EUROPEAN COMMISSION Brussels, 6.6.2018 COM(2018) 438 final 2018/0228(COD) Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL establishing the Connecting Europe Facility and repealing Regulations (EU) No 1316/2013 and (EU) No 283/2014 (Text with EEA relevance) {SEC(2018) 292 final}

{SWD(2018) 312 final}

{SWD(2018) 313 final}



EXPLANATORY MEMORANDUM 1.CONTEXT OF THE PROPOSAL This proposal aims at establishing the legal basis for the Connecting Europe Facility (CEF) for the period beyond 2020. It provides for a date of application as of 1 January 2021 and is presented for a Union of 27 Member States, in line with the notification by the United Kingdom of its intention to withdraw from the European Union and Euratom based on Article 50 of the Treaty on European Union received by the European Council on 29 March 2017. •Reasons for and objectives of the proposal The Commission presented on 2 May 2018 its proposal for the Multi-annual Financial Framework beyond 2020, including an amount of EUR 42,265 million for the Connecting Europe Facility. In order to stimulate job creation and achieve smart, sustainable and inclusive growth, the Union needs an up-to-date, high-performance infrastructure to help connect and integrate the Union and all its regions, in the transport, telecommunications and energy sectors. Those connections are key for the free movement of persons, goods, capital and services. The trans-European networks facilitate cross-border connections, foster greater economic, social and territorial cohesion and contribute to a more competitive social market economy and to combating climate change. The vision is for Europe to move towards zero-fatalities, zero-emissions and zero-paper mobility, to become a world leader in renewable energy and to be a front-runner in the digital economy. A modern, clean, smart, sustainable, inclusive, safe and secure infrastructure will provide tangible benefits to European citizens and businesses, allowing them to travel, ship goods, have access to energy and high quality digital services in an efficient way. For this purpose, CEF supports investment in transport, energy and digital infrastructure through the development of the trans-European networks (TEN). In the period 2021-2027, it is proposed that it also promotes cross-border cooperation on renewable energy generation. CEF focuses on projects of highest European added value and catalyses investments towards projects with a cross-border impact and European-wide interoperable systems and services, for which the continuity of funding support after 2020 is essential. With its efficient modus operandi, CEF addresses market failures and helps leverage further investment from other sources, notably the private sector, in synergy and complementarity with InvestEU and other Union programmes. CEF “is designed to foster investment in the trans-European networks. Those networks and cross-border cooperation are crucial not only to the functioning of the Single Market but they are also strategic to implement the Energy Union, the Digital Single Market and the development of sustainable transport modes. Without EU intervention, private operators and national authorities have insufficient incentive to invest in cross-border infrastructure projects”. Reflecting the importance of tackling climate change in line with the Union’s commitments to implement the Paris Agreement on Climate Change and the commitment to the United Nations Sustainable Development Goals, the Commission proposal for the 2021-2027 Multiannual Financial Framework sets a more ambitious goal for climate mainstreaming across all EU programmes, with an overall target of 25% of EU expenditure contributing to climate objectives. A major contribution towards this target is expected to be provided by CEF, with a target of 60% of its envelope contributing to climate objectives. The contribution of this programme to the achievement of this overall objective will be tracked through an EU climate marker system at an appropriate level of disaggregation, including the use of more precise methodologies where these are available. The Commission will continue to present the information annually in terms of commitment appropriations in the context of the annual draft budget. To support the full utilisation of the potential of the programme to contribute to climate objectives, the Commission will seek to identify relevant actions throughout the programme preparation, implementation, review and evaluation processes. The future needs for decarbonisation and digitalisation of the Union economy will imply a growing convergence of the transport, energy and digital sectors. Synergies between the three sectors should thus be harnessed to the full extent, maximising the effectiveness and efficiency of Union support. Examples of synergy areas include connected and autonomous mobility, clean mobility based on alternative fuels, energy storage and smart grids. In order to promote projects encompassing more than one sector, incentives will include the possibility to apply the highest co-funding rate of the sectors concerned. In addition, it will be possible for each sector to accept as eligible costs ancillary elements pertaining to another sector, for instance renewable energy generation within a transport project. In order to incentivize and prioritise cross-sectoral proposals, the synergy dimension of a proposed action will be assessed under the award criteria. Synergies will be implemented through joint work programmes and joint financing involving the relevant sectors. For transport, CEF aims at contributing to the completion of both layers of the TEN-T: the strategic backbone (i.e. the core network) by 2030 and its more extensive layer (i.e. the comprehensive network) by 2050. It also supports the deployment of European traffic management systems for all traffic modes, in particular for air transport and railways, and helps the EU transition towards smart, sustainable, inclusive, safe and secure mobility (for example by establishing a European network of charging infrastructure for alternative fuels). It is estimated that the completion of the TEN-T core network by 2030 will generate 7.5 million job-years between 2017 and 2030 and an additional GDP increase of 1.6 % in the Union in 2030. In addition, following the Joint Communication on improving military mobility in the European Union of November 2017 and the Action Plan on Military Mobility adopted on 28 March 2018 by the Commission and the High Representative of the Union for Foreign Affairs and Security Policy, Union funding for the implementation of the civilian-military dual-use transport projects should be implemented through the CEF. For energy, the focus is on completing the trans-European energy networks through the development of projects of common interest relating to further integration of the internal energy market and interoperability of networks across borders and sectors; sustainable development by enabling decarbonisation in particular through integrating renewable energy sources; and security of supply inter alia through the smartening and digitalisation of the infrastructure. It also contributes to the cost-effective achievement of the objectives of the Paris Agreement on Climate Change as well as the 2030 energy and climate and long-term decarbonisation objectives by integrating renewable energy through the development of appropriate infrastructure and by supporting a limited number of cross-border projects in the field of renewable energy. For digital, CEF maximises the benefits that all citizens, businesses and public administrations can get from the Digital Single Market. The deployment of very high capacity digital networks featuring a high level of security supports all innovative digital services, including connected mobility and other services of public interest. In addition, it contributes to ensure that all main socio-economic drivers such as schools, hospitals, transport hubs, main providers of public services and digitally intensive enterprises have access to future-oriented broadband connections (1 Gbit/second) by 2025. It contributes to the overall connectivity of the European territories, including that of the outermost regions, to the Internet. •Consistency with existing policy provisions in the policy area The overarching objective of CEF is to support the achievement of the EU policy objectives in the transport, energy and digital sector, as regards the trans-European networks, by enabling or accelerating investments into projects of common interest, and to support cross-border cooperation on renewable energy generation. It will aim at maximising synergies among the sectors covered by CEF and with the other EU programmes.

In the transport sector, CEF contributes to EU long-term objectives regarding the completion of the TEN-T core network by 2030 and progress towards the completion of the TEN-T comprehensive network by 2050. This includes the transition towards clean, competitive and connected mobility, the deployment of SESAR and European Rail Traffic Management System (ERTMS) and the low-carbon transition through innovative infrastructure including an EU backbone of charging infrastructure by 2025. In the energy sector, CEF contributes to the completion of the TEN-E priority corridors and thematic areas, in alignment with “Clean Energy for all Europeans” objectives, to ensure the functioning of the Union internal energy market providing security of supply (inter alia through smartening and digitalisation of the infrastructure) and contributing to sustainable development and climate objectives by integrating renewable energy sources. For renewable energy sources, CEF will contribute to achieving the proposed EU 2030 target in a cost-effective way, with regards to the energy transition and the mainstreaming of renewable energy policies including sector coupling. In the digital sector, CEF contributes to achieving the digital connectivity infrastructure of a Gigabit society, as un underlying condition for a functional digital single market, as well as providing the necessary infrastructure to properly support the EU-wide digital transformation of economy and society. •Consistency with other Union policies Transport, energy and digital infrastructure will be supported to various degrees by a number of EU financial programmes and instruments, including CEF, the European Regional Development Fund (ERDF) and Cohesion Fund, Horizon Europe, InvestEU and LIFE. It is important to make the most efficient use of the various Union financing programmes and instruments and thus maximise the complementarity and value-added of investments supported by the Union. This would be achieved via a streamlined investment process enabling visibility on the transport pipeline and consistency across relevant Union programmes in close cooperation with Member States. The Programme's actions should be used to address market failures or sub-optimal investment situations, in a proportionate manner, without duplicating or crowding out private financing and have a clear European added value. This will ensure consistency between the actions of the programme and EU State aid rules, avoiding undue distortions of competition in the internal market. 2.LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY •Legal basis Trans-European networks are covered under Article 170 TFEU, which specifies: “The Union shall contribute to the establishment and development of trans-European networks in the areas of transport, telecommunications and energy infrastructures”. The right for the EU to act in the field of infrastructure financing is set out in Article 171 which provides that the Union "may support projects of common interest supported by Member States, (…) particularly through feasibility studies, loan guarantees or interest-rate subsidies". Article 172 TFEU specifies that ''the guidelines and other measures referred to in Article 171 (1) shall be adopted by the European Parliament and the Council, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee and the Committee of the Regions.'' The promotion of renewable energy sources is covered under Article 194 TFEU, which explicitly lists it as one of the objectives of EU energy policies. Since renewable projects having a cross-border nature contribute to a cost-effective achievement of the Union target proposed for 2030, the legislative instrument should also be based on Article 194 TFEU. The legislative instrument and the type of measure (i.e. funding) are both defined in the TFEU, which provides the legal basis for CEF, and states that the tasks, priority objectives and the organisation of the trans-European networks may be defined in regulations. •Subsidiarity (for non-exclusive competence) The scale of the problems targeted by CEF specifically requires EU action since they are by nature EU-dimensional and can be more efficiently resolved at Union level, leading to overall greater benefits, more accelerated implementation and reduction of costs if Member States act together. The investment needs in TENs beyond 2020 are very significant and exceed the resources available at Member State level. Renewable energy projects are also expected to be increasingly financed by the market in the future. Potential support in this area would only compensate the cost for overcoming barriers and lacking incentives associated with cooperation beyond borders amongst Member States and/or the barriers preventing sector integration. Such coordination between Member States can bring economies of scale, avoid duplication of infrastructures, increase deployment across Europe to better reflect the available potential, contribute to policy convergence and thus to further market integration, knowledge transfer and uptake and replication of innovative technologies in the European home market. •Proportionality The proposal complies with the proportionality principle and falls within the scope for action in the field of the trans-European networks, as defined in Article 170 of the TFEU and Article 194 of the TFEU for cross-border projects in the field of renewable energy. The action envisaged by this proposal is specifically limited to the European dimension of transport, energy and digital infrastructure and cross-border deployment of renewable energy sources. 3.RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS •Ex-post evaluations/fitness checks of existing legislation In accordance with the current CEF Regulation, the Commission, in cooperation with the Member States and the beneficiaries concerned, was required to present a report on the mid-term evaluation of CEF to the European Parliament and the Council. This report was adopted by the Commission on 13 February 2018 and was accompanied by a Commission staff working document (SWD). The evaluation assessed the Programme’s overall performance in light of its general and sectoral objectives, as well as compared to what has been achieved as a result of national or EU action. In line with the Commission’s Better Regulation Guidelines, the evaluation was carried out according to five criteria: effectiveness, efficiency, relevance, coherence and EU added value.

