REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS on the mid-term evaluation of the Connecting Europe Facility (CEF)
Date: 2018-02-14
Institutions: Directorate-General for Mobility and Transport, European Commission
Subjects: EU financial instrument, EU programme, energy grid, investment, project of common interest, structural policy, sustainable development, trans-European network, transmission network, transport network

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 14.2.2018  COM(2018) 66 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS on the mid-term evaluation of the Connecting Europe Facility (CEF) {SWD(2018) 44 final}  
 
 
INTRODUCTION 

Europe’s  sustainable  growth  and  competitiveness  depend  on  efficient  connectivity,  both 
within  and  to  the  rest  of  the  world.  Achieving  well-interconnected,  interoperable  and 
efficiently managed transport, energy and digital infrastructures in Europe requires the ability 
to plan and invest in a coordinated long-term approach at EU level. 

The Connecting Europe Facility1 (CEF) is a common, centrally-managed funding programme 
for  transport,  energy  and  telecommunications  infrastructures,  with  an  available  budget  of 
EUR 30.4  billion  for  the  years  2014  to  2020.  It  was  established  as  part  of  the  Europe  2020 
strategy for smart, sustainable and inclusive growth and the EU’s ‘20-20-20’ objectives in the 
area of energy and climate policy. 

Based  on  the  respective  sectoral  guidelines2,  CEF  supports  the  development  of  trans-
European networks (TEN)3, with the objective of improving cohesion in the  internal market 
and the EU’s competitiveness in the global market. The general objective of CEF is to foster 
implementation of projects contributing to the completion of the TEN. This is reflected in the 
priorities  laid  down  in  the  guidelines  for  the  three  sectors  of  transport,  energy  and 
telecommunications.  CEF  addresses  market  failures,  focuses  on  projects  of  high  European 
added value and helps leverage further investment from the private sector. 

As  outlined  in  the  Communication  on  the  budget  for  Europe  20204,  the  Commission 
considered  that  "while  the  market  can  and  should  deliver  the  bulk  of  the  necessary 
investments,  there  is  a  need  to  address  market  failure  –  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.  Therefore,  the 
Commission  has  decided  to  propose  the  creation  of  a  Connecting  Europe  Facility  to 
accelerate the infrastructure development that the EU needs.”  

Investment needs in all three sectors were estimated to be around EUR 970 billion when CEF 
was proposed in 2011. It was expected that the bulk of this investment would be delivered by 
the  private  sector,  by  public  support  at  national  level  or  fostered  by  regulatory  measures. 
However,  the  impact  assessment5  also  identified  ‘a  need  to  address  market  failure  —  to  fill 
persistent gaps, remove bottlenecks and ensure adequate cross-border connections’. 

1 Regulation (EU) No 1316/2013 of the European Parliament and of the Council of 11 December 2013. 
2  Regulation  (EU)  No  1315/2013  of  the  European  Parliament  and  of  the  Council  of  11 December  2013  on  Union  guidelines  for  the 
development  of  the  trans-European  transport  network,  Regulation  (EU)  No  347/2013  of  the  European  Parliament  and  of  the  Council  of 
17 April 2013 on guidelines for trans-European energy infrastructure, and Regulation(EU) No 283/2014 of the European Parliament and of 
the Council of 11 March 2014 on guidelines for trans-European networks in the area of telecommunications infrastructure. 
3 Articles 170-174 of the Treaty on the Functioning of the European Union (TFEU). 
4  Communication  from  the  Commission  to  the  European  Parliament,  the  Council,  the  European  economic  and  social  Committee  and  the 
Committee of the regions: A Budget for Europe 2020, European Commission, 29 June 2011. 
5 Commission Staff Working Document (COM(2011) 665 final) accompanying the Regulation establishing the Connecting Europe Facility - 
Impact Assessment 

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Under the CEF Regulation6, the Commission, in cooperation with the Member States and the 
beneficiaries concerned, is required to present a report on the mid-term evaluation of the CEF 
to the European Parliament and the Council no later than 31 December 20177. The evaluation 
assesses the programme’s overall performance in light of its general and sectoral objectives, 
as well as compared to what has been achieved as a result of national or EU action. 

The  detailed  evaluation  is  presented  in  the  Commission  staff  working  document  (SWD) 
accompanying  this  Communication.  In  line  with  the  Commission’s  Better  Regulation 
Guidelines, the evaluation was carried out according to five criteria: effectiveness, efficiency, 
relevance, coherence and EU added value. The detailed assessment according to these criteria 
can  be found in  the SWD, while  this Communication highlights the main findings  from the 
process. 

1 

THE CONNECTING EUROPE FACILITY IS SUPPORTING PROJECTS WHERE THE EU 
MAKES A DIFFERENCE 

1.1 

Developing infrastructures that unite 

The EU’s infrastructure policy has three main dimensions: 
- 

long-term  planning  of 

its 
common 
geographical  scope  and  technical  characteristics  (with  different  approaches  adapted  to 
each sector); 
a set of regulatory measures to facilitate investment;  
a specific funding instrument, the Connecting Europe Facility. 

infrastructure  development  as  regards  both 

- 
- 

The  experience  to  date  with  CEF  shows  a  strong  positive  interaction  between  these  three 
dimensions.  Long-term  planning  means  that  a  project  pipeline  can  be  prepared  in  Member 
States,  while,  the  possibility  to  receive  support  for  investments  with  a  clear  European 
dimension  allows  for  the  development  of  more  integrated  networks.  As  an  example,  in 
transport  the  possibility  to  support  key  cross-border  sections  of  infrastructure  facilitates  the 
development of a corridor approach among Member States, leading to the coherent planning 
of  national  sections.  In  energy,  the  dynamic  process  of  establishing  every  2  years  a  list  of 
projects  of  common  interest  (PCIs)  located  in  priority  corridors  and  thematic  areas  ensures 
both  long-term  planning  and  adaptation  to  future  needs.  In  telecommunications,  the  CEF 
telecom  guidelines  list  the  building  blocks  and  sector-specific  digital  service  infrastructures 
(DSIs) eligible for funding. 

