policy was highlighted by the stakeholders who replied to the consultation activities pointing the relevance of the LIFE operating grants. Source: Ecorys (2017) Support for an external and independent LIFE Mid Term Evaluation Report For this impact assessment, it was not considered necessary to organise a new, broad public consultation. Still, further opinions on the LIFE mid-term evaluation results and the future of the LIFE Programme were received from environmental NGOs and some consultation activities to discuss the challenges and opportunities of the programme were undertaken with relevant stakeholders (see Annex 2). These consultations confirmed the conclusions of the LIFE mid-term evaluation and provided new insights relating to the options for the new LIFE programme. A summary of these points is presented in the box below. ·A wide range of environmental NGOs highlighted the importance of the LIFE Programme in funding environmental issues even if the current budget of the programme only represents 0.3% of the total EU MFF. At the same time, they called for more than a 3-fold increase of the future LIFE’s budget, arguing that LIFE should receive at least 1% of the total EU post-2020 MFF. ·Given the need to increase nature conservation efforts and the importance of LIFE’s role in supporting biodiversity, some NGOs called to dedicate 50% of the future LIFE programme to Nature and Biodiversity. Furthermore, several stakeholders called for the creation of a large dedicated Nature Fund, possibly within the LIFE umbrella. ·The need to increase co-financing rates was also highlighted, particularly to facilitate participation from the Member States which are participating less. Furthermore, NGOs emphasised the need to reduce administrative burden on project applicants in order to increase the effectiveness of the programme. 2. The Objectives 2.1. Challenges for the LIFE programme for the next MFF 2.1.1. Key features of the current LIFE Programme The LIFE programme is directly managed by the European Commission ( DG Environment and DG Climate Action ), although the implementation of some components has been delegated to EASME. The European Investment Bank (EIB) manages the two financial instruments associated with the LIFE programme 2014-2020. The budget for the current Environment sub-programme is EUR 2.59 billion and it targets the following Priority Areas: environment and resource efficiency; nature and biodiversity, including terrestrial and marine ecosystems; environment governance and information. The budget for the current Climate sub-programme is EUR 864 million and it targets the following Priority Areas: climate mitigation; climate adaptation and climate governance and information. The setting of strategic priorities differs between the sub-programmes. The Environment sub-programme is quite prescriptive in the Regulation and the Multiannual Work Programmes (MAWP), whereas the Climate sub-programme enjoys a greater flexibility, allowing, in the yearly call for proposals, the identification of key priorities in line with the latest policy developments, e.g. the implementation of the 2015 Paris Agreement on Climate Change.

LIFE currently has three main types of delivery mechanisms (Article 17). These are: grants (action and operating), financial instruments and public procurement contracts. An overview of the intervention logic and key features of the delivery mechanisms is set out in Annex 5. As mentioned in Section 1.2, the final evaluation of the LIFE+ Programme (2007-2013) identified several shortcomings, the vast majority of which have been addressed in the design of the current LIFE Programme (2014-2020). This includes changes to the action grants delivery mechanism. The catalytic effect of the standard 'traditional' LIFE projects is to demonstrate suitable technologies or methodologies for implementation of EU environment and climate policy, which can subsequently be deployed at large scale, funded by other sources, including the main EU funds. The LIFE integrated projects and technical assistance projects are dedicated to facilitating the development, implementation and coordination of large-scale actions including by bringing together stakeholders and by using investment plans that mobilise funding from other sources. Likewise, the objective of the financial instruments currently being financed under LIFE is to test the possibility to improve the leveraging of funds for environmental and climate objectives. Similarly, support to the definition of policy and legislative targets, to the exchange of good practices, and to the EU role of global leader in international fora, financed through the LIFE procurement activities, further contributes to the catalytic effect of the programme. Replication of results, including through promoting synergies with other EU programmes, increases the catalytic effect of LIFE and enhances the added value of EU spending overall. For this reason, LIFE projects are required to establish a replication plan (After LIFE plan). Furthermore, projects appearing to have a large replication potential are closely monitored and beneficiaries are advised about other funding instruments (e.g. the Horizon 2020 SME Instrument or regional development schemes) or private investors which might provide additional funding for up-scaling. Moreover, LIFE also magnifies the impacts of other EU programmes by taking forward their results, particularly through awarding bonus points for project applications that take up results from Horizon 2020 or previous research programmes. It is challenging to determine the full impact of the LIFE programme because of its catalytic effect. The full effect of a LIFE project often materialises 5-7 years after the project has been completed, and may manifest itself in societal transformations that are hard to measure. 2.1.2. Key challenges and opportunities facing LIFE The key challenges and problems to be addressed by the future LIFE programme remain largely unchanged compared to the current programme, as illustrated in the needs analysis of Annex 4 and summarised below: ·The urgent need of transforming society to a clean, circular, energy-efficient, low-carbon and climate-resilient economy, with a high level of environmental protection and of halting and reversing biodiversity loss. ·Insufficient availability and use of efficient environmental, climate-friendly and low-carbon methods across different sectors. ·Insufficient knowledge, know-how and information. ·Insufficient levels of compliance with EU environmental and climate policy and legislation, and weak environmental and climate governance at all levels. However, as highlighted by the World Economic Forum in its 2018 Report on Global Risks the urgency of facing up to systemic challenges has intensified, in particular in the field of environmental degradation and climate change. In order to adequately address these systemic problems and failures, both environmental and climate mainstreaming as well as targeted funding are needed. Furthermore, as mentioned in Annex 4, allocations to integrated projects should be scaled up by at least four-fold to achieve increased replication and large-scale deployment, particularly as regards mainstreaming of nature and biodiversity objectives into other financing programmes/instruments. These challenges are developing rapidly over time, which accentuates the need for having a LIFE programme which is sufficiently flexible to target the evolving needs throughout the programming period as well as having a sufficient critical mass of finance to catalyse real societal transformation. In designing the new LIFE Programme, there is a need to address the specific challenges mentioned in Section 1.2 above, as well as to address the cross-cutting objectives flexibility, focus on performance, coherence and synergies, simplification, which are mentioned in the Commission Communication on "A new, modern Multiannual Financial Framework for a European Union that delivers efficiently on its priorities post-2020".. 2.1.3. Potential gaps and synergies with other EU programmes An analysis of potential gaps and synergies with other EU programmes is presented in Annex 6. In general, it confirms the conclusions from the LIFE mid-term evaluation that overlaps in financing stages related to implementation and development of environment and climate policy are synergetic. Nevertheless, if potential synergies could be exploited more systematically, this would enhance the performance of all the programmes. Moreover, considering the similar objective and stage in the shift to a greener Europe (see Figure 1) targeted by the LIFE Climate sub-programme and the IEE part of Horizon 2020, integrating the IEE programme into the future LIFE Programme could increase the coherence of the EU budget. At the same time the analysis shows some gaps related to the financing of specific environmental, climate and energy objectives, in particular regarding: ·Conservation of biodiversity and sustainable use of ecosystem services in the EU's Outermost Regions (ORs) and Overseas Countries and Territories (OCTs), which is presently supported through the BEST initiative . ·Nature and biodiversity, where several evaluations and assessments (notably the mid-term review of the EU Biodiversity Strategy to 2020 and the Nature Fitness Check), and a recent study highlighted the shortcomings of the current integration approach to nature and biodiversity financing. 2.2. Expected impacts of an unchanged LIFE programme (baseline)