Overall, the conclusions of the Mid-Term Evaluation of CEF were as follows: "The evaluation illustrated that after the first three and a half years of CEF implementation, the programme is on track, although it is much too early to measure results given that the programme implementation is still at an early stage. Moreover, the performance framework provided in the Regulation has proven lacking well defined or robust indicators. With this reservation in mind, the evaluation showed that: ·CEF is an effective and targeted instrument for investment in trans-European infrastructure (TEN) in transport, energy and the digital sector. Since 2014, it has invested EUR 25 billion, which has resulted in approximately EUR 50 billion of overall infrastructure investment in the EU. CEF contributes to the Commission’s priorities on jobs, growth and investment, the internal market, Energy Union and climate, and the Digital Single Market. In so doing, it is strengthening the competitiveness and modernisation of the EU economy. ·CEF brings high European added value for all Member States by supporting connectivity projects with a cross-border dimension. Most funding is awarded to projects bridging missing links and removing bottlenecks, with the aim of ensuring the proper functioning of the EU internal market and territorial cohesion among Member States in the transport, energy and digital sectors. Projects in energy also provide security of supply and are key for the cost-effective decarbonisation and modernisation of the economy. CEF is also instrumental in the deployment of EU-wide new systems in traffic management and safety (e.g. SESAR for aviation, ERTMS for railways), high-performance electricity lines and smart grids essential for the rapid intake of renewable non-carbon energy sources, and in the roll-out of broadband and interconnected Digital Services (such as Open Data, e-Health, e-Procurement, eIdentification and eSignature). ·The direct management of CEF grants has proven very efficient, with a strong project pipeline and a competitive selection process, a focus on EU policy objectives, coordinated implementation and the full involvement of Member States. The INEA executive agency has a very good track record on the financial management of CEF and on optimising the budget, particularly thanks to its flexibility in quickly re-directing money unspent by certain actions to financing new ones. ·For the first time, a share of the cohesion budget (EUR 11.3 billion for transport) was executed under direct management within the CEF framework. 100 % of the envelope was allocated during the first half of the programme period, almost exclusively on sustainable transport modes. Targeted technical assistance, lower administrative costs for Member States, clear funding priorities and a solid project pipeline stemming from the continuity of projects and studies formerly supported by the TEN-T Programme or by the Cohesion Policy instruments contributed to the fast allocation of funds. ·CEF has continued to use and develop innovative financial instruments. However, their deployment has been limited due to the new possibilities offered by European Fund for Strategic Investment. The use of the CEF financial instruments is expected to take up during the second half of the programme when complementarity between the CEF specific financial instruments and EFSI will have been ensured." The Connecting Europe Broadband Fund, building on contributions from CEF and EFSI, is expected to become operational in 2018 and fund the rollout of very high capacity networks in underserved areas, with an important leverage effect. ·“Moreover, a very positive first experience of blending grants with financial instruments was carried out in 2017 in transport, with EUR 2.2 billion funding requested for a call with an indicative budget of EUR 1 billion, enabling the use of grants to maximise the leverage of private or public funds. ·CEF spending in transport and energy is a major contributor to the EU’s target of at least 20 % of the total EU budget to be dedicated to climate action-related spending.” In the area of energy more than 50% of the CEF energy budget was allocated to electricity transmission and smart grids therefore contributing to the energy transition. ·“In the Telecom sector, the dual focus of CEF on digital cross border services of public interest and communication and computing infrastructure has shown that the programme has an important impact on achieving the EU digital single market goals, enabling citizens and businesses to access high quality digital services across Europe. It has helped develop and implement common policies to address societal challenges including the digital transformation of healthcare, cybersecurity and digitisation of governments. However, due to the limited resources CEF Telecom could only support the very first steps towards a full cross border digital infrastructure in areas of public interest.” Given the limited envelope allocated for broadband under CEF vis-à-vis the size of the investment gap, it was necessary to implement it in an innovative way and to aim at maximising leverage in order to ensure effectiveness. However, due to the complex set up of the dedicated financial instruments, the investments on the ground will only materialise at a late stage in the implementation of the programme. ·“CEF has also tested cross-sectoral synergies, but has been limited by constraints in the current legal/budgetary framework. The sectoral policy guidelines and the CEF instrument would need to be made more flexible to facilitate synergies and be more responsive to new technological developments and priorities such as digitalisation, while accelerating decarbonisation and addressing common societal challenges such as cybersecurity. ·The completion of the TENs defined in the EU policy priorities will still require considerable investments, part of which will depend on continued EU support. The size of CEF currently makes it possible to address only some of the identified market failures in all three sectors. Therefore, potential exists for unlocking further public and private investment if additional EU budget was made available to address market failures." The proposal to make cross-border cooperation on renewable energy eligible for CEF funding is supported by relevant findings of the REFIT-evaluation of the Renewables Directive of 2016. •Stakeholder consultations An online public consultation organised as part of a series of public consultations covering the entire spectrum of EU future funding was launched on 10 January 2018 and remained opened for a period of 8 weeks, until 9 March 2018. While the public consultation covered the topic of strategic infrastructure funding (comprising CEF, Galileo and ITER), over 96% of responses related to CEF. Overall, stakeholders reiterated their support for the CEF programme and highlighted the key role it plays in contributing to the EU’s objectives in areas such as the completion of the TENs, promoting economic growth and jobs across the EU and the transition to a low-carbon and climate-resilient economy and society. Stakeholders encouraged additional flexibilities in the new programme to encourage further synergies across the three sectors. Respondents in the transport sector stressed the importance of CEF in facilitating cross-border projects as well as removing bottlenecks and missing links. The energy-related responses to a very large extent reaffirmed the important contribution of CEF towards the completion of the trans-European energy infrastructure network and by extension towards the fulfilment of the Energy Union targets yielding significant benefits for all European citizens, with the transition to a low carbon economy scoring highest among the future challenges. Stakeholders called for an increased budget in order to accelerate the decarbonisation and digitalisation of both the energy and the transport sector while increasing connectivity across the EU. The digital respondents highlight the central role of broadband connectivity as a catalyst for the economic and social development across society and sectors. In order to increase the competitiveness of the EU, they called for increased investments in connectivity and 5G, which would help improve economic performance, generate jobs in the EU and promote a qualitative leap in the transition to a Digital Society.

