Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EC) No 663/2009 establishing a programme to aid economic recovery by granting Community financial assistance to projects in the field of energy
Date: 2010-05-31
Institutions: European Commission
Subjects: economic support, electrical energy, energy resources, gas, project of common interest

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EUROPEAN COMMISSION 

Brussels, 31.5.2010 
COM(2010)283 final 

2010/0150 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL  

amending Regulation (EC) No 663/2009 establishing a programme to aid economic 
recovery by granting Community financial assistance to projects in the field of energy  

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EXPLANATORY MEMORANDUM 

Regulation  (EC)  no  663/2009  of  13  July  20091  established  a  programme  to  aid  economic 
recovery for Europe (EEPR) by granting EUR 3.98 billion by the end of 2010. The EEPR is a 
financial  instrument  whose  overall  objective  is  to  stimulate  recovery  from  the  downturn 
affecting  the  EU  economy  while  enhancing  the  achievement  of  the  EU  energy  policy 
priorities,  namely  the  security  and  diversification  of  energy  supply,  the  operation  of  the 
internal  energy  market  and  the  reduction  of  greenhouse  gas  emissions.  This  Community 
financing  was  allocated  to  three  sub-programmes  in  the  field  of  gas  and  electricity 
infrastructure  projects;  offshore  wind  electricity  projects  (OWE),  and  carbon  capture  and 
storage projects (CCS). 

The  Commission  adopted  the  award  decisions  for  each  sub-programme  respectively  on  9 
December 2009 for the OWE and CCS sub-programmes and on 4 March 2010 for the gas and 
electricity  infrastructure  projects.  It  is  estimated  in  the  report  from  the  Commission  of  27 
April  20102  on  the  implementation  of  the  EEPR  that  almost  the  entire  EEPR  financial 
envelope (€3.98 billion) will be committed in  the course of spring 2010. An amount of around 
€114 million will however not be committed unde r the EEPR Regulation adopted on 13 July 
2009. The Report indicates that this amount is not expected to change, but notes that one or 
more  project  promoters  may  fail,  for  legal,  financial  or  technical  reasons,  to  comply  with 
some specific conditions for the disbursement of the grants so that more funds may finally not 
be  committed  under  the  EEPR  Regulation  adopted  on  13  July  2009.  The  amount  of 
uncommitted funds will be known by the end of 2010. 

Energy  saving  is  the  EU's  most  immediate  and  cost-effective  way  of  addressing  the  EU's 
strategic  objectives  of  fighting  climate  change,  ensuring  security  of  energy  supply  and 
achieving  sustainable  economic  and  social  development.  In  the  spirit  of  the  Europe  2020 
strategy  for  sustainable  growth  and  jobs,  the  development  of  further  renewable  sources  and 
the  promotion  of  energy  efficiency  would  contribute  to  Greener  Growth,  building  a 
competitive and sustainable economy, and tackling climate change. By giving support to these 
policies,  Europe  will  create  new  jobs  and  green  market  opportunities  fostering  the 
development of a competitive, secure and sustainable economy. 

Even though there is a modest improvement of the GDP growth projections for the first half 
of 2010, the forecasted growth rate for 2010 remains  mainly  unchanged  at  0.7%  in  the  EU. 
Furthermore, the industrial production and retail sales figures amongst others have been less 
promising,  and  investments  remain  weak.  Equally,  financial  markets  remain  unstable  and 
uncertain3.  Adding  a  weak  labour  market,  the  economic  crisis  is  still  present  in  Europe  and 
requires swift and effective EU action in line with policy objectives. 

Providing  for  increased  financial  incentive  and  technical  assistance  is  a  key  element  to 
address  the  barriers  of  high  up-front  cost  and  lack  of  information  and  stimulate  sustainable 
energy  improvements.  In  a  market  constrained by  the  prevailing  economical  crises  and  in  a 

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Regulation  (EC)  No  663/2009  of  the  European  Parliament  and  of  the  Council  of  13  July  2009 
establishing  a  programme  to  aid  economic  recovery  by  granting  Community  financial  assistance  to 
projects in the field of energy. 
Communication  from  the  Commission  to  the  European  Parliament  and  the  Council,  Report  on  the 
implementation of the European Energy Programme for Recovery, COM(2010)191 final. 
The  Commission  interim  economic  forecasts  on  25  February  2010,  Press  release  of  ECFIN  of 
25/2/2010. 