Three  and  a  half  years  after  its  launch,  the  type  of  projects  co-financed  by  CEF  strictly 
matches the EU’s ambition to: (i) increase connectivity at European scale for the three sectors 
and; (ii) concentrate the support on public goods of a European dimension. CEF contributes 
to  the  Commission’s  priorities  on  jobs,  growth  and  investment,  the  internal  market,  Energy 
Union and climate and the Digital Single Market, strengthening the global competitiveness of 
the  EU.  Furthermore,  CEF  provides  a  substantial  share  of  EU  funding  for  transport  and 
energy  projects  with  a  strong  contribution  to  decarbonising  the  European  economy,  thus 

6 Article 27 of Regulation (EU) No 1316/2013 of the European Parliament and of the Council of 11 December 2013. 
7  This  report  also  serves  the  purpose  of  reporting  to  the  European  Parliament  and  the  Council  on  progress  in  the  implementation  of 
Regulation (EU) No 283/2014 (Telecommunications guidelines), and in particular on the aspects required under Articles 8(7) and (8). 

3 

 
 
 
 
 
 
                                                            
contributing  to  meeting  the  EU’s  emission  reduction  targets  under  the  Paris  Climate 
Agreement. 

In  transport,  priority  has  been  given  to  projects  to  create  or  improve  cross-border 
connections,  complete  missing  links  and  eliminate  bottlenecks.  These  can  be  projects 
affecting  physical  sections  of  the  network  or  EU-level  programmes  to  develop  efficient, 
interoperable and safer traffic management systems for the different modes of transport. The 
‘CEF  Transport’  funding  objective  on  cross-border  transport  infrastructure  represents 
86 % of the funds currently allocated for transport (EUR 18.35 billion). Examples include the 
Fehmarn Belt (a multimodal tunnel between Denmark and Germany), the Rail Baltica project, 
which improves east-west connections between Poland, Lithuania, Latvia and Estonia, and the 
deployment  of  SESAR  (Single  European  Sky  ATM  (Air  Traffic  Management)  Research). 
Ultimately,  CEF  is  making  a  concrete  contribution  to  the  ambition  of  achieving  a  single 
European transport area. 

In  energy,  CEF  has  addressed  obstacles  to  a  better  integrated  EU  energy  market  through 
strengthening  cross-border  connections.  The  specific  aims  are  to  end  energy  isolation  and 
eliminate  bottlenecks.  In  line  with  its  objectives,  ‘CEF  Energy’  supports  projects  carrying 
significant externalities. It has contributed to increasing security of supply in Member States 
where this issue is most pressing. Examples include the Gas Interconnector Poland-Lithuania, 
the first gas interconnector between the eastern Baltic Sea region and continental Europe, and 
Balticconnector, the first gas interconnector between Finland and Estonia. Sustainability has 
been addressed by support to innovative  electricity projects by co-funding important studies 
and works: a 600 km subsea link between Ireland and France, compressed air energy storage 
in Northern Ireland and a smart grids project between Slovenia and Croatia. 

In telecommunications, priority has been given to deploying trans-European digital services 
with mature technical and organisational solutions, as listed in the telecom guidelines. These 
cover areas as diverse as electronic identification- that addresses the challenge of cross-border 
recognition of nationally issued electronic identification mechanisms (eIdentification or eID), 
enabling  Europeans  to  access  online  public  services  across  Europe  seamlessly-,  and 
interoperable health services- that facilitate continuity  of care and  patient  safety for citizens 
seeking  cross-border  healthcare,  allowing  health  data  to  be  exchanged  across  national 
borders-. Since these cross-border services help improve the daily lives of Europeans through 
digital  inclusion  and  connectivity,  they  are  essential  to  achieving  the  digital  single  market. 
However, the evaluation found that the telecommunications guidelines limit the ability of the 
programme  to  take  full  advantage  of  the  latest  technological  developments  and  address  the 
new priorities in the political agenda that have subsequently emerged. For broadband, given 
resource limitations, support has so far been focused on: (i) technical assistance activities that 
can  help  projects  with  a  difficult  business  case  to  materialise;  and  (ii)  financial  instruments 
with significant leverage potential. 

4 

 
 
 
 
 
 
1.2 

Focusing on EU added value 

Investments needed to meet  connectivity goals are  very high in all three sectors  covered 
by the  programme. For transport, recent  estimations  by the Commission8 confirmed in  the 
work  plans  of  the  Core  Network  Corridor  Coordinators  reveal  that  investment  needs  in  the 
TEN-T  core  network  amount  to  EUR 750  billion  by  2030  alone,  and  about  three  times  this 
amount including the comprehensive network and other transport investments such as urban 
transport,  digitalization  and  maintenance9.  In  energy,  the  investment  needs  for  projects  that 
can be classified as PCIs amount to EUR 179 billion over the 2021-2030 period10, the largest 
share  by  far  being  in  the  electricity  sector.  In  telecommunications,  approximately  EUR 500 
billion  worth  of  investments  are  estimated  to  be  required  to  meet  strategic  objectives  on 
gigabit connectivity up to 2025, or EUR 155 billion in excess of what can be expected based 
on current investment trends11. However, these estimates do not include further investments 
needed to complete deployment of cross-border DSIs.  

