Modernisation of cohesion policy: Keeping Europe Together in Changing Times
- 02 Apr 2025
Yesterday, 1st of April, the European Commission proposed a series of amendments to the current legislation to modernise cohesion policy, to make it more flexible in order to help address the many new challenges that have arisen since the negotiation and approval of the current programming period in 2021.
By prioritising investment in critical technologies, defense, energy and social welfare, these reforms aim to provide Europe with a toolbox fit for the times we live in. By inviting Member States and regions to reprogramme resources from the 2021-2027 programming period, the Commission is moving to secure Europe’s future, ensure its economic growth, and protect its citizens from both current and emerging risks. Adapting cohesion policy is a matter of staying true to its core principles and its purpose of fostering growth and convergence.
Change for greater competitiveness
Upholding Europe’s edge in the face of global competition is paramount to securing long-standing prosperity for the Union. In particular, industrial innovation hinges on greater investment in critical technologies—such as those identified through the Strategic Technologies for Europe Platform (STEP) like clean tech, biotechnology or deep-tech innovation. Already positioned as the EU’s primary instrument for this objective, STEP is set to become more prominent under current reform proposals. The Commission extends the support of cohesion policy to businesses of all sizes, thus addressing industrial challenges like decarbonisation, including in the automotive sector. Given the central role of large enterprises in driving innovation and technology transfer, the Commission proposes to offer them the support of the cohesion policy in critical areas such as defence, strategic technologies, and decarbonisation. This support will help enterprises establish local supply chains and technology clusters, ensuring that the EU has the infrastructure and technological capacity to face future challenges.
The decision to include support for larger industries depends on their ability to drive research and development, steer technology transfer and enhance Europe’s capacity to innovate across a wide range of sectors, thus contributing to regional development.
Greater focus on security
The announcement of the modernisation of cohesion policy also comes when the EU’s stance on the geopolitical checkboard is changing rapidly. The 3 year-long support to Ukraine against Russia’s invasion, along with the increasing need for a home-grown coordinated European defense capability drove the Commission to launch the ReArmEU initiative only weeks ago. The demand for a greater EU-led focus on defence and security is echoed by the 30% of Europeans who consider global instability a pressing concern (Eurobarometer) and the 66% saying that the EU should take on a bigger role in protecting citizens in times of global crises (European Parliament Survey). With yesterday’s announcement, the Commission makes cohesion policy available to Member States that choose to invest more in defence industries and critical infrastructure.
The investment is entirely voluntary and at the discretion of single Member States. The availability of cohesion funds provides the necessary flexibility to respond to national needs and priorities. This is why cohesion programmes in the Eastern border regions, disproportionately affected by the Russian war of aggression against Ukraine, will benefit from higher financial incentives for the projects under the new strategic priorities.
Cohesion policy support could include investment in dual-use technologies and infrastructure, such as transport networks, which are primarily intended for civilian use but can also improve military mobility.
Taking a sip: water resilience
Water management is another priority identified in the proposed changes. With climate change leading to more frequent droughts and water shortages, the Commission put on the table measures to strengthen water resilience across the EU. The European Regional Development Fund (ERDF) will support projects aimed at improving water efficiency, digitising water infrastructure, and mitigating the impacts of desertification in compliance with, among others, the Urban Wastewater Treatment Directive. Such emphasis on water management acknowledges the impossibility to face future challenges without an efficient distribution infrastructure.
For citizens, this means ensuring a more reliable and sustainable supply of water, which is critical for both survival, food production and economic activities. Investments in water infrastructure contribute to a greener, more sustainable Europe, directly benefiting communities by improving their quality of life and mitigating the effects of climate change.
Get a Roof: tackling the housing crisis
Housing remains a key concern for many EU citizens, with 23% of respondents in a recent Eurobarometer survey highlighting the lack of affordable housing as a pressing issue. While cohesion policy had already deployed initiatives to tackle this issue, the upcoming changes allow Member States to access and mobilise more resources.
The Commission is proposing financial incentives for Member States to address this gap, particularly in cities and regions where affordable housing is scarce.
Namely, Member States and regions will also be able to leverage private and concessional financing by using a new financial instrument set up jointly with the European Investment Bank. The instrument will combine cohesion funding with the resources of the EIB and of other international financial institutions as well as national promotional and commercial banks.
The overall objective is to double the cohesion funding invested in housing from 7.5 to 15 billion.
Electric feel: support to the energy transition
The updated priorities reiterate the energy transition focus and to invest in recharging infrastructures and energy interconnectors: the structures enabling exchanges between grids, trading of electricity between different territories and the management of peak demand. This will be crucial to accelerate the energy transition and promote clean mobility, while the proposal will also make it easier to fund decarbonisation measures for Member States and regions.
Flexibility and Support for Member States
Finally, the Commission heeded to the many calls for greater flexibility in the use of funds. On this matter, the Executive Vice-President of the Commission Raffaele Fitto, addressing the press yesterday in Strasbourg, stated that the preparation of the updated priorities stands on intense months of consultations. He recalled that since taking office he has toured EU Member states, met all cohesion ministers, spoke to presidents of regions, mayors and delegates at the Committee of the Regions. “Being on the ground is crucial to understand the needs of regions” and recalling his visit to Greece, where he spoke to mayors from islands, or to Lappeenranta on the Finnish Eastern border EVP Fitto added that cohesion policy needs to ensure responses to local needs that may differ enormously from one region to another.
For this reason, Member States will be able to transfer projects from the Recovery and Resilience Facility (RRF) to cohesion policy programmes if they are unlikely to meet the 2026 deadline. Additionally, Member States will be able to receive up to 30% of their funding in advance for projects focused on strategic priorities, with the funding fully covered by the EU, ensuring no extra costs for the Member States and enhancing financial flexibility.