COMMISSION STAFF WORKING PAPER Summary of the Impact Assessment
Date: 2011-10-19
Institutions: European Commission
Subjects: EU investment, competitiveness, financing method, investment promotion, project of common interest, single market, trans-European network, transport planning

EUROPEAN COMMISSION 

Brussels, 19.10.2011 
SEC(2011) 1263 final 

COMMISSION STAFF WORKING PAPER 

Summary of the Impact Assessment  

Accompanying document to the 

Proposal for a Regulation of the European Parliament and of the Council  

establishing the Connecting Europe Facility Summary   

{COM(2011) 665 final} 
{SEC(2011) 1262 final} 

 
 
 
 
  
 
This  document  provides  the  executive  summary  of  the  Impact  Assessment  Report  on  the 
Regulation  establishing  the  Connecting  Europe  Facility  (CEF)  that  will  fund  pre-identified 
transport, energy and information and communication technology (ICT). This new instrument 
was  proposed  by  the  Commission  in  its  Communication  "A  Budget  for  Europe  2020 
(hereinafter  the  MFF  Communication),  adopted  on  29  June  2011,  and  its  accompanying 
documents1.  The  CEF  Regulation  forms  part  of  a  package  of  legal  instruments  covering 
transport, energy and ICT, including also the sector-specific policy frameworks for the three 
sectors concerned2 and the available financial instruments.  

1. 

PROBLEM DEFINITION 

As  the  MFF  Communication  acknowledged,  the  current  EU  framework  for  infrastructure 
funding  is  not  adequate  to  provide  an  effective  response  to  the  challenge  identified  above. 
Funding  of  infrastructure  is  indeed  fragmented  among  sectors,  among  programmes  and 
among  financing  instruments,  preventing  thereby  the  full  exploitation  of  possible  synergies 
between sectors, programmes and financing instruments and reducing risks.3 In this context, 
and in view to accelerate the infrastructure development that the EU needs, the Commission 
decided  to  propose  the  creation  of  a  centrally  managed  common  facility,  the  so-called  CEF 
with a EUR 50 billion budget that will fund "pre-identified projects in transport, energy and 
ICT priority infrastructures of EU interest." 

The creation  of  the CEF is aimed at aligning EU financing instrument for infrastructures in 
the  sectors  concerned  on  their  respective  policy  objectives  and,  thereby,  at  contributing  to 
simplifying sector specific rules under the constraints set by the policy frameworks. 

The  MFF  Communication  did  not  however  define  the  operating  rules  of  the  CEF  that  will 
enable the facility to be a success in operational terms, i.e. the operating rules that will create 
the  investment  conditions  conducive  to  accelerating  the  infrastructure  development  that  the 
EU needs for its future sustainable competitiveness.  

At  the  same  time,  and  as  highlighted  in  the  MFF  Communication,  a  transversal  analysis  of 
existing  sector  specific  rules  shows  that,  beyond  the  creation  of  the  CEF,  there  is  room  for 
further simplification  of  operating  rules between the three concerned sectors. Therefore, the 
potential for synergies across sectors in the CEF should be explored further. 

In  light  of  the  above  and  drawing  on  ex  post  programme  evaluations,  stakeholder 
consultations  and  expert  recommendations,  the  Commission  has  identified  two  main  policy 
areas in which market and regulatory failures prevent EU funding to support adequately the 
development of infrastructures needed to achieve the objectives of the EU 2020 Strategy: 

– 

1 

2 

3 

Investment  leverage:  Existing  procedures,  methods  and  forms  for  granting  EU 
funding are not conducive to sufficient investment leverage. Three main reasons for a 
continuing  limited  impact  of  EU  funding  have  been  identified:  EU  funding  is  not 
sufficiently  focussed  on  projects  with  a  real  EU  added  value;  the  way  co-funding 
rates are set today does not trigger the investment needed because co-funding rates 
do not correspond to project risks and are not proportionate to their complexity and 

and 

500 

final 

COM(2011) 
http://ec.europa.eu/budget/biblio/documents/fin_fwk1420/fin_fwk1420_en.cfm  
Legislative proposals laying down revised policy frameworks in the area of TEN-E, TEN-T and e-TEN 
respectively. 
SEC(2011) 868, p. 79. 

SEC(2011) 

868.  All 

documents 

accessible 

are 

at 

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EU  added  value;  the  existing  forms  (grants  and/or,  in  some  sectors,  financial 
instruments) under which EU funding has been channelled to projects so far has not 
created an environment sufficiently conducive to private investment needed in each 
of the sectors. 