In addition, market failures persist for projects aiming at achieving TEN policy objectives. 
For  example,  failures  can  happen  when  the  costs  occur  at  national/local  level  whereas  the 
benefits are realised on a European scale, or when the costs and benefits of projects involving 
several Member States are distributed asymmetrically among them. This is typically the case 
for  cross-border  projects  and  the  deployment  of  EU-wide  technological  systems,  where 
appropriate financing is usually not provided through the market or the national budget alone. 
In  energy,  projects  that  lack  commercial  viability  fall  into  this  category,  as  they  deliver  on 
externalities like regional security of supply or highly innovative solutions. 

Since its launch,  CEF has focused on providing EU added value12  to the development of 
connectivity  in  transport,  energy  and  telecommunications,  not  only  because  of  the  type  of 
public goods with a European dimension it covers, but also because of its focus on projects at 
national,  regional  or  local  level  that  would  not  be  realised  without  EU  support.  More 
specifically, the EU added value of CEF resides in its capacity to: 
- 
steer public and private finance towards EU policy objectives; 
- 
enable  key  investments  where  the  costs  are  borne  at  national/local  level  whereas  the 
benefits are tangible on a European scale; 
accelerate the shift to a low-emission and digital society. 

- 

In  transport,  CEF  has  brought  a  clear  added  value,  in  particular  for  the  completion  of  the 
TEN-T core network by 2030 and for the low-emission mobility ambition. Some railway and 
inland waterways infrastructure projects, which are long-term investments (with a lifecycle of 
30  to  50  years),  could  not  have  been  kicked  off  without  the  European  public  grant  funding 
available under CEF. This is the case for the Brenner Base tunnel project, which will remove 
a  key  rail  bottleneck  in  the  EU  between  Austria  and  Italy.  The  CEF  commitment  provides 

8  The  data  stems  from  the  Core  Network  Corridor  studies  which  have  been  undertaken  by  external  contractors  supporting  the  CNC 
Coordinators. 
9 At the scale of the core network corridors, investments are expected to generate some € 4,500 billion of cumulated GDP and correspond to 
around 13.000.000 job-years and a reduction of about 7 million tons of CO2 emissions between 2015 and 2030. 
10 Based on the study "Investment needs in trans-European energy infrastructure up to 2030 and beyond", Ecofys, July 2017 
11 Communication from the Commission to the European Parliament, the council, the European Economic and Social Committee and the 
Committee of the Regions. Connectivity for a Competitive Digital Single Market — Towards a European Gigabit Society, COM(2016) 587 
final, p. 8. 
12  Criteria  for  assessing  the  value-added  of  European  Finance  were  set  out  in  the  Reflection  Paper  on  the  Future  of  EU  Finances 
(COM(2017) 358 of 28 June 2017). 

5 

 
 
 
 
 
                                                            
assurances  and  sometimes  also  secures  additional  sources  of  financing,  notably  from  the 
banking sector and private investors. In addition, European flagship programmes such as the 
European  Rail  Traffic  Management  System  (ERTMS)  required  coordinated  implementation 
of  investments  across  countries  and  stakeholders  to  bring  the  benefits  of  performance, 
interoperability  and  safety.  The  CEF  support  through  both  grant  funding  and  programme 
support  actions  such  as  capacity  building  in  Member  States’  administrations  created  the 
conditions for such coordination to happen. 

In  energy,  CEF  is  a  key  instrument  supporting  transnational  cooperation  and  generating 
economies  of  scale.  It  is  also  playing  a  key  role  in  supporting  cross-border  energy 
infrastructure, as PCIs have to deliver benefits to at least two Member States. CEF is a strong 
catalyst  in  bringing  together  project  promoters,  National  Regulatory  Authorities  and 
government representatives to solve issues so that cross-border infrastructure projects can be 
realised.  Its  grants  component  is  making  the  difference  in  promoting  cooperation  between 
countries  to  develop  energy  interconnection  PCIs  that  otherwise  would  not  happen.  This  is 
especially the case for cross-border projects located in countries with smaller population sizes 
or in a more remote location, where tariffs would need to be increased substantially to cover 
the investment needs. The Gas Interconnector Poland-Lithuania is a key example of a project 
that could not have been funded in a purely national context. 

In  telecommunications,  CEF  has  facilitated  coordination  among  Member  States  on 
developing  standards  and  enabling  interconnected  cross-border  services.  Although  Member 
States have developed solutions that make public services available online, their benefits are 
confined  by  national  borders.  CEF  has  played  a  key  role  in  helping  these  solutions  achieve 
better  outcomes  by  making  them  interoperable,  for  the  benefit  of  citizens,  businesses  and 
public administration across Europe. Moreover, in some cases like the Electronic Exchange of 
Social Security Information, as  Member States have a legal obligation to ensure cross-border 
communication between the national social security institutions, CEF has played an important 
role  in  strengthening  the  protection  of  mobile  citizens’  social  security  rights  and  helping 
Member States speed up compliance. In other areas like cybersecurity — where cross-border 
interoperability is not subject to a legal obligation — CEF has made it possible to put in place 
a voluntary cooperation platform that strengthens preparedness and response to cyberattacks 
by providing an EU-wide solution to threats that do not respect national borders. According to 
stakeholder consultation results, without CEF, the deployment of some DSI would have been 
significantly  delayed  or  even  abandoned.  Moreover,  basic  solutions  supported  by  CEF 
funding (the so-called building blocks) are creating economies of scale by being extensively 
reused in more complex digital services, including beyond the remit of CEF, in areas such as 
agriculture, environment and education13. 

