Explanatory Memorandum to COM(2025)123 - Amendment of Regulations (EU) 2021/1058 and (EU) 2021/1056 as regards specific measures to address strategic challenges in the context of the mid-term review - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2025)123 - Amendment of Regulations (EU) 2021/1058 and (EU) 2021/1056 as regards specific measures to address strategic challenges in ... |
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| source | COM(2025)123  |
| date | 01-04-2025 |
1. CONTEXT OF THE PROPOSAL
• Reasons for and objectives of the proposal
The mid-term review of cohesion policy presents an opportunity for Member States to redirect 2021-2027 resources towards investment in defence capabilities and for the competitiveness and strategic autonomy of the EU and in other emerging priorities, including clean industrial deal objectives by submitting corresponding programme amendments to the Commission. However, the framework for cohesion policy investments set out in the ERDF, Cohesion Fund and JTF regulations is not sufficiently aligned with these new priorities. Furthermore, additional flexibility is required to accelerate investment in these areas, notably to reinforce the resilience of the EU economy and all its regions at a critical geopolitical juncture such as the one the EU is currently facing. This proposal sets out a number of adjustments to these regulations to achieve these objectives.
Contents
- Aligning cohesion policy investments to new priorities
- Competitiveness and decarbonisation
- Affordable housing (including social housing)
- Access to water, sustainable water management and water resilience
- Energy transition
- Eastern border regions
- Greater flexibility and simplification for accelerating investments
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- Specific objectives
- Defence and security
- Affordable housing (including social housing)
- Secure access to water, sustainable water management and water resilience
- Energy transition
- Eastern border regions
- Cities
- Further flexibilities on implementation
- Mid-term review
In recent years, geopolitical dynamics have been marked by profound uncertainty, necessitating a fundamental re-evaluation of the EU’s strategic autonomy, resilience and preparedness. These shifts are unfolding alongside the green, social and technological transitions, which are rapidly reshaping the world around us. The challenges posed by these simultaneous transformations were comprehensively analysed in the report on the “Future of European Competitiveness”, published in September 2024. The report underscores the urgent need to close the innovation gap, accelerate decarbonisation efforts to strengthen economic competitiveness, and reduce external dependencies by diversifying supply chains and scaling-up domestically produced green energy investing in climate resilience, digitalisation and critical sectors.
In response, several major initiatives have already been launched to enhance the EU’s economic resilience and strategic autonomy. These include the “Strategic Technologies for Europe Platform” (STEP), which aims to strengthen Europe’s technological leadership; “REPowerEU”, designed to reduce reliance on external energy sources and accelerate the green transition, to complete interventions already underway via cohesion policy programmes and the “Recovery and Resilience Facility” (RRF), to support structural changes in Member States and regions as well as to enhance their resilience.
As the EU’s main investment instrument within the Multiannual Financial Framework (MFF), cohesion policy plays a crucial role in supporting these priorities. It drives targeted investments that contribute to economic, social and territorial cohesion while at the same time addressing emerging challenges. However, the regulatory framework governing the 2021-2027 cohesion policy funds was drafted, negotiated and adopted before the series of major geopolitical and economic events that have since reshaped some of the EU’s strategic political priorities.
Similarly, the Partnership Agreements and the national and regional cohesion policy programmes were developed and approved within this same timeframe, hence reflecting the priorities set at the time. Given the evolving global and regional context, the 2025 mid-term review presents a critical opportunity to assess their implementation and the effectiveness of their contribution to the evolving priorities. This review will help determine the extent to which cohesion policy programmes can directly and swiftly respond to rapidly changing political, economic and social realities.
At the same time, it has become evident that the early implementation of the 2021-2027 cohesion policy programmes has faced challenges which have not been conducive to a swift uptake and rapid disbursement of the funds, leading to delays in their implementation compared to previous programming periods. These delays come at a time when strong and accelerated investment is essential to support economic resilience and competitiveness.