Stakeholders at the same time provided useful feedback on the areas that require further improvement or development. This is further detailed in the consultation report in Annex 2 of the accompanying Impact Assessment. •Impact assessment The Commission proposal is based on an Impact Assessment (IA) submitted to the Regulatory Scrutiny Board on 21 March 2018 and for which the Board issued a positive opinion (ref. number "MFF – CEF") with reservations. The Board in particular recommended reinforcing the description of the arrangements for monitoring and evaluation of the Programme, better explaining the coherence with other EU programmes and explaining in more detail how the extensions of the Programme's scope reinforce the cross-border character of CEF. The recommendations provided by the Board in its opinion have been reflected in the final version of the IA report. In line with the general approach applied for all the MFF-related impact assessments, the IA for CEF focused on the changes and policy choices foreseen in the legislative proposal. The report in particular explained the structure and priorities for the proposed continuation of the CEF programme and looked into the options for a most optimal delivery. The IA report drew on lessons learned and experience from the current CEF with the recent mid-term evaluation of CEF used as the principle source of data (in addition to the results of the open public consultation organised as part of a series of public consultations covering the entire spectrum of EU future funding and of more targeted exchanges with stakeholders in the case of synergies and renewable energy). Using the lessons learned and considering the new challenges and developments (in particular in the area of the digital sector), it was assessed whether the objectives needed to be adjusted for the continued programme. The challenges ahead for the new CEF programme were set out and the assessment was carried out on how CEF could deliver on the common objectives of the MFF such as simplification, greater flexibility and improved performance. The structure and priorities, the calibration with the current CEF as well as the expected delivery mechanism of the new programme were further discussed from the perspective of the Programme effectively attaining the set objectives. Alternative implementation options were assessed in particular for the extensions to the Programme’s scope of intervention, both in the digital pillar and for the cross-border projects in the field of renewable energy. The IA also looked into options and capacities for reinforcing synergies between the sectors under the Programme. It assessed in particular the possibility to adopt joint work programmes covering specific priorities of several sectors and the removal of obstacles that have hampered synergies in the current period, notably as regards eligibility rules. The Commission proposal corresponds accurately to the preferred policy option identified in the assessment. •Regulatory fitness and simplification In the framework of the Commission's global simplification measures under the post-2020 Multiannual Financial Framework (MFF), overall simplification efforts will impact the CEF programme delivery. The preparation of the next MFF was launched by the Commission with the publication of the White Paper on the Future of Europe in March 2017. The next steps were the publication of the Reflection Paper on the Future of EU Finances in June 2017 and the guidance documents on simplified programme basic acts provided by DG BUDG in November/December 2017. The results of this political process provided the top-down guidance for the next MFF which will affect the form of the post-2020 CEF programming period. Overall simplification efforts for the post-2020 CEF regulation have been made according to the above described horizontal guidance. This is in line with all other funding programmes and will consequently affect the new CEF in particular in the simplification of cost options, co-funding rates, stakeholder involvement and in the development of programme objectives, monitoring and reporting. It will also provide for a further simplified legal framework for CEF through a streamlined CEF regulation and the possibility to delegate provisions and conditions to work programmes, facilitating further synergies between the three sectors and enabling CEF to adapt to future needs. The programme simplification will lighten the regulatory burden and compliance costs for stakeholders involved in the Programme and will consequently have a positive impact on EU competitiveness in the sectors concerned. It will also enable further digitisation efforts pursuant to the better regulation Guidelines and in accordance with the digital support services already in place for the implementation of the Programme (e.g. TENtec information system). 4.BUDGETARY IMPLICATIONS The Commission’s proposal for the Connecting Europe Facility includes the following amounts: Connecting Europe Facility 2021-2027 (figures in current prices – EUR) Transport: Including: General envelope Contribution from the Cohesion Fund: Support for military mobility: 30,615,493,000 12,830,000,000 11,285,493,000 6,500,000,000 Energy 8,650,000,000 Digital 3,000,000,000 Total 42,265,493,000 Based on the positive experience from the implementation of the current CEF programme, the Commission proposes to continue the implementation of the new programme, for the three CEF sectors, with direct management by the European Commission and its Innovation and Networks Executive Agency (INEA). As detailed in the Legislative Financial Statement, the proposed budget will cover all the necessary operational expenditure for the implementation of the Programme as well as the cost of human resources and other administrative expenditure in connection with the management of the Programme. 5.OTHER ELEMENTS •Implementation plans and monitoring, evaluation and reporting arrangements The implementation of the Programme will be delegated to INEA, with the exception of certain programme support actions that will be managed directly by the parent DGs. The mid-term evaluation of the current CEF 2014-2020, indicated that "the direct management of CEF grants has proved very efficient, with a strong project pipeline and a competitive selection process, a focus on EU policy objectives, coordinated implementation and the full involvement of Member States. The INEA executive agency has a very good track record on the financial management of the CEF and on optimising the budget, particularly thanks to its flexibility in quickly re-directing money unspent by certain actions to financing new ones."

It is thus proposed to maintain the current delivery mechanism. Improvements will however be introduced as regards simplification and flexibility. Compared to the CEF 2014-2020, a simpler but more robust performance framework will be put in place to monitor the achievement of the Programme's objectives and its contribution to EU policy objectives. Indicators to monitor implementation and progress of the Programme will relate in particular to: ·Efficient and interconnected networks and infrastructure for smart, sustainable, inclusive, safe and secure mobility as well as adaptation to military mobility requirements; ·Contribution to interconnectivity and integration of markets, security of energy supply and sustainable development through enabling decarbonisation; contribution to cross-border cooperation in the field of renewable energy ·Contribution to the deployment of digital connectivity infrastructure throughout the European Union The necessary data will be collected by INEA during the implementation and evaluation of supported actions. To this end, the conditions for applying for a grant and the model grant agreement will contain proportionate requirements on applicants and beneficiaries to provide the necessary data. The Commission will carry out an interim and an ex-post evaluation of the Programme in order to assess its efficiency, effectiveness, relevance, coherence and value added, in conformity with Article 34 paragraph 3 of the Financial Regulation. The Commission will communicate the conclusions of the evaluations accompanied by its observations, to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions. •Detailed explanation of the specific provisions of the proposal Article 1 – Subject Matter This Article introduces the subject matter of the Regulation, which is to establish CEF. Article 2 – Definitions This Article sets out the definitions relating to the Regulation. Article 3 –Objectives This Article establishes the general objective of the Programme, with emphasis on synergies among the transport, energy and digital sectors and the specific objectives for each sector. Article 4 – Budget This Article sets outs the total budget for the Programme. The budget is divided into transport (including a transfer from the Cohesion Fund and support for military mobility from the Defence cluster), energy and digital. The Article includes a provision to cover all the necessary expenses pertaining to preparatory, monitoring, control, audit, evaluation and other activities; necessary studies, meetings of experts, corporate IT tools and any other technical and administrative assistance needed in connection with the management of the Programme. The Article also states that expenditure for actions may be eligible from 1 January 2021 for the first work programmes. The Article asserts that for the Cohesion Fund transfer in the transport sector, national allocations will represent 70% of the total transfer and will be respected until 31 December 2023. In addition, it states that Member States may request that resources allocated to them under shared management may be transferred to CEF.

Article 5 – Third Countries associated to the programme This Article establishes the conditions for which third countries can participate in the Programme. Article 6 – Implementation and forms of EU funding This Article defines the management mode of CEF as direct management and in particular in the form of grants and procurement, as well as in the form of financial instruments within blending operations. The implementation of the Programme may be delegated to an executive agency. Article 7 – Cross-border projects in the field of renewable energy This Article relates to the identification of cross-border projects in the field of renewable energy and to the specific eligibility criteria applicable for those. Article 8 - Projects of common interest in the area of digital connectivity infrastructure. This Article relates to the identification of digital connectivity infrastructure projects of common interest and to the specific eligibility and prioritisation criteria applicable in view of supporting them through the Programme. Article 9 – Eligible actions This Article details the actions under each specific objective that are eligible for financial assistance under the Regulation. This Article includes a provision allowing for a flexible approach regarding actions that in addition to addressing a specific objective of the Programme, also contribute to facilitating synergies amongst the transport, energy or digital sectors. Article 10 – Synergies This Article sets out the provisions applicable for synergy actions among the Programme sectors through either cross-sectoral work programmes or the co-funding of ancillary elements to an action providing that certain conditions as set out in the Article are met. Article 11 - Eligible entities This Article sets out the criteria for persons and entities to be eligible for the Programme. It states that work programmes may provide for certain further conditions such as Member State agreement to the proposal. Article 12 – Grants This Article establishes that CEF grants will be awarded and managed in line with the Financial Regulation. Article 13 – Award criteria This Article provides a common reference for the three sectors concerning the award criteria as regards the assessment of a proposal. It introduces specific requirements allowing to better take into account the corridor approach in the transport sector, notably where applicable, the corridor work plans and implementing acts pursuant to Article 47 of Regulation (EU) No 1315/2013 and the opinion of the responsible European Coordinator pursuant to Article 45 (8) of the same Regulation.

