Types of Funding
The EU awards grants to organisations and, occasionally, individuals, to help them carry out projects that further its policies and objectives. Grants are usually in the form of complementary financing meaning that the beneficiary organisation will also have to put up a percentage of the funding for their project.
Loans, guarantees and equity
The EU provides loans, guarantees and equity as forms of financial assistance to support its policies and programmes.
Prizes and awards
Prizes are rewards to winners of contests under a range of EU initiatives.
The Commission uses public contracts to buy services, works and goods from the market for its internal use. They are selected via calls for tenders and not considered a form of EU funding.
Regional Policy Funds
Regional policy is the main EU investment strategy under the EU's cohesion policy (2021-2027). The policy is delivered through five funds, which together form the European Structural and Investment Funds (ESIF). The European Regional Development Fund and the Cohesion Fund deliver the majority of the financing. They are jointly administered by the European Commission and national authorities in the EU countries. With the political agreement by the European Parliament and the Council on the Commission's proposals for 2021-2027, all instruments related to cohesion policy have now been agreed and final texts are pending formal approval by the European Parliament and the Council.
Five main objectives will drive EU investments in 2021 to 2027, including two which are relevant for urban mobility:
- a more Connected Europe, with strategic transport and digital networks
- a Greener, carbon free Europe, implementing the Paris Agreement and investing in energy transition, renewables and the fight against climate change.
European Regional Development Fund (ERDF)
- The ERDF promotes balanced development in the different regions of the EU.
- ERDF finances INTERREG which covers four interregional cooperation programmes. While each programme can support urban transport projects, URBACT specifically focuses on fostering sustainable integrated urban development. URBACT is a European exchange and learning programme that promotes sustainable urban development and helps cities work together to develop pragmatic solutions to urban challenges. URBACT is co-financed by the European Regional Development Fund, in all EU countries, Norway and Switzerland.
- Urban Innovative Actions (UIA) is an Initiative of the European Union that provides urban areas throughout Europe with resources to test new and unproven solutions to address urban challenges. The assessment study of UIA published in February 2021 recommends retaining fundamental elements of the instrument, as well as revising the selection and implementation process with a view to improving the operational readiness of projects and their relevance to Cohesion Policy 2021-2027.
Cohesion Fund (CF)
The CF supports transport and environment projects and is aimed at Member States whose Gross National Income (GNI) per inhabitant is less than 90% of the EU average.
Connecting Europe Facility (CEF)
CEF was created to accelerate the development of transport infrastructure across the EU. European Regional Development Fund and Cohesion Fund interventions are planned in close cooperation with the support provided from the CEF, to ensure complementarity and avoid duplication of efforts.
A provisional agreement has been reached for adaptations to the CEF programme. While certain provisions, such as budget, remain open pending decisions on the EU’s overall long-term budget, the total proposed transport budget amounts to €27.2 billion.
In transport, the new CEF programme seeks to shift the focus to decarbonisation, and making transport connected, sustainable, inclusive, safe and secure. The proposed budget reflects this rebalancing: 60 % of transport resources would go to the development of basic infrastructure and 40% to modernising the existing network.
In 2019, the European Commission (EC) together with the European Investment Bank (EIB) launched a new CEF Transport Blending Facility, serving as a pilot for the next financial period. This is an innovative financial instrument to support projects contributing to the environmental sustainability and efficiency of the transport sector in Europe. With an initial budget of EUR 200 million from the EU budget, the Facility will finance investments in the European Railway Traffic Management System (ERTMS) and in Alternative Fuels infrastructure, leveraging funds from the EIB, National Promotional Banks and private sector.
Horizon Europe is the new EU Research and Innovation programme which succeeds the previous programme, Horizon2020. Horizon Europe has been allocated a budget of approximately €95.5 billion of funding to be made available over 7 years (2021 to 2027) in areas including energy and transport.
Horizon Europe incorporates 5 research and innovation missions. Mission areas which are relevant for urban mobility include:
The first Horizon Europe Strategic Plan (2021-2024) is expected to be adopted in February 2021. The European Union presented the first Work Programme under Horizon Europe for the European Research Council (ERC), which includes the addition of a new panel focused on Human Mobility, Environment and Space. Further work programmes are expected to be published by April 2021.
Horizon Europe will also support the Clean Hydrogen Joint Undertaking, building on the work of the Fuel Cells and Hydrogen Joint Undertaking
This aims to accelerate the commercial deployment of hydrogen-based energy and transport solutions across Europe through a total investment of €1.30 billion.
European Investment Bank
The European Investment Bank (EIB), known as the EU’s bank, is owned by the EU’s Member States. The EIB offers finance and expertise for projects that support innovation, small and medium enterprises (SMEs), infrastructure and climate action. Lending, blending and advising are the three main instruments utilised by the EIB. Some of the most relevant instruments from the perspective of urban mobility are:
- Currently, there are 14 different instruments contributing to supporting investment in the EU, the European fund for strategic investments (EFSI) being the main one. The Commission is proposing to build on the success of the EFSI model and benefitting from economies of scale by merging all instruments currently available to foster investment in the EU.