·Against this backdrop, the Commission is proposing targeted amendments to Regulations (EU) 2021/1056 and (EU) 2021/1058. These changes aim to adjust investment priorities with the evolving economic, societal, and geopolitical context, as well as with our climate and environment objectives, while at the same time introducing greater flexibility and incentives to facilitate and encourage the rapid deployment of much-needed resources. By refining the 2021-2027 cohesion policy framework, the EU can ensure that its investment mechanisms remain agile and responsive, enabling a more effective response to current and future challenges.
·In order for Member States to make effectively use of the possibilities provided in this proposal, the Commission proposes that they be allowed to re-submit their mid-term review proposal by 2 months after the entry into force of the present proposal for amendment to Regulation (EU) 2021/1058. Any programme amendment that would be carried out pursuant to the new priorities and flexibilities, shall be without prejudice to the application of any measures adopted under Regulation (EU) 2020/2092 and to the compliance by relevant programmes with the priorities under Article 15 of Regulation (EU) 2021/1060. In this context the Commission will closely monitor the conformity of the programmes with the requirements of relevant EU law.
The Commission presented in the Competitiveness Compass, the Clean Industrial Deal and the Affordable Energy Action Plan a concrete path for Europe to regain its competitiveness and secure sustainable prosperity, with decarbonisation and circularity as drivers of growth.
In particular, energy intensive industries play a critical role in our regions and require special attention as part of the reprogramming of EU funds. These industries face significant challenges, including higher energy costs compared to their global competitors, the continued lack of competitiveness of certain clean technologies, a slow-down in demand in some of the main downstream sectors, increased international competition driven by overcapacities and subsidised production in non-EU countries As a result, these factors undermine the competitiveness of energy intensive industries and weaken Europe’s decarbonisation and resilience objectives.
The cohesion funds can already support investments to climate objectives as laid down in Regulation (EU) 2021/1060 but efforts should be further accelerated in order to ensure that decarbonisation is a driver for growth for European industries and the prosperity of Europeans. In light of the significant investment needs to achieve our decarbonisation and competitiveness objectives, Member States need to continue investing in projects directly contributing to the climate and energy transition in line with the requirements set out in Article 6 of Regulation (EU) 2021/1060 which will continue to apply to maintain the level of climate related investments.
Support for projects within the scope of STEP should be made possible in all regions, including in the more developed regions in Member States of the Union with GDP per head above the EU average to the extent it is allowed by State aid rules as set out in Articles 107 and 108 of the Treaty, in particular to the extent such investments contribute to the Union’s strategic objectives as set out in the applicable guidelines such as the future Clean Industrial State aid Framework (currently in public consultation) and in the IPCEI Communication 1 .
Furthermore, other restrictions linked to STEP as regards the ceiling set at 20% of the ERDF allocation for reprogramming should be removed and the deadline for submitting STEP amendments and benefit from the additional one-off prefinancing deleted. This should also help in promoting investments in innovative clean technologies (manufacturing capacities and deployment) that are essential to deliver on the objectives of the Clean Industrial Deal and also in other important support areas for which STEP provides important incentives.
It is important to recognise and strengthen the role also of large enterprises in regional development, as they steer research, innovation, knowledge, and technology transfer towards other companies and create demand and employment throughout the supply chain. With the objective to maximise the impact of EU support to boost growth and competitiveness, the Commission also proposes to expand the possibilities to provide support for productive investments in enterprises other than SMEs under the ERDF in cases where the financial resources are used for (1) supporting investments contributing to the STEP objectives, (2) enhancing the industrial capacities to foster defence capabilities, (3) contributing to a defence projects and i facilitating industrial adjustment linked to the decarbonisation and support to circular processes of production processes and products, such as in the automotive and energy intensive industries, to the extent allowed by State aid rules. Investments in projects directly participating in an IPCEI as approved by the Commission pursuant to Article 107(3), point (b) TFEU, and to Communication C(2021) 8481, in enterprises other than SMEs may also be supported. Support for such enterprises needs to be further facilitated under the Just Transition Fund as well by not requiring a gap analysis. Therefore, it is proposed that Member States are allowed, in line with State aid rules, to directly grant support from ERDF to projects directly participating in an Important Project of Common European Interest approved by the Commission pursuant to Article 107(3), point (b), of the Treaty of the Functioning of the European Union (TFEU) and to Communication C(2021) 8481.