Article 14 – Co –financing rates This Article sets the maximum co-financing rates applicable to each sector. It also provides for the maximum co-financing rates in the case of a cross-sectoral work programmes covering more than one sector with the view to facilitating synergies. The Article also introduces a derogation concerning the amounts transferred from the Cohesion Fund. Article 15 – Eligible costs This article provides the criteria on eligible costs that apply in addition to the criteria set out in Article 186 of the Financial Regulation. Article 16 – Combination of grants with other sources of financing This Article ensures the possibility of using grants for combination with financing from the European Investment Bank or National Promotional Banks or other development and public financial institutions as well as from private-sector finance institutions and private-sector investors, including through Public Private Partnerships. Article 17 - Reduction or termination of the grants In order to ensure sound financial management and to mitigate the risks linked with important delays that can occur in the case of major infrastructure projects, this Article defines the conditions for reduction of termination of the grants. It establishes that grants may be reduced or terminated if the action has not started within one year following the starting date indicated in the grant agreement or if, following a review of the progress of the action, it is established that the implementation of the action has suffered such major delays that the objectives of the action are likely not to be achieved. Article 18 – Cumulative, complementary and combined funding This Article ensures that an action that has received a contribution under the Programme may also receive a contribution from any other Union programme, provided that the contributions do not cover the same costs. The Article provides for the possibility that a proposed action, which has been positively assessed under CEF but which may not be financed due to budgetary constraints, is funded by the European Regional Development Fund (ERDF) or the Cohesion Fund. Article 19 – Work programmes This Article establishes that the Programme will be implemented by work programmes adopted by the Commission by means of an implementing act in accordance with the examination procedure. Article 20 - Monitoring and reporting This Article provides a link to the Annex where the indicators to monitor the CEF programme can be found. The Article allows for the indicators to be amended by a delegated act. Moreover, a monitoring and evaluation framework will be developed to allow assessment of the progress of the programme towards achieving its objectives. Article 21 – Evaluation This Article requires the Commission to carry out an interim and an ex-post evaluation of the programme and to communicate the conclusions of the evaluations accompanied by its observations, to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions. Article 22 – Committee procedure This Article establishes the CEF Coordination Committee within the meaning of Regulation (EU) No 182/2011. It specifies that the examination procedure foreseen at Article 5 of Regulation (EU) No 182/2011 will apply.

Article 23 – Delegated Acts This Article allows for the Commission to adopt delegated acts relating to parts I, II, III, IV and V of the Annex. Article 24 – Exercise of the delegation This Article contains standard provisions on the delegation of powers. Article 25 – Information, communication and publicity This Article obliges the recipients of CEF funding to ensure the visibility of EU funding for their actions as well as obliging the Commission to communicate on CEF actions and results. Article 26 – Protection of the financial interests of the Union This Article relates to the competence of the European Anti-Fraud Office (OLAF) and the European Court of Auditors in relation with third countries associated to the Programme. Article 27 – Repeal and transitional provisions This Article repeals the previous CEF Regulation (Regulation (EU) No 1316/2013) and Regulation (EU) No 283/2014 on guidelines for trans-European networks in the area of telecommunications infrastructure. Transitional provisions relating to CEF actions and technical and administrative assistance are also included. Article 28 – Entry into force This Article states that the Regulation shall apply from 1 January 2021. Annex – Part I – Indicators This Part of the Annex indicates the indicators used for monitoring the progress of the Programme in relation with its general and specific objectives. Annex – Part II - Indicative percentages for the transport sector This Part of the Annex contains indicative percentages for the distribution of budgetary resources in the transport sector. Annex – Part III – Transport core network corridors and pre-identified sections; Pre-identified sections on the comprehensive network This Part of the Annex defines the alignment of the core network corridors, including their pre-identified sections and provides an indicative list of cross-border sections on the comprehensive network. Annex – Part IV – Identification of cross-border project in the field of renewable energy

This Part of the Annex defines the criteria and procedure to identify cross-border projects in the field of renewable energy Annex – Part V -– Digital connectivity infrastructure projects of common interest This Part of the Annex provides an indicative list of pre-identified digital connectivity projects of common interest. 2018/0228 (COD) Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL establishing the Connecting Europe Facility and repealing Regulations (EU) No 1316/2013 and (EU) No 283/2014 (Text with EEA relevance) THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty on the Functioning of the European Union, and in particular Articles 172 and 194 thereof, Having regard to the proposal from the European Commission, After transmission of the draft legislative act to the national parliaments, Having regard to the opinion of the European Economic and Social Committee, Having regard to the opinion of the Committee of the Regions, Acting in accordance with the ordinary legislative procedure, Whereas: (1)In order to achieve smart, sustainable and inclusive growth and to stimulate job creation, the Union needs an up-to-date, high-performance infrastructure to help connect and integrate the Union and all its regions, in the transport, telecommunications and energy sectors. Those connections should help to improve the free movement of persons, goods, capital and services. The trans-European networks should facilitate cross-border connections, foster greater economic, social and territorial cohesion and contribute to a more competitive social market economy and to combating climate change. (2)The aim of the Connecting Europe Facility (the ‘Programme’) is to accelerate investment in the field of trans-European networks and to leverage funding from both the public and the private sectors, while increasing legal certainty and respecting the principle of technological neutrality. The Programme should enable synergies between the transport, energy and digital sectors to be harnessed to the full extent, thus enhancing the effectiveness of Union action and enabling implementing costs to be optimised. (3)The Programme should aim at supporting climate change, environmentally and socially sustainable projects and, where appropriate, climate change mitigation and adaptation actions. In particular, the contribution of the Programme to achieving the goals and objectives of the Paris Agreement as well as the proposed 2030 climate and energy targets and long-term decarbonisation objective should be reinforced. (4)Reflecting the importance of tackling climate change in line with Union’s commitments to implement the Paris Agreement, and the commitment to the United Nations Sustainable Development Goals, this Regulation should therefore mainstream climate action and lead to the achievement of an overall target of 25% of the EU budget expenditures supporting climate objectives. Actions under this Programme are expected to contribute 60% of the overall financial envelope of the Programme to climate objectives, based inter alia on the following Rio markers: i) 100% for the expenditures relating to railway infrastructure, alternative fuels, clean urban transport, electricity transmission, electricity storage, smart grids, CO2 transportation and renewable energy; ii) 40% for inland waterways and multimodal transport, and gas infrastructure - if enabling increased use of renewable hydrogen or bio-methane. Relevant actions will be identified during the Programme's preparation and implementation, and reassessed in the context of the relevant evaluations and review processes. In order to prevent that infrastructure is vulnerable to potential long term climate change impacts and to ensure that the cost of greenhouse gas emissions arising from the project is included in the project's economic evaluation, projects supported by the Programme should be subject to climate proofing in accordance with guidance that should be developed by the Commission coherently with the guidance developed for other programmes of the Union where relevant.