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time  of  caution  by  commercial  banks,  generating  low  investment  rates,  there  are  additional 
barriers for project financing to promote this policy area. Existing experiences across Europe 
demonstrate  how  well-targeted  and  well-designed  financial  aid  policies  can  lead  to  massive 
improvement and succeed to tap the development potential of sustainable energy. 

Investments help in sustainable energy can be most effective and beneficial when targeted at 
municipal  and  local  levels.  Housing  energy  renovation,  decentralised  renewable  energy 
installations, urban mobility plans are activities that need a high workload input from skilled 
persons, whose jobs are not subject to delocalisation. It is therefore very intensive in terms of 
job creation. Besides, sustainable energy at local level contributes decisively to other policies, 
such  as  social  integration,  or  improvement  of  quality  of  life,  and  attractiveness  of  local 
communities towards business and visitors. 

In  this  context,  the  technical  assistance  and  financial  incentive  may  assist  in  preparing  and 
mobilising the existing Structural and Cohesion Funds to the optimal extent.  

In the 2nd Strategic Energy Review4, the European Commission's announced its intention to 
launch a Sustainable Energy Financing Initiative in cooperation with the European Investment 
Bank  and  other  International  Financial  Institutions  (IFIs)  in  order  to  establish  appropriate 
financing  mechanisms  for  the  massive  development  of  energy  efficiency  and  renewable 
energies. 

Provision of financial assistance through financial intermediaries such as IFIs enables to use 
the EU funding in the most efficient way and to maximise its impact in the short term, with 
the highest possible benefits on economic activity and job creation. Through the financing of 
technical  assistance  to  project  development  combined  with  innovative  financial  incentive 
schemes  (such  as  guarantees,  soft  loans  with  favourable  interests,  blended  instruments  and 
project  financing),  a  high  leverage  factor  between  the  EU  funding  and  the  total  investment 
mobilized can be guaranteed. 

These elements were taken into account when drawing the present proposal. 

It is proposed to use the uncommitted funds under Chapter II of the EEPR Regulation for the 
creation  of  a  dedicated  financial  instrument  to  support  energy  efficiency  and  renewable 
initiatives  within  the  Sustainable  Energy  Financing  Initiative.  The  financial  facility  shall 
support  the  development  of  bankable  energy  efficiency  and  renewable  energy  projects  and 
facilitate the financing of investments in energy efficiency and renewable energy, in particular 
in urban settings. In order to foster a large number of decentralised investments,  municipal, 
local and regional public authorities will be the beneficiaries. The approach will build up on 
the success of the Covenant of Mayors, signed up by more than 1600 regions and cities across 
Europe. 

The  sustainable  energy  projects  to  be  financed  include  public  and  private  buildings,  high 
energy  efficient  combined  heat  and  power  (CHP)  and  district  heating/cooling  networks  (in 
particular from renewable energy sources), decentralised renewable energy sources embedded 
in  local  settings,  clean  urban  transport  and  local infrastructure  such  as  smart  grids,  efficient 
street lighting, and smart metering. 

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2nd  Strategic  Energy  Review  of  13.Nov.  2008,  An  EU  Energy  Security  and  Solidarity  Action  Plan, 
COM(2008)781. 

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The facility shall be implemented by one or several financial intermediaries such as IFIs. The 
selection  will  be  operated  on  the  basis  of  the  demonstrated  capacity  of  the  financial 
intermediaries  to  use  the  funding  in  the  most  efficient  and  effective  way.  Financial 
intermediaries  shall  put  in  place  financial  schemes  that  guarantee  a  high  leverage  factor 
between the EU funding and the total investment in order to raise significant investments in 
the  EU.  Reaching  this  leverage  factor  shall  be  a  necessary  precondition  for  the  financial 
assistance. The financial intermediaries shall abide to transparent management and reporting 
procedures to allow strict Commission's supervision of the use of the funds; no funding other 
than management fees or costs related to the establishment and implementation of the facility 
shall  be  made  available  to  those  financial  intermediaries.  Finally,  negotiations  with  the  IFIs 
can be pursued in parallel to the legislative procedure which shall facilitate early commitment 
of the funds. 