Finally,  EU-level  action  (including  regulatory  cooperation)  is  enabling  CEF  to  overcome 
shortcomings  in  information  and  cooperation  among  Member  States,  which  can  hamper 
such complex but crucial projects. 

13 Information available from the CEF Telecommunications dashboard: 
https://ec.europa.eu/cefdigital/wiki/display/CEFDIGITAL/Reuse+by+domains 

6 

 
 
 
 
 
 
                                                            
2.  THE CONNECTING EUROPE FACILITY PROVIDES EU SUPPORT IN AN EFFICIENT AND 

COHERENT MANNER 

2.1 

Using grants in the most efficient manner 

Most of the funding provided  by CEF is  in the form of grants  (90 %). Such an approach is 
appropriate  as  a  large  majority  of  CEF  funding  relates  to  projects  with  wider  regional 
and EU benefits but insufficient national funding or market-based financing. 

For  transport,  this  is  the  case  for  most  of  the  cross-border  projects  on  the  trans-European 
network  and  for  the  ‘horizontal’  priorities,  particularly  traffic  management  systems  such  as 
ERTMS for rail, SESAR for aviation and intelligent transport systems (ITS) for road, as well 
as  alternative  fuels.  It  is  also  the  case  for  projects  where  the  benefits  cannot  yet  be 
internalised.  In  this  sector,  very  high  oversubscription  rates14  following  calls  for  proposals 
show a very high demand for EU grants, with the available budget constantly falling short of 
the sector’s needs. 

In energy, bottlenecks still exist and further interconnections are still needed to fully integrate 
the market, ensure security of supply and enable the EU to make optimal use of its renewable 
resources and thus avoid curtailment. Grants are considered the most appropriate instrument 
for  supporting  projects  delivering  significant  positive  externalities  that  go  beyond  the 
nationally  set  tariffs,  such  as  security  of  supply,  technological  innovation  and  solidarity 
between Member States. 

In  telecommunications,  all  DSIs  have  a  double  layer:  the  core  service  platform  (CSP) 
conceived as a central hub that enables the interoperability, and the generic services (GS) as 
gateways  that  connect  the  nationally  developed  solutions  to  the  CSP.  Grants  are  used  to 
support  the  deployment  of  the  generic  services,  whereas  procurement  is  used  for  the 
development  and  operation  of  the  core  service  platforms.  This  is  justified  by  the  need  to 
address  underinvestment  at  Member  State  level  in  interoperable  solutions  for  Pan-European 
service integration. 

The Commission proposal for CEF in 2011 contained a total budget of EUR 50 billion (31.7 
billion  for  transport,  9.1  billion  for  energy  and  9.2  billion  for  telecoms).  The  cuts  that 
followed during both the negotiation phase and the later negotiations on the European Fund 
for Strategic Investments (EFSI) reduced the total funding to EUR 30.44 billion. The telecom 
sector experienced the most severe reduction (EUR 8 billion, with final allocated funding of 
EUR 1.04  billion).  Completing  the  TEN  set  out  in  the  EU  policy  priorities  still  requires 
enormous investments, part of which will depend on continued EU support. The size of CEF 
currently  makes  it  possible  to  address  only  some  of  the  identified  market  failures  (e.g. 
bridging the funding gap with EU support) in all three sectors. Therefore, potential exists for 
unlocking  further  public  and  private  investment    if  additional  EU  budget  was  made 
available to address more market failures. 

The CEF selection process ensures that the grant funding is modulated per sector and category 
of  investment,  taking  into  account  the  financing  gap  for  individual  projects.  For  transport, 

14 Total requested funding of the eligible proposals compared to the indicative budget of the call. 

7 

 
 
 
 
 
 
 
                                                            
support  ranged  from  85 %  co-funding  rates  for  the  cohesion  envelope,  to  maximum  co-
funding rates ranging between 10 % and 50 % depending on the priority and the nature of the 
action. For energy, funding rates may be modulated up to 50 %, and — in exceptional cases 
—  increased  to  a  maximum  of  75 %.  However,  this  is  only  possible  if  proposed  actions 
provide  a  high  degree  of  regional  or  EU-wide  security  of  supply,  strengthen  solidarity  or 
comprise  highly  innovative  solutions.  For  telecommunications,  core  service  platforms  have 
generally been financed through procurement, while the generic services have been supported 
through  grants  applying  a  co-funding  rate  of  up  to  75 %  of  eligible  costs.  The  competitive 
nature  of  the  calls  and  the  evaluation  and  selection  mechanism  in  place  mean  that  projects 
unable to demonstrate the need for financial assistance in the form of grants can be discarded. 
Such projects may still consider using existing possibilities under EFSI or the CEF Financial 
Instruments as appropriate.  

For  a  policy-driven  instrument  with  specific  sectoral  objectives  and  considering  that  CEF 
addresses complex projects with a cross-border or EU-wide interoperability dimension, direct 
management  has  been  efficient  in  ensuring  a  fast  allocation  of  funds  and  very  sound 
budgetary  execution.  During  their  implementation,  projects  are  closely  followed  by  the 
Innovation  and  Networks  Executive  Agency  (INEA)  to  ensure  that  EU  funds  are 
appropriately spent. The CEF budget is optimised thanks to the capacity of INEA to quickly 
adapt  to  manage  redirected  money  unspent  by certain  actions,  using  it instead  for  financing 
new actions. For instance, approximately EUR 600 million was re-injected in a transport call 
in  2016,  while  an  investment  of  EUR  120  million  was  proposed  in  2016  to  finance  a  new 
flagship project, WIFI4EU, in the digital sector. 

