commission staff
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

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EUROPEAN COMMISSION 

Brussels, 19.10.2011 

SEC(2011) 1262 final 

COMMISSION STAFF WORKING DOCUMENT 

Accompanying the Regulation establishing the Connecting Europe Facility  

IMPACT ASSESSMENT  

{COM(2011) 665 final} 
{SEC(2011) 1263 final} 

This report commits only the Commission’s services involved in its preparation and does not 
prejudge the final form of any decision to be taken by the Commission.  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TABLE OF CONTENTS 

1.  PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES ... 3 

1.1.  Organisation and timing ............................................................................................. 3 

1.2.  Consultation and expertise ......................................................................................... 3 

1.3.  Consultation of the Impact Assessment Board .......................................................... 4 

2.  PROBLEM DEFINITION............................................................................................... 6 

2.1. 

Policy context............................................................................................................. 6 
Current EU framework for infrastructure financing .......................................... 6 

2.1.1. 

2.2.  A renewed context for infrastructure financing in Europe....................................... 12 

2.3. 

2.4. 

2.5. 

The problem ............................................................................................................. 14 

Justification for EU action........................................................................................ 20 

The Baseline: How would the problem evolve, all things being equal? .................. 22 

3.  OBJECTIVES ..................................................................................................................... 28 

3.1. 

Policy objectives ...................................................................................................... 29 

Possible trade-offs between the search for synergies and the objectives of the sector 
3.2. 
specific policy frameworks .................................................................................................. 31 

3.3.  Coherence with other horizontal policies................................................................. 31 

4.  POLICY OPTIONS ............................................................................................................. 32 

Identification  of  generic  scenarios 

4.1. 
leverage  and  project 
implementation..................................................................................................................... 33 

investment 

for 

4.2. 

Identification of policy options ................................................................................ 35 

5.  ANALYSIS OF IMPACTS..................................................................................................... 48 

5.1.  Analysis of the impacts of the creation of the CEF.................................................. 48 

5.2.  Analysis of the impacts of the six retained policy options....................................... 51 

6.  COMPARISON OF THE RETAINED POLICY OPTIONS ......................................................... 54 

7.  MONITORING AND EVALUATION ..................................................................................... 57 

List of annexed documents 

Annex 1 – Summary of stakeholder consultations 

Annex 2 – Summary of ex-post studies and reviews 

Annex 3 – Impacts of CEF establishment 

Annex 4 –Financial instruments under CEF 

Annex 5 – Assessment of alternative policy measures within CEF design options 

Annex 6 - Glossary

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1.  PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES 

Lead DGs: DG MOVE, DG ENER, DG INFSO1 

WP reference:  2011/MOVE/019  

Proposal  to  the  European  Parliament  and  the  Council  for  a  Regulation  on  the  Connecting 
Europe Facility that will replace and repeal Regulation No 1159/20052 (covering the field of 
ICT) and Regulation No 680/20073 (covering the fields of energy and transport). 

1.1.  Organisation and timing 

This Impact Assessment (IA) report accompanies the proposal for the Regulation establishing 
the  Connecting  Europe  Facility  (CEF)  that  will  fund  pre-identified  transport,  energy  and 
Information  and  Communication  Technology  (ICT)  priority  infrastructures  of  EU  interest. 
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 documents4.  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 concerned5 and the available financial instruments. 

This IA is a joint report that has been drafted by DG MOVE, DG INFSO and DG ENER. DG 
ECFIN has had a significant contribution to this report on the issue of financial instruments. 
The work on this joint IA report has started on 30 June 2011, immediately after the adoption 
by the Commission of the decision to establish a CEF, as part of its package of proposals put 
forward  within  the  MFF  Communication.  An  Impact  Assessment  Steering  Group  (IASG)  6 
has been set up and IASG members have been consulted three times between 30 June and 28 
July 2011.7  

1.2.  Consultation and expertise  

With  a  view  to  preparing  the  ground  for  later  policy  developments,  the  Commission  has 
launched various consultation exercises. The summaries of the stakeholder meetings and the 
contributions  received  during  the  preceding  public  consultation  are  available  on  the 
Commission website. A summary of the results of the stakeholder consultations is available in 
Annex 1 of this IA report.8It should be noted however that no stakeholder consultation was 

COM(2011) 

1 DG ECFIN's contribution has focused particularly on financing instruments. 
2  Regulation  (EC)  No  1159/2005  of  the  European  Parliament  and  of  the  Council  of  6  July  2005  amending 
Council Regulation (EC) No 2236/95 laying down general rules for the granting of Community financial aid in 
the field of trans-European networks. 
3  Regulation  (EC)  No  680/2007  of  the  European  Parliament  and  of  the  Council  of  20 June  2007  laying  down 
general rules for the granting of Community financial aid in the field of the trans-European transport and energy 
networks. 
4 
and 
http://ec.europa.eu/budget/biblio/documents/fin_fwk1420/fin_fwk1420_en.cfm  
5  Legislative  proposals  laying  down  revised  policy  frameworks  in  the  area  of  TEN-E,  TEN-T  and  e-TEN 
respectively. 
6  Apart  from  the  lead  DGs,  the  following  services  participated:  DG  BUDG,  DG  ECFIN,  DG  COMP,  DG 
REGIO, DG MARE, DG ENV, DG CLIMA, DG MARKT, DG RTD, DG ELARG, Commission SG, EEAS. 
7 The second consultation took place by means of written procedure. 
8  Other  relevant  documents  in  this  context  are  Resource-efficient  Europe  flagship  Initiative,  And  A  Digital 
Agenda for Europe COM(2010)0245,  Reference to Transport White Paper SEC 0359/2011, Commission Staff 
Working  Document  accompanying  the  Commission  Recommendation  on  regulated  access  to  Next  Generation 

868.  All 

SEC(2011) 

documents 

accessible 

final 

500 

are 

at 

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specifically  conducted  on  the  particular  issue  of  a  common  funding  framework  for  TEN 
infrastructures. Nevertheless, the question was addressed to the stakeholders, in the context of 
options  for  improving  coordination  between  the  various  Union  funding  instruments,  within 
sectoral  consultations  concerning  the  revision  of  the  specific  sectoral  policy  and  funding 
frameworks.  In  addition,  a  cross-sectoral  consultation  was  conducted,  on  the  relevance  and 
applicability  of  a  new  innovative  approach  to  funding  European  infrastructure  projects  of 
public interest, the Europe 2020 Project Bonds Initiative. 

For  the  purposes  of  this  impact  assessment,  the  following  issues  raised  during  these 
stakeholder  consultations  are  particularly  relevant  and  have  been  taken  into  account  in 
assessing the different possible actions presented in this report: 
- 

There is a broad consensus emerging from the consultations on the fact that accelerating 
the  development  of  infrastructure  with  European  added  value  requires  not  only  an 
increased EU support, but also a better targeted support on EU added value priorities. 
Stakeholders called for a higher leverage of EU funding towards TEN policy objectives 
through  for  instance  a  greater  coordination  and  synergies  between  different  financial 
instruments,  namely  the  Cohesion  Fund  and  European  Regional  Development  Fund 
(ERDF), the TEN programmes and the EIB's interventions. 

- 

- 

-  Widening  the  portfolio  of  available  financial  instruments  is  seen  by  stakeholders  as  a 
means  to  better  adjust  support  to  the  particular  needs  of  a  project,  to  enable  effective 
project structuring and to attract new investors.  
Stakeholders  expressed  their  concern  about  the  complexity  generated  by  overlapping 
schemes  or  by  lack  of  coordination  at  strategic  level.  Beneficiaries/participants  are 
confronted with different sets of rules, exceptions or specificities, albeit dealing with the 
same  actor  (the  Commission)  within  the  same  sector.  This  is  reportedly  confusing  at 
times,  and  translates  into  obstacles  to  effective  access  and  correct  implementation. 
Administrative  burden  is  also  generated  by  the  segmentation  of  IT  tools  for  the 
submission  of  documents,  by  the  duplication  of  procedures  for  the  application  by  the 
same beneficiary/participant to different types of financing schemes, and the duplication 
of reporting obligations. 

1.3.  Consultation of the Impact Assessment Board 

Following  the  submission  of  a  draft  report  to  the  Impact  Assessment  Board  (IAB)  on  1 
August 2011 and a hearing with the IAB on 31 August 2011, the IAB sent its opinion on 6 
September 2011, asking DG MOVE to make a series of improvements. To this end, the IAB 
made  six  recommendations  that  were  addressed  in  the  final  version  of  the  IA  report  in  the 
following manner: 
(1) The report should provide more detail on the implementation of the programme. 

The  revised  IA  provides  more  detail  with  regard  to  the  concrete  form  the  CEF  provisions 
would take, in each of the six policy areas of intervention identified, for each of the options 
retained for in-depth assessment (Table 6 in section 4.2.2). A new Annex 5 has been drafted, 
which contains an assessment of the coherence of these various policy measures alternatives 
in options of minimal, maximal or variable integration with the established policy objectives 
as well as their effectiveness and efficiency in achieving the latter, in order to provide further 
(argumentative) background to the impact assessment developed in the main body of the IA. 

Access Networks (NGA), Communication on Energy Infrastructure Priorities to 2020 and beyond – A Blueprint 
for an integrated European energy network (COM (2010) 677. 

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The argument in section  2.3 "Justification of EU action"  has also been developed to further 
explain the rationale for the CEF as a common framework covering three distinct sectors. The 
argument  in  Annex  5  also  seeks  to  highlight  the  extent  to  which  simplification  of  the  TEN 
funding framework by harmonising sectoral rules within the common CEF framework would 
be coherent, effective and efficient in achieving the identified policy objectives.   

(2) Present evaluation findings in a more consistent way. 

The  revised  report  provides  a  better  balanced  presentation  of  evidence  arising  from 
stakeholder  consultations  and  ex-post  evaluations,  both  in  a  streamlined  section  2  "Problem 
definition"  and  in  revised  Annexes  2  and  3  providing  summaries  of  the  most  relevant 
consultations and evaluations for the current IA exercise. The argument in Annex 5 draws on 
the  findings  of  these  consultations  and  evaluations  when  discussing  the  possibility  of 
simplifying TEN funding rules by drawing on synergies across the sectors in the various areas 
of  policy  measures,  i.e.  the  coherence,  effectiveness  and  efficiency  of  the  various 
simplification options in reaching the established policy objectives. Besides obvious common 
characteristics  of  current  sectoral  approaches,  one  of  the  main  possibilities  of  drawing 
synergies  across  the  sectors  considered  has  been  that  of  drawing  on  lessons  learnt  and 
successful practices in one field in order to improve the quality of policy interventions in the 
others. The discussion in Annex 5 highlights also why structural differences between the three 
policy fields do not allow further rule simplification in certain policy areas.  

(3)Better demonstrate the investment needs and the financing gap 

The revised report provides further details with regard to the underlying assumptions of the 
baseline  scenario.  It  also  provides  further  details  with  regard  to  the  investment  needs  and 
financing gap in the three sectors in a global sensitivity analysis (section 2.5.3), in the main 
body of the report as well as in a specifically developed Annex 4, which gives an overview of 
current  financing  volumes  for  infrastructure,  highlights  market  imperfections  and  points  to 
financing  gaps  in  the  three  sectors.  The  question  of  the  relative  role  of  grants  and  financial 
instruments in the overall approach is also addressed in more detail in Annex 4. 

(4) Describe the options on financing instruments in more detail 

The  discussion  in  the  new  Annex  4  provides  a  detailed  discussion  on  main  modalities  of 
potential future financial instruments and how they relate to other funding sources in the three 
sectors as well as to the Project Bonds Initiative currently under development. A discussion 
on various levels for grants co-financing rates in the three sectors is provided in Annex 5. 

 (5)Specify the economic impacts of policy options 

The  revised  report  provides  further  discussion  with  regard  to  the  economic,  social  and 
environmental aspects of the establishment of the CEF.  

(6)Procedure and presentation 

Stakeholder views on the current programmes and the proposed changes in their management 
have been better reflected in the argument developed in the revised IA, and in particular in the 
discussion in Annex 5, that focuses on alternative policy measures within the various options 
for CEF design. Findings of ex-post reviews have also been more systematically reflected in 
section  2,  in  defining  the  problem.  The  latter  section  has  also  substantially  streamlined, 
following the IAB recommendations.  

The revised IA report has addressed also the more detailed comments transmitted by the IAB 
to DG MOVE.  

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2.  PROBLEM DEFINITION 

2.1.  Policy context 

2.1.1.  Current EU framework for infrastructure financing 

Common legislative basis 

Treaty  base.  First  introduced  in  the  Maastricht  Treaty  (1992),  Articles  170  to  172  of  the 
Treaty on the Functioning of the European Union (TFEU) provide the legal base for the EU 
intervention  supporting  the  establishment  and  development  of  trans-European  networks 
(TEN) in the areas of transport, telecommunications and energy infrastructures. Accordingly, 
action  by  the  Union  shall  aim  at  promoting  the  interconnection  and  interoperability  of,  and 
access  to,  national  networks,  taking  into  account  in  particular  the  need  to  link  islands, 
landlocked  and  peripheral  regions  with  the  central  regions  of  the  Union.  To  this  end,  the 
Union  may,  among  others,  support  projects  of  common  interest  supported  by  the  Member 
States; the Union may also contribute, through the Cohesion Fund, to the financing of specific 
projects in Member States in the area of transport infrastructure.  

Secondary  legislation.  The  Council  Regulation  2236/95  of  18  September  1995  (hereinafter 
referred  to  as  the  1995  Regulation)  laid  down  the  first  general  rules  for  the  granting  of 
transport, 
Community  financial  aid 
telecommunications and energy infrastructures. The Regulation defined the eligibility criteria 
(projects  of  common  interests  identified  by  the  Guidelines  referred  to  in  the  Treaty),  the 
project selection criteria and the forms of aid. The total amount of Community aid could not 
exceed 10 % of the total investment cost.  

trans-European  networks  for 

the  field  of 

in 

The  1995  Regulation  was  amended  several  times  with  specific  Regulations  taking  into 
account the developments for the sectors covered and their intrinsic characteristics, but also in 
order  to  refine  the  eligibility  criteria  and  the  level  of  co-financing  according  to  the  type  of 
projects.9  In  2005,  Regulation  No  1159/200510  amended  the  1995  Regulation  with  specific 
modifications concerning the area of ICT. In 2007, a specific regulation laying down general 
rules for the granting of Community financial aid in the field of the trans-European transport 
and energy networks was adopted (Regulation No 680/2007), repealing the 1995 Regulation.  

Sector specific programmes 

Starting from this common legislative basis, distinct sets of sector-specific programmes  have 
been developed. Currently, there are several different sources of EU funding for infrastructure 
projects in the energy, transport and ICT sectors, including funding from the ERDF and the 
Cohesion Fund. These are channelled through a number of distinct programmes with different 

9 See for instance Regulation (EC) No 1655/1999, Regulation (EC) 788/2004, Regulation (EC) No 807/2004 and 
Regulation (EC) No 1159/2005 
10  Regulation  (EC)  No  1159/2005  of  the  European  Parliament  and  of  the  Council  of  6 July  2005  amending 
Council Regulation (EC) No 2236/95 laying down general rules for the granting of Community financial aid in 
the field of trans-European networks.  

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forms  and  methods  of  financing,  monitoring  and  evaluation  mechanisms,  and  overlapping 
objectives but loosely (if) coordinated priorities, resulting in different eligibility criteria even 
within a single sector. The current state of play of EU funding for infrastructure in the three 
sectors is summarised in Table 1 below. 

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Table 1: EU funding of infrastructures in the 2007-2013 multi-annual financial framework 

Sector 

Source/Programme 

Objectives 

Priorities/Eligibility criteria 

Budget 
2007-2013 

Forms  and  methods  of 
financing 

Monitoring and evaluation 

Energy 

TEN-E Programme 

(electricity 
and gas 
networks) 

Developing 
energy 
projects that  contribute 
to  the  working  of  the 
market, 
single 
of 
particularly 
crossborder nature  

Project  of  common  interest 
and  projects  of  European 
interest  as  identified  in  the 
TEN-E guidelines 

(€ million) 

155 

Grants: 

- for studies (up to 
50% co-financing) 

- for works (up to 
10%) 

Interest 
(never used) 

rate 

rebate 

Grants  for  works  and 
project preparation: 

- up to 50%  

Grant  for  works  –  up 
to  85%  co-financing 
(but reduced in case of 
projects 
generating 
revenues) 

Member  States  undertake 
the technical monitoring and 
financial  control  of  projects 
in  close  cooperation  with 
the Commission  

Evaluation 
responsibilities 
shared  by  the  Commission 
and Member States 

of 

evaluation 

Commission  in  charge  of 
the 
the 
progMember  States  may  be 
evaluate 
to 
requested 
projects; 
specific 
Commission 
to 
other institutions 

to  report 

Monitoring 
States 

by  Member 

Commission  in  charge  of 
the 
the 
programme 

evaluation 

of 

European Energy Programme 
for Recovery (EEPR) 

Cohesion Fund and ERDF 

Investing 
in 
modernising  Europe's 
energy  infrastructure  in 
the 
response 
economic 
in 
Europe 

to 
crisis 

and 
Increasing 
improving  the  quality 
of investment in energy 
sector  physical  capital 
improve 
to 
in  order 
conditions  for  growth 
and  employment,  speed 
up  the  convergence  of 
least-developed 
the 
and 
Member  States 
regions  

TEN-E projects as specified in 
the EEPR Regulation11 

Projects improving security of 
supply;  gas  and  electricity 
interconnections  in  cases  of 
identified market failure 

2 36512 

(2009-
2010) 

1607 

(Funds 
allocated 
within 
financial 
perspective 
2007-
2013) 

11 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 
12 The total budget of the EEPR programme i.e. €3.980 billion was  divided into three sectors: gas and electricity infrastructure projects (€2.365 billion); offshore wind energy 
projects (€0.565 billion) and carbon capture and storage projects (€1.05 billion) 

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European Neighbourhood and 
Partnership Instrument (ENPI) 
Neighbourhood Investment Fac

energy 
Converging 
Enhancing 
markets, 
energy 
security, 
Supporting  sustainable 
energy development, 

Various 

c.a. 25 

Grants 

Transport 

TEN-T Programme 

Support 
development 

TEN-T 

Projects of common interest,  

8 043 

Grants: 

of  which  list  of  30  Priority 
Projects 

Shared  responsibilities  by 
the 
and 
Commission 
Member States 

Monitoring  and  evaluation 
is  mainly  undertaken  by  the 
TEN-T  ExecMonitoring  is 
undertaken  by  the  Member 
states  in  cooperation  with 
the Commission 

Commission  may 
request 
beneficiary  Member  States 
to 
specific 
evaluation of projects 

provide 

a 

Commission  is  assisted  in 
on  monitoring  aspects  by 
the 
Executive 
TEN-T 
Agency  tive Agency 

- for studies (up to 
50% co-financing) 

- for priority projects: 
works (up to 20%); up 
to 30% for cross-
border sections; 

- for other projects of 
common interest: 
works: up to 10%. 

- ERTMS: up to 50% 
for both track-side and 
mobile equipemnt. 

- traffic management 
systems: up to 20% of 
eligible costs of works. 

Interest 
(never used) 

rate 

rebate 

TEN-T 
programme 
and  EIB  Action  for 
initiative 
growth 
to 
risk.  Capital 
cover 
contribution 
€ 1 
of 
billion  (50%  EU,  50% 
EIB)  with  estimated 
leverage of 25. 

*of which LGTT 

Encourage 
PPPs 
financed  through  user-
pay mechanisms 

The LGTT provides additional 
guarantees  against  traffic  risk 
that  facilitate  and  accelerate 
private  sector  investment  in 
TEN-T projects. 

500 

*of which Marguerite Fund 

Support TEN-T, energy 
and 
renewables 
development 

Priorities:  TEN-T,  and  other 
transport projects; 

80 

Sponsors 

(1500 

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Cohesion Fund and ERDF 

transport  

Support 
infrastructure 
development in order to 
strengthen 
the 
economic  and  social 
cohesion of the Union 

Marco Polo 

Encourage modal shift 

climate  change,  meet  energy 
targets, renewables  

Eligibility: transport & energy 
projects > € 200million 

Renewables > € 50million 

target of 
total 
capital 
invested 
with other 
investors) 

Finances action on: 

43 000 

-  TEN-T,  especially  Priority 
Projects of European interest  

road  congestion  and 
Ease 
pollution  /  Companies  with 
viable  projects  to  shift  freight 
from road to greener modes 

450 

Result oriented support 
(grant not loan) 

Commission 
MOVE and EACI 

DG 

ICT 

CIP ICT PSP 

Stimulating 
sustainable 
inclusive growth  

smart 
and 

Areas  of  public 
interest, 
including  health  and  ageing, 
inclusion,  energy  efficiency, 
sustainable  mobility,  culture 
preservation  and  learning  as 
well 
public 
as 
administrations 

efficient 

730 

for  consortia 
Grants 
pilot 
implementing: 
thematic 
projects, 
networks, best  practice 
networks. 

Continuous  and  systematic 
monitoring, 
interim 
evaluation,  final  evaluation 
two  years  after  completion 
of 
Programme. 
the 
implementation  

Monitoring  and  evaluation 
is  mainly  undertaken  by  the 
Commission  as  a  part  of 
central 
programme 
management.  

reports,  interim  and  final 
evaluations.  

Cohesion Fund and ERDF  Telephone 

2 300  

Grants  

infrastructures 
(including 
networks)  

broadband 

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ICT 
digital 
other measures  

technologies, 
and 

services 

Framework Programme7 

Information 
Communication 
Technologies 

and 

Competitiveness 
of 
industry, 
European 
strengthening  scientific 
technology  base, 
and 
global 
in 
leadership 
ICT,  product,  service 
and  process  innovation 
ICT 
and 
creativity, 
for  Europe's 
benefits 
citizens, 
businesses, 
and 
industry 
governments,  reducing 
digital divide and social 
exclusion. 

Productivity  and  innovation, 
public 
modernisation 
services,  advances  in  science 
and technology 

of 

ICT Technology Pillars 

Integration of Technologies: 

Applications Research: 

ICT for content, creativity and 
personal development 

ICT supporting businesses and 
industry 

ICT for trust and confidence 

10 280  

Grants  

9700  

of which 
270 
contributed 
to RSFF 

Mainly  Grants 
consortia 
implementing 
projects 

for 

r&D 

(from 
programme,  

Cooperation 

ICT 

And 
eInfrastructures 
(capacities 
programme)  

Continuous  and  systematic 
interim 
monitoring, 
evaluation,  final  evaluation 
two  years  after  completion 
of the Programme.  

Monitoring  and  evaluation 
is  mainly  undertaken  by  the 
Commission  as  a  part  of 
central 
programme 
management.  

Risk Sharing Finance Facility 
(RSFF) 

Improve  access  to  debt 
for  private 
financing 
companies  or  public 
institutions  promoting 
activities  in  the  field  of 
RDI 

Support to a wide range of 
RDI activities, including 
research, experimental and 
pre-competitive development, 
feasibility studies and pilots.  

Projects to be financed by the 
EIB need to be technically, 
economically, financially and 
environmentally feasible 
according to the EIB's project 
evaluation criteria. 

310  

Corporate 
financing,  

debt 

Monitoring  and  evaluation 
together with FP7.  

Project financing, 

Mezzanine financing,  

Risk  sharing  lines  of 
credit,  

Guarantees.  

*Established by the European Commission in cooperation with EIB. EU support comes from within the TEN-T Programme budget.    

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2.2.  A renewed context for infrastructure financing in Europe 

On 29 June 2011, the Commission adopted a package of legislative proposals concerning the 
MFF  and  a  Communication  on  'A  Budget  for  Europe  2020'  (hereinafter  'the  MFF 
Communication)  which  presents  the  policy  rationale  for  the  Union's  finances  for  the  years 
2014-2020.  The  proposed  budget  of  the  EU  has  been  designed  to  support  the  Europe  2020 
growth  strategy.  Smart,  sustainable  and  inclusive  growth  is  therefore  the  leading  theme  for 
this proposal. To this end, the Communication focused on prioritising funding at the EU level 
on  actions  that  provide  true  added  value  for  EU  citizens.  Programmes  and  instruments 
included  in  the  MFF  have  been  redesigned  to  ensure  that  their  outputs  and  impacts  push 
forward  key  policy  priorities  of  the  EU.  In  particular,  the  MFF  has  been  modernised  by 
reallocating  resources  to  priority  areas  such  as  pan-European  infrastructure,  research  and 
innovation,  education  and  culture,  securing  the  EU's  external  borders  and  external  relations 
policy priorities such as the EU's neighbourhood.13  

As  far  as  infrastructures  are  concerned,  a  consensus  exists  among  stakeholders  that,  in  a 
"business  as  usual"  scenario,  Europe  might  not  be  able  to  mobilise  in  time  the  investments 
needed  to  modernise  its  infrastructure  networks  and  plug  missing  links  as  defined  in  the 
Europe 2020 Strategy. 

In  the  wake  of  the  financial  crisis,  Member  States'  public  budgets  are  struggling  with  the 
necessary  fiscal  consolidation.  Capital  expenditure  has  often  suffered  substantial  cuts,  with 
spending for infrastructure investment projects suspended or delayed.  At the  same time,  the 
prospects  for  stepping  up  investments  from  private  sources  are  uncertain.  The  financing 
capacities  of  companies  involved  in  infrastructure  projects,  such  as  transmission  system 
operators  in  the  case  of  energy,  are  overstretched.  In  many  cases,  companies  are  unable  to 
raise  substantial  volumes  of  additional  debt  capital  because  they  have  reached  borrowing 
ceilings or their investment grade is no longer adequate. In addition to financing constraints, 
regulatory  obstacles  also  delay  or  impede  the  implementation  of  needed  infrastructure 
projects. 

Against this background, the current EU framework for infrastructure funding does not seem 
adequate to provide an effective response. 

It  is  estimated  that  about  €200  billion  is  need ed  to  complete  the  trans-European  energy 
networks,  €500  billion  needs  to  be  invested  in  the  trans-European  transport  network,  and 
between €181 and 273 250 billi on in ICT for the period 2014-2020. While the market can and 
should  deliver  the  bulk  of  the  necessary  investments,  there  is  a  need  to  address  market 
imperfections – to fill persistent gaps, remove bottlenecks and ensure adequate cross-border 
connections.  However,  experience  shows  that  national  budgets  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. It can 
secure funding for the pan-European projects that connect the centre and the periphery to the 
benefit of all. 

13  Cross-cutting  policy  priorities,  such  as  environmental  protection  and  the  fight  against  climate  change,  are 
addressed as an integral part of all the main instruments and interventions. To this end, the Commission intends 
to  increase  the  proportion  of  climate  related  expenditure  across  the  EU  budget  to  at  least  20%,  as  an  overall 
contribution of different policies. In this context, attention will need to be paid to climate proofing, in particular 
of the transport infrastructure. 

12 

 
 
 
 
 
 
                                                 
However,  EU  funding  is  currently  fragmented  among  too  many  programmes.  This  prevents 
the full exploitation of synergies between programmes and sectors. ICT, energy and transport 
infrastructure  all  contribute  to  shaping  smart  networks,  such  as  intelligent  grids  ensuring 
uninterrupted  flexible  availability  of  gas  and  electricity  for  consumers  or  smart  transport 
networks  based  on  sensors  to  manage  congestion.  Bringing  the  governance  of  programmes 
under a common framework leading to a multi-sector and multi-country approach would also 
reduce risks and increase effectiveness and efficiency of EU funding. 

The  budget  available  to  individual  programmes  is  often  not  sizeable  enough  to  meet  the 
projected needs. Blending between EU funds and EIB loans have produced some results but 
could  be  further  improved.  There  is  also  scope  for  expanding  the  use  of  risk  sharing  and 
project  financing  techniques  through  appropriate  new  rules  and  mechanisms,  notably  the 
equity and debt platforms foreseen in the general approach to the use of financial instruments. 
Some of the described challenges are of a regulatory and policy nature, but some others call 
into question the way in which the EU organises infrastructure funding. Any future EU action 
in  infrastructure  financing  should  thus,  as  a  general  objective,  enhance  support  for 
infrastructure projects with high European value added and clear links with Europe 2020 and 
the Single Market, which the market alone would not deliver, by ensuring an appropriate mix 
of direct funding and market-based instruments that reduce the commercial risks for private 
investors. 

In this context, and in the view to accelerate the infrastructure development that the EU needs, 
the Commission decided to propose the creation of a centrally managed funding facility _ the 
Connecting  Europe  Facility.  As  proposed  in  the  MFF  Communication14,  the  CEF  will  fund 
"pre-identified  projects  in  transport,  energy  and  ICT  priority  infrastructures  of  EU  interest, 
and  both  physical  and  information  technology  infrastructures,  consistent  with  sustainable 
development criteria."  

The aim of the CEF will be to boost the pan European value of infrastructure projects. With € 
50 billion at its disposal, of which €10 billio n from the Cohesion Fund, it will fund transport, 
energy  and  ICT  projects  that  bring  more  interconnectivity  across  Europe.15  In  addition,  the 
CEF will provide financing for the infrastructure of EU interest (both on the Union's territory 
and outside the EU) that will need to connect with or pass through neighbourhood and pre-
accession countries.  

The CEF is designed to plug market gaps and correct coordination failures, intervening where 
an incentive effect is demonstrated and to the extent necessary to trigger market participation. 
It will offer opportunities for using innovative financing tools to speed up and secure greater 
investment than could be achieved only through public funding. It will promote the use of EU 
project bonds and  other  financial instruments, offering  an alternative to the traditional grant 
funding and plugging financing gaps for strategic investments. A key advantage of financial 
instruments  is  that  they  create  a  stronger  multiplier  effect  for  the  EU  budget  compared  to 
traditional  instruments,  by  facilitating  and  attracting  other  public  and  private  financing  to 
projects  of  EU  interest.  The  multiplier  effect  of  these  instruments  has  an  estimated  range 
between 6 (for equity investment) and 20 (for risk-sharing instruments such as project bonds). 
16 

14 COM (2011) 500 pp. 14-15.  
15 An indicative preliminary list of such projects is provided in the MFF Communication (COM(2011) 500 part 
II). 
16 See, in this regard, the argument provided in Annex 4. 

13

 
 
 
 
 
                                                 
Building on the experience of financial instruments under the current financial framework put 
in  place  in  cooperation  with  the  EIB,  such  as  the  Loan  Guarantee  Instrument  for  trans-
European  transport  networks  projects  (hereafter  LGTT),  the  Commission  proposes  to 
implement a significant part of its interventions within the CEF through financial instruments. 
In  particular,  the  Europe  2020  Project  Bonds  Initiative  will  be  used  as  a  means  of  securing 
investment  resources  for  infrastructure  projects  of  key  strategic  European  interest17.  EU 
budget will therefore be used to support projects by enhancing their credit rating, and thereby 
attracting  funding  from  the  EIB,  other  financial  institutions,  and  private  capital  market 
investors.  The  risk  for  the  EU  budget  will  be  in  all  cases  strictly  limited  to  the  budgetary 
contribution.18 

2.3.  The problem 

The  creation  of  the  CEF  along  the  defining  lines  proposed  by  the  Commission  in  the  MFF 
Communication will provide an overall framework for the financing of TEN infrastructures at 
EU level. The establishment of the facility is aimed at aligning TEN infrastructures funding 
instruments in the three sectors concerned and, thereby, at contributing to the simplification of 
sector  specific  rules,  both  within  and  across  the  sectors,  within  the  constraints  set  by  their 
respective policy frameworks.19   

However, the MFF Communication did not define the operating rules of the CEF, rules which 
would  enable  the  Union  to  create  the  investment  conditions  conducive  to  accelerating  the 
development of the infrastructure the EU needs. 

Given  that  the  decision  about the  proposal  to  create  the  CEF  has  already  been  taken  by  the 
Commission,  this  IA  will  focus  on  procedural  and  monitoring  aspects  of  the  CEF.  The 
creation of the CEF and the associated problem will therefore not be further explored in this 
IA. 

At the same time, a transversal analysis of existing sector specific rules shows that, beyond 
pooling resources within a common facility, there is room for further simplification of the EU 
TEN infrastructures funding rules, by exploiting the potential for synergies across the sectors. 
As highlighted by Table 1 above, there are currently several different sources of EU funding 
for infrastructure projects in the energy, transport and ICT sectors, including funding from the 
ERDF  and  the  Cohesion  Fund,  and  the  mix  of  instruments  constitute  significantly  differing 
sets  from  sector  to  sector.  Within  each  sector  too,  the  EU  budget  support  is  channelled 
through  a  number  of  distinct  programmes,  with  different  eligibility  and  management  rules, 
and  overlapping  objectives  but  loosely  (if)  coordinated  priorities.  The  heterogeneity  of  the 
current  funding  instruments,  both  across  and  within  each  of  the  three  infrastructure  sectors, 
inevitably leads to overlaps, gaps in funding and insufficient exploitation of synergies20.The 
availability  of  different  sources  of  funding  within  the  same  sectors  also  leads  to  "fund 

For details see http://ec.europa.eu/economy_finance/consultation/index_en.htm.  

17  
18 The project bonds' initiative would cover pre-identified transport, energy and ICT priority infrastructures as 
defined in the Connecting Europe Facility. As a single legal instrument, project binds would complement, rather 
than replace, the existing sources of project financing through bank loans. The aim is to expand the investor base 
for private debt funding of projects from loan providers to bond investors. The rational behind the intrioduction 
fo  project  bonds  is  that  infrastructure  projects  may  face  numerous  risks  due  the  possibilities  of  construction 
delays, payment delays etc. Investors react to risk and uncertainty by not undertaking or investing in a project, by 
requiring a higher rate of return or by using insurance. Most infrastructure deals in Europe are structured to have 
a  rating  that  is  just  above  or  just  below  investment  grade.  Many  investors,  on  the  other  hand  are  limited  to 
investment-grade bonds and want some cushion to ensure that a single downgrade does not force them to sell. 
19 The alternatives to the creation of the CEF are therefore not be explored in this IA. 
20 SEC(2011) 868, p. 16. 

14

 
 
                                                 
shopping", where the same project proposal is sought to be resubmitted if not accepted within 
one of the programmes.21 

Synergies between sectors should therefore be explored and exploited further so as to simplify 
as  much  as  possible  the  financing  framework.  The  potential  value  added  of  exploiting 
synergies for accelerating the implementation of TENs has long been acknowledged. Despite 
initiatives22  taken  so  far,  the  Communication  "Trans-European  Networks:  Towards  an 
integrated approach"23 listed examples of possible synergies between various types of projects 
across the sectors24. 

Three  main  types  of  potential  synergies  have  been  thus  identified:  (1)  procedural  –  arising 
from the integrated planning of various infrastructure networks (coordinated planning across 
modes  and  borders;  single  Strategic  Environmental  Assessment,  combined  land  acquisition, 
common consultation process for packages of infrastructure); (2) physical – lower costs and 
impacts due to the combined construction of sections of infrastructure networks and structural 
works, both existing and new (bridges, tunnels, underpasses and the like) or higher efficiency 
of infrastructure as in the case of the deployment of smart  grids on energy networks, essential 
for  decentralised  energy  production,  and  deployment  of  ICT  services  and  broadband 
infrastructure  in  transport  for  intelligent  traffic  management;  (3)  financial  –  the  additional 
value or revenues that can be created and captured by the infrastructure provider or operator 
when sections of infrastructure networks are combined.25 However, no steps have ever been 
taken  on  the  EU  level  to  allow  exploiting  synergies  in  terms  of  programming  and 
disbursement of the EU financial aid or procedures (impact studies, planning and budgetary 
arrangements).  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,  in  defining  the  operational  rules  of  the  CEF,  the  Union  can 
address  market  and  regulatory  gaps  that  currently  prevent  EU  funding  from  adequately 
supporting  the  development  of  infrastructures  needed  to  achieve  the  objectives  of  the  EU 
2020 Strategy. 

2.3.1. 

Investment  leverage:  Existing  procedures,  methods  and  forms  for 
granting EU funding are not conducive to sufficient investment leverage 

The results and recommendations of both ex-post analyses and stakeholder consultation have 
lead the Commission to the conclusion that, in spite of progress registered along the years, the 
impact of the use of EU budget still needs significant leveraging.26  Three main reasons for 
the continuing limited impact of EU funding have been identified. 

(1) EU funding is insufficiently focussed on projects with a real EU added value 

Programming  and  project  support  appears  to  be  not  sufficiently  tailored  to  ensure  that  the 
Union focuses its funding support to projects with a real EU added value, namely cross-border 
projects, projects addressing bottlenecks or projects that bring EU wide benefits, including by 
using synergies of two of the three sectors.  

21 SEC(2011) 868, p. 78-79. 
22 Such as the establishment in 2005 of a Steering Committee of Commissioners for the trans-European networks 
that considered questions of synergy between the networks, the methods of funding and their spread across the 
various Community financial instruments 
23 SEC(2007) 374} 
24 e.g. to interconnect electricity networks: laying high-voltage cables along the banks of canals and rivers, low-
voltage  interconnections  (2  x  25  kV)  along  high-speed  railway  lines,  more  systematic  interconnections  of 
underground high-voltage lines (300 to 700 kV) along transport network paths 
25 ECORYS, "Synergies between trans-European networks. Evaluations of potential areas for synergic impacts", 
Final report, 2006. 
26 COM(2010) 700, p. 20.  

15

 
                                                 
to  continuing  missing 

links,  bottlenecks  and 

For example, in the realm of TEN-T, the projects that have registered most important delays 
are, in their majority, cross-border projects. More generally, the fact that the TEN-T remains 
essentially  fragmented,  due 
limited 
interoperability of national networks, is partly a question that needs remedy at the wider TEN-
T policy level, but also to an important extent a question of improving the definition of the 
rules governing the EU financial support.27 With regard to TEN-E networks, the Commission 
also  concluded  that  there  is  a  need  to  narrow  the  focus  on  a  limited  number  of  strategic 
projects demonstrating European priorities.28 Another example of an area with important EU 
added  value  but  where  EU  funding  has  had  hardly  any  impact  is  connecting  the  TEN 
infrastructures  to  neighbouring  and  third  countries'  networks,  in  particular  in  the  areas  of 
energy  and  transport.  However,  in  both  areas,  the  TEN  programmes  under  the  current 
financial  framework  do  not  allow  EU  funding  of  projects  outside  the  EU29  to  support  and 
match ENPI and IPA instruments.  

In  short,  EU  funding  in  infrastructure  does  not  contribute  in  a  satisfactory  manner  to 
accelerating  strategic  investments  inside  and  outside  the  EU.  The  absence  of  prioritised 
programming has been identified as one of the "weak links" in the current funding framework 
in this respect,. Another may also be linked to the fact that the concept/notion of EU added 
value  has  not  yet  been  translated  into  clearly  identified  markers  in  the  TEN  policy 
frameworks.  

(2) Inadequate co-funding rates 

The  insufficient  focus  on  EU  added  value  projects  is  also  closely  linked  to  the  fact  that,  in 
certain cases, co-funding rates remain inadequate to make a real difference. The way the co-
funding  rates  are  set  today  does  not  trigger  the  investment  needed  because  they  do  not 
correspond to project risks and are not proportionate to their complexity and EU added value. 
This is particularly the case for kick starting complex projects on the TEN-E or the TEN-T, 
with high EU added value.30For instance, despite progress achieved during the period 2007-
2013,  the  high  percentage  of  cross-border  projects  experiencing  significant  delays  in 
implementation,  appears  highly  correlated  with  the  findings  of  ex-post  evaluation  reports 
highlighting that the seemingly higher co-funding rate of 30% for cross-border sections is, in 
practice,  not  higher  than  21%  in  average.  As  these  difficult  cross-border  projects  often  run 
across  several  MFF,  the  final  contribution  from  the  TEN-T  budget  may  be  as  low  as  5  to 

27  See  also  the  argument  developed  in  the  IA  report  accompanying  the  revision  of  the  TEN-T  Guidelines, 
SEC(2011)1212. In this respect, the 2010 report from Court of Auditors on investments in rail infrastructure has 
concluded  that,  despite  the  progress  achieved  so  far,  there  is  still  room  for  improving  the  TEN-T  call  for 
proposals.    Special  Report  No  8,  European  Court  of  Auditors,  “Improving  transport  performance  on  trans-
European rail axes: have EU rail infrastructure investment been effective?” 
28 2010 Commission implementation report on the TEN-E networks 2007-2009, COM(2010) 203. 
29 As pointed out in the Report on the implementation of the TEN-E (COM(2010) 203), EU strategic interests, 
related to large gas import infrastructure and the connection to upstream sources or electricity interconnections 
with  third  countries,  lie  well  beyond  EU  borders.  With  regard  to  TEN-T,  a  2009  TENCONNECT  report  also 
indicates  that  borders  to  the  neighbouring  countries,  except  Norway  and  Switzerland,  constitute  major  time 
consumers 
at 
http://ec.europa.eu/transport/wcm/infrastructure/studies/2009_12_ten_connect_final_report.pdf). The importance 
of developing connections outside the EU has been comprehensively discussed within a dedicated Expert Group 
(see report at http://ec.europa.eu/transport/infrastructure/ten-t-policy/review/expert-groups_en.htm).  
30 Fort TEN-T, see in this respect the findings and recommendations in Steer Davies Gleeves, "Final Report" and 
of the "Final Report" of the TEN-T Review Expert Group 5, also summarised in Annex 2, as well as the input of 
stakeholders, as summarised in Annex 1, stakeholder consultation on the Green Paper "TEN-T: A policy review" 
(2009),  answers  to  set of questions no. (2) For  TEN-E,  see  for  example  COWI,  Cambridge  Econometrics  and 
KEMA on "The revision of the trans-European energy network policy (TEN-E)   

for  both  passenger 

and  particularly 

(see  document 

transport 

freight 

traffic 

16

 
                                                 
10%.31  The  Commission  implementation  report  on  the  TEN-E  networks32  reached  the  same 
conclusion:  although  the  maximum  co-financing  rate  is  up  to  50%  for  studies  and  10%  of 
eligible costs of works, it rarely amounts to more than 0.01-1% of the total investment cost of 
a project.33  

(3) Insufficient involvement of private investors in infrastructure financing 

Strategic  projects  of  European  interest  require  European  start-up  funding,  which  private 
investors  cannot  always  shoulder  alone.  In  particular,  the  record  investment  volumes  in 
Europe's transport, energy, information and communication networks that will be needed over 
the next decade in order to underpin the Europe 2020 flagship actions, combined with the fact 
that government budgets face severe constraints, make it crucial to foster the participation of 
the private sector in the financing of infrastructure projects. Yet, experience so far has shown 
that  private  investment  in  infrastructures  has  remained  limited34.  As  noted  in  the 
Commission's consultation paper on the Europe 2020 Project Bonds Initiative, "the majority 
of infrastructure in the EU with a trans-European dimension and interest is still financed from 
the  public  purse  (EU,  national  and  regional  level)  and  only  a  small  part  draws  on  private 
funding"35. 

On  the  other  hand,  institutional  investors  such  as  pension  funds,  insurance  companies  and 
wealth  funds  are  showing  an  increasing  interest  for  moving  into  infrastructure  investment 
given  its  potential  to  match  long-term  assets  and  provide  diversification.  For  instance,  the 
stability  provided  by  the  regulated  model  in  energy  and  natural  monopoly  situation  in 
transport  corresponds  to  pension  funds’  investment  profile,  characterized  by  relatively  low 
rates  of  return  –  around  7%-8%36  –  and  long  investment  horizons.  These  investors  are  also 
becoming  increasingly  ready  to  invest  directly  in  infrastructure  assets.  This  is  new,  as  their 
exposure to infrastructure has traditionally been via listed companies (such as utilities), or via 
real estate portfolios37. However, for such new classes of investors to invest, there need to be 
investment  opportunities  available,  i.e.  equity  opened  to  participation  and/or  debt  products. 
Hence, the need for new products, and possible enhancements, that would allow channelling 
the investment into the infrastructures of European importance. 

The obvious conclusion is that the EU infrastructure funding framework has not been able so 
far  to  create  an  environment  sufficiently  conducive  to  private  investment  needed  in  each  of 
the  sectors.  In  addition  to  the  insufficient  focus  of  EU  financial  support  and  the  inadequate 
levels of co-funding rates for particularly complex and risk laden projects, the insufficient use 
of  financial  instruments  constitutes  one  of  the  main  factors  leading  up  to  this  situation.  In 
energy,  no  financial  instruments  have  been  used  so  far  at  EU  level.  Given  the  investment 
challenge  up  to  2020  as  well  as  the  growing  number  of  complex  and  cross-border  projects, 

31  Steer  Davies  Gleeves.  See  also  TEN-T  EA,  MAP  mid-term  review  and  Assessment  of  TEN-T  programme 
implementation. There is also a consensus among the stakeholders that co-funding rates need to be raised (see 
input to consultation on 2009 Green Paper, as summarised also in Annex 1).  
32 COM(2010) 203 
33In the field of ICT, direct funding of high speed broadband infrastructure aimed at meeting the targets set by 
the Digital Agenda for Europe constitutes an absolute novelty, so no co-funding rates have been existing so far.  
The  definition  of  high  speed  broadband  adopted  in  this  impact  assessment  is  the  one  in  line  with  the  DAE 
targets.  So,  it  considers  high  speed broadband  as  any  technology  capable  of  delivering  at  least  30Mbps  to  the 
final users' premises.  
34 COM(2010) 700, p. 20. 
35  Abadie  R.  and  S.  Pagdadis  "The  global  reality  of  public-private  partnerships"  in  PwC  Gridlines:  Building 
Intelligent Infrastructures, June 2010. 
36 Compared to 10%-12% infrastructure funds typically offer their investors. Source: InfraNews, “How Real a 
Threat to Infra Funds is the Direct Investing Phenomenon?” 24 May 2011. 
37  OECD,  "Pension  Fund  Investment  in  Infrastructure",  Working  Paper  on  Insurance  and  Private  Pensions, 
January 2009. 

17

 
                                                 
 
this lack of instruments that facilitate access to equity and/or debt finance, reduce the cost of 
capital, adapt lending conditions or facilitate project finance structuring could be an obstacle 
to the development of certain projects of strategic European importance, even if the majority 
of  energy  infrastructure  projects  will  continue  to  be  corporate  financed  and  therefore  not 
adapted to some of these instruments38.  

For  transport  and,  to  a  lesser  extent,  digital  infrastructures,  a  new  generation  of  financial 
instruments have been put in place in the 2007-2013 financial framework, in cooperation with 
the  EIB,  such  as  the  Risk-Sharing  Finance  Facility  (RSFF)  under  the  7th  R&D  Framework 
Programme,  the  Loan  Guarantee  Instrument  for  TEN-T  projects  (LGTT)  or  the  Marguerite 
Fund.39  The  Mid-Term  Evaluation  of  the  Risk-Sharing  Finance  Facility  praised  the  use  of 
financial  instruments  in  addition  to  grants  in  funding  ICT  projects,  and  evaluated  the 
intervention  as  highly  efficient  and  effective,  and  "having  dramatically  expanded  the 
financing".40 For transport, the mid-term evaluation report of the Loan Guarantee Instrument 
for  Trans-European  Transport  Network  Projects  (LGTT),  while  making  a  number  of 
recommendations  for  further  improvement,  concluded  that  the  instrument  was  successfully 
used on a number of projects.41 In parallel since the 1990s national policies of many Member 
States have sought to increase private sector participation in the financing and implementation 
of  infrastructure  projects  by  other  complementary  means,  notably  through  project  finance. 
Nevertheless,  overall,  only  around  10%  of  private  sector  infrastructure  investment  uses 
project finance, including public private partnerships (PPP).  

As  pointed  out  in  the  Report  of  the  TEN-T  Expert  Group  5,  in  times  of  public  budget 
constraints and difficulties of the private sector to raise funds, "Europe needs to have a fresh 
look  at  the  economics  of  cross-border  investment  and  at  innovative  ways  to  ensure  its 
financing."42  Availability  of  adequate  financial  instruments  enabling  guarantees  and  risk 
sharing  arrangements  would  indeed  create  the  necessary  conditions  to  attract  private 
investors. 

2.3.2.  Project implementation: Existing conditions for a fast implementation of 

EU co-funded projects are not adequate 

As  ex  post  evaluations  and  stakeholder  consultations  have  highlighted,  the  set  of  rules 
concerning  TEN  programme  implementation  procedures  need  to  be  further  streamlined  and 
strengthened in order to make sure that co-funded infrastructure projects are implemented in 
the most efficient and effective way. This is particularly felt at three levels: 

(1) Application and project support 

38 Commission Communication on the "Energy infrastructure priorities for 2020 and beyond – a blueprint for an 
integrated European energy network", COM(2010) 677. 
39 In the area of transport infrastructure, the following instruments have been used under the 2007-2013 financial 
framework:  first,  the  Loan  Guarantee  Instrument  for  TEN-T  Projects  (LGTT)  is  a  €1bn  instrument  managed 
jointly  with  the  EIB,  which  supports  PPP  projects  in  case  of  revenue  shortfall  in  the  early  stage  of  operation. 
Second, DG MOVE has set up jointly with the EIB the European PPP Expertise Centre (EPEC) in September 
2008. EPEC responds to public sector needs by ensuring collaboration between the competent national "PPP task 
forces"  to  promote  best  practices  to  encourage  the  development  of  PPPs.  Third,  the  2020  European  Fund  for 
energy,  climate  change  and  infrastructure,  the  so-called  "Marguerite  Fund",  which  is  a  pan-European  equity 
fund, and was launched in 2010 with a target size of €1.5bn. 
40  Evaluation  of  the  Risk-Sharing  Finance  Facility,  Final  draft  of  the  independent  group  of  experts,  31  July, 
2010. 
41 Cf. European Investment Bank, "Loan Guarantee Instrument for Trans-European Transport Network Projects 
Mid-Term Review", from 2008 to date, LGTT has been successfully used in six operations in France, Germany, 
Portugal and Spain, in the road and rail  sectors involving a total capital investment of more than EUR 10bn. 
42 Final report of the Expert Group 5, Funding Strategy and Financing Perspectives for the TEN-T 

18

 
                                                 
Management of EU TEN infrastructures funding is currently fragmented across different EU 
support  schemes.  In  transport,  EU  funding  is  fragmented  between  different  EU  instruments 
such  the  TEN-T  Programme,  the  Cohesion  Fund  and  ERDF.  As  ex-post  evaluation  reports 
and  stakeholder  consultation  have  highlighted,  the  different  policy  objectives  and  set  of 
implementation procedures do not allow the Commission to optimise the use of EU funding.43 
Similarly,  in  the  area  of  ICT,  funding  has  been  fragmented  in  the  current  Multi-Annual 
Financial Framework between the CIP Programme, FP 7 and the regional policy funds.  

This  leads  to  considerable  administrative  costs  for  project  promoters  when  seeking 
information about and applying for EU funding. While calls for proposals have proved to be 
an  effective  tool  for  competitive  tendering,  synergies  of  the  various  funds  were  used  only 
partially.  

(2) Monitoring & evaluation 

Monitoring  and  evaluation  constitutes  another  area  where  further  improvements  could  be 
pursued.  The  generally  limited  development  of  mechanisms  to  reward  performance  and 
penalise non-effective use of the EU funds constitute another reason for suboptimal results of 
the use of EU funds. 

Mechanisms  in  place  so  far  have  mainly  concentrated  on  penalties.  And  while  provisions 
concerning  penalties  are  necessary  to  ensure  that  funds  granted  from  the  EU  budget  are 
recovered  and/or  saved  if  they  are  not  used  for  the  purposes  they  have  been  contracted,  a 
mechanism relying solely on penalties has shown an important drawback. While providing a 
"stimulus" for project developers to ensure that funds are effectively used within the terms of 
the contract, it does not necessarily ensure the effective (or timely) realisation of the projects. 
From this perspective, a much more efficient approach would include monitoring and support 
mechanisms to assist project developers towards an effective and timely implementation.  

In  this  respect,  the  report  on  the  implementation  of  the  European  Energy  Programme  for 
Recovery (EEPR)44 highlighted the importance of a well developed set of procedures in order 
to manage risk and closely monitor the progress made on projects.  In the field of transport, 
the  implementation  of  the  TEN-T  Programme  has  been  notably  improved  following  the 
establishment in 2006 of the TEN-T Executive Agency (TEN-T EA), through a better follow-
up  of  the  preparation  and  subsequent  implementation  of  projects  selected  under  the  TEN-T 
calls for proposals. However, there too, improvements in a number of aspects could enhance 
the effectiveness of the programme's implementation.45    

The  ability  of  the  Commission  to  redeploy  funds  to  new  projects  through  new  competitive 
calls for proposals is an important element of discipline in the implementation of projects by 
the Member States and project promoters and enhances the effectiveness of the programme by 
ensuring  that  other  mature  projects  can  get  access  to  funding.  In  sectors,  such  as  transport, 
already  applying  the  'use  it  or  lose  it'  principle,  reports  still  conclude  that  "the  Commission 
should be able to use more effective project incentives (such as the 'use it or lose it' principle) 
to  make  sure  that  project  promoters  are  feeling  more  accountable  for  the  EU  grants  given, 
including on Priority Projects".46 By contrast, when the responsibility for EU funds allocation 
and management remains primarily with the Member States, as is the case of the Structural 

43 See for example Steer Davies Gleaves. For the input of the stakeholder consultations, see summary presented 
in Annex 1.  
44 COM(2011) 217.   
45  Steer  Davies Gleaves'  provides  a  detailed  assessment  of  the  TEN-T  EA's  performance  and  areas for  further 
improvements.  
46 Steer Davies Gleeves, p. 93. 