In  compliance  with  the  EEPR  Regulation,  the  facility  shall  be  limited  to  the  financing  of 
measures that have a rapid, measurable and substantial impact on economic recovery within 
the EU, increased energy security and reduction of greenhouse gas emissions.  

The criteria set out in the EEPR Regulation adopted on13 July 2009 should fully apply to the 
selection of the measures financed under the facility. These criteria include the soundness and 
technical  adequacy  of  the  approach,  the  soundness  of  the  financial  package,  the  maturity  of 
the project, the extent to which lack of access to finance is delaying the implementation of the 
action  and  EEPR  assistance  will  stimulate  public  and  private  finance,  as  well  as  the 
socioeconomic  and  environmental  impacts.  The  geographical  balance  of  the  projects  should 
also be taken into account as an essential element. 

This proposal is fully in line with the Declaration of the Commission5 referred to in Recital 7 
of the EEPR Regulation6, indicating its intention to propose, if appropriate, when reporting in 
2010  on  the  implementation  of  the  Regulation,  measures  allowing  for  the  reallocation  of 
uncommitted funds to the financing of projects in the areas of energy efficiency and energy 
from renewable sources.  

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The Commission Declaration reads as follows: "Should the Commission, when reporting in 2010 on the 
implementation of the Regulation under its Article 28, find that it will not be possible to commit by the 
end  of  2010  a  part  of  the  funds  foreseen  for  the  projects  listed  in  the  annex  to  the  Regulation,  the 
Commission will propose, if appropriate and in a geographically balanced way, an amendment to the 
Regulation allowing for the financing of projects in the area of energy efficiency and renewable energy 
sources,  in  addition  to  the  above  initiatives,  including  eligibility  criteria  similar  to  those  applying  to 
projects listed in the Annex to this Regulation". 
Recital 7 of the EEPR states the following: "In the event that it is not possible to commit all funds by 
the end of 2010, the Commission has declared its intention, if appropriate, to propose, when reporting 
in  2010  on  the  implementation  of  this  Regulation,  measures  allowing  for  the  financing  of  projects 
consistent with the Recovery Plan, such as projects in the areas of energy efficiency and energy from 
renewable sources". 

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2010/0150 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL  

amending Regulation (EC) No 663/2009 establishing a programme to aid economic 
recovery by granting Community financial assistance to projects in the field of energy  

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 
Article 194(1)(c) thereof, 

Having regard to the proposal from the European Commission7, 

Having regard to the opinion of the European Economic and Social Committee8, 

Having regard to the opinion of the Committee of the Regions9, 

After transmission of the proposal to the national Parliaments 

Acting in accordance with the ordinary legislative procedure, 

Whereas: 

(1) 

(2) 

Regulation (EC) No 663/2009 of the European Parliament and the Council of 13 July 
200910  established  a  programme  to  aid  economic  recovery  for  Europe  (EEPR)  by 
granting EUR 3.98 billion by the end of 2010.  

Part of this money will not be committed under the sub programmes provided for in 
Chapter II of Regulation (EC) No 663/2009. 

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OJ C , , p. . 
OJ C , , p. . 
OJ C , , p. . 
OJ L 200, 31.7.2009, p. 31. 

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(3) 

(4) 

(5) 

(6) 

(7) 

(8) 

(9) 

In  the  spirit  of  the  Europe  2020  strategy  for  sustainable  growth  and  jobs,  the 
development  of  further  renewable  sources  and  the  promotion  of  energy  efficiency 
would contribute to Greener Growth, building a competitive and sustainable economy, 
and  tackling  climate  change.  By  giving  support  to  these  policies,  Europe  will  create 
new jobs and green market opportunities fostering the development of a competitive, 
secure and sustainable economy.  

Providing increased financial incentive is a key element to address the barriers of high 
up-front  cost  and  stimulate  sustainable  energy  improvements.  Investment  support  in 
sustainable energy can be most effective and beneficial when targeted at local level.  