(5)In order to comply with the reporting obligations set in Article 11(c) of Directive 2016/2284/EU on the reduction of national emissions of certain atmospheric pollutants, amending Directive 2003/35/EC and repealing Directive 2001/81/EC, regarding the uptake of Union funds to support the measures taken with a view to complying with the objectives of this Directive, expenditure related to the reduction of emissions or air pollutants under this Directive shall be tracked. (6)An important objective of this Programme is to deliver increased synergies between the transport, energy and digital sector. For that purpose, the Programme should provide for the adoption of cross-sectoral work programmes that could address specific intervention areas, for instance as regards connected and automated mobility or alternative fuels. In addition, the Programme should allow, within each sector, the possibility to consider eligible some ancillary components pertaining to another sector, where such an approach improves the socio-economic benefit of the investment. Synergies between sectors should be incentivized through the award criteria for the selection of actions. (7)The trans-European transport network (TEN-T) guidelines as laid down in Regulation (EU) No 1315/2013 of the European Parliament and of the Council (hereafter ‘TEN-T guidelines) identify the infrastructure of the TEN-T, specify the requirements to be fulfilled by it and provide for measures for their implementation. Those guidelines envisage, in particular, the completion of the core network by 2030 through the creation of new infrastructure as well as the substantial upgrading and rehabilitation of existing infrastructure. (8)In order to achieve the objectives laid down in the TEN-T guidelines, it is necessary to support with priority the cross-border links and the missing links and to ensure, where applicable, that the supported actions are consistent with the corridor work plans established pursuant to Article 47 of Regulation (EU) No 1315/2013 and to the overall network development regarding performance and interoperability. (9)In order to reflect growing transport flows and the evolution of the network, the alignment of the core network corridors and their pre-identified sections should be adapted. These adaptations should be proportionate in order to preserve the consistency and the efficiency of the corridor development and coordination. For that reason the length of the core network corridors should not increase by more than 15%. (10)It is necessary to promote investments in favour of smart, sustainable, inclusive, safe and secure mobility throughout the Union. In 2017, the Commission presented "Europe on the move", a wide-ranging set of initiatives to make traffic safer, encourage smart road charging, reduce CO2 emissions, air pollution and congestion, promote connected and autonomous mobility and ensure proper conditions and rest times for workers. These initiatives should be accompanied by Union financial support, where relevant through this Programme. (11)The TEN-T guidelines require, with regard to new technologies and innovation, that the TEN-T enables the decarbonisation of all transport modes by stimulating energy efficiency as well as the use of alternative fuels. Directive 2014/94/EU of the European Parliament and of the Council establishes a common framework of measures for the deployment of alternative fuels infrastructure in the Union in order to minimise dependence on oil and to mitigate the environmental impact of transport and requires Member States to ensure that recharging or refuelling points accessible to the public are made available by 31 December 2025. As outlined in the Commission proposals of November 2017, a comprehensive set of measures to promote low-emission mobility is necessary including financial support where the market conditions do not provide a sufficient incentive. (12)In the context of its Communication "Sustainable Mobility for Europe: safe, connected, and clean", the Commission highlighted that automated vehicles and advanced connectivity systems will make vehicles safer, easier to share and more accessible for all citizens, including those who may be cut-off from mobility services today, such as the elderly and disabled. In this context, the Commission also proposed an "EU Strategic Action Plan on Road safety" and a revision of Directive 2008/096 on Road Safety infrastructure management. (13)In order to improve the completion of transport projects in less developed parts of the network, a Cohesion Fund allocation should be transferred to the Programme to finance transport projects in the Member States eligible for financing from the Cohesion Fund. In an initial phase and within a limit of 70% of the transferred envelope, the selection of projects eligible for financing should respect the national allocations under the Cohesion Fund. The remaining 30% of the transferred envelope should be allocated on a competitive basis to projects located in the Member States eligible for financing from the Cohesion Fund with priority to cross-border links and missing links. The Commission should support Member States eligible for financing from the Cohesion Fund in their efforts to develop an appropriate pipeline of projects, in particular by strengthening the institutional capacity of the public administrations concerned. (14)Following the Joint Communication on improving military mobility in the European Union of November 2017, the Action Plan on Military Mobility adopted on 28 March 2018 by the Commission and the High Representative of the Union for Foreign Affairs and Security Policy highlighted that transport infrastructure policy offers a clear opportunity to increase synergies between defence needs and TEN-T. The Action Plan indicates that by mid-2018, the Council is invited to consider and validate the military requirements in relation to transport infrastructure and that, by 2019 the Commission services will identify the parts of the trans-European transport network suitable for military transport, including necessary upgrades of existing infrastructure. Union funding for the implementation of the dual-use projects should be implemented through the Programme on the basis of specific work programmes specifying the applicable requirements as defined in the context of the Action Plan. (15)In its Communication "A stronger and renewed strategic partnership with the EU's outermost regions", the Commission highlighted the outermost regions' specific transport needs and the necessity to provide Union funding to match these needs, including through the Programme. (16)Considering the significant investment needs to progress towards completing the TEN-T core network by 2030 (estimated at EUR 350 billion during 2021-2027), the TEN-T comprehensive network by 2050 and decarbonisation-digitalisation-urban investments (estimated at EUR 700 billion during 2021-2027), it is appropriate to make the most efficient use of the various Union financing programmes and instruments and thus maximise the value-added of investments supported by the Union. This would be achieved via a streamlined investment process, enabling visibility on the transport pipeline and consistency across relevant Union programmes, notably the Connecting Europe Facility, the European Regional Development Fund (ERDF), the Cohesion Fund and InvestEU. In particular, the enabling conditions as detailed under Annex IV of Regulation (EU) XXX [Regulation of the European Parliament and of the Council laying down common provisions on the European Regional Development Fund, the European Social Fund Plus, the Cohesion Fund, and the European Maritime and Fisheries Fund and financial rules for those and for the Asylum and Migration Fund, the Internal Security Fund and the Border Management and Visa Instrument (‘CPR’)] should be taken into account where relevant. (17)Regulation (EU) No 347/2013 of the European Parliament and of the Council identifies the trans-European energy infrastructure priorities which need to be implemented in order to meet the Union's energy and climate policy objectives, identifies projects of common interest necessary to implement those priorities, and lays down measures in the field of the granting of permits, public involvement and regulation to speed up and/or facilitate the implementation of those projects, including criteria for the eligibility of such projects for Union financial assistance. (18)Directive [recast Renewables Directive] stresses the need to set up an enabling framework comprising the enhanced use of Union funds, with explicit reference to enabling actions to support cross-border cooperation in the field of renewable energy. (19)While completion of network infrastructure remains the priority to achieve the development of renewable energy, integrating cross-border cooperation on renewable energy reflects the approach adopted under the Clean Energy for all Europeans initiative with a collective responsibility to reach an ambitious target for renewable energy in 2030 and the changed policy context with ambitious long-term decarbonisation objectives. (20)Innovative infrastructure technologies that enable the transition to a low carbon energy and mobility systems and improve security of supply are essential in view of the Union's decarbonisation agenda. In particular, in its Communication of 23 November 2017 "Communication on strengthening Europe's energy networks", the Commission emphasised that the role of electricity, where renewable energy will constitute half of the electricity generation by 2030, will increasingly be driving the decarbonisation of sectors so far dominated by fossil fuels, such as transport, industry and heating and cooling and that accordingly, the focus under the trans-European energy infrastructure policy is increasingly on electricity interconnections, electricity storages and smart grids projects. To support the Union's decarbonisation objectives, due consideration and priority should be given to technologies and projects contributing to the transition to a low carbon economy. The Commission will aim at increasing the number of cross-border smart grid, innovative storage as well as carbon dioxide transportation projects to be supported under the Programme. (21)The achievement of the digital single market relies on the underlying digital connectivity infrastructure. The digitalisation of European industry and the modernisation of sectors like transport, energy, healthcare and public administration depend on universal access to reliable, affordable, high and very high capacity networks. Digital connectivity has become one of the decisive factors to close economic, social and territorial divides, supporting the modernisation of local economies and underpinning the diversification of economic activities. The scope of intervention of the Programme in the area of digital connectivity infrastructure should be adjusted to reflect its increasing importance for the economy and the society at large. Therefore, it is necessary to set out the digital connectivity infrastructure projects of common interest needed to meet Union's digital single market objectives, and to repeal Regulation (EU) No 283/2014 of the European Parliament and of the Council (22)The Communication on "Connectivity for a Competitive Digital Single Market - Towards a European Gigabit Society" (the Gigabit Society Strategy) sets out strategic objectives for 2025, in view of optimising investment in digital connectivity infrastructure. Directive (EU) 2018/XXX [European Electronic Communications Code] aims inter alia at creating a regulatory environment which incentivises private investments in digital connectivity networks. It is nevertheless clear that network deployments will remain commercially non-viable in many areas throughout the Union, due to various factors such as remoteness and territorial or geographical specificities, low population density, various socio-economic factors. The Programme should therefore be adjusted to contribute to the achievement of these strategic objectives set out in the Gigabit Society Strategy, complementing the support provided for the deployment of very high capacity networks by other programmes, in particular the European Regional Development Fund (ERDF) and Cohesion Fund and the InvestEU fund. (23)While all digital connectivity networks which are connected to the Internet are intrinsically trans-European, due mainly to the functioning of the applications and services which they enable, priority for support via the Programme should be given to actions with the highest expected impact on the Digital Single Market, inter alia through their alignment with the objectives of the Gigabit Society Strategy Communication, as well as on the digital transformation of the economy and society, having regard to market failures and implementation obstacles observed. (24)Schools, universities, libraries, local, regional or national administrations, main providers of public services, hospitals and medical centres, transport hubs and digitally intensive enterprises are entities and places that can influence important socio-economic developments in the area where they are located. Such socio-economic drivers need to be at the cutting edge of Gigabit connectivity in order to provide access to the best services and applications for European citizens, business and local communities. The Programme should support access to Gigabit connectivity for these socio-economic drivers with a view to maximising their positive spill-over effects on the wider economy and society, including by generating wider demand for connectivity and services.

