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Mr Lemaître, one year ago when you gave an interview to Panorama magazine we spoke a lot about the COVID-19 pandemic and how Cohesion policy was one of Europe’s first responders to the crisis and an instrument for recovery. Can you tell us how did this progress since then?
Indeed, Cohesion policy has been at the forefront of the European response: we empowered Member States to mobilise almost €23 billion of unspent cohesion policy resources – of which €13 billion was available in just the first six months. These emergency funds were used to purchase vital medical equipment, keep businesses afloat during lockdowns and provide some basic income to those most heavily affected. Without this short-term help enabled by the legislative packages CRII and CRII+, which we were able to deploy very speedily, the consequences for our people and economies would have been much more devastating. We then followed with REACT-EU (Recovery Assistance for Cohesion and the Territories of Europe), one of the largest programmes under Next Generation EU amounting to EUR 50.6 billion in new and additional financial support. REACT-EU continued and extended the crisis response and crisis repair measures while bridging the gap to long-term recovery by supporting projects that not only address the consequences of the crisis, but also invest in operations contributing to a green, digital and resilient recovery of the economy. And, finally, we are now focusing on the various elements of the CARE package – Cohesion’s Action for Refugees in Europe – that provides a rapid response to the consequences of the Russian invasion of Ukraine and represents an extended response to the ongoing impact of the COVID-19 pandemic.
This leads right into our next question: at the beginning of the year, as the continent was slowly leaving the height of the pandemic behind, the war in Ukraine started. Can you provide more details about the CARE package you have just mentioned?
Millions of Ukrainians have fled the Russian invasion of their country towards the safety of the European Union. To help Member States and regions deal with this inflow the Commission has put forward two proposals adopted in record speed this past April – CARE and the increased pre-financing from REACT-EU resources (that we informally refer to as CARE 2). CARE includes targeted changes to the 2014-2020 legal framework established for cohesion policy, as well as to the Fund for European Aid to the Most Deprived (FEAD) regulation. It can finance investments in infrastructure, equipment, products and health and may cover anybody arriving in the EU as a result of the Russian aggression, irrespective of their status. So far, almost ten million people arrived in the EU from Ukraine through Poland, Slovakia, Hungary, and Romania’s border crossing points. Member States have been financing the first reception measures from national budgets, including accommodation, basic food and material aid, financial assistance, medical services and healthcare, transport, access to labour market, social and legal assistance, allowances for hosting households, education, and much more. Allow me to recall that following the CARE proposals, such measures that started after 24 February could be eligible for retroactive reimbursement by the Commission. However, the broader economic impact of Russian aggression has been more severe than initially anticipated when preparing the initial CARE package. Many stakeholders raised concerns about concrete difficulties encountered in the implementation of investments supported by cohesion policy under 2014-2020 programmes, which were severely impeded by shortages of materials and in the labour force. We have reacted promptly by adopting a proposal for FAST (Flexible Assistance for Territories) – CARE. This proposal entails a further set of flexibility measures to successfully finalise the 2014-2020 investment cycle, and contribute to alleviating the budgetary impact on Member States, by increasing pre-financing and co-financing rates in a targeted way in the 2021-2027 Common Provision Regulation.
Besides the immediate support for those fleeing Ukraine, we see effects reverberating on all EU citizens, such as the increasing and ever-expanding energy crisis. Can you provide concrete examples of cohesion policy support for this particularly difficult area?
Following the Russian invasion of Ukraine, the Commission adopted on 8 May a Communicaton on ‘REPowerEU: Joint European Action for more affordable, secure and sustainable energy’. Ten days later, concrete actions complemented the Communication. Such actions aim at making Europe independent from Russian fossil fuels well before 2030. With Russia providing more than 40 % of the EU’s total gas consumption, 27 % of oil imports and 46 % of coal imports, the case for a rapid, clean energy transition has never been stronger and clearer. Now even more than in the past, saving energy is the top priority for actions delivered through cohesion policy investments to help Member States and regions eliminate our dependence on Russian fossil fuels.