To further enhance the leverage of InvestEU, the EU flagship programme to boost investments in strategic and critical industries, and further the transfer possibilities already provided by the legislation, the Commission proposes to make possible the transfer of resources from the ERDF and the Cohesion Fund to InvestEU Member State compartments for implementing a new InvestEU financial instrument for the achievement of cohesion policy objectives.
Defence and security
In the face of unprecedented geopolitical instability in decades, the European Union must now make crucial decisions to ensure its readiness and security. To guarantee its own defence deterrence, Europe must be prepared to enter a new era by significantly increasing its support for the development of the defence capabilities, reduced dependencies, infrastructure resilience and the competitiveness of the EU defence industry. This effort will enable the Union to address the short-term urgency of supporting Ukraine while ensuring the continent’s long-term stability.
The Commission has proposed to the European Council an immediate response plan — REARM Europe — amounting to EUR 800 billion, by activating all available financial levers to swiftly and significantly support investment in European defence capacities. Among these levers, the Union budget can further contribute to this collective effort through a new dedicated defence instrument and the strengthening of the European Defence Industry Programme (EDIP).
To complement these tools and further incentivise Member States to directly support defence investments, it is essential that cohesion policy funding can be swiftly mobilised. These investments will reinforce the resilience and EU competitiveness while promoting regional development and growth. They will also tackle the dual challenge faced by the Union’s regions bordering Russia, Belarus and Ukraine: strengthening security while revitalising their economies.
In order to provide for a framework that allows for flexibility and financial support, the Commission proposes to create two new specific objectives within the existing scope of the ERDF support. The first new specific objective allows Member States to reprogramme under their 2021-2027 programmes under the Investments for jobs and growth goal amounts for enhancing productive capacities in enterprises in the defence sector without restriction in terms of geography or size of the enterprise. Productive investments in enterprises other than SMEs and made in all EU regions should also be able to access financial support for defence industry projects of common interest under EDIP and reinforce Europe’s overall defence and preparedness capacities. The second new specific objective related to defence contributes to building resilient defence or dual use infrastructure to foster military mobility in the EU. These specific objectives also help eastern border regions.
It is proposed that Member States, when using the proposed framework, benefit from an additional one-off pre-financing of 30% of the amounts programmed under the dedicated priority and the possibility to apply a Union financing of up to 100% regarding both specific objectives – provided that the programme amendment is submitted in 2025.
Housing prices and rents have increased significantly over the past years. At the same time, wages have not increased at a similar pace. This uneven evolution has created a widening gap between the availability of affordable housing and the needs of the population.
The average house prices declined after 2008 following the economic recession but have consistently risen throughout the EU since 2013. In total, there was an increase of 59% in the EU between 2013 and the third quarter of 2024, which is about twice the increase in the overall price level (HICP) in the same period.
The escalation of house price growth has not been matched by a corresponding rise in wages, leading to considerable pressure on housing affordability. The price-to-income ratio increased by more than 15pp between 2013 and 2022, and despite some respite in 2023 it is still above its long-term average.
While the issue varies in severity from country to country and region to region, its impact is widespread. High housing costs force many households to allocate a disproportionate share of their income to rent or mortgages, leaving less for other necessities like food, healthcare and education – with a risk of falling into poverty. In 2023, one out of three households that are at risk of poverty spend 40% or more of the household disposable income on housing. House prices differ also between urban and non-urban areas. Housing prices as a proportion of income are higher and have been steadily increasing since 2015 in metropolitan and other urban areas, while they remained stable in other areas. The social impact of these figures is wider if we consider that they include the lack of students housing and of adequate lodgements for prospective new families.