(25)In addition, building on the success of the WiFi4EU initiative, the Programme should continue to support the provision of free, high quality, local wireless connectivity in the centres of local public life, including entities with a public mission such as public authorities and providers of public services as well as outdoor spaces accessible to the general public, in order to promote the Union's digital vision in local communities. (26)The viability of the anticipated next generation digital services, such as Internet of Things services and applications which are expected to bring significant benefits across various sectors and for society as a whole, will require uninterrupted cross-border coverage with 5G networks, in particular in view of allowing users and objects to remain connected while on the move. However, the cost sharing scenarios for 5G deployment across these sectors remain unclear and the perceived risks of commercial deployment in some key areas are very high. Road corridors and train connections are expected to be key areas for the first phase of new applications in the area of connected mobility and therefore constitute vital cross-border projects for funding under this Programme. (27)Unconnected territories in all areas of the Union, including in central ones, represent bottlenecks and unexploited potential to the digital single market. In most rural and remote areas, high quality Internet connectivity can play an essential role in preventing digital divide, isolation and depopulation by reducing the costs of delivery of both goods and services and partially compensating for remoteness. High quality Internet connectivity is necessary for new economic opportunities such as precision farming or the development of a bio-economy in rural areas. The Programme should contribute to providing all European households, rural or urban, with very high capacity fixed or wireless connectivity, focusing on those deployments for which a degree of market failure is observed and which can be addressed using low intensity grants. In doing so, the Programme should aim at achieving a comprehensive coverage of households and territories, as gaps in an already covered area are uneconomic to address at a later stage. (28)The deployment of backbone electronic communications networks, including with submarine cables connecting European territories to third countries on other continents or connecting European islands or overseas territories to the mainland, is needed in order to provide necessary redundancy for such vital infrastructure, and to increase the capacity and resilience of the Union's digital networks. However, such projects are often commercially non-viable without public support. (29)Actions contributing to projects of common interest in the area of digital connectivity infrastructure shall deploy the technology best suited for the specific project, while proposing the best balance between state-of-the-art technologies in terms of data flow capacity, transmission security, network resilience and cost efficiency, and should be prioritised by way of work programmes taking into account criteria set out in this Regulation. Deployments of very high capacity networks can include passive infrastructure, in view of maximising socio-economic as well as environmental benefits. Finally, when prioritising actions, the potential positive spill-overs in terms of connectivity shall be taken into account, for example when a project deployed can improve the business case for future deployments leading to further coverage of territories and population in areas which have remained uncovered so far. (30)The Union has developed its own satellite Positioning, Navigation and Timing (PNT) technology (EGNOS/Galileo) and its own Earth observation system (Copernicus). Both EGNOS/Galileo and Copernicus offer advanced services which provide important economic benefits to public and private users. Therefore any transport, energy or digital infrastructure funded by the Programme - that makes use of PNT or Earth observations services - should be technically compatible with EGNOS/Galileo and Copernicus. (31)The positive results of the first Blending Call for proposals launched under the current programme in 2017, confirmed the relevance and added value of using EU grants for blending with financing from the European Investment Bank or National Promotional Banks or other development and public financial institutions as well as from private-sector finance institutions and private-sector investors, including through public private partnerships. The Programme should therefore continue to provide for dedicated Calls enabling combination between EU grants and other sources of financing. (32)The policy objectives of this Programme will be also addressed through financial instruments and budgetary guarantee under the policy window(s) [...] of the InvestEU Fund. The Programme's actions should be used to address market failures or sub-optimal investment situations, in a proportionate manner, without duplicating or crowding out private financing and have a clear European added value. (33)In order to favour an integrated development of the innovation cycle, it is necessary to ensure complementarity between the innovative solutions developed in the context of the Union Research and Innovation framework programmes and the innovative solutions deployed with support from the Connecting Europe Facility. For this purpose, synergies with Horizon Europe will ensure that: (a) research and innovation needs in the areas of transport, energy and in the digital sector within the EU are identified and established during Horizon Europe’s strategic planning process; (b) the Connecting Europe Facility supports large-scale roll-out and deployment of innovative technologies and solutions in the fields of transport, energy and digital infrastructure, in particular those resulting from Horizon Europe; (c) the exchange of information and data between Horizon Europe and the Connecting Europe Facility will be facilitated, for example by highlighting technologies from Horizon Europe with a high market readiness that could be further deployed through the Connecting Europe Facility. (34)This Regulation lays down a financial envelope for the entire period 2021-2027 which is to constitute the prime reference amount, within the meaning of [reference to be updated as appropriate according to the new inter-institutional agreement: point 17 of the Interinstitutional Agreement of 2 December 2013 between the European Parliament, the Council and the Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management for the European Parliament and the Council during the annual budgetary procedure]. (35)At Union level, the European Semester of economic policy coordination is the framework to identify national reform priorities and monitor their implementation. Member States develop their own national multiannual investment strategies in support of these reform priorities. These strategies should be presented alongside the yearly National Reform Programmes as a way to outline and coordinate priority investment projects to be supported by national and/or Union funding. They should also serve to use Union funding in a coherent manner and to maximise the added value of the financial support to be received notably from the European Regional Development Fund (ERDF) and Cohesion Fund, the European Investment Stabilisation Function, InvestEU and the Connecting Europe Facility, where relevant. Financial support should also be used in a manner consistent with Union and national energy and climate plans where relevant. (36)Horizontal financial rules adopted by the European Parliament and the Council on the basis of Article 322 of the Treaty on the Functioning of the European Union apply to this Regulation. These rules are laid down in the Financial Regulation and determine in particular the procedure for establishing and implementing the budget through grants, procurement, prizes, indirect implementation, and provide for checks on the responsibility of financial actors. Rules adopted on the basis of Article 322 TFEU also concern the protection of the Union's budget in case of generalised deficiencies as regards the rule of law in the Member States, as the respect for the rule of law is an essential precondition for sound financial management and effective EU funding. (37)The types of financing and the methods of implementation under this Regulation should be chosen on the basis of their ability to achieve the specific objectives of the actions and to deliver results, taking into account, in particular, the costs of controls, the administrative burden, and the expected risk of non-compliance. This should include consideration of the use of lump sums, flat rates and unit costs, as well as financing not linked to costs as referred to in Article 125(1) of the Financial Regulation. (38)Third countries which are members of the European Economic Area (EEA) may participate in Union programmes in the framework of the cooperation established under the EEA agreement, which provides for the implementation of the programmes by a decision under that agreement. Third countries may also participate on the basis of other legal instruments. A specific provision should be introduced in this Regulation to grant the necessary rights for and access to the authorizing officer responsible, the European Anti-Fraud Office (OLAF) as well as the European Court of Auditors to comprehensively exert their respective competences. (39)The Financial Regulation establishes the rules concerning the award of grants. In order to take into account the specificity of the actions supported by the Programme and to ensure a consistent implementation among the sectors covered by the Programme, it is necessary to provide additional indications as regards eligibility and award criteria. (40)In accordance with the Financial Regulation, Regulation (EU, Euratom) No 883/2013 of the European Parliament and of the Council, Council Regulation (Euratom, EC) No 2988/95,Council Regulation (Euratom, EC) No 2185/96 and Council Regulation (EU) 2017/193, the financial interests of the Union are to be protected through proportionate measures, including the prevention, detection, correction and investigation of irregularities and fraud, the recovery of funds lost, wrongly paid or incorrectly used and, where appropriate, the imposition of administrative sanctions. In particular, in accordance with Regulation (EU, Euratom) No 883/2013 and Regulation (Euratom, EC) No 2185/96 the European Anti-Fraud Office (OLAF) may carry out administrative investigations, including on-the-spot checks and inspections, with a view to establishing whether there has been fraud, corruption or any other illegal activity affecting the financial interests of the Union. In accordance with Regulation (EU) 2017/1939, the European Public Prosecutor's Office (EPPO) may investigate and prosecute fraud and other criminal offences affecting the financial interests of the Union as provided for in Directive (EU) 2017/1371 of the European Parliament and of the Council. In accordance with the Financial Regulation, any person or entity receiving Union funds is to fully cooperate in the protection of the Union’s financial interests, to grant the necessary rights and access to the Commission, OLAF, the European Public Prosecutor’s Office (EPPO) and the European Court of Auditors (ECA) and to ensure that any third parties involved in the implementation of Union funds grant equivalent rights. (41)Pursuant to [reference to be updated as appropriate according to the new decision on OCTs: Article 94 of Council Decision 2013/755/EU] persons and entities established in overseas countries and Territories (OCTs) are eligible for funding subject to the rules and objectives of the Programme and possible arrangements applicable to the Member State to which the relevant overseas country or territory is linked. (42)The Union should seek coherence and synergies with the Union programmes for external policies, including pre-accession assistance following the engagements taken in the context of the Communication "A credible enlargement perspective for and enhanced EU engagement with the Western Balkans". (43)When third countries or entities established in third countries participate in actions contributing to projects of common interest or to cross-border projects in the field of renewable energy, financial assistance should only be available if it is indispensable to the achievement of the objectives of these projects. (44)Pursuant to paragraph 22 and 23 of the Inter-institutional agreement for Better Law-Making of 13 April 2016, there is a need to evaluate this Programme on the basis of information collected through specific monitoring requirements, while avoiding overregulation and administrative burdens, in particular on Member States. Evaluations should be carried out by the Commission and communicated to the European Parliament, the Council, the European Economic and Social Committee and the Committee of Regions in order to assess the effectiveness and efficiency of the funding and its impact on the overall goals of the Programme.

(45)Adequate monitoring and reporting measures including indicators should be implemented in order to report the progress of the Programme towards the achievement of the general and specific objectives set out in this Regulation. This performance reporting system should ensure that data for monitoring implementation of the Programme and its results are collected efficiently, effectively and in a timely manner. It is necessary to impose proportionate reporting requirements on recipients of Union funds in order to collect relevant data for the Programme. (46)In order to ensure uniform conditions for the implementation of this Regulation, implementing powers should be conferred on the Commission as regards adoption of work programmes. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council. (47)In order to adapt, where necessary, the indicators used for the monitoring of the Programme, the indicative percentages of budgetary resources allocated to each specific objective in the transport sector and the definition of the transport core network corridors, the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union should be delegated to the Commission in respect of amendments to Parts I, II and III of the Annex to this Regulation. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement on Better Law-Making of 13 April 2016. In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council receive all documents at the same time as Member States' experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts. (48)Regulations (EU) No 1316/2013 and (EU) No 283/2014 should, for reasons of clarity, be repealed. However, the effects of Article 29 of Regulation (EU) No 1316/2013, which amends the Annex to Regulation (EU) No 913/2010 of the European Parliament and of the Council as regards the list of freight corridors, should be preserved. (49)In order to allow for the timely adoption of the implementing acts provided for by this Regulation, it is necessary that it enters into force immediately upon its publication, HAVE ADOPTED THIS REGULATION: CHAPTER I GENERAL PROVISIONS Article 1

Subject matter This Regulation establishes the Connecting Europe Facility (the ‘Programme’). It lays down the objectives of the Programme, the budget for the period 2021-2027, the forms of Union funding and the rules for providing such funding. Article 2

