Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EC) No 1080/2006 on the European Regional Development Fund as regards the eligibility of energy efficiency and renewable energy investments in housing
Date: 2008-12-03
Institutions: European Commission
Subjects: European Regional Development Fund, economic and social cohesion, economic development, operation of the Institutions, powers of the institutions (EU), regional aid, regional development, regional disparity

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 3.12.2008 
COM(2008) 838 final 

2008/0245 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

amending Regulation (EC) No 1080/2006 on the European Regional Development Fund 
as regards the eligibility of energy efficiency and renewable energy investments in 
housing 

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EXPLANATORY MEMORANDUM 

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CONTEXT OF THE PROPOSAL 

•  Grounds for and objectives of the proposal 

In dealing with the financial crisis, the Commission took the initiative to propose to the 
Member  States  a  framework  aiming  to  stimulate  the  real  economy1.  This  initiative 
endorsed by the Member States has subsequently been substantiated by the European 
Economic Recovery Plan2 which, among other, suggests the adoption of actions in the 
priority areas of the Lisbon Strategy. As for the energy, special attention is given to the 
improvement  of  energy  efficiency  in  buildings.  Member  States  are,  therefore, 
encouraged to re-programme their Structural Funds Operational Programmes in order 
to devote a greater share to energy-efficiency investments, including where they fund 
social  housing.  To  make  this  happen,  an  amendment  to  the  current  regulatory 
framework is needed. 

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•  General context 

Speeding  up  energy  investment  in  buildings  contributes  to  enhance  Europe's 
sustainable growth potential, to promote EU competitiveness, to improve know how in 
the  field  of  energy  efficiency  and  renewable  energies  and  to  promote  the  European 
Energy  Strategy  objectives.  Moreover,  public  investment  in  favour  of  low-income 
households confirms solidarity and ensures social cohesion in this period.  

Although there is no EU competence, different EU policies have an impact on housing. 
The decision to support energy investment in buildings, including social housing, lies 
within the competence of the Member States. Recently, the Housing Ministers on their 
informal meeting held in Marseille on 24 November 2008 stressed the importance and 
the need for such support. 

In the current situation, at first stage, it is important to make possible the use of the EU 
financial support for this type of investments by providing all Member States with the 
appropriate  legal  instrument  and,  subsequently,  to  ensure  the  appropriate  use  of  this 
facility  by  the  Member  States.  Moreover,  EU  co-financed  public  support  should  be 
limited only to those households which are most in need. 

The  envisaged  proposal  promotes  investment  in  the  fields  of  energy  efficiency  and 
renewable energies which constitutes one of the core elements of the EU Energy and 
Climate Change Strategy and both constitute priority interventions under the ERDF.  

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•  Existing provisions in the area of the proposal 

Under the current regulatory framework, ERDF supported interventions in the housing 
sector, including energy efficiency, are reserved only for Member States that acceded 
to  the  European  Union  on  or  after  1  May  2004,  and  under  the  conditions  set  out  in 

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COM(2008) 706. 
COM(2008) 800. 

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Article 7(2) of Regulation (EC) No 1080/2006.  

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•  Consistency with the other policies and objectives of the Union 

The  proposal  is  fully  consistent  with  the  EU  policy  objectives  in  the  fields  of 
environment, energy efficiency and renewable energies and promotes the objectives of 
Directive  2002/91/EC  on  energy  performance  of  buildings3,  of  Directive  2006/32/EC 
on  energy  end-use  efficiency  and  energy  services  and  repealing  Council  Directive 
93/76/EEC4  and  of  Proposal  for  a  directive  of  the  European  Parliament  and  of  the 
Council on the promotion of the use of energy from renewable sources5. 

2. 

CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT 

•  Consultation of interested parties 

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Consultation methods, main sectors targeted and general profile of respondents 

Two meetings of the Coordination Committee of the Funds on 24 September 2008 and 
21  October  2008  provided  opportunities  to  examine  the  extent  of  the  flexibility 
permitted under the text of the Regulation via a guidance note on eligibility of energy 
efficiency and renewable energies in buildings (COCOF note No 08/0034/02). 

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Summary of responses and how they have been taken into account 

The outcome of all these consultations was that the Member States felt that solutions 
based on the interpretation of Regulation No 1080/2006 were not adequate.  

•  Collection and use of expertise 

There was no need for external expertise. 

•  Impact assessment 

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The  present  proposal  completes  a  series  of  non-regulatory  adjustments  which  have 
sought  to  ensure  that  all  Member  States  can  fully  exploit  the  existing  co-financing 
possibilities under the ERDF and the Cohesion Fund (COCOF note No 08/0034/02). 

It  broadens  the  scope  of  eligibility  of  expenditure  on  housing,  in  order  to  permit  and 
facilitate further investments which could not be possible without modification of the 
existing regulatory framework. 

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OJ L 1, 4.1.2003, p. 65. 
OJ L 114, 27.4.2006, p. 64.  
COM(2008) 19, 23.1.2008. 

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3. 