2.2 

Pioneering the use of financial instruments and blending 

For  revenue-generating  projects,  CEF  support  can  take  place  in  the  form  of  financial 
instruments.  The  CEF  financial  instruments  budget  can  be  used  to  provide  a  variety  of 
products such as guarantees or senior debt backed by EU capital. They thus help to optimise 
the  use  of  public  funds.  Such  projects  include,  for  example,  capacity  extensions  in  ports, 
railway links to airports and the development of alternative fuel infrastructure in the transport 
sector,  as  well  as  sub-ordinated  loans  or  guarantees  for  ring-fenced  transmission  projects  in 
the energy sector. 

However, in all three sectors, financial instruments have not been used to the expected extent. 
The  CEF  Debt  Instrument  (CEF  DI),  building  on  the  experience  gained  with  the  Loan 
Guarantee  Instrument  for  Trans-European  Transport  (LGTT)  and  the  pilot  phase  of  the 
Project Bond Initiative (PBI), pioneered the use of financial instruments, but there has been a 
substitution  effect  when  EFSI  was  created.  The  use  of  the  CEF  financial  instruments  is 
expected  to  take  up  during  the  second  half  of  the  programme15  when  complementarity 
between  the  CEF-specific  financial  instruments  and  EFSI  will  have  been  ensured  following 
the  call  for  specific  guidance  by  the  CEF  DI  Steering  Committee  to  ensure  effective 
complementarity between the two initiatives. 

15 For example, by means of the CEBF (investment from CEF of EUR 100 million).  

8 

 
 
 
 
 
 
 
                                                            
In the energy sector, a number of factors have contributed to CEF DI not being used. One of 
these is the short pipeline of bankable CEF-eligible projects available at the time the CEF DI 
went  into  operation.  There  is  also  a  competitive  range  of  debt  and  equity  options  already 
available  to  project  promoters  due  to  their  sound  Regulated  Asset  Base  model  for  project 
finance.  Nevertheless,  joint  project  monitoring  by  the  European  Investment  Bank  and  the 
Commission has led to a number of PCIs having obtained financing via the former. 

In  addition,  an  equity  instrument  is  currently  being  developed.  In  telecommunications,  the 
landscape  of  broadband  deployment  projects  is  highly  diverse  and  requires  a  variety  of 
instruments that  address location-specific  challenges.  Whereas  debt  instruments can  cater  to 
commercially-driven  deployments  with  a  clear  business  case  that  are  undertaken  by  larger 
players,  equity  instruments  are  needed  to  bridge  existing  financing  gaps  by  supporting 
projects  with  a  risker,  longer-term  business  case.  The  Connecting  Europe  Broadband  Fund 
(CEBF), due to become operational in the first half of 2018, is expected to play this role. 

In February 2017, a 'blending call' was launched for CEF Transport. The call, which  blends 
CEF  grants  with  market-based  finance,  in  particular  financial  instruments  available  under 
EFSI,  is  intended  to  strengthen  complementarity  between  the  two  support  schemes  while  at 
the same time, leveraging other sources of finance notably EFSI, private investors or national 
promotional banks .Such an approach had previously been successfully applied under CEF on 
an ad hoc basis in  a few cases,  such  as  for the Port of Dublin  and the Port of Calais  in  the 
transport sector. With EUR 2.2 billion funding requested for a call with an indicative budget 
of EUR 1 billion, the first experience of this has been very positive. 

2.3 

Enhancing synergies and coherence, simplifying access 

Synergies 

For  the  first  time,  CEF  has  brought  the  transport,  energy  and  telecommunications  sectors 
under a common funding framework, centrally managed by the Commission. 

At  programme  level,  this  approach  allows  for  economies  of  scale  by  the  delegation  of  the 
grant management to a single executive agency (INEA) and by the establishment of common 
procedures  across  the  three  sectors  (coordinated  implementation  by  the  Agency,  common 
Work  Programmes  for  CEF Financial Instruments,  a common CEF coordination Committee 
comprised of all Member States, grant agreements following a common model).  

At project level, CEF has so far not fully succeeded in bringing about synergies between the 
three  sectors  despite  the  expectations  mentioned  in  the  recitals  of  the  Regulation.  This  is 
particularly due to the inherent differences in the sectoral policy objectives and the rigidity of 
the legal/budgetary framework as regards the eligibility of projects and the eligibility of costs. 
A  EUR 40  million  multi-sectoral  (transport  and  energy)  pilot  call  for  proposals  for  studies 
launched  in  2016,  therefore  fell  short  of  expectations  in  terms  of  the  number  of  projects 
selected (7) and the budget allocation (EUR 24 million). 

Nevertheless, keeping the three sectors together seems appropriate in light of their common 
goals  and  challenges.  According  to  stakeholders  consulted  during  the  evaluation,  these 
challenges  include  the  complexity  of  the  infrastructure  networks  arising  from  different 

9 

 
 
 
 
 
 
 
 
 
national  systems,    their  interconnection  needs  as  well  as  the  need  to  ensure  interoperability 
while  constantly  adapting  to  market  and  technology  changes.  The  number  of  examples  of 
synergies  involving  the  three  sectors  covered  by  CEF  is  increasing,  fostered  by  recent 
innovation  developments  and  the  fact  that  synergies  are  naturally  present  in  each  of  the 
sectors  or  relate  to  an  overarching  priority  like  cybersecurity.  Examples  include  connected 
cooperative and automated mobility, alternative fuel infrastructure for cars, buses and ships, 
smartening  of  the  grid,  and  deployment  of  5G  along  the  transport  network.  Creating  the 
conditions for such projects to continue to materialise will yield further efficiency gains. 

