Legal provisions of COM(2020)453 - Public sector loan facility under the Just Transition Mechanism

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dossier COM(2020)453 - Public sector loan facility under the Just Transition Mechanism.
document COM(2020)453 EN
date July 14, 2021

CHAPTER I - GENERAL PROVISIONS


Article 1

Subject matter and scope

This Regulation establishes the public sector loan facility (the ‘Facility’) for the duration of the 2021-2027 MFF in support of public sector entities by combining grants from the Union budget with loans granted by the finance partners, and sets out the objectives of the Facility. It lays down rules for the grant component of the Facility, covering in particular its budget, the forms of Union support and provisions on eligibility.

The Facility shall provide support benefiting Union territories facing serious social, economic and environmental challenges deriving from the transition towards the Union’s 2030 climate target and the objective of climate neutrality in the Union by 2050.

Article 2

Definitions

For the purposes of this Regulation, the following definitions apply:

(1) ‘administrative agreement’ means a legal instrument establishing the cooperation framework between the Commission and a finance partner setting out the respective tasks and responsibilities for the implementation of the Facility in accordance with this Regulation;

(2) ‘beneficiary’ means a legal entity established in a Member State as a public law body or established as a body governed by private law entrusted with a public service mission, with which the Commission has signed a grant agreement under the Facility;

(3) ‘finance partners’ means the EIB, other international financial institutions, national promotional banks and financial institutions, including private financial institutions, with which the Commission signs an administrative agreement to cooperate within the Facility;

(4) ‘project’ means any action identified by the Commission as being eligible for Union support under the Facility, intended to accomplish an indivisible task of a precise economic or technical nature, which has a pre-defined objective and a set period during which it must be implemented and finalised;

(5) ‘territorial just transition plan’ means a plan established in accordance with Article 11 of Regulation (EU) 2021/1056 and approved by the Commission;

(6) ‘loan scheme’ means a loan granted to a beneficiary by finance partners that is aimed at financing a set of several pre-determined projects under the Facility;

(7) ‘less developed region’ means a less developed region as referred to in Article 108(2) of Regulation (EU) 2021/1060.

Article 3

Objectives

1. The general objective of the Facility is to address serious social, economic and environmental challenges deriving from the transition towards the Union’s 2030 climate and energy targets and the objective of climate neutrality in the Union by 2050 at the latest, set out in Regulation (EU) 2021/1119, for the benefit of the Union territories identified in the territorial just transition plans.

2. The specific objective of the Facility is to increase public sector investments which address the development needs of the territories identified in the territorial just transition plans, by facilitating the financing of projects that do not generate sufficient streams of revenues to cover their investment costs, in order to prevent the replacement of potential support and investment from alternative resources.

3. In pursuing the specific objective referred to in paragraph 2, this Regulation also aims to ensure that advisory support for the preparation, development and implementation of eligible projects, where necessary, including support for the preparation of projects prior to the submission of the application, is provided. That advisory support shall be provided in accordance with the rules and implementation methods for the InvestEU Advisory Hub established by Article 25 of Regulation (EU) 2021/523 of the European Parliament and of the Council (19).

Article 4

Horizontal principles

1. Respect for fundamental rights and compliance with the Charter of Fundamental Rights of the European Union, and in particular gender equality, shall be ensured, as appropriate, throughout the preparation, evaluation, implementation and monitoring of eligible projects.

2. Beneficiaries and the Commission shall avoid any discrimination based on gender, racial or ethnic origin, religion or belief, disability, age or sexual orientation throughout the implementation of the Facility. In particular, accessibility for persons with disabilities, when relevant, shall be taken into account throughout the preparation and implementation of eligible projects.

3. The objectives of the Facility shall be pursued in line with the United Nations Sustainable Development Goals, the European Pillar of Social Rights, the ‘polluter pays’ principle, the Paris Agreement and the ‘do no significant harm’ principle.

Article 5

Budget

1. Without prejudice to additional resources allocated in the Union budget for the 2021-2027 period, the grant component of the Facility shall be financed from:

(a) resources from the Union budget at an amount of EUR 250 000 000 in current prices; and

(b) assigned revenue as referred to in paragraph 2 up to a maximum amount of EUR 1 275 000 000 in current prices.

2. The assigned revenue referred to in point (b) of paragraph 1shall be provided by repayments stemming from financial instruments established under the programmes listed in Annex I to this Regulation, up to a maximum amount of EUR 275 000 000, and from the surplus of the provisioning for the EU guarantee established by Regulation (EU) 2015/1017, up to a maximum amount of EUR 1 000 000 000.