– 

Project implementation: Existing conditions in the fields of funding application and 
support,  of  monitoring  and  evaluation  and  programme  management  for  a  fast 
implementation of EU co-funded projects are not adequate. 

The  Commission  has  carried  out  an  analysis  of  possible  future  developments  of  these 
problems  with  unchanged  policies,  notably  with  the  continuation  of  the  2007-2013  MFF  in 
the  field  of  energy,  transport  and  ICT.  This  analysis  indicates  that  in  this  context,  the 
development  of  infrastructure  of  European  added  value  is  unlikely  to  happen  by  2020.  The 
involvement  of  the  private  sector  will  remain  marginal,  even  on  projects  with  long-term 
potential  commercial  interest.  Major  trans-European  connections,  including  those  with 
neighbouring countries, will remain missing, particularly for projects facing major  technical 
difficulties  or  limited  commercial  interest  for  project  promoters.  This  will  therefore  have 
detrimental impacts for instance on the functioning of the internal market, on accessibility and 
connections  with  the  neighbouring  countries.  The  impacts  on  environmental  and  climate 
change  objectives  are  also  likely  to  be  insignificant  with  the  continuation  of  the  current 
policies. 

2. 

ANALYSIS OF SUBSIDIARITY 

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". Furthermore, the EU's 
competence in the area of energy is also enshrined  in  TFEU,  Article  194. As regards  trans-
European  networks,  the  Commission’s  financing  proposals  have  to  be  approved  by  the 
Member States, who are responsible for the planning and construction of projects.  

In  the  Budget  Review  Communication,  the  Commission  underscored  the  importance  of 
employing  the  EU  budget  in  order  to  "plug  gaps  left  by  the  dynamics  of  national  policy-
making,  most  obviously  addressing  cross-border  challenges  in  areas  like  infrastructure, 
mobility, territorial cohesion… - gaps which would otherwise damage the interest of the EU 
as  a  whole."4  Member  states  tend  to  give  principal  priority  to  projects  of  primary  national 
relevance  when  planning  and  funding  infrastructure.5  Yet,  cross-border  connections  are 
essential  if  TENs  are  to  become  a  reality  and,  not  least,  in  an  optimal  configuration,  that 
carries highest EU added value for the Unions citizens.  

Subsequently, the Commission has clearly presented its position with regard to the role of the 
EU  budget  for  supporting  infrastructure  development,  in  particular  in  the  areas  of  energy, 
transport  and  ICT,  in  its  MFF  Communication:  "…experience  shows  that  national  budgets 

4 
5 

COM(2010)700, p. 5. 
See  Impact  Assessment  Reports  of  revised  TEN-T  Guidelines,  SEC(2011)xxx,  of  revised  TEN-E 
Guidelines, SEC(2011)xxx and of e-TEN Guidelines, SEC(20111)xxx. 

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will never give sufficiently high priority to multi-country, cross-border investments to equip 
the  Single  Market  with  the  infrastructure  it  needs.  This  is  one  more  example  of  the  added 
value of the EU budget. Indeed, the Commission further noted, "The costs for Europe of not 
investing sufficiently in its future network would be very high."6 

The  rationale  for  a  European  action  in  the  field  of  infrastructure  financing  stems  from  the 
trans-national nature of the identified problem.  

3. 

OBJECTIVES OF EU INITIATIVE 

As defined in the MFF Communication, the overarching objective of the CEF is to accelerate 
the  infrastructure  development  that  the  EU  needs  to  reach  the  EU  2020  Strategy  associated 
energy  and  climate  change  targets  and,  more  generally,  to  achieve  its  future  sustainable 
competitiveness. In order to meet this goal and in light of the problem identified in section 2 
above,  the  general  objective  of  the  initiative  accompanied  by  this  IA  is  to  establish optimal 
operating rules governing the use of funds under the CEF. 

At  the  same  time,  as  mentioned  in  section  4  of  the  MFF  Communication,  programmes  and 
instruments  such  as  the  CEF  included  in  the  MFF  Communication  also  have  a  focus  on 
simplification of inter alia sector specific rules. Therefore, the proposed initiative should also 
exploit  as  much  as  possible  synergies  within  each  sector  and  between  sectors  taking  into 
account the policy objectives laid down by the sector specific policy frameworks. 