The lack of sufficient affordable housing puts an increasing number of households under severe difficulties, but it also has a competitiveness angle. Indeed, European companies in some areas start to have problems to attract workers because the costs of housing and living in those areas are disproportionately high as compared to income. High prices are also putting public services in certain cities under pressure due to difficulties in attracting essential public workers (teachers, nurses, police, etc.).
Against this background, the political guidelines of the Commission give housing policy strong emphasis by proposing a coordinated approach under the upcoming European ‘Affordable Housing Plan’. As part of this overarching ambition, the Commission now proposes to address the growing investment gap in affordable housing by allowing Member States to reprogramme under their 2021-2027 programmes amounts for supporting investments that promote access to affordable housing. Investments under the New European Bauhaus should make full use of these new possibilities provided.
At the same time, it must be ensured that housing is climate resilient.
The Commission proposes to include corresponding additional specific objectives under three policy objectives thus allowing flexibility for Member States and regions depending on their programming structures and the focus of the housing interventions.
In order to incentivise reprioritising their programmes and uptake, and without prejudice to compliance with State aid rules, it is proposed that Member States, when using the proposed framework, benefit from a 100% Union financing and a pre-financing of 30% of the amounts programmed under the dedicated priority. With a view to enhancing the impact of investments, the scope of interventions now allows to include actions linked to implementing reforms under cohesion policy, provided that the programme amendment is submitted in 2025.
Water is a vital resource for the security of our food, energy and economic systems, yet both at EU and global level water resources are facing mounting pressures. Effective water management is essential for safeguarding public health, protecting the environment, and maintaining the EU’s economic competitiveness. Mismanagement, including over-abstraction and pollution, is increasingly constraining critical sectors such as agriculture, energy, manufacturing, and transport. The EU is faced with increasing impacts from climate change which exacerbate the existing pressures on water quality, water quantity and marine ecosystems. In this context, it is urgent to enhance implementation of the water and marine protection legislation and improve water efficiency, address water scarcity, and progress towards a water resilient Europe, requiring significant efforts and investments. The EU water sector and blue economy sector are significant economic sectors in many regions, driving innovation, and safeguarding public health, and sustainability, e.g. by offering advanced solutions such as desalination, water treatment, water reuse, blue biotechnology etc. The global leadership in water technologies enhances the EU’s export potential and creates jobs in all regions across Europe.
The EU therefore must protect these water ecosystems and infrastructures by scaling up investments and consider water supply and infrastructure through the lens of ensuring access to and supply of water to our citizens and societies in all circumstances.
The EU has established a strong legal framework for the sustainable and secure management of water, but further progress in implementation is essential and more decisive action is urgently needed. For that reason, the EU will come forward with an EU Water Resilience Strategy in the first half of 2025. In line with the Preparedness Union Strategy, water resilience requires a shift from reactive crisis management to proactive, risk-based management and increased preparedness.
In the 2021-2027 period, almost EUR 13 billion are being invested in water services and improved wastewater collection and treatment in cohesion policy programmes. But additional efforts from the public and private sectors are needed to ensure sufficient progress Therefore, to properly emphasise the importance and focus of investments in water resilience, the Commission proposes to modify the wording of the specific objective related to water management under policy objective 2 “A greener, low-carbon transitioning towards a net zero carbon economy and resilient Europe by promoting clean and fair energy transition, green and blue investment, the circular economy, climate change mitigation and adaptation, risk prevention and management, and sustainable urban mobility”.
Cohesion policy investments in sustainable and secure investments should be incentivised, notably to contribute to build a water resilient society, through increased restoration of water bodies, deployment of nature-based solutions to reduce floods risk and increase the capacity of ecosystems to store water, improved control of water abstractions and increased water efficiency and reuse increased digitisation of water infrastructure, mitigation of drought and desertification impacts, flooding and extreme weather events, and compliance with the Water Framework, the Groundwater, the Urban Wastewater Treatment, and the Environmental Quality Standards Directives. It is proposed that Member States, when using the proposed framework, benefit from the possibility of a Union financing up to 100% and a pre-financing of 30% of the amounts programmed under the dedicated priority for this new specific objective.