Complementarity 

CEF has  proven to be complementary to  Horizon 2020, the European Structural Investment 
Funds (ESIF) and to EFSI. 

Horizon  2020  finances  the  early  stages  of  the  innovation  chain,  while  CEF  enables  the 
technological deployment throughout the infrastructure. 

Both  CEF  and  ESIF  contribute  to  achieving  the  TEN  objectives.  While  ESIF  focuses 
financial support on the less-developed regions and the 15 Member States which are eligible 
for Cohesion Fund support, CEF focuses on EU integration through cross-border connections 
and interconnections, bottleneck removal and interoperability projects. In transport, there is a 
partial  overlap  between  CEF  and  ESIF  regarding  rail  projects  located  on  the  core  TEN-T 
network, while ESIF also finances projects not eligible to the CEF (for instance road projects, 
and  projects  on  the  comprehensive  network).  In  energy,  ESIF  focuses  on  smart  distribution 
grids  at 
In 
telecommunications  sector,  ESIF  is  directed  at  developing  national  digital  services,  while 
CEF  enables  the  cross-border  interoperability  of  some  specific  and  nationally  developed 
digital services. 

level,  while  CEF  supports 

infrastructure. 

local/regional 

transmission 

For the first time,  a  share of the  cohesion budget (EUR 11.3 billion — transport)  has  been 
executed  under  direct  management  within  the  CEF  framework.  This  has  proved  very 
successful  with  100%  of  the  envelope  was  allocated  during  the  first  half  of  the  programme 
period,  almost  exclusively  on  sustainable  transport  modes.  Targeted  technical  assistance, 
lower administrative costs for Member States and clear funding priorities contributed to this 
success.  

Regarding  EFSI,  CEF  worked  as  a  catalyst  for  EFSI  as  several  projects  initiated  in  the 
context of the CEF DI feeding into the EFSI project pipeline. This was the case for the Grand 
Contournement Ouest de Strasbourg (A355), the A6 Wiesloch autobahn project, the Transgaz 
"BRUA"  (Bulgaria-Romania-Hungary-Austria)  gas  interconnection  project,  and  the  Italy-
France electricity interconnector.  Moreover, projects prepared with CEF support or supported 
in part with CEF grants for works have started to benefit from EFSI. However, as discussed 
previously, there has been a substitution effect on the CEF FIs on the part of EFSI. 

While  it  was  anticipated  that  CEF  would  enlarge  the  possibilities  for  debt  financing  of 
broadband  projects,  EFSI  now  makes  ample  funding  available  in  this  respect.  It  is  thus 
envisaged  to  focus  on  equity  and  quasi-equity  support  for  broadband  projects.  As  indicated 
above,  the  CEBF  is  expected  to  complement  existing  instruments  (i.e.  debt-based  EFSI 

10 

 
 
 
 
 
 
 
 
 
support  to  commercially-driven  deployments  with  a  clear  business  case  and  ESIF  grants  to 
mainly  public-driven  deployments).  The  CEF  contribution  of  risk-absorbing  capital  for 
equity-type  support  will  be  complemented  by  a  lower  risk  tranche  from  EFSI  as  well  as  a 
market  tranche  composed  of  National  Promotional  Bank  and  private-sector  shares  (multi-
layer fund structure).  An additional gap is becoming increasingly apparent but  has not been 
addressed  by  either  EFSI,  the  CEBF  or  ESIF,  in  particular for  projects on  the  borderline  of 
commercial  viability  (even  in  the  long  term).  In  the  area  of  broadband,  this  gap  could  be 
addressed  through  a  structured  blending  instrument  combining  both  public  grants  and 
financing support with private investment. 

Simplification 

Improvements in the application process have resulted in simpler and time-saving procedures 
for  beneficiaries  and  the  Commission.  Examples  of  such  improvements  include  the 
introduction  of  electronic  tools  for  exchanges  with  the  beneficiaries  and  the  replacement  of 
grant  decisions  adopted  by  the  Commission  by  grant  agreements  whose  signature  was 
delegated  to  the  Director  of  INEA.  For  beneficiaries,  the  administrative  costs  have  been 
deemed to  be  overall proportionate to  the financial support provided. The evaluation results 
indicate, however, that legal and administrative requirements for approving and implementing 
actions may impose disproportionate costs on smaller actions, for which simplified forms of 
support could be better adapted. This was particularly true for telecommunications, where the 
average grant size was just EUR 1 million. Furthermore, also for telecommunications sector, 
the adoption of annual work programmes does not enable the planning of long-term financing 
for  the  actions  and  creates  administrative  burden  as  regards  the  management  of  the 
programme. 

3 

THE CONNECTING EUROPE FACILITY IS ON TRACK TO DELIVER RESULTS 

3.1 

Contributing to the sectoral policy objectives 

The CEF is focused on the following long-term EU policy objectives: 

  Transport: by 2030, completion of the TEN-T Core Network, including the deployment 
of  SESAR  and  ERTMS,  and  transition  towards  clean,  competitive  and  connected 
mobility, including an EU backbone of alternative fuels charging infrastructure by 2025; 
progress towards the completion of the TEN-T comprehensive network by 2050. 

  Energy: by 2030, completion of the TEN-E priority corridors and thematic areas aligned 
with “Clean Energy for all Europeans" and long-term decarbonisation objectives, namely 
to smarten and digitalise the grids, to reach the 2030 interconnection targets (including for 
peripheral  Member  States),  to  develop  meshed  off-shore  grids  and  to  ensure  security  of 
supply, also through synchronisation. 