By the end of this year, we plan to adopt a delegated act on simplified cost options. This will target energy efficiency and renewables, and it will enable authorities to proceed more quickly with the reimbursement of related investments. We are working with Member States and regions on the programmes for the 2021-2027 period, to build on past investments and further contribute to a clean, secure and affordable energy system in the EU. Cohesion policy plays a key role in boosting investments in new renewable technologies. Nevertheless, it can do even more, for instance by supporting further investments in offshore energy, innovation in mature Renewable Energy Sources (RES) such as solar or onshore wind, biomethane and renewable based hydrogen, including the storage aspects.
We need to develop EU-wide value chains and reinforce existing ones in key sectors such as hydrogen, batteries, solar or offshore renewable energies. The industrial and energy transitions constitute a challenge and at the same time an immense opportunity and they need to go hand in hand. We have seen many valuable plans in this regard for the 2021-27 programmes, not least those on hydrogen. However, there is room for additional actions and I encourage all authorities and stakeholders to do more with our available support, which include those on smart specialisation strategies and interregional innovation instruments.
We also need to focus on people and governance, in particular in terms of the capacities and expertise available in administrations and in the private sector, to design and implement the needed projects. In the REPowerEU package, we have proposed to launch a specific technical assistance support instrument for regional and local energy agencies. We would be happy to work with managing authorities experienced in this as well as others willing to further explore and develop such agencies.
To give you some concrete examples, we have also launched several initiatives and financial instruments throughout the summer to provide concrete support in fighting the energy crisis on all fronts. For instance, within the Urban Innovative Actions (UIA) programme, which was launched for cities to test new and unproven solutions to address urban challenges, there are very innovative projects on energy transition and energy poverty. Such projects in Gothenburg, Paris and Viladecans (Barcelona) promote behavioural change, community approaches and the take up of low carbon technologies such as nature-based solutions to heat/cool buildings and neighbourhoods. Many cities enrolled in UIA figure among the 100 that are part of the climate-neutral and smart cities mission. We also launched the fi-compass model deployed by REGIO and the European Investment Bank, which offers an attractive combination of grants and financial instruments in the area of energy efficiency. It will help encourage deeper renovations, while also improving affordability for low-income households suffering from energy poverty.
Seeing the inflationary effect stemming from the war and the post-pandemic recovery, what does the Commission do to address the difficulties that rising prices in various sectors represent for cohesion policy projects?
We are aware of the difficulties Member States face regarding cohesion policy projects against the backdrop of overall high inflation, and in particular the construction sector. The Commission has issued guidance documents on how to tackle rising energy prices, procurement issues and eligible costs for major projects. National authorities can modify the amounts of support set out in the grant agreements signed with beneficiaries to take into account changing circumstances (including for major projects), as long as the relevant EU and national rules are respected. It is the responsibility of the Member States and the contracting authorities to manage grant agreements and ongoing contracts on a case-by-case basis.
More fundamentally, through FAST CARE we are proposing to make it much easier in 2021-2027 to continue and finalise projects started under the 2014-2020 programmes. This should allow projects to take account both of delays due to shortages and of prices increases.
C’est la rentrée: what do you see as the immediate priorities for regional and urban development policies in the following months?
I would first again refer to FAST CARE, which is expected to be approved by the co-legislators in October. The sooner we see the package adopted, the faster Member States will have the additional flexibility and support to face the present difficult context. Equally important, we want to finalise the adoption of all the Partnership agreements and programmes for 2021-2027. We have so far adopted 19 Partnership agreements with 19 Member States totalling some € 330 billion to support a green, digital, social and better-connected Europe in the years to come. We have also adopted some 100 funding programmes, which is an important milestone – but there are another 290 to go. All programmes must be adopted by the end of 2022; otherwise, the 2022 allocation will be lost. We will work around the clock with the Managing Authorities to get over the finishing line before the end of the year.
Other important policy initiatives are also in the pipeline, with notably the forthcoming Communication addressing the situation of regions facing a loss of talents. A first regional outlook is under preparation. Once launched, these yearly outlooks will provide a concise picture of where we are with EU cohesion at the regional level. This will allow, in a changing and unpredictable environment, to ensure the necessary on-going political focus on cohesion challenges, otherwise limited to the years of publication of the cohesion reports.
Lastly, it is also already time to prepare for the future and a reflection group is being set-up by Commissioner Elisa Ferreira to sharpen our reflections on the main challenges to be addressed by cohesion policy beyond 2027.