3. The resources and assigned revenue referred to in paragraph 1 may be complemented by financial contributions from Member States, from third countries and from bodies other than those set up under the TFEU or the Treaty establishing the European Atomic Energy Community. Those financial contributions shall constitute external assigned revenue within the meaning of Article 21(5) of the Financial Regulation.

4. By way of derogation from point (f) Article 21(3) of the Financial Regulation, resources stemming from repayments referred to in paragraph 2 of this Article shall constitute external assigned revenue within the meaning of Article 21(5) of the Financial Regulation. By way of derogation from point (a) of Article 213(4) of the Financial Regulation, the resources stemming from surplus of the provisioning for the EU guarantee referred to in paragraph 2 of this Article shall constitute external assigned revenue within the meaning of Article 21(5) of the Financial Regulation.

5. An amount up to 2 % of the resources referred to in paragraph 1 may be used for technical and administrative assistance for the implementation of the Facility, such as preparatory, monitoring, control, audit and evaluation activities, including in relation to corporate information technology systems, as well as administrative expenditures and fees of the finance partners.

6. Resources up to an amount of EUR 35 000 000 included in those referred to in paragraph 1 shall be provided for activities set out in Article 3(3), out of which at least EUR 10 000 000 shall support the administrative capacity of beneficiaries, in particular in the less developed regions.

7. Budgetary commitments for actions extending over more than one financial year may be broken down over several years into annual instalments.

CHAPTER II - UNION SUPPORT


Article 6

Form of Union support and method of implementation

1. Union support provided under the Facility shall be provided in the form of grants in accordance with Title VIII of the Financial Regulation.

2. Union support provided under the Facility shall be implemented in direct management in accordance with the Financial Regulation.

Article 7

Availability of resources

1. The resources referred to in Article 5(1) and (3), after deduction of a provision for technical and administrative expenditure referred to in Article 5(5), shall be used to finance projects in accordance with paragraphs 2 and 3.

2. For grants awarded pursuant to calls for proposals published not later than 31 December 2025, Union support awarded to eligible projects in a Member State shall not exceed the national shares set out in Annex I to Regulation (EU) 2021/1056.

3. For grants awarded pursuant to calls for proposals published as from 1 January 2026, Union support awarded to eligible projects shall be provided without any pre-allocated national share and on a competitive basis at Union level until the exhaustion of remaining resources. The award of such grants shall take into account the need to ensure the predictability of investment and the promotion of regional convergence, paying special attention to less developed regions, in accordance with the award criteria as provided for in Article 14(2).

Article 8

Administrative agreements with finance partners

Prior to the implementation of the Facility with a finance partner, the Commission and the finance partner shall sign an administrative agreement. The agreement shall set out the respective rights and obligations of each party to the agreement, including audit and communication arrangements including in particular the obligation to publish information on each project financed through the Facility and the scope of loan schemes.

CHAPTER III - ELIGIBILITY


Article 9

Eligible projects

1. Only projects that contribute to the objectives set out in Article 3 and that fulfil all the following conditions shall be eligible for Union support under the Facility:

(a) the projects achieve a measurable impact, and include output indicators where appropriate, in addressing serious social, economic and environmental challenges deriving from the transition towards the Union’s 2030 climate and energy targets and the objective of climate neutrality in the Union by 2050 at the latest and benefit territories identified in a territorial just transition plan, even if the projects are not located in those territories;

(b) the projects do not receive support under any other Union programmes;

(c) the projects receive a loan by a finance partner under the Facility; and

(d) the projects do not generate sufficient streams of revenues to cover their investment costs, in order to prevent the replacement of potential support and investment from alternative resources;

2. By way of derogation from point (b) of paragraph 1, projects receiving Union support under the Facility may also receive advisory and technical assistance support from other Union programmes for their preparation, development and implementation.

3. The Facility shall not support activities excluded under Article 9 of Regulation (EU) 2021/1056.

Article 10

Eligible persons and entities

Notwithstanding the criteria set out in Article 197 of the Financial Regulation, only legal entities established in a Member State as a public law body or established as a body governed by private law entrusted with a public service mission, shall be eligible to apply as potential beneficiaries under this Regulation.

CHAPTER IV - GRANTS


Article 11

Grants

1. Grants shall take the form of financing not linked to costs in accordance with point (a) of Article 125(1) of the Financial Regulation.