- The EU budget provides a €26.2 billion guarantee to support strategically important projects across the EU. By crowding in private and public investments, the Commission expects the InvestEU fund to trigger more than €372 billion in additional investment across the EU between 2021 and 2027.
- InvestEU is intended to support four policy areas:
- sustainable infrastructure,
- research, innovation and digitalisation;
- small and medium-sized businesses;
- social investment and skills.
- The InvestEU Portal allows project promoters to reach investors that they may not be able to reach otherwise. The Portal continues the work started under the European Investment Project Portal (EIPP) and is the online EU ‘marketplace’ connecting EU-based project promoters to investors worldwide.
- The InvestEU Advisory Hub will become operational by the end of 2021. It is envisioned as the central entry point for project promoters and intermediaries seeking advisory support and technical assistance related to centrally managed EU investment funds. Managed by the European Commission and financed by the EU budget, the hub connects project promoters and intermediaries with advisory partners, among them the European Investment Bank Group, who work directly together to help projects reach the financing stage. The European Investment Advisory Hub provides funding advice in the meantime.
Safer Transport Platform (STP) – Road Safety Advisory
- The STP – Road Safety Advisory as hosted by the European Investment Advisory Hub (the Hub), is a gateway to advisory services to support the uptake of funding and financing opportunities for projects that improve road safety.
- The European Commission has put forward a new and ambitious road safety agenda, which includes a Road Safety Policy Framework for 2021-2030 and a Strategic Action Plan on Road Safety.
Loan Guarantee Instrument for Trans-European Transport Network Projects (LGTT)
- The LGTT can partially cover risks in public-private-partnership transport projects.
- ELENA is a joint initiative by the EIB and the European Commission under the Horizon 2020 programme. ELENA provides grants, mainly to cities and regions, for technical assistance focused on the implementation of energy efficiency, distributed renewable energy and urban transport projects and programmes.
- The European Commission has allocated a further €35 million towards the initiative with €5 million dedicated to support projects across its sustainable transport portfolio.
- FELICITY is a joint initiative of the European Investment Bank (EIB) and the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ). It supports a number of urban sub-sectors including public transport and infrastructure
European Energy Efficiency Fund (EEEF)
- The EEEF aims to promote a sustainable energy market and climate protection by attracting additional capital into climate financing.
InnovFin financing tools
Available under Horizon 2020, this tool covers a wide range of loans, guarantees and equity-type funding.
Special Support and Financial Instruments
- LIFE is the EU's financial instrument for the environment, nature conservation and climate action. It is managed by the European Commission’s DG Environment and DG Climate Action. Under the theme of climate change mitigation, projects focusing on the efficient use of energy in the transport sector are supported.
- The budget for 2014–2020 is set at €3.4 billion in current prices (2021). For the next long-term EU budget 2021-2027, the Commission is proposing to increase LIFE funding by almost 60%.
The EIB, together with the European Commission, has set up four special support instruments:
- Provides technical assistance to prepare high-quality major projects to be financed by the ERDF and CF, including CEF projects. It targets assistance on infrastructure projects which are defined as 'major' projects in the Common Provisions Regulation.
- Promotes the use of financial engineering instruments to improve access to finance for SMEs via Structural Funds interventions.
- Supports sustainable urban development and regeneration through financial engineering mechanisms.
Provides both technical assistance and financial support to non-bank micro-credit providers and helps them to improve the quality of their operations, to expand and to become sustainable.
NextGenerationEU which is implemented alongside the European Union’s long term budget, is a €750 billion temporary recovery instrument to help repair the immediate economic and social damage brought about by the coronavirus pandemic.
NextGenerationEU provides additional funding to initiatives outlined above, including InvestEU, the ERDF, having previously provided additional funding for Horizon 2020
Recovery and Resilience Facility (RRF)
The central component of NextGenerationEU is the Recovery and Resilience Facility (RRF) which provides €672.5 billion in loans and grants available to support reforms and investments undertaken by EU countries. Member states are developing RRF plans to access funds under this initiative, which aims to mitigate the socio-economic impacts of the coronavirus pandemic make European economies and societies more sustainable, resilient and better prepared for the challenges and opportunities of the green and digital transitions.
Recovery Assistance for Cohesion and the Territories of Europe (REACT-EU)
Within NextGenerationEU, €47.5 billion is allocated to REACT-EU. The funds will be made available to the:
- European Regional Development Fund (ERDF)
- European Social Fund (ESF)
- European Fund for Aid to the Most Deprived (FEAD)
The additional funds will be provided in 2021-2022 and in 2020 through a targeted revision to the current financial framework.