Definitions For the purposes of this Regulation, the following definitions shall apply: (a)"action" means any activity which has been identified as financially and technically independent, has a set time-frame and is necessary for the implementation of a project; (b)"alternative fuels" means alternative fuels as defined in Article 2(1) of Directive 2014/94/EU; (c)“associated country” means a third country which is party to an agreement with the Union allowing for its participation in the Programme in accordance with Article 5; (d)'Blending operation' means actions supported by the EU budget, including within blending facilities pursuant to Article [2(6)] of the Regulation (EU, Euratom) 2018/XXX (the ‘Financial Regulation’), combining non-repayable forms of support and/or financial instruments from the EU budget with repayable forms of support from development or other public finance institutions, as well as from commercial finance institutions and investors; (e)"comprehensive network" means the transport infrastructure identified in accordance with Chapter II of Regulation (EU) No 1315/2013; (f)"core network" means the transport infrastructure identified in accordance with Chapter III of Regulation (EU) No 1315/2013; (g)"core network corridors" means an instrument to facilitate the coordinated implementation of the core network as provided for in Chapter IV of Regulation (EU) No 1315/2013 and listed in Part III of the Annex to this Regulation;

(h)"cross-border project in the field of renewable energy" means a project selected or eligible to be selected under a cooperation agreement or any other kind of arrangements between Member States or arrangements between Member States and third countries as defined in Articles 6, 7, 9 or 11 of Directive 2009/82/EC in the planning or deployment of renewable energy, in accordance with the criteria set out in Part IV of the Annex to this Regulation; (i)"digital connectivity infrastructure" means very high capacity networks, 5G systems, very high quality local wireless connectivity, backbone networks, as well as operational digital platforms directly associated with transport and energy infrastructure; (j)"5G systems" means a set of digital infrastructure elements based on globally agreed standards for mobile and wireless communications technology used for connectivity and value-added services with advanced performance characteristics such as very high data rates and capacity, low latency, high reliability, or supporting a high number of connected devices;. (k)"5G corridor" means a transport path, road or railway, fully covered with digital connectivity infrastructure and in particular 5G systems, enabling the uninterrupted provision of synergy digital services such as connected and automated mobility or similar smart mobility services for railways; (l)"operational digital platforms directly associated with transport and energy infrastructure" means physical and virtual information communication technology ("ICT") resources, operating on top of the communication infrastructure, which support the flow, storage, processing and analysis of transport and/or energy infrastructure data; (m)"project of common interest" means a project identified in Regulation (EU) No 1315/2013 or Regulation (EU) No 347/2013 or in Article 8 of this Regulation; (n)"studies" means activities needed to prepare project implementation, such as preparatory, mapping, feasibility, evaluation, testing and validation studies, including in the form of software, and any other technical support measure, including prior action to define and develop a project and decide on its financing, such as reconnaissance of the sites concerned and preparation of the financial package; (o)"socio-economic drivers" means entities which by their mission, nature or location can directly or indirectly generate important socio-economic benefits to citizens, business and local communities located in their surrounding territory; (p)"third country" means a country that is not member of the European Union; (q)"very high capacity networks" means very high capacity networks as defined in Article [2 (XX)] of Directive (EU) 2018/XXX [the European Electronic Communications Code] (r)"works" means the purchase, supply and deployment of components, systems and services including software, the carrying-out of development and construction and installation activities relating to a project, the acceptance of installations and the launching of a project. Article 3

Objectives 1.The Programme has the general objective to develop and modernise the trans-European networks in the fields of transport, energy and digital and to facilitate cross-border cooperation in the field of renewable energy, taking into account the long-term decarbonisation commitments and with emphasis on synergies among sectors. 2.The Programme has the following specific objectives: (a)In the transport sector: (i)to contribute to the development of projects of common interest relating to efficient and interconnected networks and infrastructure for smart, sustainable, inclusive, safe and secure mobility; (ii)to adapt the TEN-T networks to military mobility needs; (b)In the energy sector, to contribute to the development of projects of common interest relating to further integration of the internal energy market, interoperability of networks across borders and sectors, facilitating decarbonisation and ensuring security of supply, and to facilitate cross-border cooperation in the area of renewable energy; (c)In the digital sector, to contribute to the deployment of very high capacity digital networks and 5G systems, to the increased resilience and capacity of digital backbone networks on EU territories by linking them to neighbouring territories, as well to the digitalisation of transport and energy networks. Article 4

Budget

1.The financial envelope for the implementation of the Programme for the period 2021-2027 is set at EUR 42,265,493,000 in current prices. 2.The distribution of this amount shall be as follows: (a)up to EUR 30,615,493,000 for the specific objectives referred to in Article 3(2)(a), of which: (i)EUR 12,830,000,000 from the European Strategic Investment cluster; (ii)EUR 11,285,493,000 transferred from the Cohesion Fund to be spent in line with this Regulation exclusively in Member States eligible for funding from the Cohesion Fund; (iii)EUR 6,500,000,000 from the Defence cluster for the specific objective referred to in Article 3(2)(a)(ii); (b)up to EUR 8,650,000,000 for the specific objectives referred to in Article 3(2)(b), out of which up to 10% for the cross-border projects in the field of renewable energy (c)up to EUR 3,000,000,000 for the specific objectives referred to in Article 3(2)(c). 3.The Commission shall not depart from the amount referred to in subparagraph 2 (a) (ii). 4.The amount referred to in paragraph 1 may be used for technical and administrative assistance for the implementation of the Programme and the sector-specific guidelines, such as preparatory, monitoring, control, audit and evaluation activities including corporate information and technology systems. This amount may also be used to finance accompanying measures to support the preparation of projects. 5.Budgetary commitments for actions extending over more than one financial year may be broken down over several years into annual instalments. 6.Without prejudice to the Financial Regulation, expenditure for actions resulting from projects included in the first work programme may be eligible as from 1 January 2021. 7.The amount transferred from the Cohesion Fund shall be implemented in accordance with this Regulation, subject to paragraph 8 and without prejudice to Article 14(2)(b). 8.As regards the amounts transferred from the Cohesion Fund, 30% of these amounts shall be made available immediately to all Member States eligible for funding from the Cohesion Fund to finance transport infrastructure projects in accordance with this Regulation, with priority to cross-border and missing links. Until 31 December 2023, the selection of projects eligible for financing shall respect the national allocations under the Cohesion Fund with regard to 70% of the resources transferred. As of 1 January 2024, resources transferred to the Programme which have not been committed to a transport infrastructure project shall be made available to all Member States eligible for funding from the Cohesion Fund to finance transport infrastructure projects in accordance with this Regulation. 9.Resources allocated to Member States under shared management may, at their request, be transferred to the Programme. The Commission shall implement those resources directly in accordance with [point (a) of Article 62(1)] of the Financial Regulation or indirectly in accordance with point (c) of that Article. Where possible those resources shall be used for the benefit of the Member State concerned. Article 5

Third countries associated to the Programme 1.The Programme shall be open to the following third countries : (a)European Free Trade Association (EFTA) members which are members of the European Economic Area (EEA), in accordance with the conditions laid down in the EEA agreement; (b)acceding countries, candidates and potential candidates, in accordance with the general principles and general terms and conditions for their participation in Union programmes established in the respective framework agreements and association council decisions, or similar agreements, and in accordance with the specific conditions laid down in agreements between the Union and them; (c)countries covered by the European Neighbourhood Policy, in accordance with the general principles and general terms and conditions for the participation of those countries in Union programmes established in the respective framework agreements and association council decisions, or similar agreements, and in accordance with the specific conditions laid down in agreements between the Union and those countries;

(d)other third countries, in accordance with the conditions laid down in a specific agreement covering the participation of the third country to any Union programme, provided that the agreement: –ensures a fair balance as regards the contributions and benefits of the third country participating in the Union programmes; –lays down the conditions of participation in the programmes, including the calculation of financial contributions to individual programmes and their administrative costs. These contributions shall constitute assigned revenues in accordance with Article [21(5)] of the Financial Regulation; –does not confer to the third country a decisional power on the programme; –guarantees the rights of the Union to ensure sound financial management and to protect its financial interests. 2.The third countries referred to in paragraph 1, and entities established in these countries, may not receive financial assistance under this Regulation except where it is indispensable to the achievement of the objectives of a given project of common interest and under the conditions set in the work programmes referred to in Article 19. Article 6

Implementation and forms of EU funding 1.The Programme shall be implemented in direct management in accordance with the Financial Regulation or, in indirect management with bodies referred to in Article [61(1)(c)] of the Financial Regulation. 2.The Programme may provide funding in any of the forms laid down in the Financial Regulation, in particular grants and procurement. It may also provide financing in the form of financial instruments within blending operations. Blending operations decided under this Programme shall be implemented in accordance with the InvestEU Regulation and Title X of the Financial Regulation. 3.The Commission may delegate power to implement part of the Programme to executive agencies in accordance with Article [69] of the Financial Regulation with a view to the optimum management and efficiency requirements of the Programme in the transport, energy and digital sectors. 4.Contributions to a mutual insurance mechanism may cover the risk associated with the recovery of funds due by recipients and shall be considered a sufficient guarantee under the Financial Regulation. The provisions laid down in [Article X of] Regulation XXX [successor of the Regulation on the Guarantee Fund] shall apply. Article 7