2. The amount of the grant shall not exceed 15 % of the amount of the loan provided by the finance partner under the Facility. For projects located in territories in less developed regions, the amount of the grant shall not exceed 25 % of the amount of the loan provided by the finance partner under the Facility.

3. Payments of an awarded grant may be split into several instalments linked to progress in implementation as set out in the grant agreement.

Article 12

Reduction or termination of the grants

1. In addition to the grounds specified in Article 131(4) of the Financial Regulation, after consulting the finance partner, the Commission may reduce the amount of the grant or terminate the grant agreement if within two years from the date of signature of the grant agreement, the economically most significant supply contract, works contract or services contract has not been signed and the conclusion of such contract is envisaged pursuant to the grant agreement.

2. Where Union support is combined with loan schemes or where a supply contract, works contract or services contract is not envisaged, paragraph 1 does not apply.

In such cases, after consulting the finance partner, the Commission may reduce the amount of the grant or terminate the grant agreement, and recover any related amounts paid, in accordance with the conditions set out in the grant agreement.

CHAPTER V - ADVISORY SUPPORT SERVICES


Article 13

Advisory support services

1. Advisory support under this Regulation shall be implemented in indirect management in accordance with the rules and implementation methods for the InvestEU Advisory Hub.

2. Activities necessary to support the preparation, development and implementation of projects shall be eligible for advisory support and shall be financed in accordance with Article 5(6).

CHAPTER VI - PROGRAMMING, MONITORING, EVALUATION AND CONTROL


Article 14

Work programmes

1. The Facility shall be implemented by work programmes established in accordance with Article 110 of the Financial Regulation.

2. The work programmes shall include award criteria that apply whenever the total requested grant support for eligible projects would exceed the available resources. These criteria shall include priorities, where applicable, for:

(a) projects promoted by beneficiaries located in less developed regions;

(b) projects that contribute directly to the achievement of the Union’s 2030 climate and energy targets and the objective of climate neutrality in the Union by 2050 at the latest; and

(c) projects promoted by beneficiaries that have adopted decarbonisation plans.

3. The Commission shall adopt the work programmes by means of implementing acts. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 20.

Article 15

Selection of finance partners other than the EIB

1. The Commission shall set out the conditions and procedures for selecting finance partners other than the EIB by means of implementing acts. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 20.

2. The conditions for selecting finance partners other than the EIB shall reflect the objectives of the Facility.

3. In particular, when selecting finance partners, the Commission shall take into account the capacity of potential finance partners:

(a) to ensure that their lending policy is consistent with Union environmental and social standards, the Union’s 2030 climate and energy targets and the objective of climate neutrality in the Union by 2050;

(b) to contribute sufficient own resources to maximise the impact of the Union grant;

(c) to ensure appropriate geographical coverage of the Facility and allow for the financing of smaller individual projects;

(d) to implement thoroughly the requirements set out in Article 155(2) and (3) of the Financial Regulation concerning money laundering, terrorism financing, tax avoidance, tax fraud, tax evasion and non-cooperative jurisdictions;

(e) to ensure transparency and adequate visibility concerning each project financed through the Facility.

4. The Commission shall publish the list of the finance partners selected in accordance with this Article.

Article 16

Monitoring and reporting

1. Key performance indicators to monitor the implementation of the Facility and its progress towards the achievement of the objectives set out in Article 3 are set out in Annex II.

2. The performance reporting system shall ensure that data regarding the indicators referred to in paragraph 1 are collected effectively, efficiently and in a timely fashion. Beneficiaries and finance partners shall provide the Commission with data regarding those indicators in accordance with the grant agreements and administrative agreements, respectively.

3. By 31 October of each calendar year, starting with 2022, the Commission shall issue a report on the implementation of the Facility. That report shall provide information on the level of implementation of the Facility with respect to its objectives, conditions and performance indicators.

4. Where the interim evaluation report referred to in Article 17(2) finds that the indicators set out in Annex II do not allow for a proper assessment of the Facility, the Commission shall be empowered to adopt delegated acts in accordance with Article 19 to amend the key performance indicators set out in Annex II.

Article 17

Evaluation

1. Evaluations of the implementation of the Facility and its capacity to achieve the objectives set out in Article 3 shall be carried out in a sufficiently timely manner to take appropriate action.

