The Covenant of Mayors, which convened in Brussels yesterday, has received consistent praise from EU leaders since being set up in 2008, but has thus far being operating on a relatively modest budget of some €15 million per year.
The money was administered as a grant fund, managed by the European Investment Bank (EIB) to support the development of energy efficiency and sustainable energy projects in European cities and regions.
The European Commission has now pledged to significantly increase the amount of funding available for such projects, using unused money from the EU recovery package.
Speaking at yesterday's event, EU Energy Commissioner Günther Oettinger indicated that at least €115 million in unused funds will be available, and he would push for a significant percentage to support local and urban energy projects. "I would expect a serious leverage effect" from these funds, he added.
Mayors and their representatives questioned by EurActiv yesterday broadly welcomed the proposal, though many added that it was "about time" for the Commission to "put its money where its mouth is" on the role of cities and local authorities in pushing energy reform.
Paul Bevan, secretary-general of city lobby Eurocities, told EurActiv that while the proposed funds were "rather little, and rather late," they could nevertheless make a huge difference.
"Cities are desperate to act," he argued, though it is not yet clear when this new fund could be set up.
A spokesperson for the European Commission told EurActiv that approval first had to be sought to ensure that the €115 million in unused funds could in fact be diverted elsewhere, and only then could a decision be made on the new energy projects purse.
The Commission envisages that in the best-case scenario, the new fund could also be used as a vehicle for investment by the European Investment Bank or the European Bank for Reconstruction and Development, which would match the initial investment from the unused recovery money.
Oettinger went as far as to claim that the final budget could even reach 2.5 to 2.8 billion euro "if there's a strong leverage effect".
The mayors now expect swift action from the Commission, as these funds would need to be reused by the end of 2010.