19

 
 
                                                 
funds,  where  the  selection  of  projects  is  made  at  the  beginning  of  the  financial  period  and 
cannot be changed until its end, "an unclear prioritisation of projects and dissemination of EU 
funds is experienced".47  

(3) Programme management 

The process of implementation of EU financial support for TEN infrastructures development 
is currently managed differently in the three sectors. In the fields of energy and transport, it is 
centrally managed, but within distinct structures. While the TEN-E funds are managed within 
the specialised Commission service (DG ENER), the management of the implementation of 
the  TEN-T  Programme,  while  still  the  responsibility  of  the  specialised  Commission  service 
(DG MOVE), is managed with the substantial support of the TEN-T EA, which manages the 
implementation of the entire programme life cycle. In the case of both TEN-E and TEN-T, the 
Commission  is  also  assisted  by  a  Committee  on  financial  issues,  and  by  European 
Coordinators,  tasked  with  facilitating  and  monitoring  the  implementation  of  particularly 
complex projects. In the field of ICT, broadband network infrastructure funding is an entirely 
new concept, hence no management structures is as yet in place.  

According  to  the  Commission  proposal  in  the  MFF  Communication  however,  the  new 
common  facility  shall  be  "centrally  managed  by  the  Commission  with  the  support  of  an 
executive  agency  (such  as  the  current  TEN-T  agency)  and  financial  intermediaries."48  The 
challenge the Commission faces in establishing the CEF rules therefore is to create this joint 
central  management  structure  starting  from  the  distinct  sectoral  arrangements  currently  in 
place. 

Conclusion: The discussion presented above makes apparent that the problem of developing 
the  operational  rules  that  will  govern  the  use  of  EU  funds  under  the  CEF  is  twofold:  (1) 
addressing the shortcomings highlighted by ex-post evaluations and stakeholder consultations 
with  regard  to  TENs'  programmes  implementation  so  far,  while  (2)  concentrating  on  the 
simplification  of  the  current  EU  infrastructure  funding  framework  rules  by  drawing  on 
synergies across sectors. 

2.4.  Justification for EU action 

The  EU  action  on  trans-European  networks  is  grounded  in  the  Treaty.  Article  170  TFEU 
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 also derives from the Treaty. 
Article 171 (paragraph 1 indent 3) TFEU provides that: "[i]n order to achieve the objectives 
referred to in Article 170, the Union (…) may support projects of common interest supported 
by Member States, which are identified in the framework of the guidelines referred to in the 
first indent, particularly through feasibility studies, loan guarantees or interest-rate subsidies". 
The Commission’s financing proposals have to be approved by the Member States, who are 
responsible for the planning and construction of projects.  Furthermore, the EU's competence 
in  the  area  of  energy  is  also  enshrined  in  TFEU,  Article  194.  Energy  transmission 
infrastructure  (including  an  interconnected  off-shore  grid  and  smart  grid  infrastructure)  has 
Trans-European or at least cross-border nature or impacts.  

47 Ibid., p. 13. 
48 COM(2011)500, part II. 

20

 
 
 
                                                 
In areas which do not fall within EU exclusive competence, EU action has to be justified. In 
the present case, it is therefore necessary that the subsidiarity principle set out in Article 5 (3) 
of the Treaty on the European Union is respected. This involves assessing two aspects. 

(1) Firstly, it is important to be sure that the objectives of the proposed action could not be 
achieved  sufficiently  by  Member  States  in  the  framework  of  their  national  constitutional 
system, the so-called necessity test. In this respect, the Commission has already 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."49  Large  investments,  from  both  the  public  and  the  private 
sectors, are needed to meet the infrastructure challenge. It is estimated that about €200 billion 
is  needed  to  complete  the  trans-European  energy  networks  at  transmission  level  only,  €500 
billion needs to be invested in the trans-European transport network, and over €250 billion in 
ICT for the period 2014-2020.50 While recognising that the market can and should deliver the 
bulk of the necessary  investments,  the  Commission stressed in its MFF Communication the 
added  value  of  the  Union  can  bring  in  securing  funding  for  the  pan-European  cross-border 
projects that connect the centre and the periphery to the benefit of all.  

Experience  has  shown  that  Member  States'  predominantly  national  focus  in  planning 
infrastructures  does  not  give  sufficiently  high  priority  to  multi-country,  cross-border 
investments  to  equip  the  Single  Market  with  the  infrastructure  it  needs.  In  addition  in  the 
aftermath of the economic and financial crisis, the constraints on private and public sources of 
funding  have  cast  an  important  degree  of  uncertainty  on  the  extent  to  which  required 
investments  would  be  met.  "The  costs  for  Europe  of  not  investing  sufficiently  in  its  future 
network would be very high."51 

Most affected are likely to be, in particular, the projects with trans-European relevance, which 
require  particularly  high  and  long  term  investments,  due  to  their  inherent  higher  technical 
complexity as well as cross-border coordination needs. While the EIB and other national or 
multilateral development banks have expanded the scale of their lending, to effectively fill the 
gap,  complementary  solutions  have  to  be  found,  to  unlock  private  capital  and  restore  stable 
funding streams through the capital and banking market. EU funds should accompany market 
dynamics,  incentivising  rather  than  crowding  out  market  participation  in  infrastructure 
funding.  In  particular,  as  both  the  Budget  Review  Communication52  and  the  MFF 
Communication53 have pointed out, the EU budget would be best placed to plug in gaps left 
by Member States. 

Yet,  the  current  EU  framework  for  infrastructure  funding  is  not  adequate  to  provide  an 
effective  response  to  the  challenge  identified  above.  As  highlighted  earlier  in  this  report, 
funding of infrastructure remains fragmented among sectors, among programmes and among 

49 COM(2010)700, p. 5. It echoed the findings of the various ex-post evaluations, stakeholder consultations and 
expert analysis, that all converged in their assessment: member states tend to give principal priority to projects of 
primary national relevance when planning and funding infrastructure. 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.  Cross-border  services,  interoperability  and  inter-connections  need  to  be  properly 
established,  else  there  is  a  risk  of  market  partitioning  and  creation  of  barriers  to  entry.  See  also  the  Impact 
Assessment  Reports  of  revised  TEN-T  Guidelines,  of  revised  TEN-E  Guidelines,  and  of  e-TEN  Guidelines, 
respectively. 
50 For a more detailed break-down of financial needs per sector, see COM(2011)500. 
51 SEC(2011) 368, p. 78. 
52 SEC (2010) 700. 
53 COM(2011) 500, p. 1.  

21

 
                                                 
 
financing instruments, preventing thereby the full exploitation of possible synergies between 
sectors, programmes and financing instruments and to reduce risks.54 

(2)  Secondly,  it  has  to  be  considered  here  whether  and  how  the  objectives  of  the  policy 
initiative under consideration could be better achieved by action on the part of the EU, the so-
called  test  of  European  added  value.  The  rationale  for  a  European  action  in  the  field  of 
infrastructure financing stems from the trans-national nature of the identified problem. At the 
same  time,  the  rationale  for  a  common  legislative  basis  for  providing  financial  support  in 
three  distinct  sectors  with  different  policy  framework  lies  in  the  opportunity  to  exploit 
synergies  across  sectors,  stemming  from  common  issues with regard to the financing of the 
implementation  of  otherwise  importantly  varying  policy  objectives.  The  added  value  of  a 
common framework would be three fold:  

o  A  common  framework  would  lead  to  the  simplification  of  the  EU  legal  framework 
concerning TEN infrastructures funding. It would also ensure a coherent approach to 
EU  project  financing  across  the  three  sectors.  As  highlighted  earlier,  the  EU 
infrastructure  financial  framework  is  currently  fairly  complex,  due  mainly  to  the 
number and heterogeneity of the existing EU legal texts. Simplification of rules is one 
of the keywords of the new approach proposed by the Commission with regard to EU 
budgetary spending. 55  

o  At  the  same  time,  a  single  EU  infrastructure  financial  framework  and  fund  would 
provide a coherent and transparent approach to EU funding that would offer certainty 
and  would  thus  have  a  huge  potential  to  attract  more  private  sector  financing. 
Financial  instruments  would  be  available  in  a  centralised  and  coordinated  manner, 
attracting and improving the effectiveness of the relationship with the private investors 
and the partner financial institutions.  

o  In  addition, 

the  progressively 

interdependency  between  economic 
infrastructure projects, networks and sectors would enable the realisation of economies 
of scale. An integrated EU infrastructure funding framework  would allow exploiting 
cross-sector synergies at project development and implementation level, enabling cost 
savings and/or more efficient exploitation and higher returns.  

increasing 

Last  but  not  least,  a  common  framework  would  allow  lessons  learned  and  best  practice 
sharing across sectors, enabling an enhanced effectiveness and efficiency of EU financing in 
all sectors. 

2.5.  The Baseline: How would the problem evolve, all things being equal? 

The Commission has carried out an analysis of possible future developments for TEN funding 
policy  in  a  scenario  of  unchanged  policies,  the  so-called  baseline  scenario.  The  baseline 
scenario  provides  a  benchmark  for  evaluating  new  policy  measures  against  developments 
under current trends and policies. 

The baseline scenario developed below foresees a continuation of the current policy, with the 
current  mix  of  financial  instruments  that  support  EU  action  in  the  three  policy  areas.  The 
baseline therefore reflects both achievements and deficiencies of the policies already in place. 
The baseline scenario is a composed scenario consisting of the Reference scenario applied for 

54 See also SEC(2011) 868, p. 79. 
55 See, for example, the Communications on the Budget Review (COM(2010)700) and Smart Regulation (COM 
(2010) 543). The MFF Communication reiterates Commission's commitment to this end. 

22

 
 
                                                 
the  Impact  Assessment  accompanying  the  revision  of  the  TEN-T  guidelines56  and  TEN-E 
guidelines57.  It  also  consists  of  elements  of  the  Reference  scenario  applied  for  the  Impact 
Assessment accompanying the revision of the TEN-ICT guidelines.  
The time horizon  for the baseline scenario developed  below  is 202058. The baseline is fully 
consistent with the time horizon of the EU2020 Strategy. 

2.5.1.  Common aspects 

The scenario of unchanged policies is first of all determined by the continuation of the 2007 – 
2013 financial period over 2014 – 2020. Therefore, the budget allocated for the three sectors 
will remain stable, with similar provisions regarding the availability of financial instruments. 
As  noted  in  the  composite  Impact  Assessment  accompanying  the  MFF  proposal,  “EU 
spending programme rules and implementation time are often hard to reconcile with the needs 
of  private  financing”.  Therefore,  in  spite  of  the  experience  and  the  successes  in  the  use  of 
financial instruments, their use and impact will remain marginal. 

Secondly,  the  implementation  mechanisms  will  remain  the  same.  Programming  rules  and 
management structures will follow the same approach, while taking into account the benefits 
of the revision undertaken in the last years59. Hence, according to the baseline, no synergies 
between sectors would be created in terms of implementation mechanisms. 

At the EU level funding instruments would remain fragmented as described in Table 1 above. 
Moreover, at the general economic level, the context for investments in infrastructure is likely 
to  face  constraints  similar  to  the  current  economic  situation.  With  the  growing  pressure  on 
public finance and overall economic and social circumstances, public budgets, which are the 
most  important  source  of  financing  for  trans-national  infrastructure  investments,  should 
remain  under  pressure  across  Member  States  for  reasons  of  fiscal  consolidation,  which  is 
likely to remain a priority. In parallel, in the wake of the economic and financial crisis, private 
sector  investments  and  access  to  bank  financing  for  project  promoters  is  likely  to  remain 
difficult,  due  to  capital  and  liquidity  constraints  faced  by  commercial  banks  (see  also  the 
sensitivity analysis below). Hence, investment leverage would remain weak and there is a risk 
of a certain crowding out, which would not be conducive to kick starting projects of mainly 
EU added value. 

2.5.2.  Sector specific aspects 

In the field of energy infrastructure, business as usual would mean that Europe will not be 
able to deliver on its 2020 ambitious targets for climate and renewable energy in a cost and 

56 For transport, the baseline scenario is therefore identical with the Reference scenario applied for the Impact 
Assessment accompanying the White Paper for transport (COM/2011/0144). The Reference scenario of the IA of 
White  Paper  builds  on  a  modelling  framework  including  PRIMES,  TRANSTOOLS,  PRIMES-TREMOVE 
transport  model,  TREMOVE  and  GEM-E3  models.  For  the  TEN-T  Guidelines  Impact  Assessment  and  more 
specifically the TEN-Connect studies, the TRANSTOOLS model was considered as most appropriate due to its 
infrastructure component. The assumptions used in the studies are identical with the assumptions of the White 
Paper. The models are based on a assumption of an average GDP growth of 1.7% per year for the period 2005-
2030. 
57 The baseline scenario is based on the following models: a) the PRIMES model (using the results of GEME3, 
PROMETHEUS  and  GAINS  modelling  as  inputs)  for  determining  energy  balances  in  2020  and  2030;  b)  a 
specialized  grid  modelling  framework  developed  by  KEMA  and  Imperial  College  London  for  evaluating 
resulting  infrastructure  needs  in  the  electricity  and  gas  sector;  c)  for  assessing  infrastructure  needs  for  CO2 
transport,  two  specialized  analysis  and  modelling  tools  developed  by  ARUP  and  JRC.  The  PRIMES  model  is 
based on an average GDP growth of 1.7% per year for the period 2005-2030. 
58 In accordance to the White Paper for Transport and the IA report accompanying the TEN-T Guidelines, the 
time horizon for the baseline scenario for transport is 2030/2050, with intermediate results for 2020.   
59  For  instance,  in  the  field  of  TEN-T,  the  role  of  the  European  Coordinators  and  the  Open  Method  of 
Coordination will be continued. 

23

 
                                                 
resource-efficient  manner  and  will  not  be  able  to  deploy  by  2020  the  networks  needed  for 
greater  market  integration,  competitive  energy  choices  and  security  of  supply  for  energy 
consumers and business. Given the investment challenge of around €200 billion 60 in and the 
urgency,  the  existing  regulatory  framework  is  not  sure  to  deliver  on  EU  infrastructure 
priorities.  61  Furthermore,  even  if  there  was  more  private  debt  and  equity  available  on  the 
market, more complex types of projects of European significance would still not be delivered. 
Without a step change in the way energy infrastructure of European significance is supported 
the Commission estimates that a significant share of the needed investment until 2020 will not 
be delivered on time under the existing framework. 

The  continuation  of  the  current  TEN-E  approach  to  financing,  with  limited  amounts  of  EU 
funding  focussed  on  studies  rather  than  works  and  no  reiteration  of  the  European  Energy 
Programme  for  Recovery.  As  a  result,  projects  of  European  significance  would  continue  to 
mainly  receive  EU  grants  for  feasibility  and  front-end  engineering  and  design  studies. 
Financial support for the construction of projects would remain very limited: An expected € 
55 million of the available funds of € 155 millio n would cover works expenses. In addition, 
EU allowed co-financing rates for works would continue to be insufficient to address the risks 
of  the  projects,  attract  private  investors  and  boost  the  deployment  and  implementation  of 
certain  projects.  Indeed,  as  demonstrated  by  the  EEPR  experience,  for  projects  aiming  at 
increasing security of supply, a co-financing rate of 50% or more can be necessary to unblock 
the  project  while  the  current  TEN-E  co-financing  rate  is  capped  at  10%  of  the  construction 
costs . As a result, only investments with a sufficiently high direct benefit for the investor(s) 
would  be  realised.  No  support  would  be  available  under  the  TEN-E  budget  for  projects 
outside  the  EU,  which  would  continue  to  benefit  from  various  other  EU  programmes.  The 
range of financial facilities available through the EIB would not evolve (no specific financial 
instruments would be made available by the EIB and the lending volumes towards energy grid 
infrastructures would remain the same or possibly decrease). 

In conclusion, targeted EU support to incentive and leverage private and public investment for 
the deployment of  major EU energy infrastructure priorities that would contribute to market 
integration, improving the EU’s security of supply, connecting renewables or increasing the 
EU’s  energy  systems’  flexibility  will  not  be  possible.  Only  investments  with  a  sufficiently 
high  direct  and  short-term  commercial  benefit  for  the  investor(s)  would  be  realised,  which 
would be insufficient to meet the challenge arising from the step change in investments62. 

The baseline scenario in the field of transport infrastructure consists of the current TEN-T 
Guidelines  and  a  TEN-T  Programme,  together  with  other  sources  of  funding  such  as  the 
Cohesion Fund and ERDF. According to the current forecasts drawn up in cooperation with 
the  Member  States,  the  total  investment  cost  of  the  30  TEN-T  Priority  Projects  will  be 
realised  by  2025,  which  would  represent  an  accelerated  implementation  pace.  The  National 
transport  plans  currently  discussed  between  the  Commission  and  the  Member  States  in  the 
Framework  of  the  Open  Method  of  Coordination  have  also  been  taken  into  account  in  this 
forecast. 

The  Commission  will  continue  its  efforts  to  encourage  Member  States  to  coordinate  their 
infrastructure policies, with a view to exchanging best practices and identifying obstacles to 
funding and solving cross-border constraints. In particular, the Open Method of Coordination 
is expected to have a certain impact through fostering transparency and up-to-date monitoring 
of  project  planning  and  implementation  across  Europe.  Moreover,  the  European  Institutions 

60 More details on the investment needs and financial gaps is provided in box 1 below. 
61  Impact  Assessment  accompanying  the  document  Regulation  laying  down  rules  for  the  implementation  of 
European energy infrastructure priorities SEC (2011) XXX 
62  See  also  conclusions  from  the  2009  TEN-E  Implementation  Report  (COM(2010)203  and  SEC(2010)505)  and 
SEC(2010)1396. 

24

 
                                                 
and  Member  States  will  continue  to  rely  on  the  work  of  the  European  Coordinators,  taking 
care of 11 of the most difficult Priority Projects of the TEN-T network. 

The consequences of an 'unchanged policies' scenario would be a slow implementation of the 
current  Priority  Projects,  with  a  limited  development  of  interoperability  and  multimodality, 
hampering the functioning of the transport system. The free movement of goods will remain 
constrained  by  the  low  level  of  infrastructural  interconnectivity  between  the  European 
markets,  especially  as  concerns  the  peripheral  areas  of  Europe.  The  current  market 
segmentation of the Internal Market will thus endure, limiting the choice for consumers and 
the size of market for enterprises, especially for small businesses. 

As  regards  ICT  infrastructure,  in  the  field  of  broadband,  bandwidth  demand  from  current 
applications  alone,  such  as  high-definition  video,  is  projected  to  quickly  saturate  current 
broadband networks capacity if no substantial upgrades are implemented. Broadband demand 
in the next ten years will not only be shaped by the current set of applications available, but 
will  be  determined  by  many  new  innovative  applications  and  services  (e.g.  high-definition 
tele-presence,  cloud  computing,  telemedicine  and  remote  surgery,  remote  learning  (virtual 
campuses)) which would need expanded bandwidth to operate efficiently. 

Lack  of  EU  support  to  the  implementation  of  digital  infrastructure  services  means  that 
common technical specifications, pilot and test versions of these infrastructures already built 
up  by  past  and  current  programmes  like  the  CIP  ICT  PSP  would  probably  cease to exist. It 
would  also  be  more  difficult  to  achieve  pan-European  interoperability  as  member  States  do 
not  have  sufficient  incentive  to  fund  common  digital  service  infrastructure.  Hence,  benefits 
from  cross-border  positive  externalities  could  not  be  fully  reaped  and  there  would  be  a 
situation whereas some 63Member States would seek individual solutions.  

Any European cross border service solutions in support of the digital internal market would 
need EU support, in addition to national financial investments. 

2.5.3.  Global sensitivity analysis 

Considering the high degree of uncertainty surrounding projections over a relatively long time 
horizon, especially for such complex systems as transport, energy and digital infrastructures 
and networks, an evaluation is provided below for the possible impact of external factors on 
the assumptions underlying the baseline scenario, in addition to the sensitivity analyses that 
were  carried  out  in  the  impact  assessments  of  the  sector  specific  Guidelines  in  which  the 
influence of external factors on macroeconomic assumptions are assessed64.  

First,  the  high  degree  of  uncertainty  regarding  budgetary  constraints  at  the  Member  States  
level needs to be taken into consideration. The development of extremely costly hard and soft 
infrastructure depends very much on the public and private resources available.  

Fiscal austerity and structural reforms in many EU countries will drive or have already driven 
public  authorities  to  reassess  their  infrastructure  investment  programmes  as  well  as  those 
related to public private partnerships (PPPs).65 

63 Investments in cross-border interoperability would have a positive knock-on effect at local level as Member 
States would replicate the model in deployment service interoperability within regions and municipalities. 
64 The impact of the macroeconomic environment on the investments needs and the level of investments realised 
is  studied  in  the  Impact  Assessment  accompanying  the  sector  specific  Impact  Assessments,  as  well  as,  for 
Energy, in the IA accompanying the Communication Energy infrastructure priorities for 2020 and beyond - A 
Blueprint for an integrated European energy network (SEC(2010)1395) 
65    For  example,  "in  Portugal  and  Spain,  stopping  or  postponing  infrastructure  projects  by  downscaling 
investment expenditures is one of the most important contributions on the expenditure side. In Spain, a reduction 

25

 
                                                 
The economic downturn  has slowed  down companies investment plans and infrastructure is 
not  exception;  due  to  a  number  of    uncertainties  as  regards  the  economic/regulatory 
environment, reduction of agreed support under existing incentive schemes, scaling down of 
public  investment  programmes,  taxation,  impact  of  sovereign  rating  on  investor  behaviour, 
etc). Finally, potential future liquidity shortages of financial institutions will have an impact 
on the availability of financing even for healthy corporates and projects66. 

Moreover  infrastructure  projects  entail  risk  elements  such  as  greenfield,  new  technologies, 
uncertain  business  case  as  regards  future  revenue  flows,  regional  aspects  including  the 
influence of the sovereign crisis and cross-border impact making the project development and 
implementation  demanding  and  less  attractive  for  private  sector  financiers  and  investors.  In 
addition,  in  case  of  private  sector  financing,  depending  on  the  sector,  the  project,  the 
economic situation in the country or region as well as national regulations and the maturity of 
the  financial/capital  markets  there  can  be  a  greater  need  for  either  debt  or  equity  support. 
Alike,  as  the  risk-return  profile  of  infrastructure  projects  change  during  the  lifecycle 
(preparation  and  planning,  construction  and  ramp-up  operations  and  subsequent  operational 
period  with  more  predictable  revenue  flow),  higher  revenues  from  projects  could  free 
resources for further investment. 

However,  in  the  baseline  scenario  described  above,  the  level  of  investments  does  not  only 
depend  on  future  economic  growth,  fiscal  constraints  in  the  Member  States  or  access  to 
financing for private investors. Most of the infrastructure projects need major political support 
and long-term determination in order to be implemented, including revised political selection 
of projects, revised implementation mechanisms or co-financing rates. For instance, projects 
that have no direct benefits for  private investors or that  are  not suited for  them due to their 
size  for  instance,  such  as  a  project  aiming  at  ensuring  a  better  security  of  supply  or  major 
cross-border transport project (such as a tunnel through the alps) are unlikely to happen even 
if  the  economic  context  were  favourable.  They  require  a  radical  change  in  the  way  projects 
are currently selected, co-financed and implemented. 

The  extent  to  which  these  factors  will  affect  the  implementation  of  infrastructure  projects 
resulting from the sector specific guidelines is uncertain. However, the degree of uncertainty 
will be reduced by the creation of the CEF with its strengthened and more targeted financial 
EU contribution.  In  sum, although  there are considerable uncertainties related to large scale 
EU  infrastructure  projects,  the  CEF  would  to  a  certain  extent  counter-balance  these  and 
consequently reduce risks perceived by investors, thus increasing their incentives to invest in 
infrastructure projects. 
Lastly, the way projects of high EU added value are being selected and implemented has an 
impact  on  the  level  of  investments.  This  question  is  dealt  with  in  the  Impact  Assessments 
accompanying the sector specific Guidelines. 

Box 1: Investments needs and financing gap 

As  part  of  the  Baseline  scenario,  the  Commission  has  identified  investment  needs  and 
financing  gaps  for  infrastructure  and  networks  in  the  field  of  energy,  transport  and  digital 

of 0.5% of GDP is planned between 2011 and 2013. In Portugal, cumulative savings on investments will amount 
to 1.2% of GDP by 2013. In Ireland and Slovenia, infrastructure spending will be reduced, respectively, by 1.6% 
of GDP from 2011-14 and 0.8% of GDP in 2010-13". OECD, Restoring public finances, 2011. 
66  The  impact  of  private  financing  and  financing  instrument  for  infrastructure  on  investment  is  studied  in  the 
Impact  Assessment  accompanying  the  proposal  on  the  Europe  2020  Project  Bond  Initiative  pilot  phase  2012-
2013 

26

 
 
 
                                                                                                                                                         
infrastructures. 

Firstly, the figures for investment needs, based on a number of studies, represent the level of 
investment  needed  in  order  to  realise  infrastructures  and  networks  of  high  European  Added 
value. These infrastructure have been selected according to specific criteria that are listed in 
the sector specific Guidelines. For instance, they consist: of missing links between the main 
axes of the national transport networks; of electricity and gas transmission systems in order to 
complete the internal energy market and infrastructure improving security of supply; and of 
the pan-European digital service infrastructure. 

The Commission estimated the total investment needs between €1.5 tri llion and €2 trillion in 
total for the three sectors. Among those needs, only a fraction of it can realistically be realised 
before 2020. The Commission has calculated that from now until 2020, €500 billion will be 
needed  for  the  implementation  of  the  Trans-European  Transport  Network  (TEN-T) 
programme, of which €215 billion is for the remova l of the main bottlenecks in the so called 
transport  "core  network".  In  the  energy  sector,  public  and  private  entities  in  the  Member 
States  will  need  to  spend  around  €400  billion  on  distribution  networks  and  smart  grids, 
another €200 billion on transmission networks  and storage as well as €500 billion to upgrade 
and  build  new  generation  capacity  between  now  and  202067.  Finally,  up  to  €270  billion  in 
capital investment is required to bring fast and ultra-fast broadband to all households by 2020. 
Secondly, financing gap represent the investment needs minus the capacity of the public and 
private  sector  to  realise  those  investments.  Even  though  the  bulk  of  the  investment  under 
Europe 2020 strategy can be delivered by markets and regulatory measures, some investments 
of high European added value are not going to be realised due to the nature of the project (no 
direct  commercial  interest  or  not  a  priority  for  national  and  regional  public  investments). 
Financing gap therefore refers to the investments of high EU added value that are "at risk" (of 
not  being  realised).  They  can  also  be  referred  to  as  part  of  the  "market  gap".  Unlike  the 
investment needs, which are not dependent on economic uncertainties, the financing gap can 
be reduced if the economic environment is favourable to private and public investments. 

The  three  sectors  are  different  in  terms  of  financing  gap.  In  transport,  the  great  majority  of 
investments are made by the public sector; moreover, most of the project with high EU added-
value  such  as  cross-border  connection  would  not  be  realised  without  the  regulatory  and 
financial  contribution  of  the  Union.  No  general  figure  can  be  given  for  transport  due  to  the 
political nature of the cross-border projects. However, the Commission has identified that the 
removal  of  the  main  bottlenecks  in  the  so  called  transport  "core  network"  (with  the  highest 
EU Added Value) would  amount to about € 215  billion. For each of the projects, there is a 
different  co-funding  rate  or  type  of  innovative  instrument  necessary  in  order  to  have  the 
project being implemented. The Commission has developed different scenario with different 
co-funding  rates  in  order  to  calculate  the  amount  of  EU  co-funding  needed  to  remove  the 
bottlenecks. 

In the energy sector, the investments of high EU added-value, mostly carried out by private 
investors, depend on the regulatory environment (and therefore of the regulatory measures to 

67  Commission  Staff  Working  Paper,    Energy  infrastructure  investment  needs  and  financing  requirements; 
SEC(2011) 755 final 
68  See  Impact  Assessment  to  the  revised  energy  infrastructure  Guidelines  and  the  Impact  Assessment  to  the 
Communication "Energy infrastructure priorities for 2020 and beyond - A Blueprint for an integrated European 
energy network" COM(2010) 677 final 
69 See Impact Assessment to the INFSO Guidelines 
70 See also Annex 3 

27

 
 
 
 
 
                                                                                                                                                         
be adopted by the Commission in the form of  the Guidelines) and the possible contribution 
from  the  public  sector.  The  Commission  has  identified  an  amount  of  €  100  billion  being  at 
risk, including electricity interconnectors, off-shore grids, electricity storage and smart grids, 
gas interconnectors and CO² transportation68. 

As for telecommunications and broadband networks, an investment gap of up to €220bn has 
been  identified.  In  order  to  attain  a  critical  investment  level  it  is  likely  that  some  degree  of 
credit  enhancement  and/or  other  financial  instruments  will  be  needed  to  trigger  the 
investment69. 

In view of the level of financing gap identified in the three sectors, the € 50 billion proposed 
under the Connecting Europe Facility only cover a small amount of these gaps. Moreover, the 
funds  available  under  the  CEF  will  be  made  available  primarily  for  projects  with  high 
European  added  value,  often  of  cross-border  nature,  which  are  projects  for  which  Member 
States  and  private  investors  are  not  willing  to  invest.  Therefore,  the  funds  available  under 
CEF will not crowd out other sources of funding70. 

2.5.4.  Conclusions 

In  the  scenario  of  unchanged  policies,  notably  with  the  continuation  of  the  2007  –  2013 
approach  as  for  the  EU  budget  available  for  European  infrastructure  in  the  field  of  energy, 
transport and ICT, the development of infrastructure of European Added Value is unlikely to 
happen by 2020. The involvement of the private sector will remain limited, even on projects 
will  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. As a consequence, 
projects  favouring  security  of  energy  supply  (including  those  crossing  EU  borders)  or 
connections to peripheral areas will not be implemented. 
This  will  have  detrimental  impacts71  at  socio-economic  level,  with  imperfect  functioning  of 
the  internal  market  or  limited  job  creation  due  to  sub-optimal  infrastructure  investments.  In 
addition,  the  EU  economic  performance  will  not  benefit  from  increased  connectivity, 
accessibility and connections between neighbouring countries.  

The impacts on environmental and climate change objectives are also likely to be insignificant 
with  the  continuation  of  the  current  policies:  the  absence  of  development  of  new  transport 
infrastructure favouring a modal shift to cleaner modes of transport will not be the expected 
positive impacts of these new infrastructures in terms of reduction of CO2 emissions. Without 
the  energy  infrastructure  enabling  the  integration  of  renewable  energies  across  the  EU 
network  and  smart  grids,  linking  North  and  South  and  isolated  regions,  the  EU  will  not  the 
able to meet its energy and climate targets in a cost and resource efficient manner. 

3.  OBJECTIVES  

This  section  defines  the  general,  specific  and  operational  policy  objectives  of  the  proposed 
initiative, discusses possible trade-offs between the search for synergies and the objectives of 
the sector-specific policy frameworks and verifies their consistency with other EU horizontal 
objectives. 

71 The economic, social and environmental impacts of the business-as-usual scenario will be further developed in 
section 5 of this document. 

28

 
 
 
 
                                                 
3.1.  Policy objectives 

General objective 

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 therefore to make the Connecting Europe 
Facility a success in operational terms by, i.e. to define operating rules governing the use of 
funds  under  the  CEF  that  will  optimally  address  the  problems  identified  in  the  two  main 
policy  areas  of  EU  infrastructure  while  concentrating,  in  particular,  on  simplifying  TEN 
infrastructure funding provisions currently in place in the three sectors. As highlighted in the 
MFF  Communication,  one  of  the  major  hallmarks  of  the  Commission  in  putting  forward 
revised  proposals  for  financial  programmes  and  instruments  is  the  simplification  of,  current 
sector specific rules. ,  

At  the  same  time,  since  this  initiative  is  developed  within  the  larger  context  of  the 
implementation  of  the  EU  budget  over  the  2014-2020  MFF,  its  aim  is  to  contribute  also  to 
achieving the objectives set out by the Commission in its related policy documents: the "EU 
Budget  Review"  Communication  and  the  MFF Communication.  More  specifically,  the  CEF 
operating rules will also need to follow the main principles for the future management of the 
EU  funds:  focusing  on  delivering  key  policy  priorities  -  "directing  resources  where  the 
rewards can come more quickly, more broadly and more strongly"; focusing on the EU added 
value - "plug gaps left by the dynamics of national policy-making, most obviously addressing 
cross-border  challenges  in  areas  like  infrastructure,  mobility,  territorial  cohesion…";  being 
results driven, with action "measured in terms of real impact, rather than in terms of the inputs 
involved"; delivering mutual benefits across the European Union.72  

Specific objectives (SO) 

In light of the above and in order to address the problem identified earlier in this IA report, the 
general objective of this initiative, respectively putting in place optimal operating rules for the 
use of EU funds pooled within the CEF can be translated into two specific objectives: 

SO 1:  

SO 2: 

Increase  the  leverage  of  EU  funds  by  defining  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. 

Facilitate  the  timely  delivery  of  EU  co-funded  projects  by  defining  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) 

72 COM(2010) 700 final, p. 4-6. 

29

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

As regards investment leverage: 

•  OO 1:  

•  OO 2: 

•  OO 3: 

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 
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. 

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 programme implementation (programming and support): 

•    OO 4: 

•  OO 5: 

Define rules for proposal selection in order to ensure a competitive and 
transparent allocation of funds.  

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: 

Set  up  an  adequate 
management of the programme. 

institutional  structure  for 

the  centralised 

Operational objectives have not been quantified because the specificities of the three sectors 
would  not  allow  defining  common  quantitative  targets  in  all  cases.  This  is  the  case  for 
instance  for  OO3.  Indeed,  it  is  not  possible  to  define  common  target  on  the  number  of 
specialised investors to be involved across the sectors given the different use and proportion 
of funding instruments between the sectors. The evaluation of achievement of the objectives 
needs  therefore  to  be  assessed  on  a  case  by  case  basis  on  the  basis  of  the  tools  defined  in 
section 7 below. 

Table 2: Mapping problem, drivers and objectives 

Problem 

General objective 

The  2011  Communication  did 
not  define  the  operating  rules 
of the CEF. 

Establish optimal operating rules governing the use of funds under the 
CEF  while  exploiting  as  much  as  possible  synergies  between  sector, 
particularly in the case of cross-sectoral projects 

Policy areas (PA) 

Specific and operational objectives 

PA1 

Investment leverage 

SO1  Define forms and methods 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 

Targeted funding  OO1  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. 

Co-funding rates  OO2  Define  co-funding  maximum  rates  for  EU  support  for  projects 

30

 
 
 
 
 
 
 
 
 
according to priorities set in terms of EU added-value and risks/market 
failures faced by prokects. Allow flexible use of these rates, in order to 
maximise the leverage of EU funding contributions. 

Instruments  OO3  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. 

PA2  Programme 

implementation 

SO2  Define  monitoring  and  evaluation  mechanisms 

reward 
performance and penalise non-effective use of EU funds with a view to 
ensure  the  effective  and  timely  implementation  of  the  projects 
supported. 

that 

  Funding application and 
support  

Monitoring and 
evaluation 

OO4  Define rules for proposal selection in order to ensure a competitive and 

transparent allocation of funds. 

OO5  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). 

Programme 
management 

OO6  Set  up  an  adequate 

institutional  structure  for 

the  centralised 

management of the programme. 

3.2.  Possible  trade-offs  between  the  search  for  synergies  and  the  objectives  of  the 

sector specific policy frameworks 

The optimisation of CEF operating rules should take place taking into account two associated 
overarching policy goals of the EU, namely the sector specific policy objectives in the field of 
infrastructures  as  defined  in  Articles  170  and  171  of  the  TFEU  first  indent  and  the 
simplification  of  the  EU  funding  rules,  notably  derived  from  synergies  between  sectors,  to 
which the Commission committed itself.73 The commitment of the Commission to pursue the 
goal of simplifying EU funding rules has been reiterated in the MFF Communication. 

These two policy goals may however lead to trade-offs when defining CEF optimal operating 
rules. Indeed, a complete harmonisation of CEF operating rules between the three sectors may 
induce inconsistencies in each sector with its own policy objectives, leading in the end to a 
suboptimal use of EU funds by the CEF. 

Therefore,  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. 

3.3.  Coherence with other horizontal policies 

As indicated above, the proposed initiative is fully consistent with the MFF Communication 
and its accompanying document. Besides, the EU 2020 strategy, the EU Budget Review, the 
Single  Market  Act74  and  the  MFF  Communication  have  set  the  scene  for  the  proposed 

73 See, for example, the Communications on the Budget Review (COM(2010)700) and Smart Regulation (COM 
(2010) 543). 
74The Single Market Act adopted by the Commission on 13th April 2011 sees European networks as one of the 
levers to unlock the growth and jobs potential of the Single Market and to reinforce citizens' confidence in its 
benefits. One of its twelve key actions is legislation for energy and transport infrastructure to identify and roll-
out projects of European interest, ensuring intermodality and interoperability (COM(2011) 607). 

31

 
 
 
 
 
                                                 
initiative.  Its  general  objective  of  defining  optimal  operating  rules  of  the  CEF  are  fully 
consistent  with  the  objectives  of  the  above-mentioned  horizontal  policies  as  recalled  in 
section 2 of this IA report. The Cohesion Fund and the ERDF will continue to be available for 
funding  transport  infrastructure,  ICT  and  energy  distribution  networks.  More  generally,  this 
policy initiative will ensure that actions funded under the CEF will be carried in conformity 
with the Union law, including as concerns market distortions and state aid rules, and will take 
into  account  any  relevant  Union  policies,  such  as,  for  example,  the  efforts  to  liberalise  the 
markets in the three sectors concerned.  

4.  POLICY OPTIONS 

As identified in section 2 of this report, the problem that needs to be addressed in defining the 
CEF operational rules is to address the shortcomings highlighted by ex-post evaluations and 
stakeholder  consultations  with  regard  to  TEN  financial  programmes  implementation  so  far 
(namely  in  the  two  main  policy  areas  identified  –  investment  leverage  and  programme 
implementation),  while  concentrating,  in  particular,  on  the  simplification  of  the  current  EU 
infrastructure funding framework rules by drawing on synergies across sectors.  
Drawing  on  the  recommendations  of  the  same  ex-post  evaluations,  stakeholder,  as  well  as 
internal consultations, the Commission proceeded to the identification of a range of possible 
policy  options  that  could  address  the  problem  identified  earlier,  and  help  to  achieve  the 
objectives  set  out  in  section  3  above  of  this  IA  report.  This  process  of  identification  of  the 
policy  options  has  been  developed  on  two  parallel  tracks,  which  together  will  feed  into  the 
decision  of  the  Commission  with  regard  to  the  specific  measures  proposed  in  its  policy 
initiative. 
A  first  track  has  had  as  starting  point  the  central  rationale  underlying  the  Commission's 
decision to propose the establishment of a common TEN infrastructure funding facility, i.e. to 
simplify the existing EU funding framework by drawing on sectoral synergies. It has provided 
the  main  conceptual  grid  that  guided  the  Commission  in  developing  the  main  alternative 
policy  options,  starting  from  a  range  of  policy  scenarios  for  each  of  the  two  main  fields  of 
policy  intervention  (investment  leverage  and  programme  implementation),  corresponding  to 
the three basic options for financial rules simplification, i.e. of minimal, maximal and variable 
harmonisation of sectoral rules.   
A second track has had as starting point the need to address the shortcomings, as highlighted 
by the ex-post reviews and stakeholder consultations, of current sectoral provisions for each 
area  of  policy  measures,  within  both  main  policy  fields  of  intervention  identified.  Based  on 
the recommendations of the same reviews and consultations, the Commission has considered, 
in  a  first  instance,  what  could  constitute  the  best  option  for  addressing  these  shortcomings 
separately for each of the six policy measures identified in each of the three sectors, making 
abstraction of the need to simply the rules across the sectors. Starting from this "ideal" policy 
measures responses, the Commission has then considered the extent to which these responses 
overlap,  or  allow  generalisation  of  the  successful  experience  in  one  sector  to  the  other  two, 
with  regard  to  a  certain  area  of  policy  measures.    This  assessment,  presented  in  detail  in 
Annex 5, would later provided the basis for specifying the actual content of the policy options 
on distinct and/or common provisions between the three sectors, depending on the outcome of 
the  impact  analysis  of  the  main  policy  options  (as  generated  according  to  the  degree  of 
harmonisation)  with  regard 
the  preferred  policy  way(s) 
to  what  would  constitute 
forwardassessing  the  effectiveness,  efficiency  and  coherence  in  addressing  the  policy 
objectives, as presented in section 6 below.  

. 

32

 
 
                                                                                                                                                         
4.1.  Identification  of  generic  scenarios  for  investment  leverage  and  programme 

implementation 

Taking as starting point the central rationale underlying the Commission's decision to propose 
the  establishment  of  a  common  TEN  infrastructure  funding  facility,  i.e.  to  simplify  the 
existing EU funding framework by drawing on sectoral synergies, a range of possible generic 
policy  scenarios  in  each  policy  area  (investment  leverage  and  programme    implementation) 
has been developed. These scenarios are presented in the Tables 3 and 4 below. 

The  potential  added  value  of  exploiting  synergies  for  accelerating  the  implementation  of 
TENs  has  long  been  acknowledged.75  However,  efforts  to  this  end  have  been  limited  so  far 
and the policy framework differences, stemming from sector specificities, have reinforced the 
tendency  –  natural  in  the  first  stages  of  developing  a  sector  specific  policy  framework  –  to 
focus on specificities rather than on commonalities. 

With  a  view  to  explore  further  the  synergies  between  the  three  sectors  at  the  level  of  the 
operational  rules  of  the  CEF,  the  scenarios  developed  for  each  policy  area  (investment 
leverage and programme implementation) have been designed in such a way that they explore 
three  degrees  of  harmonisation  across  sectors:  minimal  harmonisation,  maximal 
harmonisation and 'à la carte' or variable harmonisation. Each policy scenario is composed of 
the corresponding component elements of the CEF identified in section 2 above. 
Three  "investment  leverage"  scenarios  (the  L  scenarios)  have  been  envisaged  (see  Table  3 
below). As identified earlier, the scope of improving the leverage of EU funding support can 
be done in three areas of policy measures, which will give the CEF components/instruments: 
multi-level  criteria  for  evaluation  the  EU  added-value  of  projects,  level  of  co-funding  rates, 
and  the  use  of  financial  instruments.  Three  "programme  implementation"  scenarios  (the  I 
scenarios) have been elaborated following the same methodology (see Table 4 below), along 
three further areas of policy measures: procedural rules for organisation of calls and allocation 
of  funds;  monitoring  instruments  and  rules  for  the  implementation  of  the  "use  it  or  lose  it 
principle", management structure.  

75  On  20  July  2005,  at  the  request  of  the  Commission,  a  steering  group  was  set  up  to  examine  the  possible 
synergies between the trans-European networks along with methods of funding and potential distribution. It has 
established  that  synergies  between  the  transport  and  telecommunications  networks  appear  the  most  promising 
and  ways  of  interconnecting  the  electricity  networks  were  also  worth  exploring.  See  SEC(2007)135,  "Trans-
European Networks: Towards an integrated approach". 

33

 
 
                                                 
 Table 3: Investment leverage scenarios 

CEF components 

Levels of harmonisation across sectors 

Minimal (LMin) 

Maximal (LMax) 

Variable (LVar) 

objectives and (multi-level) criteria for 
transparent  evaluation  of  proposals 
according to their EU added-value 

Distinct  objectives  and  criteria 
according to sectoral priorities 

Common  objectives  and  criteria  based 
on  overall  Europe  2020  Strategy  and 
Budget for Europe 2020 priorities  

co-funding rates 

Distinct  rates  for  each  sector    and 
type of action 

Common  rates  for  all  sectors  for  each 
type of action 

financial instruments 

Distinct  mix  of  instruments  for 
each sector 

Common mix of instruments 

Common  objectives  and  criteria  based  on  overall 
Europe  2020  Strategy  &  Budget  priorities  but 
adapted  where  necessary  to  better  target  sectoral 
priorities within overall priorities 

Common  rates  for  certain  types  of  actions  (studies 
for  instance);  specific  rates  for  certain  actions, 
depending on sectoral policy priorities 

Distinct mix for each sector formed of: 
- a common set of equity and debt instruments; 
-different additional specific instruments 

Table 4: Project implementation scenarios 

CEF components 

Levels of harmonisation across sectors 

Minimal (I Min) 

Maximal (I Max) 

Variable (I Var) 

procedural  rules  for  organisation  of 
calls and allocation of funds 

Distinct  calls  procedures  for  each 
sector  

Common calls procedures 

monitoring  instruments  and  rules  for 
the implementation of the "use or lose 
it"  principle,  including  competitive 
funding re-allocations 

sets 

Distinct 
of  monitoring 
instruments  and  "use  it  or  lose  it" 
rules for each sector 

Single  set  of  monitoring  instruments 
and "use it or lose it" rules  

(centralised)  management  structure 
(executive agency) 

Distinct  management 
structure 
(executive agency) for each sector 

Single 
(executive agency) 

management 

structure 

34 

Common  calls  and  procedures  where  possible  to 
encourage actions that make use of  
a  cross-sectoral  synergies  such  as  smart  grids 
(combining  energy  hardware  and  ICT  software), 
transport  &  ICT  services,  bundling  of  energy, 
transport and ICT infrastructure, 
…and  distinct  sectoral  calls  and  procedures  where 
necessary to meet sector specific needs  

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 

 
 
4.2.  Identification of policy options 

4.2.1. 

Identification of (theoretically) possible alternative policy options 

As  pointed  out  earlier,  the  ex-post  review  and  consultation  processes  made  apparent  that  a 
number  of  shortcomings  in  all  policy  areas,  both  with  regard  to  investment  leverage  and  to 
programme  implementation  would  need  to  be  addressed  for  the  new  TEN  infrastructure 
financing framework to be a success.  
In light of this, the interaction between each of the three scenarios envisaged for action at the 
level of investment leverage with each of the three scenarios envisaged for action at the level 
of programme implementation has been considered within alternative policy options. In total, 
nine possible alternative policy options, constituting potentially viable policy alternatives for 
achieving  the  objectives  identified  in  section  3  above,  were  thus  initially  generated.  These 
nine policy options are presented in table 5 below. 
The resulting policy options consist of combinations of various degrees of harmonisation of 
investment  leverage  and  of  programme  implementation,  respectively.  The  range  of  options 
can  be  situated  between  two  extremes:  at  the  one  extreme,  minimum  harmonisation  of 
investment  leverage  and  programme  implementation  and  at  the  other  extreme,  maximum 
investment  leverage  and  programme  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.  To  illustrate,  the  policy 
option  characterised  by  minimum  harmonisation  of  investment  leverage  and  programme 
implementation  refers  to  a  situation  where  sectors  would  have  specific  rules  and  set-ups 
within  the  CEF.  The  policy  option  characterised  by  maximum  investment  leverage  and 
programme implementation refers to a situation where sectors would have common rules and 
set-ups within the CEF. 
Intermediary policy options refer to a situation whereby sectors would share certain rules and 
set-ups whereas other would remain distinct to the sectors. These options represent the large 
majority  of  the  identified  policy  options.  Whereas  some  of  the  intermediary  policy  options 
may  be  less  efficient  and  effective  for  reasons  of  lack  of  coherence,  other  intermediary 
options  may  allow  preserving  sector  specificities  while  harmonising  all  other  aspects  where 
possible synergies would be present. 

35

 
L Max 

L Var 

Table 5: Identification of possible Policy Options 
Leverage 
Implementation
I Min 

L Min 

and 

criteria 

objectives 

L Min – I Min  (Baseline under CEF) 
Distinct 
for 
evaluation  of  proposals'  EU  added-value 
according to sectoral priorities 
Distinct  co-funding  rates  for  each  sector  
and type of action 
Distinct  mix  of  financial  instruments  for 
each sector 
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 Min  
Common  objectives  and  criteria 
for 
evaluation  of  proposals'  EU  added  value 
EU  added-value  based on overall  Europe 
2020  Strategy  and  Budget  for  Europe 
2020 priorities 
Common  co-funding  rates  for  all  sectors 
for each type of actions 
Common mix of innovative instruments 
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 

I Max 

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

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

36 

LVar – I Min  
Common  objectives  and  criteria  for  evaluation  of  proposals'  EU 
added  value  based  on  overall  Europe  2020  Strategy  &  Budget 
priorities  but  adapted  where  necessary  to  better  target  sectoral 
priorities within overall priorities 
Common  rates  for  certain  types  of  actions  (studies  for  instance),; 
specific  rates  for  certain  actions  depending  on  sectoral  policy 
priorities  
Distinct mix of financial instruments for each sector formed of: 
- a common set of equity and debt instruments; 
-different additional specific instruments 
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  objectives  and  criteria  for  evaluation  of  proposals'  EU 
added  value  based  on  overall  Europe  2020  Strategy  &  Budget 
priorities  but  adapted  where  necessary  to  better  target  sectoral 
priorities within overall priorities 
Common  rates  for  certain  types  of  actions  (studies  for  instance); 
specific  rates  for  certain  actions  depending  on  sectoral  policy 
priorities  
Distinct mix of financial instruments for each sector formed of: 
- a common set of equity and debt instruments; 
-different additional specific instruments 
Common calls and procedures 
Single set of monitoring instruments and "use it or lose it" rules 
Single management structure (executive agency) 

 
 
I Var 

L Min – I Var  
Distinct  criteria  for  identifying  EU  added-
value  of  poroposals  according  to  sectoral 
priorities 
Distinct  co-funding  rates  for  each  sector  
and type of actions 
Distinct  mix  of  financial  instruments  for 
each sector 
Common  calls  and  procedures  where 
possible  and  distinct  sectoral  calls  and 
procedures  where  necessary  to  meet  sector 
specific needs  
common/harmonised  
core 
A 
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 

L Max – I Var 
Common  objectives  and  criteria 
for 
evaluation  of  proposals'  EU  added-value 
based  on  overall  Europe  2020  Strategy 
and Budget for Europe 2020 priorities 
Common  co-funding  rates  for  all  sectors 
for each type of actions 
Common mix of innovative instruments 
Common  calls  and  procedures  where 
possible  and  distinct  sectoral  calls  and 
procedures  where  necessary 
to  meet 
sector specific needs  
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 

LVar – I Var  
Common  objectives  and  criteria  for  evaluation  of  proposals'  Eu 
added  value  based  on  overall  Europe  2020  Strategy  &  Budget 
priorities  but  adapted  where  necessary  to  better  target  sectoral 
priorities within overall priorities 
Common  rates  for  certain  types  of  actions  (studies  for  instance); 
specific  rates  for  certain  actions  depending  on  sectoral  policy 
priorities 
Distinct mix of financial instruments for each sector formed of: 
- a common set of equity and debt instruments; 
-different additional specific instruments 
Common  calls  and  procedures  where  possible  and  distinct  sectoral 
calls and procedures where necessary to meet sector specific needs  
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 

37

 
 
4.2.2.  Pre-screening of envisaged alternative policy options76  

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. The reasoning leading up to this 
conclusion is presented briefly below.  
Maximising harmonisation of CEF instruments aimed at leveraging the impact of EU funding 
across  the  three  sectors  (L  Max),  while  maintaining  distinct  implementation  instruments  at 
sectoral  level  (I  Min),  would  hardly  reflect  a  coherent  policy  approach  on  the  part  of  the 
Commission.  For  example,  having  a  distinct  set  of  monitoring  instruments  for  each  sector 
would not be justifiable/possible insofar as the co-funding rates set and the mix of financial 
instruments used are identical for all sectors. Similarly, organising distinct calls for proposals 
with distinct selection procedures, managed by separate executive agencies would contradict 
the  logic  of  simplification  of  the  policy  framework  applied  at  the  level  of  the  instruments 
concerning the leverage of funding.  
By  the  same  token,  maximising  harmonisation  across  sectors  in  terms  of  instruments  of 
implementation  (I  Max)  constitutes  an  effort  of  simplification  and  of  exploiting  potential 
synergies  that  would  be  offset  by  the  lack  of  efforts  in  the  same  direction  at  the  level  of 
funding  leverage  instruments  (L  Min).  Thus,  a  single  set  of  instruments  would  likely  prove 
inappropriate  for  monitoring  distinct  sets  of  financial  instruments  or  actions  with  likely 
importantly diverging co-funding rates. Similarly, applying the same set of rules enforcing the 
"use  it  or  lose  it"  principle  for  actions  benefitting  of  distinct  co-funding  rates  would  rather 
suggest  short-sightedness  or  inflexibility  on  the  part  of  the  Commission  than  capacity  to 
streamline the approach to providing EU support for TEN project development.  