2. An interim evaluation shall be performed by 30 June 2025 and a report on that interim evaluation shall be submitted to the European Parliament and to the Council. The interim evaluation shall in particular assess:

(a) the extent to which the Union support provided under the Facility contributed to address the needs of territories implementing the territorial just transition plans;

(b) how the horizontal principles referred to in Article 4 were taken into account;

(c) the need to carry out gender impact assessment;

(d) the application of the eligibility conditions set out in Article 9 and how the visibility obligations were applied;

(e) on basis of the projects supported by the Facility, the extent to which the Facility contributed to the environmental objectives laid down in Article 9 of Regulation (EU) 2020/852 of the European Parliament and of the Council (20), taking into account the applicable screening criteria provided for in that Regulation.

The interim evaluation report may be accompanied by a legislative proposal which takes into account, in particular, possible adjustments to the eligibility conditions.

3. At the end of the implementation period, in any case not later than 31 December 2031, the Commission shall submit to the European Parliament and to the Council a final evaluation report on the results and long-term impact of the Facility, which shall also assess the matters set out in paragraph 2.

Article 18

Audits

1. Audits of the use of the Union support provided under the Facility carried out by persons or entities, including by persons or entities other than those mandated by the Union institutions or bodies, shall form the basis of the overall assurance pursuant to Article 127 of the Financial Regulation.

2. Beneficiaries and finance partners, in accordance with their respective grant and administrative agreements, shall provide to the Commission and any designated auditors all available documents that are necessary for them to carry out their auditing tasks.

3. The external audit of the activities undertaken in accordance with this Regulation in relation to the use of the Union support provided under the Facility shall be carried out by the Court of Auditors in accordance with Article 287 TFEU. For those purposes, the Court of Auditors, at its request, shall be granted access to any document or information necessary to carry out its auditing tasks, including any information on the evaluations of applications and their outcome, in accordance with Article 287(3) TFEU.

Article 19

Exercise of the delegation

1. The power to adopt delegated acts is conferred on the Commission subject to the conditions laid down in this Article.

2. The power to adopt delegated acts referred to in Article 16(4) shall be conferred on the Commission until 31 December 2028.

3. The delegation of power referred to in Article 16(4) may be revoked at any time by the European Parliament or by the Council. A decision to revoke shall put an end to the delegation of power specified in that decision. It shall take effect the day following the publication of the decision in the Official Journal of the European Union or at a later date specified therein. It shall not affect the validity of any delegated acts already in force.

4. Before adopting a delegated act, the Commission shall consult experts designated by each Member State in accordance with the principles laid down in the Inter-institutional Agreement of 13 April 2016 on Better Law-Making.

5. As soon as it adopts a delegated act, the Commission shall notify it simultaneously to the European Parliament and to the Council.

6. A delegated act adopted pursuant to Article 16(4) shall enter into force only if no objection has been expressed either by the European Parliament or by the Council within a period of two months of notification of that act to the European Parliament and the Council or if, before the expiry of that period, the European Parliament and the Council have both informed the Commission that they will not object. That period shall be extended by two months at the initiative of the European Parliament or of the Council.

Article 20

Committee procedure

1. The Commission shall be assisted by the committee established by Article 115(1) of Regulation (EU) 2021/1060. That committee shall be a committee within the meaning of Regulation (EU) No 182/2011.

2. Where reference is made to this paragraph, Article 5 of Regulation (EU) No 182/2011 shall apply.

CHAPTER VII - TRANSITIONAL AND FINAL PROVISIONS


Article 21

Information, communication and visibility

1. Beneficiaries and finance partners shall ensure the visibility of the Union support provided under the Facility, in particular when promoting the projects and their results, by providing targeted information to multiple audiences, including the media and the public.

2. The Commission shall implement information and communication actions relating to the Facility, the funded projects and the results of those projects. That includes, in particular, informing Member States of the Commission’s intention to open the Facility to finance partners other than the EIB and informing Member States of the calls for proposals that have been published, as well as raising awareness regarding technical and administrative support provided to beneficiaries. Financial resources allocated to the Facility shall also contribute to the communication of the political priorities of the Union, insofar as they are related to the objectives set out in Article 3. The Commission shall publish and regularly update the list of projects financed under the Facility.

Article 22

Transitional provisions

If necessary, appropriations may be entered in the budget beyond 2027 to cover the expenses provided for in Article 5(5) to enable the management of actions not completed by 31 December 2027.

Article 23

Entry into force

This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.