A dedicated financial instrument to support energy efficiency and renewable initiatives 
within the Sustainable Energy Financing Initiative11 should therefore be created to use 
the  uncommitted  funds  under  Chapter  II  of  Regulation  (EC)  No  663/2009.  This 
financial  facility  should  support  the  development  of  bankable  energy  efficiency  and 
renewable  energy  projects  and facilitates the  financing  of  investment  programmes  in 
energy  efficiency  and  renewable  energy  by  local  and  regional  public  authorities,  in 
particular in urban settings. 

So as to maximise the impact of the EU funding in the short term, the facility should 
be managed by one or several financial intermediaries such as International Financial 
Institutions (IFIs). The selection should be operated on the basis of the demonstrated 
capacity  of  the  financial  intermediaries  to  use  the  funding  in  the  most  efficient  and 
effective  way  and  with  the  highest  leverage  between  the  EU  funding  and  the  total 
investment in order to raise significant investments in the EU. 

In compliance with Regulation (EC) No 663/2009, the facility should be limited to the 
financing  of  measures  that  have  a  rapid,  measurable  and  substantial  impact  on 
economic  recovery  within  the  EU,  increased  energy  security  and  reduction  of 
greenhouse gas emissions. The criteria set out in Regulation (EC) No 663/2009 should 
fully apply to the selection and eligibility of the measures financed under the facility. 
The  geographical  balance  of  the  projects  should  also  be  taken  into  account  as  an 
essential element. 

Since the exact amount of uncommitted funds may be known just by the end of 2010, 
individual legal commitments implementing budgetary commitments should be made 
by 31 March 2011. 

Due to the urgent need to address the economic crises and the Union's pressing energy 
needs,  expenditure  should  be  eligible  as  from  13  July  2009  as  many  applicants 
requested the eligibility of expenditure from the submission of the grant application in 
line  with  Article  112  of  Regulation  (EC,  Euratom)  No  1605/2002  on  the  Financial 
Regulation applicable to the general budget of the European Communities. 

(10)  Due  to  the  urgent  need  to  address  the  economic  crisis  and  the  European  Union's 
pressing  energy  needs,  this  Regulation  should  enter  into  force  immediately  after  its 
publication, 

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2nd Strategic Energy Review of 13.Nov. 2008 , COM(2008)781. 

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HAVE ADOPTED THIS REGULATION: 

Article 1 
Amendments to Regulation (EC) No 663/2009 

Regulation (EC) No 663/2009 is amended as follows: 

(1) 

In Article 1, the following fourth paragraph is added: 

"This  Regulation  shall  allow  for  the  creation  of  financial  instruments  to  support 
energy efficiency and renewable initiatives." 

(2) 

In Article 3, paragraph 2 is replaced by the following: 

"Individual  legal  commitments  under  Chapter  II  implementing  the  budgetary 
commitments  made  in  2009  and  2010  shall  be  made  by  31  December  2010. 
Individual  legal  commitments  according  to  Article  22  shall  be  made  by  31  March 
2011." 

(3) 

Article 22 is replaced by the following: 

"Article 22 
Funds that cannot be committed under Chapter II or become available by 31 December 2010 

1. 
In  compliance  with  Article  3(2),  appropriations  that  could  not  be  subject  to 
individual  legal  commitments under Chapter II  for  an  amount  of  EUR  114  million, 
and  eventually  other  appropriations  that  become  available  as  a  result  of  total  or 
partial  non-implementation  of  the  projects  according  to  Chapter  II  shall  be  for  a 
financial facility within the Sustainable Energy Financing Initiative12. 

The  financial  facility  referred  to  in  paragraph  1  shall  be  implemented  in 

2. 
compliance with Annex II. The provisions of Article 23 (1) shall not apply.  

(4) 

In paragraph 2 of Article 23, the second sentence shall be replaced by the following: 

"Expenditure may be eligible as from 13 July 2009." 

(5) 

The Annex shall be renamed Annex I and a new Annex II shall be added: 

"Annex II 
Financial facility within the Sustainable Energy Financing Initiative 

I. 

Implementation of a financial facility for sustainable energy projects 

The  financial  facility  shall  support  the  development  of  bankable  energy  efficiency  and 
renewable energy projects and facilitate the financing of investments in energy efficiency and 
renewable  energy  by  municipal,  local  and  regional  public  authorities.  This  facility  shall  be 
implemented in accordance with the provisions on the delegation of budgetary execution tasks 
laid down in the Financial Regulation and its Implementing Rules. 