The continuation of the LIFE programme in its current format, and scale, in the next MFF would likely see a similar outcome as that described in the mid-term evaluation and in Annex 5. However, this would result in sub-optimal effectiveness in reaching the programme’s overall objectives, particularly when considering the emerging new challenges including for circular economy and the plastics strategy, as well as the needs for nature protection, including in the marine environment. Thus, positive environmental impacts, highlighted by previous evaluations, would continue to be delivered in each of the programme’s thematic areas: air quality and emissions; biodiversity; climate change adaptation, climate change mitigation; environmental and health; nature; resource efficiency; waste and water. While the programme would continue to act as a catalyst to promote changes in the development and implementation of environmental and climate policies, it is not expected to reach its full potential as a catalyst without seizing the opportunity to address the specific challenges mentioned in section 1.2 above, as well as the cross-cutting MMF objectives. In particular, some gaps would remain in the funding of certain environmental and climate challenges. Furthermore, the continuation of the programme in its current format would not ensure extensive coherence between the LIFE programme and other EU funds. Without an increase in funding for certain environmental and climate challenges, the scale of action taken may be insufficient to address the associated problems sufficiently (see Annex 4). The funding of nature projects is one such example. Likewise, there may be gaps in financial support for some of the new and increasingly urgent environmental and climate challenges. Prioritisation between the various strands of LIFE is not possible because there is no hierarchy of objectives in environment and climate policy. Furthermore, multiple interlinked priorities are addressed by more than one strand of the programme, which makes prioritising one strand above another impossible. Thus, if the scope were broadened without an increase in budget, the funding available for all existing activities would have to be consistently decreased and the needs described in Annex 4 would not be adequately addressed. The programme will continue to support existing, and promote new, jobs in environmental and climate fields as well as supporting the development of skills, knowledge, and innovation. 2.3. Objectives of the LIFE programme post 2020 General and specific objectives for the future LIFE programme On the basis of the key challenges to be addressed by the LIFE Programme, the general objective for the future LIFE Programme is: To contribute to the shift towards a clean, circular, energy-efficient, low-carbon and climate-resilient economy, including through the transition to clean energy, to the protection and improvement of the quality of the environment and to halting and reversing biodiversity loss, thereby contributing to sustainable development. The general objective of the next LIFE Programme has been simplified but not changed in substance compared to the current LIFE Programme, which has four general objectives. Furthermore, while a contribution towards a transition to clean energy is already covered by the current objectives, this transition is mentioned explicitly in the future objective in order to reflect the appropriateness of considering the activities discussed under Option 1 in Section 3.4.1. In response to the general objective, the implementation of the Programme will be optimised in terms of coverage and delivery mechanisms (see Sections 3 and 4), by pursuing, in line with the cross-cutting objectives of the MFF, greater efficiency (simplification and flexibility), an improved coherence and better synergy with other programmes as well as increased effectiveness. Although the new programme will not explicitly mention 'priority areas,' its actions will continue to address all topics covered by the current priority areas, as they are relevant according to the results of the mid-term evaluation. Moreover, to take into account the possible integration into LIFE of the transition to clean energy, an additional focus has been added on energy efficiency and renewable energy. As a result, the following specific objectives have been set as follows: 1.To develop, demonstrate and promote innovative techniques and approaches for reaching the objectives of the Union legislation and policy on environment and climate action, including the transition to clean energy, and to contribute to the application of best practice in relation to nature and biodiversity. 2.To support the development, implementation, monitoring and enforcement of the relevant Union legislation and policy, including by improving governance through enhancing capacities of public and private actors and the involvement of civil society. 3.To catalyse the large-scale deployment of successful technical and policy-related solutions for implementing the relevant Union legislation and policy by replicating results, integrating related objectives into other policies and into public and private sector practices, mobilising investment and improving access to finance. The specific objectives are consistent with those established by the present LIFE Regulation, but they have been consolidated, giving more focus to replication and the triggering of large-scale deployment. This responds to the findings of the MTE. The present LIFE Regulation has several specific objectives for each of its six priority areas, which are partly repetitive. Through these specific objectives, LIFE should continue to contribute to a societal transformation through its catalytic effect targeting the implementation of EU climate and environment policy goals, including compliance with the relevant EU acquis. The main source of EU finance for environmental, climate and energy action must continue to come from other EU programmes (mainstreaming). Seizing opportunities for optimising the performance of the LIFE programme To address the cross-cutting objectives of the future MFF and take advantage of the lessons learned, the new LIFE programme aims at achieving four operational goals, which are presented below together with the issues/opportunities to be addressed and the relevant parts of the programme – coverage, delivery mechanism, programme management – in which they will be addressed.

Operational goals Issues addressed Relevant part of LIFE 1. To avoid gaps and ensure coherence with other EU programmes • Lack of finance for action on nature and biodiversity in the EU Programme coverage: geographical and technical scope; delivery mechanism • Lack of finance for biodiversity in ORs and OCTs. • Opportunity to improve the coherence with IEE 2. To improve the strategic focus of LIFE Limited flexibility to provide funds for new and key environmental and climate priorities and launch strategically focused calls. Delivery mechanism: strategic flexibility 3. To improve LIFE's performance and catalytic role Unbalanced accessibility for beneficiaries in different Member States Delivery mechanism: Improve awareness and know-how in Member States Build on LIFE project successes and improve synergies with other EU programmes Delivery mechanism: increase effectiveness /sustainability of projects Under-utilised potential for Strategic Integrated projects Delivery mechanism: scope of integrated projects, and specific project type for nature mainstreaming. Opportunity to improve the leverage effect Delivery mechanism: improve the implementation of the financial instruments 4: To increase the efficiency and simplify the management of LIFE Potential opportunities to improve specific elements of the programme management Programme management: management costs Potential opportunities to improve specific elements of the monitoring and evaluation processes Programme management: monitoring and evaluation Potential opportunities to simplify the application procedures for certain beneficiaries Programme management: application procedures 3. Programme structure and priorities 3.1. Programme priorities Fundamentally, the priorities of the LIFE programme 2021-2027 remain unchanged from the present programme, namely to support the development and implementation of the EU's environment and climate policy, through catalytic actions that improve compliance on the ground at all levels. The operational challenges and the options to change the programme in order to address them are described in the box below. As can be seen in their description in Annex 8, these options are not alternatives, but rather measures that are assessed individually and can function in synergy. In Annex 8, the effectiveness, efficiency and coherence of each one of these options has been analysed and some of them have been discarded. Many of the options can be implemented without a net increase to the budget; where additional budget would be required this is described in annex 8 and below. Given the synergistic nature of the EU's environment and climate policies that underlie the LIFE programme and the fact that it is not appropriate to establish a hierarchy between the different environmental and climate policy areas, in case the budget is lowered, there will be a proportional reduction of the budget for the sub-programmes and thus a general reduction in funding for all activities covered by the LIFE programme. 