Moving EU money to Juncker Plan could hurt transport investment

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV.COM Ltd.

London's Crossrail project is an example of how transport investment can bring economic benefits. [Department for Transport/Flickr]

Reallocating Connecting Europe Facility and Horizon2020 money to the Juncker Investment Plan could prevent sustainable urban and public transport infrastructure getting the finance it needs, write Alain Flausch and Karen Vancluysen.

Alain Flausch, is secretary general of UITP, which represents more than 400 urban, suburban and regional public transport operators and authorities from all member states. Karen Vancluysen, is POLIS secretary general. POLIS is the network of over 65 cities and regions working on innovative urban mobility.

The European Parliament together with the Council are discussing the Commission’s proposal for a European Fund for Strategic Investment (EFSI), the financial instrument of European Commission President Juncker’s Investment Offensive, which will seek to mobilise €315 billion in private and public investment across the EU.

This proposal is currently in the trialogue phase where all three aforementioned institutions discuss the final revision of the text behind closed doors. Within the next month, the dossier will be submitted to a last vote by the Council and Parliament for its final adoption.

UITP and POLIS fully support the creation of this new financial mechanism aiming to mobilise additional investments in areas including transport infrastructure, urban development, energy and energy efficiency, with the overall objective of boosting the European economy.

However, UITP and POLIS also strongly support the vote in the Transport Committee of the European Parliament to reject the proposal to reallocate part of the Connecting Europe Facility (CEF) and Horizon 2020 programmes’ budgets to the EFSI mechanism (Article 18 and 19). As rightly underlined by the Transport Committee in its vote last month, the CEF is meant to support the development of the Trans-European transport network, through direct co-financing of the European Union and based on commonly defined criteria.

Those criteria put a high focus on environmental sustainability, helping the European Union to achieve the goals of the 2011 White Paper on transport in terms of modal shift, reduction of greenhouse gas emissions and of the oil dependency of the transport sector. Public transport projects, including urban nodes, are recognised to have a key role in achieving those objectives, and are eligible for the CEF.

The EFSI, on the other hand, is meant to target socially and economically viable projects through risk sharing and financial guarantees, thus with different structures and objectives. The mechanism is said to support projects in a broad range of areas, including but not specifically focusing on transport. It does not focus either on supporting environmental goals, but rather on projects able to attract private investors.

Moreover, EFSI will target short/medium term projects with a quick return on investment. It is clear that the CEF and the EFSI have complementary yet different objectives. It would thus be counterproductive to reallocate resources from one fund to the other.

There is a risk that the allocation of CEF and H2020 money to the EFSI will be at the expense of infrastructure and innovation projects, including sustainable urban and public transport projects, which are eligible under CEF and H2020, but have a long return on investment. Urban and public transport may thus not be eligible under EFSI, while still playing a key role in supporting innovation and economic development in the longer term.

Dominique Riquet, of the Liberals, and Ines Ayala Sender, of the Socialists & Democrats (S&D), co-rapporteurs on this dossier for the TRAN Committee, share the same views on this topic: “We do support the Juncker Plan but we cannot accept the idea of diverting resources from programmes already dedicated to investment and recently entered into force. Also, we keep hearing about creating more leverage effect but the CEF actually foresees the possibility to use innovative financial instruments, if necessary in combination with grants!

“The European Commission, following the European Parliament votes on the EFSI, should also pay particular attention to financing urban mobility projects which can make a significant contribution to growth and employment in Europe.”

Ismail Ertug, coordinator of the S&D in the TRAN Committee, confirms this perspective: “Allocating funds from CEF to EFSI could jeopardise the goals we have set in the Transport White Paper 2011, as EFSI and CEF project criteria do not necessarily overlap. This can cause unnecessary confusion for regional and local authorities when developing urban and public transport projects.”

Indeed, urban areas play a major role in the European economy. 80% of the European Union’s GDP is generated in urban areas, which gather about 75% of the European population.

Urban areas are key points in most, if not all, journeys: they do not only represent the first and last miles of long distance journeys, they also serve as connecting points, linking transport modes and corridors. Well-developed and maintained urban infrastructure greatly helps in removing bottlenecks. Besides, developing urban mobility helps to make European funding actions visible to the citizen, who sees a direct, close, immediate benefit.

For instance, linking Orly airport to Paris by extending metro line 14 and Roissy Charles de Gaulle airport with the future metro line 17 is expected to provide new rail transfer opportunities for millions of public transport customers by offering direct connections between Paris airports and the centre of Paris. In our 21st Century, medium and long distance travel – both domestic and international – have become more and more common and frequent in Europe, bringing new requirements not only to the air or rail national and international services, but also to the local and regional transport systems of the European metropolises considered as global urban hubs.

Similarly, the Crossrail project in London will create overall economic benefits which exceed the initial investment (£42 billion vs £15 billion). Businesses in London are voluntarily playing a key role in funding the system, acknowledging the significant return on investment it will generate for them.

Urban nodes therefore deserve great attention when setting the priorities of European financing programmes. Supporting sustainable mobility towards and within European cities is the best way to reconcile the economic and environmental sustainability objectives that are on the EU agenda, to the benefit of European citizens.

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