Finally,  maintaining  a  minimal  level  of  harmonisation  of  instruments  aimed  at  both 
leveraging  the  impact  of  EU  funding  and  ensuring  an  efficient  implementation  (L  Min  –  I 
Min) would prove little effective in addressing the policy objectives set out. As pointed out 
earlier, the main difference between this option and the baseline scenario is that it will mainly 
contribute to streamlining EU infrastructure funding frameworks within sectors, but will fail 
to  address  the  overarching  objectives  of  simplification  across  sectors  and  exploitation  of 
synergies. For this reason, it can be considered as a proxy baseline scenario, and it has been 
retained  in  this  report  in  the  assessment  of  options'  impacts  that  follows  as  the  reference 
scenario. 

4.2.3.  Description of the policy options retained for in-depth assessment 

76 This section is completed by Annex 5. While this section aims at explaining the logical reasoning leading to 
the construction of policy options, Annex 5 aims at providing details on the implementation of these options. It 
therefore  gives  details  on  the  choice  of  the  multi-level  criteria,  co-funding  rates,  procedural  rules  for  the 
allocation of funds and for the management of the fund. Details on innovative financing instruments are given in 
Annex 4. 

38

 
                                                 
In light of the above pre-screening process, six scenario combinations have been retained for 
in-depth assessment of impacts, as potentially viable policy options. The detailed description 
of the option is presented in Table 6 below. 
The assessment of impacts in section 6 is made taking as reference the L Min – I Min option, 
or no harmonisation of rules, which consists in keeping distinctive elements for each sector 
under the umbrella of the CEF. Thus, with regard to the leverage aspect, in this option each 
sector retains specific co-funding rates, mix of financial instruments and distinct criteria for 
selecting  actions.  As  compared  to  the  business-as-usual  scenario,  the  difference  lies  in  the 
revision and simplification of instruments and rules within each sector in light of the findings 
and  recommendations  of  ex-post  and  stakeholder  consultations,  as  well  as  the  systematic 
introduction of financial instruments such as project bonds. 
With  regard  to  implementation  aspect,  each  sector  functions  along  specific  selection 
procedures, monitoring instruments and management structure. The main differences with the 
Business-as-usual  are  here  again  the  revision  and  simplification  of  rules  within  sectors,  as 
well  as  the  application  of  the  "use  it  or  loose  it"  principle  and  the  use  of  a  centralised 
management structure. 

39

 
 
 
Table 6: Presentation of retained policy options77 

Option LVar – I Min 

Option L Max – I Max 

Investment Leverage 

Investment Leverage 

(1)  Common  objectives  and 
criteria  for  proposal  selection 
based  on  overall  Europe  2020 
Strategy & Budget priorities…  

-contribute to smart, sustainable and inclusive 
growth,  
-  create  an  environment  more  conducive  to 
private and public investment,  

better 

...  but  adapted  where  necessary 
sectoral 
to 
priorities 
overall 
priorities 

target 
within 

for 
Common  award  criteria 
proposal  selection  based  on 
common objectives… 

… and adapted where necessary 
to 
sectoral 
priorities 

target 

better 

-  provide  support  for  the  achievement  of 
specific 
as 
established  in  the  respective  sectoral  TEN 
Guidelines 

objectives 

priorities 

and 

of 

impacts 

assessment 

cost-benefit 

- 
(economic, social, environmental) 
-  maturity, 
of 
soundness 
and 
implementation, of the action proposed 
-nature  or  urgency  of  the  project  based  on 
needs to overcome specific financial obstacles 
and lack of market-finance 
-  stimulating  effect  on  public  and  private 
funding of the Union financial support 

the 

-  for  e.g.  transport,  addressing  cross-border 
sections and removal of bottlenecks  
-  other  specific  criteria  in  the  context  of 
annual  calls  depending  on  specific  sectoral 
priorities at a certain moment in time  

(2)  Common  grant  co-funding 
types  of 
rates 

for  certain 

- studies: up to 50% of eligible costs 

(1)  Common  objectives  and 
criteria  for  proposal  selection 
based  on  overall  Europe  2020 
Strategy & Budget priorities…  

-contribute to smart, sustainable and inclusive growth,  
-  create  an  environment  more  conducive  to  private  and 
public investment 
- common  set of priorities for proposal selection 

(2)  Common  grant  co-funding 
rates for all  types of actions..  

- studies: up to 50% of eligible costs 
-  works:  a  general  rate  of  up  to  50%;  increased  to  max 
80%  for  actions  implementing  established  (common) 
priorities  

(3)  Common  mix  of  financial 
instruments 

- investment funds with a focus on providing risk capital 
for  project  of  common 
interest  with  EU  capital 
participation; 
- loans or other risk-sharing based instruments, including 
project bonds, issued by a financial institution on its own 
resources with an EU contribution to the provisioning and 
capital allocation. 
-  no  sector-specific  specialised  financial  instruments 
envisaged 

77 The justification for the policy measures proposed in this table is provided in Annex 5. 
78  For  all  options  envisaged,  financial  instruments  are  demand  driven  and  market  based  schemes  which  will  be  implemented  by  the  EIB  and  the  International  Financial 
Institutions (IFIs) or national institutions. Therefore, they will be used to address specific market needs in a cost effective way, in line with the objectives of the programmes, 
and will not crowd out private financing as explained in Annex 4. They will be targeted on projects that can benefit from an identifiable revenue stream. Grants will aim at 
supporting projects and actions that cannot benefit from such revenue stream due to their nature. Grants and innovative financing instruments can be combined on a same 
project.  

40 

 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
actions..  

Mix 

financial 
(3) 
of 
instruments78  for  each  sector 
consisting of 
-  a  common  set  of  equity  and 
debt instruments: 

-different  additional 
instruments: 

specific 

Programme implementation 

(4)  Distinct  calls  and  selection 
procedures for each sector  

importance  for 

for  certain  actions 

…but  specific  rates 
depending on sectoral policy priorities 
-energy:  a  general  rate  of  up  to  50%  of 
eligible  costs;  increased  to  max  80%  for 
actions  of  particular 
the 
regional or EU-wide security of supply 
-  transport:  a  general  rate  of  up  to  20%  of 
eligible  costs;  increased  to  max  30%    for 
actions  addressing  bottlenecks,  to  max  40% 
for  actions  concerning  cross-border  sections 
and  to  max  50%  for  actions  concerning  the 
European  Rail  Traffic  Management  System 
(ERTMS);  for  actions  eligible  for  funds 
allocated from the Cohesion Fund, rates of can 
be increased to max 75%. 
-ICT:  for  broadband  networks  actions,  a  rate 
of  20%  of  eligible  costs;  for  generic  services 
actions,  a  75%  rate  of  eligible  costs;  for 
actions in the field of applications, 50% of the 
eligible costs. 

loans 

-  investment  funds  with  a  focus  on  providing 
risk  capital  for  project  of  common  interest 
with EU capital participation; 
- 
based 
instruments,  including  project  bonds,  issued 
by a financial institution on its own resources 
with  an  EU  contribution  to  the  provisioning 
and capital allocation. 

risk-sharing 

other 

or 

-  specialised  financial  instruments  developed 
according  to  sector  and/or  project    specific 
needs 

-  energy:  specific  calls  for  annual  work 
programmes, established according to sectoral 
priorities;  continuation  of  current  selection 
procedures,  improved  according  to  results  of  

Programme implementation 

Common 

(4) 
procedures 

calls 

and 

(5)  Single  set  of  monitoring 
instruments  and  "use  it  or  lose 
it" rules 

Single 

(6) 
structure  

management 

-  common  calls  for  both  multi-annual  and  annual 
programmes  with  common  application  and  selection 
procedures  
-  developed  by  the  Commission  with  the  support  of  the 
TEN Executive Agency (EA) drawing on the experience 
and  lessons  learned    of  the  TEN-T  EA  and  relevant 
sectoral  experience,  including  results  of  ex-post  and 
stakeholder consultations.  

-  developed  by  the  Commission  with  the  support  of  the 
TEN  EA  on  the  basis  of  accumulated  experience  of  the 
TEN-T  EA  and  relevant  sectoral  experience,  including 
results of ex-post and stakeholder consultations. 

- common "use it or lose it" rules will apply 

-  single  TEN  Executive  Agency  managing  the  entire 
programme  implementation  cycle  on  behalf  of  the 
Commission in all three sectors concerned, on the model 
of the current TEN-T EA 

- European Coordinators for complex projects  

- TENtec database extended to hold information relevant 
for all TEN infrastructures 

41 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
, 

and 

evaluations 

stakeholder 

ex-post 
consultations 
-  transport:  specific  calls  for  multi-annual 
and annual work programmes; continuation of 
current  selection  procedures, 
improved 
according  to  results  of    ex-post  evaluations 
and stakeholder consultations 
-  ICT:  specific  calls 
for  annual  work 
programmes, established according to sectoral 
priorities;  selection  procedures  developed 
according  to  experience  acquired  with  other 
financial programmes in the field, and adapted 
to e-TEN requirements 

and 

evaluations 

-energy:  continuation  of  current  monitoring 
procedures,  improved  according  to  results  of  
ex-post 
stakeholder 
consultations 
current 
continuation 
-transport: 
monitoring procedures, improved according to 
results of  ex-post evaluations and stakeholder 
consultations 
-ICT:  continuation  of  current  monitoring 
procedures,  improved  according  to  results  of  
ex-post 
stakeholder 
consultations 

evaluations 

and 

of 

(5)  Distinct  sets  of  monitoring 
instruments  and  "use  it  or  lose 
it" rules for each sector 

Distinct 

management 
(6) 
structure/executive  agency  for 
each sector 

-energy: TEN-E Executive Agency 
-transport: TEN-T Executive Agency 
-ICT: e-TEN Executive Agency 

42 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Option LVar – I Max 

Option L Var – I Var 

Investment Leverage 

Investment Leverage 

objectives 

(1)  Common 
and 
criteria  for  proposal  evaluation 
based  on  overall  Europe  2020 
Strategy & Budget priorities…  

-contribute  to  smart,  sustainable  and  inclusive 
growth,  
-  create  an  environment  more  conducive  to 
private and public investment,  

objectives 

(1)  Common 
and 
criteria  for  proposal  evaluation 
based  on  overall  Europe  2020 
Strategy & Budget priorities…  

...  but  adapted  where  necessary  to 
target  sectoral  priorities 
better 
within overall priorities 

award 

for 
Common 
proposal  evaluation  based  on 
common objectives… 

criteria 

… and adapted where necessary to 
better target sectoral priorities 

(2)  Common  grant  co-funding 
rates for certain types of actions.  
…but  specific  rates  for  certain 
actions  depending  on  sectoral 
policy priorities 

- provide support for the achievement of specific 
objectives  and  priorities  as  established  in  the 
respective sectoral TEN Guidelines 

- cost-benefit assessment of impacts (economic, 
social, environmental) 
- maturity, and soundness of the implementation, 
of the action proposed 
-nature or urgency of the project based on needs 
to overcome specific financial obstacles and lack 
of market-finance 
-  stimulating  effect  on  public  and  private 
funding of the Union financial support 

-  for  e.g.  transport,  addressing  cross-border 
sections and removal of bottlenecks  
-  other  specific  criteria  in  the  context  of  annual 
calls depending on specific sectoral priorities at 
a certain moment in time  

- studies: up to 50% of eligible costs 

-energy: a general rate of up to 50% of eligible 
costs;  increased  to  max  80%  for  actions  of 
particular  importance  for  the  regional  or  EU-
wide security of supply 
-  transport:  a  general  rate  of  up  to  20%  of 
eligible costs; increased to max 30%  for actions 
addressing  bottlenecks,  to  max  40%  for  actions 
concerning  cross-border  sections  and  to  max 

...  but  adapted  where  necessary  to 
target  sectoral  priorities 
better 
within overall priorities 

award 

Common 
for 
proposal  evaluation  based  on 
common objectives… 

criteria 

… and adapted where necessary to 
better target sectoral priorities 

(2)  Common  grant  co-funding 
rates for certain types of actions..  

…but  specific  rates  for  certain 
actions  depending  on  sectoral 
policy priorities 

-  contribute  to  smart,  sustainable  and  inclusive 
growth,  
-  create  an  environment  more  conducive  to  private 
and public investment,  

-  provide  support  for  the  achievement  of  specific 
objectives  and  priorities  as  established 
the 
respective sectoral TEN Guidelines 

in 

-  cost-benefit  assessment  of  impacts  (economic, 
social, environmental) 
-  maturity,  and  soundness  of the  implementation, of 
the action proposed 
-nature  or  urgency  of  the  project  based  on  needs  to 
overcome  specific  financial  obstacles  and  lack  of 
market-finance 
- stimulating effect on public and private funding of 
the Union financial support 

-  for  e.g.  transport,  addressing  cross-border  sections 
and removal of bottlenecks  
- other specific criteria in the context of annual calls 
depending  on  specific  sectoral  priorities  at  a  certain 
moment in time  

- studies: up to 50% of eligible costs 

-energy: a general rate of up to 50% of eligible costs; 
increased  to  max  80%  for  actions  of  particular 
importance  for  the  regional  or  EU-wide  security  of 
supply 
-  transport:  a  general  rate  of  up  to  20%  of  eligible 
costs; increased to max 30%  for actions addressing 
bottlenecks,  to  max  40%  for  actions  concerning 

43 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
50%  for  actions  concerning  the  European  Rail 
Traffic  Management  System  (ERTMS);  for 
actions  eligible  for  funds  allocated  from  the 
Cohesion Fund, rates of can be increased to max 
75%. 
-ICT:  for  broadband  networks  actions,  a  rate  of 
20%  of  eligible  costs;  for  generic  services 
actions, a 75% rate of eligible costs; for actions 
in  the  field  of  applications,  50%  of  the  eligible 
costs. 

-  investment  funds  with  a  focus  on  providing 
risk  capital  for  project of  common  interest  with 
EU capital participation; 
-  loans  or  other  risk-sharing  based  instruments, 
including  project  bonds,  issued  by  a  financial 
institution  on  its  own  resources  with  an  EU 
contribution  to  the  provisioning  and  capital 
allocation. 

-  specialised  financial  instruments  developed 
according to sector and/or project  specific needs 

- common calls for both multi-annual and annual 
programmes  with  common  application  and 
selection procedures  
- developed by the Commission with the support 
of the TEN Executive Agency (EA) drawing on 
the experience and lessons learned  of the TEN-
T EA and relevant sectoral experience, including 
results of ex-post and stakeholder consultations.  

- developed by the Commission with the support 
of  the  TEN  EA  on  the  basis  of  accumulated 
experience  of  the  TEN-T  EA  and  relevant 
sectoral  experience,  including  results of  ex-post 
and stakeholder consultations. 

(3)  Mix  of  financial  instruments 
for each sector consisting of 
- a common set of equity and debt 
instruments: 

-different 
instruments: 

additional 

specific 

Programme implementation 

(4) Common calls and procedures 

(5)  Single  set  of  monitoring 
instruments and "use it or lose it" 
rules 

(3)  Mix  of  financial  instruments 
for each sector consisting of 
- a common set of equity and debt 
instruments: 

-different 
instruments 

additional 

specific 

Programme implementation 
(4)  Common  calls  and  procedures 
where possible…  

…and  distinct  sectoral  calls  and 
procedures  where  necessary 
to 
meet sector specific needs  

A 

(5) 
of 
core 
common/harmonised    monitoring 

set 

cross-border  sections  and  to  max  50%  for  actions 
concerning  the  European  Rail  Traffic  Management 
System  (ERTMS);  for  actions  eligible  for  funds 
allocated  from  the  Cohesion  Fund,  rates  of  can  be 
increased to max 75%. 
-ICT: for broadband networks actions, a rate of 20% 
of eligible costs; for generic services actions, a 75% 
rate  of  eligible  costs;  for  actions  in  the  field  of 
applications, 50% of the eligible costs. 

-  investment  funds  with  a  focus  on  providing  risk 
capital  for  project  of  common  interest  with  EU 
capital participation; 
-  loans  or  other  risk-sharing  based  instruments, 
including  project  bonds,  issued  by  a  financial 
its  own  resources  with  an  EU 
institution  on 
the  provisioning  and  capital 
contribution 
allocation. 

to 

specialised 

- 
according to sector and/or project  specific needs 

instruments  developed 

financial 

-  common  calls  for  both  annual  programmes  with 
common application and selection procedures 

 - developed by the Commission with the support of 
the  TEN  Executive  Agency  (EA)  drawing  on  the 
experience  and  lessons  learned    of  the  TEN-T  EA 
and relevant sectoral experience, including results of 
ex-post and stakeholder consultations.  

- distinct calls for multiannual programmes, targeting 
overall sectoral priorities 

-  developed  by  the  Commission  with  the  support  of 
the TEN EA on the basis of accumulated experience 

44 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(6) Single management structure  

- common "use it or lose it" rules will apply 

instruments and "use it or lose it" 
rules with specific instruments…  

of  the  TEN-T  EA  and  relevant  sectoral  experience, 
stakeholder 
results  of  ex-post  and 
including 
consultations. 

-  single  TEN  Executive  Agency  managing  the 
implementation  cycle  on 
entire  programme 
behalf  of  the  Commission  in  all  three  sectors 
concerned  

…and  adapted/target  rules  to  take 
sectoral 
into 
characteristics 

account 

- common "use it or lose it" rules will apply 

- additional monitoring instruments can be developed 
in  the  context  of  the  calls  (both  for  the  annual  and 
multiannual work programmes) 

(6)  Single  executive  agency  as 
common  management  structure 
but  with  various  degrees  of 
by 
delegation 
the 
Commission 
in  each 
sector 

tasks 
services 

of 

the 

-  single  TEN  Executive  Agency  assisting 
Commission 
- the extent to which the programme implementation 
cycle  is  managed  by  the  EA  on  behalf  of  the 
Commission 
three  sectors 
concerned  (for e.g. in transport fully; in energy and 
ICT  it  will  be  decided  following  on  further  cost-
benefit  analysis  on  how  this  management  formula 
could serve sectoral specificities) 

is  different 

in  all 

Option LMin – I Var 

Option L Max – I Var 

- European Coordinators will continue to be used in 
transport and energy 
-  TENtec  database  currently  developed  for  TEN-T 
could be extended to all sectors  

Investment Leverage 
 (1) Distinct objectives and criteria 
for  identifying  EU  added-value  of 
proposals  according  to  sectoral 
priorities 

(2) Distinct grant co-funding rates 
for each sector and type of actions 

- provide support for the achievement of specific 
objectives  and  priorities  as  established  in  the 
respective sectoral TEN Guidelines 

-energy: a general rate of up to 50% of eligible 
costs  for  both  works  and  studies;  increased  to 
max  80%  for  actions  of  particular  importance 
for the regional or EU-wide security of supply 
-  transport:  a  general  rate  of  up  to  50%  for 
studies  and  20%  of  eligible  costs;  increased  to 
max  30%  for  actions  addressing  bottlenecks,  to 

Investment Leverage 

objectives 

(1)  Common 
and 
criteria  for  proposal  evaluation 
based  on  overall  Europe  2020 
Strategy & Budget priorities…  

to  smart,  sustainable  and 

-contribute 
growth,  
-  create  an  environment  more  conducive  to  private 
and public investment 
- common  set of priorities for proposal selection 

inclusive 

(2)  Common  grant  co-funding 
rates for all  types of actions  

- studies: up to 50% of eligible costs 
-  works:  a  general  rate  of  up  to  50%;  increased  to 
max  80%  for  actions  implementing  established 
(common) priorities  

45 

 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
  
 
 
 
max  40%  for  actions  concerning  cross-border 
sections and to max 50% for actions concerning 
the  European  Rail  Traffic  Management  System 
(ERTMS); 
funds 
for  actions  eligible 
allocated  from  the  Cohesion  Fund,  rates  of  can 
be increased to max 75%. 
-ICT: up to 75% for support actions and studies; 
for broadband networks actions, a rate of 20% of 
eligible  costs;  for  generic  services  actions,  a 
75% rate of eligible costs; for actions in the field 
of applications, 50% of the eligible costs. 

for 

(3)  Common  mix  of  financial 
instruments 

-  specialised  financial  instruments  developed 
according  to  sector  and/or  project    specific 
needs. 

Programme implementation 
(4)  Common  calls  and  procedures 
where possible…  

-  common  calls  for  both  annual  programmes 
with 
selection 
application 
procedures 

common 

and 

 -  developed  by  the  Commission  with  the 
support  of  the  TEN  Executive  Agency  (EA) 
drawing  on  the  experience  and  lessons  learned  
relevant  sectoral 
of 
experience,  including  results  of  ex-post  and 
stakeholder consultations.  

the  TEN-T  EA  and 

-  distinct  calls  for  multiannual  programmes, 
targeting overall sectoral priorities 

- developed by the Commission with the support 
of  the  TEN  EA  on  the  basis  of  accumulated 
experience  of  the  TEN-T  EA  and  relevant 
sectoral  experience,  including  results of  ex-post 
and stakeholder consultations. 

- common "use it or lose it" rules will apply 

…and  distinct  sectoral  calls  and 
procedures  where  necessary 
to 
meet sector specific needs  

A 

set 

(5) 
of 
core 
common/harmonised    monitoring 
instruments and "use it or lose it" 
rules with specific instruments…  

…and  adapted/target  rules  to  take 
sectoral 
into 
characteristics 

account 

-  investment  funds  with  a  focus  on  providing  risk 
capital  for  project  of  common  interest  with  EU 
capital participation; 
-  loans  or  other  risk-sharing  based  instruments, 
including  project  bonds,  issued  by  a  financial 
its  own  resources  with  an  EU 
institution  on 
contribution 
the  provisioning  and  capital 
allocation. 
- no sector-specific specialised financial instruments 
envisaged 

to 

 -  common  calls  for  both  annual  programmes  with 
common application and selection procedures 

 - developed by the Commission with the support of 
the  TEN  Executive  Agency  (EA)  drawing  on  the 
experience  and  lessons  learned    of  the  TEN-T  EA 
and relevant sectoral experience, including results of 
ex-post and stakeholder consultations.  

- distinct calls for multiannual programmes, targeting 
overall sectoral priorities 

-  developed  by  the  Commission  with  the  support  of 
the TEN EA on the basis of accumulated experience 
of  the  TEN-T  EA  and  relevant  sectoral  experience, 
stakeholder 
results  of  ex-post  and 
including 
consultations.  

- common "use it or lose it" rules will apply 

- additional monitoring instruments can be developed 
in  the  context  of  the  calls  (both  for  the  annual  and 
multiannual work programmes) 

(6)  Single  executive  agency  as 
common  management  structure 
but  with  various  degrees  of 

-  single  TEN  Executive  Agency  assisting 
Commission but  

the 

46 

(3)  Distinct  mix  of 
instruments for each sector 

financial 

Programme implementation 
(4)  Common  calls  and  procedures 
where possible…  

…and  distinct  sectoral  calls  and 
to 
procedures  where  necessary 
meet sector specific needs  

A 

set 

of 
core 
(5) 
common/harmonised    monitoring 
instruments and "use it or lose it" 
rules with specific instruments…  

…and  adapted/target  rules  to  take 

-  additional  monitoring  instruments  can  be 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
into 
characteristics 

account 

sectoral 

developed  in  the  context  of  the  calls  (both  for 
the annual and multiannual work programmes) 

delegation 
Commission 
sector 

of 

tasks 
services 

by 
the 
in  each 

(6)  Single  executive  agency  as 
common  management  structure 
but  with  various  degrees  of 
by 
delegation 
the 
Commission 
in  each 
sector 

tasks 
services 

of 

-  single  TEN  Executive  Agency  assisting  the 
Commission but  

the  extent 

- 
the  programme 
to  which 
implementation cycle is managed by the EA on 
behalf of the Commission is different in all three 
sectors concerned  (for e.g. in transport fully; in 
energy and ICT it will be decided following on 
further  cost-benefit  analysis  on  how 
this 
management 
formula  could  serve  sectoral 
specificities) 

-  European  Coordinators  will  continue  to  be 
used in transport and energy 
- TENtec database currently developed for TEN-
T could be extended to all sectors 

is  different 

- the extent to which the programme implementation 
cycle  is  managed  by  the  EA  on  behalf  of  the 
Commission 
three  sectors 
concerned  (for e.g. in transport fully; in energy and 
ICT  it  will  be  decided  following  on  further  cost-
benefit  analysis  on  how  this  management  formula 
could serve sectoral specificities) 

in  all 

- European Coordinators will continue to be used in 
transport and energy 
-  TENtec  database  currently  developed  for  TEN-T 
could be extended to all sectors 

47 

 
 
 
 
ANALYSIS OF IMPACTS  

This  section  provides  an  assessment  of  impacts  that  is  proportionate  to  the  nature  of  the 
document proposed. The assessment of those impacts is mainly qualitative.  

The analysis of impacts presented below is surrounded by a significant degree of uncertainty 
stemming from the fact that the EU action in the field of infrastructure financing is triggered 
mainly by the  Member States.  Whereas some  parameters such  as  the  projects considered as 
being candidates for EU funding and appended to the MFF Communication can be foreseen 
with a reasonable degree of confidence, the evolution of other key factors like the capacity of 
Member States to continue investing in infrastructures in times of severe budget constraints or 
the appetite of private sector over the concerned period of time incorporates a higher amount 
of  uncertainty.  This  needs  to  be  taken  into  account  for  the  assessment  of  impacts  presented 
below. 

This being said, the Commission has used a two-step approach for analysing the impacts of 
the envisaged policy options linked to the proposed initiative. First, it has assessed the socio-
economic  and  environmental  impacts  of  the  creation  of  the  CEF  in  comparison  with  the 
baseline presented in section 2 above. This assessment is available in Annex 1. In a second 
stage, it has analysed the impacts of the six proposed policy options within the framework set 
out by the CEF. The retained policy options of the CEF will be assessed on their own merits. 
This two-step approach is justified by the fact that, at the time this IA report is prepared, the 
Commission has already taken the decision to create the CEF with a budget of € 50 billion. In 
this context, as explained in section 4, the six policy options assessed in this IA report have 
been set up under this framework. Therefore, the baseline scenario presented in section 2 of 
this  IA,  which  corresponds  to  the  existing  funding  framework,  cannot  be  used  as  the 
benchmark against which the six policy options will be assessed. 

4.3.  Analysis of the impacts of the creation of the CEF 

As  detailed,  in  Annex  3  of  this  IA,  comparing  the  impacts  of  creating  the  CEF  with  the 
baseline  scenario  presented  in  section  2  above,  taking  into  consideration  the  pre-conditions 
(budget,  central  management79,  the  alignment  of  EU  funding  instruments  within  sectors 
including  also  market  based  instruments)  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. 

The  investments  in  the  three  sectors  under  the  CEF  have  to  be  taken  into  account  in  the 
framework of the policies detailed in the sector specific Guidelines. The Impact Assessments 
accompanying  those  Guidelines  provides  details  on  sector  specific  impacts  of  each  policies 

79 In transport for instance, centralised management will better promote and ensure coherent implementation of 
(common)  transport  policy  measures  across  Europe  (e.g.  with  regards  to  charging,  security,  safety  in  tunnels, 
interoperability,  etc.).  It  will  also  allow  for  almost  'real  time'  monitoring  of  projects/programme  performance 
(beyond information on 'earmarked funds)'; this is important in assessing evolving priorities (e.g. in the case of 
the European Economic Recovery Plan). 

48

 
 
                                                 
and  their  required  investments,  while  this  impact  assessment  focuses  more  on  common 
features of a major increase in infrastructure investments. 

Economic impacts 

The development of the infrastructure of high European added-value due to the investments 
co-financed by the CEF will contribute to strengthening the Single Market.  The main positive 
effects will be on the free movement of goods and services, overcoming market segmentation, 
foster accessibility and territorial cohesion. 
As  explained  in  the  annex,  development  of  high  performing  infrastructure  can  be  act  as  a 
growth enabler for the whole European economy, beyond the sectors covered by the CEF. For 
instance,  since  broadband  networks  serve  as  a  General  Purpose  Technology  enabler, 
infrastructure diffusion positively affects Total Factor Productivity, capital accumulation, and 
ultimately, GDP growth.80 . 
 In  addition,  the  promotion  of  intelligent  transport  systems  or  smart  grids  should  foster 
research and innovation for new technologies and create new business cases. Building  new 
transport,  energy  or  broadband  infrastructure  would  have  an  important  impact  on  the 
construction sector. Some infrastructure projects like high-speed rail provide several years of 
works  for  construction  companies  and  related  businesses.  Finally,  the  improvement  of  the 
efficiency of the transport and energy systems and the reduction of prices and uncertainties in 
the  delivery  would  improve  the  economic  conditions  for  both  transport  businesses  and 
enterprises heavily depending on transport for their activity. 
Consumers will be major beneficiaries of these investments in several ways, with an increase 
choice: in the energy and transport sectors, investments will improve market integration and 
competition,  leading  to  greater  choice  to  consumers;  with  new  broadband  networks,  more 
consumers will be able to purchase on-line, having the possibility to choose cheaper products. 
Finally,  as  indicated  above,  current  funding  rules  have  evolved  not  only  in  response  to  the 
need  for  accountability  on  how  public  money  is  spent  but  also  to  take  account  of  previous 
problems. The result is a diversity and complexity that is difficult to implement and control. 
This  complexity  imposes  a  heavy  administrative  burden  on  beneficiaries  as  well  as  on  the 
Commission  and  Member  States,  which  can  have  the  unintended  effect  of  discouraging 
participation and delaying implementation. The creation of the CEF will contribute to simpler 
processes  and  alleviate  administrative  costs  by  bringing  the  governance  of  various 
programmes in different policy fields under a common framework.  

Social impacts 

As  shown  in  the  annex,  the  acceleration  of  the  development  of  infrastructure  of  high  EU 
added value will have major short and medium term impacts on job creation. Job creation is 
primarily related to the construction works to implement this increase level of infrastructure, 
but not only. Long-term induced job creation is difficult to calculate, but cases studies have 
shown the positive results of infrastructure development on long-term job creation. 
According to the economic literature, infrastructure investments help boost economic growth, 
enhance trade and mobility of people and constitute a highly effective engine of job creation. 

80As an example, a 10% increase in broadband household penetration delivers a boost to a country’s GDP that 
ranges from 0.1 percent to 1.4 percent (Mobile Broadband for the Masses, McKinsey & Company, 2009). As a 
spillover, broadband-enabled smart grid services and devices could result in over €850 billion in gross energy 
savings. This approach is expected to reduce end-use energy consumption in the USA in 2020 by roughly 23 per 
cent of projected demand (Davidson, Santorelli and Kamber, 2009). 

49

 
                                                 
One  recent  study  in  the  US  showed  that  infrastructure  investment  spending  creates  about 
18,000 total  jobs  for  every $1 billion in  new investment  spending, including direct, indirect 
and  induced  jobs81.  Job  creation  is  mainly  related  to  infrastructure  works,  but  it  is  also 
induced by the indirect economic effect of the use of the new infrastructure82.  
The development of the three infrastructures networks will have also an important impact in 
term  of  accessibility  and  territorial  cohesion.  As  explained  in  the  Fifth  Cohesion  Report, 
"regional  competitiveness  and  development  prospects  are  also  affected  by  infrastructure 
endowment, such as transport or telecommunication networks". 
The increase development of  these networks will  also  have  sector  specific types  of  aspects; 
broadband infrastructure is for instance favouring quality of life thanks to the development of 
eServices and eHealth, better transport infrastructure is favouring transport safety, and more 
developed energy infrastructure favouring the security of supply and better access to energy 
for European households and enterprises. 

Environmental impacts 

As  shown  in  the  annex,  the  impacts  of  the  increase  development  of  infrastructure  on  the 
environment have two main aspects. On the one side, this development may negatively affect 
land-use, the flora and the fauna where new surrounding the new infrastructure. However, the 
compliance with existing EU legislation (of which SEA directive83, EIA directive84 Habitats 
directive85  and  Water  framework  directive86)  will  be  of  primary  importance  to  limit  these 
adverse impacts. 
On  the  other,  the  development  and  design  of  new  infrastructures  is  essential  for  the 
implementation  of  less  polluting  life-style.  For  instance,  the  development  of  smart  energy 
grids will be crucial for the integration of renewables in the energy market; for transport, the 
development of electrified railways, inland waterways or electricity refuelling power stations 
along the roads will allow for the development of cleaner solutions for transport. Therefore, 
investing  in  new  transport  infrastructure  in  the  framework  of  the  revised  Guidelines  would 
contribute  to  further  reduction  in  emissions  thanks  to  their  positive  impact  on  congestion 
reduction, and as a result of induced modal shift. However, new transport infrastructure would 
facilitate larger volumes of transport traffic flows, leading to an increase of energy and fuel 
consumption,  the  so-called  rebound  effect87.  Hence,  whether  on  balance  the  overall  impact 
will be positive or negative will depend on the extent to which cleaner vehicle technology is 
introduced.  The  reinforced  coordination  approach  to  implementation  foreseen  in  the  revised 
TEN-T  Guidelines  would  further  contribute  to  the  reduction  of  vehicles  emissions,  as  it 
enables  better  promotion  of  greener  transport  solutions,  for  example  by  fostering  the 
replacement  of  diesel  locomotives  by  electric  ones  and  promoting  cleaner  road  transport 
through technological innovation for both vehicles and the infrastructure. 

81How Infrastructure Investments Support the U.S. Economy: Employment, Productivity and Growth, Political 
Economy Research Institute, January 2009. 
82 More details on the temporary and long-term employment effects of infrastructure investments can be found in 
the  TEN-T  Guidelines  impacts  and  in  the  OECD  2002  report  on  the  Impact  of  Transport  Infrastructure 
Investment on Regional Development. 
83 Directive 2001/42/EC on the assessment of the effects of certain plans and programmes on the environment 
84  Directive  85/337/EEC  on  the  assessment  of  the  effects  of  certain  public  and  private  projects  on  the 
environment 
85 Directive 92/43/EEC on the conservation of natural habitats and of wild fauna and flora 
86 Directive 2000/60/EC establishing a framework for the Community action in the field of water policy 
87 Rebound effects are indirect, second order effects of policy instruments, which are often unintended and 
have the potential to undermine the ultimate objective of the primary policy instrument 

50

 
 
                                                 
As a general note for the three sectors, in these environmental issues, EU funding under the 
CEF cannot act in isolation, but it can condition EU funding (in the general CEF framework 
as  well  as  in  the  sector  specific  Guidelines)  to  the  respect  of  environmental  standards.  The 
contribution  of  the  development  of  infrastructure  to  the  ‘20-20-20’  objectives  will  therefore 
be really important. 

Conclusions 

The Annex 3 and the Impact Assessments accompanying the three sector specific Guidelines 
show  the  major  positive  environmental,  social  and  economic  impacts  of  an  accelerated 
development  of  energy,  transport  and  broadband  infrastructures  on  the  basis  of  the  revised 
policies defined in the Guidelines.  
These positive impacts of the accelerated development of infrastructure through the creation 
of  the  CEF  will  be  visible  for  all  the  policy  options  assessed  in  the  below.  Their  order  of 
magnitude  will  depend  to  a  certain  but  limited  extent  on  the  effectiveness  of  the  policy 
options  to  address  the  problem  identified  in  part  2  of  this  document,  the  optimal  operating 
rules  of  the  CEF.  However,  it  has  to  be  borne  in  mind  that  the  effects  of  defining  the 
operational rules of the CEF are marginal when compared with the effects of investing € 50 
billion  in  energy,  transport  or  digital  infrastructure.  While  investing  €  50billion  in  energy, 
transport and broadband infrastructures will lead to an important accelerated development of 
infrastructure of high EU added value, with the positive impacts described above and in the 
Annex  3,  the  impacts  of  the  options  described  below  will  mainly  focus  on  reduction  of 
administrative costs and on variations for the leverage effects of EU funds.  

4.4.  Analysis of the impacts of the six retained policy options 

The following subsection will focus on the impacts of the retained Policy options selected in 
section 4 of the IA report on their capacity to enable the CEF to accelerate the development of 
infrastructures  of  EU  interest.  As  explained  in  subsection  3.2  above,  the  optimal  use  of  EU 
funds  by  the  CEF,  leading  to  an  accelerated  development  of  infrastructures  of  common 
interest, is achieved by solving the trade-off between the search for synergies between sectors 
and sector specific objectives. Therefore, the impacts of the policy options  on those  aspects 
will be assessed also. Finally, the impact of the various options on administrative burden will 
be analysed. 

4.4.1.  Option L Var – I Min  

For the leverage components, this options aims at adapting as closely as possible to the needs 
of  each  sector,  while  looking  for  synergies  where  possible.  As  for  implementation,  rules, 
procedures and management structures are distinct for each sector. 
By  having  co-funding  rates  and  innovative  instruments  specific  to  the  needs  of  each  sector 
while also proposing common rates (for studies) and common set of innovative instruments, 
the leverage of this option will be high, favouring the development of infrastructure with high 
EU added-value in each of the three sectors. Sector specific stakeholders in each sector will 
deal  with  simplified  but  adapted  rules,  while  Member  States  and  Institutional  investors  will 
deal with common criteria and general funding rules. It will attract private investors and allow 
Member States to adapt their funding to clearer EU priorities. The adapted co-funding rates 
will also allow take into account the eligibility of Member States to the Cohesion Fund. 
On the implementation side, sector specific stakeholders will benefit from the clarity of sector 
specific  calls,  selection  procedures,  monitoring  instruments  and  management  structure. 

51

 
 
Therefore,  the  policy  targets  of  each  sector  (in  line  with  the  Europe  2020  Strategy)  will  be 
well taken into account. However, this structure will not allow using the potential synergies 
between  sectors,  therefore  downgrading  the  added  value  of  the  creation  of  the  CEF. 
Moreover,  the  distinct  management  structure  for  each  sector,  as  well  as  the  distinct  set  of 
procedures and monitoring instruments will prevent from benefiting from economies of scale 
at the level of administrative costs. With three separate management structures and the level 
of funding proposed by the Commission in the MFF Communication, the administrative costs 
are likely to increase dramatically. 

4.4.2.  Option L Max – I Max  

This  option  goes  for  the  maximal  harmonisation  between  the  three  sectors,  maximising  the 
synergies  under  the  CEF.  Private  investors  will  be  interested  in  the  simplified  mix  of 
innovative instruments. The single set of calls, procedures, monitoring instruments and rules 
as  well  as  the  single  management  structure  will  lead  to  reduction  in  administrative  costs, 
better visibility of the EU objectives for infrastructure investments and reduced administrative 
burdens for private investors as well as for public funding authorities. 
However, the common co-funding rates for the 3 sectors will lead to a suboptimal use of EU 
funds.  With  the  different  configuration  of  the  sectors,  the  differences  in  the  sector  specific 
objectives, different co-funding rates are needed to finance projects in the most effective way. 
For  instance,  as  demonstrated  by  the  EEPR  experience,  for  projects  aiming  at  increasing 
security  of  supply,  a  co-financing  rate  of  50%  or  more  can  be  necessary  to  unblock  the 
project.  In  the  field  of  transport,  as  demonstrated  by  the  TEN-T  Programme,  cross-border 
projects  do  not  require  more  than  30  to  40%  of  EU  co-funding.  On  the  other  end,  while 
energy  cross-border  infrastructures  are  mostly  owned  and  run  by  private  investors,  the  co-
funding  rate  needed  is  very  different  from  transport  projects  such  as  a  Base  Tunnel  for  rail 
freight transport between two countries, which cannot be financed by the private sector due to 
low  and  uncertain  rates  of  return.  Therefore,  this  option  will  not  allow  to  fulfil  the  sectoral 
objectives  of  the  policy  covered  under  the  CEF,  and  is  thus  in  contradiction  with  the 
reasoning behind the creation of the Facility.  

4.4.3.  Option L Max – I Var 

For the same reasons as for Option L Max – I Max above, this option will not allow to fulfil 
the sectoral objectives of the policy covered under the CEF, and is thus in contradiction with 
the reasoning behind the creation of the Facility.  

4.4.4.  Option L Var – I Max 

For the leverage components, this option aims at adapting as closely as possible to the needs 
of each sector, while looking for synergies where possible. As for implementation, the single 
set  of  calls,  selection  procedures,  monitoring  instruments  and  rules  as  well  as  the  single 
management structure will lead to reduction in administrative costs, better visibility of the EU 
objectives  for  infrastructure  investments  and  reduced  administrative  burden  for  private 
investors as well as for public funding authorities. 
By  having  co-funding  rates  and  innovative  instruments  specific  to  the  needs  of  each  sector 
while also proposing common rates (for studies) and common set of innovative instruments, 
the leverage of this option will be high, favouring the development of infrastructure with high 
EU added-value in each of the three sectors. Sector specific stakeholders in each sector will 
deal  with  simplified  but  adapted  rules,  while  Member  States,  project  promoters  and 
Institutional investors will deal with common criteria and general funding rules. It will attract 
private investors and allow Member States project promoters to adapt their funding to clearer 

52

 
EU priorities. The adapted co-funding rates will also allow take into account the eligibility of 
Member States to the Cohesion Fund. 
However,  on  the  implementation  side,  the  positive  aspects  of  clarity  of  EU  policy  and 
reduction in the administrative cost and administrative burden for investors will be offset by 
the  difficulty  to  adapt  the  implementation  procedures  and  rules  to  the  specificities  of  each 
sector  and  policies.  Stakeholders  in  each  sector  will  be  confronted  with  a  new  framework, 
which will not be tailor-made for their needs. With general common rules applying to distinct 
rates, mix of financial instruments and criteria and budget priorities adapted to the needs of 
each  sector,  the  project  life  cycle  will  be  complex.  With  this  somewhat  distinct  rules  and 
instruments  regarding  leverage,  but  strictly  common  rules  for  implementation,  it  will  be 
difficult to prepare calls and define monitoring procedures adapted to the needs of each sector 
and  the  specific  objectives  of  each  policy.  It  will  therefore  bring  additional  complexity  for 
stakeholders  and  Member  States  that  may  be  reluctant  to  participate  in  the  calls,  thus  being 
counterproductive and unlikely to help reach the Europe 2020 targets.  

4.4.5.  Option L Var – I Var  

This options aims at adapting as closely as possible to the needs of each sector, while looking 
for synergies where possible.  
As  for  implementation,  cross-sectoral  synergies  will  be  reached  by  using  common  call  and 
procedures  for  projects  with  a  cross-sectoral  dimension.  Clarity  of  the  monitoring  tools  and 
instruments by having harmonised set of general rules, while keeping the possibility to adapt 
to  sector  specific  needs.  As  for  management,  the  single  executive  agency  and  its  common 
management structure will optimise the administrative costs while keeping a flexible structure 
adapted to the Commission needs for each of the policy area. The use of the executive agency 
will build on the structure and the successes of the current TEN-T Executive Agency88, not 
requiring the creation of a new European Agency. 
This flexible implementation architecture will allow using the flexible approach to leverage of 
this  option.  By  having  co-funding  rates  and  innovative  instruments  specific  to  the  needs  of 
each  sector  while  also  proposing  common  rates  (for  studies)  and  common  set  of  innovative 
instruments,  the  leverage  of  this  option  will  be  high,  favouring  the  development  of 
infrastructure  with  high  EU  added-value  in  each  of  the  three  sectors.  Sector  specific 
stakeholders in each sector will deal with simplified but adapted rules, while Member States, 
project  promoters  and  Institutional  investors  will  deal  with  common  criteria  and  general 
funding rules. It will attract private investors and allow Member States and project promoters 
to adapt their funding to clearer EU priorities. The adapted  co-funding rates will also allow 
take into account the eligibility of Member States to the Cohesion Fund. 
This option is consistent with the purpose of the creation of the CEF, since it will optimise the 
use  of  EU  funding  in  each  sector  in  order  to  accelerate  the  deployment  of  infrastructure  of 
high EU added value, while using the synergies of the EU budget to pool funds, simplify rules 
and therefore attract investors. 

4.4.6.  Option L Min – I Var  

This  option  combines  the  same  approach  to  implementation  as  the  one  above  with  the 
minimum harmonised approach to the leverage area, with distinct co-funding rates, innovative 
instruments and criteria, therefore not using commonalities between sectors, in a way similar 

88 See the 2 report on the implementation of the TEN-T programme by the Agency and the report of the court of 
Auditor? 

53

 
 
                                                 
to  the  Business-as-usual  scenario.  Thanks  to  the  flexible  approach  to  implementation,  this 
option will benefit from synergies and economies of scales for implementation. However the 
benefits  will  not  be  optimal  since  the  features  present  to  generate  synergies  in  the 
implementation  area  will  be  based  on  leverage  rules  that  are  not  fostering  those  synergies. 
This  option  is  likely  to  have  a  positive  impact  on  the  accelerated  development  of 
infrastructure of EU interest, but this impact will not be optimal. 

5.  COMPARISON OF THE RETAINED POLICY OPTIONS 

The  analysis  in  subsection  5.1  above  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 table 6 below: 

Table 7:  Summary table of impacts of the retained policy options under the CEF 
Option  L 
Impact on 
Var  – 
I 
Max 

Option  L 
Max  –  I 
Max  

Option  L 
Max  –  I 
Var 

OptionL 
Var  – 
Min  

I 

Option  L 
Var  – 
I 
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 

+ 

- 

- 

+ 

++ 

+ 

+ 

= 

- 

- 

= 

+ 

++ 

++ 

++ 

++ 

+ 

= 

= 

++ 

+ 

++ 

+ 

+ 

Legend:   

–  
=  
+  
++ 

: negative impact 
: no change 
: positive impact 
: very positive impact 

As  discussed  above,  the  options  including  the  Lmax  component  would  not  have  a  positive 
impact on the accelerated development of the infrastructure since it would not be possible to 
find  common  rates  and  instruments  that  would  be  adapted  to  the  needs  of  the  sectors.  As 
already  described  in  section  2,  although  the  sectors  have  significant  potential  for 
harmonisation,  the  sectors  are  different,  notably  with  respect  to  their  use  of  funding 
instruments. The energy sector, for instance, is, to a large extent, revenue bearing, which, in 
contrast to the transport sector, requires different levels of EU co-funding rates. Therefore, the 
use of funds for each sector would not be optimal, logically inducing a non-optimal use of the 
fund under the CEF. 
The option L Var – I Min would not lead to a reduction in administrative burden and would 
allow  looking  for  a  certain  level  of  synergies  on  the  leverage  aspects  only.  Sectors  specific 
needs would be well taken into account. The overall result on the accelerated development of 
infrastructure would be slightly positive compared to the Business-as-usual under the CEF 

54

 
 
 
 
 
 
 
 
 
 
The option Option L Var – I Max would lead to an important reduction in administrative costs 
and would maximise the synergies between sectors. Regarding sector specific objectives, the 
impact  would  be  positive  on  the  leverage  aspects,  but  it  may  trigger  difficulties  on  the 
implementing side for sector specific stakeholders. The overall impact on the use of EU funds 
is therefore expected to be only slightly positive on the optimal use of EU funds. 
The  Option  L  Var  –  I  Var  would  lead  to  a  certain  reduction  in  administrative  costs,  highly 
facilitate the use of synergies between sector while keeping a flexible approach allowing for 
the  optimal  use  of  funds  for  each  sector.  Therefore,  the  overall  impact  on  the  accelerated 
development of infrastructure would be high. 
Option L Min – I Var would lead to a certain reduction in administrative costs. It would allow 
looking for a certain level of synergies on the implementing side only. Sector specific needs 
should  be  well  taken  into  account.  The  overall  result  on  the  accelerated  development  of 
infrastructure would be slightly positive compared to the Business-as-usual under the CEF. 
This  section  provides  for  an  assessment  of  how  the  policy  options  will  contribute  to  the 
realization  of  the  policy  objectives,  as  set  in  Section  3,  in  light  of  the  following  evaluation 
criteria: 

•  effectiveness – the extent to which options achieve the objectives of the proposal; 
•  efficiency – the extent to which objectives can be achieved at least cost; 
•  coherence – the extent to which policy options are likely to limit trade-offs across the 

assessed impacts. 

Effectiveness 

The  following  table  gives  a  synthetic  overview  of  the  policy  options’  effectiveness  with 
regard  to  the  specific  policy  objectives  defined in  section  3.  From  this  table,  it  appears  that 
Policy  Options  L  Var  –  I  Max  and  L  Var  –  I  Var  score  best  on  effectiveness.  They  offer 
indeed  the  most  appropriate  degree  of  harmonisation  between  sectors  to  meet  the  defined 
objectives. 

Table 8: Effectiveness of retained policy options in light of objectives 
Specific objectives 

Maximum investment leverage 

Effective 
and 
implementation 

timely 

project 

Option L Var – I Min  

Option L Max – I Max  

Option L Max – I Var 

Option L Var – I Max 

Option L Var – I Var  

Option L Min – I Var  

High 

Low 

Low 

Medium 

High 

Medium 

Low 

Low 

Low 

High 

Medium 

Medium 

As regards the specific objective linked to the investment leverage, as argued in more detail in 
the  discussion  in  Annex  5,  Options  L  Max  –  I  Max  and  L  Max  –  I  Var  have  a  low 
effectiveness  since  they  do  not  take  into  account  the  objectives  of  the  sector  related  policy 
frameworks.  Option  L  Var  –  I  Max  has  a  medium  effectiveness  since  the  leverage  aspects 
allow  for  a  good  balance  between  sector  specific  needs  and  synergies,  but  sector  specific 
needs may be affected on the implementation aspects. Option L Min – I Var has a medium 
effectiveness since sector specific needs are well taken into account with a limited number of 

55

 
 
synergies  that  mainly  derive  from  the  implementation  aspects.  Option  L  Var  –  I  min  and 
Option  L  Var  –  I  Var  have  a  high  effectiveness  on  leverage  due  to  the  leverage  aspects 
allowing  for  a  good  balance  between  sector  specific  needs  and  synergies,  which  is  not 
adversely affected by the implementation aspects.  
As  regards  the  specific  objective  linked  to  the  project  implementation,  Options  L  Max  –  I 
Max and L Max – I Var have a low effectiveness since with a low effectiveness on leverage, 
implementation  aspects  are  of  no  use.  Option  L  Min  –  I  Var  has  a  low  effectiveness  on 
implementation since possible synergies are not taken into account. Option L Var – I Max has 
a  high  effectiveness  since  it  is  maximising  synergies  on  the  implementation  side  while 
benefiting from the flexibilities on the leverage aspects. Option L Var – I Var and Option L 
Min  –  I  Var  have  a  medium  effectiveness  since  synergies  are  partially  taken  into  account 
while keeping flexibility for each sector. 

Efficiency 

As shown in  Table 6 above, the only option that does not lead to a reduction in administrative 
costs as compared to the Business-as-usual under CEF is option L Var – I Min. This option is 
thus the least efficient among the 4 options selected according to effectiveness. 
Option L Var – I Max leads to a more important reduction in administrative costs compared to 
Options Option L Var – I Var and L Min – I Var, but is less effective than option L Var – I 
Var in addressing the main problem. 
In light of this, the most efficient policy option is clearly Option L Var – I Max. 

Coherence 

As highlighted in Table 6 above, Policy Option L Var – I Var ensures the achievement of the 
objectives with the lowest trade-offs across the assessed impacts. 

Conclusion 

In light of the above, 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 above 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.  
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 
referred to above has to be addressed by the political decision makers. 

56

 
 
 
 
6.  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, as illustrated in the table below.  

57

 
Table 9. Monitoring and evaluation 
Operational objectives 

Means 

Reporting 
applicable) 

tool  and  body 

(if 

Investment leverage 

OO1:  Define  co-funding  maximum  rates 
for  EU  support  for  projects  according  to 
priorities  set  in  terms  of  EU  added-value. 
Allow flexible use of these rates, in order to 
maximise  the  leverage  of  EU  funding 
contributions. 

for 
OO2:   Define  multi-level  criteria 
project  evaluation  in  order  to  ensure  that 
funding is channelled on projects with high 
EU added-value. 

infrastructure 

the  participation  of 
OO3:  Encourage 
specialised 
investors  by 
means of rules for the use of market based 
instruments,  and  by  making  available 
sufficient  funds  for  support  of  innovative 
instruments. 

Rates  set  in  the 
Regulation 

Annual report on the application of 
the rates by an executive Agency 

of 
Definitions 
EU  added  value 
the 
as 
in 
set 
or 
Regulation, 
to 
reference 
Guidelines 
Rules  set  in  the 
Regulation 

Annual  Report  by  an  Agency, 
repartition  by  typology  of  projects 
defined in the Regulation 

Annual  EIB  and  an  agency  report 
on  the  effects  of  the  individual 
instruments  (number  of  projects 
and structure of financing) 

Project Implementation 

OO4:  Define  rules  for  project  selection 
in  order  to  ensure  a  competitive  and 
transparent allocation of funds. 