3.2. Critical mass As described above, the programme's main impact arises from its catalytic actions to promote the substantial societal transformation required to achieve the full range of EU's environmental, climate and clean energy objectives. Annex 4 describes the overall level of change required for each thematic area covered by the Programme, based on the scale of the problems to be addressed. Given that the role of LIFE is to catalyse change, in order to reach the overall goals, a critical mass is required not only in LIFE but also in other financing sources which are 'mobilised' by LIFE actions. Any reduction from the present levels of financing would spread the funding too thinly across different thematic areas, for the full catalytic effects to be realised. Therefore, any expansion of thematic coverage or any new emerging priority will need to be accompanied by an adequate funding increase or by the definition of negative or limited priorities. The concept of negative priorities is difficult to apply in the environmental and climate spheres there is a demonstrated interdependence among the different priorities (e.g. air, water, nature and biodiversity, resource efficiency, climate mitigation, etc..). The specific unmet needs in the area of nature and biodiversity indicate that the critical mass needed, including to promote coordinated used of complementary funding sources, is significantly more than presently allocated. Further elements on an appropriate level of support for the different priority areas, defining also the need for the Strategic Integrated Projects, are provided in Annex 4. 3.3. The EU added value of LIFE The EU added value of the LIFE Programme is recognised by almost all stakeholders and the general public. Its approach is unique as it is specialised in catalytic interventions primarily targeting issues concerning environmental protection and climate action. According to the MTE, LIFE is fulfilling its role as a catalyst by sharing best practices and supporting actions to accelerate change. Highlighting its catalytic role, LIFE responds to cross-border environmental challenges, which a Member State is unlikely to address alone or which would risk leading to a duplication of efforts by Member States. The programme's value added stems from its support to EU environmental and climate policy development, as well as its support to activities enhancing the ability to meet EU environmental and climate objectives across the EU. More homogenous implementation is achieved because LIFE represents an EU-level platform for sharing best practice and for the demonstration of more efficient solutions as well as by giving priority to projects that can be replicated at a wider scale in the EU. LIFE allows a better sharing of responsibility and promotes solidarity for the management/conservation of EU environmental assets, which are usually public goods, which are not evenly distributed across the EU. Their associated costs and benefits are not normally reflected in the market and, as a consequence, there is the need to ensure a sharing of associated burden.

LIFE focusses on relatively small-scale projects providing one-off investment needed in a specific area, eliminating initial barriers and testing new approaches which in turn catalyse broader actions and mainstreaming of environmental and climate policy into the major EU spending instruments. Through strategic integrated projects, and the new strategic nature projects, the Programme will create synergies across EU and national funds which ease implementation of the relevant EU legislation. Furthermore, LIFE finances those actions and measures that would otherwise be inadequately financed by Member States alone. Certain pieces of EU environmental legislation, such as the Habitats Directive and the National Emission Ceilings (NEC) directive, specifically acknowledge the need for EU finance to meet their objectives. 3.4. Possible enhancements to the scope and structure of the future LIFE programme The internal structure and scope of the present LIFE instrument is generally considered sufficiently fit-for-purpose albeit there is room for broadening its scope and size, and reflecting the possible expanded scope in the area of transition to clean energy (see section 3.4.1) and nature (see section 3.4.2) through dedicated sub-programmes. Indeed, as described in Annex 6, there are potential gaps in meeting the needs for environment and climate finance in the various EU instruments as well as opportunities to enhance synergies between them. To address these challenges and better meet the related operational goal of avoiding gaps and ensuring coherence with other EU programmes, several options relating to potential changes in the scope and structure of the LIFE programme were identified and then screened in terms of effectiveness, efficiency and coherence. Annex 8, section 1 presents the relevant options and the results of the screening. The most promising options are summarised in Box7 below. They are further analysed in sections 3 and 4. In accordance with the methodology described in annex 7, the impacts of the options are considered taking into account environmental, social and economic factors, however only those impacts which differ from the status quo are mentioned. In practice, and in view of the fact that the options were conceived with the purpose of improving the effectiveness of the LIFE programme to meet its environment and climate policy goals, most of the observed net impacts concern environmental factors. 3.4.1 Extend the scope of the LIFE programme to include capacity-building projects related to clean energy by adding a sub-programme on Clean Energy Transition This option is introduced to respond to the operational challenge to increase coherence between EU instruments and further develop synergies between the funded actions. This option would involve extending the scope of projects supported through LIFE to include the capacity-building activities of the Intelligent Energy Europe Programmes (IEE), along with the necessary funding. Focusing on energy efficiency and small-scale renewables that contribute to climate mitigation, the relevant activities would be funded under a new Clean Energy Transition sub-programme. Their objective is to enable socio-economic transformation for transition to clean energy in Europe, especially with those regions, sectors and actors who need to catch up (e.g. cities, coal and carbon-intensive regions in transition, islands). The transition to clean energy is an essential contribution to the mitigation of climate change with co-benefits for the environment and in line with the LIFE framework. These activities address the different elements of the market environment by developing and spreading best practice in policy implementation, mobilising investments, improving skills, creating favourable market conditions for technology deployment and providing support to socio-economic transformation and addressing vulnerabilities. Lessons learnt: The evaluation of IEE and the integration in Horizon 2020 under the Societal Challenge 3, did not reveal major weaknesses and confirmed the effectiveness of the funded actions. The integration of the Clean Energy Transition sub-programme in LIFE is expected to lead to improvements and address the shortcomings of the current approach as presented in Annex 9, section 9.3. The main shortcoming, which will be addressed, is the different focus of the R&I framework programme which does not specifically aim at supporting capacity building activities. The integration of IEE III into Horizon 2020, with different objectives, clients and funding logic, has proved to be difficult and the current proposal is to continue these activities under a better suited framework. The inclusion of IEE-like actions under the R&I programme followed the logic of installing a comprehensive programme covering all steps from basic research to market uptake and deployment. However, in the report on the first results of Horizon 2020 on energy efficiency the evaluators point out that mainly large consortia are funded, too little support is given for the applicants and that the impact on national policies could be improved. Also, higher barriers to participation in Horizon 2020 than in IEE actions are mentioned (see Annex 9 9.2.2. Lessons learnt from the current MFF for the details). Conclusions for the next MFF: 1. The Horizon Europe programme does not specifically cover 'capacity building' activities in its scope The R&I programme objective is to fund excellent research and innovation, supporting pioneers who will show the way. But the EU has also the responsibility to help laggards and followers 'catching up' by building the capacity in order to quickly narrow the gap. There is also a need to address specific barriers hampering the wide uptake of the existing clean energy solutions. For the massive market roll-out, 'expected impact' and 'quality of implementation' criteria should outweigh the criterion of 'scientific excellence', which has less of relevance for capacity building. Based on this conclusion the unsuitability of the R&I framework for capacity building is confirmed in the R&I FP proposal for the next MFF, where the clear demarcation is made in the Horizon Europe Impact Assessment between a 'first-of-the-kind market uptake of innovation' and 'capacity building for a large-scale market uptake'.

