Agnes Kelemen, Policy officer, Conception, Forwards Studies and Impact

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EU regional funding for mitigation and adaptation

Agnes Kelemen

European Commission, DG REGIO

European Journalism Centre Climate Action Conference

23-24 March, Budapest

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European UnionRegional Policy – Employment, Social Affairs and Inclusion

Content

1. Climate change and economic, social and territorial cohesion

2. Current programming period 2007-20133. Future Cohesion Policy post-2013

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1. Climate change and economic, social and territorial cohesion

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Role of cohesion policy in funding climate change investments (1)

Potential for economic and social gains:• Job creation:

– in 2006 2.3 million new jobs were created worldwide in the renewable energy industry (World Development Report 2010)

– up to 2 million jobs from implementing EU energy efficiency measures (Energy Efficiency Plan 2011)

• Economic growth:

– meeting 20% RE target results in GDP increase by 2030 compared to a policy off scenario is expected to be between 0.36-0.44% (Fraunhofer ISI 2009)

• Competitiveness: – 2008 was the first year when global investment in new power generation in

renewable energies was greater than in fossil fuel technologies (UNEP 2009)– 2010 Renewable Energy Attractiveness Index cites US and China as the best

investment opportunity for renewable energy

• Other benefits: – Reduced morbidity and mortality, alleviation of fuel poverty, risk reduction

through climate adaptation, etc.

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• Significant cost of investment which cohesion policy can help finance:– Cohesion policy has a history of financing environmental interventions

which are "investment heavy“, focussing on poor MS and regions. In the current programming period Cohesion Policy is contributing EUR 28 billion to financing interventions which help MS comply with directives in the field of water supply, wastewater and solid waste

– Funding needs in the Roadmap for moving to a competitive low carbon economy in 2050 includes the following investment needs until 2020: energy-saving building components and equipment € 200 billion, implementation of the Strategic Energy Technology Plan € 50 billion.

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• Assisting structural change:– Climate policy will likely lead to a redistribution of jobs within and across

sectors, this may require active labour market policies, in particular training (e.g. new skills for RE and EE sectors)

– lack of skills required could reduce the capacity of the economy to respond to government and EU incentives to transition to a LCE, and increase the likelihood of painful transition costs for EU MS

– Climate change will impact some regions more than others, some with high proportion of climate sensitive sectors, over the long term this may result in need for restructuring in regions heavily reliant on e.g. agriculture, tourism

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Ability of cohesion policy to deliver climate adaptation and mitigation

• Not a sectoral fund, provides the opportunity not only for financing investments, but also for integrating of climate change into all relevant activities, e.g. transport

• Cohesion Policy has a place-based approach, climate change is also highly place-specific and regionally differentiated, which requires action at the local and regional levels

• The territorial cooperation element of Cohesion Policy is particularly well-suited to address issues of a cross-border nature, e.g. adaptation issues which are linked to trans-boundary impacts, such as floods

• Multi-level governance implies that Cohesion Policy has the potential to align national, regional and local actions with EU climate change priorities by using funding as leverage

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Europe 2020 Strategy

– smart, sustainable and inclusive growth

– one of the five headline targets related to climate change (the “20-20-20” targets)

– "investing in cleaner, low carbon technologies will help our environment, contribute to fighting climate change and create new business and employment opportunities.“

– "harnessing the contribution of cohesion [policy]“ to move to a low carbon, resource efficient and climate resilient economy by 2050

– under the resource-efficient flagship initiative the Commission will work to "mobilise EU financial instruments (e.g. rural development, structural funds, R&D framework programme, TENs, EIB) as part of a consistent funding strategy, that pulls together EU and national public and private funding"

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2. Current programming period 2007-2013

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Current investment in climate change (planned 2007-2013, EU contributions only)

Investment categories Billion EUR

Rail Railways, mobile rail assets

23.9

Other sustainable transport

Urban, multimodal, IWW, intelligent transport, ports

15.4

Energy Renewable energy, energy efficiency

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Environment Risk prevention, climate change adaptation

7.8

Total 56- Cohesion policy is the single largest source of investment in climate change mitigation and adaptation from the EU Budget- 16.1 % of total Community financial contribution under Cohesion Policy for this purpose- approx. 90% of this spending under the Convergence objective

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Breakdown of planned investment on climate change 2007-2013 by Member State

Indirect investment

Direct investment

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Project examples (1)

Adaptation in the Baltic Sea Region (BaltCICA):

• prepare regions and municipalities to cope with a climate change

• Assess costs and benefits of adaptation in case studies

• Integrate latest CC research results for cost-effective adaptation strategies which focus on territorial development

• 24 partners involved from 02/2009 to 01/2012

• Total budget: €5,3 million

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Green energy for hospital in Szeged (HU)

• Old steam boilers & external pipe system replaced

• Computer controlled energy systems

• 800 m²of solar panels • Resulted in 20% energy

saving

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BioenergyTechnology Transfer Network

• Applied R&D on biofuelproduction, refining & combustion

• Training Programme “Use of Wood Fuel for Heat Production”

• Regional bioenergystrategies and development plans

• €0,89 M ERDF (of €1,3 M total)

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Tramway in Clermont-Ferrand (FR)

• New line of 14 kmsand 31 stations (2001-2006)

• -20% car traffic in city centre• Contribution to revitalise

suburbs• Creation/maintenance of

about 7000 jobs• €20.2 M ERDF (of €169 M

total)

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Cohesion policy is making a significant positive contribution, however, there is room for improvement:

• Explicit treatment of trade-offs between economic development and climate change (only 19 programmes out of a total of 246 address specific trade-offs in respect of sustainable development, only few MS and regions have carbon accounting tools)

• Stronger focus on synergies between economic development and climate change, recognise positive economic role of climate change invesments.