OO5:  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) 

Rules  set  in  the 
Regulation 

Calls for Proposals 
Annual Report + TEN-days 

Framework set in 
the Regulation 

Annual  Report  +  TEN-days  and 
mid-term public consultation Calls 
for Proposals 
Mid-term review 

OO6:  Set  up  an  adequate  institutional 
structure  for  the  centralised  management 
of  processes  of  evaluation,  support  and 
monitoring of projects. 

Management 
structure  set 
the Regulation 

External  Evaluation  report  on  the 
institutional structure 

in 

The Commission will also develop  performance  indicators in order to assess the impacts of 
the  Connecting  Europe  Facility  on  the  policy  objectives  of  the  sector  specific  Guidelines. 
These indicators will come in addition to the performance indicators provided for in the sector 
specific  Guidelines.  The  performance  of  the  CEF  will  therefore  be  assessed  against  the 
following sector specific performance indicators: 

Table10: performance indicators 
Common 
objectives 

overall 

Contribution  to  smart,  sustainable  and  inclusive  growth,  asessed 
according to relevant indicators under the Europe 2020 Strategy. 
Impact  of  financial  instruments  offered,  measured  as  investment 
encouraged by each of the instrument and average level of leverage 
attained. 

58

 
 
in the field of Transport: 

in the field of Energy: 

-  The  number  of  actions  successfully  completed  or  on  track  to  be 
completed  within  the  established  time-frame  which  have  benefited 
from CEF grant support and/or financial instruments. 
-  The  number  of  new  cross-border  connections  and  removed 
bottlenecks  effectively  enabled  with  CEF  support  via  grants  and/or 
financial instruments. 
-  Travel  time,  cost  savings  and  increased  safety  (in  terms  of 
accidents  reductions)  registered  on  major  transport  routes  where 
action  concerning  specific  sections  has  benefitted  of  CEF  grant 
and/or financial instruments support. 
- The share of actions receiving Union aid for studies that entered the 
construction phase. 

- The share of actions receiving Union aid for studies that entered the 
construction phase; 
- The number of actions contributing to the EU’s energy and climate 
policy  objectives  effectively  enabled  with  the  help  of  grants  and/or 
financial instruments;  
- The number of actions contributing to the integration of the internal 
energy  market  and  the  interoperability  of  the  network  effectively 
enabled with the help of grants and/or financial instruments; 
-  The  number  of  actions  contributing  to  diversification,  enhancing 
the  regional  or  EU-wide  security  of  supply  and  solidarity  among 
Member  States  effectively  enabled  with  the  help  of  grants  and/or 
financial instruments. 
• 

in  the  field  of  broadband 
and telecommunications: 

-  High  speed  broadband  coverage,  to  be  checked  against  the  DAE 
targets of access to 30 Mbs for all citizens by 2020. 

-  High  speed  broadband  uptake,  to  be  checked  against  the  DAE 
target of 50% of citizens having subscriptions for above 100 Mbs by 
2020. 

-  Implementation,  availability  and  uptake  of  digital  service 
infrastructures, as identified in the e-TEN Guidelines 

In addition to these indicators, common performance indicators will be developed, such as the 
number  of  projects  effectively  enabled,  the  share  of  private/public  investment,  the  share  of 
grants  and  Financial  instruments  compared  to  2007  -2013,  the  total  value  of  annual 
investments  compared  to  2007  -2013,  the  number  of  projects  using  synergies.  Finally,  the 
impacts of financial instruments will be measured as investments encouraged by each of the 
instrument and the average level of leverage attained. 

59

 
 
 
 
 
 
 
 
ANNEX 1 

Summary of results of public consultations 

CROSS-SECTORAL CONSULTATIONS 
Europe 2020 Project Bonds Initiative (consultation period: 28 February – 2 May 2011)89 

The Europe 2020 Project Bond Initiative aims at boosting the funding of projects with long-
term revenue potential in line with the Europe 2020 policy priorities. Over the next decade, 
record  investment  volumes  in  Europe's  transport,  energy,  information  and  communication 
networks will be needed in order to underpin the Europe 2020 flagship actions. Developing 
smart,  upgraded  and  fully  interconnected  infrastructures  will  foster  the  completion  of  the 
internal  market.  Preliminary  estimates  point  to  investment  needs  of  €1.5  to  2  trillion  for 
Trans-European  Transport  Networks,  the  energy  sector  and  information  and  communication 
technologies.  These  needs,  combined  with  the  fact  that  government  budgets  face  severe 
constraints, make it crucial to foster the participation of the private sector in the financing of 
infrastructure projects.  

The objective of the Project Bonds initiative is to help the private project companies to attract 
capital  market  funding  from  investors  such  as  pension  funds  and  insurance  companies.  The 
initiative has been identified in the Annual Growth Survey as a priority measure to enhance 
growth. The stakeholders were consulted on the following main questions: 

(1) Will the initiative attract private investment in transport, energy and ICT infrastructure? 

•  60% of stakeholders think that the chosen mechanism is likely to attract private 

sector institutional investors to the sectors of transport, energy and ICT in particular 
(see the chart below). 16% expect it to depend on technical features of the mechanism 
(price, structure, attracted rating, etc.). 

•  Large share of stakeholders would also like to see the following sectors included:  

- Social infrastructure (25%) 
- Renewables (16%) 
- Water and waste (13% and 6% respectively) 

•  19% of respondents believe that the guarantee would both facilitate and accelerate 
the conclusion of financing packages (see the chart below); while 22% say it would 
only facilitate (14%) or accelerate (8%).  

(2)Would the guarantee facilitate/accelerate   the conclusion of financing packages? 

•  An absolute majority of stakeholders agree that minimum rating of A- is sufficient to 

attract investors. The views on desirable minimum rating diverged as follows:  
- A/A- for bigger projects 
- BBB/BBB+ for smaller projects 

•  Several investors stressed that they do not merely look at ratings, but also at the 
general legal framework of the jurisdiction of the project, the exact contractual 
arrangements as well as the quality of the financial package. 

•  50% of answers stated that a credit enhancement of 20% of outstanding senior bonds 
would be sufficient (10%) or would depend on other factors (40%) and should be 

For 

89 
http://ec.europa.eu/economy_finance/consultation/index_en.htm 

contributions 

stakeholder 

detailed 

the 

and 

the 

consultation 

document 

see 

60

 
 
                                                 
decided in case-by-case basis. 5% of the stakeholders believe that 20% credit 
enhancement would not be enough.  

•  Effect on financing costs and maturities: 
- 50% of stakeholders expect lower financial costs and (or) longer maturities 
- 20% of stakeholders expect it to depend on different factors – regulation, guarantee and 
other fees, rating, etc. 
•  Some sponsors are worried about negative carry as the full financing amount is 

drawdown at the outset rather than in phases as for a bank loan. Some also feared that 
bond financing would prove less flexible.  

•  50% of stakeholders think a single entity acting as controlling creditor is essential  
33%) (especially during the conclusion of the financial package and the construction 
phase), beneficial (15%) or depends on the project (3%). 10% would expect the EU or  
the EIB to serve as a controlling creditor. 11% of respondents do not see a single 
controlling creditor necessary. 

Additional messages from the stakeholders: 

•  Views on size of project appropriate for bond funding varied widely with quoted 
ticket sizes per investor varying from EUR 20 million to EUR 100 million, which 
would translate into deal sizes ranging from EUR 50 to EUR 250 million, assuming a 
minimum of two investors. 

•  Procurement process and its obstacles in terms of requiring fully funded and 

committed fixed price offers to a tight timeline generally does not favour or even 
allow bond solutions. The process differs across Member States, but in general the 
demand was that the procurement process should be more flexible to allow bond 
solutions with their different benchmark, volatility of spread and timing requirements.  

•  Regulatory issues: many investors cited Solvency II as a main obstacle to investing 
in longer-term, lower-rated assets as such bonds would attract higher capital charges, 
although some actors are of the view that the regulation favours the longest-term 
assets, since capital charges increase no further beyond a certain point. A few banks 
were worried that depending on exact structure project bonds could be classified as 
asset-backed securities under Capital Requirements Directive, which would mean a 
higher risk weighting. 

ENERGY INFRASTRUCTURE 

In November 2008 the Second Strategic Energy (SER 2) Review launched the Green Paper 
"Towards  a  secure,  sustainable  and  competitive  European  energy  network"90  and  the 
process  of  revision  of  the  TEN-E  programme.  The  SER2  called  for  a  new  Energy 
Infrastructure and Security Instrument and suggested six flagship projects as examples of how 
European network projects might evolve in the future towards 2020.  

A  first  dedicated  public  consultation  took  place  during  13/11/2008  -  31/03/2009  on  the 
Green Paper. The Commission received 91 written replies to the Green Paper. 13 came from 
Member  States  (2  from  a  regional  and  a  local  government),  1  from  regulators,  60  from  the 
industry,  2  from  academia  and  13  from  individual  citizens,  NGOs  and  other  organisations. 
The  public  consultation  covered  the  future  scope  of  the  TEN-E,  the  selection  process,  the 
budget and financing instruments and the role of the EU to foster cooperation, coordination 
and support in the energy networks area as well as the role of the internal energy market.  

90 COM(2008)782 

61

 
 
                                                 
Among  respondents  from  the  energy  industry  consensus  emerged  on  the  need  for  a 
fundamental review of the TEN-E, for the EU to better align the energy network policy and 
the  EU  energy  and  climate  policy  targets,  to  provide  for  a  stable  regulatory  framework, 
coordination  and  raising  public  acceptance.  The  respondents  identified  complicated 
administrative procedures, diverging regulatory regimes across local authorities and national 
borders and local resistance as the main barriers. The absence of a specific legal remit at EU 
level  to  mitigate  these  obstacles  was  acknowledged.  The  role  of  the  EU  in  facilitating 
infrastructure projects in third countries was welcomed, and the importance of external energy 
relations to infrastructure policies was reaffirmed.  

On  the  scope  of  the  future  TEN-E,  the  public  consultation  gave  large  support  to  the  six 
flagship projects identified by the Green Paper but respondents were diverging on the need to 
extend the scope to oil or CO2 networks.  

The public consultation concluded that EU support for projects should continue to address 
both commercial and supply security goals and non-commercial goals, such as the integration 
of renewable energy sources, underground cabling of high-voltage electricity wires to reduce 
visual impact of new interconnections. 

On  the  design  of  the  future  TEN-E,  the  consultation  concluded  that  an  alignment  was 
needed  with  other  financial  sources  (EIB,  EBRD,  Regional  Funds)  and  respondents  were 
strongly  in  favour  of  increasing  the  budget  of  TEN.  While  some  respondents  supported 
continuing the support by feasibility studies, while others asked for broadening the scope of 
funding, e.g. with EU grants to be awarded for construction, subject to budget increases. The 
value  of  the  TEN-E  label  as  a  "door-opener"  or  "certifier"  for  other  sources  of  finance 
strongly acknowledged and seen as a positive by-product of the instrument.  

Asked  about  the  identification  of  projects  of  common  interest  from  a  fixed  list  or  a 
selection  process,  the  majority  of  respondents  were  in  favour  of  an  open  system  with  all 
projects  competing  on  an  equal  basis.  The  role  of  the  European  network  for  transmission 
system operators for gas and electricity (ENTSO-E and ENTSO-G) and the Union-wide ten-
year  network  development  plan  was  considered  as  an  important  stepping  stone  for  an 
enhanced investment planning from a European perspective.  

The  crucial  role  of  the  European  Coordinators  was  supported  and  recognised  by  the 
majority of respondents. They found that the EU should be more involved in coordinating and 
facilitating  dialogue  and  information  exchanges  among  Member  States,  market  players  and 
other  stakeholders.  Some  respondents  even  proposed  a  more  direct  role  for  the  EU  in  the 
management of individual projects, e.g. through the appointment of European Coordinators.91  

After  the  adoption  by  the  Commission  of  a  "Communication  on  energy  infrastructure 
priorities  for  2020  and  beyond"  on  17  November  2010  (COM(2010)677),  which  outlined 
the  challenges  faced  for  the  development  of  adequate  energy  infrastructures  across  the  EU, 
priority  corridors  for  electricity,  gas,  oil  and  CO2  have  been  identified  and  a  new  strategy 
covering the planning and prioritisation of energy infrastructures of European importance as 

91  The  European  Coordinators  were  used  during  the  2007-2009  for  the  first  time.  Four  European  coordinators 
were  appointed  on  the  12 September 2007  by  the  Commission  for  duration  of  four  years  to  monitor  projects 
facing  technical,  political  or  financial  difficulties.  The  "Priority  Interconnection  Plan"  adopted  by  the 
Commission  on  10 January 2007  in  the  framework  of  the  so-called  "energy  package"  and  the  Action  Plan 
adopted  by  the  European  Council  on  9 March 2007  had  mentioned  specifically  the  nomination  of  European 
Coordinators. In November 2008 the mandate of a European coordinator was extended to the planned 380kV-
SalzburgleitungAnnual 
at: 
reports 
http://ec.europa.eu/energy/infrastructure/tent_e/coordinators_en.htm 

coordinators 

found 

can 

the 

be 

of 

62

 
 
                                                 
well  as  specific  measures  to  facilitate  their  implementation  through  more  efficient  and 
transparent permit granting procedures and stakeholder involvement, improved cost allocation 
across  borders  and  an  adequate  environment  for  private  and  public  investments,  including 
financial  incentives  has  been  proposed.  The  Commission's  priorities  and  approach  were 
endorsed by the February 2011 European Council.  

A series of consultations and workshops on the future TEN-E programme and the new design 
of  a  new  instrument  were  launched  in  spring  2011.  Several  exchanges  between  the 
Commission,  European  Network  of  transmission  system  operators  for  gas  and  electricity 
(ENTSO-G and ENTSO-E), Council of European Energy Regulators (CEER), the Agency for 
the  Cooperation  of  Energy  Regulators  (ACER),  national  regulatory  authorities  and  other 
stakeholders  confirmed  the  step  increase  in  investment  need  in  case  of  infrastructure  of 
European significance.  

In  the  report  by  the  Commission  to  the  10  June  2010  TTE  Council92  the  Commission 
presented  a  summary  of  the  main  views  from  stakeholders  in  the  consultation  process  on 
November  2010  Communication  and  reported  in  further  details  on  the  investment  needs. 
According  to  a  survey  carried  out  by  the  Council  of  European  Energy  Regulators  (CEER) 
among  national  regulatory  authorities  (NRAs)  in  February/March  2011,  total  investment 
needs in national electricity transmission for the same period were confirmed and estimated as 
being in the range of 96 to 143 bn €, of which 25-55 bn € for offs hore grids. Under the current 
work ongoing for the preparation of the 2012 10-year network development plan (TYNDP), 
the  European  Network  of  Transmission  System  Operators  in  Electricity  (ENTSO-E)  sees 
roughly  100  bn  €  of  investment  needs  for  th e  period  up  to  2020,  excluding  investments  for 
offshore  grids  and  maintenance  and  refurbishment  of  ageing  assets.  Nor  does  this  number 
reflect the specific investment needs for smart grids at both transmission and distribution level 
and electricity storage, which could exceed 40 bn € 93.  

In gas, in the latest 10-year network development plan (TYNDP), published in March 2011, 
the  European  Network  of  Transmission  System  Operators  in  Gas  (ENTSOG)  foresees 
investments of at least 89 bn € until 2020, includ ing projects for which the Final Investment 
Decision (FID) has been taken94 and projects for which the FID has not been taken, although 
they  are  considered  necessary  for  diversification  of  supply  routes/sources  and  security  of 
supply inside EU. This is considerably more than the results of the CEER survey among its 
members,  according  to  which  total  investment  needs  in  transmission,  LNG  and  storage95 
infrastructure are estimated between 51 and 59 bn € (about 40 for transmission, 8 for LNG, 5-
10  for  storage).  It  should  be  noted  that  the  CEER  survey  covers  only  investments  on  EU 
territory.  

A  consultation  of  the  ENTSOs  in  electricity  and  gas,  GIE,  national  regulators  and 
financial institutions (notably the EIB) was carried out in spring 2011 and provided further 
recommendations on the design of future EU financial instruments.  

ENTSO-E carried out a survey among 41 European TSOs in 34 countries. Six main barriers 
to  investments  are  considered  by  TSOs:  social  acceptance,  planning  delays,  few  investment 
incentives (in particular for R&D and innovation), and the lack of stable return on investment 

92 SEC(2011) 755 
93 
SEC(2010)1395. 
94 
The gas TYNDP produced by ENTSOG in February 2011 does not put costs on the various investment 
projects but gives only an overall cost estimate on investments on the basis of a non-exhaustive list of about 200 
investment projects as collected from its members. 
95 

The numbers for storage do not include investments for France and Germany.  

63

 
 
                                                 
as  well  as  the  uncertainty  about  future  regulatory  regime  change.  Cross-border  projects 
require  a  reinforcement  of  the  national  grids.  Public  funding  should  be  targeted  to  address 
specific project/country risks and with a competitive approach to the label and support. 

More detailed responses were provided by: 

•  Amprion (Germany) 
•  Eirgrid (Ireland) 
•  Elia (Belgium) 
•  EMS (Serbia) 
•  50 hertz (Germany) 
•  HTSO (Greece) 
•  MAVIR (Hungary) 
•  REE (Spain) 
•  RTE (France) 
•  Statnett (Norway) 
•  Swissgrid (Switzerland) 
•  Terna (Italy) 
•  Transelectrica (Romania) 

Financing of infrastructure in the past 

For  past  investment  mainly  corporate  financing  was  used  and  projects  were  implemented 
together  with  adjacent  TSOs,  investment  expenditure  being  covered  in  the  CAPEX  of  the 
TSOs  concerned.  Next  to  debt  and  equity  financing,  auction  revenues  from  cross-border 
capacity  allocation  are  used  to  fully  or  partially  finance  interconnectors  (only  one  TSO 
referred to this financing). Upfront pre-construction investments are mainly financed by 100% 
equity.  Debt  capital  can  hardly  be  attracted  for  this  type  of  investment.  Among  the  main 
constraints to investment, TSOs raised the following issues: 
−  Time-lag  in  the  remuneration  of  invested  capital  during  the  construction  phase  (pre-
financing  and  start-up  losses,  of  particular  importance  when  projects  are  delayed  by 
permitting or acceptance problems) 

−  Transmission  fees  do  not  cover  all  costs  linked  to  the  internal  reinforcement  of  the  grid 

linked to connection of new RES generation (shallow transmission fees, 1 TSO), 

−  Lack of incentives for technology innovation and R&D or other risks,  
−  Projects that will face particular challenges relate to offshore developments or submarine 

cables and for some countries interconnector investments. 

Recommendations for future financing and EU support 

In the light of the new and urgent investment challenges, TSOs will need to attract equity and 
debt  financing  and  new  investors.  Asked  about  the  added  value  of  EU  support,  TSOs 
recommend  financial  support  to  the  construction  phase.  Some  TSOs  note  that  the  most 
effective  measure  is  to  ensure  sufficient  rate  of  returns  for  all  projects  and  rate  of  return 
markups for projects of major importance and to align the RORs to the risks faced by project 
owners. 

The consultation of TSOs among ENTSO-G included detailed responses by: 

•  GAZ SYSTEM 
•  Gasunie 
•  National Grid 
•  Thyssengas 

64

 
 
 
•  GEOPLIN PLINOVODI 
•  RAG 
•  DESFA 
•  ENGAS 
•  GRTgaz 
•  OMV 
•  Wingas 
•  Fluxys 
•  FGSZ 
•  NET4GAS 

Financing of infrastructure in the past 

Past investments were financed on the basis of corporate financing within the structure of the 
parent  company  on  the  basis  of  equity  and  shareholder  loans  complemented  by  EU  direct 
grants  and  EIB  loans.  Depending  on  the  degree  of  ownership  unbundling  and  international 
expansion,  the  experience  with  credit  ratings,  corporate  bonds,  project  financing  and  direct 
exposure to capital markets differs widely. Project financing was mainly used for new LNG 
terminals  and  new  interconnectors  in  Western  Europe.    Project  bonds  and  project  financing 
via special project vehicles are being examined for future investment by TSOs outside of the 
national network. The attractiveness of these bonds will largely depend on the costs.  

Recommendations for future financing and EU support 

ENTSOG  Members  underlined  that  new  gas  projects  aiming  to  increase  diversification, 
competition, market integration and security of supply, thus removing market Imperfections, 
will  not  come  forward  by  relying  on  market  (shippers)  commitments  alone.  While  volume 
risk is covered in regulated gas networks, fluctuating utilization, the short-term tariff setting 
and capacity allocation do not fit to the long-tem investment cycles. 

Future EU support should minimize investment lead times and construction risks, reduce the 
administrative  burden  on  project  promoters,  offer  coordinated  political  support  to  decrease 
country  risks  in  geopolitically  difficult  regions,  enhance  cross-border  cooperation  and  the 
coordination  of  open  seasons.  The  EU  should  support  should  be  targeted  to  the  entire 
investment cycle including feasibility and routing studies, environmental impact assessments 
(EIA), land and building permit design as well as the construction of projects.  

Cost  allocation  should  be  enhanced  by  multilateral  negotiations  of  investment  projects  at 
regional  level  between  operators  and  regulators  with  strategic  guidance  by  ACER  and 
ENTSOG. In practical terms, TSOs in the respective Member States could book the capacities 
needed for security of supply and include these costs in their respective transmission tariffs. 
Other  options  include  settlements  through  direct  cash  transfers  between  TSOs  or  through 
netting system using EU funds granted to the Member States concerned. 

While ENTSOG members unanimously call for instruments to make projects bankable along 
the long term investment cycle, they consider various instruments depending on the particular 
needs  of  the  TSOs.  These  range  from  credit  enhancement,  to  public/private  guarantees  (for 
example through the EIB), European public private investment funds, harmonized investment 
conditions and performance-related incentives as well as direct EU grants and a dedicated EU 
fund for infrastructure.  

65

 
 
 
 
 
 
 
Investment in regulated and non-regulated infrastructure in the gas sector requires a long-term 
commitment  either  by  regulators  or  users.  Given  the  regulatory  and  market  trends  towards 
short-term capacity, Gas Infrastructure Europe (GIE) underlines that tariffs and investment 
regulation should give long-term signals for investment. New financing instruments should be 
beneficial  to  all  projects.  Costs  of  stranded  assets  remain  with  consumer  in  the  case  of 
regulated networks. Risk profiles change as gas TSOs are about to unbundle or restructure the 
ownership.  Gas  TSOs  will  need  to  invest  in IT and human resources to handle the growing 
capacity  and  congestion  management  with  short-  and  long-term  products.  Among  the 
measures suggested by GIE are the following: 
−  Cost-allocation  mechanism  is  mentioned  in  cases,  where  the  lack  of  user  commitment 

could be substituted by cross-border compensation. 

−  Adequate risk/reward ratios and tariff to ensure long-term signal and not only short-term 

− 

low rates of return 
Incentives  for  operators  –  performance-related  rewards  for  implementation  of  network 
development  measures,  independent  of  and  on  top  of  the  allowed  revenues,  including 
shortened  amortization  period  in  order  to  limit  risks.    GIE  sees  higher  risks  for  cross-
border projects due to inconsistent regulatory frameworks on two sides of the border and 
higher complexity. 

TRANSPORT INFRASTRUCTURE 

Green Paper: "TEN-T: A policy review - Towards a better integrated trans-European 
transport network at the service of the common transport policy" (Consultation period: 
04/02/2009 – 30/04/2009)96 

With the Green Paper, the Commission initiated a broad review process of the trans-European 
transport  network  policy  (TEN-T).  It  considered  future  political  and  economical  challenges 
such  as  the  achievement  of  climate  change  objectives,  further  economic  growth,  economic 
and social cohesion as well as the strengthening of Europe's international role. 

The TEN-T Guidelines are linked with instruments to facilitate the implementation of projects 
identified  as  being  of  common  interest.  These are  a)  various  financial  instruments  based  on 
the  relevant  legislation,  including  the  TEN  Financial  Regulation[5]  and  the  Cohesion  Fund, 
ERDF and loans from the European Investment Bank, and b) non-financial instruments, such 
as  coordination  initiatives  taken  by  the  Commission.  So  far,  the  instruments  available  have 
not  been  sufficient  to  deliver  full  completion  of  projects  of  common  interest  within  the 
timeframe agreed in the Guidelines.  

Regarding  the  performance  and  options  for  improvement  of  the  use  of  financial  and  non-
financial  instruments,  the  Commission  consulted  the  stakeholders  on  the  following  sets  of 
questions: 

(1) How can the financial needs of TEN-T as a whole in the short, medium and long term be 
established? What form of financing — public or private, Community or national — best suits 
what aspects of TEN-T development? 

A  high  number  of  contributors  suggested  meeting  the  financial  needs  of  TEN-T  through 
increased participation of users in the costs of construction and operation. Proposals suggested 
earmarking  revenue  by  including  transport  sectors  in  the  EU  ETS,  the  Eurovignette,  EIB 

96 For the full summary and the detailed stakeholders contributions, a as well as the consultation document see 
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2009:0044:FIN:EN:PDF. 

66

 
 
 
                                                 
loans,  infrastructure  charging  or  kerosene  tax,  the  latter  being  proposed  by  only  one 
contribution. The harmonisation of track access charging systems in the rail sector is deemed 
highly  desirable  by  some  respondents.  The  structuring  and  the  multiannual  contracting  of 
track access charges would be needed to mobilise private funds.  

Regarding  the  involvement  of  the  private  sector,  responses  were  fairly  divided.  Those 
advocating  the  involvement  of  private  investment  mainly  pointed  to  insufficient  public 
spending  behaviour.  Private  investment  would  be  an  ideal  supplement  to  public  funds.  One 
Member State was very much in favour of using private investment. Sharing knowledge and 
expertise in designing major transport projects or setting up and running PPPs. Private-sector 
involvement would be a useful method of delivering TENT projects. A clear scope and risk 
definition would be needed to attract private investment. One business organisation said that 
the contribution of private investment and private risk capital in terms of asset provision was 
not  recognised  in  the  Green  Paper.  Those  sceptical  about  private  involvement  cited  the 
inability  of  peripheral  regions  to  attract  private  investment  and  the  inexperience  of  several 
countries. Similarly, some argued that PPPs were not suitable for all projects as if they were a 
‘passepartout’  but  needed  to  be  assessed  on  a  case-by-case  basis.  PPPs  may  even  raise  the 
overall  price  of  project,  according  to  one  respondent  from  the  rail  sector.  Respondents 
sceptical  about  private-sector  participation  stated  that  private  involvement  within  the  rail 
sector would only be effective in a few specific projects, e.g. high-speed rail. One respondent 
suggested  taking  into  account  the  fact  that  socio-economic  costs  and  benefits  often  differed 
from  a  private  investor’s  evaluation.  One  Baltic  Member  State  proposed  that  where 
infrastructure is based on business needs, a high share of private involvement is possible and 
desirable. One local administration stated that shifting borderlines between infrastructure and 
vehicles increases the opportunities for PPP financing. An aviation research institute said that 
private-sector investment would be limited to business cases with marketability. In cases such 
as Galileo, where a long phase of preparation precedes market penetration, private investment 
would be hard to attract. Project financing through Eurobonds remains controversial. Whereas 
some  respondents  view  this  possibility  as  incentive  for  strengthening  the  existing  financial 
platforms, others argue that the EU would go beyond its mandate and escape parliamentary 
control. Issuance through Eurozone States would weaken the stability and growth pact. Such 
borrowing  would  benefit  States  with  poor  budgetary  discipline.  Respondents  from  the  rail 
sector  suggested  addressing  the  difference  in  construction  life  cycle  between  road  and  rail 
projects. Road projects would usually need 2 to 3 years, whereas rail projects would typically 
need 6 to 8 years for completion. Thus, rail projects would often be impeded because they did 
not fit into the 7-year budget period of TEN-T.  

Other new ideas included: 

- Establishing a European infrastructure fund/supranational body to coordinate funding; 

-  Devising  a  European  scoreboard  to  record  year  by  year  the  state  of  implementation  of 
Priority  Projects  and  the  funds  committed  and  disbursed  by  Member  States  and  the  EU  on 
each project. This tool would aim to fine tune investment from EU and Member States; 

- Taking into account  the  amounts of  funds  per  capita  that  each Member State  has invested 
over  the  past  years  for  evaluating  eligibility  and  performance  of  future  projects  (a  Member 
State proposal); 

-  Distance-related  charging  should  be  avoided  as  this  approach  entails  geographic 
discrimination, according to one business organisation. 

67

 
(2)  What  assistance  can  be  given  to  Member  States  to  help  them  fund  and  deliver  projects 
under  their  responsibility?  Should  private-sector  involvement  in  infrastructure  delivery  be 
furtherencouraged? If so, how? 

Generally,  a  huge  number  of  contributors  proposed  increasing  the  rates  of  co-funding.  One 
Member  State  asked  for  more  flexibility  regarding  the  total  amount  of  support  to  projects. 
Similarly,  a  high  number  of  contributors  reiterated  the  need  for  combined  funding  from 
Cohesion, Structural, EIB, and TEN-T funds where possible to maximise the effect of overall 
Community  funding.  But  combining  cohesion,  regional,  EIB  funds  with  TEN-T  funds  was 
also criticised by some respondents as this could blur the specific goals of each programme. A 
number  of  respondents  were  in  favour  of  lowering  the  administrative  burden  linked  to  the 
disbursement of TEN-T funds.  

One  organisation  suggested  that  Community  funding  should  only  be  disbursed  when  a 
Member State faces higher costs than other Member States. One regional administration and 
one  Member  State  underlined  the  benefits  of  a  credit  with  preferential  interest  rates  and 
guarantees via commercial banks. 

One  respondent  suggested  that  the  EU  create  a  ‘sovereign  European  debt’  from  which 
Member States could receive loans. The EU should be more flexible towards MS with a ratio 
of debt: GDP over 60%. Some contributors proposed to generally improve instruments of the 
European Investment Bank. 

Others  proposed  to  take  on  board  only  projects  which  are  economically  feasible.  A  railway 
organisation  suggested  creating  a  European  scoreboard  to  record  year  by  year  the  state  of 
implementation of Priority Projects and the funds committed and disbursed by Member States 
and  the  EU  on  each  project.  One  member  state  welcomed  an  exchange  of  knowledge  and 
experience within NETLIPSE project on managing large projects. 

Regarding private-sector participation, a number of contributors made constructive proposals 
on how to encourage private involvement. One respondent from the private sector identified 
the lack of guarantee mechanisms and clear rules of risk sharing under PPPs. In this context, 
one Member State wanted to encourage States to launch small-scale PPPs as pilot projects and 
to  draft  European  standardised  PPP  guidelines  on  experience,  selection,  negotiation  and 
implementation  in  a  European  standardised  toolkit  for  PPPs.  A  business  organisation 
suggested that projects could be advised by private companies to make private financing more 
likely. One Member State proposed benefitting from leverage effects and mobilising private 
capital by launching PPP projects. More specifically, by increasing the rate of support from 
EU funds for PPPs, private investors could be attracted. A railway organisation deemed PPP 
projects to be linked to long-term visibility and guarantees given over return on investments, 
which necessitates use of the user-pays principle. Another respondent from the railway sector 
stated that the LGTT (Loan Guarantee for the Trans-European Transport Network) was very 
useful but should be adapted to the complexity of rail PPPs. 

(3) What are the strengths and weaknesses of existing Community financial instruments, and 
are  new  ones  needed  (including  ‘innovative’  instruments)?  How  could  the  combined  use  of 
funds from various Community resources be streamlined to support TEN-T implementation? 

Respondents  considered  the  fixed  7-year  budget,  clear  project  eligibility  rules,  higher 
subsidisation  thresholds  from  Cohesion  Fund  and  Structural  Funds  and  the  focus  on 
prioritised  transport  infrastructure  to  be  an  advantage.  The  inability  to  combine  financing 
from different funds was cited as a weakness (Remark from the EC: This is probably based on 
a  misunderstanding  of  the  rules,  see  the  TEN-T  financing  regulation  EC/680/2007,  Article 

68

 
 
7(2) and Article 13(2b)). In this respect, the concept of a one-stop shop for financing is cited 
in  one  contribution.  As  further  weaknesses  were  cited  low  TEN-T  subsidisation  thresholds 
and  the  fact  that  subsidies  do  not  increase  along  with  cost.  A  few  respondents  found  the 
incentives  for  investment  coordination  between  neighbouring  countries  to  be  insufficient. 
Furthermore,  some  Member  States  pointed  to  problems  in  securing  national  funding  by  the 
beneficiary of the EU grant. One local administration believed that, in addition to the costs of 

infrastructure provision, variable costs (cost of infrastructure operation) should also be taken 
account of in the Cost-Benefit-Analysis. One respondent from the rail industry believed that, 
while TEN-T budget prioritises the rail sector, ERDF, cohesion and Member State funds seem 
to  prioritise  road  transport;  they  therefore  perceive  a  lack  of  complementarity  and 
coordination. A railway undertaking stated that EIB loan rates do not appear to be enough of 
an  incentive  to  create  leverage.  One  regional  administration  deemed  the  consideration  of 
peripheral  regions  under  the  CF  and  ERDF  to  be  inadequate.  Although  two  regional 
administrations saw no need for new financial mechanisms, but instead suggested extending 
and  reviewing  current  EIB  mechanisms  and  easing  and  supporting  PPP,  many  respondents 
made proposals for new financial instruments. An intermodal organisation proposed tax relief 
for investment completed in advance, a bonus scheme for projects resolving bottlenecks and 
penalties/bonuses/peer pressure for Member States lagging behind. Another proposal was to 
divide funds between study research phase and real infrastructure building. One environment-
related  organisation  proposed  a  system  of  ex-ante  certification  of  projects  in  view  of  their 
TEN-T  status,  which  could  be  based  on  criteria  such  as  the  contribution  to  climate  change 
objectives. In general, some respondents proposed creating new guarantee mechanisms. One 
railway  undertaking  proposed  issuing  ‘project  bonds’  with  EIB  guarantee  of  payment. 
Another  new  instrument  could  be  a  national  ‘sustainable  transport  fund’  funded  by  revenue 
from the internalisation of external costs of transport. Two citizens suggested that maximum 
funding thresholds should be fixed on a unit basis. This would provide an incentive to build 
the cheapest infrastructure. One railway organisation deemed a PPP expertise centre (EPEC) 
to  be  a  useful  platform  for  exchange  on  PPP  issues.  One  organisation  from  the  road  sector 
proposed establishing a PPP fund, managed by PPP experts, which would give higher value 
for money. This fund would allocate support directly to PPP schemes. One organisation from 
the maritime sector suggested that a strategic ‘corridor management body’ (or what is referred 
to as the ‘Governance body’ in the rail freight corridor proposal of the European Commission) 
would be best to manage or coordinate the allocation of funds and grants according to a cost-
benefit  analysis,  with  the  Commission  overseeing.  One  regional  administration  thought  that 
the various existing funds could be combined, which would allow a more efficient allocation 
of support (taking account of the objectives and the sector concerned). 

(4) How could existing non-financial instruments be improved and what new ones might be 
introduced? 

A  common  consensus  seems  to  be  to  boost  the  role  of  European  Coordinators  as  they  have 
proven valuable in the past. One local administration proposed assigning one coordinator to 
each TEN-T project. Other local administrations proposed choosing a single coordinator for 
two corridors when there is a crossing point. However, one Member State opposed more EC 
coordination;  project  delays  would  not  be  solved  by  stronger  coordination.  According  to  an 
intermodal  association,  the  EC  should  be  directly  involved,  especially  on  cross-border 
projects,  to  make  coordinators’  work  more  effective.  One  Member  State  proposed  that 
Coordinators  extend  their  mandate  to  the  comprehensive  network.  One  environmental 
organisation  expressed 
that  high-quality 
environmental  impact  assessments  are  conducted.  Representatives  of  the  railway  sector 

that  coordinators  could  ensure 

the  view 

69

 
 
recommended appointing a European manager for rail infrastructure. Corridor coordination is 
largely  viewed  positively.  However,  one  Member  State  opposed  public  financial  support  to 
such  business-driven  projects,  as  these  projects  should  be  able  to  attract  private  investors 
instead. 

The  Open  Method  of  Coordination  was  deemed  useful  as  a  governance  approach  by  many 
contributors, as it helps to inform the public better on the progress of projects. Transparency 
of  data,  sharing  best  practices  and  establishing  performance  data  were  called  for.  Better 
accessibility of TEN-T and Natura 2000 GIS data and transparency of information on traffic 
data forecasts would also improve environmental assessments, according to an environmental 
organisation.  One  railway  undertaking  proposed  facilitating  access  to  technical  data 
describing  technical  and  economic  parameters  of  TEN-T  corridors.  Progress  reports  on 
corridors  or  an  observatory  on  implementation  were  desirable  according  to  a  regional 
administration.  The  TEN-T-EA  was  proposed  as  a  platform  for  best  practice  by  the  rail 
infrastructure industry. This would serve to increase communication on the progress made by 
different projects.  

respondents  proposed  mandatory  deadlines 

Regarding new non-financial instruments, the Commission’s proposal for benchmarking was 
largely  supported.  Several 
for  project 
implementation to be imposed on Member States. Technical assistance, such as the JASPERS 
initiative,  was  also  proposed.  This  could  help  the  Commission  to  rank  projects  by  their 
European  value-added  in  view  of  receiving  Community  funding.  One  Member  State 
suggested that all projects of common interest should be subject to a harmonised cost-benefit 
analysis.  They  indicated  certain  national  CBA  and  HEATCO  guidelines  as  an  appropriate 
basis for TEN-T wide application. According to one municipality, coordination at the level of 
urban regions should be given more attention. One intermodal organisation proposed creating 
a  new  entity  in  charge  of  the  priority  network.  This  entity  would  be  responsible  for 
supervising safety, security standards, traffic flow, interoperability design etc. 

Commission  Working  Document:  Consultation  on  the  Future  Trans-European 
Transport Network (Consultation period: 04/05/2010 – 15/09/2010)97 

This  consultation  was  based  on  a  document  drafted  following  the  input  of  the  previous 
consultation, including as main elements the proposed planning methodology for the TEN-T 
and ideas on how to enhance the effectiveness of instruments for TEN-T implementation. 

As  a  key  issue  for  the  revision  of  TEN-T  guidelines  and  for  the  post-2013  multi-annual 
financial  framework  has  been  how  to  ensure  the  best  possible  use  of  the  EU  financial 
contribution  in  order  better  to  achieve  the  objectives  set  out  in  the  Guidelines,  the 
Commission has consulted stakeholders on the following aspects: 

In  which  way  can  the  different  sources  of  EU  expenditure  be  better  coordinated  and/or 
combined in order to accelerate the delivery of TEN-T projects and policy objectives? 

How  can  EU  funding  strategy  coordinate  and/or  combine  the  different  sources  of  EU  and 
national funding and public and private funding? 

the  setting  up  of  a  European 

Would 
implementation gap in the completion of TEN-T projects and policy objectives? 

framework  adequately  address 

funding 

the 

The  majority  of  contributors,  especially  at  Member  State  and  regional  level,  support  better 
coordination  between  different  financial  instruments  that  fund  TEN-T  at  Community  level, 

97 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2010:0212:FIN:EN:PDF 

70

 
 
                                                 
namely Cohesion and Structural Funds (CSF), research funding, the TEN-T programme and 
the  EIB's  interventions.  However,  there  is  little  support  for  the  idea  of  merging  the  TEN-T 
programme and the part of CSF funding transport investments in a single fund. Some reject it 
as immature and putting transparency at risk, while some Member States emphasise the need 
to focus on the development needs of cohesion regions. One Member state asks for clarifying 
the  role  and  the  goals  of  the  different  funding  instruments  available.  One  environmental 
organisation  sees  the  possibility  of  a  merging  the  different  funds  as  a  possible  chance  to 
achieve climate change goals and to assure greater coherence of the different projects. There  
s  strong  support  among  the  respondents,  including  some  Member  States,  for  the  idea  of  an   
integrated  financial  framework,  guiding  investments  in  TEN-T  across  the  different  funding  
instruments. Such a framework could contribute to an optimisation of the use of EU funding 
and remove the confusion that is sometimes felt when it comes to EU support. Moreover, a 
funding  strategy  should  aim  at  better  coordinating  the  available  sources  of  financing  and 
concentrating available EU resources on projects of strategic importance and high European  
added value. The support for an integrated financial framework goes often together with the 
emphasis on demonstrating stronger EU added value for projects financed with EU funds, i.e. 
focus on the Core Network on cross-border projects. The concept of EU added value should 
be objective, clear and transparent, with considerable attention paid to the cross-border aspect 
(at  both  internal  and  external  borders).  There  is  support  for  maintaining  the  option  of  co-
financing  different  parts  of  big  infrastructure  projects  from  different  sources  (e.g.  CSF  and  
TEN-T). Some support the idea of increased cofinancing when the projects considered make a 
particular contribution to environmental or innovation objectives. There is limited support for  
enerating  additional  sources  for  funding  from  infrastructure  charges  or  revenues  from  
mission trading schemes and earmarking them to be reinvested by the Member States for their  
nfrastructure. However, some Member States support the reinvestment of all revenues coming  
rom the application of Eurovignette in the transport field, while tolls and revenues generated  
y  road  transport  should  be  entirely  earmarked  to  transport  investments  and  not  destined  to  
ther purposes. Some local authorities are in favour of introducing congestion charging. Some  
ember States feel that user financing is also an important way to generate revenue for national  
nfrastructure investments and at the same time internalise external costs caused by transport. 
Although, most Member States clearly point out that planning and implementation has to be 
done by them, some associations and European organisations prefer a centralised approach led 
by the EU level.  

There is a wide range of diverse proposals concerning the focus future funding should: 

• 

• 

• 

• 

• 

focus on cross-border sections or – in other contributions - on sections crossing natural 
barriers,  
focus on projects of strategic importance and high EU added value (e. g. projects  eing 
part of several TEN-T sections/ nodes and/or connecting TEN-T with regional feeder 
and distribution networks), 
focus  on  demand  management  projects,  like  road  pricing  schemes  and  traffic 
avoidance projects, 
focus  on  low-carbon  energy  infrastructure  and  projects  to  improve  transport 
efficiency, 
focus on existing infrastructure and capacities (e. g. upgrades, maintenance) and less 
focus on building new infrastructure. 

A  contributor  from  the  private  sector  reminds  of  possible  distortion  of  competition  effects 
which  have  to  be  checked  in  advance.  Others  are  calling  for  an  approach  also  including 
important  sections  of  Trans-European  axis  within  a  Member  State,  especially  in  transit 

71

 
countries. One proposal comments the different cost-benefit analysis and calls for a common 
approach  for  assessing  them.  One  Member  State  is  also  asking  for  funding  possibilities  for 
maintenance of existing routes.  

As  regards  the  role  of  public-private  partnerships  (PPP),    ontributions  are  contrasted:  some 
appreciate  the  "just-in-time,  just-in-cost''  contribution  to  infrastructure  investments  and 
therefore  propose  the  promotion  of  PPPs,  while  others  see  private  involvement  in 
infrastructure development as problematic because of the inherent risks to be borne by public 
administrations (e. g. difficult negotiations to conclude contracts, possibly higher investments 
costs,  financing  risks).  PPPs  do  not  make  extra  money  available,  but  help  spread  out  the 
payments  over  a  longer  period  of  time.  Therefore  PPPs  are  seen  as  useful  for  very  specific 
sections, but could neither be a systematic solution nor an alternative to the scarcity of public 
funds.  

One contributor proposes coordination and grouping of the EU funding for financing Priority 
Projects and calling for an adjustment of time  horizons of the EU programmes and  funding 
schemes  to  pay  attention  to  the  more  long-term  planning  horizons  and  implementation 
horizons of the projects to gain security for planning and financing.  

3) TEN-T Policy Review Expert Group 5: Funding Strategy and Financing Perspectives 
for the TEN-T (Final report 7.7.2010) 

To support the Commission, six expert groups were set up, consisting of external experts from 
various  fields:  infrastructure  managers,  infrastructure  planners,  national,  regional  and  local 
representatives, environmental experts, academia, etc. Expert Group 5 focuses on funding and 
financing. 

a) General comments of the Group 

The  current  TEN-T  is  not  yet  a network,  at  best  the  aggregation  of  transport  corridors.  The 
experts  called  for  greater  coordination  between  the  Member  States  and  the  stakeholders 
involved  in  the  delivery  and  the  operating  of  TEN-T  projects.  They  also  pointed  out  the 
current weaknesses in designing and evaluating the projects. 

b) Greater appeal to the transport revenues and internalisation of externalities 

- 

- 

- 

- 

the  huge  constraints  posed  on  public  resources,  worsened  off  by  the  financial  crisis, 
which will durably limit the capacity of Member States to fund large projects; 

the  challenge  to  better  take  into  account  European  objectives  in  terms  of  climate 
change, energy efficiency and innovation; 

the  need  to  adapt  to  the  users  requirements  (the  clients)  and  to  increase  the 
affordability and the profitability of the projects; 

the insufficiently explored potential for a greater involvement of the private sector in 
the delivery of the TEN-T. 

Greater  appeal  to  user  fee  collection.  Indeed  generating  more  revenues  from  transport 
activities  –  and  ensuring  that  these  revenues  remain  to  their  great  extent  in  the  transport 
sector, would significantly relieve national budgets by covering at least the maintenance costs 
and the operating costs. 

72

 
 
 
 
Ultimately the Group agreed that earmarking could be a viable financing solution if applied at 
least on trans-European corridors. 

c) The EU funding issues: greater coordination and focus on the added-value 

In  order  to  connect  national  networks,  the  completion  on  cross-border  sections  are  of  vital 
importance,  but  it  can  only  be  achieved  if  the  Member  States  concerned  can  coordinate 
themselves  not  only  politically  speaking  but  preferably  on  operational  and  financing  terms 
too. 

The  Group  finally  stated  that  the  EU  contribution  should  be  channelled  to  projects  and 
programmes with the highest EU added-value (EUAV). However the experts suggested that 
emphasis should also be equally given to the promotion of profitable projects in line with the 
TEN-T policy in order to pace the completion of the network. 

d) The participation of the private sector 

The  discussion  focused  mainly  on  Public  Private  Partnerships  (PPPs)  and  on  the  various 
opportunities to increase liquidity in response to the crisis. 

To facilitate the participation of the private sector in the delivery of the TEN-T, the experts 
also  stressed  the  usefulness  of  instruments  whose  object  is  to  mitigate  the  risks  and  their 
associated costs, especially in the framework of availability-based PPPs. The Group suggested 
that these instruments could take the form of guarantees which could be called by the private 
partner on first demand. 

Some  members  also  proposed  to  give  further  considerations  to  bonds  opportunities  -  in 
particular  for  the  issuance  of  project  bonds  for  TEN-T  projects,  which  could  be  bonds 
guaranteed by the EU budget to be sold directly on the international markets. 

The infrastructure investments and the "real economy" 

(1)  In  line  with  the  Europe  2020  Strategy  and  in  particular  its  ''resource  efficient  Europe'' 
flagship  initiative,  the  Commission  should  set  infrastructure  investments,  in  particular 
transport  infrastructure,  as  a  political  priority  to  exit  the  crisis  and  to  ensure  growth  for 
Europe. This priority should be reflected in the post-2014 Multi-annual Financial Framework 
(MFF). 

(2)  The  Group  encourages  the  Commission  to  investigate  further  on  the  opportunity  to 
deconsolidate  some  "productive  investments"  such  as  (transport)  infrastructure  from  the 
government  deficit  with  the  objective  to  accelerate  the  exit  of  the  crisis.  Some  temporary 
amendments to the Stability and Growth Pact could be envisaged. 

Project’s definition and project’s preparation 

(3)  The  TEN-T,  and  in  particular  the  TEN-T  Core  Network,  should  give  more  focus  to 
(financially)  affordable  and  profitable  projects  (e.g.  projects  which  can  generate  sufficient 
revenues to use more effectively public funding). 

(4)  For  the  non  profitable  projects/programmes,  due  EU  economic  and  net  social  benefits 
(EUAV)  should  be  demonstrated  in  line  with  the  various  EU  policy  objectives  and  the  EU 
2020 Strategy. 

(5)  The  Commission  should  then  provide  a  standard  framework  for  the  assessment  of  the 
EUAV  of  TEN-T  Projects,  including  propositions  for  a  harmonization  of  the  Cost  Benefit 
Analysis. 

(6) The fulfilment of a standard evaluation should be conditional to the allocation of TEN-T 
funding. 

73

 
(7)  Only  projects  with  due  financial  profitability  and/or  with  a  positive  EUAV  should  be 
considered for TEN-T funding. 

Improving efficiency in the implementation process and in the use of public capacity 

(8)  The  mandate  of  the  European  Coordinators  could  comprise  more  responsibilities  as 
regards  coordination.  In  particular  with  a  dedicated  support  from  DG  MOVE,  the 
Coordinators  could  contribute  to  the  financial,  the  technical  and/or  the  operational 
coordination of their corridor. This can include participating in the elaboration, the checking 
and/or  the  endorsement  of  critical  pieces  related  to  the  projects  within  the  corridor,  such  as 
financial engineering, corridor planning, technical issues, pricing, operation, etc.  

(9) TEN-T corridor bodies - for instance  in the form of European  Economic Interest Group 
(EEIG), could be set up under the approval of the Commission. They could be composed of 
infrastructure  managers, representatives of the Member States and operators involved in the 
corridors. They could participate in the bottleneck definition (developing a masterplan at the 
corridor level), pool national and European resources and ensure operational coordination of 
the corridor. 

(10)  TEN-T  funding  should  become  more  conditional  to  the  pooling  of  national  resources 
along the corridors of the forthcoming TEN-T Core Network so as to ensure completion of the 
projects/corridors.  The  conditionality  can  be  reflected  in  the  co-financing  rate,  by  way  of 
either incentives or full conditionality (no cofinancing if no pooling). 

User fee collection schemes and earmarking of the revenues 

(11)  The  Commission  should  foster  (potentially  make  compulsory)  pricing  the  use  of  the 
infrastructure with earmarking of the revenues on the TEN-T Core Network, and encourage 
its use for the secondary network. 

(12) The implementation of user fee collection could be reflected in the support rate by way 
of either incentives or full conditionality. 

(13)  The  Commission  should  review  the  conditions  attached  to  EU  grants  in  the  Cohesion 
area where a user fee collection is in place so as to ensure non discriminatory treatment. 

Eurovignette I & II: paving the way for a greater internalisation of external costs at the 
EU level 

(14) The implementation of Eurovignette should be set as a political priority by the European 
Commission.  A  first  step  would  be  to  make  its  application compulsory  on  the  TEN-T  Core 
Network. 

(15)  The  Commission  should  foster  the  use  of  cross-financing  for  the  removal  of  critical 
bottlenecks  within  the  TEN-T  Core  Network.  A  list  of  TEN-T  priority  projects  within  the 
Core Network which should be subject to cross-financing could be defined. 

(16)  Further  investigation  on  the  potential  of  positive  externalities  as  surplus  generation  for 
funding should be considered. 

(17) The Commission could propose that part of the revenues generated by the internalisation 
of externalities could be transferred to the EU level with the perspective of leveraging funds 
for further TEN-T operations. It could be saved into a dedicated fund managed either by the 
Commission or by the European Investment Bank (EIB) with specific goals as regards TEN-T 
implementation, for instance financing guarantees for Public Private Partnership deals. 

Focus on the EU added-value (EUAV) 

74

 
(19) The TEN-T contribution should focus  on  investments with strong EUAV as defined in 
the TEN-T Core Network and in the TEN-T conceptual pillar. 

(20)  The  TEN-T  funding  should  take  into  account  “quick  wins”  opportunity  based  on  soft 
investments  which  can  significantly  improve  the  efficiency  of  the  network  at  lesser  costs. 
Both horizontal measures and self-sustainable programmes could apply as “quick wins”. 

Leverage of the EU contribution 

(21)  The  Commission  should  investigate  further  on  the  possibility  to  better  coordinate  the 
Cohesion and structural funds and the priority TEN-T investments, without prejudice to the 
objectives of the Cohesion policy. 

(22) The TEN-T policy should define Core Network Priority Investments (CNPIs) for the next 
Multi-annual  Financial  Framework  (post  2014).  These  CNPIs  would  comprise  a  short  list 
(max.  10)  of  priority  projects/programmes  within  the  TEN-T  Core  Network  where  the 
leverage  effect  of  the  EU  contribution  will  be  concentrated.  It  would  typically  concern  the 
removal of major bottlenecks of the network. 

(23)  Conversely,  road  or  air  projects  outside  the  TEN-T  Core  Network  should  not  be 
considered for TEN-T co-financing.  

(24)  The  Commission  should  consider  the  opportunity  of  revising  the  TEN-T  co-financing 
rates. For instance for the CNPIs, the co-financing rates could go beyond 30% (up to 50%) of 
the eligible cost so as to make a significant difference in the funding of genuine EU priorities. 

(25)  A  ratio  of  up  to  [-5%  :  +5%]  could  be  applied  to  the  standard  co-financing  rates 
depending  on  performance  criteria  such  as:  effective  implementation  of  transport  policy 
measures  of  EU  significance  (railway  packages,  ERTMS,  Eurovignette,  etc.);  absorption 
(quality  of  the  evaluation,  degree  of  preparation    and  readiness  of  the  projects);  European 
coordination, generation and earmarking of transport revenues; etc. 