As stated in the Horizon Europe impact assessment improving market uptake of innovative solutions is a broad concept encompassing various activities, which help R&I -driven innovation to succeed on the market and create new value for market players and consumers/citizens alike. However, market uptake goes beyond research and innovation. Therefore, activities under the Framework Programme alone cannot suffice to incentivise broad market uptake and dissemination of innovative solutions. Other EU programmes need to also play a key role (see Horizon Europe Impact Assessment Annex 7 on Synergies). 2. Bringing the clean energy capacity building and deployment activities under the LIFE programme will increase the coherence of the European funding landscape As research and innovation activities would rest with Horizon Europe, the clear distinction between excellent research and innovation, including market uptake of first of a kind innovations, on the one side and supporting the catching-up and rolling-out processes by capacity building, removing barriers and shaping market on the other side leads to improving the coherence of EU funding landscape. This coherence would allow the Clean Energy Transition sub-programme to tailor its interventions more closely to the often limited capacity of catch-up actors and territories and lower the barriers for participation in the programme (see Annex 9 for a comprehensive review of barriers to energy efficiency uptake). 3. LIFE provides the best suitable framework and the potential for synergies while the differences in the implementation know-how will be mutually enriching when integrating the Clean Energy Transition sub-programme. a.Programme coherence and avoidance of overlaps: LIFE provides a suitable regulatory environment, taking into account its intervention logic, legal base and delivery mechanisms aiming to implement EU environment and climate policy. The LIFE programme offers the possibility to host the clean energy capacity building that contributes to climate mitigation in a clearly structured but at the same time flexible framework. Installing the Clean Energy Transition sub-programme in LIFE would ensure that potential theoretical overlaps between LIFE and the present IEE III are avoided (see annex 6 for a discussion) and that gaps between the two programmes are filled. b.Synergies and multiplier effects: Joining forces would enable synergy effects, which can be triggered by the projects implemented under the common framework (tackling energy efficiency, greenhouse gas emissions and local air pollutants at the same time). Such a synergetic action between the projects and the underlying policies is already observed, like in the case of the Covenant of Mayors initiative, and it will be further strengthened . There is also a potential for exploiting synergies between actions supporting capacity building for clean energy transition on the one hand and strategic LIFE integrated projects focusing on implementing climate mitigation plans at a larger scale. These synergies could be more easily exploited if these actions were funded under the same programme (see also Appendix 3 to Annex 9, summarising some examples of the existing synergies in the projects and initiatives for environment, climate and clean energy). c.Further development of the implementation know-how: The clean energy transition enabling actions funded under IEE and its continuation in Horizon 2020 have developed their own implementation intelligence, know-how and close interactions with policy-making, which are exemplary across all the centrally-managed EU funding activities. This precious experience needs to be preserved, while the implementation modalities and instruments available in LIFE are definitely worth exploring. This justifies the integration of Clean Energy Transition as a separate sub-programme, which would allow differences in implementation approaches and facilitate clear communication to the stakeholders. Implementation knowledge cross-fertilization would be facilitated by the fact that both LIFE and IEE activities in Horizon 2020 are implemented by EASME and the frequent interactions and common initiatives (e.g. common projects feedback workshops) are already in place between the units implementing both programmes. d.Simplification potential: The evaluation of IEE type of actions under Horizon 2020 suggests that there is a clear potential for simplifying the presently complex application procedures. The review showed that the Horizon 2020 framework favours bigger projects and large consortia, putting forward resource-intensive research and innovation efforts. This crowds out smaller participants and projects. In consequence there is not only a need for simplified administration on the side of the Commission, but also the need to guarantee simple and open access to the programmes for the potential beneficiaries, especially catching-up actors with limited capacities (see Annex 9.3.3. Simplification efforts for details). Assessment of the integration option: The Horizon 2020 sustainable energy capacity building projects are currently managed by EASME and currently sit within the Horizon 2020 budget programme with an allocation ~€135 million per year. A planned expansion of the allocated annual budget for these projects to ~€171 million could include the policy support and capacity building for renewables Particular focus is given to capacity building related to the implementation of the climate and energy package in the Member States, as a key enabler for acceleration of the technological, financial and social transformation. This option would extend the current thematic coverage of LIFE to explicitly include capacity building for policy implementation and investment mobilisation for the uptake of existing technologies related to: energy efficiency and small-scale, distributed renewable energy sources for climate mitigation. The option will not include projects on biofuels. The option would not require any change to the current management modes, delivery mechanism and type of projects financed under LIFE. Table 3.1: Assessment of option 1 Relevant conclusions from screening results Effectiveness + Greater concentration of financial resources would improve capacity to have a greater catalytic effect. Coherence + Increased coherence in the overall MFF structure since the actions to be financed under this extension correspond better to those already financed by LIFE as regards their size, nature and objectives, as compared to the other projects financed under the framework programme for research and innovation. + Increased synergies in energy, environmental and climate policies implementation on the ground and improved coherence of the EU funding landscape. Impact assessment (qualitative assessment) Economic impacts + Potential accrued economic impact due to the integration into LIFE, although the activities were already in place under a different programme. Social impacts + Increased number of beneficiary groups Environmental impacts + Potential accrued environmental impact due to the integration into LIFE, although the related activities were already in place under a different programme. Conclusions Greater positive impacts, in particular on ensuring coherence and synergies. Potential negative implementation-coherence impact and increased administrative burdens. 3.4.2. Extend the scope of the LIFE programme to improve mainstreaming for nature and biodiversity

This option, as the one to finance large scale deployment activities for nature and biodiversity which was discarded during the preliminary screening (see Annex 8), intends to address, at least partially, the unmet needs in the area of nature and biodiversity. Under this option, LIFE would include a specific sub-programme for 'nature and biodiversity' covering both the terrestrial and marine environment. This 'nature and biodiversity' sub-programme would consist of a reinforced centrally managed component funding actions similar to those presently implementing the Nature and Biodiversity priority area of LIFE through 'traditional' standard action projects, as well as funding a new type of dedicated strategic nature projects. The strategic nature projects (SNPs) would reinforce the implementation of Union nature and biodiversity objectives through mainstreaming these objectives into other policies and funding instruments. These projects will support the implementation of programmes of action for each Member State, including the coordination of finance available for large-scale nature and biodiversity actions, with a particular focus on the Natura 2000 network and the implementation of the prioritised action frameworks established pursuant to the Habitats Directive. This option does not change the objectives of LIFE, nor does it significantly alter the structure of delivery mechanisms of the Programme. This option would be complemented by actions, particularly under the European Agricultural Fund for Rural Development (which presently provides 75% of EU funding for nature), the European Regional Development Fund/Cohesion Fund and the European Maritime and Fishery Fund, that target direct investments in nature conservation and biodiversity or that contribute indirectly to protecting nature and biodiversity. The effectiveness of this approach is therefore dependent on adequate allocation of funding under these other instruments. Table 3.2: Assessment of option 2 Relevant conclusions from screening results Effectiveness ++ This option would be an effective, targeted solution having the conservation of nature as overarching objective. + It would facilitate the smooth transfer of best practices developed in the classical LIFE actions to large scale implementation actions implemented in the Member States. + Uptake of the funds for nature actions, which has sometimes been sub-optimal under the CAP and Structural Funds, would be enhanced due to a greater role for the environment authorities who would be better placed to ensure uptake. Impact assessment (qualitative assessment) Economic impacts - Planning and coordination effort needed from the environment authorities. Social impacts ++ Positive impact on governance: the establishment of dedicated managing authorities would ensure the close articulation of actions with nature policy activities in the MSs; it would ensure a smooth transfer of best practices developed in the classical LIFE actions to large-scale implementation actions implemented in the Member States. Environmental impacts ++ Increase in nature and biodiversity large-scale deployment projects, direct positive impacts Other considerations Relevance + It will address the gap in financing for nature and biodiversity in EU, and would support implementation of EU nature legislation, including in the marine environment, in line with findings of the Nature fitness check. EU added value + High EU added value since natural capital is a quintessential EU public good. Mainstreaming and coherence + Experience with integration of nature and biodiversity in the CAP has so far fallen short of expectations. The 2017 "Communication on the future of farming and food" recognises the link between agriculture and environment and the need to integrate environmental objectives as a means to ensure coherence between policies and to enhance the delivery of natural capital public goods in rural areas. The strategic nature projects would specifically improve this. Conclusions Effective targeting of support for financing for nature and biodiversity, with positive social and environmental impacts. Potential small negative economic impacts as a result of increased administrative burden. Coherence with mainstreaming approach. 