Mayors to receive extra EU cash for energy projects

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This article is part of our special report Rural Energy.

European Commission President José Manuel Barroso yesterday (4 May) pledged to divert unused EU stimulus cash into a fund to help regions and cities become more energy efficient. "About time," said EU mayors meeting in Brussels.

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.

European Parliament President Jerzy Buzek welcomed the mayors to Brussels, informing them that their role was important and crucial as they are "closer to EU citizens than any government or institution".

Claude Turmes, vice-president of the Greens in the European Parliament and a self-professed "promoter" of the Covenant of Mayors, stated that "the European Commission is set to finally deliver funding for green investments in cities and municipalities, as promised by Commission President Barroso, thanks to pressure from the Greens".

"Up to €400 million will be made available from this year's EU budget out of the non-spent funds from the EU recovery package (1). This financial support will now be dedicated to a special fund (2) to promote green investments in municipal infrastructure available to thousands of local authorities in Europe."

"At a moment when the EU's solidarity is more than ever at stake, helping local communities in the EU to invest and create thousands of local jobs while reducing the EU's energy dependency is exactly the type of decision which would help regain the confidence of local decision-makers and the citizens they represent."

Speaking at the Covenant of Mayors signing ceremony in the European Parliament, Committee of the Regions (CoR) Vice-President Ramón Luis Valcárcel Siso argued that "many cities and towns lack the resources to face these issues on their own, and financial and administrative support on the ground is vital if they are to succeed. That is why the role of regions as supporting structures within the Covenant of Mayors is so important. The Committee of the Regions will focus its efforts on encouraging more of these important stakeholders to take the Covenant of Mayors pledge".

The European Commission considers cities to be at the heart of the EU's sustainable development efforts. In January 2006, it launched a Thematic Strategy on the Urban Environment. But the strategy is limited in scope, since the Union has no direct competence in urban affairs. Meanwhile, EU sectoral policies in the areas of transport, environment and social affairs significantly impact upon cities.

EU ministers responsible for urban and spatial development also attempted to lay the foundations for a European urban policy by signing the Leipzig Charter on Sustainable European Cities in May 2007.  

In January 2008, nearly 100 mayors from across Europe signed up to the Commission-backed Covenant of Mayors, a commitment by city leaders to go beyond the EU's own stated aim of slashing CO2 emissions by 20% by 2020.Since then some 1300 local authorities in the EU have signed up.

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