Another area where cohesion policy investments contribute to EU priorities is climate action and climate transition, where the policy invests more than EUR 110 billion. In light of the significant investment needs of the climate transition, Member States need to maintain their efforts to respect the funds’ climate ambition.
In order to enhance energy security and accelerate the transition across the Union and also to promote clean mobility, a new specific objective should be created to promote energy interconnectors and related transmission infrastructure, and the deployment of recharging infrastructure from ERDF and Cohesion Fund resources.
In order to accelerate the energy transition of industry, notably in energy-intensive sectors, that is necessary for reaching the EU climate objectives and for the EU’s competitiveness and resilience, the Commission proposes to enlarge the scope of support from the ERDF to decarbonisation of projects selected in the context of Union instruments in particular projects in installations that have been awarded a ‘Sovereignty Seal’ under the Innovation Fund established by the EU Emissions Trading System (ETS), and to reduce administrative checks for similar support under the JTF.
To increase climate resilience is essential to ensure competitiveness. In line with the Preparedness Union Strategy and the concept of preparedness and security by design, it is vital to ensure sustainable and informed investments, based on proper climate modelling data, so as to protect both vulnerable populations and the EU economy and competitiveness.
Given the challenges of the eastern border regions since the Russian aggression against Ukraine, programmes under the Investment for jobs and growth goal with NUTS 2 regions that have borders with Russia, Belarus or Ukraine, should benefit from the possibility of a one-off 9.5% pre-financing of the programme allocation and a 100% Union financing.
Halfway through the 2021-2027 programming period, the level of payments claimed by the Member States to the Commission is low, owing to a combination of factors: the late adoption of the regulations governing the policy; the need to face successive crises from the COVID-19 pandemic to the war against Ukraine, and to the energy crisis; the pressure to close the previous programming period; and the priority given to implement the instruments of NGEU, given their shorter implementation timeframe. All this has in turn put a strain on the administrative capacities of Member States’ authorities to design and quickly deliver investments. Notwithstanding a rapid acceleration experienced over last year with project selection close to 40% of the allocations, cohesion policy implementation should rapidly pick up pace in a context where the Union is facing a range of new challenges requiring rapid responses. The Commission therefore proposes a set of measures aiming at further enhancing the flexibility and simplification of the use of cohesion policy support for accelerating investments:
–To avoid that programme implementation is delayed because of national budgetary constraints, and to expand the financial capacity of Member States to address the newly emerging challenges, the Commission proposes to provide a one-off 4.5% pre-financing provided from the ERDF and the Cohesion Fund in 2026 to all programmes that reallocate at least 15% of their resources for the new priorities in the context of the mid-term review process. The pre-financing percentage is proposed to be increased to 9.5% in 2026 for programmes under the Investment for jobs and growth goal covering one or more NUTS2 regions bordering Russia, Belarus or Ukraine. To avoid that the risk of delays and corresponding loss of funds reduces willingness to undertake programme amendments and to ensure the proper implementation of the operations concerned, the Commission proposes to extend the time limit for using the ERDF and the Cohesion Fund resources and extend the end date for eligibility by an additional year. This flexibility is proposed to be made available only for programmes that proposed amendments resulting in reallocation of at least 15% of the resources for the new priorities set out in the present proposal and in the context of the mid-term review exercise, once approved.
–Costs related to preparatory actions for reforms will be eligible including for self-standing reforms (i.e. not accompanied by investments).