Specific objectives (SO) 

In  light  of  the  above  and  on  the  basis  of  the  problem  defined  in  section  2  of  this  IA,  the 
general objective of putting in place optimal operating rules of CEF can be translated into two 
specific  objectives  that  are  in  line  with  the  Staff  Working  Paper  accompanying  the  2011 
Communication7: 

SO 1:  Define  forms,  methods  and  rules  of  financing  to  ensure  maximal  leverage  of  EU 
budget contributions in attracting public and private investments for projects with a European 
and  Single  Market  dimension,  in  particular  priority  networks  that  must  be  implemented  by 
2020, and where European added value is most warranted including, where appropriate, those 
crossing the EU borders. 

SO 2:  Define monitoring and evaluation mechanisms that reward performance and penalise 
non-effective use of EU funds with a view to ensure the effective and timely implementation 
of the projects supported. 

Operational objectives (OO) 

These  specific  objectives  can  be  translated,  in  their  turn,  in  a  number  of  operational 
objectives:  

As regards investment leverage: 

6 
7 

SEC(2011) 368, p. 78. 
Staff Working Paper, A Budget for Europe 2020: the current system of funding, the challenges ahead, 
the results of stakeholders consultation and different options on the main horizontal and sectoral issues 
SEC(2011) 868 final. 

EN 

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• 

• 

• 

OO 1: 
Define  objectives  and  multi-level  criteria  for  proposal  evaluation  in 
order to ensure that funding is channelled on actions implementing projects with high 
EU added-value. 

Define  co-funding  maximum  rates  for  EU  support  for  projects 
OO 2: 
according to priorities set in terms of EU added-value and risk/market failures faced 
by the projects. Allow flexible use of these rates, in order to maximise the leverage of 
EU funding contributions. 

OO 3: 
Encourage  the  participation  of  specialised  infrastructure  investors  by 
means  of  rules  for  the  use  of  market  based  instruments,  and  by  making  available 
sufficient funds for support of innovative instruments. 

As regards project implementation: 

• 

• 

• 

OO 4: 
transparent allocation of funds. 

Define rules for proposal selection in order to ensure a competitive and 

OO 5: 
Establish  a  consistent  framework  for  monitoring  and  evaluation  to 
support decisions for continuing, discontinuing or recalibrating EU funding support 
(i.e.  the  "use  it  or  lose  it"  principle,  rules  for  ensuring  that  the  competitive  re-
allocation of funds is made on transparent and highly competitive bases).  

OO 6: 
management of the programme. 

Set  up  an  adequate 

institutional  structure 

for 

the  centralised 

4. 

POLICY OPTIONS 

Finding  the  appropriate  balance  between  coherence  with  sector  policy  objectives  and 
maximisation  of  synergies  will  be  key  in  defining  CEF  optimal  operating  rules.  This 
appropriate  balance  only  will  ensure  that  CEF  operating  rules  are  optimal,  i.e.  that  they  are 
designed in such a way that a maximum value for money is attained. 

The identified policy options, consisting of combinations of various degrees of harmonisation 
of investment leverage and project implementation, can be situated between two extremes; at 
the one extreme, minimum harmonisation of investment leverage and project implementation 
and  at  the  other  extreme,  maximum  investment  leverage  and  project  implementation.  In 
between the extremes, there are several intermediary options, which consist of combinations 
of minimum and maximum harmonisation levels as well as of variable harmonisation levels. 

These combinations are shown in table 1 below: 

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Table 1: Identification of possible Policy Options 

Leverage 

L Min 

L Max 

L Var 

Implementation

I Min 

I Max 

financial 

innovative 

L Min – I Min (Baseline under CEF) 
Distinct co-funding rates for each sector and 
type of projects 
Distinct  mix  of 
instruments for each sector 
Distinct  criteria  for  identifying  EU  added-
value according to sectoral priorities 
Distinct  calls  and  selection  procedures  for 
each sector  
Distinct  sets  of  monitoring  instruments  and 
"use it or lose it" rules for each sector 
Distinct  management  structure/executive 
agency for each sector 

financial 

innovative 

L Min – I Max  
Distinct co-funding rates for each sector and 
type of projects 
Distinct  mix  of 
instruments for each sector 
Distinct  criteria  for  identifying  EU  added-
value according to sectoral priorities 
Common calls and procedures 
Single  set  of  monitoring  instruments  and 
"use it or lose it" rules 
Single  management  structure  (executive 
agency) 

L Max – I Min  
Common  co-funding  rates  for  all  sectors 
for each type of projects 
Common mix of innovative instruments 
Common  objectives  and  criteria  for  EU 
added-value  based  on  overall  Europe 
2020  Strategy  and  Budget  for  Europe 
2020 priorities 
Distinct calls and selection procedures for 
each sector  
Distinct  sets  of  monitoring  instruments 
and "use it or lose it" rules for each sector 
Distinct  management  structure/executive 
agency for each sector 
L Max – I Max  
Common  co-funding  rates  for  all  sectors 
for each type of projects 
Common mix of innovative instruments 
Common  objectives  and  criteria  for  EU 
added-value  based  on  overall  Europe 
2020  Strategy  and  Budget  for  Europe 
2020 priorities 
Common calls and procedures 
Single  set  of  monitoring  instruments  and 
"use it or lose it" rules 
Single  management  structure  (executive 
agency) 