The PPP market and the TEN-T projects 

(26)  The  Commission  should  support  the  continuation  of  the  European  PPP  Expertise  Centre 
(EPEC) in the next Multi-annual Financial Framework. 

(27) The allocation of TEN-T grants could be made conditional to the application of a ‘Public 
Sector  Comparator’  (*).  The  TEN-T  Executive  Agency  could  provide  assistance  to  the 
beneficiaries in this domain, including considerations for a standard framework for the PSC. 

(28)  DG  MOVE  with  the  support  of  the  TEN-T  Executive  Agency  and  the  European 
Investment Bank (EIB) could identify and assess TEN-T projects with PPP potential in order 
to form a PPP project pipeline.  

(29)  With  relation  to  (28),  amongst  the  PPP  project  pipeline  DG  MOVE  could  select  some 
projects  to  act  as  'pilot  projects'.  A  project  coordination  team  including  staff  from  the  EU 
Institutions  could  be  set  up  to  accompany  the  project  and  the  beneficiaries  from  the  project 
preparation through, to financial close. 

(30) The Commission should provide a standard framework to the blending of EU Grants and 
(TEN-T) PPPs, considering both the Cohesion funds and the TEN-T budget. 

(31)  The  Commission  could  consider  the  use  of  escrow  accounts  to  contribute  more 
effectively to PPP deals. 

(32) The Commission should consider putting on hold any change regarding the accounting 
rules for PPP investments. In times of crisis, if carefully used, PPPs could relieve pressure on 
public  finance.  The  change  currently  envisaged  in  ESA  95  would  result  in  bringing  on-

75

 
balance sheet almost all PPP investments. However a clarification of the existing rules could 
be helpful. 

Ideas on the future financing of the TEN-T 

(33)  The  Commission  and  the  EIB  should  broaden  the  scope  of  the  current  LGTT  by 
enlarging  its  applicability  for  availability-based  PPPs  and  extending  the  guarantee  period  to 
the whole duration of the PPP contract. 

(34)  The  Commission  together  with  the  EIB  should  investigate  further  on  the  guarantee 
mechanisms capable to be called on first demand, in particular for availability-based schemes. 

(35) In order to ensure more flexibility as well as to be able to respond to the market needs on 
time,  the  TEN-T  regulation  could  enhance  its  provision  to  risk  sharing  facility  from  1%  to 
10%  of  the  overall  TEN-T  budget  (*).  The  funding  of  LGTT  would  be  included  in  this 
envelope.  

(36) The creation of a financing instrument under the TEN-T regulation should be associated 
to a pilot project in order to ensure right response of the market, with reasonable prospects as 
regards a potential project pipeline. If recommendation (35) was to be adopted, the creation of 
a new risk sharing facility could intervene at any moment during the next budgetary period. 

(37) Conversely if a financing instrument is not performing well, the TEN-T regulation could 
foresee  conditions  for  the  termination  of  the  instrument  before  the  end  of  the  budgetary 
period.  The  refund  of  the  TEN-T  contribution  would  then  be  used  for  other  financial 
transactions. 

Developing Capital Market initiatives for the TEN-T: the case of bond issuance 

(38) The Group encourages the Commission to investigate further on the feasibility of issuing 
E-bonds. Given the limited capacity of Member States to borrow on the market due to their 
current  deficit  and  level  of  indebtment,  this  solution  -  maybe  temporary,  could  benefit  to 
"productive investments" and accelerate the exit of the crisis. 

(39) The EIB and the Commission should support the development of TEN-T project bonds, 
notably by providing credit enhancement facilities (guarantees).  

(40) DG MOVE, with the support of the TEN-T Executive Agency and the EIB should assess 
the TEN-T project pipeline in order to identify potential candidates for project bonds. 

BROADBAND AND DIGITAL INFRASTRUCTURE 

In the field of broadband rollout, numerous consultations with Member States, industry and 
social  stakeholders  have  been  carried  out  for  individual  initiatives  in  the  field  of  broadband 
infrastructure, digital services and their financing aspects such as: 

• 

In March 2011 Vice-President Kroes convened a "roundtable" of CEOs to request them to 
come  forward  with  concrete  proposals  on  how  to  address  the  broadband  investment 
challenge. The CEOs, from a broad range of companies and stakeholders with an interest 
in  broadband  networks  (including  content  providers,  equipment  makers,  investors  and 
telecoms operators), on 13th July submitted a paper summarising their common position.98 

98http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/11/508&format=HTML&aged=0&language
=EN&guiLanguage=en 

76

 
 
 
 
                                                 
•  The  first  Digital  Agenda  Assembly  took  place  in  Brussels  on  16th  and  17th  June  2011. 
There were two workshops dedicated to the rollout of broadband, several more on digital 
services.  Altogether,  the  Digital  Agenda  Assembly  was  attended  by  more  than  1,000 
participants.  

•  For  the  use  of  the  financial  instruments,  the  Mid-Term  Evaluation  of  the  Risk-Sharing 
Finance  Facility,  was  completed  by  a  group  of  independent  experts  in  July  2010, 
concluded  that  the  use  of  Financial  Instruments  in  addition  to  grants  as  "having 
dramatically expanded the financing" of research and innovation efforts.  

•  With the support of the EU, the EUTC (European Utilities Telecom Council) is managing, 
since  January  2009,  ICT4SMARTDG  an  open  virtual  forum  where  stakeholders  in  the 
telecommunications  services  sector  meet  with  stakeholders  within  the  local  distributed 
power generation sector, the manufacturers of local renewable sources and the distribution 
system operators. The objective is to create consensus on how to implement smart grids 
from the technical, financial and regulatory points of view.   

•  Finally, DG INFSO is currently managing an expert group on synergy between electricity 
utilities and telecom operators. The aim of the group is to bring together these two sectors 
in  order  to  identify  synergies  at  infrastructure  and  services  level  for  the  deployment  of 
Smart  Grids.    The  main  conclusion  of  a  recent  (27  May  2011)  workshop  was  that 
significant  and  sustained  capital  investment  is  required  and  that  opportunities  to  use 
existing  infrastructure  exist,  and  collaboration  in  the  development  and  operation  of  new 
systems can be beneficial for both. 

As far as digital services are concerned consultations have taken place for Europeana 
multilingual services and Safer Internet, while sustainability studies are currently ongoing for 
STORK, PEPPOL, and digital libraries. All these studies include consultation and interviews 
with relevant stakeholders.

77

 
ANNEX 2 

Ex-post Evaluations 

CROSS-SECTORAL  

Commission  Communication  "Trans-European  Networks:  Towards  an  integrated 
approach", COM(2007) 135 

The  Communication  is  the  outcome  of  the  work  of  a  steering  group  constituted  of  five 
Commissioners,  set  up  on  20  July  2005,  at  the  request  of  the  Commission,  to  examine  the 
possible synergies between the trans-European networks along with methods of funding and 
transport  and 
potential  distribution.  It  has  established 
telecommunications  networks  seem  the  most  promising  and  ways  of  interconnecting  the 
electricity networks are also worth exploring. 

that  synergies  between 

the 

The  steering  group  also  underlined  the  potential  environmental  benefits  of  integrating  the 
TEN. In fact, the 30 priority projects involving the trans-European transport network largely 
favour methods of transport which are more fuel-efficient and environmentally-friendly, such 
as rail or water. Interconnections between the national energy networks and connections with 
renewable energy sources will also optimise the use of available capacities in each Member 
State, thus reducing the environmental impact. 

The steering group recommended: continuing research into synergies between the TENs with 
the  aim  of  producing  and  circulating  a  manual  of  good  practices,  and  developing  synergies 
between  the  objectives  of  cohesion  policy  and  the  priorities  adopted  in  the  TEN  context; 
evaluating  the  need  for  alternative  solutions  for  availability  payments  over  several  financial 
the 
periods  and  making  appropriate 
development  of  public-private  partnerships  and  promoting  this  type  of  funding;  completing 
TEN priority projects on schedule while ensuring the application of environmental law 

if  necessary;  monitoring 

legislative  proposals 

"Synergies  between  trans-European  networks.  Evaluations  of  potential  areas  for 
synergic impacts", Final report, ECORYS, 2006.  

This study, undertaken at the request of the steering group on possible synergies between the 
trans-European  networks,  has  identified  a  range  of  examples  of  possible  synergies  between 
various types of projects across the sectors:  

(1) procedural – arising from the integrated planning of various infrastructure networks (e.g. 
coordinated planning across modes and borders; single Strategic Environmental Assessment, 
combined land acquisition, common consultation process for packages of infrastructure);  

(2) physical – either lower costs and impacts due to the combined construction of sections of 
infrastructure networks and structural works, alongside both existing and new infrastructures 
such  as  bridges,  tunnels,  underpasses  and  the like  (for  e.g.  laying  high-voltage  cables  along 
the  banks  of  canals  and  rivers,  low-voltage  interconnections  (2  x  25  kV)  along  high-speed 
railway lines, more systematic interconnections of underground high-voltage lines (300 to 700 
kV) along transport network paths); or higher efficiency of infrastructure as in the case of the 
deployment of smart  grids on energy networks, essential for decentralised energy production, 
and  deployment  of  ICT  services  and  broadband  infrastructure  in  transport  for  intelligent 
traffic management;  

(3)  financial  –  the  additional  value  or  revenues  that  can  be  created  and  captured  by  the 
infrastructure provider or operator when sections of infrastructure networks are combined.  

78

 
However,  no  steps  have  ever  been  taken  on  the  EU  level  to  allow  exploiting  synergies  in 
terms  of  programming  and  disbursement  of  the  EU  financial  aid  or  procedures  (impact 
studies, planning and budgetary arrangements). 

ENERGY INFRASTRUCTURE 

The chapter on energy infrastructure summarizes the main conclusions from the most recent 
ex-post evaluations carried out between 2008 and 2011 to provide an overview on the main 
recommendations  for  the  revision  of  the  TEN-E  programme.  A  comprehensive  list  of  other 
studies and contributions is made available in addition.  
In  2007  the  Commission  Communication  on  the  Priority  Interconnection  Plan99 
concluded  that  with  existing  infrastructure  investment,  the  EU  would  be  able  to  construct  a 
real single internal market. It would not be able to integrate the required increased production 
of  electricity  from  renewable  sources.  It  would  continue  paying  higher  costs  as  a  result  of 
congestion and of maintaining inefficient capacity in each of the insufficiently interconnected 
energy  areas.  The  Plan  suggested  further  action  to  provide  support  to  key  infrastructure 
undergoing  significant  difficulties  by  appointing  European  coordinators  to  pursue  identified 
priority  projects,  by  planning  of  grids  according  to  consumer  needs,  by  ensuring  the 
acceleration of authorization procedures and by providing a clear framework for investment.   

The  study  by  Ramboll  and  Mercados  "TEN-E  Priority  Corridors  for  Energy 
Transmission"  by  the  Commission  DG  Energy  and  Transport  in  2008  provided  an  in-
depth  analysis  of  the  major  interconnections  and  priority  areas  for  both  gas  and  electricity 
within the EU and to link the EU with key external supplies.  
The  2010  Commission  implementation  report  on  the  TEN-E  networks  2007-2009100 
concluded that there is a need to narrow the focus of TEN-E on a limited number of strategic 
projects demonstrating European priorities. It pointed out that EU strategic interests, related to 
large  gas  import  infrastructure  and  the  connection  to  upstream  sources  or  electricity 
interconnections  with  third  countries  lie  well  beyond  EU  borders.  Connecting  TEN 
infrastructures  to  neighbouring  and  third  countries'  networks,  in  particular  in  the  areas  of 
energy  and  transport,  constitute  an  important  dimension  of  TENs  development  in  order  to 
further leverage their EU added-value. However, in both areas, the TEN-E programme under 
the  current  financial  framework  does  not  allow  EU  funding  of  projects  outside  the  EU  to 
support and match ENPI and IPA instruments.  

The European Energy Programme for Recovery (EEPR) has played an important role as 
driver  and  facilitator  for  project  implementation  as  acknowledged  on  several  occasions  by 
mobilising  infrastructure  projects  and  mitigating  disruptions  of  supply  with  negative  effects 
on  citizens  and  the  European  economy.  The  report  from  the  Commission  to  the  Council 
and  the  European  Parliament  on  the  implementation  of  the  European  Energy 
Programme  for  Recovery101  outlined  the  lessons  learnt  from  the  EEPR  and  evaluated  its 
impact.  The  report  highlighted  that  the  large-scale  support  from  the  EU  side  allowed  the 
energy  infrastructures  to  gain  a  truly  European  dimension  and  to  contribute  to  the 
implementation of the third internal market package and of the new Regulation No 994/2010 
on security of gas supply. EEPR helped to improve the way the internal gas market works by 
providing  for  interconnections  between  western  and  eastern  parts  of  the  EU,  in  peripheral 

99 COM(2006) 846 final 
100 COM(2010) 203 
101 COM/2011/0217 final 

79

 
 
                                                 
Member  States  and  in  Central  and  Eastern  Europe,  by  progressively  completing  a 
bidirectional gas pipeline network and by bringing ‘energy islands’ closer.  

The EEPR also supported the external energy relations by illustrating external suppliers such 
as Turkmenistan, Azerbaijan and Iraq the EU interest and support for the Southern corridor 
and  Algeria  for  the  Mediterranean  corridor  on  the  interest  of  the  European  Union  in 
diversification of energy supply routes. The electricity projects supported are lending strong 
impetus  to  completion  of  the  internal  market  with  the  full  participation  of  all  parts  of  the 
European Union and bringing major improvements to the security of supply of the countries 
and  regions  concerned.  The  programme  also  helps  to  abolish  bottlenecks  and  integrate 
‘energy  islands’  such  as  the  Baltic  States,  the  Iberian  peninsula,  Ireland,  Sicily  and  Malta. 
Several  new  interconnections  are  also  very  important  for  integrating  renewable  energy 
sources into the electricity system.  

In  conclusion,  the  EEPR  has  speeded  up  implementation  of  projects  by  financing  specific 
action,  such  as  technical,  engineering  and  environmental  studies,  procurement  of  long-lead 
items (pipes, cables, converter stations, transformers, etc.) and construction work. Thanks to 
the  programme,  project  promoters  were  able  to  secure  additional  funding  from  financial 
institutions. Moreover, EEPR support supported a number of projects that were facing serious 
permit granting delays to receive priority in the procedure from the national administrations. 
The  European  Energy  Programme  for  Recovery  (EEPR)  was  a  clear  driver  for  timely 
implementation  of  infrastructure  projects.  It  provided  an  incentive  to  quickly  agree  on 
outstanding  issues  to  all  stakeholders  involved,  national  regulators,  project  promoters  and 
Member States.  

In  November  2010  the  Commission  Communication  on  the  "Energy  infrastructure 
priorities  for  2020  and  beyond  –  a  blueprint  for  an  integrated  European  energy 
network"102  identified  investment  needs  and  potential  financing  gaps  for  the  horizon  2020. 
Until 2020, the investment challenge in the EU energy sector is expected to amount to around 
€1  trillion  with  €600  billion  alone  for  transm ission  and  distribution  networks.  Some  €140 
billion will need to be invested in high voltage electricity transmission systems of European 
significance  including  storage  and  smart  grid  applications  at  transmission  and  distribution 
level. About €70 billion  will be required for high pressure gas transmission pipelines (coming 
into  the  EU  and  between  EU  Member  states),  storage,  liquefied/compressed  natural  gas 
(LNG/CNG)  terminals  and  reverse  flow  infrastructure103.  It  has  been  further  estimated  that 
projects  worth  €60  billion  would  be  at  risk  of  not being  delivered as needed by 2020 if the 
existing regulatory and financing framework did not improve.  

The  October  2010  study  by  COWI,  Cambridge  Econometrics  and  KEMA  on  "The 
revision of the trans-European energy network policy (TEN-E)" provided input into this 
analysis of the future priorities and financing gaps.104  

In  Spring  2011  Roland  Berger  prepared  two  evaluation  studies  for  the  Commission  DG 
Energy on the structuring and financing of energy infrastructure projects, financing gaps 
and recommendations regarding the new TEN-E financial instrument and on Permitting 
procedures  for  energy  infrastructure  projects  in  the  EU:  evaluation  and  legal 
recommendations (Annex: Selection of good practices in Member States).105  

102 COM(2010) 677 
103 SEC(2010)1395  
104 
http://ec.europa.eu/energy/infrastructure/studies/doc/2010_11_ten_e_revision.pdf 
105  

The studies are published at the following link: 
http://ec.europa.eu/energy/infrastructure/studies/ten_e_en.htm 

The study is available at: 

80

 
                                                 
 
According  to  the  financing  study  prepared  by  Roland  Berger,  investment  volumes  for  the 
2010-2020 period will, based on forecasts by transmission system operators (TSOs), increase 
by  30%  for  gas  and  70%  for  electricity  compared  to  current  levels.  This  confirms  the 
Commission’s  assessment  that  in  electricity,  annual  investment  will  even  have  to  double, 
compared to investment over the period 2000-2010106.  

On the basis of the analysis of the financing of energy transmission infrastructure projects 
over  the  past  five  years,  Roland  Berger  highlighted  the  need  to  enhance  the  investment 
climate,  increase  capital  market  readiness  of  the  energy  networks,  remove  institutional 
barriers  to  enhance  the  private  equity  investment  and  stimulate  unbundling  and  industry 
consolidation.  With  a  view  to  mitigate  the  financing  gaps  and  the  design  of  a  new  TEN-E 
financial  instrument,  Roland  Berger  recommended  market-based  financing.  As  main 
condition for increased investment volumes to come forward by the market operators, Roland 
Berger  suggested  to  strongly  improve  investment  conditions  through  measures  for  projects 
with  high  priority  for  implementation,  including  priority  premiums  for  projects  facing 
particularly high risks and to provide support for specific project types through the inclusion 
of anticipatory investments in the regulated asset base. On the design of the future EU support 
the  study  concluded  that  a  further  development  of  the  TEN-E  programme  is  needed  with  a 
continuous  financial  support  by  grants  in  combination  with  stronger  EIB  support  and  new 
financial  instruments  and  funds,  like  a  Transmission  Infrastructure  Fund  (similar  to 
Marguerite  Fund).  Roland  Berger  saw  also  a  role  for  the  EU  to  support  TSOs  to  access 
corporate bond markets and to receive a credit rating and support and mediation for complex 
cross-border projects and financial management. 

With regard to permit granting procedures, Roland Berger assessed permitting practices in 
13  Member  States,  identified  best-practices  and  provided  recommendations  on  policy 
measures  to  implement.  Among  the  main  recommendations  Roland  Berger  considered  the 
need to improve transparency and management of the processes by defining projects of public 
interest,  by  creating  national  and  European  energy 
infrastructure  supervision,  by 
implementing  and  monitoring  plans  and  by  establishing  time  limits.  The  study  also 
recommended  that  Member  States  should  designate  one-stop  shops  with  decision-making 
power  where  possible.  Thirdly,  the  study  suggested  the  need  to  optimise  the  permitting 
procedures  by  introducing  mandatory  scoping  and  by  limiting  recourse  to  a  single  level  of 
jurisdiction.  Further  measures  to  improve  stakeholder  involvement  and  communication, 
including a communication strategy at EU level, were suggested.  

Following  a  request  from  the  Council,  the  Commission  presented,  in  a  Staff  Working 
Document107 to the June 2011 Energy Council, an analysis on (1) the investment needs of 
European  relevance  in  electricity  and  gas  infrastructures,  (2)  the  investments  at  risk  of  not 
being  delivered  due  to  various  obstacles,  and  (3)  the  measures  proposed  to  respond  to  the 
financing requirements and overcome the obstacles identified. The Commission approach has 
been  subsequently  supported  by  the  Committee  of  the  Regions108  and  the  European 

106 
The 2006 inquiry into the European Gas and Electricity Sectors underlined that "Amounts invested in 
cross-border  infrastructure  in  Europe  appear  dramatically  low.  Only  200  million  €  yearly  is  invested  in 
electricity grids with as main driver the increase of cross-border transmission capacity." 
107 
108 CoR 7/2011 rev. 2 – ENVE-V-010 

SEC(2011) 755 

81

 
                                                 
Parliament109.  The  latter  also  came  out  in  favour  of  using  the  EU  budget  to  promote  the 
energy infrastructures110.  

List of ex-post evaluation and studies: 

"Adaptation  and  Mitigation  Strategies  (ADAM)  –  Supporting  European  Climate  Policy", 
2009. 

the  European  Commission, 

report, 

final 

June 

project 
funded 
http://www.adamproject.eu/  

by 

* Arup, "Feasibility of Europe-wide CO2 infrastructures", study for the European Commission 

DG Energy, 2010. 

* Boston Consulting  Group "Electricity Storage: Making Large-Scale Adoption of  Wind and 

Solar Energies a Reality", study by Cornelius Piper and Holger Rubel, March 2010. 

CEER,  "European  Infrastructure  Package:  Investment  needs  and  financing  mechanisms  – 

Financing Task Force conclusions", Reference C11-FTF-02-01, 23 March 2011 

*  Centro  Elettrotecnico  Sperimentale  Italiano,  Instituto  de  Investigación  Tecnológica, 
Mercados  Energeticos,  Ramboll,  "Energy  Infrastructure  Costs  and  Investments  between 
1996  and  2013  (medium-term)  and  further  to  2023  (long-term)  on  the  Trans-European 
Energy Network and its Connection to Neighbouring Regions with emphasis on investments 
on renewable energy sources and their integration into the Trans-European energy networks, 
including  an  Inventory  of  the  Technical  Status  of  the  European  Energy-Network  for  the 
Year  2003"  (TEN-Energy-Invest),  study  for  the  European  Commission  DG  Energy  and 
Transport, October 2005. 

*  COWI,  Cambridge  Econometrics  and  KEMA,  "The  revision  of  the  trans-European  energy 
network  policy  (TEN-E)",  impact  assessment  study  for  the  European  Commission  DG 
Energy, October 2010. 

* 

ENTSO-E, 

"Ten-Year 

Network 

Development 

Plan", 

2010. 

https://www.entsoe.eu/index.php?id=232 

* ENTSO-E, "System Adequacy Forecast 2010-2025", 2009. https://www.entsoe.eu/resources/ 

publications/system-development/ 

ENTSOG, 

"Ten-Year 

Network 

Development 

Plan", 

February 

2011. 

http://www.entsog.eu/publications/index_g_investment.html 

* European Commission, Joint Research Centre (JRC), "Evolution of size and cost of a trans-

European CO2 pipeline network", 2010. 

European  Commission,  "The  implementation  of  the  Trans-European  Energy  Networks  in  the 
period 2007-2009", report pursuant to Article 17 of Regulation (EC) 680/2007 and Articles 
9(2) and 15 of Decision 1364/2006/EC, COM(2010)203, May 2010. 

European  Commission,  "Annex  to  Report  on  the  implementation  of  the  Trans-European 
Energy  Networks  in  the  period  2007-2009",  Commission  Staff  Working  Document, 
SEC(2010)505, May 2010. 

109  European  Parliament  resolution  of  5  July  2011  on  energy  infrastructure  priorities  for  2020  and  beyond 
(2011/2034(INI)) 
110  European  Parliament  resolution  of  8  June  2011  on  Investing  in  the  future:  a  new  Multiannual  Financial 
Framework (MFF) for a competitive, sustainable and inclusive Europe (2010/2211(INI)) 

82

 
 
                                                 
European Commission, "Energy infrastructure priorities for 2020 and beyond – A Blueprint for 

an integrated European energy network", COM(2010)677, November 2010. 

European  Commission,  "Impart  assessment  on  Energy  infrastructure  priorities  for  2020  and 
beyond  –  A  Blueprint  for  an  integrated  European  energy  network",  Commission  Staff 
Working Document, SEC(2010)1396, November 2010. 

European Commission, "Smart Grids: from innovation to deployment", COM(2011)202, April 

2011. 

European Commission, “Energy Infrastructure Investment needs and financing requirements”, 

Commission Staff Working Document (SEC(2011)755 final), June 2011. 

European  Commission,  “2009-2010  Report  on  progress  in  creating  the  internal  gas  and 

electricity market”, Commission Staff Working Document, 2011. 

European Commission, “DG ENER Staff Working Document: Report on Progress in Creating 

the Internal Gas and Electricity Market – Technical Annex”, 2011. 

European  Parliament,  "Energy  Infrastructure  Priorities",  Directorate-General  for  Internal 
Policies,  Policy  Department  Economic  and  Scientific  Policy  –  Industry,  Research  and 
Energy, Briefing Paper, March 2011. 

*  EWI,  "Model-based  Analysis  of  Infrastructure  Projects  and  Market  Integration  in  Europe 
with Special Focus on Security of Supply Scenarios", University of Cologne, May 2010. 

*  "EWIS  –  European  Wind  Integration  Study",  final  report,  March  2010.  http://www.wind-

integration.eu/ 

* High-Level Advisory Group on ICT for Smart Electricity Distribution Networks: “ICT for a 
low  carbon  Economy  –  Smart  Electricity  Distribution  Networks”,  supported  by  the 
European Commission, DG for Information Society and Media, July 2009. 

* ILF, Purvin&Gertz, "Technical Aspects of Variable Use of Oil Pipelines coming into the EU 

from Third Countries", study for the European Commission DG Energy, 2010. 

*  OffshoreGrid 

study,  various  presentations 

and 

interim 

reports, 

July  2011. 

http://www.offshoregrid.eu/ 

* Ramboll Oil and Gas, "Study on natural gas storage in the EU", October 2008. 

*  Supponen,  Matti,  “Influence  of  national  and  company  interests  on  European  electricity 
transmission investments”, PhD thesis for the Helsinki University of Technology, 2011. 

"REALISEGRID – Research, Methodologies and Technologies for the effective development 
of  pan-European  key  grid  infrastructures  to  support  the  achievement  of  a  reliable, 
competitive  and  sustainable  electricity  supply",  project  supported  by  the  European 
Commission,  various  reports  and  final  conference,  February  2011.  http://realisegrid.rse-
web.it/default.asp 

Rebours,  Y.,  M.  Trotignon,  V.  Lavier,  T.  Derbanne,  and  F.  Meslier,  “How  much  electric 
interconnection  capacities  are  needed  within  Western  Europe?”,  Conference  on  European 
Energy Markets (EEM), June 2010. 

Ramboll,  Mercados,  "TEN-E  Priority  Corridors  for  Energy  Transmission",  study  for  the 

European Commission DG Energy and Transport, 2008. 

CEER, "Energy Infrastructure Package – Draft Position Paper on Cost Allocation", Reference 

C11-IBP-30-03, 25 March 2011. 

83

 
ENTSO-E, "Overview of Transmission Tariffs in Europe: Synthesis 2010", September 2010. 

Glachant, Jean-Michel, Haikel Kalfallah, “Identifying Benefits and Allocating Costs for Cross-
Border  Electricity  &  Gas  Infrastructure  Projects”,  European  Commission  and    Florence 
School of Regulation workshop conclusions, 4 May 2011 

Helm,  Dieter,  "Redefining  the  models  for  private  sector  investment  in  infrastructure  –  The 
RAB Model", 9th February 2011 presentation, Slides for the UK Infrastructure Summit. 

Helm, Dieter, and Tom Tindall, "The evolution of infrastructure and utility ownership and its 
implications,  Oxford  Review  of  Economic  Policy,  Volume  25,  Number  3,  2009,  pp.411–
434. 

* KEMA, REKK, "Methodologies for Gas Transmission Network Tariffs and Gas Balancing 
Fees in Europe", study for the European Commission DG Transport and Energy, December 
2009. 

Pelkmans,  Jacques,  Lionel  Kapff,  “Interconnector  Investment  for  a  Well-fuctioning  Internal 
Market: What EU regime of regulatory incentives?”, Bruges European Economic Research 
Papers, BEER n°18, 2010. 

Rious, Vincent, Jean-Michel Glachant, Philippe Dessant, "Transmission network investment as 

an anticipation problem", EUI Working Paper RSCAS 2010/04, January 2010 

Roland  Berger,  "Study  on  the  structuring  and  financing  of  energy  infrastructure  projects,  the 
financing gaps and recommendations regarding the new TEN-E financial instrument", study 
for the European Commission DG Energy, May 2011 (2011a). 

Observatoire  Méditerranéen  de  l’Energie,  "Realisegrid  –  D3.6.2:  Incentive  schemes  and 
regulation framework for transmission development in Europe", final report, 29 April 2010. 

Rothschild,  presentation  at  the  Hungarian  EU  Council  Presidency  /  European  Commission 

high-level energy infrastructure conference, May 2011. 

TRANSPORT INFRASTRUCTURE 

Loan  Guarantee  Instrument  for  TEN-T  Projects  –  Mid-term  Review,  European 
Investment Bank, July 2011 

Findings. The LGTT has been successfully utilised in a number of traffic revenue-risk TEN-T 
PPP transactions from 2008 to date: six operations in France, Germany, Portugal and Spain, in 
the  road  and  rail  sectors  involving  a  total  capital  investment  of  more  than  EUR  10bn.  By  
improving  the  risk  profile  of  the  senior  debt,  the  LGTT  has  enabled  revenue  risk  TEN-T  
transactions  to  close  even  in  recent  adverse  market  conditions.  It  has  also  generated  a  high 
multiplier  effect/leverage  on  the  risk  capital  committed  by  the  EC/EIB  to  the  LGTT.  The 
LGTT has been incorporated into the financing of most eligible revenue-risk TEN-T projects 
reaching  financial  close,  while  the  current  LGTT  pipeline  involves  a  further  capital 
investment of EUR 13bn. The positive market perception of the LGTT will also facilitate the 
market introduction of another joint EIB/EC credit enhancement instrument: the Europe 2020 
Project Bond Initiative.  

Recommendations 

 - In the context of the development of the Project Bond  Initiative, which will apply from 
2011-2020, it is proposed that the LGTT be also developed further in order to align it with the 

84

 
 
 
Project  Bond  instruments  and  to  allow  the  instrument  to  profit  from  its  established  market 
credibility to credit enhance commercial bank senior debt. 

–  Changes  in  the  EC/EIB  LGTT  cooperation  agreement  should  be  introduced,  notably  in 
order to align it to the Project Bond instruments, to the extent allowed by the existing legal 
basis; 

– In addition, the scope of LGTT application should be extended to credit enhance senior debt 
of projects to be refinanced early in the operating period (up to 5 years post construction); 

- The risk- and revenue-sharing mechanism should be aligned to follow the principles of the 
Project Bond Initiative to the extent possible. 

Mid-term evaluation of the TEN-T Programme (2007-2013) - final Report, Steer Davies 
Gleave111, March 2011 

Steer Davies Gleave was appointed to conduct a Mid-term evaluation of the trans-European 
Network  transport  Programme  (2007-2013).  The  report  formulates  overall  conclusions  and 
possible  recommendations  on  the  implementation  of  the  TEN-T  Programme  with  a  view  to 
providing input to the revision of the TEN-T Programme and policy. 

Findings. The objectives of the Programme are so general that it makes any evaluation of the 
Programme  successes  difficult.  The  Programme  has  been  the  catalyst  to  a  number  of  key 
pieces of transport infrastructure in Europe, and has been playing a part in the structuring of 
the transport network by allowing transport investments to be focussed. Its political leverage 
is  high  but  its  financial  leverage  is  poor.  The  Programme  has  clearly  made  a  positive 
contribution to the mobility needs of the European citizens and goods. However some aspects 
of  the  Programme  need  to  be  improved  which  requires  a  revision  of  the  Guidelines  and 
Regulation and of some internal aspects of the Programme practices. 

The Programme’s reporting requirements are significant, with a system of doublechecks in 
place. Member States are required to undertake technical monitoring and financial control of 
projects in close cooperation with the Commission, and need to provide the Commission with 
a  description  of  the  control,  management  and  monitoring  systems  set  up  to  ensure  that 
projects  are  successfully  completed.  This  is  also  the  case  with  the  selection  procedures  for 
TEN-T funding meaning that projects must be endorsed and assessed by the Member States 
first. This process increases the checks and scrutiny that project plans are put under. 

The political leverage of the  Programme  is  however much higher than its share of funding 
would  otherwise  suggest  as  recognised  by  all  stakeholders.  For  Member  States  it  is  more 
difficult politically to cancel projects once they have been selected in the TEN-T projects, so 
if projects as a part of national austerity programmes have to be losing national funding it is 
expected that those TEN-T projects will not be at the top of this list. For the private sector the 
“seal of endorsement” provided by the EC funding of TEN-T projects is less likely to play a 
significant  role  in  the  decision  to  invest  in  projects,  but  it  shows  a  stronger  public 
commitment to these projects, meaning that the project is less likely that some others to see its 
funding cancelled or postponed. 

The  EU  funding  is  fragmented  between  the  TEN-T  Programme,  the  Cohesion  and  the 
Structural funds and the evaluation found that the Programme would benefit from a stronger 

111http://ec.europa.eu/transport/infrastructure/midterm_review/doc/final_report_v_to_commission_12_04_2011.
pdf 

85

 
 
                                                 
partnership  between  DG  REGIO  and  DG  MOVE  to  achieve  the  EU  transport  policy 
objectives. 

Cross-border  projects  are  progressing  slowly  and  are  fragmented  because  of  the  lack  of 
cooperation and coordination amongst Member States but cross-border projects are some of 
the  projects  of  the  highest  EU  added  value  and  therefore  require  continued  and  stronger 
Programme focus by considering a higher cofunding rate, or a specific allocation of the total 
budget to these projects. 

The sources of finance for the trans-European transport network come from both the public 
and  private  sector  but  are  largely  geared  towards  national  and  European  Union  financial 
instruments. First of all, this is because of the private sector’s fundamental need to identify a 
revenue  stream  and  understand  the  distribution  of  risks  (identification,  mitigation  and 
allocation). When the revenues are too low or the risks too high, the private sector will simply 
not  be  willing  to  invest  and  the  burden  of  financing  is  reliant  on  national  governments. 
Secondly, this  is  also because  there  are no clear incentives for the public sector to  consider 
using  PPPs  (if  at  all)  at  the  right  time  (i.e.  from  the  start),  except  in  a  few  countries.  This 
explains why there has been a certain level of passivity with regards to PPPs. 

PPPs are also lengthy and costly to arrange, usually requiring contracts of 20-years or more in 
length,  and  also  require  additional  skills  and  financial  resources.  It  is  recognised  that  PPP 
preparation is too time consuming and costly for small projects. Additionally, it requires the 
projects to be well-prepared at the beginning of the budgetary period so that the procurement 
process can be completed before the end of the relevant financial period (e.g. 2007-2013)20. 
The  2008-2009  “credit  crunch”  has  also  increased  the  difficulty  for  the  private  sector  to 
provide long-term borrowing, raising of debt, and refinancing. 

The  structure  of  the  Programme  with  the  Multi-Annual  Work  Programme  receiving 
between  80  and  85%  of  the  available  funding  and  the  Annual  Work  Programme  being 
allocated  to  the  rest  was  found  to  be  adequate,  but  some  implementation  issues  need  to  be 
addressed: among them the MAP call calendar, the separation of mixed proposals into works 
or studies, any improvement in cost-benefits analysis and better incentives of project delivery. 

Project  delivery  should  be  better  incentivised:  The  Commission  should  be  able  to  use  more 
effective  project  incentives  (such  as  the  “use  it  or  lose  it”  rule)  to  make  sure  that  project 
promoters  are  feeling  more  accountable  for  the  EU  grants  given,  including  on  Priority 
Projects. 

The TEN-T Programme is allocated through a competitive call for proposals procedure and 
the award of funding is subject to on-going technical and financial monitoring of all funded 
projects  by  the  TEN-T  Executive  Agency.  The  TEN-T  Programme  also  benefits  from  a  re-
distribution mechanism during the financial perspective. 

Since 2005, European Coordinators have been appointed by the European Commission to 
focus attention on specific trans-European Priority Projects that present severe difficulties and 
lag  significantly  behind  in  completion  compared  with  their  initial  schedule.  Currently  there 
are 9 Coordinators who are monitoring 11 Priority Projects. Their mandates end in July 2013. 
One  of  the  common  features  of  these  projects  is  that  they  involve  several  Member  States, 
which renders coordination between the project countries especially difficult and potentially 
hinders the speed of decision making. 

Assessment of TEN-T Programme Implementation, TEN-T EA, December 2010 

86

 
 
The  assessment  highlights  areas  that  need  improvement  towards  the  better  customization  of 
procedures,  on  the  one  hand,  and  effective  policy  implementation,  on  the  other.  A  strategic 
reflection on the orientation of TEN-T policy and, at the same time, the structure of the TENT 
Programme,  in  conjunction  with  small-scale  adjustments  at  the  level  of  operational 
management  promise  a  further  significant  enhancement  in  terms  of  both  efficiency  and 
effectiveness. 

Of particular relevance was the need to address the issue of the overall financing of the TENT 
Programme.  Under  the  current  financial  perspective,  the  TEN-T  Programme  represents  the 
smallest  endowment  to  the  TEN-T  network  next  to  the  funds  made  available  through  the 
ERDF and the Cohesion Fund in the form of grants, and the loans granted by the EIB. This is 
surprising considering that the TEN-T Programme is the one which encapsulates the essence 
of  what  represents  EU  added-value,  which,  after  all,  is  what  drives,  or  should  drive,  the 
development  of  the  TEN-T  network.  That  the  TEN-T  Programme  budget  is  not  enough  is 
shown  by  the  low  retention  rates  of  proposals  (despite  the  evaluations)  and  the  frequent 
failure  to  meet  the  maximum  co-funding  rates  as  foreseen  by  the  TEN-T  Regulation. 
Improving  the  efficiency  and  effectiveness  of  the  TEN-T  Programme  will  be  strongly 
facilitated by the increase of its budget during the next financial perspective. 

It  is  important  to  make  an  effort  to  avoid  excluding  important  projects  of  high  EU-added 
value from the selection procedure even if such projects entail more risks. One way forward 
in this respect would be to introduce the ‘corridor concept’ already at the proposal submission 
stage  accompanied  by  respective  agreements.  This  would  accelerate  the  implementation  of 
relevant  Actions  in  addition  to  placing  their  realization  within  a  global  perspective,  so  that 
technical, political and financial impediments can be more effectively addressed. 

Several project officers expressed concerns about budget overruns because these then result in 
reduction of the relative effectiveness of the EU contribution—a problem in terms of leverage 
as well as for publicity purposes. 

A number of officials interviewed were of the opinion that one way to improve the levels of 
national commitment to the TEN-T policy would be by increasing the rate of co-financing of 
key  projects.  This  would  automatically  also  increase  the  Agency’s  leverage  in  terms  of 
monitoring and evaluation. 

One  of  the  priorities  of  the  annual  programme  for  the  year  2010  has  been  to  explore  the 
potential for developing public-private partnerships or PPPs on Priority Projects or projects of 
common interest on the TEN-T network. 10 million has been earmarked for this purpose. This 
priority follows renewed attempts by the TEN-T Programme to encourage the involvement of 
the private sector in the financing of transport infrastructure. 

Preparatory work is, however, needed, including pilot activities for testing the readiness of the 
private  sector  to  engage  in  the  transport  sector  under  various  financial  engineering  models. 
This  is  what  lies  behind  the  feasibility  studies  to  be  supported  under  the  2010  annual 
programme. This idea deserves further elaboration and enhancement during the annual calls in 
2011 and 2012. 

Since its creation, the Agency has harnessed its working methods towards the optimisation of 
project monitoring and implementation mechanisms. This has included the careful preparation 
of high quality Commission Decision texts with detailed technical descriptions and accurate 
implementation  timetables,  in  order  to  facilitate  the  monitoring  of  the  actions.  Besides 
specifying the type of action, the co-financing rate and maximum EU contribution in absolute 
terms,  the  Decision  specifies  that  actions  will  submit  action  status  reports  (ASR)  and  be 
monitored regulatory on the basis of their strategic action plans (SAP). 

87

 
Mid-Term  Review  of  the  2007-2013  TEN-T  Multi-Annual  Work  Programme-  Project 
Portfolio (MAP Review), TEN-T EA, October 2010 

The budget for the MAP represented 80-85% of the total available EU budget for the granting 
of aid in the field of the TEN-T for the period 2007-2013 through the TEN-T Programme. The 
review covers 92 projects selected under the 2007 calls for proposals which were launched to 
meet the objectives of the MAP. All projects were initially planned to be implemented during 
the 2007-2013 programming period. The 92 projects account for approximately two-thirds of 
the  total  TEN-T  budget  (€5.301  bil lion  out  of  a  total  €8.013  billion)  and  78%  of  the  total 
MAP  for  the  entire  2007-2013  period.  The  total  budgeted  cost  of  these  projects  is  €32.647 
billion.  Therefore,  the  TEN-T  budget  accounts  for  approximately  16%  of  the  projects’ 
budgeted costs. 

The report concluded that projects should be allowed to run their course with a cut-off date on 
31 December 2015, but subject to certain well-defined conditions based on both political and 
technical/financial  milestones.  This  allowed  critical  support  to  be  maintained  without 
rewarding  poor  performance  or  requiring  additional  funding  commitments.  The  review 
recommended  the  redirection  of  around  €311  milli on  which  is  to  be  re-injected  into  new 
annual/multi-annual calls under the current Programme. 

The overall outcome of the MAP review can be summarised as follows: 
- Confirmation of EU support to the most critical and complex projects within the TEN-T; 
- Prolongation of the eligibility period for a maximum of two more years (to the end of 2015), 
subject to specific political, technical and financial conditions; 
- Cancellation of projects that have not started within the first two years after adoption of the 
Commission Decision; 

-  A  further  increase  in  the  expected  leverage  effect  can  be  achieved  if  more  resources  are 
mobilised, notably private funding. 

The MAP review demonstrated that there is a positive correlation between higher co-funding 
rates  and  better  project  performance.  Moreover,  the  rate  of  co-financing  is  a  key  factor  in 
generating  sufficient  EU  leverage  in  several  respects  such  as  attracting  private  funding  and 
supporting  cross-border  projects  and,  more  generally,  helping  decision  makers  to  put  the 
concerned projects higher on their respective national agendas. 

The MAP is designed to maximise the assurance of the continuity of TEN-T funding for 
the  current  financial  period.  However,  the  review  highlighted  the  delay/budget  variations 
experienced  by  some  Member  States  and  other  involved  authorities  who  require  this 
assurance  to  be  provided  absolutely  before  launching  their  own  procedures  to  commit  their 
part of the budget. The absence of such guarantees has been a recurrent problem which has 
contributed to projects being submitted for funding at a premature stage. 

The ongoing financial crisis has had a mixed impact on the portfolio. Some projects benefited 
either from reduced market prices under increased competition or from additional funding as 
part of national recovery plans, whereas the majority were affected by budgetary cuts and will 
inevitably be delayed. 

The  participation  of  the  private  sector  in  financing  the  MAP  project  portfolio  is  not  in 
evidence.  The  presence  of  Public-Private  Partnerships  (PPP)  is  rather  limited.  The  MAP 
portfolio includes only four projects currently involving Public-Private Partnership schemes. 
The grant for PPP schemes involving availability payment mechanisms, introduced as part of 

88

 
 
the current Programme, has not been utilised, in part due to the seven year limitation imposed 
by the Financial Regulations. 

“Improving  transport  performance  on  trans-European  rail  axes:  have  EU  rail 
infrastructure  investment  been  effective?”112,  Special  Report  No  8,  European  Court  of 
Auditors, October 2010 

The  report  observed  that  19  (of  the  30)  TEN-T  Priority  Projects  defined  in  2004  relate  to 
railways.  The  Court  examined  in  detail  8  of  the  rail  axes  covered  by  the  Priority  Projects 
involving a sample of 21 specific sections in 8 Member States covering 8.6 billion euros of 
EU investment up to 2006. The report identified that overall transport volumes in Europe are 
expected  to  continue  rising  in  the  next  decades,  however,  Europe’s  railways  would  account 
for only a small part of this growth. 

Whereas, the audit recognised that the concentration of  TEN-T co-financing  at cross-border 
locations  has  improved  since  2006  where  the  European  co-ordinators  have  had  a  positive 
influence  in  concentrating  and  facilitating  developments  on  the  Priority  Projects,  much 
remains to be achieved such as the identification of bottlenecks could be improved as could 
then selection and approval procedures at the Commission. 

Project cost escalations did not have a direct impact on the EU budget because the investment 
by the EU was limited to the amounts initially granted. However, they should be considered in 
the  light  of  the  large  scale  investment  needs  on  the  Priority  Projects,  and  the  fact  that  the 
attraction  of  private  sector  investment  has  been  recognised  as  being  increasingly  important. 
The risk of project cost escalations can exacerbate concerns regarding low rates of return and 
therefore represent a disincentive for private sector investors. 

Co-financed projects in respect of works typically address the construction of certain parts or 
technical elements of a section of the Priority Projects. Projects are selected on a competitive 
basis following the assessment o f proposals submitted by Member State authorities. Proposal 
evaluation procedures culminate in a ranking of projects with EU co-financing being allocated 
to  the  projects  evaluated  as  the  best.  DG  Mobility  and  Transport  is  responsible  for  TEN  -T 
policy. Organising the evaluation procedure is one of the tasks recently delegated to the TEN-
T Executive Agency. 

Recommendations: 
- build on the roles played to date by the European co-ordinators; 
- make sure that procedures for approving projects under Cohesion Policy are robust; 
- ensure that decisions about the targeting of TEN-T funds are supported by robust analysis of 
important bottlenecks; 
- improve the quality of cost-benefit analysis for TEN-T selection procedures; 
-  take  the  lead  in  facilitating  the  exchange  of  knowledge  and  experience  about  rail 
infrastructure development amongst project promoters. 

In  summary,  the  audit  report  recognised  that  through  co-financing  the  development  of  rail 
infrastructure,  the  EU  has  contributed  to  providing  new  possibilities  for  trans-European  rail 
transport but value for EU money could be improved. 

112http://www.europarl.europa.eu/document/activities/cont/201012/20101208ATT08208/20101208ATT08208E
N.pdf 

89

 
 
                                                 
Funding  Strategy  and  Financing  Perspectives  for  the  TEN-T,  Final  Report,  Expert 
Group 5, July 2010 113 

Findings  &  Recommendations..  The  Group  has  shed  light  on  some  general  trends  with 
relation to the financing of TEN-T projects, in particular: the huge constraints posed on public 
resources,  worsened  off  by  the  financial  crisis,  which  will  durably  limit  the  capacity  of 
Member  States  to  fund  large  projects;  the  challenge  to  better  take  into  account  European 
objectives in terms of climate change, energy efficiency and innovation; the need to adapt to 
the users requirements (the clients) and to increase the affordability and the profitability of the 
projects; the insufficiently explored potential for a greater involvement of the private sector in 
the delivery of the TEN-T. 
As  TEN-T  projects  are  generally  complex  which  require  lengthy  preparation,  they  entail 
mobilising  national  and  regional  capacities,  which  is  often  difficult:  the  expertise  and  the 
capacities  needed  to  develop  complex  projects  are  scarce,  especially  in  the  convergence 
regions,  and  generally  channelled  to  national  or  regional  priorities.  Greater  coordination 
between the Member States, especially for the implementation of transnational links, is key to 
success. In order to connect national networks, the completion on cross-border sections are of 
vital importance, but it can only be achieved if the Member States concerned can coordinate 
themselves  not  only  politically  speaking  but  preferably  on  operational  and  financing  terms 
too. 

A  proposal  was  made  to  bring  closer  the  Cohesion  policy’s  funding  mechanisms  with  the 
TEN-T policy. The Group was not able to reach a full consensus on this idea: some experts 
remained of the opinion that the two policies have to stay fully apart since, according to them, 
they  diverge  both  in  their  rationale  and  in  their  objectives.  Other  members  though,  outlined 
that the two EU policies could share some priorities on the basis of the TEN-T and that there 
could  be  a  room  for  further  thinking  in  order  to  concentrate  EU  contribution.  Everybody 
agreed though that any proposal should not prejudice to the Cohesion policy and that it should 
ensure that the convergence objective remains of greater importance. 

The EU contribution should be channelled to projects and programmes with the highest EU 
added-value  (EUAV).  Considerations  for  the  definition  of  this  EUAV  were  put  for 
discussion and a majority of experts agreed that it should focus on initiatives which have an 
important net economic and social EU benefits (i.e. which benefits to the Union as such) and 
which  will  not  likely  to  be  implement  without  a  strong  EU  support.  Typically  this  would 
mainly  concern  cross-border  projects,  the  railways,  the  inland  waterways  and  the  maritime 
transportation,  as  well  as  horizontal  measures  aiming  at  strengthening  the  efficiency  of  the 
network  (interoperability,  safety,  traffic  management,  research  and  innovation…).  However 
the  experts  suggested  that  emphasis  should  also  be  equally  given  to  the  promotion  of 
profitable  projects  in  line  with  the  TEN-T  policy  in  order  to  pace  the  completion  of  the 
network.  

All experts agreed on the potential gains that can result from PPPs, but they insisted that this 
procurement  scheme  has  to  be  applied  on  specific  projects,  basically the  ones  which  aim  at 
solving  actual  capacity/demand  problems  hence  the  most  financially  feasible.  They  argued 
PPPs should be partnerships, where the private sector can be given enough flexibility under a 
clear  legal  framework  so  as  to  bring  efficiencies  to  a  project.  Given  the  current  crisis,  the 
possibility  to  deconsolidate  the  PPP  investments  (under  certain  conditions)  from  the  deficit 

113  The  report  was  developed  in  the  context  of  the  TEN-T  Policy  review  process,  started  in  2009.  Experts’ 
contributions,  participants’  presentations  and  the  minutes  of  the  individual  meetings  can  be  consulted  at  the 
following website: http://ec.europa.eu/transport/infrastructure/tent_policy_review/expert_groups/expert_group_5_en.htm. 

90

 
 
 
                                                 
 
can  also  represent  a  powerful  asset  to  the  exit  strategy  even  though  it  cannot  represent  the 
main  reason  to  have  appeal  to  PPPs.  All  in  all,  the  Group  pointed  out  that  the  use  of  PPPs 
should be given more systematic consideration - wherever adapted to the project, and public 
authorities should be supported in better dealing with innovative procurement and financing 
schemes. 

To facilitate the participation of the private sector in the delivery of the TEN-T, the experts 
also  stressed  the  usefulness  of  instruments  whose  object  is  to  mitigate  the  risks  and  their 
associated costs, especially in the framework of availability-based PPPs. The Group suggested 
that these instruments could take the form of guarantees which could be called by the private 
partner on first demand. 

Some  members  also  proposed  to  give  further  considerations  to  bonds  opportunities  -  in 
particular  for  the  issuance  of  project  bonds  for  TEN-T  projects,  which  could  be  bonds 
guaranteed by the EU budget to be sold directly on the international markets. 

"TEN-T  Progress  Report,  Implementation  of  the  Priority  Projects"  and  the  "Priority 
Projects 2010: a detailed analysis", European Commission, June 2010  

Findings. The report concludes that transport infrastructure has been historically designed to 
serve national rather than European goals and cross border links constitute bottlenecks that are 
likely to become increasingly costly as the EU economy continues integrating. 

During the next financial perspectives (2014-2020), numerous cross-border sections will be 
in  construction  or  completed.  Therefore,  the  decisions  for  concentrating  financing  here,  and 
the obvious need to continue to do so, will be an essential centrepiece for linking up national 
networks into a European network and thereby contributing directly to the realisation of the 
internal market, reaping the benefits of years of investment. 

Financing continues to be a problem as the economies of the Baltic states continue  to  pass 
through  difficult  times  (see  below)  and  it  is  increasingly  difficult  for  governments  in  the 
region to finance major capital works schemes such as the “Rail Baltica”. This is why it will 
remain  important  in  the  next  few  years  to  look  into  how  best  to  leverage  the  money  that  is 
available. 

While  operations  are  of  great  relevance  and  constitute  the  ultimate  goal,  they  do  not 
constitute  the  primary  objective  of  TEN-T  funding:  on  the  one  hand,  because  there  are 
funding  schemes  better  adapted  to  fund  private  sector  operations  (maritime,  ports  or  other) 
such as the Marco Polo scheme; on the other hand, because before any operations may start 
the infrastructure needs to be in place. Accordingly, TEN-T concentrates on the development 
of  infrastructure  which  also  is  highly  time  consuming  -  on  average  it  takes  10  years  from 
preliminary studies to operation. 

PPPs  will  be  structured  on  the  basis  of  a  DBO  (Design,  Build  and  Operate)  +  Maintain 
scheme, but the operation will be limited to the availability of the network and the service (it 
is  therefore  mostly  linked  to  maintenance).  In  order  to  guarantee  good  coordination  at 
interfaces and provide incentives for an adequate development of services, a +/-2% bonus for 
the concessionaire is linked to the actual traffic flows. 

