Explanatory Memorandum to COM(2010)283 - Amendment of Regulation (EC) No 663/2009 establishing a programme to aid economic recovery by granting Community financial assistance to projects in the field of energy - Main contents
Please note
This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2010)283 - Amendment of Regulation (EC) No 663/2009 establishing a programme to aid economic recovery by granting Community financial ... |
|---|---|
| source | COM(2010)283  |
| date | 31-05-2010 |
The Commission adopted the award decisions for each sub-programme respectively on 9 December 2009 for the OWE and CCS sub-programmes and on 4 March 2010 for the gas and electricity infrastructure projects. It is estimated in the report from the Commission of 27 April 2010 i on the implementation of the EEPR that almost the entire EEPR financial envelope (€3.98 billion) will be committed in the course of spring 2010. An amount of around €114 million will however not be committed under the EEPR Regulation adopted on 13 July 2009. The Report indicates that this amount is not expected to change, but notes that one or more project promoters may fail, for legal, financial or technical reasons, to comply with some specific conditions for the disbursement of the grants so that more funds may finally not be committed under the EEPR Regulation adopted on 13 July 2009. The amount of uncommitted funds will be known by the end of 2010.
Energy saving is the EU's most immediate and cost-effective way of addressing the EU's strategic objectives of fighting climate change, ensuring security of energy supply and achieving sustainable economic and social development. In the spirit of the Europe 2020 strategy for sustainable growth and jobs, the development of further renewable sources and the promotion of energy efficiency would contribute to Greener Growth, building a competitive and sustainable economy, and tackling climate change. By giving support to these policies, Europe will create new jobs and green market opportunities fostering the development of a competitive, secure and sustainable economy.
Even though there is a modest improvement of the GDP growth projections for the first half of 2010, the forecasted growth rate for 2010 remains mainly unchanged at 0.7% in the EU. Furthermore, the industrial production and retail sales figures amongst others have been less promising, and investments remain weak. Equally, financial markets remain unstable and uncertain i. Adding a weak labour market, the economic crisis is still present in Europe and requires swift and effective EU action in line with policy objectives.
Providing for increased financial incentive and technical assistance is a key element to address the barriers of high up-front cost and lack of information and stimulate sustainable energy improvements. In a market constrained by the prevailing economical crises and in a time of caution by commercial banks, generating low investment rates, there are additional barriers for project financing to promote this policy area. Existing experiences across Europe demonstrate how well-targeted and well-designed financial aid policies can lead to massive improvement and succeed to tap the development potential of sustainable energy.
Investments help in sustainable energy can be most effective and beneficial when targeted at municipal and local levels. Housing energy renovation, decentralised renewable energy installations, urban mobility plans are activities that need a high workload input from skilled persons, whose jobs are not subject to delocalisation. It is therefore very intensive in terms of job creation. Besides, sustainable energy at local level contributes decisively to other policies, such as social integration, or improvement of quality of life, and attractiveness of local communities towards business and visitors.
In this context, the technical assistance and financial incentive may assist in preparing and mobilising the existing Structural and Cohesion Funds to the optimal extent.
In the 2nd Strategic Energy Review i, the European Commission's announced its intention to launch a Sustainable Energy Financing Initiative in cooperation with the European Investment Bank and other International Financial Institutions (IFIs) in order to establish appropriate financing mechanisms for the massive development of energy efficiency and renewable energies.
Provision of financial assistance through financial intermediaries such as IFIs enables to use the EU funding in the most efficient way and to maximise its impact in the short term, with the highest possible benefits on economic activity and job creation. Through the financing of technical assistance to project development combined with innovative financial incentive schemes (such as guarantees, soft loans with favourable interests, blended instruments and project financing), a high leverage factor between the EU funding and the total investment mobilized can be guaranteed.
These elements were taken into account when drawing the present proposal.
It is proposed to use the uncommitted funds under Chapter II of the EEPR Regulation for the creation of a dedicated financial instrument to support energy efficiency and renewable initiatives within the Sustainable Energy Financing Initiative. The financial facility shall support the development of bankable energy efficiency and renewable energy projects and facilitate the financing of investments in energy efficiency and renewable energy, in particular in urban settings. In order to foster a large number of decentralised investments, municipal, local and regional public authorities will be the beneficiaries. The approach will build up on the success of the Covenant of Mayors, signed up by more than 1600 regions and cities across Europe.
The sustainable energy projects to be financed include public and private buildings, high energy efficient combined heat and power (CHP) and district heating/cooling networks (in particular from renewable energy sources), decentralised renewable energy sources embedded in local settings, clean urban transport and local infrastructure such as smart grids, efficient street lighting, and smart metering.
The facility shall be implemented by one or several financial intermediaries such as IFIs. The selection will be operated on the basis of the demonstrated capacity of the financial intermediaries to use the funding in the most efficient and effective way. Financial intermediaries shall put in place financial schemes that guarantee a high leverage factor between the EU funding and the total investment in order to raise significant investments in the EU. Reaching this leverage factor shall be a necessary precondition for the financial assistance. The financial intermediaries shall abide to transparent management and reporting procedures to allow strict Commission's supervision of the use of the funds; no funding other than management fees or costs related to the establishment and implementation of the facility shall be made available to those financial intermediaries. Finally, negotiations with the IFIs can be pursued in parallel to the legislative procedure which shall facilitate early commitment of the funds.
In compliance with the EEPR Regulation, the facility shall be limited to the financing of measures that have a rapid, measurable and substantial impact on economic recovery within the EU, increased energy security and reduction of greenhouse gas emissions.
The criteria set out in the EEPR Regulation adopted on13 July 2009 should fully apply to the selection of the measures financed under the facility. These criteria include the soundness and technical adequacy of the approach, the soundness of the financial package, the maturity of the project, the extent to which lack of access to finance is delaying the implementation of the action and EEPR assistance will stimulate public and private finance, as well as the socioeconomic and environmental impacts. The geographical balance of the projects should also be taken into account as an essential element.
This proposal is fully in line with the Declaration of the Commission i referred to in Recital 7 of the EEPR Regulation i, indicating its intention to propose, if appropriate, when reporting in 2010 on the implementation of the Regulation, measures allowing for the reallocation of uncommitted funds to the financing of projects in the areas of energy efficiency and energy from renewable sources.