LVar – I Min  
Common  rates  for  certain  types  of  projects  (studies  for  instance), 
common  rates  as  a  function  of  the  risk  level  faced  by  projects; 
specific  rates  for  certain  projects  depending  on  sectoral  policy 
priorities Distinct mix for each sector formed of: 
- a common set of equity and debt instruments; 
-different additional specific instruments 
Common  criteria  based  on  overall  Europe  2020  Strategy  &  Budget 
priorities  but  adapted  where  necessary  to  better  target  sectoral 
priorities within overall priorities 
Distinct calls and selection procedures for each sector  
Distinct  sets  of  monitoring  instruments  and  "use  it  or  lose  it"  rules 
for each sector 
Distinct management structure/executive agency for each sector 
LVar – I Max 
Common  rates  for  certain  types  of  projects  (studies  for  instance), 
common  rates  as  a  function  of  the  risk  level  faced  by  projects; 
specific  rates  for  certain  projects  depending  on  sectoral  policy 
priorities Distinct mix for each sector formed of: 
- a common set of equity and debt instruments; 
-different additional specific instruments 
Common  criteria  based  on  overall  Europe  2020  Strategy  &  Budget 
priorities  but  adapted  where  necessary  to  better  target  sectoral 
priorities within overall priorities 
Common calls and procedures 
Single set of monitoring instruments and "use it or lose it" rules 
Single management structure (executive agency) 

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I Var 

financial 

innovative 

L Min – I Var  
Distinct co-funding rates for each sector and 
type of projects 
Distinct  mix  of 
instruments for each sector 
Distinct  criteria  for  identifying  EU  added-
value according to sectoral priorities 
Common calls (and procedures) for projects 
with  a  cross-sectoral  dimension  (using  an 
earmarked  common  funding  line);  Distinct 
calls 
for  sector  specific  projects  but 
common (ie fully harmonised) procedures 
A 
common/harmonised 
monitoring  instruments  and  "use  it  or  lose 
it"  rules  with  specific  instruments  and 
adapted/target  rules  to  take  into  account 
sectoral characteristics 
Single  executive  agency  as  common 
management  structure  but  with  various 
degrees  of  delegation  of  tasks  by  the 
Commission services in each sector 

set  of 

core 

(and  procedures) 

L Max – I Var 
Common  co-funding  rates  for  all  sectors 
for each type of projects 
Common mix of innovative instruments 
Common  objectives  and  criteria  for  EU 
added-value  based  on  overall  Europe 
2020  Strategy  and  Budget  for  Europe 
2020 priorities 
Common  calls 
for 
projects  with  a  cross-sectoral  dimension 
(using  an  earmarked  common  funding 
line);  Distinct  calls  for  sector  specific 
projects 
fully 
but 
harmonised) procedures 
A  core  set  of  common/harmonised 
monitoring instruments and "use it or lose 
it"  rules  with  specific  instruments  and 
adapted/target  rules  to  take  into  account 
sectoral characteristics 
Single  executive  agency  as  common 
management  structure  but  with  various 
degrees  of  delegation  of  tasks  by  the 
Commission services in each sector 

common 

(ie 

LVar – I Var  
Common  rates  for  certain  types  of  projects  (studies  for  instance), 
common  rates  as  a  function  of  the  risk  level  faced  by  projects; 
specific  rates  for  certain  projects  depending  on  sectoral  policy 
priorities 
Distinct mix for each sector formed of: 
- a common set of equity and debt instruments; 
-different additional specific instruments 
Common  criteria  based  on  overall  Europe  2020  Strategy  &  Budget 
priorities  but  adapted  where  necessary  to  better  target  sectoral 
priorities within overall priorities 
Common  calls  (and  procedures)  for  projects  with  a  cross-sectoral 
dimension (using an earmarked common funding line); Distinct calls 
for  sector  specific  projects  but  common  (ie  fully  harmonised) 
procedures 
A core set of common/harmonised monitoring instruments and "use 
it or lose it" rules with specific instruments and adapted/target rules 
to take into account sectoral characteristics 
Single executive agency as common management structure but with 
various degrees of delegation of tasks by the Commission services in 
each sector 