91

 
 
 
 
 
Position Paper of the European Coordinators on the future of TEN-T Policy, 6th October 
2009 

The  European  Coordinators  have  been  appointed  to  follow  projects  that  present  severe 
difficulties  and  lag  significantly  behind  in  completion  compared  with  their  initial  schedule. 
One  of  the  common  features  of  these  projects  is  that  they  involve  several  Member  States, 
which  renders  coordination  between  the  project  countries  especially  difficult  and  stunts 
progress  on  the  terrain.  Most  of  the  projects  are  rail  projects,  but  the  Danube  and  Seine  – 
Scheldt projects and the Motorways of the Sea are at least as challenging. The main issue at 
stake  for  the  Coordinators  is  to  ensure  that  with  their  efforts  of  coordination,  they  can 
contribute  to  giving  Europe  the  opportunity  to  endow  it  with  the  infrastructure  it  needs  to 
sustain  the  internal  market.  The  Coordinators'  vision  is  one  of  enabling  a  door-to-door 
logistics chain that is economically and environmentally efficient. 

Despite the differences in the nature of the coordinated projects, their experiences during their 
first mandate (2005-2009)  has  led  to  common  views  on objectives of  TEN-T policy  and on 
financing and governance of TEN-T projects. 

Regarding the present financial perspectives 2007-2013, the EU has made an important effort 
to  concentrate  its  investments  on  the  Priority  Projects  and  in  particular  on  cross-border 
sections,  bottlenecks  and  access  routes  to  both  such  sections.  This  increased  the  leverage 
effect of the TEN-T budget. The multi-annual call for proposals 2007-2013 proved the needs 
of project promoters. For Priority Projects alone, the proposals received for the multi-annual 
program 2007-2013 represented a total investment of more than EUR 55 billion, and a total 
requested  Community  contribution  of  EUR  11.5  billion.  The  EU  budget  available  for 
multiannual funding for the Priority Projects was limited to EUR 5.1 billion. 

Recommendations: 
- Put the European economic and environmental interest first; 
- Take full account of the interests of an enlarged European Union and to put the European 
internal market at the service of Europe's place on the global market; 
-  Take  a  fresh  look  at  financing  difficulties  of  infrastructure  projects  and  change  decision 
makers' mindsets from too much attention for the short to medium term to taking full account 
of the interest of the long term sustainability of the European internal market; 
- Ensure the mobilisation of enough financial leverage to complete the planned projects and 
ensuring that all financial instruments and all EU funds available for transport infrastructure 
are used in a coordinated manner to reach this goal; 
- Involve all relevant stakeholders in infrastructural projects at an early stage so as to avoid 
costly oversights and delays; 
- Ensure coherence between the comprehensive project approach and EU co funding; 
-  Look  at  transport  and  transport  modes  as  part  of  one  logistical  chain  that  can  ensure 
seamless door-to-door transport and to improve the quality of service of all modes; 
- Include intermodal nodes in the TEN-T network in order to improve, where necessary with 
financial support, the intermodality of the network; 
-  Direct  European  co-financing  with  priority  to  investments  enabling  each  mode  to  form  an 
optimal link in the logistics chain; 
-  Urgently  tackle  the  lack  of  interoperability  along  many  European  transport  networks  and 
remove main bottlenecks, notably at cross border sections; 
-  Ensure  regulatory  stability  for  the  market  and  enforce  current  European  and  national 
legislation; 
-  Better  coordinate  policy  and  enforcement  efforts  throughout  the  different  layers  of  public 
administration. 

92

 
Evaluation of the Marco Polo Programme 2003 – 2010, Europe Economics, April 2011 

Marco Polo Programme (both MPI and MPII) is currently the only funding instrument in the 
freight  transport  services  sector,  which  occur  at  the  scale  of  the  EU  and  beyond.  The 
programme has been established114 for the period 2003 – 2006 (MPI) and 2007 – 2013 (MPII) 
in  order  to  reduce  road  congestion  and  to  improve  the  environmental  performance  of  the 
freight transport within the European Union and to enhance inter-modality while contributing 
to an efficient and sustainable transport system. Budget of the programme amounted to €102 
million for MP I, and for MP II it has been raised to €450 million. 

Findings. The evaluation points out unique and important features of the programme such as 
its  transparency,  the  almost  numerical  precision  with  which  results  are  being  measured  and 
quantified and the direct relationship between EU funding and the results obtained. Also, 
the  analyses  confirm  the  devolved  management  of  the  programme115  has  strengthened  its 
implementation  and  allowed  the  Commission  to  concentrate  on  policy  issues.  However,  the 
programme  has  also  suffered  from  a  number  of  flaws  inherent  in  its  design,  which  have 
come to the surface during the course of their implementation, and particularly so under the 
strain of the economic crisis. 

Nevertheless,  the  evaluators  underline  it  is  important  that  a  successor  to  the  Marco  Polo 
programme  is  introduced  since  this  is  currently  the  only  European  financial  instrument  that 
allows  significant  means  to  be  devoted  to  the  improvement  of  environmental  efficiency  for 
freight  transport,  a  reduction  in  greenhouse  gas  emissions  and  reduced  congestion  on 
European road networks. However, this does not necessarily mean that the focus needs remain 
on start-up aid to support modal shift. 

Recommendations  

The  evaluation's  findings  suggest  that  there  is  a  clear  argument  that  modifications  to  the 
programme  are  required  if  a  successor  to  the  programme  is  to  be  introduced.  Several 
potentially complementary options have been recommended and the main ones are: 

(1) Improve  synergies  with  the  new  TEN-T  policy  where  the  new  instrument  supporting 
transport  services  could  potentially  operate  within  the  revised  framework  of  TEN-T, 
within  the  framework  of  a  broader  coherent  multi-modal  TEN-T  network  which  is 
implemented through “corridor” approaches; 

(2) Focusing  on  promotion  of  innovation,  efficiency  and  sustainability  as  requirements  to 
bring about modal shift: support to investments and actions which lower the emissions of 
CO2 of freight transport (and associated other external costs); 

(3) Expanding the scope of the programme towards supporting sustainable urban freight and 

logistics; 

(4) Expanding the range of support instruments: depart from supporting the start-up of actions 
directed  to  shifting  freight  transport  off  the  road  and  implement  other  financial 
instruments such as loans, subsidised loans or guarantees, which would help finance the 
needed investments; 

114 Regulation (EC) No. 1382/2003 of the European Parliament and of the Council of 22 July 2003 on granting of 
Community  financial  assistance  to  improve  the  environmental  performance  of  the  freight  transport  system 
(“Marco  Polo  Programme”),  OJ  L  196,  02.08.2003,  p  1  and  Regulation  (EC)  No.  1692/2006  of  the  European 
Parliament  and  of  the  Council  of  24  October  2006  establishing  the  second  “Marco  Polo”  programme  for  the 
granting of Community financial assistance to improve the environmental performance of the freight transport 
system (“Marco Polo II”), OJ L 328, 24.11.2006, p 1 
115 in 2008, to the Executive Agency for Competitiveness and Innovation (EACI)  

93

 
                                                 
Measures  supporting  sustainable  and  efficient  freight  transport  services  under  Connecting 
Europe Facility in the new EU budgetary perspective 2014 – 2020 

The  proposed  measures  would  be  implemented  under  the  broader  framework  of  TEN-T 
programme and would target sustainable and efficient freight transport solutions that use the 
infrastructure  of  TEN-T  comprehensive  network  and  contribute  to  reducing  carbon  dioxide 
emissions  (including  actions  focusing  on  shifting  road  freight  to  more  sustainable  and 
efficient  transport  modes  over  300  km).  The  measures  will  be  delivered  through  a  mix  of 
grants, risk sharing instruments (credit enhancement measures facilitating access to finance in 
particular for SMEs) and instruments combining grants with loans. 
(1) Improving sustainable use of transport infrastructure; 
(2) Improving  sustainability  and  environmental  efficiency  of  multi-modal  transport  service 
operations  (including  urban  freight  delivery),    enhancing  cooperation  between  transport 
service providers; 

(3) Improving  the  technical  interoperability  and  deployment  of  eco-innovative  transport 

services or of new combinations of proven existing transport services; 

(4) Development  and  deployment  of  ITS  and  traffic  management  systems,  including  the 

establishment of relevant governance structures and services; 

(5) Stimulating  resource  and  carbon  efficiency  and  improving  sustainability  of  individual 
transport modes, notably in the fields of vehicle traction, technological improvements of 
the  existing  fleets/facilities,  driving/steaming,  systems  and  operations  planning,  resource 
sharing and cooperation; 

(6) Education  and  training:  development  of  human  resources  for  efficient  management  of 

supply chains; 

(7) Horizontal measures: analysing, providing information and monitoring related to markets, 
awareness raising, fleet characteristics and performance, administrative requirements and 
human resources 

Implementation of the above mentioned measures shall be consistent with the state-of-the-art 
technological developments and deployments, notably aiming at: 
(1) Enabling  the  decarbonisation  of  transport  through  transition  to  alternative  transportation 

technologies; 

(2) Improving  operation,  accessibility,  interoperability,  multimodality,  and  efficiency  of  the 

network; 
(3) Supporting 

the 

infrastructure-vehicle 

interface  and  on-board  equipment,  which 

encompasses all required telematics; 

Promoting measures to reduce external costs, such as pollution of any kind including noise, 
congestion, health damage; 

Ex-post/Final  evaluation  of  the  Trans-European  Transport  Network  Multiannual 
Indicative Programme 2001- 2006 Final Report, Deloitte consulting SCRL116, European 
Commission November 2007 

Findings. According to the study, the downside was the tendency of mature projects with high 
national  commitment  to  self-select.  These  were frequently  projects  which  would  often  have 
proceeded  in  any  event,  though  not  necessarily  quite  as  fast.  The  report  concluded  that  the 
Commission  could  reduce  the  rate  of  funding  for  such  projects  and  still  retain  political 
leverage,  while  at  the  same  time  freeing  funds  for  projects  where  the  European  interest  is 
greater  than  the  national  interest.  These  are  typically  cross-border  projects  in  the  broadest 

116 http://ec.europa.eu/transport/evaluations/doc/2007_tent_t_mip_ex_post.pdf 

94

 
 
                                                 
sense  of  the  word.  This  recommendation  formed  a  key  component  of  the  revised  financial 
regulations where greater emphasis is place on cross-border funding. 

Also,  the  report  identified  that  the  MIP  was  not  effective  in  achieving  its  objective  of 
encouraging  public-private  partnerships.  It  sited  the  instability  of  the  management 
procedures over the life of the MIP that affected the effectiveness, efficiency and relevance of 
the programme. Minimising the administrative burden and the need to demand accountability 
and transparency were also key recommendations. Nevertheless, the report did conclude that 
the  MIP  funding  did  go  to  projects  which  had  a  socio-economic  impact,  particularly  at 
national level. 

Recommendations  

Regarding objectives and funding rates: 
-  The  primary  objective  of  the  MIP  should  be  to  fund  projects  of  high  European  interest, 
which will fill missing links or eliminate bottlenecks; 
- the rate at which studies for projects of high European interest and low national interest is 
funded be increased; 
-  the  rates  at  which  investment  projects  are  funded  be  modified,  with  projects  of  high 
European  interest  and  low  national  commitment  being  eligible  for  grants  of  30%  and  other 
projects be restricted to grants of 5% of total eligible cost; 
- the TEN-T coordinators be asked to define which are the projects of high European interest 
and low national commitment. 

Regarding PPPs: 
-  Encouragement  of  Public-Private  Partnerships  (PPP)  should  continue  to  be  an  objective, 
and; 
-  the  European  Commission  should  collect  and  disseminate  in  a  structured  manner 
information on best practice in transport infrastructure PPP or other instruments designed in 
order to facilitate access to private sources of financing, such as the EIB loan guarantee or the 
risk capital facility; 
- the financing rate be increased for studies on the suitability of investment projects for PPP; 
- the financing rate be 30% for any project financed by a PPP. 

Regarding procedures: 
-  A  revision  of  the  MIP  Framework  Decision  in  order  to  redistribute  funds  likely  to  be 
underutilised be made automatic after four years, and that any other revisions be announced 
six months in advance. 

Other studies or documents quoted or referred to  

Atkins  Management  Consultancy,  "Assessment  on  a  Communication  from  the  European 
Commission  designed  to  promote  the  development  of  a  rail  freight-orientated  network", 
December 2006 

Deloitte  consulting  SCRL,  "Ex-post/Final  evaluation  of  the  Trans-European  Transport 
Network Multiannual Indicative Programme 2001-2006", Final Report, November 2007 

ECORYS  Transport  Consultants,  "Ex-ante  evaluation  and  Impact  Assessment  of  the  TEN-T 

Multiannual Programme 2007-2013", 22 October 2007  

European  Commission,  "White  Paper:  Roadmap  to  a  Single  European  Transport  Area  – 
Towards a competitive and resource efficient transport system", COM/2011/0144, 28 March 
2011 

95

 
 
European Commission, "Staff Working Document: Accompanying the White Paper - Roadmap 
to  a  Single  European  Transport  Area  –  Towards  a  competitive  and  resource  efficient 
transport system", SEC/2011/0391, 28 March 2011 

European Commission, "Impact Assessment: Accompanying the White Paper - Roadmap to a 
Single  European  Transport  Area  –  Towards  a  competitive  and  resource  efficient  transport 
system", SEC(2011) 0358, 28 March 2011 

European  Commission,  "The  New  Trans-European  Transport  Network  Policy  Planning  and 

implementation issues", Staff Working Document, SEC(2011) 101, 19 January 2011 

European  Commission,  DG  MOVE,  "TEN-T  Priority  Projects  2010:  A  Detailed  analysis", 

December 2010  

European  Commission,  “Consultation  on  the  Future  Trans-European  Transport  Network 

Policy”, Staff Working Document, COM(2010) 212 , 4 May 2010 

European Commission, "TEN-T policy review: background papers", Staff Working Document, 

SEC(2010) 613, 11 June 2010. 

European Commission, DG MOVE, "Drawing up the EU Core network", TEN-T Days Final 

report, Zaragoza, June 2010 

European Commission, "TEN-T: A policy review - Towards a better integrated trans-European 
transport network at the service of the common transport policy", Green Paper, COM(2009) 
44 , 4 February 2009 

European  Parliament,  "The  Impact  of  Trans-European  Networks  on  Cohesion  and 

Employment", June 2006 

BROADBAND AND DIGITAL INFRASTRUCTURE 

Conclusion of ex-post evaluation studies: 

The  conclusions  from  the  limited  set  of  evaluations  of  existing  instruments  in  the  area  of 
broadband and service infrastructures are as follows: 
•  A programme from the previous period, the e-TEN117 (2001-2006), supported deployment 
of trans-European e-services in the public interest. The programme covered the following 
themes: eGovernment, eHealth, eInclusion, eLearning, and services for SMEs. The e-TEN 
program  evaluation118  indicated  that  the  programme  made  considerable  progress  in 
involving  stakeholders  from  New  Member  States,  SMEs  and  public  bodies.  It  was 
concluded, that their participation strongly favoured the further deployment and uptake of 
project  outputs  at  a  pan-European  level  and  the  competitive  health  of  markets  for  these 
and related services. 

•  The final evaluation119 of the Safer Internet Plus Programme (2005-2008) concluded that 
the programme contributed to achieving a safer Internet through a range of interventions 
and  produced  a  significant  impact  and  influence.  The  programme  has  managed  to 

117 http://ec.europa.eu/information_society/activities/eten/library/about/intro/index_en.htm 
118 http://ec.europa.eu/dgs/information_society/evaluation/studies/s2006_02/index_en.htm 
119 http://ec.europa.eu/information_society/activities/sip/docs/prog_evaluation/report_sip_en_2005_2008.pdf 

96

 
 
 
 
                                                 
successfully  ensure  that  the  themes  and  actions  are  relevant  to  the  dynamic  social  and 
technological environment within which it operates.  

•  The report on the final evaluation of the eContentplus programme found that Europeana 
contributed  to  creating  better  conditions  for  accessing,  using,  re-using  and  exploiting 
digital material.  

•  The  Interim  Evaluation  of  the  Ambient-Assisted  Living  Joint  Programme120  concluded 
that the market for ICT for the elderly is very fragmented. In order to scale up successful 
solutions, with the aim of improving quality of life and saving care costs, what is needed 
is  systems  integration  of  services  and  technology.  Technology  deployment  clearly  relies 
on the availability of appropriate infrastructures, both physically (broadband availability) 
and in terms of cross-boarder public and private services. 

•  For  the  use  of  the  financial  instruments,  the  Mid-Term  Evaluation  of  the  Risk-Sharing 
Finance Facility, completed by a group of independent experts in July 2010,  121  praised 
the  use  of  Financial  Instruments  in  addition  to  grants,  and  evaluated  the  intervention  as 
highly efficient and effective, and "having dramatically expanded the financing".  

•  A 2006 ISTAG report points out that Europe has a major opportunity to take advantage of 
the paradigm shift in the content industry brought by broadband networks and strengthen 
its  position  in  the  digital  media  sector.  The  report  states  “Europe  has  major  technology 
assets here: a strong broadband infrastructure, leadership in mobile communications, and a 
good  position  in  broadcast-multicast  convergence  are  all  key  building  blocks  through 
which to capitalise on the potential of rich-content and related services”122. 

•  The Second Interim Evaluation of the 7th Framework Programme reported that  the strong 
push  for  innovation  implemented  in  FP7  reflects  the  evolution  in  European  policy 
thinking  and  the  effects  of  the  technology  and  market  trends  in  the  global  ICT  sector, 
While industry participants perceived high commercial risks for their research activities, 
especially  the  research  stakeholders  considered  the  technical  risks  more  limited  than  in 
FP6.  These  stakeholders  pointed  out  that  too  much  reliance  on  industry  input  for  the 
definition  of  the  research  priorities  might  lead  to  a  focus  on  ‘tomorrow’  and  not 
sufficiently on ‘the day after tomorrow’. 

In conclusion, the limited number of evaluations available show that the interventions in areas 
of  network  and  service  infrastructures  have  been  beneficial  to  Europe  as  a  whole.  The 
interventions have been enhanced by the lessons learned from the previous programmes and 
have  the  potential  to  produce  stronger  impacts  and  considerable  European  added  value. 
Nevertheless,  as  the  evaluations  show,  there  have  been  some  difficulties  in  harnessing  the 
whole potential, for example in absorption of the structural funds123. 

120 Unlocking Innovation in Ageing Well. Interim Evaluation of the Ambient Assisted Living Joint Programme, 
December 2010. 
121 http://ec.europa.eu/research/evaluations/index_en.cfm?pg=rsff 
122 “Shaping Europe’s Future through ICT”, Report from the Information Society Technologies Advisory Group 
(ISTAG), 2006 
123  See  for  example:  Nagy,  G.,  Fekó,  A.,  Kulisiewicz  T.,  (2011).  The  role  of  broadband  developments  in  the 
Eastern  EU  Member  States.  Jaksa  R.  (ed.),  International  Center  for  Economic  Growth  (ICEG  EC).  OISTU 
Report, JRC-IPTS, Sevilla, (Forthcoming) 

97

 
 
 
                                                 
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103

 
ANNEX 3 

ASSESSMENT OF IMPACTS OF CREATING THE CEF 

1. 

INTRODUCTION 

As  a  complement  to  the  analysis  of  impacts  presented  in  Part  5  of  the  Impact  Assessment 
Report, the purpose of this Annex is to assess the impacts of creating the Connecting Europe 
Facility (CEF). It will do so by discussing and comparing the impacts of creating the Creating 
the CEF against the Reference scenario124.  
The  Impact  Assessment  Report  has,  following  a  pre-screening,  retained  several  options 
pertaining to the functioning of the CEF, which will be assessed and compared in the Impact 
Assessment Report.  

In this annex, the preconditions of the CEF, contained in all of the retained options mentioned 
above, will be preliminarily assessed against the Reference scenario with a view to isolating 
the  impacts  of  creating  the  CEF,  which  are  expected  to  be  significant  compared  to  the 
Reference scenario.  

This  preliminary  assessment  will  allow  focussing  Part  5  of  the  CEF  IA  on  the  comparison 
between the retained options of the CEF on the basis of their own merits, without having to 
artificially  isolate  the  impact  stemming  from  the  creation  of  the  CEF  compared  to  the 
Reference scenario. 

The  pre-conditions  of  the  CEF  are:  The  amount  of  €  50  bn  (see  table  below  detailed  the 
amount and comparing with the reference scenario), the alignment of EU funding instruments 
within sectors including also market based instruments, and a more centralised management 
of the CEF125. 

Reference scenario 
- € 155 million for Energy 

-  €  8  billion  for  TEN-T  and  €  43  billion  for 
transport projects in Cohesion countries 

€  2300  million 

- 
infrastructure through cohesion funds 

for 

ICT  physical 

CEF 
- 
infrastructure 

€  9.1  billion 

for 

energy  priority 

-  €  21.7  billion  +  €  10  billion  earmarked  for 
for  Transport  Core 
Cohesion  countries 
Network  under  the  rules  of  the  CEF.  (€  24 
Billion for transport projects in the Cohesion 
fund) 

- € 9.2 billion for ICT projects 

It this combination of market-based and direct financial support made available at EU level 
that  can  provide  the  flexibility  and  tailor  made  support  to  address  specific  project  risks 
necessary for the different network industries.  

124 The reference scenario is detailed in section 2.4 of the CEF IA 
125 See Chapter 4 of he Impact Assessment Report for a thorough description of the policy options 

104

 
 
 
 
                                                 
Sector/CEF 

Transport 

Energy 

ICT 

Grants 

Risk 
instruments 

sharing 

Grants 
to 
construction 
and 
studies 

support 
costs 
preparatory 

Grants 
to 
construction 
and 
studies  

support 
costs 
preparatory 

Grants 
to 
construction 
and 
studies 

support 
costs 
preparatory 

Project  bond  credit 
or 
enhancement 
guarantees  (of  LGTT 
type) 

 Project  bond  credit 
or 
enhancement 
guarantees (up  to 5% 
of energy envelope) 

Project  bond  credit 
or 
enhancement 
guarantees 

Risk 
instruments 

capital 

support  or 
(of 
capital 

Equity 
seed 
Marguerite type) 

Equity 
seed capital  

support  or 

Equity 
seed capital 

support  or 

The following provides an assessment of the economic, social and environmental impacts that 
are proportionate to the nature and purpose of the Impact Assessment. The analysis of these 
impacts  is  derived  from  a  qualitative  analysis  and  originates  from  Commission  working 
documents and impacts assessments produced by the three lead Directorate Generals involved 
in the work of this Impact Assessment. 

2.  ECONOMIC IMPACTS 

The economic impacts of creating the CEF compared to the Reference scenario are assessed 
in two steps. First of all, the creation of the CEF itself, and more so by determining optimal 
rules for the functioning of the CEF, is likely to have major impacts on industries. Secondly, 
the network effects induced by the massive investments will engender important externalities 
for the European economy as a whole. 

The main difference between the impacts of creating the CEF and the reference scenario will 
be  derived  from  the  level  of  investments  triggered  by  the  new  funding  available  in  the 
Connecting Europe Facility. 

2.1.  Impacts on the level of investments 

With € 50 billion to be spent in the developmen t of cross-border infrastructures and services, 
the  EU  budget  available  for  infrastructure  will  undergo  a  major  increase.  A  possible  risk  in 
this  regard  would  be  a  crowding  out  of  other  investments  sources  in  infrastructure,  such  as 
local and national public funding and private investments.  

This risk has to be seen against the preliminary estimation of the Commission of  investment 
needs  of  between  €1.5  trillion  a nd  €2  trillion  in  total  for  the  three  sectors.  From  now  until 
2020,  €550  billion  will  be  needed  for  the  implem entation  of  the  Trans-European  Transport 
Network  (TEN-T)  programme,  of  which  €215  b illion  is  for  the  removal  of  the  main 
bottlenecks in the so called transport "core network". In the energy sector, public and private 
entities in the Member States will need to spend around €400 billion on  distribution networks 
and smart grids, another €200 billion on transm ission networks and storage as well as €500 
billion to upgrade and build new generation capacity between now and 2020. Finally, between 

105

 
 
€180-270 billion in capital investment is required to  bring fast and ultra-fast broadband to all 
households by 2020. 

In total, the  € 50 billion proposed under the Connecting Europe Facility only cover a small 
amount  of  the  investments  needs  identified.  For  instance,  the  €  31.7  billion  allocated  to 
transport represent less than 15% of the investments needs identified for the removal of the 
main bottlenecks only. Moreover, the funds available under the CEF will be made available 
primarily  for  projects  with  high  European  added  value,  often  of  cross-border  nature,  which 
are projects for which Member States and private investors are not willing to invest.  

Therefore, the funds available under CEF will not crowd out other sources of funding. On the 
contrary,  they  are  likely  to  favour  the  crowding  in  of  investments  by  attracting  investors 
towards new projects. There are two reasons for this: 

Firstly, the increase in the available budget for infrastructure will allow the EU to provide co-
funding  to  an  identified  pipeline  of  projects  of  high  EU  added  value  (energy  priority 
corridors,  transport  core  network  corridors  and  broadband  infrastructure  corridors).  These 
projects were not financed by member states and local authorities in the previous period due 
to the high costs and because of the predominant European dimension of these projects. For 
instance,  some  of  the  projects  have  higher  regional  than  national  expected  benefits  and 
therefore are not commercially viable or a priority for national funding. This is, for instance, 
the case of a gas storage or LNG terminal serving the needs of several Member States or of 
interconnection  projects  where  costs  are  allocated  asymmetrically  between  participating 
countries. This is also the case for a project such as the Brenner Base Tunnel between Austria 
and Italy, which would not have been implemented without the support of EU funding. 

Secondly,  the  availability  of  new  innovative  financing  instruments,  including  EU  project 
bonds, in order to attract private debt and equity capital, would allow for the pooling of assets 
to improve the risk profile and lower the costs of financing for future infrastructure portfolios. 
With a growing number of complex and cross-border projects of European importance, well 
designed equity or debt instruments would be likely to assist private investors in facilitating 
access to equity and/or debt finance, reducing the cost of capital, adapting lending conditions 
to better match project cash flows and facilitating project finance structuring through standard 
equity and debt instruments. It is also essential to note that such form of support would come 
at a lower expense to the public budget (higher leverage)126. 
Therefore,  the  important  increase  of  EU  funding  will  contribute  to  an  even  more  important 
increase of the financing coming from other sources, especially from the private sector. With 
a better alignment of the sectoral funding instruments with the policies, and with an increased 
use  of  innovative  financing,  the  leverage  of  EU  funding  will  be  improved.  In  the  field  of 
trans-European  Network,  the  TEN-T  programme  allowed  to  finance  €  41.619  billion  of 
projects with €7.081 billion of funding (on proj ects selected for funding on the period 2007 -
2009)127. On the side of innovative financial instruments, € 400 millions  of LGTT financing 
has  contributed  to  €  1 0.584  billion  of  projects128,  with  a  multiplying  effect  of  26.5.  By 

126  

Market based/innovative instruments are characterised by a higher leverage (in comparison to grants) 
and their potential to generate revenue for the body that provides them (unlike grants, they do not come 
for free) 

127 Figures from the TEN-T Executive Agency implementation report 
128 LGTT mid-term review, EIB, July 2011 

106

 
                                                 
 
applying the same leverage effect to the € 21.7  billion allocated to transport through the CEF 
(not including the € 10 billion  earmarked in the Cohesion fund for Cohesion countries), the 
level  of  investments  triggered  by  the  CEF  in  the  field  of  transport  would  amount  to  about 
likely  to  be  higher  due  to  the  new  innovative 
€150  billion.  The  leverage  effect  is  however 
financial instruments, co-funding rates and implementation tools. 

The  increase  of  EU  funding  for  infrastructure  with  high  European  Added  Value  will 
accelerate the development of energy, transport and digital infrastructure across Europe. This 
accelerated  implementation  of  the  “backbone  of  the  European  Single  Market”129  will  have 
major impacts on the industry using these infrastructures, but also on the European economy 
taken as a whole130. 
The  Europe  2020  strategy  underlines  also  that  meeting  the  energy  and  climate  goals  could 
result in € 60 billion less in oil and gas im ports by 2020 of financial savings and benefits for 
energy security.  

2.2.  Impacts on the industry 

As identified in the problem definition, in the reference scenario market failures prevent key 
infrastructure  of  high  EU  added  value  to  be  realised,  such  as  cross-border  connections, 
hindering the completion of the European Single Market.  

The creation of the CEF however is likely to accelerated the implementation of infrastructure 
and create network effects to the benefits of the users. 

2.2.1. 

impacts on the energy sector 

Concerning  electricity,  the  deployment  of  infrastructure  to  meet  our  energy  and  climate 
targets  will  allow  for  the  large-scale  deployment  of  renewable  energies,  the  optimisation  of 
transmission  at  EU  level  rather  than  only  at  national  rather  than  EU  level,  thus  leading  to 
greater  cost  and  resource  efficiency.  It  will  also  help  realising  complex  projects  such  as 
offshore grids and cross-border interconnectors. Transmission bottlenecks and will therefore 
be  reduced,  as  well  as  the  price  differences  between  Member  States,  thanks  to  a  better 
integration  in  a  single  electricity  market.  The  new  infrastructure  will  also  foster  the 
implementation  of  smart  grids,  leading  to  a  better  integration  of  an  increasing  share  of 
renewables  and  an  increased  integration  and  operation  of  grids  at  European-level.  In  the 
longer term, smart grids will also contribute to price reductions on the electricity market by 
increasing  transparency  of  supply  and  demand,  hence  reducing  congestions,  optimising 
system flows and providing the information needed for dynamic pricing. The French regulator 
CRE  has  estimated  that  with  the  implementation  of  smart  metering  the  supplier  switch 
capability for households will increase by a factor of 10 (50% instead of 5%). 

As  for  gas,  the  development  of  the  necessary  North-South  interconnections  in  the  priority 
corridors  in  Central  West  and  Eastern  Europe  will  strengthen  the  resilience  of  the  gas 
network, improve market integration and competition, leading to greater choice to consumers, 

129 Single Market act (COM (2011) 0206 
130  Networks  and  smart  grids  are  essential  to  achieve  the  targets  by  2020.  Economic  benefits  from  greater 
integration of the European energy market are estimated at 0.6% to 0.8% GDP. Meeting the EU's objective of 
20% of renewable sources of energy alone implies a job creation potential of more than 600 000 jobs in the EU. 
Delivering  on  the  20%  energy  efficiency  target  over  1  million  new  jobs  and  new  energy  services  would  be 
created. 

107

 
                                                 
decrease  the  probability  of  supply  shortages  or  supply  disruptions  and  enhance  the 
possibilities  to  mitigate  actual  supply  disruptions,  in  a  context  of  decreasing  domestic 
production (all over Europe) and higher import dependency. Linking isolated regions, like the 
Baltics  to  the  EU  gas  market,  will  decrease  the  dependency  from  only  a  few  or  a  single 
source. The development of a new Southern gas corridor will boost diversification of sources, 
routes and suppliers.    

Concerning  CO2  transportation,  EU  funding  under  the  CEF  would  allow  significant 
investment  in  networks  and  give  rise  to  a  coordinated  development  of  the  infrastructure, 
fostering market integration which will help reducing energy prices in the long term. Under 
the  reference  scenario,  the  absence  of  sufficient  transportation  capacity  and  lack  of 
interconnection between CO2 producing sites in one Member State and CO2 storage sites in 
another  Member  State  would  slow  down  the  commercial  deployment  of  CCS  technologies, 
again maintaining higher CO2 emissions. 

2.2.2. 

impact on transport 

The accelerated implementation of the trans-European transport Core Network corridors will 
favour  more  adequate  transport  infrastructure  coverage  of  the  Union,  modal-shift  and  co-
modality.  It  should  thus  support  a  concentration  of  trans-national  traffic  and  long-distance 
flows  –  both  for  freight  and  passengers  –  and,  as  a  result,  a  higher  resource  efficiency  of 
infrastructure use. Innovative information and management systems, that will form part of the 
network, would provide support for logistic functions, inter-modal integration and sustainable 
operation  in  order  to  establish  competitive  door-to-door  (or,  at  least,  terminal-to-terminal) 
transport  chains,  according  to  the  needs  of  the  users.  The  efficiency  of  the  whole  transport 
system would be, as a result, improved, with an important reduction of congestion and travel 
times. 

As explained in the OECD 2002 report on the Impact of Transport Infrastructure Investment 
on Regional development, the principle underlying the assessment of benefits associated with 
travel time is that transport system users’ economic decisions regarding the location of their 
homes,  businesses,  mode  choice  or  route  followed  to  get  to  a  specific  destination  and 
behaviour in traffic, reflect their valuation of travel time. Time savings are benefits resulting 
from  an  improvement  in  the  efficiency  of  the  transport  system  (shortened  routes,  increased 
traffic  fluidity,  better  access  to  connection  services,  etc.).  For  freight  carriers,  time  savings 
will take the form of money savings given that reductions in travel time reduce hourly costs of 
transport  services  (e.g.  drivers’  wages,  insurance,  etc.)  for  shippers.  For  consignees,  travel 
time savings may be converted into reduced inventory costs. On the other hand, for passenger 
transportation, travel time savings normally bring no direct monetary reward. 

More  efficient  infrastructure  in  isolation  may  give  rise  to  rebound  effects.  Therefore,  as 
concluded  in  the  recent  Transport  White  Paper  and  its  Impact  Assessment,  infrastructure  in 
combination  with  other  measures,  notably  pricing  and  taxation,  are  required  to  reach  the 
overall  target  of  the  transport  sector  of  reducing  CO2  emissions  by  60%  compared  to  1990 
levels. 

2.2.3. 

impacts on digital users 

108

 
 
Broadband infrastructure supports the development of ICT services and is a general purpose 
technology. The benefits from the roll out of fast broadband will therefore not be limited to a 
single category of stakeholders, but will spill over to the European economy and society. The 
externalities mentioned in relation to the Digital single Market can be applied to investment in 
broadband as well. Further externalities relevant for broadband investment may refer to: 

-  Economic  Efficiency:  transaction  costs  of  economic  operators  are  reduced  by  broadband. 
This  makes  it  easier  to  conduct  online  business  and  attract  foreign  investments  to  certain 
locations131, the effect of this can spill over other geographical areas. Broadband development 
is  already  supporting  a  wide  and  increasing  number  of  dedicated  business,  government  and 
leisure  applications  and  services.  Bringing  broadband  to  new  areas  means  expanding  the 
market for e-Commerce (which is a European one): more consumers will be able to purchase 
on-line, thus enlarging the market base, with a final impact on GDP132.  
-  Network  Externality:  the  more  users  that  benefit  from  high-speed  broadband,  the  more 
visible  and  effective  are  the  above  impacts.  The  benefits  of  broadband  extend  across  many 
different social groups in many different ways, reinforcing each other. These supplementary 
gains  extend  well-beyond  the  telecommunications  sector.  Technological  progress  in  remote 
care,  which  directly  lowers  health  care  costs,  postpones  or  eliminates  the  need  for 
institutionalised  care,  and  makes  it  possible  to  increase  workforce  participation  from  home. 
As an example, if more people are connected through broadband to the network, the network 
effect  will  decrease  the  average  cost  of  eHealth  infrastructure,  shortening  payback  times  of 
investment. 

The results from investment in broadband are certainly worth the cost: a study from Booz & 
Co.  (2009)  found  that  a  ten  per  cent  higher  broadband  penetration in  any  year  is  correlated 
with a 1.5 per cent increase in labour productivity over the following five years133. 

2.2.4.  Administrative burden 

The  alignment  of  the  EU  funding  instruments  on  the  policy  priority  set  for  each  sector  is  a 
major  feature  of  the  Connecting  Europe  Facility.  It  will  greatly  simplify  the  funding 
framework for stakeholders when applying for EU funds for their projects of high European 
added value. 

In  the  field  of  transport  for  instance,  the  projects  aiming  at  developing  parts  of  the  Core 
Network Corridors will ask for funding under one single EU budget heading, not depending 
whether the project would be situated in countries covered by Cohesion funds or not.  
Also  a  more  centralised  management134,  which  is  envisaged  by  CEF,  will  reduce  the 
administrative burden at the EU level by ensuring a simplified institutional architecture.  

131 In October 2008, the Irish Management Institute (IMI), together with the National Irish Bank, published the results of its 
tenth  survey  of  multinational  companies  located  in  Ireland.  Compared  to  three  years  ago,  the  strategic  importance  of 
broadband availability moved up twelve positions in the ranking from 18th to 6th. 

132 According to estimates of McKinsey & Company 132 a 10% increase in broadband household penetration delivers a boost 
to a country’s GDP that ranges from 0.1 percent to 1.4 percent 

133  Roman  Friedrich,  Karim  Sabbagh,  Bahjat  El-Darwiche,  and  Milind  Singh  (2009):  Digital  Highways.  The  Role  of 
Government in 21st Century Infrastructure. Booz & Company. 
134 Centralised management will also better promote and ensure coherent implementation of (common) transport 
policy measures across Europe (e.g. with regards to charging, security, safety in tunnels, interoperability, etc.). 
Centralised  management  will  allow  for  almost  'real  time'  monitoring  of  projects/programme  performance 

109

 
                                                 
2.3.  General economic impacts 

2.3.1.  Support to the Single Market 

A  truly  integrated  Single  Market,  as  the  Monti  Report  indicated135,  would  not  be  possible 
without  a  seamless  connection  between  all  its  component  parts.  Roads  and  other  transport 
connections,  electricity  grids  and  broadband  networks  are  vital  for  a  functioning,  integrated 
economic  area  and  for  its  social  and  territorial  cohesion.  The  development  of  the 
infrastructure of high European added-value will have positive effects on the free movement 
of goods and services, market segmentation, accessibility, and territorial cohesion. 

The single market is generally considered one of the main European achievements of the last 
50  years.  In  the  European  single  market  freedom  of  movement  of  the  production  factors 
translates into better resource allocation and ultimately increases total factor productivity. As 
explained in the Single Market Act, energy, transport and broadband infrastructure networks 
are essential for the Single Market. Transport and broadband networks increase the level of 
interconnectivity  between  the  European  markets  for  most  households  and  enterprises  that 
have  access  to  it.  "Europe's  energy  infrastructure  is  the  central  nervous  system  of  our 
economy"136. 
For instance, the  rationale for European action in the making  of the  European digital  single 
market  can  be  summarised  by  the  positive  externalities  that  a  single  market  has  on  all  the 
Member States, and not only in those where certain policy measures are taken.  

Some examples of positive externalities are:  

-  The  Innovation  Diffusion  Externality  New  and  more  innovative  services  emerge  that  will 
benefit a growing number of users, thus ultimately improving the overall quality of life. From 
the infrastructure side, broadband coverage and penetration rates correlate positively with the 
“e-Readiness”  of  a  given  country,  or  the  capacity  of  a  nation’s  consumers,  businesses  and 
government(s) to reap the full benefits of the Information Society137. 
-  Competition  externality:  a  digital  Single  market  means  that  business  and  digital  content 
creators are exposed to a much higher level of competition than in a national digital market. 
As  some  of  the  stakeholders  may  successfully  oppose  resistance  at  the  national  level, 
European  action  is  deemed  to  be  more  effective  to  prevent  market  fragmentation.  In  a 
European digital single market eCommerce can be exploited to the full and most competitive 
companies  will  be  the  ones  benefiting  the  most  from  it.  They  will  experience  a  rise  in 
customers  and  will  be  able  to  exploit  better  economies  of  scale.  Consumers  will  benefit  as 
they will have the possibility to choose cheaper products. 

-  Specialisation:  the  clustering  of  production  factors  will  trigger  in  the  long  run  further 
specialisation  of  the  EU  industry  into  worldwide  competitive  clusters.  Economies  of  scope 
will also occur in this case. 

"A new Strategy for the Single Market at the service of Europe's economy and society". Report by Mario Monti to 

(beyond information on 'earmarked funds)'; this is important in assessing evolving priorities (e.g. in the case of 
the European Economic Recovery Plan). 
135 
the President of the European Commission, 9 May 2010, page 64-65. 
136 COM (2010) 277 final, Communication "Energy infrastructure priorities for 2020 and beyond - A Blueprint 
for an integrated European energy network" 
137 A positive correlation is evident with the “2009 e-Readiness Rankings” compiled by The Economist’s Intelligence Unit 
(EIU) 

110

 
                                                                                                                                                         
2.3.2.  Economic Growth 

High  performing  infrastructure  can  be  growth  enabler  by  enhancing  the  functioning  of  the 
European  Single  market.  According  to  economic  literature,  investment  in  network 
infrastructure can boost long-term economic growth138. However, it has to be borne in mind 
that  not  all  studies  converged  towards  this  conclusion,  since  some  are  inconclusive139.  This 
Impact  Assessment  assumed  that  infrastructure  investment  can  have  a  positive  effect  on 
growth  that  goes  beyond  the  effect  of  the  capital  stock,  due  to  economies  of  scale,  the 
existence of network externalities and competition enhancing effects.140 Studies have shown 
that relatively large improvements in infrastructure (and accessibility) can translate into gains 
in economic performance, though limited.141  
Each  infrastructure  network  sector  brings  its  won  contribution  to  the  European  economic 
growth.  For  instance,  Europe's  future  economic  growth  and  stability  depend  on  the 
availability  of  appropriate  energy  infrastructure  ensuring  the  achievement  of  the  EU  energy 
and  climate  goals,  cost-efficient  functioning  of  the  internal  energy  market  and  security  of 
supply. 

In  parallel,  since  ICT  infrastructure  serves  as  a  General  Purpose  Technology  enabler, 
infrastructure diffusion positively affects Total Factor Productivity, capital accumulation, and 
ultimately, GDP growth. This mechanism of transmission is not only limited to region where 
broadband is deployed. Productivity and competitiveness gains spread out from the personal 
to  the  corporate  and  country  levels.  Schumpeterian  cycles  of  creative  destruction  may  be 
triggered by innovations coming from formerly unconnected regions.  

For instance, the effectiveness of eGovernment services can bring a lot to the economy. As an 
example,  the  eGEP  project  reports  have  documented  through  economic  modelling  and  case 
studies,  the  both  actual  and  potential  efficiency  gains  (Codagnone  and  Boccardelli  2006; 
Corsi  et  al  2006).  These  reports142  illustrate  the  contribution  that  the  full  take-up  of 
eGovernment can make to GDP growth and to private sector productivity143. 
This argument is similar for transport network, since a more integrated and efficient transport 
system  enabling  the  free  movement  of  people  and  goods  across  the  EU  and  with  its 
neighbours  is  expected  to  contribute  to  economic  growth,  as  it  would  allow  for  a  more 
efficient  use  of  resources.  The  EU  economy  should  also  benefit  from  the  increase  in  the 
capacity  and  performance  of  the  infrastructure resulting  from  the  elimination  of  bottlenecks 
and addition of missing links.  

Moreover,  the  building  of  new  transport,  energy  or  broadband  infrastructure  would  have  an 
important impact on the construction sector; some infrastructure projects like high-speed rail 
provide several years of works for building companies and related businesses. In addition, the 

for 

See 

instance 

138  See  for  example  the  World  Bank  Report—Connecting  to  Compete  2010  Trade  Logistics  in  the  Global 
Economy  -The Logistical Performance Index and its Indicators 
139 
studies: 
http://www.dtu.dk/upload/institutter/dtu%20transport/rapporter/rap_7_2010_infrastruktur%20og%20danmarks%
20internationale%20konkurrenceevne.pdf 
140Infrastructure  and  Growth:  Empirical  Evidence  ,  OECD  Economics  Department  Working  Paper  No.  685, 
March 2009 
141 As shown by the ECORYS report, using the SASI model. 
142 See eGEP final deliverable – Economic Model p.6 
http://82.187.13.175/eGEP/Static/E_Interim.asp?ST=0&page=1 

following 

summary 

the 

of 

111

 
                                                 
promotion  of  intelligent  transport  systems  or  smart  grids  should  foster  research  and 
innovation for new technologies and create new business cases. Finally, the improvement of 
the  efficiency  of  the  transport  and  energy  systems  and  the  reduction  of  prices  and 
uncertainties  in  the  delivery  would  improve  the  economic  conditions  for  both  transport 
businesses and enterprises heavily depending on transport for their activity. 

3. 

SOCIAL IMPACTS 

The social impacts of the accelerated development of infrastructure are wide and vary from 
sector  to  sector.  However,  many  common  aspects  can  be  found  for  job  creation  or 
accessibility and territorial cohesion. 

3.1.  Employment and jobs 

According to the economic literature, infrastructure investments help boost economic growth, 
enhance trade and mobility of people and constitute a highly effective engine of job creation. 
One  recent  study  in  the  US  showed  that  infrastructure  investment  spending  creates  about 
18,000 total  jobs  for  every $1 billion in new  investment  spending, including direct, indirect 
and  induced  jobs144.  Job  creation  is  mainly  related  to  infrastructure  works,  but  it  is  also 
induced  by  the  indirect  economic  effect  of  the  use  of  the  new  infrastructure.  Indeed,  more 
investment  creates  the  need  for  more  employment  in  a  first  phase,  notably  in  construction, 
mechanical  engineering  and  business  services.  This  in  turn  leads  to  higher  incomes  and 
household spending. Multiplier effects contribute in a second phase to increased employment 
in consumer sectors such as retail, even if these effects can be delayed in time.  

The TEN-T guidelines Impact Assessment as well as the Impact Assessment accompanying 
the Communication "Energy infrastructure priorities for 2020 and beyond - A Blueprint for an 
integrated  European  energy  network"  have  shown  important  direct  and  indirect  impact  of 
large investments in infrastructure. For instance, the E3ME model used for the energy sector 
has  calculated  that  the  option  leading  to  €  201.5  billion  of  investments  in  energy 
infrastructures would lead to a GDP increase of  0.9  points  compared  to  the  Business-as-usual 
scenario and to the creation of 774.000 extra jobs over the period 2011 - 2020. The TEN-T 
Guidelines  Impact  Assessment  has  shown  that  an  Option  in  which  €  215  billion  would  be 
invested in European transport infrastructure with high added-value would lead to the creation 
of a minimum of 2.92 million jobs, i.e 899.000 more than with a business-as-usual scenario 
with  €  150  billion  of  investment s.  Long-term  job  creation  is  very  difficult  to  calculate,  but 
case studies in the field of transport mentioned by the OECD 2020 Report on the Impact of 
Transport Infrastructure Investment on Regional Development have shown the positive results 
of  infrastructure  development  on  long-term  job  creation.  However,  in  the  absence  of  clear 
parameters explaining these  results,  the impact of the proposed policy options on  long-term 
employment effect cannot be compared for the purpose of this document. 

143 An online procedure to register a new company that takes 2 weeks rather than the previous 2 to 3 months was introduced 
by the Danish Commerce and Companies Agency: http://www.eogs.dk/sw21252.asp 
144How Infrastructure Investments Support the U.S. Economy: Employment, Productivity and Growth, Political 
Economy Research Institute, January 2009. 

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3.2.  Accessibility and territorial cohesion 

The  three  infrastructures  networks  have  an  important  impact  in  term  of  accessibility  and 
territorial cohesion. As explained in the Fifth Cohesion Report, "regional competitiveness and 
development  prospects  are  also  affected  by  infrastructure  endowment,  such  as  transport  or 
telecommunication  networks.  As  indicated  by  many  studies,  the  provision  of  public 
infrastructure has a positive and large effect on productivity and growth".  

Improved transport links between regions and countries facilitate access to EU-wide markets, 
which is likely to create new opportunities for growth. The Cohesion Report also explain that 
Access  to  high-speed  ICT  networks  is  increasingly  considered  to  be  a  key  factor  of 
competitiveness,  as  determining  the  capacity  to  compete  in,  and  benefit  from,  the  global 
market.  It  is  also  a  major  determinant  of  the  facility  to  adopt  new  technologies,  which  is 
central  to  the  growth  of  less  developed  regions.  At  the  same  time,  it  is  critical  to  the 
development of eservices, whether public or private. Access to the energy system is also of 
course essential for the development of businesses.  

As  an  example,  in  the  TENconnect  II  study  calculating  the  impacts  of  the  development  of 
different transport infrastructure scenarios, the comparison of the Business-As-Usual scenario 
(seen  on  the  map  below  as  PP)  with  the  proposed  CORE  network  (which  represent  an 
accelerated  pace  of  investments  with  a  focus  on  project  of  highest  EU  added-value)  for 
Accessibility is given in the following map—hence the 'added value' of the CORE over-and-
above the currently programmed, fragmented network is shown.  

113

 
Figure 1: Comparison of BAU with the proposed CORE network for accessibility (horizon 2030) 

It should be noted here that funding would continue for the Comprehensive Network through 
the  Cohesion  and  Structural  Funds  (CSF),  which  would  target  projects  of  a  national  and/or 
regional  interest.  The  impacts  shown  here  include  investment  triggered  by  EU  funding 
coming from the CEF but also EU funding from the Cohesion and Structural Funds. 

3.3. 

(some examples of ) Sector specific aspects 

3.3.1.  Quality of life due to eServices 

An improved coverage of the broadband network will lead in the development of eServices, 
of both public and private nature, that will enhance the citizens' quality of life. 

Increase  in  quality  of  life  due  to  access  to  eGovernment  services.  The  development  of 
broadband also has downstream effects on public services. The European public sector holds 
enormous  amounts  of  knowledge  that  needs  to  be  more  easily  accessible.  The  use  of  E-
government  procedures  has  demonstrated  an  ability  to  generate  savings  for  European 
companies through the reduction of administrative burdens. In addition, savings derived from 
the  possibility  of  using  broadband  for  information  sharing  among  public  services 

114

 
 
 
(eAdministration)  have  been  even  four  times  higher  than  savings  at  the  interfaces  between 
public administration and users. Other examples include, eSolutions, such as standardised and 
shared  registration  systems  and  data  bases,  e-portals  to  provide  access  to  public  services, 
digitalisation  of  financial  management  and  tax  administration,  which  all  offer  significant 
scope for efficiency savings.  

Increase  in  quality  of  life  and  side  economic  effects.  Higher  quality  of  life  of  European 
citizens is linked to the provision of these eServices. As an example the provision of eHealth 
services  will  not  only  reduce  costs  for  acute  hospitals,  but  there  will  be  positive  economic 
effects due to the monetary value of QALY145 from prolonged life; or to the reduction in loss 
of  productivity  due  to  illness.  eHealth  also  has  a  great  potential  in  terms  of  fostering 
independent  living  which  increases  quality  of  life  for  the  elderly  but  also  generates  savings 
compared to hospitalisation146. 

3.3.2.  Transport Safety 

For  transport,  investing  in  the  infrastructure  does  not  only  mean  investments  in  the  hard 
infrastructure,  but  also  investments  in  the  various  modal  intelligent  transport  systems  (ITS) 
projects,  such  as  European  Railways  Traffic  Management  System  (ERTMS),  the  Single 
European Sky Air Traffic Management Research (SESAR), Vessel Traffic Management and 
River Information Services.  
As demonstrated by the evaluation of the EasyWay project147, the coordinated deployment of 
ITS services on the trans-European road network) can have significant positive impacts. Thus, 
within the frame of EasyWay I, this has lead to injury accident savings of between 10% and 
20%,  depending  on  the  particular  application,  rising  to  approximately  60%  on  some  safety 
critical roads sections.  

The  results  of  the  deployment  of  dynamic  traffic  and  network  management  services  in 
particular, successfully deployed by European road operators to tackle disrupted traffic flows 
on strategic and critical sections of the TEN-T, have proved significant on those parts of the 
network that suffer greater congestion and accident rates. Positive impacts include increased 
capacity rates of up to 9% and a reduction in accidents of typically between 20% and 30%, 
but as high as 63% on particular safety critical sections of the TEN-T. 

Therefore,  the  accelerated  deployment  of  ITS  (especially  for  roads,  where  most  of  the  hard 
infrastructure is built, but where ITS largely needs to be developed) will lead to an increase in 
road safety. 

3.3.3.  Consumer access to energy 

The  social  impacts  on  consumers  related  to  the  disruption  of  energy  supplies  can  be 
significant148.  When  Russian  supplies  via  Ukraine  were  disrupted  between  6th  and  20th 
January  2009,  EU  Member  States  were  deprived  of  20%  of  their  gas  supplies  (30%  of 

145 Quality Adjusted Life Years 
146  The  Scottish  West  Lothian  council  independent  living  programme  has  succeeded  in  ensuring  that  elderly  couples  with 
severe  impairments  stay  in  their  own  homes.  They  have  thus  saved  the  public  budget  £84,000  on  an  annual  basis.  The 
standardisation of such services (through adequate institutional change and regulation) could produce important savings for 
the public budget. 
147 EasyWay – Synthesis of Project Evaluation Results 2007-2009, 15 February 2011. 
148 Supply disruptions happened in the light of political disturbances in transit countries or transit disputes (e.g. for supplies 
from Russia through Ukraine or Belarus) but also due to technical disruptions of production facilities or political situation in 
producing countries, like e.g. the disruption of gas supplies via Greenstream (Libya-Italy) in 2011.  