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LEGAL ELEMENTS OF THE PROPOSAL 

•  Summary of the proposed action 

The  proposed  modification  to  Regulation  (EC)  No  1080/2006  on  the  European 
Regional  Development  Fund  seeks  to  permit  and  facilitate  energy  efficiency  and 
renewable energies interventions in the housing sector in all Member States. In order to 
achieve  substantial  economic  results,  it  is  important  to  undertake  this  type  of 
investment not in a fragmentary and isolated way but in the framework of a scheme set 
up  by  the  national  public  authorities  at  the  appropriate  level.  This  scheme  can  be  for 
instance  a  State  Aid  scheme  or  a  public  works  programme  at  large  scale.  It  is  also 
essential, in the framework of interventions under the cohesion policy, to concentrate 
the efforts where the public intervention is needed, in the case at issue to the benefit of 
the low-income households. As there is no EU definition of the latter, Member States 
have to apply a national definition based on national provisions in force.  

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•  Legal basis 

European  Parliament  and  Council  Regulation  (EC)  No 1080/2006  on  the  European 
Regional  Development  Fund  and  repealing  Regulation  (EC)  No 1783/1999  in  its 
Article 7 defines the eligibility rules applicable to the housing sector. 

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•  Subsidiarity principle 

The  proposal  complies  with  the  subsidiarity  principle  to  the  extent  that  it  seeks  to 
provide support to the Member States through changes that strengthen their role within 
the framework of shared management of the Funds. Moreover, the envisaged proposal 
permits the Member States to frame the public support in the way they consider more 
appropriate  and,  for  the  definition  of  the  low  income  households,  to  use  national 
definitions. 

•  Proportionality principle 

The proposal complies with the proportionality principle for the following reason(s). 

The proposal conforms to the proportionality principle since it is limited to provide for 
the  eligibility  in  all  Member  States  under  the  ERDF  of  energy  investments  in  the 
housing sector for the low-income households without fixing additional conditions. 

The  proposal  offers  an  additional  possibility  for  investment  activity  in  the  Member 
States for the benefit only of those who need the public support.  

•  Choice of instruments 

Proposed instruments: regulation. 

Other means would not be adequate for the following reason(s). 

The  Commission  has  already  explored  the  limits  offered  by  the  current  legislation. 
Even with the most flexible interpretation, the current rules setting a limited eligibility 

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do not permit important investments in the housing sector in all Member States.  

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BUDGETARY IMPLICATION 

The proposal has no implication for the Community budget. 

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2008/0245 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

amending Regulation (EC) No 1080/2006 on the European Regional Development Fund 
as regards the eligibility of energy efficiency and renewable energy investments in 
housing 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, and in particular Article 
162 thereof, 

Having regard to the proposal from the Commission6, 

Having regard to the opinion of the European Economic and Social Committee7, 

Having regard to the opinion of the Committee of the Regions8, 

Acting in accordance with the procedure laid down in Article 251 of the treaty, 

Whereas: 

(1)  With  the  view  to  enhance  Europe's  longer-term  sustainable  growth  potential,  the 
Commission has adopted a Communication on a European Economic Recovery Plan9 
which  considers  the  importance  of  undertaking  investments  improving  energy 
efficiency of the buildings, including the housing sector. 

(2) 

The  European  Regional  Development  Fund  supports  interventions  in  the  housing 
sector, including energy efficiency, only in favour of Member States that acceded to 
the  European  Union  on  or  after  1  May  2004, where  the conditions  set out in Article 
7(2) of Regulation (EC) No 1080/2006 of the European Parliament and of the Council 
of 5 July 2006 on the European Regional Development Fund and repealing Regulation 
(EC)  No 1783/199910  are  met.  Such  support  for  energy  efficiency  and  renewable 
energy  investment  in  the  housing  sector  should  be  made  available  for  all  Member 
States.  

(3) 

Support should be provided to those investments which take place in the framework of 
public  schemes  in  line  with  the  objectives  of  the  Directive  2006/32/EC  of  the 

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OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
COM(2008) 800, 26.11.2008. 
OJ L 210, 31.7.2006, p. 1. 

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European  Parliament  and  of  the  Council  on  energy  end-use  efficiency  and  energy 
services and repealing Council Directive 93/76/EEC11. 

(4) 

In  order  to  ensure  that  the  objectives  of  economic  and  social  cohesion  as  set  out  in 
Article  158  of  the  EC  Treaty  are  met,  interventions  should  target  low-income 
households, as defined by the national legislation in force.  

(5) 

Regulation (EC) No 1080/2006 should therefore be amended accordingly. 

HAS ADOPTED THIS REGULATION: 

Article 1 

Article 7 of Regulation (EC) No 1080/2006 is amended as follows:  

1. The following paragraph 1a. is inserted after paragraph 1:  

"1.a.  Expenditure  on  energy  efficiency improvement and on the use of renewable energy in 
existing housing in favour of low-income households shall be eligible for all Member States." 

2. The introductory phrase of paragraph 2 is replaced by the following: 

"Expenditure on housing, except for energy efficiency and the use of renewable energy as set 
out  in  paragraph  1a,  shall  be  eligible  only  for  those  Member  States  that  acceded  to  the 
European Union on or after 1 May 2004, where the following conditions are met:" 

Article 2 

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

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

Done at Brussels,  

For the European Parliament 
The President 

For the Council 
The President 

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OJ L 114, 27.4.2006, p. 64. 

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