  Digital: by 2030, maximising the benefits of the digital single market for all citizens and 
businesses with the achievement of a fully cyber-secure gigabit society by 2025, preparing 
for  terabit  connectivity  by  2030  and  the  roll-out  of  EU-wide  data  and  digital  service 
infrastructure  supporting  the  digital  transformation  of  key  areas  of  public  interest,  from 
healthcare to mobility and public administrations. 

11 

 
 
 
 
 
 
 
 
 
As the programme is in the early stages of implementation, only limited data on actual outputs 
and  results  is  available.  It  was  therefore  often  not  possible  to  measure  progress  towards 
sectoral  policy  objectives  during  the  evaluation.  However,  almost  all  stakeholders  who 
responded  to  the  technical  survey  believe  CEF  will  effectively  achieve  the  development  of 
transport,  energy  and 
modern  and  high-performing 
telecommunications, at least to some extent (99%, 97% and 96%, with  33%, 38% and 21% 
agreeing fully).  

trans-European  networks 

in 

Most  of  the  CEF  transport  envelope  was  awarded  for  the  completion  of  missing  links  and 
removal  of  bottlenecks  on  projects  along  the  TEN-T  Core  Network  (either  through  the 
creation  of  new  infrastructure  or  the  substantial  upgrading  and  rehabilitating  of  existing 
infrastructure).  

In energy, CEF grants effectively contribute to enhancing security of supply, ending energy 
isolation,  eliminating  energy  bottlenecks,  completing  the  internal  energy  market  and  to 
enhancing  the  integration  of  renewable  energy  into  the  grid.  Examples  of  key  CEF  energy 
projects include Balticconnector, the first interconnector between Finland and Estonia, and the 
Gas  Interconnector  Poland-Lithuania,  ,  which  will  enable  these  Member  States  to  diversify 
their gas sources and routes, safeguarding them against possible future supply disruptions. 

In  telecommunications,  there  is  evidence  that  CEF  support  for  the  deployment  of  DSIs  is 
enabling public administrations, citizens and businesses to benefit from more comprehensive 
the 
and  efficient  cross-border  online  services, 
competitiveness  of  private  and  public  actors  alike.  Examples  notably 
the 
establishment  of  cooperation  mechanisms  and  increase  of  capabilities  to  respond  to  cyber 
threats, easier access for companies to national procurement procedures in other EU Member 
States,  streamlined  invoicing  procedures  and  cross-border  recognition  and  validation  of 
eIdentification  and  eSignature.  CEF  also  helps  remove  the  bottlenecks  which  hinder  the 
completion of the Digital Single Market, although the limited budget has so far only allowed 
to partially address the sector's needs. 

to  enhance 
include 

thereby  contributing 

In  the  three  sectors  it  covers,  CEF  is  instrumental  in:  (i)  the  deployment  of  EU-wide  new 
systems in traffic management and safety (e.g. SESAR for aviation, ERTMS for railways, ITS 
for  roads);  (ii)  the  deployment  of  high-performance  electricity  lines  and  cross-border  smart 
grids  in  energy;  and  (iii)  the  roll-out  of  interconnected  Digital  Services  (such  as  eHealth, 
Cyber Security, eProcurement, eIdentification and eSignature). 

3.2 

Contributing to smart, sustainable and inclusive growth 

CEF  supports  investments  in  modern  and  high-performing  networks  throughout  the  EU, 
which are essential for creating the conditions for a competitive economy. Since 2014, it has 
invested  EUR 25  billion,  resulting 
in  approximately  EUR 50  billion  of  overall 
infrastructure investment in the EU.  

12 

 
 
 
 
 
 
 
 
CEF  spending  in  transport  and  energy  is  a  major  contributor  to  the  EU’s  target  of  at  least 
20 %  of  the  total  EU  budget  to  be  dedicated  to  climate  action-related  spending16.  Well 
integrated networks in energy and transport and the promotion of low-carbon transport modes 
help  keep  the  cost  of  decarbonisation  in  check.  While  the  contribution  of  CEF-supported 
action  to  the  specific  targets  cannot  be  measured  fully  at  this  mid-term  evaluation  stage,  an 
analysis  of  its  contribution  was  performed  under  the  mid-term  review  of  the  2014-2020 
multiannual financial framework. That analysis showed that CEF effectively and significantly 
contributed  to  the  EU  target,  with  a  share  of  commitment  appropriations  estimated  at  an 
average  of  more  than  5 %  of  total  climate  change  finance  in  the  EU  budget  for  2014-2016. 
This average rose to 35 % when considering the CEF’s contribution to the ‘Competitiveness 
for Growth and Jobs’ heading of the EU budget. 

In transport, the CEF contributes to the EU target with 81 % of the total amount of funding 
awarded to lower emission transport modes, in particular rail and inland waterways, thereby 
enabling  a  modal  shift.  In  addition,  the  programme  funds  new  technologies  aimed  at 
decarbonising  transport,  in  particular  alternative  fuels,  and  their  deployment  along  the 
transport  infrastructure.  For  example,  the  LNG  Motion  project  aims  to  increase  Liquefied 
Natural  Gas  (LNG)  availability  along  the  TEN-T  Core  Network  covering  France,  Belgium, 
the  Netherlands,  Germany,  Poland,  Spain,  Italy,  Hungary  and  Romania,  mainly  for  road 
transport. This  project receives an EU grant  contribution of EUR 27.8  million out of a  total 
cost of EUR 55.5 million (50% co-funding rate).  