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2nd Strategic Energy Review of 13.Nov. 2008 , COM(2008)781. 

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The facility shall be used for sustainable energy projects in particular in urban settings. This 
shall include: 

(a) 
projects  for  public  and  private  buildings  incorporating  renewable  and/or  energy 
efficiency  solutions  including  those  based  on  the  usage  of  Information  and  Communication 
Technologies (ICT); 

investments  for  high  energy  efficient  combined  heat  and  power  (CHP)  and  district 

(b) 
heating/cooling networks, in particular from renewable energy sources; 

(c) 

decentralised renewable energy sources embedded in local settings; 

clean  urban  transport  to  support  increased  energy  efficiency  and  integration  of 

(d) 
renewable energy sources; 

local infrastructure, including efficient street lighting, smart metering, and smart grids, 

(e) 
that make full usage of ICT. 

The  facility  may  be  used  to  provide  incentives  and  technical  assistance  as  well  as  raise 
awareness  of  the  national  and  local  authorities,  to  ensure  optimal  use  of  the  Structural  and 
Cohesion  Funds,  in  particular,  in  cases  of  energy  efficiency  and  renewable  energy 
improvements in housing and other types of buildings 

The  beneficiaries  of  the  facility  shall  be  public  authorities,  preferably  at  regional  and  local 
level, or private entities acting on behalf of these public authorities. Particular attention will 
be  given  to  proposals  involving  co-operation  of  such  bodies  with  housing  associations  and 
development agencies. 

II. 

Cooperation with Financial Intermediaries 

The  facility  shall  be  implemented  by  one  or  several  financial  intermediaries  such  as 
International  Financial  Institutions  (IFIs).  The  selection  will  be  operated  on  the  basis  of  the 
demonstrated capacity of the financial intermediaries to use the funding in the most efficient 
and effective way in accordance with the rules and criteria set out in this Annex. 

The financial intermediaries shall comply with the relevant requirements on the delegation of 
budgetary execution tasks set out in the Financial Regulation and its Implementing Rules, in 
particular  as  regards  procurement  rules,  internal  control,  accounting  and  external  audit.  No 
funding other than management fees or costs related to the establishment and implementation 
of the facility shall be made available to those financial intermediaries. 

The detailed terms and conditions of the facility, including monitoring and control, shall be 
laid down in a(n) agreement(s) between the Commission and the financial intermediaries. 

III. 

Funding conditions and selection and eligibility criteria  

The facility shall be limited to the  financing  of measures that have a  rapid, measurable and 
substantial  impact  on  economic  recovery  within  the  EU,  increased  energy  security  and 
reduction of greenhouse gas emissions. 

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Due  attention  will  be  paid  to  reaching  a  significant  leverage  factor  between  the  total 
investment  and  the  EU  funding  in  order  to  raise  significant  investments  in  the  EU.  Public 
authorities benefiting from financing should comply with the following conditions:  

(a) 

they have made a political commitment to mitigate climate change, including precise 
targets;  

they  dispose  of  an  emission  inventory  and  develop  multi-annual  strategies  to  attain 

(b) 
their targets;  

(c) 

they accept to be publicly accountable for the progress in their overall strategy.  

Measures financed under the facility shall comply with the following selection and eligibility 
criteria: 

(i) 

the soundness and technical adequacy of the approach; 

(ii) 

the soundness of the financial package for the full investment phase of the action; 

(iii) 

the geographical balance of the projects; 

(iv)  maturity,  defined  as  reaching  the  investment  stage,  and  incurring  substantial  capital 
expenditure as soon as possible; 

the  extent  to  which  lack  of  access  to  finance  is  delaying  the  implementation  of  the 

(v) 
action; 

(vi) 

the extent to which EEPR assistance will stimulate public and private finance; 

(vii)  quantified socioeconomic impacts; 

(viii)  quantified environmental impacts." 

Article 2 
Entry into force 

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

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

Done at Brussels, […] 

For the European Parliament 
The President 

For the Council 
The President 

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