3.4.3. Extend eligibility of LIFE to the EU's Overseas Countries and Territories (OCTs) specifically for nature and biodiversity actions within the Environment sub-programme This option would involve a change in the Article 6 provision of the LIFE Regulation, allowing the eligibility of projects on nature and biodiversity in OCTs countries under the same conditions as the ones in the EU. The BEST scheme has addressed a gap related to the financing for biodiversity in the Outermost Regions (ORs) and in the OCTs. It has allowed substantial synergies and its financing should be continued. In the absence of a specific legal basis, the financing of this scheme is decided each year by the Budgetary Authority: in 2018 a preparatory action has been financed. According to the Financial Regulation, a preparatory action is designed to prepare a proposal for the adoption of future actions and cannot be renewed for more than 3 consecutive years. There is therefore the need to provide a (more) stable financing framework for the continuation of BEST in the next MFF. The external development instrument, the regional funds or the LIFE Programme could constitute such framework. However, given the need to include both ORs and OCTs, the eligibility rules of the concerned programme, whatever it will be, would need to be changed. Taking into account the type of actions (small-scale grants) and the specific sector (biodiversity), the LIFE Programme seems to be the most suitable framework, subject to additional funding being made available. This option would allow the continuation of the financing of the BEST scheme under LIFE under its Nature and Biodiversity sub-programme. Table 3.3: Assessment of option 3 Relevant conclusions from screening results Effectiveness + Secured future for the BEST initiative, supporting the financing of small-scale demonstration projects related to biodiversity in both the OCTs and the ORs (which are already eligible under LIFE). Impact assessment (qualitative assessment) Economic impacts - Additional funding would be needed to support the BEST scheme (8 million Euro per year) without displacing finance for other LIFE priorities. Social impacts + The grassroots organisations that are receiving support under BEST could continue their activity for the protection of biodiversity. Environmental impacts + Additional support for biodiversity hotspots in OCTs and ORs, positive climate resilience benefits from ecosystem-based adaptation solutions. Conclusions Potential positive impacts on external coherence of the Programme and on biodiversity in OCTs and ORs but there is the need to ensure no overlap with the external development instrument for OCTs. 3.5. Conclusions The LIFE programme has a very high EU added value and its scope and structure are generally suitable to its objectives. This section presents three possible extensions to the current scope of the LIFE programme. The option to extend the scope to include the energy efficiency and renewable energy actions presently financed under Horizon 2020 is clearly desirable and should be implemented as a priority, provided the new LIFE Programme is equipped with the necessary funding. The option to extend LIFE to further support the mainstreaming of nature and biodiversity objectives is a highly viable alternative for better financing of nature. In line with the Commission communication on the post 2020 financial framework,., this would improve coherence in the overall structuring of the EU budget by facilitating an improved mainstreaming approach. The integration of the BEST initiative for OCTs (and ORs) is a smaller extension to the programme, which also shows an overall positive impact. Unless either an external instrument or the European Regional Development Fund can finance the entirety of the BEST initiative, it should be incorporated into LIFE, to the extent that the capacity of LIFE to address other priority objectives is not weakened.

4. Delivery mechanisms of the intended funding The present LIFE instrument comprises a variety of delivery mechanisms including several types of standard action grants, strategic integrated projects, technical assistance to develop integrated projects, preparatory projects, operational grants for NGOs, two financial instruments, capacity-building projects for certain Member States and procurement. As mentioned in Section 1.2, these mechanisms (also described further in Annex 5) have been assessed as generally effective and efficient in delivering the objectives of the LIFE programme. It is therefore not appropriate to substantially modify the delivery mechanisms or management model of the programme. Elements such as the NGO operational grants will be continued in their present format. However, this section explores some possible options for further improving the effectiveness and efficiency of the LIFE programme. As in Chapter 3, these options are not alternatives, but rather complementary measures that are assessed individually and could be applied in synergy. In accordance with the methodology described in Annex 7, only those impacts which differ from the status quo are mentioned and most of the observed net impacts concern environmental factors in view of the inherent nature of the options. 4.1. Possible enhancements to funding mechanisms As previous sections of this report indicate, several challenges and opportunities have been identified in relation to LIFE's present funding mechanisms. In particular, operational challenges have been established as the basis for further optimisation in view of evolving policy needs to improve the performance and catalytic role of LIFE, and to improve the strategic focus of LIFE. Options for addressing these operational challenges and improving simplification are presented and screened in Annex 8. An overview of the options assessed is also presented in Box 6 above. The most promising options are further considered below. In terms of project management arrangements, the present model is considered to be the best option. Some measures related to the reduction of the administrative burden are included in Annex 9. 4.1.1. Expand the scope and scale of Strategic Integrated Projects (SIPs) This option is meant to improve the performance and catalytic role of LIFE. The proposed option is an expansion in both the scope and scale of the integrated projects which will be called strategic integrated projects (SIPs) in the post-2020 programming period. The SIPs are designed to support Member State implementation of key environmental or climate plans and strategies, so are focussed on practical support to policy implementation. Since the concept of integrated projects is proving effective during the present programme, it should be reinforced through both: ­an increase in the SIPs targeting the presently eligible plans (air, water, nature, waste, climate mitigation and climate adaptation). As regards waste, SIPs would be eligible for both waste management plans and, as a new feature, for waste prevention programmes, in coherence with the overall aim of transitioning towards a circular economy and ­an increase in the scope of the SIPs under the Environment sub-programme (to include also plans for national emissions ceilings, noise, marine environment and nitrates in accordance with the relevant legislation and policies). SIPs related to the marine environment could be developed through LIFE and EMFF funding. While the funds allocated for integrated projects in the current programming period have been at a level appropriate to piloting the concept, this level does not allow full realisation of the potential of the mechanism as a tool for improving compliance with key climate and environment policies and legislation, and would need to be increased. This would imply an overall funding increase in the LIFE budget so as to ensure continued availability of funding also for other project types. Specifically in order to respond to the considerable needs for financing in the area of nature including the marine environment, identified in the Nature Fitness check, and in order to ensure that LIFE can play the necessary role in coordinating actions related to nature and biodiversity under the mainstream EU funds, the number of strategic projects for nature (SNPs) should be significantly increased and their focus on mainstreaming should be reinforced (see section 3.4.4). Further information about the critical mass required for SIPs can be found in the relevant section of annex 4. Table 4.1: Assessment of option 4 Relevant conclusions from screening results Effectiveness + This effective mechanism for promoting compliance would cover more key elements of environment and climate policy, addressing a wider range of implementation challenges. Efficiency + Cost-efficient way to ensure coordinated use of environmental mainstreaming in other EU instruments, including financial instruments. To ensure the full potential of SIPs and SNPs, however, the programming process for the mainstream funds needs to be sufficiently flexible to allow the financing of complementary actions after SIPs and SNPs are defined. At the very least, the potential for such complementary financing needs to be taken into account in the national strategies and programmes for implementing the main funds. Impact assessment (qualitative assessment) Economic impacts + More potential to mobilise finance from sources other than EU programmes for environmental and climate objectives - While greater administrative burden can be expected, given that the process for processing SIPs is already established the impact will not be significant but procedures and resources will be required to ensure policy coherence. - Additional budget required Social impacts ++ Positive impacts on capacity building / Positive impact is on governance and ownership of stakeholders in playing their role Environmental impacts + Potential to achieve greater environmental and climate impacts as a result of the targeting of the most pressing environmental and climate issues + Potential for better governance of nature and biodiversity given the more emphasis on this area Other aspects Mainstreaming The success depends on condition that the other instruments provide the expected levels of environmental mainstreaming for complementary actions. The large over subscription for such projects limits this risk. Conclusions Only very minor negative impacts and significant positive impacts on social and environmental aspects. 4.1.2. Targeted support to upscale and replicate successful projects This is a second option aimed at improving the performance and catalytic role of LIFE. LIFE would provide targeted support to facilitate the upscaling and replication of successful LIFE project results. It would therefore increase overall performance by enhancing the impacts of the projects supported by the programme, and focussing the effort on those projects with the greatest potential impact. This would include a range of mechanisms such as follow-up technical assistance grants to provide coaching and finance to develop upscaling and/or replication plans and undertake centralised measures to diffuse project results to relevant stakeholders. These technical assistance will be small in size and would not require additional budget overall for the LIFE programme. Targeted support could help to facilitate access to technical assistance/grants, e.g. following the successful example of the ELENA facility, or blending or pilot financial instruments under the centrally managed EU Invest Fund, as a means of enhancing sustainability and dissemination of project results. In such option, the overall existing focus on follow-up plans during project duration would remain and use as a reference for identification of the more promising projects. It would be complemented by additional targeted support actions.

This approach will be coordinated with policy initiatives, taking into account and building on existing dissemination activities (databases of measures, Country Dialogues, Commission-led networks such as the Covenant of Mayors for Energy and Climate, expert groups, conferences, etc.). It will thus strengthen the link between LIFE and policy development. Table 4.2: Assessment of option 5 Relevant conclusions from screening results Effectiveness + Increase support to most promising projects Coherence + Increased synergies with other EU programmes Impact assessment (qualitative assessment) Economic impacts + improved contribution to the Europe 2020 Strategy and in particular to sustain innovation - Increased administrative burden to deal with applications, and also tailoring of support to different types of projects Social impacts + improved contribution to the Europe 2020 Strategy and in particular to create and maintain jobs Environmental impacts ++ Upscaling of positive environmental and climate impacts: enhanced overall impact of LIFE projects through replication and upscaling of positive environmental and climate impacts Others Catalytic effect + Improved catalytic effect of the Programme Conclusions Significant positive environmental impacts. Further positive impacts on social aspects and coherence. Potential negative economic impacts. 4.1.3. Address the unbalanced participation of candidates from some Member States to LIFE calls for proposals through a reinforced network of LIFE contact points and targeted capacity-building actions This option is aimed at improving the performance and catalytic role of LIFE, notably through enhancing participation from different Member States. Taking into account the experience of the current national capacity building projects, the capacity of the LIFE contact points will be enhanced through the financing of networking activities. Specifically, it will improve performance by focussing on those approaches that have been most effective under the current programme at building the capacity of national contact points to support the preparation of high quality proposals. The funding for the network would be managed centrally by the European Commission or EASME, and participation would be open to all Member States. The funding would be used to target the specific capacity building needs of the National Contact Points (NCPs), including through mutual learning. It would also include a component targeting barriers to participation specifically in Member States with a low absorption rate. This evolution is in line with suggestions already made by several NCP which have tried to initiate such cooperation in the framework of the preparation of the Multi Annual Work Programme 2018-2020. It would still lead to specific target actions similar to the existing capacity building projects. In turn, the increased capacity of the national contact point will enhance their role in supporting project applicants, leading to both an increase in participation rates from selected Member States, as well as high quality proposals. These activities will be supported using the budget that is currently allocated to capacity building projects under the current programme. Table 4.3: Assessment of option 6 Relevant conclusions from screening results Effectiveness +/- Expected wider impact than the present capacity building projects, which have shown only limited results to date but no evidence yet that it will produce anticipated results + Greater flexibility to target interventions to specific needs Impact assessment (qualitative assessment) Economic impacts + Reduced administrative burden associated with submitting/processing of application and award than for the capacity building projects for all concerned MS Social impacts + Enhancing ownership, governance and potential involvement of all Member States + Positive impacts linked to the possibility to learn from experiences of other countries Environmental impacts No significant environmental impacts. Other considerations EU added value + Positive impacts linked to the possibility to learn from experiences of other countries Flexibility + Greater flexibility to target interventions addressed to specific needs Conclusions Positive impacts on education and training, whilst also offering greater flexibility. May require additional management time. 4.1.4. Increase the co-financing rate This is the fourth option for responding to the operational goal to improve the performance and catalytic role of LIFE, notably through enhancing participation for beneficiaries in different Member States. The maximum EU co-financing rates that are included in the LIFE Regulation would be increased and therefore project beneficiaries would be required to provide less co-financing. It will therefore improve performance by removing one of the barriers to applicants. Additional budget would need to be made available to allow for an increase in co-financing rates whilst maintaining the same number of projects to be supported. Table 4.4: Assessment of option 7 Relevant conclusions from screening results Effectiveness +/- Alleviates one of the barriers to participation, but increasing the co-financing rate may means that fewer projects can be supported in total unless the overall budget is increased. Coherence + Potential for increased coherence if increased co-financing rate ensure greater harmonisation across other programmes Impact assessment (qualitative assessment) Economic impacts - If the overall budget is not increased proportionately, fewer projects can be financed, decreasing the total cumulative impact of LIFE interventions. Social impacts ++ Increased access of funds and hence increased participation from beneficiary groups which have limited co-financing capacity. +Alleviates one of the barriers to participation, and thereby encourages projects from some of those countries that currently have low participation rates due to lack of resources for co-financing. Environmental impacts No significant environmental impacts. Other considerations Quality of projects - Might create false demand and stimulate more applications for lower quality projects. The rate of over subscription of the on-going LIFE programme should ensure that this risk will be very limited. Conclusions Would increase participation of beneficiary groups but this may be at the expense of a reduction in the cost-effectiveness of the programme, as fewer projects would be supported. 4.1.5. Systematically define and develop synergies with other instruments It would complement the present practice of giving preferential treatment in standard LIFE project applications to projects which build on the result of relevant EU research projects (Horizon 2020 or previous programmes). The preference could be extended to results from other programmes that develop small-scale pilots, such as Interreg. This option would not require any specific modifications to the LIFE legal base, but would require more coordination and control at the level of programming and implementation among the concerned DGs and Agencies . No additional budget will be required to implement this option.