Cross-border projects in the field of renewable energy 1.Cross-border projects in the field of renewable energy shall involve at least two Member States and shall be included in a cooperation agreement or any other kind of arrangement between Member States or arrangements between Member States and third countries as set out in Articles 6, 7, 9 or 11 of Directive 2009/28/EC. These projects shall be identified in accordance with the criteria and procedure laid down in Part IV of the Annex to this Regulation. 2.By 31 December 2019, the Commission shall adopt a delegated act in accordance with Article 23(d) of this Regulation to further specify the selection criteria and lay down details of the selection process of the projects and shall publish the methodologies for assessing the contribution of the projects to the general criteria and for assessing the overall costs and benefits specified in Part IV of the Annex. 3.Studies aiming at the development and identification of cross-border projects in the field of renewable energy shall be eligible for funding under this Regulation. 4.Cross-border projects in the field of renewable energy shall be eligible for Union funding for works if they meet the following additional criteria: (a)the project specific cost-benefit analysis pursuant to point 3 of Part IV of the Annex provides evidence concerning the existence of significant cost savings and/or benefits in terms of system integration, security of supply or innovation, and; (b)the applicant demonstrates, that the project would not materialise in the absence of the grant, or that the project cannot be commercially viable in the absence of the grant. This analysis shall take into account any revenues resulting from support schemes. 5.The amount of the grant for works shall be proportionate to the cost savings and/or benefits referred to in point 2 (b) of Part IV of the Annex and shall not exceed the amount required to ensure that the project materialises or becomes commercially viable. Article 8

Projects of common interest in the area of digital connectivity infrastructure

1.Projects of common interest in the area of digital connectivity infrastructure shall contribute to the specific objective provided for in Article 3(2)(c). 2.Studies aiming at the development and identification of projects of common interest in the area of digital connectivity infrastructure shall be eligible for funding under this Regulation. 3.Without prejudice to the award criteria laid down in Article 13, priority for funding shall be determined taking into account the following criteria: (a)actions contributing to access to very high capacity networks capable of providing Gigabit connectivity for socio-economic drivers shall be prioritised taking into account the function of the socio-economic drivers, the relevance of the digital services and applications enabled by providing the underlying connectivity, and the potential socio-economic benefits to citizens, business and local communities, including the potential positive spill-overs in terms of connectivity, in accordance with Part V of the Annex; (b)actions contributing to the provision of very high-quality local wireless connectivity in local communities, in accordance with Part V of the Annex; (c)with regard to actions contributing to the deployment of 5G systems, priority shall be given to deployment of 5G corridors along major terrestrial transport paths, including the trans-European transport networks. The extent to which the action contributes to ensuring coverage along major transport paths enabling the uninterrupted provision of synergy digital services, while maximising potential positive spill-overs for territories and population in the vicinity of the project deployment area shall also be taken into account. An indicative list of projects that could benefit from support is included in Part V of the Annex; (d)projects aiming at the deployment of cross-border backbone networks linking the Union to third countries and reinforcing links within the Union territory, including with submarine cables, shall be prioritised according to the extent to which they significantly contribute to increasing the resilience and capacity of electronic communications networks in Union territory; (e)with regard to coverage with very high capacity networks, priority shall be given to actions contributing to coverage of territories and population, in inverse proportion to the intensity of the grant support that would be required to allow the project to be implemented, relative to the applicable maximum co-financing rates laid down in Article 14. The extent to which the action contributes to ensuring comprehensive coverage of the territory and population within a certain project deployment area, while maximising potential positive spill-overs for territories and population in the vicinity of the project deployment area shall also be taken into account. (f)with regard to projects deploying operational digital platforms, priority shall be given to actions based on state-of-the-art technologies, taking into account aspects such as interoperability, cybersecurity, data privacy and re-use. (g)the extent to which the deployed technology is best suited for the specific project, while proposing the best balance between state-of-the-art technologies in terms of data flow capacity, transmission security, network resilience and cost efficiency. CHAPTER II ELIGIBILITY Article 9

Eligible actions 1.Only actions contributing to the achievement of the objectives referred to in Article 3 are eligible for funding. Such actions include in particular studies, works and other accompanying measures necessary for the management and implementation of the Programme and the sector-specific guidelines. 2.In the transport sector, the following actions shall be eligible to receive Union financial assistance under this Regulation: (a)Actions relating to efficient and interconnected networks: (i)actions implementing the core network in accordance with Chapter III of Regulation (EU) No 1315/2013, including actions relating to urban nodes, maritime ports, inland ports and rail-road terminals of the core network as defined at Annex II to Regulation (EU) No 1315/2013. Actions implementing the core network may include related elements located on the comprehensive network when necessary to optimize the investment and according to modalities specified in the work programmes referred to in Article 19 of this Regulation; (ii)actions implementing cross-border links of the comprehensive network in accordance with Chapter II of Regulation (EU) No 1315/2013, notably the sections listed in Part III of the Annex to this Regulation; (iii)actions implementing sections of the comprehensive network located in outermost regions in accordance with Chapter II of Regulation (EU) No 1315/2013, including actions relating to the relevant urban nodes, maritime ports, inland ports and rail-road terminals of the comprehensive network as defined at Annex II to Regulation (EU) No 1315/2013; (iv)actions supporting projects of common interest in order to connect the trans-European network with infrastructure networks of neighbouring countries as defined in Article 8(1) of Regulation (EU) No 1315/2013;

(b)Actions relating to smart, sustainable, inclusive, safe and secure mobility: (i)actions supporting motorways of the sea as provided for in Article 21 of Regulation (EU) No 1315/2013; (ii)actions supporting telematic applications systems, including for safety purposes, in accordance with Article 31 of Regulation (EU) No 1315/2013; (iii)actions supporting freight transport services in accordance with Article 32 of Regulation (EU) No 1315/2013; (iv)actions supporting new technologies and innovation, including automation, enhanced transport services, modal integration and alternative fuels infrastructure, in accordance with Article 33 of Regulation (EU) No 1315/2013; (v)actions to remove interoperability barriers, notably when delivering corridor/network effects; (vi)actions implementing safe and secure infrastructure and mobility, including road safety, in accordance with Article 34 of Regulation (EU) No 1315/2013; (vii)actions improving transport infrastructure resilience to climate change and natural disasters; (viii)actions improving transport infrastructure accessibility for all users in accordance with Article 37 of Regulation (EU) No 1315/2013; (ix)actions improving transport infrastructure accessibility and availability for security and civil protection purposes. (c)Under the specific objective referred to in Article 3(2)(a)(ii): actions, or specific activities within an action, supporting transport infrastructure on the TEN-T Network in order to adapt it to military mobility requirements with the purpose of enabling a civilian-military dual-use of the infrastructure. 3.In the energy sector, the following actions shall be eligible to receive Union financial assistance under this Regulation: (a)actions relating to projects of common interest as set out at Article 14 of Regulation (EU) No 347/2013; (b)actions supporting cross-border projects in the field of renewable energy, including their conception, as defined in Part IV of the Annex to this Regulation, subject to the fulfilment of the conditions laid down in Article 7 of this Regulation. 4.In the digital sector, the following actions shall be eligible to receive Union financial assistance under this Regulation: (a)actions supporting Gigabit connectivity of socio-economic drivers; (b)actions supporting the provision of very high-quality local wireless connectivity in local communities that is free of charge and without discriminatory conditions; (c)actions implementing uninterrupted coverage with 5G systems of all major terrestrial transport paths, including the trans-European transport networks; (d)actions supporting deployment of backbone networks including with submarine cables, across Member States and between the Union and third countries; (e)actions supporting access of European households to very high capacity networks;

(f)actions implementing digital connectivity infrastructure requirements related to cross-border projects in the areas of transport or energy and/or supporting operational digital platforms directly associated to transport or energy infrastructures. An indicative list of eligible projects in the digital sector is provided for in Part V of the Annex. Article 10

Synergies 1.Actions contributing to the achievement of one or more objectives of at least two sectors, as provided for in Article 3(2) (a), (b) and (c) shall be eligible to receive Union financial assistance under this Regulation. Such actions shall be implemented through specific cross-sectoral work programmes addressing at least two sectors, including specific award criteria and financed with budget contributions from the sectors involved. 2.Within each of the transport, energy or digital sectors, actions eligible in accordance with Article 9 may include ancillary elements, which may not relate to eligible actions as provided for in Article 9(2), (3) or (4) respectively, provided that they comply with all of the following requirements: (a)the cost of these ancillary elements does not exceed 20% of the total eligible costs of the action; and (b)these ancillary elements relate to the transport, energy or digital sector; and (c)these ancillary elements allow to significantly improve the socio-economic, climate or environmental benefits of the action. Article 11

Eligible entities 1.The eligibility criteria set out in this Article shall apply in addition to the criteria set out in Article [197] of the Financial Regulation. 2.The following entities are eligible: (a)legal entities established in a Memb