The new Regulation governing the European Structural and Investment Funds (ESI Funds) for 2014-2020 introduced several key reforms, ensuring a more strategic and complementary use of the Funds in order to exploit their full potential in reaching the EU goals of growth and job over the next decade.
In 2014-2020, €454 billion from the EU budget - €637 billion with national co-financing included - will be invested in Europe's cities and regions through 456 national and regional programmes and 79 Interregional cooperation programmes.
The importance of ESI Funds in public investment in the EU has considerably increased, as national and regional investments are declining. Between 2014 and 2016, the ESI Funds are expected to account for approximately 14% of total public investment on average, and to reach up to 70% in some Member States.
The ESI Funds are the EU’s main investment arm and important contributors to the Investment Pl an and to the Commission's priorities. To ensure maximum transparency for the public, the Commission has launched a new Open Data Platform for ESI Funds to show the progress in the implementation of ESI Funds programmes.
What is the objective of this communication?
As foreseen by the Article 16 of the Common Provisions Regulation, the Communication presents the main results of the negotiations between Member States, their partners, including regional and local actors, and the Commission on the Partnership Agreements and the programmes. It includes an overview of the key issues for each Member State in Annex II, while Annex I focuses on the Interregional cooperation programmes.
What are the main priorities for ESI Funds investments in 2014-2020?
1. Research and Innovation (R&I), Information and communications technology (ICT) and SME Development
In 2014-2020, the Funds will invest €121 billion in R&I, ICT and support to small businesses throughout Europe.
Two million companies will be directly supported by the ESI Funds, to boost their competitiveness and increase their research and innovation capacity. Almost 15 million households will have access to high-speed broadband thanks to European Regional Development Fund (ERDF) support, while almost 20 million people in rural areas will have new or improved ICT services or infrastructure with the support of the European Agricultural Fund for Rural Development (EAFRD).
2. Environment, climate change, energy and transport
With €193 billion, the highest EU budget ever allocated to investments in energy, environment, biodiversity, climate, risk management and sustainable transport, ESI Funds programmes will steer Europe on the path to a low-carbon economy. They will also create business opportunities and green jobs in sectors that have a significant growth potential.
Over the next years, thanks to ESI Funds investments, 875 000 households will benefit from thermal renovation work, over 57 000 companies will operate with improved energy efficiency, and 3.3 million additional energy users will be connected to smart grids.
Overall, the programmes will contribute to a decrease of estimated annual greenhouse gas emissions of around 30 million tons of CO2 and will support the production of more than 7 500 Mega Watt of additional renewable energy capacity – almost equal to the total electricity capacity of Slovenia and Croatia combined.
3. Employment, social inclusion, and education
A total of €120 billion will be allocated to employment, social inclusion, education and training. The Youth Employment Initiative (YEI) will support measures aiming to fight against youth unemployment.
Over 2014-2020, the European Social Fund (ESF) will help 10 million unemployed people improve their chances of finding a job. 400 000 SMEs (including cooperative enterprises and enterprises in the social economy) are expected to receive funding to invest in human capital development and skills.
4. Efficient Public Administration
The Funds will invest €4.2 billion in institutional capacity-building to support solid, modern and connected institutions throughout Europe.
How can the Commission ensure that ESI Funds investments reach their objectives?
First, the new Regulation has introduced conditions ("ex-ante conditionality") before funds can be channelled into Member States, to ensure more efficient investments. For example, smart specialisation strategies to identify particular strengths, business friendly reforms, transport strategies, measures to improve public procurement systems or compliance with environmental laws are necessary preconditions. When these were not fully met from the outset, action plans were set up for their fulfilment by 2016.
Then, the Regulation established the obligation for clear, transparent and measurable aims and targets. A performance framework was defined for each programme, detailing the investments' expected results and how progress towards these goals would be measured. Annual evaluations reporting on the implementation of the programmes are foreseen.
By 2019, the programmes and priorities that will have achieved milestones set in the performance framework will gain access to the associated performance reserve (6% of national allocations), while the ones that have seriously failed to achieve milestones may face penalties.
How are the ESI Funds contributing to the Investment Plan?
The ESI Funds fully contribute to the three pillars of the Investment Plan by leveraging public and private investment, by supporting structural reforms, and by improving access to funding.
In line with the objectives of the Investment Plan and the Commission’s Work Programme, Member States are encouraged to double the use of ESI Funds channelled through financial instruments - loans, equity and guarantees, instead of traditional grants - compared to 2007-2013. Using the leverage effect, this should bring at least €20 billion of additional investments between 2015 and 2017. Technical assistance to help Member States in the uptake of these instruments is provided by the Commission, especially through FI-compass.
The European Fund for Strategic Investments (EFSI) and the ESI Funds will both play a crucial role in delivering on EU goals of growth and jobs in the near future. These instruments have a range of differences, in terms of rationale, design, legislative framework and timeframe for implementation but the scope for common work is enormous.
They can be combined wherever it makes sense and adds value. This may be the case in certain countries or sectors, where the risks of investing are perceived as too high and therefore would make it unlikely for granting EFSI support without the presence of ESI Funds contributions.
Any project that: is economically viable; has a high societal and economic value contributing to EU policy objectives; and is in line with EU rules for investments may receive funding from both the EFSI and the ESI Funds.
In practice, joint support can take two forms:
- First option: support at the level of an individual project, where EFSI and the ESI Funds supplement the contribution provided by the project promoter and/or other private investors;
- Second option: the EFSI could directly participate in ESI Funds supported financial instruments at both EU and national level, either as investment platforms, or co-invest on a project by project basis with these instruments.
There is a huge potential for the ESIF and EFSI to complement each other; this is why the Commission will soon issue guidelines on the complementarity of the Funds, to make sure Managing Authorities make full use of these new opportunities.
How are the ESI Funds contributing to the Commission's priorities?
Detailed factsheets on the contribution of the ESI Funds to the Commission's priorities are available online:
What are the next steps?
The Communication is now transmitted to the European Parliament, the Council, the Committee of the Regions and the European Economic and Social Committee. They are encouraged to provide their comments in the course of the next months.