115

 
                                                 
imports)  with  important  economic  repercussions.  The  crisis  affected  a  majority  of  EU 
Member  States  and  non-EU  countries  in  Central  East  and  South-East  Europe  directly  and 
indirectly, left households in the cold for almost 2 weeks and also caused an estimated total 
economic  damage  of  1.6  billion  Euros.  The  January  2009  crisis  put  at  evidence  the  lack  of 
interconnection  between  the  Western  and  Central  Eastern  Member  States  of  the  EU.  It  is 
crucial  that  the  internal  gas  market  is  sufficiently  interconnected  to  meet  any  disruption  of 
imports at any time and transport the gas to where it is needed.  

An  accelerated  investment  in  energy  infrastructure,  with  better  connections  to  producing 
countries and better interconnections between Member states, would not result only in lower 
prices  for  consumers  as  shown  above,  but  would  also  ensure  that  the  risks  of  disruptions  is 
reduced to a minimum. 

4.  ENVIRONMENTAL IMPACTS 

The  environmental  impacts  of  infrastructure  are  complex.  On  the  one  side,  and  it  is 
particularly true for transport and energy, the building of new infrastructure may have adverse 
impacts on the land-use, on the flora and the fauna surrounding the new infrastructure. On the 
other, the development and design of new infrastructures is essential for the implementation 
of less polluting life-style. For instance, the development of smart energy grids will be crucial 
for  the  integration  of  renewables  in  the  energy  market;  for  transport,  the  development  of 
electrified railways, inland waterways or electricity refuelling power stations along the roads 
will allow for the development of cleaner solutions for transport. 

On these issues, EU funding cannot act in isolation, but it can do a lot, by conditioning the EU 
funding  with  the  highest  environmental  requirements,  which  are  of  high  EU  added  value, 
since Sustainable Growth is one of the main policy targets of the EU.  

4.1. 

impacts on land-use, flora and fauna 

As explained in the Impact Assessment of the Transport White Paper, the greatest impact on 
other environmental resources would be caused by an increase in land use for infrastructure, 
generating  increased  pressure  on  biodiversity  and  ecosystem  services,  due  to  direct  damage 
linked to construction, habitat fragmentation and degradation, and disturbance. The situation 
is similar for energy, and in a more limited manner for broadband infrastructure. 

It  must  be  noted  here  that,  in  accordance  with  existing  EU  legislation  (mainly  SEA 
directive149,  EIA  directive150  Habitats  directive151  and  Water  framework  directive152)  the 
Business-as-Usual scenario as well as the implementation of the CEF include the assessment 
of  the  strategic  environmental  impact  at  the  level  of  relevant  plans  and  programmes  by 
Member States, as well as the assessment of environmental effects at the level of individual 
projects of common interest. 

Major  transport  infrastructure  projects  may  pose  serious  threats  to  biodiversity  and  Natura 
2000  areas  which  were  designated  to  protect  the  most  endangered  European  species  and 
habitat  types.  The  negative  impacts  from  transport  projects  might  result  from  physical 

149 Directive 2001/42/EC on the assessment of the effects of certain plans and programmes on the environment 
150  Directive  85/337/EEC  on  the  assessment  of  the  effects  of  certain  public  and  private  projects  on  the 
environment 
151 Directive 92/43/EEC on the conservation of natural habitats and of wild fauna and flora 
152 Directive 2000/60/EC establishing a framework for the Community action in the field of water policy 

116

 
                                                 
reduction  of  natural  habitats,  landscape  fragmentation,  migration  barriers,  collision  of 
vehicles with animals, emissions of noise and air pollutants, changes to the water regime and 
others. It is therefore necessary that all projects undertaken as part of the TEN-Ts prove full 
compliance  with  EU  environmental  legislation,  including  Birds  and  Habitats  Directives, 
before they are given a green light for implementation.  

In order to enforce the environmental legislation, Energy infrastructure projects might have to 
change  their  technology  choice  (e.g.  from  overhead  line  to  underground  cable  or  special 
measures for gas pipelines in order to be able to cross Natura 2000 sites; direct current instead 
of alternating current to reduce the size of power poles). Others would have to change their 
routing or to adopt measures in order to prevent and mitigate the possible adverse effects on 
the  environment  or,  if  not  possible,  to  compensate  negative  impacts,  in  particular  on  the 
conservation objectives and integrity of Natura 2000 sites, for example through investing in 
green infrastructure153. 

4.2. 

impacts on climate change 

The limited negative impact of infrastructure building on land-use, flora and fauna has to be 
put  in  perspective  with  the  huge  positive  impact  of  infrastructure  investments  on  Climate 
change. This point is valid for the three sectors. 

4.2.1.  Sector specific aspects 

For  the  energy  sector,  according  to  the  Reference  scenario,  non-delivery  on  the  EU 
infrastructure  priorities  would  limit  the  possibilities  to  inject  electricity  from  renewable154 
sources  into  the  grid  to  reach  final  customers,  hindering  the  achievement  of  the  20% 
renewable target and preventing CO2 emission reductions, with the related consequences on 
the  climate  and  the  environment155.  The  investments  triggered  by  the  funding  under  the 
Connecting  Europe  Facility  will  have  an  important  impact  on  this.  The  construction  of 
electricity  lines  enables  the  large-scale  deployment  of  renewable  energies,  with  its  positive 
impacts in terms of reduction of CO2 emissions.  

Similarly,  the  development  of  transportation  capacity  and  interconnections  between  CO2 
producing sites in one Member State and CO2 storage sites in another Member State would 
accelerate the uptake of CCS technologies, lowering CO2 emissions. In the Business-as-usual 
scenario, gas supply shortages or disruption due to lack of infrastructure or alternative sources 
(such  as  LNG  or  CNG)  would  on  the  one  hand  lower  CO2  emissions  under  the  Reference 
scenario,  as  less  gas  is  consumed.  On  the  other  hand  however,  one  can  realistically  assume 

153 http://ec.europa.eu/environment/nature/ecosystems/index_en.htm  
154  Concerning  renewables,  given  the  difficulties  and  shortcomings  identified  above  for  offshore  grid 
development, it is estimated that a significant share of the 32 bn€ of investments needed for offshore connection 
infrastructure by 2020 will not be realised. As demonstrated by KEMA and confirmed by ENTSO-E, reaching 
the 20% renewables target in 2020 will therefore be impossible, given the important contribution expected from 
offshore  wind  (over  12%  of  total  renewable  electricity  production  in  2020  or  about  20%  of  the  additional 
renewables  capacity  to  be  installed  between  today  and  2020).  Concerning  emissions,  the  Smart  2020  study 
estimates that global emissions could be reduced by 15% thanks to smart grids, mainly through their contribution 
to energy efficiency. 
155  This  environmental  impact  analysis  is  confirmed  at  the  macro-level:  cumulated  CO2  emissions  for  the  EU 
between 2010 and 2030 under the PRIMES baseline scenario (corresponding to BAU) are projected to be about 
2,500 millions tons or over 3% higher than under the Reference scenario, where all necessary infrastructure is 
supposed to be operational. 

117

 
                                                 
that  gas  would  be  replaced  by  other  more  emitting  fossil  fuels,  typically  oil  or  coal.  The 
overall effect of insufficient gas infrastructure can be assumed to be higher CO2 emissions. 
The  development  of  new  European  Gas  corridors  (Projects  5  to  8  in  the  preliminary  list  of 
Priority Energy Corridors annexed to the MFF Communication) will reverse the trend. 

As  for  broadband  infrastructure,  few  studies  can  quantify  the  particular  benefits  for  the 
environment  of  high  speed  broadband.    The  qualitative  benefits  that  can  be  identified  are, 
nevertheless: greater use of telecommuting, smart grids and smart buildings which all benefit 
form  enhanced  deployment  of  high  speed  broadband.  In  addition,  broadband  and  on-board 
computers in lorries may allow logistics managers to better coordinate and utilise trucks and 
enhance  loads  carried.  Some  quantifications156  have  been  made  for  the  reduction  in 
greenhouse  gas  emission  in  the  US.  The  enhanced  adoption  and  use  of  broadband  could 
achieve a net reduction of one billion tons157 of greenhouse gas over 10 years.  If converted 
into energy saved this would constitute 11 per cent of annual U.S. oil imports. Again for the 
US, studies show158 that use of smart grids may save between 60 million and 480 million US 
tons of carbon emissions per year.  

In  the  field  of  transport,  according  to  the  business-as-usual  scenario  of  the  Commission 
Communication "A Roadmap for moving to a competitive low carbon economy in 2050", EU 
transport's GHG emissions will increase by 60% to 70% in 2050 in comparison to the 1990 
levels.  In  addition,  a  50%  reduction  of  emissions  in  other  sectors  compared  to  1990  would 
increase  transport's  share  in  total  emissions  from  20%  (current  state)  to  50%  by  2050.  The 
impact of the development of new infrastructure on emissions and climate change depends on 
the modal shift induced by the development of infrastructure to alternative modes of transport 
and  by  the  rebound  effect  (the  increase  in  traffic  induced  by  the  creation  of  new 
infrastructure), especially for road transport. 

By  developing  high-speed  rail  infrastructure,  these  services  can  replace  flight  services  on 
medium distance, as it was the case for the Bruxelles – Paris – London High Speed rail, part 
of Priority Project number 2.  

Increased  use  of  renewable  energy  sources  to  power  vehicles  would  be  facilitated  by  the 
development  of  supporting  infrastructure,  such  as  electrified  railways  and  power  supply 
stations (e.g. electricity/battery and hydrogen) along the road infrastructure.  Increased use of 
biofuels is also important for the further decarbonisation of transport, mostly in aviation and 
waterborne transport, where electrification is not really an option.159 
Energy  efficiency  is  the  other  major  contributor  to  the  decarbonisation  of  transport,  as  the 
technology scenario from the Impact Assessment on “Low-carbon economy 2050 roadmap" 
shows.160  Transport  infrastructure  can  contribute  to  increased  energy  efficiency  of  the 
transport  system  by  reducing  congestion,  encouraging  modal  shift  and  co-modality  towards 
more energy efficient transport modes/solutions161 as well as supporting the development of 
innovative transport solutions. Nevertheless, as pointed out above, the impact of greener/more 
efficient infrastructure development depends to an important extent also on external factors, 

156 Fuhr and Pociask, 2007; Davidson, Santorelli and Kamber, 2009 
157 One US ton is approximately 907kg, so 1billion US tons would represent just over 900 billion kg. 
158 Davidson, Santorelli and Kamber, 2009 
159 Impact Assessment accompanying the “Low-carbon economy 2050 roadmap", SEC(2011) 288 final.  
160 SEC(2011) 288 final 

118

 
                                                 
such  as  the  growth  of  the  share  of  renewable  energy  used  to  produce  electricity162  and  the 
rhythm of development and adoption of new technologies.163   
Whilst it is difficult to quantify impacts and compare effects on  the local environment with 
the contribution of energy, transport and broadband infrastructure to the prevention of climate 
change, it is expected that the overall balance of impacts is positive. In addition, the fight of 
climate  change  has  positive  effects  on  the  preservation  of  biodiversity,  as  global  warming 
could extinct certain species not adapted to higher temperatures. 

4.3.  Impacts on polluting emissions 

The  reasoning  is  similar  for  polluting  emissions.  Investing  in  modern  infrastructures  and 
combining it with other types of measures (especially in the case of transport164) and using the 
potential  synergies  between  the  sectors  (such  as  Intelligent  transport  systems  for  Roads  and 
smart grids) will allow for the reducing of polluting emissions such as local air pollutants and 
noise. 

5.  CONCLUSION 

Comparing  the  impacts  of  creating  the  CEF  with  the  Reference  scenario,  taking  into 
consideration  the  pre-conditions  (see  above)  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  benefits  as  well  as  to  overall  socio-economic  and 
environmental benefits. 

The preliminary comparison has clearly made the case for the CEF. The Impact Assessment 
of  the  CEF  will,  on  this  basis,  compare  the  retained  options  on  their  own  merits,  without 
risking any undue influence on impacts of the different amounts of funding available in the 
scenario.
CEF 

Reference 

and 

the 

in 

161  For  instance  by  promoting  electrified  high-speed  rail  for  passenger  transport  instead  of  aviation  or  by 
promoting electrified rail freight transport instead of road transport. 
162  The  pathways  for  the  decarbonisation  of  power  generation  will  be  analysed  in  the  forthcoming  Energy 
roadmap 2050. 
163  For  instance,  the  average  energy  efficiency  of  passenger  cars  in  1990  was  43.9  toe/Mpkm.  By  2050,    this 
improves  to  23.9  in  the  reference  scenario  and  it  is  further  reduced  to  13.6  toe/Mpkm  in  the  Effective 
Technology scenario. This is achieved through gradual efficiency improvements of internal combustion engines 
and  subsequently  gradual  hybridisation  leading  eventually  to  high  penetration  rates  for  electric  propulsion 
vehicles (such as for example plug-in hybrids and electric vehicles). 
164 See impact Assessment accompanying the TEN-T Guidelines Proposal 

119

 
                                                                                                                                                         
ANNEX 4 

Financial instruments under CEF165 

6. 

INTRODUCTION 

A common framework 
enhances economies 
of scale. 

Connecting Europe 
Facility is a 
transparent strategy 
which… 

…  provides  certainty 
and… 

… has a huge 
potential to attract 
more private sector 
financing with… 

… 
instruments… 

financial 

… to be validated by a 
thorough  assessment 
prior to their launch. 

The  progressively  increasing  interdependency  between  economic 
infrastructure  projects,  networks  and  sectors  provides  a  good 
ground for the creation of an integrated EU infrastructure funding 
framework  which  will  enable  economies  of  scale  and  a  coherent 
approach as regards the financing of projects.  

The  Connecting  Europe  Facility  provides  the  longer-term  plan 
ensuring that the EU priority projects in energy, transport and ICT 
are developed and implemented in a timely and effective manner. 
A comprehensive strategy of prioritised opportunities of transport, 
energy  and  ICT  projects,  as  proposed  by  the  Commission  on  29 
June 2011166, has significant potential to attract more private sector 
financing  and  at  the  same  time  help  to  complete  the  internal 
market.  The  strategy  including  the  selection  of  projects  is 
transparent  thus  ensuring  a  high  level  of  certainty  for  all 
stakeholders.  Within  this  strategy  the  setting  of  policy  priorities, 
regulations, 
incentive  schemes,  close  co-ordination  between 
stakeholders, information and awareness campaigns are required to 
establish  the  overall  framework  conditions  for  infrastructure 
investments  enforcing  behavioural  changes  amongst  stakeholders 
and  accelerating  the  pace  of  intervention.  Grants  and  financial 
instruments,  each  of  which  under  a  distinct  set  of  financial  rules, 
would be available in a centralised and co-ordinated manner. 

Financial  instruments  are  needed  to  reduce  specific  barriers  that 
prevent the flow of debt and equity finance. Their main objective 
is to attract and facilitate private sector finance in the projects. At 
the  same  time,  increased  investment  activity  in  infrastructure 
projects  with  the  help  of  new  initiatives  stimulate  the  global 
development of post-crisis financial markets, enhance the pace of 
the economic recovery and promote growth. 

This document gives an overview of current financing volumes for 
infrastructure, highlights market imperfections, points to financing 
gaps and assesses the main modalities of potential future financial 
instruments  for  equity  and  debt.  Thorough  ex-ante  assessment  is 
required  including  negotiations  with  financial  institutions  such  as 
the  EIB  in  the  next  12-18  months  before  any  concrete  and  fully-
fledged proposal can be made. 

165 This Annex consist of extracts of a document prepared by the Commission (DG ECFIN) in the context of the 
discussion on financing instruments for the CEF. 
166 COM(2011)500 A budget for Europe 2020 and the relevant Commission staff working papers. 

120

 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
7.  FINANCING OF INFRASTRUCTURE PROJECTS 

7.1.  Financing volumes  

Public budgets fund 
EUR 120 billion per 
year which together… 

…with the stimulus 
packages is no longer 
sustainable. 

Multilateral and 
development banks 
are capital 
constrained.  

As  regards  financing  of  infrastructure  investments,  annual  public 
sector  financing  amounts  to  around  1%  of  GDP,  or  around  EUR 
120  billion,  which  is  also  the  annual  average  amount  of  the  EU 
budget. Out of this, around 85% or EUR 95 billion is only in the 
transport  sector,  the  remainder  focusing  on  the  social  sector  such 
as schools and hospitals.  

While many governments have stepped in with stimulus packages 
for  infrastructure  projects,  first,  some  of  them  are  only  of  a 
temporary  nature,  second,  this  is  not  a  long-term  sustainable  way 
to support infrastructure and third, this support is no longer sound 
due to the significant deficits and sovereign debt levels. 

Multilateral  banks,  state  owned  financial  institutions  and  export 
credit  agencies  will  continue  to  play  an  important  role  in  the 
provision of finance to infrastructure projects. In addition, they are 
also  an  important  source  of  skills  for  due  diligence  and  expertise 
on  deal  structuring  and  procurement.  However,  these  institutions 
might  not  have  the  capacity  to  continue  the  recent  levels  of 
activity.  Below  as  an  example  an  overview  of  EIB's  financing 
activity showing a scaling down of financing volumes from 2011 
onwards due to capital considerations. 

EIB financing for transport and energy infrastructure (achieved in 
2010 and forecast 2011-2013) in EUR billion:  

TENs 
Environmental  protection  and 
sustainable communities 
Energy 
5.6 
(of  which 
renewables  and  1.7  energy 
efficiency in 2010) 
Overall 
EU27 (signatures) 
Total  lending  volume  of  the 
EIB (signatures) 

lending  volume 

in 

2010 
11.0 
15.6 

2011 
9.8 
15.3 

2012 
8.6 
14.1 

2013 
8.5 
14.2 

13.6 

10.8 

9.5 

9.3 

62.9 

54.5 

53.3 

52.5 

71.8 

63.1 

61.7 

60.7 

Projects guaranteed 
by credit agencies 
remain a niche 
activity.  

Export Credit Agencies (ECAs) are quasi-governmental bodies that 
provide  government-backed  guarantees  to  companies  covering  the 
risk  of  doing  business,  in  particular  in  developing  countries  and 
emerging  markets,  but  also  for  project  finance  transactions  or 
corporate finance, including bond finance. A recent example is the 
first  European  public  solar  project  bond  and  the  first  ever  project 
bond  enhanced  by  SACE  Export  Credit  Agency  of  Italy,  100% 
owned  by  the  Ministry  of  Economy  and  Finance.  Total  financing 
was divided into two classes of bonds of equal amounts, with EIB as 
one underwriter and SACE credit enhancing the other. 

121

 
 
 
In  2010,  PPPs  were 
increasing 
in 
number again… 

…with 112 
transactions closed. 

EIB remains a key 
financier… 

… for the countries 
developing PPP 
programmes. 

Bank lending… 

For  many  countries,  project  finance  provides  a  logical  means  to 
deliver  key  infrastructure  projects  with  a  lifecycle  approach  as  it 
limits pressure on both short-term cash-flows and reduces the need 
to  borrow  heavily.  Private  finance  can  be  raised  against  public 
sector  assets  using  different  public-private  partnership  (PPP) 
structures.  

In 2010, 112 PPP transactions reached financial close for an amount 
of  EUR  18.3  billion167.  In  terms  of  number  of  operations,  UK  was 
the most active country followed by France, Germany and Spain. 6 
deals  reached  financial  close  in  Eastern  Europe.  In  terms  of  value, 
Spain  was  the  largest  PPP  country  followed  by  UK,  Portugal, 
France and Belgium. Non-transport sectors presented more than half 
of the value of EUR 18.3 billion. In the first half of 2011 the number 
of  transactions  decreased168  while  the  volume  of  transactions  with 
EUR 9.7 billion remained at 2010 levels.  

Since  1990,  EIB  has  progressively  broadened  the  geographic  and 
sector  spread  of  its  PPP  lending.  A  portfolio  of  130  projects  and 
investment of around EUR 30 billion have been benefited from EIB 
lending.  The  annual  signatures  average  above  EUR  2  billion  since 
2000,  reaching  EUR  3.4  billion  EU  in  2010  of  which  EUR  2.4 
billion  in  the  transport  sector.  EIB  has  generally  concentrated  on 
Europe’s largest and most strategic PPPs.  
The results of a survey169 in 2007 showed that only 4% of all public 
sector  investments  are  PPPs.  But  many  countries,  including  in  the 
new  Member  States  have  started  to  develop  new  investment 
programmes  and  strategies  together  with  an  increased  use  of 
PPPs170. For example following a new PPP decree in 2010, in April 
2011 
that  a  number  of 
infrastructure projects should be structured as PPPs and set out a list 
of  transport  projects  (mainly  highways  and  ring.  roads),  power 
plants  and  interconnectors,  health,  regional  development  and 
environment projects171.  

the  Romanian  government  decided 

In  the  last  10  years,  private  sector  financing  has  amounted  to  an 
annual  average  of  between  EUR  40-70  billion,  of  which  2/3  have 
been  granted  in  the  form  of  bank  loans.  Transport,  energy172  and 
telecommunication amount to less than half of these volumes. 

…has  not  taken  up 
yet… 

Due to the liquidity and risk problematic, banks reacted during the 
financial  crisis  with  a  radical  shortening  of  maturities,  increased 
pricing and collateral requirements. Bank syndication markets dried 

167 EPEC, Market Update 2010. 
168 EPEC, Market Update, First semester of 2011  
169 Siemens, public infrastructures and private funding, 2007. 
170  For  example  the  Romanian  and  Bulgarian  national  strategies  for  the  development  broadband  in  2009-2015 
envisage  the  possibility  to  enter  into  PPPs  to  implement  broadband  networks  and  services.  The  Greek  PPP 
programme in the area of broadband, which foresees the implementation of an open access network spanning 50 
cities including Athens at a cost of EUR 2.1 billion is also intended to be tendered along PPP lines. 
171  Project  examples  are  Sibiu-Pitesti  highway,  Bucharest  ring  road,  AGRI  interconnector,  steam  and  hydro-
electric power plants, hospitals, etc. 
172Without oil and gas since the majority refers to exploration. 

122

 
                                                 
… and with 
refinancing 
possibilities coming 
up,… 

… importance of 
capital market 
financing 
increasing… 

… for corporate 
bonds … 

…but not on project 
bond markets. 

Utilities make 
considerable 
investments.  

Capital market 
investors invest also 
directly in equity 
or… 

up  leading  to  a  lesser  number  of  deals,  now  done  under  club 
structures with smaller ticket sizes. There are a large number loans 
on  existing  assets  that  were  originated  in  2006  and  2007  at  high 
margins on a short term or 'miniperm' basis that are now coming up 
for refinancing. This will place an additional drain on the amount of 
debt  available  to  finance  the  construction  of  new  infrastructure 
projects. 

The  importance  of  bond  markets  as  a  source  of  finance  has 
increased  during  the  economic  slowdown  as  companies  diversified 
away  from  reliance  on  banks  for  funding  and  many  governments 
increased  borrowing.  Europe’s  corporate  bond  markets  are  less 
developed than in the US, however they are gaining importance as 
larger  corporates  look  to  diversify  their  funding  sources  due  to 
increased difficulties in obtaining finance from banks173.  

The  corporate  bond  market  remained  strong  in  2010  and  thus 
continued to demonstrate its importance as effective capital raising 
and  investment  venue.  The  high-yield  corporate  bond  market  has 
grown rapidly, EUR 38 billion of high-yield bonds issued so far this 
year, already approaching 2010’s record issuance of EUR 51 billion. 
However, the evolution in recent months has again demonstrated the 
difficulties  corporates  have  been  facing  to  raise  money  on  capital 
markets,  and  those  having  been  successfully  closed  have  been 
trading poorly in the  after-market174 with very few exemptions. As 
regards  project  bond  issues,  the  markets  in  the  EU  have  shown  de 
facto no activity in 2010. 

To  these  sources  of  funding  should  be  added  a  share  of  utilities' 
investments.  European  utilities  typically  invest  EUR  60-70  billion 
per  annum175. However, this includes all utilities, also in the water 
sector  which  finance  themselves  on  a  corporate  finance  basis,  i.e. 
via  general  corporate  bond  issues,  not  specifying  the  use  of  the 
borrowed funds. 
In  2010,  considerable  amounts176  of private  sector  money  flowed 
into EU infrastructure assets, in particular renewables, with some of 
Europe's  largest  pension  funds  making  considerable  allocations  in 
equity.  For  example  PensionDanmark  invested  together  with  PKA 
(labour  market  pensions  of  Denmark)  EUR  800  million  in  an 
offshore  wind  farm.  With  skilled  and  experienced  internal  teams 
being 
the  portion  of  direct 
investments in infrastructure by institutional investors is increasing 
worldwide. Calpers in USA is a good example. However, there are 
only very few examples of investors willing to invest directly in new 
projects  as  they  prefer  the  less  complex  brownfield  and  secondary 
investing  complex  and 
tranbsactions.  Investors  find  primary 

implemented  by 

investors, 

the 

173 The CityUK, Bond markets, Financial markets series, July 2011. 
174 The Telegraph of 16 June: 'corporate bond markets hit by Greek default fears'. FT of 17 June 2011: 'corporate 
bond risk premiums soar'. 
175 
176 IPE article: Building bubbleville? Of Emma Cusworth, 1 June 2011 

 Morgan Stanley research note November 2010 

123

 
 
 
 
 
                                                 
…through 
infrastructure 
funds… 

difficult,  in  terms  of  lack  of  early  cash  yield  and  the  expertise 
needed  to  put  a  project  together  that  doe  not  always  exist  by 
investors.  Finally,  project  bonds  need  to  compete  with  alternative 
assets such as real estate and commodities. 

The  2010  increase  in  infrastructure  finance  to  around  EUR  60 
billion appears to be partly due to the increase in the availability of 
equity.  However,  the  majority  of  this  flow  was  targeted  towards 
secondary  transactions,  not  new  infrastructure.  Despite  of  the 
financial  crisis,  infrastructure  funds  have  continued  successfully 
their fund raising. Even though the recent figures do not yet achieve 
the 2007 fund raising levels, the management teams have succeeded 
in  raising  16  new  funds  in  2010  with  a  total  target  size  of  EUR  6 
billion.  This  brings  the  cumulative  number  of  infrastructure  equity 
funds  actively  raising  capital  to  47  with  an  overall  investment 
capacity of around EUR 23 billion177.  

Historical European Infrastructure Fundraising (Source: Preqin)

47

33,3

22

13

15,1
12

13,7

7
3,8

5,2

4
0,7

2
0,9

16

9

4
2,6

3

1

50

45

40

35

30

25

20

15

10

5

0

Pre 2004

2004

2005

2006

2007

2008

2009

2010

Currently Raising
Q1 2011

No.Funds Raised/Raising

Aggregate Capital
Raised/Raising ($bn)

…with 122 projects 
benefited from 
equity investments in 
2010 through these 
funds. 

The  annual  number  of 
infrastructure  deals  completed  by 
infrastructure  fund  managers  in  Europe  in  2010  was  of  122,  a  bit 
lower  than  the  all  time  peak  of  2009.  The  majority  of  equity 
investments  made  in  infrastructure  targeted  the  renewables  sector 
(35%),  transport  (33%)  and  energy  sector  (14%).  But,  institutional 
investors in general have favoured existing brownfield investments 
rather than new greenfield assets. Despite the slow start of 2011 (15 
deals in Q1), the infrastructure deal flow should improve as the year 
continues.  

177 $33 billion, exchange rate of June 2011. 

124

 
 
                                                 
Figure below provides annual data on deal flow since 2004.  

Annual Number of Deals Made by Unlisted Infrastructure Managers in Europe 
(Source: Preqin)

139

122

115

100

63

43

29

15

160

140

120

100

80

60

40

20

0

2004

2005

2006

2007

2008

2009

2010

Q1 2011

A niche market of 
specialised funds has 
been developed… 

… including credit 
enhancement funds… 

…whereby the EIB is 
an active investor. 

A few debt funds have been created recently in Europe which will 
primarily aim to provide junior/subordinated debt for infrastructure 
projects  across  the  globe,  such  as  Harbourmaster178.  In  addition, 
Hadrian’s Wall179 with a target size of around EUR 1 billion will 
use a subordinated debt tranche to enhance the rating of the project 
debt  and  sell  it  to  capital  market  investors.  As  with  all 
subordinated  debt,  the  fund  acts  as  a  first  loss  component  of  a 
transaction,  and  this  helps  to  enhance  the  credit  rating  of  the 
project  by  shielding  the  senior  debt  and  equity  from  a  certain 
amount  of  revenue  risk.  It  is  a  welcome  measure  demonstrating 
private sector innovation to address infrastructure financing needs 
in energy, education, health and service sectors.  

The EIB is an active investor in European infrastructure funds. By 
the end of 2010 it had invested in 21 equity180 and debt or mixed 
funds181  for  a  total  amount  of  commitments  of  EUR  683  million. 
These  21  funds  have  raised  EUR  6.4  billion  and  have  a  target  of 
EUR  8.8  billion.  These  funds  target  in  particular  PPPs  and 

178 Harbourmaster Capital Management is seeking to raise EUR 2 billion infrastructure debt fund to invest in 
senior debt in Western Europe.  At this stage Harbourmaster intends to structure the fund without credit 
enhancement at the fund level. This is a different proposition to the EIB/EC project bond initiative, which 
consists in credit enhancing each financing in order to give investors access to more highly rated debt securities. 
It will also consider investing in project bonds but anticipates that it will take some time until project bonds will 
have sufficient market share to become attractive. 
179 Hadrian's wall will provide a guarantee of around 10% of project's value. 
180 Includes Marguerite with a target fund size of EUR 1.5 billion and EU investment of EUR 80 million.  
181 For example the recently launched European Energy Efficiency Fund (EEEF) with EU commitment of EUR 
125 million. 

125

 
 
 
                                                 
renewable energy projects.  

7.2.  Financing gap 

Business as usual case 
not possible…  

… due to financing 
gap and… 

… a geographic 
mismatch. 

Commercially viable 
projects … 

… have difficult 
access to finance.  

The previous volumes seem to indicate that the infrastructure 
financing market is in approximate balance and able to fund 
"business as usual" investment. However, the step change in 
investment needs to meet the Europe 2020 objectives is well 
beyond "business as usual" and in itself requires a reconsideration 
of funding.  

In order to address the investments needs of the future years, 
Member States would need to increase funding levels by additional 
resources such as tax increases or reprioritisation of budget 
allocations. If this can not be done, there is a mismatch, a 
financing gap, between the high up-front capital costs to construct 
or refurbish the infrastructure and the public funding resources.  

Financing structures facilitating private finance have been sporadic 
across the countries and likely to continue as long as significant 
amounts of grants are available for economic infrastructure 
projects. Consequently, a geographic mismatch between the 
Member States, in the Member States and their regions exists as 
regards the use of grant, bond, loan and equity financing for 
infrastructure investments. 

Private sector financing is only possible when the risk-reward 
structure is appropriate, i.e. when there is confidence that the up-
front investment will be repaid over time by the funding stream, 
i.e. either by the users or by the public sector.  

However, the risk that access to credit by the private sector could 
be crowded out by sovereign debt issuance remains together with 
the fact that access to debt (bonds and loans) is particularly 
challenging in Member States with relatively high sovereign risk. 
Finally, the re-emergence of sovereign credit risk as a factor in 
developed markets is a new feature of the post-financial crisis 
world limiting the interest in projects in a number of countries. 
Good projects will not get financed on normal terms due to the 
contamination effect of the sovereign crisis. 

Bank financing 
remains less 
constraint… 

… but even with signs 
of recent 
improvement… 

Current concerns on the long-term bank debt markets remain about 
depth of markets, liquidity pressures and counter-party risks. 
Shorter lending terms, higher prices and reduced capacity by banks 
to lend to large transactions (less syndication through underwriting 
and more club deals182) may continue to persist in the future. There 
are some recent signs of improved underwriting potential by 
banks, but whether this means a real recovery, and at which pace, 

182  Under  a  syndicated  transaction,  one  bank  acts  as  an  arranger  which  guarantees,  i.e.  underwrites,  the  entire 
loan commitment to a project/company. It then syndicates the loan, i.e. asks other banks to subscribe to portions 
of  the  debt.  If  this  cannot  be  done,  the  arranger  has  to  absorb  the  difference.  It  can  try  to  sell  to  the  debt  to 
investors. In the worst case, the arranger may be forced to sell at a discount and, potentially, even take a loss. In 
a club transaction banks collectively arrange the debt to a borrower and these arranger risks do not exist.  

126

 
 
                                                 
…it is not well suited 
for long-term 
investments... 

… to which 
uncertainties as 
regards regulatory 
environment need to 
be added… 

…also having an 
impact on bond 
markets. 

The attempts to revive 
project bonds markets 
remain a niche 
activity. 

remains to be seen. 

Therefore, bank lending might remain the best solution to finance 
the construction phase of the projects. However, bank financing 
might not be the most suitable and cost-effective for a long-term 
life-cycle approach. 

The vast bulk of project finance debt is lent by Europe's leading 
banks, all of which under Basel III are facing the prospect of 
needing to increase the amount of capital they set aside to support 
their activities, which is likely to lead to a tightening of liquidity. 
In addition, the regulatory framework will continue to evolve with 
Basel III and Solvency II implementation making it more 
demanding for smaller unrated corporates and those having a 
speculative credit rating to have access to bank loans. The current 
infrastructure projects coming to a refinancing stage in the next 
years might face considerable challenges in this context. Finally, in 
Europe financial reporting and insolvency regimes seem to favour 
bank lenders. For example loan agreement covenants are not 
necessarily disclosed to bond holders and, bondholders and lenders 
do not have equal voting rights in the event of default.  

As regards the longer-term solution, another key challenge for the 
debt markets remains attracting institutional investors' capital 
through the issue of bonds by project entities and companies or 
municipalities for the benefit of infrastructure projects. The trend 
to issue corporate bonds has continued during the crisis but at 
suboptimal levels183 compared to the US, for example.  

Bond markets have been mainly open to large corporates of 
investment grade while a majority of those of a smaller size or 
which have a more speculative credit rating (or no credit rating at 
all) continue to rely on bank lending. The assessment of credit 
quality of corporate bond issuers is particularly important. 
Investors, who may have only invested in government bonds 
previously, may need to strengthen their understanding of how 
credit quality and risk affects corporate bond investments.  

While pre-crisis institutional financing was invested through 
project bonds directly into infrastructure projects with monoline 
credit enhancement market participants will continue to try to 
create multi-investor debt funds or find structured products that 
can de-risk senior debt. However, this activity is only a niche 
market. The problem is however that project bonds are not ideally 
suited to greenfield projects which usually require funding on a 
number of milestone dates during the construction period. 
"Consequently project bonds are generally much better suited for 
refinancing a project once it is complete and there is a secure cash 
flow, or perhaps bundling together a number of projects into a 
special purpose vehicle and securitising the whole. Using the bond 
markets for these purposes would of course have the benefit of 

183 TheCityUK, Bond Markets 2010, Financial market series, July 2011. 

127

 
 
                                                 
Infrastructure funds 
with high levels of 
fund raising and 
even… 

… some specialist 
funds are created, but 
a gap persists for the 
financing of EU 
infrastructure 
priorities. 

Alternative business 
and financing models 
for infrastructure are 
required… 

freeing up liquidity more generally in the market."184 

Whether equity infrastructure funds will continue to succeed in 
raising new money is uncertain in markets where the insatiable 
demand for all types of lower-risk returns and inflation hedged 
assets provide a number of alternatives to highly selective pension 
fund and other institutional investors. The current rise of 
infrastructure equity funds is largely based on the interest in 
secondary market and brownfield transactions as these markets are 
expected to continue to expand. The steady yields of infrastructure 
equity funds have attracted investors, but in some cases these 
returns have been sourced from operating cash and capital185 of the 
fund. Sustainability of these funds is questionable and perceived 
risks in the sector include potential equity bubbles186 due to the 
mismatch between supply and demand. In addition, many of the 
new equity funds with first-time investment teams have not yet 
proven their track record and their performance need to be seen. 
Finally, the current trends in corporate unbundling (notably 
utilities), investment in renewable energy and privatisation as well 
as refinancing will increase the range of alternative infrastructure 
investment possibilities thus reducing the probability of 
overheating. Deepening of the primary market for infrastructure 
assets, i.e. increased number of greenfield transactions is 
conducive for further development of secondary markets. 

Specialist funds may arise while pension funds and sovereign 
wealth funds will increasingly take direct stakes in infrastructure 
projects and companies in particular in the old Member States. 
Specialist funds would help to create expertise in specific sectors 
and develop specialist teams. However, even these infrastructure 
funds do not necessarily focus on long-term investments but rather 
medium-term return opportunities, neither primary markets, 
greenfield projects the immature equity markets nor new Member 
States. 

The changes in the economic policy set-up of the EU and in the 
structure of the financial industry raise new challenges, which have 
an impact on the availability of private financing. Whilst private 
finance will continue to be available to some extent, alternative 
financing models, which will replace or lessen the dependency on 
public sector grant financing, will be required to sustain long-term 
capital investment for infrastructure. For example, regulated 
infrastructure utilities have been less impacted in their capacity to 
issue bonds. Therefore, it should be assessed whether the regulated 

184  Norton  Rose,  Financing  power  for  the  future:  How  will  the  world’s  power  needs  be  project  financed?, 
November 2010. 
185  Richard  G.  Little,  Not  the  Macquarie  Model:  Using  U.S.  Sovereign  Wealth  to  Renew  America’s  Civil 
Infrastructure,  26  January  2009.  See  also  Lawrence,  Martin  and  Stapledon,  Geofrey  P.,  Infrastructure  Funds: 
Creative  Use  of  Corporate  Structure  and  Law  -  But  in  Whose  Interests?  (February  2008).  University  of 
Melbourne Legal Studies Research Paper No. 314. 
186  Standard  and  Poor's;  the  amazing  growth  of  global  infrastructure  funds:  Too  good  to  be  true?,  in  Ireland 
business news, 2006 

128

 
                                                                                                                                                         
… while access to 
finance remains a key 
problem. 

Markets are 
recovering…  

… but uncertainties 
persist! 

asset base model187 could be used for other type of infrastructure 
financing models, such as concessions. Furthermore, the public 
sector needs to put more emphasis on a life-cycle approach in 
order to be able to drive down the overall costs of projects 
including operations, maintenance and eventual replacement, 
building up appropriate capital reserves.  

Access to financing by companies and infrastructure projects is 
particularly challenging in the countries with relatively high 
sovereign risk and subsequent uncertainties as regards the 
economic/regulatory environment (cost of capital, reduction of 
agreed support under existing incentive schemes, scaling down of 
public investment programmes, taxation, impact of sovereign 
rating on investor behaviour, etc). In the context of sovereign 
crisis, one of the key threats associated with an indirect contagion 
of financial risks to enterprises and projects is not knowing where 
the final risk actually resides. This has an impact on investor/banks 
behaviour as regards new financing/investments or reassessment of 
existing exposures. Finally, potential future liquidity shortages of 
financial institutions will have an impact on the availability of 
financing even for healthy corporates and projects. 

To conclude, the markets show quite some development as regards 
recent move by a number of banks to provide longer maturity 
loans to projects and corporate bond markets, the lively 
discussions on the markets about the revival of project bonds and 
the fund raising activity by infrastructure equity and debt funds.  

However, the EU priority projects entail features and risks such as 
greenfield,  new  technologies,  uncertain  business  case  as  regards 
future  revenue  flows,  regional  aspects  including  the  influence  of 
the  sovereign  crisis  and  cross-border  impact  making  the  project 
development and implementation demanding and less attractive for 
private  sector  financiers  and  investors.  In  addition,  in  case  of 
private  sector  financing,  depending  on  the  sector,  the  project,  the 
economic  situation  in  the  country  or  region  as  well  as  national 
regulations and the maturity of the financial/capital markets there 
can  be  a  greater  need  for  either  debt  or  equity  support.  Alike,  as 
the risk-return  profile of infrastructure projects change during  the 
lifecycle  (preparation  and  planning,  construction  and  ramp-up 
operations  and  subsequent  operational  period  with  more 
predictable  revenue  flow)  different 
investors  and 
financiers  are  needed.  Both  debt  and  equity  instruments  are 
necessary  in  order  to  be  able  to  promptly  respond  to  cyclical 
adjustment needs.  

types  of 

187 Under Regulatory Asset Base an investment in an income generating regulated asset will be financed via a 
long-term  borrowing.  The  investment  is  effectively  guaranteed  through  the  assets'  revenue  stream  and  the 
regulatory  framework.  Risk  has  been  passed  to  the  users  through  the  price  they  have  to  pay  (for  example  for 
water, electricity). 

129

 
                                                                                                                                                         
8.  FUTURE FINANCIAL INSTRUMENTS FOR INFRASTRUCTURE  

Priority projects 
require EU 
instruments… 

Meeting the demand for increased investment over the next decade 
and  the  financial  constraints  many  governments  face  for  the 
foreseeable  future  provide  a  perfect  opportunity  for  increased 
private  sector  financing  to  deliver  much  needed  economic 
infrastructure  investment  in  transport,  energy  and  ICT.  The 
number of EU priority projects in an individual country and their 
potential  cross-border  nature  are  however  such  that  an  EU  level 
intervention  is  more  appropriate  than  a  scheme  at  national  level. 
Both debt and equity instruments are necessary in order to be able 
to promptly respond to cyclical adjustment needs. 

8.1.  Objectives 

…to attract private 
sector financing… 

…and to accelerate 
implementation of 
EU policy. 

The  objective  of  the  infrastructure  instruments  is  to  attract  private 
sector  financing  to  help  Europe  to  unleash  its  potential  in  the 
moment of a crucial transformation and the shift towards a resource 
efficient and low carbon economy.  

The toolbox of instruments should set the base for a long-term stable 
investment framework and to act as a catalyst and stimulator. They 
are  particularly  valuable  when  policies  require  a  speed  of 
implementation  but  uncertainties  for  projects  are  above  average  in 
an  economic  environment  where  investments  decisions  are  largely 
made by the private sector. 

Financial 
instruments 
stimulate demand 
for finance and 
supply of finance. 

The  financial  instruments  can  stimulate  infrastructure  financing  in 
two ways: affecting primarily the demand188 for investment finance 
or 
instruments  for 
infrastructure assessed in this paper should mainly be used  

the  supply  of  finance189.  The  financial 

(4) 

(5) 

(6) 

(7) 

(8) 

when  long-term  tenors  of  financing  can  not  be  provided  by 
the private sector,  

as a risk mitigation measure to steer the flow of private funds 
to political priority sectors or projects, 

to facilitate risk taking by the financial sector, 

to  stimulate  market  developments  such  as  the  revival  of 
capital market financing for infrastructure, 

to  stimulate  project,  corporate  and  equity  financing  in  less 
developed markets. 

188 For example interest rate subsidies combined with loans are used when private finance is as such not the main 
problem, but rates of return on investment are insufficient to motivate private investors and project promoters.  
189 For example injections of public money in private equity funds to develop risk capital markets. 

130

 
 
                                                 
The financial instruments will assist infrastructure projects190 in  

(a)  Providing  them  or  facilitating  access  to  equity  and/or  debt 

finance (loans and bonds), 

(b) Reducing possibly their overall cost of capital, 

(c)  Expanding financing tenors and grace periods to better match 

project cash flows, 

(d) Facilitate project structuring through standard equity and debt 
instruments which are well-known to all market participants. 

8.2.  Principles 

The instruments 
need to be 
sustainable… 

… and not create 
contingent liabilities 
for the EU budget,… 

…be applicable 
across EU policies… 

The  goal  of  these  instruments  for  infrastructure  shall  not  be  their 
profitability  or  revenue  generation  potential  but  sustainability: 
While  grants  under  the  facility  will  be  extended  without  any 
expectation of direct monetary return, the capital used for equity and 
risk-sharing is expected to return to the EU, potentially with a profit 
to remunerate for the risk taken. The aim of the instruments is thus 
to  preserve  the  value  of  the  EU  budget  assets  while  focusing  on 
maximisation of multiplier effects of the budget. 

Financial  instruments  for  infrastructure  are  based  on  EU  budget 
contributions. They do not generate contingent liabilities for the EU 
budget.  "All  of  the  co-financed  instruments  involve  allocations  to 
programmes  which  are  capped  in  size  and  so  none  of  these 
instruments pose a risk to the budget beyond that which is initially 
committed.  Even  in  those  cases  in  which  the  financial  instrument 
involves a form of guarantee there remains no liability beyond that 
which  was  originally  committed  during 
the 
instruments."191  

the  design  of 

The  EU  budget  covers  the  contribution  to  the  IFI  and  also 
management  costs  and  other  expenses,  such  as  costs  of  external 
audits. 
Financial  instruments192  for  infrastructure  target  policy  objectives 
across  the  flagships  and  across  Europe  2020  priorities,  avoiding 
unnecessary multiplication of instruments of a similar nature or with 
similar target beneficiaries and project structures. Geographical and 
sectoral diversification resulting from a cross-flagship approach will 
help  attract  investors  to  Europe  2020  priority  areas  by  reducing 
overall portfolio risk.  

…in EU27… 

As  regards  geographic  coverage,  in  accordance  with  the  priorities 

190 Companies carrying out an infrastructure projects as part of normal operational business (such as TSOs) or 
special  purpose  entities  set  up  to  carry  out  only  the  infrastructure  projects  (financing,  construction,  operation 
after completion).   
191 Study of the budgetary Control Committee of the European Parliament, 'The implications of EIB and EBRD 
co-financing on the EU budget', March 2011. 
192 EU measures of financial support provided from the budget of the Union in order to address a specific policy 
objective by way of loans, equity or quasi-equity investments or participations, guarantees or other risk-sharing 
instruments, possibly combined with grants. 

131

 
 
  
                                                 
… while maximising 
impact. 

A range of 
instruments 
required… 

… to be managed by 
the EIB and the 
IFIs. 

To be effective the 
instruments need a 
sizeable volume… 

… while not 
distorting the private 
financial sector… 

set  by  the  sectoral  policies,  the  financial  instruments  will  target 
EU27 and the relevant third countries.  

This  will  maximise  the  impact  and  visibility  of  such  instruments, 
reduce the administrative burden on beneficiaries and intermediaries 
and  results  in  simplification  also  from  the  viewpoint  of  the 
Commission.  

Therefore, a toolbox of instruments is required which is adaptable to 
the uneven development of the financial markets and differing needs 
of the sectors, projects and regions. For example, the demand for a 
risk-sharing  instrument  to  attract  bank  lending  can  be  higher  in 
some  countries  whereas  a  risk-sharing  instrument  to  obtain  capital 
market financing though bond issues  might  be  more  appropriate  in 
others. 

Financial instruments are demand driven and market based schemes 
which  will  be  implemented  by  the  EIB  and  the  International 
Financial  Institutions  (IFIs)  or  national  institutions.  They  have  the 
professional  expertise  and  know  how  to  manage  the  programmes. 
But they need to be willing and capable of sharing a portion of the 
financial risks with the Commission for equity and debt instruments. 

The  volume  of  financial  instruments  compared  to  the  overall 
budgetary  envelope  should  be  balanced  to  the  current  market 
financing volumes and absorption capacity as well as the capacity to 
manage significant resources by an IFI including the possibilities of 
an IFI to share the risks with the Commission. The volume will also 
largely  depend  on  the  type  of  projects  included  under  the  Facility 
(physical  networks  only  or  also  projects  including  technologies 
which  require  different  financing  structures  due  to  their  risks). 
Therefore, a precise quantification is difficult at this stage due to the 
limited availability of financing projections of eligible projects that 
are  expected  to  be  supported  and  would  involve  private  sector 
participation.  Only  the  projects  in  the  transport  sector  are  clearly 
identified, those in energy and ICT need to be further developed and 
assessed  in  accordance  with  the  priority  corridors  and  network 
development. 

Which ever instrument is used, equity or debt, it is important not to 
substitute  or  distort  the  private  financial  sector  and  to  foresee 
appropriate  exit  provisions.  Instruments  which  are  not  fully 
commercial can distort a market, and crowd out the private sector, if 
not  properly  targeted  at  revealed  market  imperfections,  and  can 
restrain the long term development of private sector investments in 
infrastructure.  On  the  other  hand,  financial  instruments  may 
stimulate difficult markets situations and create opportunities for the 
private  sector  in  the  future,  as  well  as  helping  the  infrastructure 
projects  through  difficult  economic  times.  Finally,  the  managing 
institutions such as the EIB and the IFIs need to have the absorption 
capacity and resources to implement the instruments. 

… and be visible. 

Given  that  infrastructure  financing  involves  multiple  partners 
sometimes at various stages, there may also be implications for the 

132

 
visibility  of  the  use  of  the  EU  budget.  Working  through  partners 
such  as  equity  funds  who  are  ultimately  responsible  for  the  equity 
participations, can make the EU’s role increasingly opaque. On the 
other  hand,  infrastructure  projects  are  usually  beneficiaries  of 
important  financing  partners  including  the  public  sector  who  all 
have  the  interest  to  request  promotional  measures  and  visible 
promotion of public support.  

through 

Finally, project development capacity, experience and know how by 
the  local,  regional  and  national  authorities  is  key  and  will  require 
additional  support 
technical  assistance  schemes.  In 
particular  at  regional  level  the  authorities  often  lack  resources  and 
expertise to develop and implement complex infrastructure projects 
which  require  well  organised  procurement  including  technical  and 
financial  specifications  and  negotiations  with  a 
range  of 
stakeholders, also outside of the country borders.  

Finally,  financial  instruments  need  to  be  adequately  promoted  in 
order to be recognised by all stakeholders already at an early stage. 

A risk-sharing and 
an equity instrument 
do not solve the 
problems alone – 
technical assistance 
needed… 

…together with 
intense promotion of 
the instruments. 

8.3.  Risk-sharing instrument 

A financing partner 
(EIB or other IFI) 
takes the risk on its 
balance sheet while 
EU shares a limited 
portion of the risk… 

The  EU  would  be  a  risk-sharing  partner  to  the  EIB  or  to  an  IFI 
which would be ready to take the risk of the projects on its balance 
sheet.  The  EU  would  share  a  portion  of  these  the  risk  and  pay  for 
this purpose a capital contribution to the EIB or an IFI. For its risk-
taking the EU would expect to receive a remuneration.  

…alike to existing 
programmes. 

Risk-sharing 
instruments assist 
the speedy 
implementation of 
complex projects 
and … 

…facilitate access to 
finance... 

The key role of the Commission and the EIB/IFI will be to absorb 
risks  of  a  project  and  thus  attract  more  private  sector  financing  in 
the projects.  

The risk-sharing instrument will use risk-sharing arrangements on a 
portfolio basis between the Commission and an IFI and would build 
on  experiences  gained  for  example  under  the  Loan  Guarantee 
Instrument  for  TEN-Transport  projects  (LGTT),  the  Risk  Sharing 
Finance  Facility  (RSFF)  and  the  Europe  2020  Project  Bond 
Initiative currently under development.  

the  EU 

is  faced  with  a  combination  of  a  speedy 
When 
implementation  of  projects 
further 
(combined  with 
improvements  with  regulations  and  administrative  procedures), 
higher  than  above  average  uncertainties  for  example  due  to  the 
cross-border nature of projects, and the projects still have prospects 
of  solid  revenues  in  long-term,  a  risk  sharing  instrument  is  well 
suitable as a financing instrument. 

the 

An EU wide infrastructure risk-sharing scheme will facilitate project 
companies and corporates to have access to debt financing. The joint 
support  by  EU  and  the  IFI  will  enhance  the  credit  rating  of  the 
senior debt of the project which makes it more attractive for senior 
lenders or institutional investors. 

133

 
 
 
  
… for bankable 
projects. 

Both project bond 
and bank lending 
would be targeted… 

…in order to 
respond in a flexible 
manner to different 
stage of markets and 
project needs.  

This will allow a 
phased approach 
following the 
development of 
financing markets 
while being able to 
support a prompt 
implementation of 
projects. 

But a pilot phase of 
Europe 2020 Project 
Bond Initiative 
needed. 

With a multiplier 
effect of up to 20 
and EU budget of 
EUR 5-10bn the 
instrument would 
attract  
EUR 125-250bn 
senior debt...  

…to cover part of 
the EUR 870bn 
estimated investment 
until 2020... 

In  addition  to  the  policy  eligibility  and  compliance  with  EU  rules 
and  regulations,  the  main  condition  for  financing  will  be  the 
bankability of the transactions based on the economic and financial 
viability of a project or of a corporate, which will be assessed by the 
EIB/IFI.  

The debt can be issued in the form of bonds by the project company 
or  a  corporate  under  the  Europe  2020  Project  Bond  Initiative193. 
Alternatively,  the  debt  can  be  provided  as  bank  lending  to  finance 
an infrastructure project.  

The  flexible  approach  as  regards  the  type  of  debt  financing  to  be 
targeted  (capital  market  financing  or  bank  lending)  makes  the 
instrument  receptive  to  the  multiple  financing  structures  applied  in 
the EU for the financing of infrastructure investments, the size and 
sector  of  the  projects  and  the  stage  of  development  of  project 
finance  and  capital  markets  in  the  Member  States  including  the 
choice of procurement approaches. 