In  energy,  40 %  of  CEF  allocations  are  assumed  to  contribute  to  mainstreaming  of  climate 
action  at  programme  level.  Electricity  projects  contribute  to  reducing  CO2  emissions  by 
increasing grid capacity to integrate power produced from renewable sources.  

CONCLUSIONS 

The evaluation has illustrated that after the first 3 and a half years of CEF implementation, the 
programme  is  on  track,  although  it  is  much  too  early  to  measure  results  given  that  the 
programme  is  at  the  early  stage  of  implementation.  Moreover,  the  performance  framework 
provided in Regulation is lacking well  defined or  robust indicators. With  this reservation  in 
mind, the evaluation has shown that: 

  CEF  is  an  effective  and  targeted  instrument  for  investment  in  trans-European 
infrastructure (TEN) in transport, energy and the digital sector. Since 2014, it has invested 
EUR 25  billion,  which  has  resulted  in  approximately  EUR 50  billion  of  overall 
infrastructure  investment  in  the  EU.  CEF  contributes  to  the  Commission’s  priorities  on 
jobs,  growth  and  investment,  the  internal  market,  Energy  Union  and  climate,  and  the 
Digital  Single  Market'.  In  so  doing  it  is  strengthening  the  competitiveness  of  the  EU 
economy. 

  CEF brings high European added value for all Member States by supporting connectivity 
projects  with  a  cross-border  dimension.  Most  funding  is  awarded  to  projects  bridging 

16  On  telecommunications,  significant  contributions  to  reducing  CO2  emissions  can  be  expected  from  projects 
implementing digital solutions. However, no methodology is currently applied in the context of CEF to estimate 
such reductions. 

13 

 
 
 
 
 
 
 
                                                            
missing links and removing bottlenecks, with the aim of ensuring the proper functioning 
of the EU internal market and territorial cohesion among Member States in the transport, 
energy and digital sectors. Projects in energy also provide security of supply and are key 
for  the  cost-effective  decarbonisation  of  the  economy.  CEF  is  also  instrumental  in  the 
deployment of EU-wide new systems in traffic management and safety (e.g. SESAR for 
aviation,  ERTMS  for  railways),  high-performance  electricity  lines  and  smart  grids 
essential for the rapid intake of renewable non-carbon energy sources, and in the roll-out 
of  broadband  and  interconnected  Digital  Services  (such  as  Open  Data,  e-Health,  e-
Procurement, eIdentification and eSignature).  

  The  direct  management  of  CEF  grants  has  proved  very  efficient,  with  a  strong  project 
pipeline and a competitive selection process, a focus on EU policy objectives, coordinated 
implementation and the full involvement of Member States. The INEA executive agency 
has a very good track record on the financial management of the CEF and on optimising 
the budget, particularly thanks to its flexibility in quickly re-directing money unspent by 
certain actions to financing new ones. 

  For  the  first  time,  a  share  of  the  cohesion  budget  (EUR 11.3  billion  for  transport)  was 
executed under direct management within the CEF framework. 100 % of the envelope was 
allocated during the first half of the programme period, almost exclusively on sustainable 
transport  modes.  Targeted  technical  assistance,  lower  administrative  costs  for  Member 
States, clear funding priorities and a solid project pipeline stemming from the continuity 
of projects and studies formerly supported by the TEN-T Programme or by the Cohesion 
Policy instruments contributed to the fast allocation of funds.  

  CEF  has  continued  to  use  and  develop  innovative  financial  instruments.  However,  their 
deployment has been limited due to the new possibilities offered by EFSI. The use of the 
CEF financial instruments is expected to take up during the second half of the programme 
when complementarity between the CEF specific financial instruments and EFSI will have 
been ensured. 

  Moreover,  a  very  positive  first  experience  of  blending  grants  with  financial  instruments 
was  carried  out  in  2017  in  transport,  with  EUR  2.2  billion  funding  requested  for  a  call 
with  an  indicative  budget  of  EUR  1  billion,  enabling  the  use  of  grants  to  maximise  the 
leverage of private or public funds.  

  CEF spending in transport and energy is a major contributor to the EU’s target of at least 

20 % of the total EU budget to be dedicated to climate action-related spending. 

  In  the  Telecom  sector,  the  dual  focus  of  CEF  on  digital  cross  border  services  of  public 
interest and communication and computing infrastructure has shown that the programme 
has an important impact on achieving the EU digital single market goals, enabling citizens 
and businesses to access high quality digital services across Europe. It has helped develop 
and  implement  common  policies  to  address  societal  challenges  including  the  digital 
transformation of healthcare, cybersecurity and digitisation of governments. However, as 
the proposed funding for the CEF Telecom was significantly cut, the programme funding 
could only support the very first steps towards a full cross border digital infrastructure in 
areas of public interest. 

14 

 
 
 
 
 
 
 
 
  CEF  has  also  tested  cross-sectoral  synergies,  but  has  been  limited  by  constraints  in  the 
current legal/budgetary framework. The sectoral policy guidelines and the CEF instrument 
would  need  to  be  made  more  flexible  to  facilitate  synergies  and  be  more  responsive  to 
new  technological  developments  and  priorities  such  as  digitalisation,  while  accelerating 
decarbonisation and addressing common societal challenges such as cybersecurity. 

  The completion of the TEN defined in the EU policy priorities will still require massive 
investments,  part  of  which  will  depend  on  continued  EU  support.  The  size  of  CEF 
currently  makes  it  possible  to  address  only  some  of  the  identified  market  failures  in  all 
three  sectors.  Therefore,  potential  exists  for  unlocking  further  public  and  private 
investment if additional EU budget was made available to address market failures. 

15