Table 4.5: Assessment of option 8 Relevant conclusions from screening results Effectiveness + Expected to increase catalytic effect, but scale is uncertain Coherence + Will build coherence with other funding programmes. Impact assessment (qualitative assessment) Economic impacts + Facilitates the dissemination of new ideas and projects, supporting innovation. + Ensures continued support to promising projects Social impacts No significant social impacts. Environmental impacts + Greater impact in terms of environmental and climate policy goals may be expected by increased link of LIFE interventions with large scale implementation. Other considerations EU added value + Clear EU added value in maximising the impact of EU finance Conclusions Potential positive impacts on innovation and potential to increase coherence with other funds and create EU added value. No negative impacts. Such an evolution will require some effort to define and operationalise the mechanisms but is feasible as long as the legal bases do not prevent such mechanisms. 4.1.6. Financial Instruments delivered through a central fund. This is the sixth and final option considered to respond to the operational goal to improve the performance and catalytic role of LIFE. At present the LIFE Programme operates two small-scale pilot financial instruments. After the pilot phase, thus in the next MFF, such instruments could be upscaled and delivered through a central funding instrument (InvestEU Fund) to allow synergy and economies of scale. This up-scaling would require additional budget. As described in Annex 6 the EU employs a large and increasing number of FIs, several of which could support projects of a similar nature to those targeted by LIFE’s FIs (i.e. PF4EE and NCFF). PF4EE’s design features specify the nature of support it offers, it helps intermediary banks in Member States to develop and offer specific loan programmes for energy efficiency projects and supports projects that help achieve the national energy efficiency action plan objectives, plus Member State energy efficiency programme objectives. It offers a combination of an EC guarantee, an EIB loan and a technical assistance facility. This combination distinguishes it from the majority of other instruments that can finance energy efficiency projects, although none of the elements are unique. Some potential overlap with EBRD and ERDF loans was highlighted in the Mid-term evaluation of LIFE, there are also other FIs that could support energy efficiency projects (including the EFSI). However, due to the vast investment needs in energy and climate projects that are necessary to achieve the EU’s 2030 objectives, and the relatively small scale of PF4EE the risk of FIs seeking to support energy efficiency projects crowding each other out appears minimal. The NCFF provides €10 million of technical assistance and €50 million guarantee to support EIB investments of up to €125 million that are intended to contribute to the EU’s biodiversity and climate adaptation objectives, financing projects that generate a revenue stream from natural capital. This is a new approach and thus no other European FI offers a competing service. For the future, the creation of the InvestEU Fund as Union-wide investment instrument, providing an EU guarantee with a view to mobilising public and private financing to support various political priorities represents a great opportunity for new synergies. This instrument will be the single entry point for 360-degree project development assistance for project promoters. The suggested structure of this InvestEU Fund includes the following four windows: Social, skills, and human capital; SMEs; Research and Innovation; Infrastructure and Climate. The InvestEU Fund is expected to play an important role with financial instruments for market related action, in particular by supporting a thematic investment platform for research and innovation in the Blue Economy. Besides the existing financial instruments, the opportunity to finance technical assistance and/or blending mechanisms, recommended in the LIFE mid-term evaluation, would be explored. Table 4.6: Assessment of option 9 Relevant conclusions from screening results Effectiveness + Possibly a larger budget and economies of scale could be available under a window in a single instrument + Increase support to most promising projects Efficiency + Specificity of the financial instruments in the testing phase offset in the long run by improved economy of scale in the use of FIs Impact assessment (qualitative assessment) Economic impacts + Improved contribution to the Europe 2020 Strategy through upscaling revenue generating solutions Social impacts + Improved contribution to the Europe 2020 Strategy and in particular to create and maintain jobs Environmental impacts + Upscaling of positive environmental and climate impacts: enhanced overall impact of LIFE projects through replication and upscaling of positive environmental and climate impacts from successful pilot FIs, and from blending Others Catalytic effect + Improved catalytic effect of the Programme Conclusions Significant positive environmental impacts. Further positive impacts on socio-economic aspects and coherence. InvestEU should include more financing for these up-scaled financial instruments than currently foreseen in the existing LIFE program (2014-2020) . 4.1.7. Improving the strategic focus of the programme by simplifying the Regulation and the MAWP. This option responds to the operational goal to improve the strategic focus of LIFE, specifically including the possibility to target specific new and key policy priorities, in line with the cross-cutting objectives of the MFF to pursue budget flexibility and simplification. It involves the removal of: ­The current list of thematic priorities and related activities under the Environment sub-programme from the LIFE Regulation. The thematic priorities could be included in the MAWP. ­The ceilings related to various delivery mechanisms or thematic areas, beyond the earmarking by sub-programmes, for biodiversity and for project types. This option would allow for further earmarking within the MAWP and/or in yearly calls for proposals, to target key and emerging priorities including circular economy and plastics waste. No additional budget will be required to implement this option. Table 4.7: Assessment of option 10

Relevant conclusions from screening results Effectiveness + Ensures the alignment of the MAWP with new and emerging policy priorities. Efficiency + Increased possibility to adapt the delivery mechanisms to the demand Coherence + Increased coherence with other EU policies as it creates more room for flexible response to priorities. Impact assessment (qualitative assessment) Economic impacts - Potential negative impacts on applicants because it would de facto decrease the bottom-up allocation, which many applicants favour because it allows some predictability related to the priorities targeted in future calls. Only a limited portion of the budget would be thus earmarked for key priorities. + Reduction of the administrative burden linked to the respect of the ceilings Social impacts No significant social impacts. Environmental impacts + Potential for increased environmental impacts + Increased impact on priorities which are not covered with the "pure" bottom up approach. + Potential increased impact on new/urgent environmental challenges. Conclusions Greatest positive impacts relate to increased flexibility. Some positive impacts on coherence. While negative economic impacts are expected. 4.2. Conclusions Most elements of the present LIFE delivery model can be considered to be fully functional at present and do not need any modification. Concerning the operational goal to improve the performance and catalytic role of LIFE, two options were explored in relation to improving the accessibility of LIFE for applicants from all EU Member States. The option to provide centralised support to the entire NCP network instead of the present national capacity building projects (for only certain MSs) is assessed positively. The option of increasing co-financing rates would need to be further considered once the overall shape and budget of the LIFE programme for the next MFF will be decided and basing on the demand over time. It is important that the legal base does not prejudge this issue in line with the existing template. Several other complementary options were considered to improve the performance and catalytic role of the Programme. Among them, the extension of the SIPs is considered to be the most powerful mechanism based on the pilot experience of integrated projects in the present LIFE programme. The options to enhance replication and to increase both the flexibility of the programme and the possibility to target key and emerging issues through simplifying the Regulation and the MAWP have no serious negative implications, so should both be introduced. Concerning financial instruments, it would beneficial to upscale the current LIFE pilot instruments under InvestEU in the next MFF (2021-2027). The options that are not depending on additional budgets should be implemented in any event. If the budget is specifically increased to include Clean Energy Transition and/or to include a sub-programme for Nature, these options (option 1 and 2) should be included in the structure of the Life Programme. If the LIFE budget is expanded in general, the options 3, 4 and 5 could be implemented. 