–To further enhance synergies among EU policies and instruments, it is proposed that the JTF is also covered by the Seal of Excellence (including the Sovereignty Seal) mechanism and the possibility for a simplified selection procedure under Regulation (EU) 2021/1060 thus providing support to projects selected under other EU instruments, which do not have sufficient funding. In light of the high demand for the Innovation Fund and its track record in supporting projects that are sufficiently mature and have a significant potential to reduce greenhouse gas emissions, and that either demonstrate highly innovative technologies, processes or products, or are aimed at scaling up innovative technologies, processes or products to achieve their broad commercial roll-out across the EU, the Commission also proposes to align with the possibilities for projects supported under the Innovation Fund and include a corresponding targeted provision allowing for the production, processing, transport, distribution, storage or combustion of fossil fuels provided these projects were attributed a Sovereignty Seal under the Innovation Fund.
–Recognising the important role of cities in delivering EU objectives, in addressing local challenges and in strengthening the urban-rural links to drive a balanced regional development, the Commission proposes to reinforce the European Urban Initiative (EUI) by introducing the possibility of reallocating resources from the ERDF to the EUI. Such amounts would support actions for the benefit of Member States initiating the reallocation. The Commission also proposes to establish a Seal of Excellence for the EUI, thus enabling support under cohesion policy programmes for EUI projects that have been selected but could not receive funding due to insufficient resources. Member States would also have the possibility to reallocate ERDF resources from their programmes under the Investment for jobs and growth goal to the Interregional Innovation Investment Instrument thus having more flexibility in the use of resources. These reallocations are taking place within the same fund, the ERDF, and therefore it is proposed not to count them towards the ceilings set out in Article 26 of Regulation (EU) 2021/1060.
With the objective of easing the successful and effective implementation of the JTF, the Commission proposes to remove the current restrictions applicable to the modification of indicator targets in the Just Transition Plans after their amendment following the mid-term review. These restrictions can be removed only if they do not affect the transition to climate neutrality and fossil fuel phase out commitments.
• Consistency with existing policy provisions in the policy area
The proposal is consistent with the objectives followed by the cohesion policy funds and is limited to a targeted amendment of Regulation (EU) 2021/1058 and Regulation (EU) 2021/1056.
• Consistency with other Union policies
The proposal is limited to a targeted amendment of Regulation (EU) 2021/1058 and Regulation (EU) 2021/1056 and maintains consistency with other Union policies.
2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY
• Legal basis
The proposal is based on Articles, 175, 177,178 and 322 of the Treaty on the Functioning of the European Union.
• Subsidiarity (for non-exclusive competence)
To encourage Member States to better align their cohesion policy programmes with emerging EU priorities while ensuring greater flexibility and simplification to accelerate investments, amendments to Regulation (EU) 2021/1058 and Regulation (EU) 2021/1056 are proposed. The same result cannot be achieved through actions at national level.
• Proportionality
The proposal aims at incentivising Member States to further align their cohesion policy programmes towards the emerging EU priorities and providing greater flexibility and simplification for accelerating investments. The measures do not go beyond what is necessary to achieve these goals.
• Choice of the instrument
A Regulation is the appropriate instrument as it provides directly applicable rules for the support.
3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS
• Ex-post evaluations/fitness checks of existing legislation
• Stakeholder consultations
• Collection and use of expertise
• Impact assessment
An impact assessment has been carried out to prepare the proposal for Regulation (EU) 2021/1058 and Regulation (EU) 2021/1056. The limited and targeted changes do not require a separate impact assessment.
• Regulatory fitness and simplification
• Fundamental rights
4. BUDGETARY IMPLICATIONS
The proposal concerns cohesion policy programmes under the 2021-2027 period and will result in additional pre-financing to be paid under the ERDF in 2026. This additional pre-financing will lead to frontloading of payment appropriations to 2026 compared to a no policy-change scenario and is budgetary neutral over the 2021-2027 period. Based on the estimated uptake of the proposal, the total additional pre-financing to be paid in 2026 amounts to EUR 16.1 billion. At the same time, taking into account payment forecasts and implementation shifts, the net budgetary impact is estimated at EUR 3.6 billion, which will be included in the draft budget 2026. The possibility to apply for an increased Union financing rate for investments in defence, housing, water resilience, certain energy infrastructure and for programmes covering eastern border regions will also lead to a partial front-loading of payments, followed by lower payments at a later stage as the overall envelope is unchanged. The actual budgetary impact of the increased co-financing rate on an annual basis will depend on the Member States’ uptake and the pace of submission of payment applications.