• Climate resilience of investment.• Low capacity in public administrations and final beneficiaries (e.g.

railway companies) linked to lack of good quality projects and slow implementation.

• Monitoring and evaluation of climate impact of policy: current practices mixed and sometimes do not provide useful information, even for investments in field of renewable energy or energy efficiency. Currently only 31,5% of Competitiveness OPs and 15,7% of Convergence OPs provide indicators for the reduction of greenhouse gas emissions.

• Strategic framework for investment: to set targets, to ensure coherent funding strategies.

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Negative trends in transport investments:

– More than 55% of planned spending on transport, a total of EUR 41.6 bn allocated to investment in motorways (both TEN-T and other), national, regional and local roads and airports;

– Implementation of road investments is ahead of the implementation of rail investments, with 34.2% of planned road infrastructure investment already allocated by September 2009, compared with 22.8% for rail infrastructure;

– for 1986-2006 comparison of a policy-on scenario based on historical data, against a counterfactual (policy off) where EU structural funds expenditures have been eliminated, shows that there is an average increase of 2% per annum in EU CO2 emissions for the period 2000-2006 compared with the policy-off scenario. This is due mainly to transport investment. (GHK, 2002)

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3. Future Cohesion Policy post-2013

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Timeline

• 19 October 2010: Budget Review (COM(2010)700)• 10 November 2010: Fifth Cohesion Report• 11 November 2010 – 31 January 2011: public consultation • 31 January/1 February 2011: Cohesion Forum• April 2011: Results of public consultation to be published

• Summer 2011: Proposal on Multi-annual Financial Perspective• Summer 2011: Legislative proposals• 2012: Common Strategic Framework (for ERDF, ESF, Cohesion Fund,

EFF, EAFRD)• End 2012: Adoption of new legislative package and expected

agreement on new budget post 2013

• 2013: Finalisation of new programming documents• 2014: Entry into force

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Ways to address climate change in future cohesion policy (1)

Invest more, invest better

Invest more – financing of investments related to mitigation and adaptation of climate change:

• direct spending: main purpose is to address climate change• indirect spending: main aim not climate change, but has

benefits for climate change mitigation or adaptation (e.g. flood management, urban transport)

Invest better - horizontal integration of climate change mitigation and adaptation into the policy, into all relevant investments:

• Impact of investment on GHG emissions• Climate resilience of investment (e.g. climate proofing of

transport infrastructure) is linked to long term financial viability of projects

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Ways to address climate change in future cohesion policy (2)

Need to remember that cohesion policy is under shared management with MS, which implies:

Commission will not:• determine what MS will invest in and how much they will spend in

each area• tell MS how to reach their climate change targets

Commission can:• Propose thematic priorities and orient MS to invest in certain areas,

linked to Europe 2020• Require MS to meet their legal obligations (including with respect to

climate mitigation targets, obligations to prepare strategies, horizontal obligations such as EIA and SEA, etc.)

• Provide incentives• Require monitoring and reporting

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Proposals of Commission on future Cohesion Policy published in 5th Cohesion Report

Aims:1. Enhancing European added

value2. Strengthening governance3. Streamlining delivery4. Architecture of cohesion policy

1.1 Strategic programming1.2 Limited number of key priorities1.3 Incentives and conditionality1.4 Improving evaluation, performance and results1.5 Stronger emphasis on new financial instruments

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New strategic programming approach (1)

EU level

MS level

Regulations Common Strategic Framework

MS-specific Commission negotiating mandate

Proposed MS strategies

Development and Investment Partnership

Contracts

Regional level

Operational Programmes Projects

Country assessment (EU2020 thematic

surveillance)

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Issues with potential implications for CC adaptation

• Thematic priorities and investment priorities: to orient spending towards Europe 2020 priorities

• Indicators: setting of clear and measurable targets and outcome indicators,

• Targets: central to the annual reports (in Europe 2020, CSF, DIPCO, OPs)

• Monitoring and evaluation: ex-ante, ongoing, impact• Performance reserve (?): at EU level to encourage progress

towards Europe 2020 targets and related national targets • Partnership: representation of local and regional stakeholders,

social partners and civil society in both the policy dialogue and implementation

• Capacity building and technical assistance: to continue, compelented with institutional conditionality

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Thank you for your attention!

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Agnes Kelemen, Policy officer, Conception, Forwards Studies and Impact