4.3. Programme management The MTE concluded that current management arrangements of the programme were efficient and effective. The same conclusion was made with respect to the monitoring and evaluation arrangement of the current programme. Nevertheless, some further options were considered as part of the Impact Assessment to explore whether further improvements could be made to the programme management and monitoring and evaluation processes. 4.3.1. Package of measure to reduce the administrative burden for the applicants/beneficiaries This combination of measures is proposed in order to respond to the operational goal of introducing simplification measures, where possible. This package includes changing some of the processes and systems that are used in the programme management, including: ·Taking into account the experience of the ongoing pilot, consider further waiving the requirement to submit a complete proposal at the start of the application process by expanding the use of a two-step award procedure for standard projects. This has already been applied for integrated projects and is being piloted for some traditional projects. It would reduce administrative burden for applicants. ·Adapting reporting requirements in proportion to the length and complexity of projects and the value of the grant. ·Simplifying the indicators database, based on project focus. ·Use of Simplified Cost Options, payments based on output, limitation of eligible costs for grants. ·Use of cascading grants with limited reporting, with the involvement of the monitoring team ·Simplification of the application process, including rationalised forms and supporting documents The detailed assessment of the impact of these measures in comparison to the business as usual scenario showed the following: Table 4.8: Assessment of measures to reduce the burden for applicants/beneficiaries ·Relevant conclusions from screening results Efficiency +Increased efficiency Effectiveness + Increased effectiveness Impact assessment (qualitative assessment) Economic impacts + Reduced barriers to entry for applicants. + Reduced administrative burden and increase of flexibility for beneficiaries + Reduced administrative burden for EASME and EC. Social impacts No significant social impacts. Environmental impacts No significant environmental impacts. Conclusions Greatest positive impacts relate to the reduction of administrative burden.

4.3.2. Streamlined procedures for the implementation of the EU budget These measures respond to the operational goal to introduce simplification measures, where possible, and to increase efficiency in the implementation of the programme. They include: ­the mention in the Regulation of selected organisations, which regularly receives grants without a call for proposals according to Art.190 of the RAP (e.g. because they have a de facto monopoly or the specific administrative power required for the implementation of projects with special characteristics) so that grants can be awarded directly without the need of an exceptional procedure. This will be restricted to a few organisations, such as the IMPEL network and the network of National Contact Points. ­the reduction of the multiple budget lines linked to the LIFE Programme and used for internal management to one operational line per parent DG while going on with the current system for tracking the funds per priority area. The assessment of these measures in relation to their economic, environmental and social impacts in comparison to the business as usual scenario showed the following: Table 4.9: Assessment of measures to make easier the budget implementation ·Screening results Efficiency + Increased efficiency Impact assessment (qualitative assessment) Economic impacts ++ Simplification – reduced burden for both the applicant and the Commission + Elimination of the administrative effort needed to move any unspent money between budget lines Social impacts + Ensuring the possibility of long term development plan to the beneficiary organisations. Environmental impacts No significant environmental impacts. Other considerations Transparency The organisations which would receive recurrent grants would be clearly stated in the Regulation. ·Conclusions Greatest positive impacts relate to the reduction of administrative burden. 5. How will performance be monitored and evaluated? The general and specific objectives proposed in Section 2.3 place greater emphasis on the catalytic role of LIFE and its contribution to supporting societal transformation through replication and the triggering of large-scale deployment rather than focusing on outputs at project level. Moreover the transition to clean energy has been added. Thus, while performance should still be measured at project level (building on the current monitoring and evaluation framework), additional performance criteria have been identified to strengthen the monitoring and evaluation of LIFE’s catalytic effect at programme level (as defined below). The assessment of the catalytic effect of the Programme is extremely difficult because LIFE funds small and heterogeneous projects. Moreover, the related indicators need to incorporate the different possible dimensions of the catalytic effect delivered, which can be: ­Temporal (i.e. in leading to the replication of an activity beyond the timespan of a LIFE project) AND/OR ­Sectoral (i.e. beyond the sectoral bounds of a LIFE project – a specific technology or practice can be tested in another sector/technical context) AND/OR ­Quantitative (i.e. a "practice" which is generalised) AND/OR ­Spatial (i.e. beyond the geographic bounds of LIFE projects) AND/OR ­Financial (i.e. every LIFE project mobilises external co-financing). In summary, the monitoring and evaluation framework is designed to facilitate the assessment of LIFE’s performance in the following ways: 0.Contribution towards meeting EU environmental, nature and biodiversity and climate targets: measured in quantitative terms (as a direct outcome) using standard EU environmental indicators, with the metric, baseline and milestone set at project level for use as illustrative examples to assess progress at programme level in qualitative terms. 1.Contribution towards improved environmental and climate governance: measured in quantitative terms (as a direct output) by the extent of LIFE projects supporting the development, implementation, monitoring and enforcement of environmental and climate policies. The contribution to improved environmental and climate governance is assessed at programme level in qualitative terms against a wider policy landscape. 2.Contribution towards socio-economic transition: measured at programme level in qualitative terms (as an indirect outcome) by the extent of LIFE’s catalytic effect according to various dimensions, including: temporal (project runs for an extended time period), sectoral (approaches or techniques are adopted across sectors), spatial (approaches or techniques are adopted across territories), quantitative (a novel or emerging technique succeeds in becoming commonplace), or financial (additional finance is secured to support large scale deployment). The proposed monitoring and evaluation framework reflects the change in focus arising from the revised general and specific objectives as well as the lessons learned from the current programming period (section 1.2.). Notably, the reporting requirements at project level have been simplified and the application of the performance criteria (in qualitative terms) has been centralised. The reporting requirements and indicator design that inform this framework are set out in section 5.2 below. 5.1. Lessons learned related to the existing monitoring and evaluation framework The present LIFE Regulation (Article 3.3) identifies the performance indicators against which the program