As  the  risk-sharing  instrument  for  loans  (LGTT;  Loan  Guarantee 
instrument  for  TEN-T)  already  exists  and  is  well  known  to  the 
relevant  stakeholders194,  it  is  expected  that  in  the  initial  years  the 
risk-sharing instrument for loans will have a speedier take-up. This 
will also be due to the national regulations as regards procurement 
law  and  the  (non)  possibilities  of  bond  finance  being  effectively 
included in the bidding process. However, together with the revival 
of  capital  market  financing  through  bond  issues  by  companies 
including increased competition between the providers of financing 
(banks  and  institutional  investors),  the  risk-sharing  instrument  for 
bonds has the potential to become equally important.  

Nevertheless,  with  a  pilot  phase  the  Europe  2020  Project  Bond 
Initiative be launched during this MFF, a speedier acceptance by the 
markets for the post-2013 instrument could certainly be warranted. 

The  development  of  an  appropriate  risk  sharing  method  will  take 
into  account  the  level  of  multiplier  effect  as  a  high  multiplier  is 
considered a main performance criterion for financial instruments. A 
low  risk  sharing  percentage  would  increase  the  leverage  of  the 
private finance per guaranteed amount, but it would also reduce off-
take. The expected multiplier effect of this risk sharing instrument is 
up  to  20  (EU  funds  as  a  share  of  the  total  financing  attracted  to  a 
project). To reach critical mass, EUR 5 to 10 billion of EU budget 
for  a  seven  year  period  would  seem  to  be  appropriate  considering 
the  depth  of  the  debt  markets  and  number  of  the  projects  to  be 
supported  and the  investment needs. It would have  the potential to 
target  approximately  EUR  125-250  billion  of  senior  debt  which  is 
already a considerable amount of the estimated investment needs of 
around EUR 870 billion under the Facility. However, the framework 

193  The  Europe  2020  Project  Bond  Initiative  is  subject  to  an  impact  assessment  and  Commission  proposal, 
therefore further details on the initiative are not reflected in this paper.  
194 Such as banks, financial advisors, public authorities, project promoters and equity providers. 

134

 
 
 
 
                                                 
…provided that the 
framework 
conditions are right. 

as 

such 

conditions,  such  as  Member  States'  acceptance  of  and  support  for 
private  finance  solutions  of  infrastructure  projects,  regulatory 
environment 
energy, 
sector 
telecommunications) and financial regulation,  the ability of the EIB 
and  IFIs  to  co-finance  and  manage  the  financial  instruments, 
economic  environment,  private  sector  acceptance,  etc  are  key 
constraints  for  the  development  and  implementation  of  financial 
instruments aiming at a full roll-out in EU27.  

regulation 

(ie 

8.4.  Equity instrument 

An equity fund-of-
fund… 

…with co-
investment by the 
EIB… 

…and potentially by 
the Member States… 

… would help very 
complex projects to 
have access to equity 
finance and to 
develop equity 
markets… 

With EU budget of 
EUR 3-5bn  

in 

An EU wide infrastructure equity instrument could take the form of 
a fund-of-fund scheme investing in infrastructure funds that in turn 
invest  equity  or  quasi-equity 
infrastructure  projects  and 
companies  including  public-private-partnerships  in  the  transport, 
energy and broadband sectors. While it is more difficult to arrange 
co-investment with direct investors, a fund-of-fund would allow for 
a  standardised  investment  approach  for  infrastructure  projects.  Its 
objective  would  be  to  facilitate  infrastructure  projects'  access  to 
equity capital and strengthen the capital base of these companies in 
order  to  better  attract  debt  financing.  The  fund-of-fund  scheme 
could be managed by the EIB or an IFI which would be invited to 
co-invest  alongside  the  Commission  in  order  to  align  interest  with 
EU as manager of the EU funds.  

to 

the  sheer  volumes  required  for 

It  might  be  difficult  to  attract  other  participants  in  such  a  scheme 
due  to  the  expected  high  risk  and  reward  structure  of  equity 
investments,  due 
these 
participations and due to the policy restrictions several public sector 
financial  institutions  need  to  respect.  Nevertheless,  as  Member 
States could the possibility to co-invest in such a fund, the setting up 
of  a  dedicated  investment  vehicle  managed  by  the  EIB  could  be 
considered. 

The  equity  scheme  would  complement  the  toolbox  of  financing 
options available for the EU and would help to further develop the 
EU  wide  infrastructure  risk  capital  markets  without  a  distorting 
impact.  The  equity  funds  should  to  a  certain  extent  target  market 
gaps such as greenfield infrastructure and projects of a cross-border 
nature  as  well  as  new  Member  States  where  the  equity  capital  and 
project  finance  markets  are  not  yet  well  developed.  However,  the 
ability  of  such  an  instrument  to  address  financing  gaps  related  to 
projects of EU interest needs to be carefully assessed.  

EUR  3  billion  to  EUR  5  billion  over  a  seven  year  period  provided 
by the EU budget could be appropriate with higher annual amounts 
in  the  beginning  of  the  period  in  order  to  kick  start  an  investment 
programme in a number of infrastructure equity funds right from the 
start of the MFF period. The multiplier effect of such a fund-of-fund 
structure could amount to 6 (EU commitment to a risk capital fund 
compared to its target size).  

135

 
 
 
 
 
 
9.  GOVERNANCE AND MANAGEMENT 

Focus on priorities, 
clear goals and 
transparent policy 
benchmarks will 
help IFIs to select 
the projects. 

IFIs have to be 
willing to use their 
balance sheet for the 
risk-sharing, have 
the professional 
expertise and be 
committed to support 
EU policy goals.  

IFIs would select 
and approve projects 
while... 

…a strategic 
committee will 
overview the 
implementation and 
propose corrective 
action, if need be. 

10.  LEGAL BASE 

FR defines the 
instruments which are 
different from 
grants…  

In the context of a strong governance framework, the Europe 2020 
strategy  calls  for  a  clear  focus,  clear  goals  and  transparent 
benchmarks for assessing progress. These criteria should be applied 
mutatis  mutandis 
for 
future 
infrastructure. In the context of the MFF, the Commission identified 
a list of eligible projects, corridors and networks which will benefit 
from  the  Connecting  Europe  Facility  and  also  from  the  equity  and 
risk-sharing instruments.  

instruments 

financial 

the 

for 

The  main  criteria  to  identify  suitable  IFIs  are  their  willingness  to 
assume  the  risk  of  projects  with  the  support  of  the  Commission, 
their  experience  in  the  target  sectors  and  markets  including  their 
current  financing  products  and  their  capacity  to  implement  an 
their 
instrument  as  well  as  any  restrictions 
constituencies.  The  institutions  need  to  have  appropriate  risk 
management systems and legal in house expertise. For example, for 
the  risk-sharing  instrument  the  IFI  must  be  willing  and  capable  to 
build up a portfolio, to cover the risk of this portfolio on its balance 
sheet and to manage and monitor this for the whole duration of the 
instrument. These criteria are well respected by the EIB. 

laid  down 

in 

The  projects,  companies  or  equity  funds  will  need  to  apply  for 
financing under the normal rules of the managing IFIs. 

The IFIs would then approve projects based on the policy criteria set 
by  the  Commission  and  report  to  the  Commission  on  these 
operations.  

A  strategic  steering  committee  comprising  representatives  of 
MOVE, ENER, INFSO, REGIO, ECFIN and the IFIs will supervise 
the implementation of the instruments.  

The performance of the implementation would need to be redefined 
regularly,  in  order  to  adjust  the  mix  of  equity/debt  and  technical 
assistance  programmes  more  quickly  to  changes  imposed  by  the 
overall  demand  and  market  circumstances.  The  strategic  steering 
committee with a secretariat in ECFIN should report periodically to 
the advisory board of the debt and equity platforms.  

The  future  standard  requirements  applicable  to  all  financial 
instruments  will  lay  on  a  more  rigorous  regulatory  framework 
which seems to add administrative burden at first insight, but once 
available  aims  at  facilitating  and  simplifying  the  design  of  the 
instruments by the policy DGs: 

195  See  also  SEC(2010)  639,  Commission  Staff  Working  Document  concerning  modifications  linked  to  the 
revision of the Financial Regulation prefiguring the proposal for a Delegated Commission Regulation amending 
the  detailed  rules  of  implementation  of  the  Financial  Regulation  and  the  Commission  Communication  of  19 
October 2011 'A framework for the second generation of innovative financial instruments'. 

136

 
                                                 
The  proposed  provisions  of  the  Financial  Regulation  (FR)  on 
financial 
the 
lay 
implementation  of  the  EU  budget  on  which  to  build  the  foreseen 
equity and debt platforms195.  

the  groundwork  on 

instruments  will 

The Regulation on the 
Facility will determine 
the eligibility criteria 
and list the main  
inancial instruments 
potentially to be 
implemented. 

After the adoption of 
the Regulation, 
Commission 
Delegated Act will 
implement the 
instruments.  

As  the  rules  on  budget  implementation  are  determined  in  the  FR 
and  its  Implementing  Rules,  the  Connecting  Europe  Facility 
should  preferably  provide  a  list  of  the  instruments  to  be 
implemented.  

Thereafter,  following  a  detailed  ex-ante  assessment  of  needs  and 
expected impacts of the instruments, the launch of the instruments 
and  their  technical  and  financial  modalities  will  be  ruled  by  a 
Commission  Delegated  Act  once  the  Connecting  Europe  Facility 
has been adopted by the Council and Parliament.  

137

 
ANNEX 5 

Policy measures alternatives 

As  a  complement  to  the  impact  assessment,  this  annex  aims  at  providing  the  detailed 
background to the alternative policy options set out in the impact assessment with regard to 
the development of the common operational rules for the Connecting Europe Facility (CEF).  

For each type of the scenario, the impact assessment proposes a number of alternatives in the 
policy  options  for  the  organisational  rules  of  CEF.  These  policy  alternatives  have  been 
submitted  to  a  detailed  analysis  of  the  scope  for  harmonization  on  the  basis  of  the  ex-post 
evaluations and public consultations during the TEN revision process for the three sectors196.  

The  scope  for  harmonization  under  CEF  (minimum/maximum  harmonization)  has  been 
assessed with regard to the policy objectives, the criteria for the evaluation of proposals, the 
co-financing  rates  for  grants,  the  organisation  of  calls  and  allocation  of  funds,  the 
management of the funds (financial instruments and grants) and the monitoring and control.  

1.  Objectives  and  multi-level  criteria  for  evaluation  of  proposals  to  ensure  high  EU  added-
value 

In  the  new  context  of  the  Europe  2020  Strategy,  common  challenges  are  sought  to  be 
addressed  at  EU  level  with  common  policy  objectives  across  the  different  policy  areas. 
Networks  are  considered  of  vital  importance  to  facilitate  smart,  sustainable  and  inclusive 
growth, to build an integrated single market and allow the EU to meet the energy and climate 
objectives. At the same time, the new Commission approach to EU budget implementation, as 
set  out  in  the  Budget  Review  and  MFF  Communications,  set  common  principles  for  the 
design  of  the  financial  programmes  that  will  support  the  achievement  of  these  objectives. 
From  this  perspective,  a  minimal  harmonisation,  i.e.  distinct  objectives  across  the  three 
sectors would appear not to be coherent with the CEF policy initiative objectives as identified 
in section 3 of the IA report. Rather, in the light of the latter objectives, the CEF would need 
to  establish  overarching  common  objectives,  aiming  at  the  acceleration  of  network 
deployment,  at  leveraging  private  and  public  investment  and  enhancing  the  effectiveness  of 
EU support and at contributing to social, economic and territorial cohesion objectives.  

At the same time, under these common objectives, every sector has set specific objectives on 
the basis of specific sectoral strategies,197 in the context of establishing the TEN Guidelines. . 
Today, the TEN programmes support the development and the implementation of projects on 
the basis of the policy objectives identified and the priority corridors in accordance with the 
respective TEN-T and TEN-E  Guidelines198. The revision of the  TEN frameworks  indicates 
that this overall approach would be maintained also in the future, with the e-TEN also joining 

196  Since  the  alternatives  to  be  assessed  in  the  variable  harmonisation  scenario  are  identical  with  those  in  the 
minimal and maximal scenarios respectively, the assessment of their coherence, effectiveness and efficiency in 
supporting the attainment of the policy objectives set out in section 3 of the IA report was conducted only for the 
first four alternatives outlined above. 
197The  Energy  Strategy  2011-2020,  the  Digital  Agenda  and  the  White  Paper  on  the  future  transport  policy, 
respectively. 
198  The  Regulation  for  the  granting  of  financial  aid  for  TEN  projects  in  the  fields  of  energy  and  transport 
specifies that such aid shall be given to projects in relation to their contribution to the objectives and priorities 
defined  in  the  relevant  respective  policy  framework  legislation,  i.e.  the  TEN-T  and  TEN-E  Guidelines 
respectively. 

138

 
 
 
 
                                                 
in.199  Indeed,  as  specified  in  the  EU  Treaty,  the  Union  "may  [only]  support  projects  of 
common interest supported by Member States, which are identified in the framework of the 
guidelines…"200  Hence,  in  other  words,  a  maximal  harmonisation  with  regard  to  the  CEF 
objectives across the three sectors would not constitute a viable option either.   

With  regard  to  the  evaluation  criteria,  a  set  of  common  multi-level  award  criteria  could  be 
envisaged.  These  should  ideally  include  the  assessment  of  the  costs  and  benefits,  the 
evaluation of the financial package and the stimulating effect of Union support on public and 
private funding as well as the maturity and the financial obstacles of the project. 

However,  as  the  sectors  are  planned,  financed  and  regulated  in  a  different  way,  maximum 
harmonization  to  the  level  of  streamlining  of  policy  objectives  or  setting  common  funding 
criteria  would  however  run  counter  the  goals  of  an  effective  implementation  of  the  CEF 
policy objective.  Only in seeking to exploit the best potential of each sector would the CEF 
operating rules enable the new facility to achieve its overall objectives. 

2. Co-financing rates for grant allocations 

Today,  the  financial  regulations  provide  distinct  co-financing  rates  for  grants  allocated  to 
TENs  in  transport  and  energy  respectively.  The  levels  of  co-financing  rates  reflect  the 
intention  of  the  legislator  to  focus  support  on  sectoral  policy  priorities.  The  ex-post 
evaluations  and  public  consultations  however  have  shown  that,  while  some  levels  of  co-
financing  rates  were  appropriate  to  effectively  and  efficiently  support  TEN  development, 
while others needed revision.  

In  particular,  and  in  the  light  of  the  CEF  objective  to  optimise  the  use  of  EU  funds  to 
accelerate  TENs  implementation,  fine-tuning  co-financing  rates  in  order  to  support  sector 
priorities  as  identified  in  the  process  of  revision  of  the  TEN-T  and  TEN-E  Guidelines  and, 
respectively, of drafting the first e-TEN Guidelines, is necessary.  

There  is  one  type  of  action  for  which  the  co-funding  rate  level  should  be  common  to  all 
sectors that is the area of support to studies, except for programme support actions. The same 
principle applies for actions implementing projects with cross-sector synergies i.e. those that 
aim at more efficient use of resources (optimising the delivery of infrastructres from various 
sectors) risking the potentially higher complexity of project preparation and implementation. 
In all the above cases, the increased co-financing is justified by the fact that such projects are 
facing higher risks which may impact their financial viability. 

However, for all other support instruments it should be noted that the level of co-funding rates 
has been the result of efforts over time to adjust them to most adequately address the need to 
stimulate  the  development  of  those  projects  critical  for  an  effective  and  efficient  TENs,  but 
for which the complexity levels (due to factors such as natural barriers, need of cross-border 
cooperation,  levels  of  investment)  make  them  difficult  to  kick-start  without  public 
intervention and, in this case, EU level intervention. At the same time, attention needs to be 
taken in setting these levels in order to avoid market distortions and crowding out of private 
or other public investment as well as to render EU support most effective. 

In  the  field  of  transport,  ex-post  evaluations  and  stakeholder  consultations  have  made 
apparent that EU policy so far has been successful in promoting TEN-T development, but the 
efficiency  of  the  network  remains  well  suboptimal  due  to  enduring  bottlenecks  and  missing 

199 Draft legislation proposing e-TEN Guidelines is currently being developed by the Commission. 
200 TFEU, Art. 171, paragraph 1, third indent. 

139

 
 
                                                 
cross-border links, as well as lack of interoperability, particularly on the rail network. 201 This 
is partly due to the fact that levels of co-funding rates for these type of projects were most of 
the time not appropriate. Thus, in the case of projects with cross-border sections, which have 
proven most complex to implement, the long duration of projects, spanning several financial 
frameworks,  renders  an  initial  co-financing  rate  of  30%  to  be  reduced,  in  actual  terms,  in 
average to 21%, and in some cases to even 5% to 10%; while projects alleviating bottlenecks 
have  not  been  given  any  special  rate,  benefitting  of  the  general  co-funding  level  of  20%.202 
Revised differentiated co-funding rates, depending on the type of action supported, reflecting 
lessons learned and in line with the identified TEN-T policy priorities, as proposed, drawing 
on expert and stakeholder recommendations, in the table below, could therefore constitute the 
most appropriate means for the CEF to most effectively and efficiently achieve its objectives 
in the TEN-T area. 

Assessment of current co-funding 
rates 

Recommendations for revised co-funding rates 

Studies:  

Studies:  

-  up  to  50%  of  eligible  costs:  proven 
adequate  

Priority projects:  

-  up  to  20%  of  eligible  costs  of  works: 
generally  proven  adequate,  but  not  always 
implementation 
sufficient 
(cases such as bottlenecks)  

for  efficient 

- if cross-border, up to 30% of eligible costs 
of works: generally proven inadequate 

Other projects of common interest:  

-  up  to  10%  of  eligible  costs  of  works: 
generally adequate 

European  Rail  Traffic  Management 
System (ERTMS):  

- up to 50% of eligible costs of both studies 
and works: generally proven adequate 

Road, 
air, 
management systems:  

inland  waterway 

traffic 

- up to 20%: generally proven adequate 

- current up to 50% co-funding rated can be maintained 

Priority projects: 

-  a  category  no  longer  valid  as  no  longer  provided  in 
the revised (future) TEN-T Guidelines 

Infrastructural works on the core network: 

-  maintain  the  current  general  rate  of  up  to  20%  of 
eligible costs of works;  

- should be higher for addressing bottlenecks – e.g. up 
to 30% of eligible costs of works;  

- for cross-border actions, the current insufficient  max 
30% should be raised, to up to 40% of eligible costs of 
works; 

-  for  multimodal  platforms,    the  general  rate  of  up  to 
20% could prove appropriate 

Traffic  management  systems  (for  all  modes  but 
rail): 

-  maintain  the  current  general  rate  of  up  to  20%  of 
eligible costs of works 

 ERTMS:  

-  maintain  the  current  up to  50%  rate  of  eligible  costs 
of works 

Freight transport services:  

-  the  general  rate  of  up  to  20%  of  eligible  costs  of 
works could prove appropriate 

201 See the Impact Assessment Report accompanying the proposal for the revision of the TEN-T Guidelines. 
202 See Annex 2 for the summary of findings and recommendations in Steer Davies Gleeves, "Final Report" and 
TEN-T Review Expert Group 5, "Final Report", as well as Annex 1 for the summary of stakeholder consultation 
on the Green Paper "TEN-T: A policy review" (2009), answers to set of questions no. (2).  

140

 
 
                                                 
The table above shows how the general co-funding rate of 20% has been devised and explains 
the  reasons  why  a  higher  rate  for  those  types  of  projects  whose  development  has  proven 
generally more demanding was applied.203 For studies, a 50% rate is necessary due to the high 
uncertainty  of  the  ulterior  commercial  utility  of  the  outcome  of  these  projects.  As  far  as 
ERTMS is concerned, the co-funding rate of up to 50% of eligible costs of works is justified 
by  the  importance  of  the  development  of  the  system  for  an  efficient  exploitation  of  the  rail 
TEN-T, in an area where the limited presence of private actors and the national monopolies 
make  it  difficult  the  development  of  an  European  traffic  management  system  without  a 
significant EU level intervention.  

In the field of transport, the CEF will manage also funds allocated from the Cohesion Fund 
for TEN-T projects, specifically ring-fenced for the eligible Member States. In order to avoid 
creating an unwanted competition between the Cohesion Fund and CEF, the co-funding rates 
for projects eligible for the Cohesion Fund funds within the CEF should be aligned with those 
proposed  in  the  revised  financial  regulation  concerning  the  management  of  the  Cohesion 
Fund, respectively rates that can go up to maximum 75%. Else, funds under the CEF will not 
be  tapped  but  until  after  those  available  under  the  Cohesion  Fund  have  been  committed, 
certain projects in new Member States, where the extent of TEN-T development is still well 
under that in the other Member States, would be delayed.  

In the field of energy, co-financing rates for supporting project construction under the current 
regime of the TEN-E programme were only up to 10% contribution to the cost of works. A 
higher  co-financing  rate  should  be  proposed  following  the  experience  with  the  TEN-E 
programme  and  the  European  Energy  Programme  for  Recovery  (EEPR).  The  10%  support 
rate  has  often  proven  insufficient  to  trigger  certain  infrastructure  projects  that  market  alone 
cannot take up. On the other hand, in the case of EEPR where  up  to  50%  co-financing rate 
was  allowed  for  electricity  and  gas  interconnectors,  a  substantial  acceleration  of  investment 
programmes has been recorded. However, for some projects which are essential for Europe's 
security of supply but lack commercial viability, higher co-financing rates will be needed to 
make them happen. Projects of common interest could receive up to 50% contribution to the 
cost of works or studies. For projects that are particularly important for the regional or EU-
wide security of supply and the solidarity of the Union or those that are applying innovative 
technology and solutions the cofinancing rate could be increased to a maximum of 80 % to 
ensure timely implementation.  

In  the  area  of  ICT,  co-funding  rates  should  in  principle  be  applicable  either  to  broadband 
networks  and  digital  service  infrastructure.  However,  grants  are  expected  to  be  mostly 
required  in  the  latter  area  of  intervention.  The  actual  level  of  aid  for  the  individual  project 
would  depend  on  the  size  of  rural  areas  included  as  well  as  other  factors  such  as  level  of 
income  or  potential  revenue  generation,  as  in  broadband  economic  viability  depends  very 
much on penetration within a short timeframe. In any event, co-financing rates for broadband 
networks should not exceed 50%, in order not to crowd out potential private investment. 

The threshold is supported by empirical observation of what happened so far with financing 
of broadband under the structural funds and their compliance with state aid rules. Until now 
most of the projects examined under state aid rules have received a close to or above 70-80% 
funding204.  

203 See also Steer Davies Gleeve, 2011, p.11.  
204  With  some  exceptions  as  in  the  case  of  Cornwall:  http://ec.europa.eu/eu_law/state_aids/comp-2009/n461-
09.pdf 

141

 
 
                                                 
 
Co-financing  rates  in  the  area  of  digital  service  infrastructure  should  be  higher  for  the  core 
layers,  reflecting  their  supreme  European  value  and  decrease  for  the  generic  service  and 
application  layer.  Co-financing  rates  in  the  area  of  ICT  for  grants  shouldl  not  exceed  the 
following rates: 

o  actions in the field of broadband networks 50%  

o  core service platforms: 100 % of the eligible cost  

o  actions in the field of generic services: 75 % of the eligible costs 

o  actions in the field of applications 50 % of the eligible costs  

Core service platforms are typically funded by procurement. In exceptional cases, they could 
be funded by an operating grant covering 100% of eligible costs.   

The  amount  of  Union  financial  aid  in  the  form  of  grants  for  support  actions  and  studies, 
including  infrastructure  mapping  and  technical  assistance  should  not  exceed  75%  of  the 
eligible costs. 

Returning  to  the  question  of  common  or  differentiated  levels  of  co-funding  rates,  the 
arguments above have made apparent that revised differentiated rates, both per sector and per 
type  of  projects,  reflecting  sectoral  policy  priorities,  would  constitute  the  most  appropriate 
choice  in  this  particular  area  of  policy  measures,  if  the  CEF  is  to  most  effectively  and 
efficiently achieve its goal of accelerating TENs development.  

3. Innovative financial instruments  

A  detailed  discussion  of  options  concerning  innovative  financial  instruments  is  provided  in 
Annex 4. 

Implementation measures 

4. Procedural rules for the organisation of calls  

Today,  the  allocation  of  funds  for  TEN-T  and  TEN-E  projects  is  made  essentially  through 
calls for proposals or application, while the selection and disbursing procedures exhibit some 
differences for each sector in accordance with the current financial regulations. Annual calls 
are common to both sectors. For the future, the benefits of the alternatives of annual and/or 
multi-annual calls or joint calls should be assessed.  

In  the  field  of  TEN-T,  allocation  of  funds  for  Priority  Projects,  as  identified  in  the  TEN-T 
Guidelines,  is  made  via  a  multi-annual  work  programme  (MAP),  covering  80  to  85%  of 
overall financial envelope, and spanning the entire financial framework (2007-2013). Funding 
for  other  projects  of  common  interest  is  made  via  annual  calls,  within  the  limits  of  the 
remaining  financial  envelope.  The  full  life  cycle  of  grants,  within  both  the  MAP  and  the 
annual  work  programmes,  is  centrally  managed  by  the  TEN-T  Executive  Agency  (TEN-T 
EA), which organises the calls for proposals, evaluates the project applications, on the basis of 
which the Commission takes its funding allocation decisions, and monitors and evaluates the 
projects' implementation.  

The decision to allocate a majority of funds to Priority Projects, in a single MAP, is grounded, 
on the one hand, on the importance/priority of the identified projects and, on the other hand, 
on the need to secure a stability of perspective for the development of these projects, which 

142

 
 
 
often span the seven years of the EU MFF.205 A mid-term review has been provided, that has 
allowed the possibility to take stock of the programme's performance, identify success factors 
and  aspects  that  might  be  revised,  as  well  as  the  reallocation  of  funds  depending  on  the 
progress, or not, made in the implementation of the respective projects. 206  

In the field of TEN-E today annual programming is the default programme management given 
the small budget envelopes. Given the long lead time for energy infrastructure investment, the 
MAP  could  prove  as  a  useful  instrument  to  reassure  project  promoters  and  investors  with  a 
long-term  commitment  of  the  Union  support.  As  the  project  identification  exercise  will  be 
carried out every two years, the combined use of annual and MAP could be explored. 

In  the  field  of  ICT,  there  is  currently  no  specific  support  tool  for  deploying  broadband 
networks  on  a  pan-European  scale.  Future  Union  financial  support  for  broadband  networks 
would be provided to individual companies, special purpose vehicles and consortia involving, 
but  not  limited  to,  telecom  companies,  equipment  suppliers,  other  utility  companies  (water, 
sewage, energy, transport), or construction companies which may find synergies in combined 
infrastructure  investment  and  which  may  invest  either  alone  or  in  partnership  with  regional 
and local authorities, including municipalities, who will most likely establish concessions for 
managing wholesale services of broadband infrastructures. Funding would be managed by the 
Commission  together  with  International  Financial  Institutions.  An  annual  work  programme 
should be put in place to define in greater detail the call planning.  

For  digital  service  infrastructures,  Union  financial  support  would  be  granted  to  consortia 
involving: 

• 

The  industry  at  large:  systems  builders,  content  suppliers,  service  operators, 
Social  Networking  Sites,  mobile  and  broadband  operators,  device 
manufacturers,  businesses  re-using  and  exploiting  open  data/public  sector 
information. In all areas, a large involvement of SMEs, in particular innovative 
SMEs in the ICT and creative industries sectors could be expected. 

•  Member  States  public  bodies  and  EU  institutions  as  data  providers  and  re-
users.  In  the  particular  case  of  Safer  internet,  it  would  also  involve  the 
Ministries of Justice, Internal Affairs, Education, alongside NGOs. 

205 Up to 2006, the project selection was made by means of yearly calls, covering an implementation of 2 to 3 
years.  This  proved  however  insufficient,  since  most  TEN-T  infrastructural  projects  have  a  much  longer  lead 
period,  and  the  insecurity  of  the  financial  perspective  after  the  elapsing  of  the  2  or  three  years  was  not 
particularly  attractive  for  project  promoters.  By  contrast,  "the  [MAP]  Programme  is  successful  at  providing 
political  certainty  to  project  promoters  within  the  current  funding  available,  owing  to  the  strong  political  and 
financial support signalled by becoming a chosen TEN-T project" (Steer Davies Gleave, 2011, p. 57). 
206 Thus, it was found that about 37% of projects would finish in time, 20% with a delay of less than 12 months 
and 40% with a delay of more than 12 months. However, since in a majority of cases the delays were found to be 
justified by problems usually encountered in infrastructure building, the Commission decided that the duration of 
the projects affected could be prolonged up to end of 2015 (cut-off date), while projects that did not start in the 
two  years  following  the  funding  decision  adoption  by  the  Commission,  would  be  cancelled.  The  funds 
withdrawn would be re-injected into the programme. Among the key success factors were identified the project 
maturity  and  good  project  management.  Conversely,  insufficient  maturity  of  projects  (either  due  to  technical 
design  or  the  financing  plan)  was  identified  as  one  of  the  main  characteristics  of  the  projects  displaying  the 
largest delays of facing cancellation. It was also found that criteria for fund awarding such as quality and impact 
had to be better defined in the future. The need to revise reporting mechanisms has also been identified, in order 
to ensure regular reporting on risk and risk management (see Assessment of TEN-T Programme Implementation, 
TEN-T  EA, 2011;  see  also Mid-term  evaluation of  the TEN-T  Programme  (2007-2013),  Steer  Davies  Gleave, 
2011; MAP Project Portofolio Review, TEN-T EA, 2010). 

143

 
                                                 
Financing  for  digital  service  infrastructure  will  be  disbursed  primarily  through  grants. 
Management of the full life cycle of grants, including the annual work programmes, would be 
centrally managed, organising the calls for proposals and evaluating the project applications.  

The conclusion following the mid-term review of the  TEN-T programme  implementation is 
that  the  MAP  framework  has  been  successful  in  focusing  funding  on  TEN-T  policy 
priorities.207  At  the  same  time,  the  structured,  transparent  and  comprehensive  procedures 
managed by the TEN-T EA through the calls of proposals have also been acknowledged as a 
successful  formula  for  facilitating  the  targeting  of  TEN-T  funding  to  EU  transport  policy 
priorities.208    In  other  words,  the  MAP  has  been  a  successful  formula  for  the  TEN-T 
programme  implementation,  which  should  be  maintained  and  improved,  based  on  lessons 
learned.209  

The  experience  with  the  MAP  in  the  TEN-T  Programme  might  suggest  that  it  could  be 
generalised also to the other two fields. 

However, precisely due to the distinct sectoral policy priorities, MAPs – if adopted - would 
need to remain distinct in terms of scope and share of the total envelope defined therein. This 
would be required in order to ensure the effectiveness and efficiency of the CEF in attaining 
its objective of accelerating TENs implementation. Nevertheless, in order to remain consistent 
with  the  objective  of  maximising  the  exploitation  of  synergies  between  the  sectors, 
particularly  in  areas  such  as  smart  energy  grids,  intelligent  transport  systems,  or  electro-
mobility,  MAPs  could  be  coordinated.  Another  area  of  synergies  might  lie  in  the  realm  of 
procedures,  for  organising  the  calls  of  proposals,  communication  with  project  promoters, 
disbursement  of  allocated  funds,  both  within  the  MAP  and  the  annual  programmes 
framework,  where  an  exchange  between  the  three  Commission  services  on  successful 
practices and lessons learned could lead to the establishment of a best practice standard shared 
by all fields. At the same time, insofar as annual calls constitute a framework common to all 
fields, organising common annual calls could be envisaged at least for calls managed by the 
Commission executive agency. 

Concluding, the basic disbursement of the funds through annual calls, the organisation of joint 
calls and the cooperation and coordination of the multiannual work programmes, where such 
an  approach  is  chosen,  would  allow  the  CEF  to  explore  synergies  between  the  sectors  and 
should provide for the useful degree of harmonization with a view to the CEF objectives. 

5. Monitoring instruments  

The  current  TEN-T/TEN-E  Financial  Regulation  provides  that  "the  Commission  and  the 
Member States, assisted by the beneficiaries, may undertake an evaluation of the methods of 

207  Over  60%  of  the  funding  allocated  concern  cross-border  projects,  and  about  30%  EU  wide  projects,  while 
overall the Priority Projects represent 81% of the total financial envelope allocated. Overall, to date, more than 
90% of the programme's funds have been allocated. 
208  See  European  Court  of  Auditors,  Special  Report  No.  8,  2010.  Stakeholders  have  also  highlighted  the  clear 
project  eligibility  rules  as  a  positive  aspect  of  TEN-T  programme  implementation  (see  Annex,  summary  of 
stakeholder consultation on the Green Paper "TEN-T: a policy review", answers to set of question no. (3). 
209  Among  the  key  success  factors  were  identified  the  project  maturity  and  good  project  management. 
Conversely, insufficient maturity of projects (either due to technical design or the financing plan) was identified 
as one of the main characteristics of the projects displaying the largest delays of facing cancellation. It was also 
found that criteria for fund awarding such as quality and impact had to be better defined in the future. The need 
to  revise  reporting  mechanisms  has  also  been  identified,  in  order  to  ensure  regular  reporting  on  risk  and  risk 
management. (see TEN-T EA, "Assessment of TEN-T Programme Implementation"; also Steer Davies Gleave, 
"Final Report" and TEN-T EA, "MAP Project Portofolio Review"). 

144

 
 
                                                 
carrying  out  projects  as  well  as  the  impact  of  their  implementation,  to  assess  whether 
objectives,  including  those  relating  to  environmental  protection,  have  been  attained.    The 
Commission  may  request  a  beneficiary  Member  State  to  provide  a  specific  evaluation  of 
projects  financed  or,  where  appropriate,  to  provide  it  with  the  information  and  assistance 
required to undertake an evaluation of such projects."  

The  framework  leaves  room  for  variation  with  regard  to  monitoring  practices:  on  the  one 
hand,  it  leaves  at  the  choice  of  the  Commission  and/or  Member  States  to  undertake  or  not 
project monitoring and, on the other hand, at the choice of beneficiaries/Member States how 
to organise and provide the information. Yet, as pointed out in the problem definition section 
of  the  IA  report,  more  rigorous  monitoring  practices,  including  through  the  definition  of 
standardised indicators, focusing on outputs, are necessary.  

Given  the  common  objectives  that  would  need  to  be  pursued  within  the  CEF  in  the  three 
sectors, common monitoring instruments providing for an evaluation of the impact of the CEF 
on  the  Europe  2020  objectives  could  be  envisaged,  starting  from  relevant  Europe  2020 
Strategy  indicators.  Another set of  common indicators could be envisaged in order to allow 
the  Commission  to  assess  the  impact  of  Union  aid  provided  under  CEF,  separately  for  the 
financial instruments and the grants, in each of the three sectors.  This will allow  evaluating 
comprehensively their contribution to the key objectives of the CEF.  

In addition to the continuous monitoring by the Commission and other implementing bodies, 
an  independent  evaluation  of  general  CEF  framework  should  be  carried  out  at  mid-term, 
taking into consideration the timing and advancement of programming as well as ex-post, a 
certain number of years after the end of the programming period. The evaluations will assess 
the  intervention's  relevance,  efficiency,  effectiveness,  and  preliminary  impact.  Specific 
emphasis  should  be  given  to  the  leverage  effect  of  the  Union  aid  by  comparing  past  and 
present investment levels, the annual value of EU funds engaged compared to the total value 
of beneficiary, and the timeliness of the funds disbursement.  

As the three sectors are different in the way they are financed and regulated, there should be 
ample room for the Commission to ensure the project monitoring with regard to the progress 
towards the sector specific objectives. They should, however, have in common the "focus on 
results" principle put forward by the Commission for the EU budget in the next MFF.  

For example, in the field of energy, the monitoring of the CEF leverage effect should be based 
on  energy  specific  indicators  assessing,  such  as:  the  share  of  actions  that  entered  the 
construction phase; the number of actions contributing to the EU’s energy and climate policy 
objectives  effectively  enabled;  the  number  of  actions  contributing  to  the  integration  of  the 
internal energy market and the interoperability of the network effectively enabled; the number 
of  actions  contributing  to  diversification,  enhancing  the  regional  or  EU-wide  security  of 
supply and solidarity among Member States effectively enabled.  

In transport, it should focus on the achievement of priorities as set under the revised TEN-T 
Guidelines,  such  as:  number  of  new  cross-border  connections  and  removed  bottlenecks 
effectively enabled with CEF support via grants and/or financial instruments, or travel time, 
cost  savings  and  increased  safety  (in  terms  of  accidents  reductions)  registered  on  major 
transport routes where action concerning specific sections has benefitted of CEF grant and/or 
financial instruments support. 

In  the  field  of  ICT  infrastructure  and  digital  services,  the  performance  indicators  should 
ascertain whether the objectives of the Digital Agenda for Europe (DAE) are being achieved: 
such as (non-exhaustive list): high speed broadband coverage, to be checked against the DAE 
targets  of  access  to  30  Mbs  for  all  citizens  by  2020;  high  speed  broadband  uptake,  to  be 

145

 
checked against the DAE target of 50% of citizens having  subscriptions for above 100 Mbs 
by  2020;  implementation,  availability  and  uptake  of  digital  service  infrastructures,  as 
identified in e-TEN Guidelines.  

In  addition,  in  the  field  of  energy,  on  the  basis  of  the  guidelines,  the  Commission  will  be 
expected  to  closely  assess  the  progress  achieved  by  each  project  of  common  interest  with 
regard to the implementation of the 12 priority corridors and areas. This will be monitored on 
the  basis  of  regular  reports  from  project  promoters,  Member  States'  authorities  and  national 
regulators. The Commission is  to report under the guidelines on the progress achieved. The 
Commission  would  ensure  monitoring  and evaluation via an implementation report on a bi-
annual  basis,  a  mid-term  evaluation  in  2017  and  a  final  evaluation.  In  addition,  the 
Commission proposes to set up a transparency platform allowing the general public to follow 
the advancement of individual projects of common interest in the field of energy. 

In  the  field  of  transport,  the  mid-term  evaluation  of  the  implementation  of  the  TEN-T 
programme has concluded that the monitoring procedures developed have been successful in 
ensuring project accountability of project promoters. The process is undertaken primarily with 
the support of the TEN-T EA. Member States are required to undertake technical monitoring 
and  financial  control  of  projects  in  close  cooperation  with  the  Commission,  and  need  to 
provide  the  Commission  with  a  description  of  the  control,  management  and  monitoring 
systems set  up  to  ensure that projects are successfully completed. In  addition, in MAP type 
projects,  payments  are  dependent  on  the  adequate  completion  of  project  milestones  to  the 
targets  that  were  submitted  at  the  time  of  the  funding  decision  (i.e.  the  "use  or  lose  it 
principle".  Under  the  CEF,  the  current  procedures  could  be  maintained,  though  further 
developed,  with  a  better  definition  of  monitoring  indicators,  particularly  with  regard  to  the 
"use  or  loose  it"  principle,210  and  other  types  of  project  incentives  could  render  project 
implementation even more effective.211 

In ICT and digital infrastructure, further specific indicators could be developed, drawing on 
the experience gathered under the current programmes that DG INFSO is managing, notably 
in  the  field  of  pilots  deployment,  a  number  of  main  indicators  could  be  proposed.  The 
Commission could regularly present a progress report on CEF broadband networks and digital 
service  infrastructures  investment,  which  will  be  submitted  the  European  Parliament,  the 
Council, the European Economic and Social Committee and the Committee of the Regions.  

6. Management structure 

Today,  the  management  of  the  EU  financial  support  for  TENs  development  and 
implementation  is  managed  centrally,  in  the  field  of  energy,  within  the  specialised 
Commission service (DG ENER), while in transport, the management of the implementation 
of  the  TEN-T  Programme,  while  still  centrally  managed,  has  been  delegated,  starting  with 
2007,  to  the  TEN-T  EA.  With  regard  to  additional funds (outside TENs) available for TEN 
infrastructure  projects  to  Member  States  eligible  for  Cohesion  Funds  support,  the 
management  of  these  funds  is  shared  between  the  Commission  (DG  REGIO)  and  the 
government  of  the  Member  State  concerned.  In  the  case  of  both  TEN-E  and  TEN-T,  the 
Commission  is  assisted  by  a  Committee  on  financial  issues,  and  in  the  case  of  TEN-T  by 
European  Coordinators,  tasked  with  facilitating  and  monitoring  the  implementation  of 
particularly complex projects. For TEN-T, the Commission has also developed, in the context 

210 In the past, proposals were not requiring a clear definition of the outputs leading to difficulties in interpreting 
if milestones were met. 
211 See assessment and recommendations in Steer Davies Gleeve. 

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of the Open Method of Coordination, the TENtec information system, a platform to collect, 
store, and provide information Open Method of Coordination (OMC) platform to collect and 
store  continuously  technical-  and  financial  data  for  the  entire  TEN-T  network  per  section, 
accompanied  by  dynamic  Geographical  Information  System  (GIS)  to  both  Members  States 
and to the public at large. For TEN-E, a GIS has also been developed. 

In the field of transport, the management of the TEN-T programme by means of an executive 
agency,  established  at  the  recommendations  of  the  Court  of  Auditors,212  has  been 
unanimously acknowledged as successful.213 The governance of the programme as compared 
to previous years has improved, due mainly to more rigorous calls for proposals, as well as to 
Agency's capacity to offer management assistance to project promoters. It has also provided 
more  control  over  how  the  public  money  is  spent,  thanks  to  a  tightly  managed  payment 
procedure. Consequently, there is a general support for the activity of the TEN-T EA and the 
extension of its mandate.214  

In addition, another argument in favour of extending the TEN-T EA mandate is constituted by 
the important savings in administrative costs it incurs. A Cost-Benefit Analysis that compared 
two  strategic  options  for  the  management  of  the  TEN-T  programme  from  2007/2008  until 
2013  with  a  phasing  out  period  until  2015  –  "in  house  option",  i.e.,  continued  management 
within the Commission's specialised service versus "executive agency option" – arrived at the 
conclusion that an estimated €9.88 million cost sa vings would be registered if the TEN-T EA 
exercised  full  responsibility  for  the  entire  management  of  the  TEN-T  project  cycle,  due 
mainly to the external staff cost structure and a combination of qualitative improvements.215   

Similarly,  the  European  Coordinators  have  been  found  to  have  adequately  assisted  the 
Commission  to  the  delivery  of  the  projects  selected.  Their  role  has  proven  an  effective 
mechanism  to  address  political  sensitivities  inherent  in  cross-border  projects  as  well  as 
provide visible coordination enhancement.216 Equally, the TENtec has proven of great support 
to the work of the Commission as well as to the Member States, as it supports the evaluation 
of projects proposals and progress in implementation on the basis of the eSubmitted data, as 
well the editorial preparation of the individual decisions of each project selected by the EC, 
delivering project decisions printed in a format (legiswrite) ready for publication. 

By contrast, with regard to the funds allocated to TEN-T within the Cohesion Fund, ex-post 
evaluations  have  concluded  that  their  management  under  the  shared  structure  has  been  less 
efficient  that  in  the  case  of  the  centrally  managed  TEN-T.  As  the  overall  responsibility  for 
choosing  the  projects  remains  at  national  level,  at  the  beginning  of  the  financial  period  and 
without  the  possibility  of  revision  until  the  end  of  the  period,  the  end  result  has  been  "an 
unclear prioritisation of projects and dissemination of funds."217 A logical conclusion would 

212 Special Report No. 6/2005 on the Trans-European network for transport, Court of Auditors, 2005, OJ C 94/1-
36.  
213 Steer Davies Gleeves; Court of Auditors, 2010. 
214 All the Member States consulted in the context of the study "Update of the Cost-Benefit Assessment of the 
Externalisation of the Management of Community Financial Support to the TEN-T Networks", conducted by an 
external consultancy group at the request of the Commission, have expressed their support for the Agency and 
the extension of its mandate. The conclusion of the "Final Report" of the above mentioned study also concluded 
that the mandate of the TEN-T EA be extended (see COWI, "Final Report"). During the process of consultation 
on  the  Green  Paper  "TEN-T:  A  policy  Review",  the  rail  industry  proposed  TEN-T  EA  as  a  platform  for  best 
practice. (see Annex 1, summary of stakeholder consultations, Green Paper, answer to the set of questions no. 
(4)) 
215 COWI/ECORYS, "Final Report", pp. 70-75. 
216 See assessment in Steer Davies Gleeves. See also results of stakeholder consultation on 2009 Green Paper, as 
summarised in Annex 1, responses to set of questions no. (4). 
217 Ibid, p. 13. 

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be  that,  for  the  Cohesion  Fund  funds  allocated  to  TEN-T  under  the  CEF,  according  to  the 
Commission proposal  in its  MFF Communication, centralised management  by  means  of  the 
Agency  and,  for  those  with  a  cross-border  dimension,  with  the  support  of  the  European 
Coordinators, would constitute a better alternative.  

In  the  field  of  ICT,  broadband  network  infrastructure  funding  is  an  entirely  new  concept. 
Synergies with the structural funds could take place mainly through combination of financial 
instruments  and  grants  funded  by  the  Structural  Funds.  In  practice,  that  could  mean  that  a 
consortium co-financed by the Commission through financial instruments might have among 
its  member  a  local  authority  which  is  benefiting  from  Structural  Funds'  financing  for  that 
project.  

In the field of energy, it will also be essential to ensure that the availability of the Union aid 
for  concrete  projects  is  closely  coordinated  with  the  effective  use  of  other  instruments 
proposed under in the domain of regulatory and permit granting.  

Overall, when considering funding management under the CEF, in all three fields concerned, 
it  needs  to  be  ensured,  first  and  foremost,  that  effective  programming,  efficient  financial 
management  and  control,  project  monitoring  and  evaluation  of  progress 
towards 
implementation of projects of common interest need to be ensured. The experience with the 
TEN-T EA and the European coordinators would recommend them as a management formula 
to  be  potentially  used  in  the  future.  This  concept  could  be  also  extended  to  the  other  two 
sectors, as far as grant management is concerned.218 Indeed, as the Commission has already 
acknowledged  in  the  MFF  Communication,  in  its  management  of  grants  under  CEF,  the 
Commission should be assisted by an executive agency.  

Two  alternatives  could  be  suggested:  the  establishment  of  sector  agencies  or  amending  the 
mandate of the current TEN-T EA in order to encompass support for grant management also 
in the areas of TEN-E and digital infrastructures or the centralized management. 

Separate  agencies  for  each  sector  would  have  the  advantage  of  higher  specialisation  in  the 
implementation  of  projects.  This  would  also  be  justified  if  they  became  charged  with 
additional,  sector  specific  activities,  going  beyond  grant  management.  While  separate 
agencies  would  require  administrative  costs,  an  enlarged  TEN-T  EA  could  provide  the 
advantage of a single institutional structure, at potentially lower costs, for the management of 
grants.  

However,  the  more  complex  structure  of  the  CEF,  combining  financial  instruments,  grants 
and cohesion funds (in the field of transport), would require a more centralized management 
to be developed within the Commission or in separate implementing bodies. There is a clear 
need to ensure that the Union aid, both financial instruments and grants, will be managed in a 
coordinated  manner  and  funds  are  spent  in  the  most  cost-efficient  and  tailor-made  way  in 
relation to the project needs, in close cooperation with the EIB and the project promoters. This 
centralized approach will ensure that the availability of the Union aid for concrete projects is 
closely  coordinated  with  the  effective  use  of  other  measures  proposed,  e.g.  such  as  the 
regulatory and permit granting proposed in the field of energy. Such a management across the 
sectors and instruments could be ensured by the set up of a new dedicated CEF agency.  

With  regard  to  European  Coordinators,  their  role  in  supporting  TENs  implementation  has 
been acknowledged, as highlighted earlier, in both the area of TEN-T and TEN-E.  However, 
appointing  common  Coordinators  might  only  make  sense  in  cases  of  cross-sectoral  projects 
with  a  cross-border  dimension  involving  the  same  Member  States.  Else,  the  highly  specific 

218 With regard to the management of financial instruments, see discussion in Annex 4. 

148

 
                                                 
characteristics of the individual projects in the different sectors would make it impossible for 
the Coordinators to effectively carry out their mandate. In any case, even in the context of the 
TEN-T, European Coordinators have generally been appointed for a single Priority Project.  
Finally,  the  good  experience  so  far  with  the  implementation  of  the  TENtec  system219 
recommends it to be extended also to the other sectors. In the case of TEN-E in particular, the 
development  of  the  GIS  is  already  underway.  Possible  synergies  could  therefore  be  sought 
with  common  project  tools  already  under  way,  such  as  Jessica,  Jaspers  or  GIS  mapping. 

219 The system has become operational only in the past year, and it is still being developed.  

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ANNEX 6 

GLOSSARY 

Action means any activity that is necessary to implement a project of common interest and of 
mutual interest and is independent financially, technically or over time. 

Bottleneck  (transport)  means  a  physical  barreer  that  leads  to  a  system  break  affecting  the 
continuity  of  long-distance  flows.  Such  a  bottlencek  can  be  absorbed  by  new  infrastructure 
such as bridges or tunnels that address problems as for example gradiants, curve radii, gauge. 
The need to enlarge existing infrstructure shall not be considered as a bottleneck. 

Broadband networks (ICT) means wired and wireless (including satellite) access networks, 
ancillary infrastructure and core networks capable of delivering very high speed connectivity. 

Core Network (transport) consists of those parts of the wider/comprehensive TEN-T network 
which are of the highest strategic importance for the achievement of the objectives concerning 
the development of the trans-European network. 

Cross-border  section  means  the  sections,  which  ensure  the  continuity  of  a  project  of 
common  interest  between  at  least  two  Member  States  or  between  a  Member  State  and  a 
neighbouring country. 

Digital service infrastructures (ICT) mean services providing interoperable services in the 
public  interest,  i.e.  having  an  enabling  character  for  businesses,  citizens,  and  governments, 
delivered electronically, typically over the Internet. 

Debt  instruments  refer  to  financial  mechanisms  that  facilitate  the  lending  of  money  to 
infrastructure companies, under the form of loans or guaranties for instance. For instance, The 
Equity instruments hereby refer to funds that aim at providing equity or quasi equity to (i.e. 
investing  in) companies which  own or operate infrastructure. An  example is the  Marguerite 
Fund,  a  pan-European  equity  fund  which  aims  to  act  as  a  catalyst  for  infrastructure 
investments  implementing  key  EU  policies  in  the  areas  of  climate  change,  energy  security, 
and trans-European networks. It is part of the European Economic Recovery Plan.  
(Innovative)  Financial  instruments220 are  financial  mechanisms  that  aim  at  attracting  and 
facilitating  private  sector  finance  in  the  projects.  They  can  be  of  Equity  or  Debt  nature. 
Financial instruments can be used in the framework of Public–private partnership (PPP). 

European  added  value  of  projects  means  the  value  of  spill-over  effects  to  non-investing 
countries and regions. Cross-border projects typically have high spill-over effects, but lower 
direct economic effects compared to purely national projects and therefore are not likely to be 
implemented without EU support. 

The Loan Guarantee Instrument for TEN-T projects (LGTT) is also a debt instrument set 
up and  developed jointly by  the EC and the  EIB in 2008. It  is designed to facilitate  greater 
participation  of  the  private  sector  in  financing  TEN-T  infrastructure  by  significantly 
improving the risk profile of lenders by taking the revenue ramp-up risk in the early years of 
TENs projects. 

Project  Bonds  are  also  a  type  of  Debt  instrument.  With  the  Europe  2020  Project  Bond 
Initiative,  bonds  would  be  issued  by  project  companies  and  the  European  Union  budget 

220 See also Annex 4 for more details. 

150

 
 
                                                 
together with EIB financing would be used to improve the credit quality of the bonds in order 
to  attract  funding  in  particular  from  private  investors  on  the  capital  market  such  as  pension 
funds and insurers. They should not be mixed up with Eurobonds, which are discussed in the 
context of the debate on the Public Debts of EU member States. 

Public–private  partnerships  describe  a  government  service  or  private  business  venture 
which is funded and operated through a partnership of government and one or more private 
sector  companies.  PPP  involve  a  contract  between  a  public  sector  authority  and  a  private 
party, in which the private party provides a public service or project and assumes substantial 
financial, technical and operational risk in the project 

The Risk Sharing Finance Facility (RSFF) of the European Commission and the European 
Investment Bank is also an innovative scheme to improve access to debt financing for private 
companies or public institutions promoting activities in the field of research, development and 
innovation.  RSFF  is  built  on  the  principle  of  credit  risk  sharing  between  the  European 
Community  and  the  EIB  and  extends  therefore  the  ability  of  the  Bank  to  provide  loans  or 
guarantees for investment with a higher risk and reward profile. 

Structured  Finance  Facility  (SFF)  is  a  Fund  of  the  European  Investment  Bank  (EIB)  for 
loans with a capital guarantee allowing financing to projects through instruments that have a 
riskier risk profile than the ones normally accepted by the bank.  

Studies  means  activities  needed  to  prepare  project  implementation,  such  as  preparatory, 
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. 

Works  means  the  purchase,  supply  and  deployment  of  components,  systems  and  services 
including software, the carrying out of development and construction and installation works 
relating to a project, the acceptance of installations and the launching of a project. 

151