Due to the high number of the resulting (theoretically) possible options, the nine scenario combinations have been submitted to an initial pre-screening, 
in order to assess their internal coherence as policy options, on the one hand, and their capacity to effectively address the identified problem drivers and 
corresponding specific policy objectives, on the other. In addition, their coherence with the Commission's aim of improving the effectiveness of the 
current financial framework by, inter alia, simplifying/harmonising to the extent possible current rules, has also been assessed. It became thus apparent 
that three of the nine theoretical combinations would not constitute viable policy options: two (L Max – I Min and L Min – I Max) for reasons of (lack 
of) compatibility between scenarios, i.e. for lack of internal coherence as policy options; and one other (L Min – I Min) for lack of effectiveness in 
attaining the objectives CEF has been established to reach. 

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5. 

ASSESSMENT OF IMPACTS 

Taking  into  consideration  the  pre-conditions  (budget,  central  management,  the  alignment  of 
EU  funding  instruments  within  sectors  including  also  market  based  instruments)  of  the 
creation  of  the  CEF  included  in  all  the  retained  policy  options  of  the  current  Impact 
Assessment of the CEF, it becomes evident that the CEF will contribute to significant sector 
impacts  as  well  as  to  overall  socio-economic  and  environmental  impacts  compared  to  the 
Business-as-usual scenario. 

The positive impacts of the accelerated development of infrastructure through the creation of 
the  CEF  will  be  visible  for  all  the  policy  options.  However,  their  order  of  magnitude  will 
depend  on  the  effectiveness  of  the  policy  options  to  address  the  problem  identified,  the 
optimal operating rules of the CEF.  

The analysis of impacts has shown that the different degrees of harmonisation between sectors 
of CEF operating have clear implications in terms of impacts. The latter, that are assessed as 
net  changes  compared  to  the  CEF  baseline  (the  L  min  –  I  min),  are  summarised  in  Table1 
below. 

Table1: Summary table of impacts of the retained policy options under the CEF 

Impact on 

OptionL 
Var  – 
Min  

I 

Option  L 
Max  –  I 
Max  

Option  L 
Max  –  I 
Var 

Option  L 
I 
Var  – 
Max 

Option  L 
I 
Var  – 
Var  

Option  L 
Min  –  I 
Var  

Accelerated  development  of 
infrastructure of EU interest 

of which: 

Coherence with sector 
specific policy frameworks 

Degree of synergies between 
sectors 

Reduction  of  administrative 
costs 

+ 

- 

- 

+ 

++ 

+ 

+ 

= 

- 

- 

= 

+ 

++ 

++ 

++ 

++ 

+ 

= 

= 

++ 

+ 

++ 

+ 

+ 

: negative impact 

Legend: – 
= 
+ 
++ 

: no change 
: positive impact 
: very positive impact 

6. 

COMPARISON OF OPTIONS 

In light of the analysis of impacts, Policy options L Var – I Min, L Max – I Max, L Max – I 
Var  and  L  Min  –  I  Var  are  discarded.  In  general  terms,  the  analysis  shows  that  the  policy 
options L Var - I Var and L Var – I Max are the most effective policy options in meeting the 
objective  of  defining  optimal  operating  rules  of  the  CEF  that  would  allow  to  accelerate  the 
development of infrastructure of EU interest.  

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While Policy option L Var – I Var would appear to be the best option from the perspective of 
coherence,  Policy  option  L  Var  –  I  Max  would  offer  higher  efficiency.  A  choice  between 
these  two  policy  options  would  imply  solving  the  trade-off  between  maximisation  of 
synergies  across  sectors  and  maximisation  of  coherence  within  each  with  its  specific  policy 
objectives.  Indeed,  whereas  Policy  option  L  Var  –  I  Max  is  more  ambitious  in  terms  of 
harmonisation between sectors, it offers also less coherence for each sector with its specific 
policy objectives. 

For  this  reason,  the  present  IA  considers  that  both  options  are  valid  and  that  the  trade-off 
between  coherence  with  sector  policy  objectives  and  maximisation  of  synergies  referred  to 
above has to be addressed by the political decision makers. 

7. 

MONITORING AND EVALUATION 

The Commission will properly evaluate and review the Regulation 3 years after its adoption 
by the Commission. In addition, the Commission will constantly monitor the effectiveness of 
the Regulation with the tools which are already available, by means of Annual report by an 
Executive  Agency,  but  also  an  annual  EIB  report  on  the  use  and  effects  of  innovative 
financing instruments. An external Evaluation report on the institutional structure will also be 
conducted. 

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