The proposed modification does not require changes in the Multiannual Financial Framework annual ceilings for commitments and payments as per Annex I to Council Regulation (EU, Euratom) 2020/2093.
5. OTHER ELEMENTS
• Implementation plans and monitoring, evaluation and reporting arrangements
The implementation of the measure will be monitored and reported upon in the framework of the general reporting mechanisms established in Regulation (EU) 2021/1060.
• Explanatory documents (for directives)
• Detailed explanation of the specific provisions of the proposal
The proposal involves the amendment of Regulations (EU) 2021/1058 and (EU) 2021/1056 as regards the ERDF, the Cohesion Fund and the JTF:
Competitiveness and decarbonisation
·The 20% limitation set on reprogramming resources to the STEP specific objectives is removed.
·Support from the ERDF and the Cohesion Fund to enterprises other than SMEs is made possible, to the extent they comply with State aid rules as set out in Articles 107 and 108 of the Treaty, for investments that participate in an Important Project of Common European Interest approved by the Commission pursuant to Article 107(3), point (b), of the Treaty on the Functioning of the European Union (TFEU), and to Communication C(2021) 8481, or where the enterprises facilitate industrial adjustment linked to the decarbonisation of production processes and products. In addition, the possibility to support large enterprises is extended to all regions in the context of the STEP specific objectives under policy objectives 1 and 2, to the extent this is allowed under State aid rules;
·The possibility for Member States to transfer resources from the ERDF or the Cohesion Fund to the Member State compartment of the InvestEU Fund for the deployment in the new InvestEU financial instrument, as included in the proposal for amendment of the InvestEU Regulation (COM(2025) 84);
·For Important Projects of Common European Interest that have been approved by the Commission pursuant to Article 107(3), point (b), of the Treaty of the Functioning of the European Union (TFEU) and to Communication C(2021) 8481, the selection process is simplified as the managing authorities are able, in line with State aid rules, to directly grant support from the ERDF for projects directly participating in such an approved Important Project of Common European Interest.
·Ensuring that investments with cohesion funding increase climate resilience, as it is also an essential part of ensuring competitiveness.
·A new specific objective is introduced under policy objective 1 for the ERDF and under policy objective 3 for the ERDF and the Cohesion Fund in support of investments in the EU’s defence capability and the scope of support is amended to allow for support to enterprises other than SMEs for these specific objectives, to the extent allowed under State aid rules. The specific objective under policy objective 3 will promote resilient defence or dual use infrastructure to foster military mobility in the Union. Furthermore, the Commission will pay, in addition to the yearly pre-financing for the programmes, 30% exceptional one-off pre-financing based on the resources allocated to these specific objectives in dedicated priorities and the maximum co-financing rate for these priorities is set at 100%.
·To promote investments in affordable housing, including social housing and support to related reforms, three new specific objectives are introduced for the ERDF and one for the Cohesion Fund. For these specific objectives, the Commission will pay, in addition to the yearly pre-financing for the programmes, 30% exceptional one-off pre-financing based on the resources allocated to dedicated priorities and the maximum co-financing rate for dedicated priorities supporting these objectives is 100%. At the same time, it must be ensured that housing is climate resilient.
·Furthermore, the scope of the Just Transition Fund is amended to allow for investments in affordable housing and support for relevant reforms also to take place in support of the implementation of the territorial just transition plans.
·The amendment of the specific objective into ‘promoting secure access to water, sustainable water management and water resilience’ reflects the strategic importance for the EU of resilient water management. To help accelerate investments in this area, the Commission will pay, in addition to the yearly pre-financing for the programmes, 30% exceptional one-off pre-financing based on the resources allocated to dedicated priorities supporting the specific objective and the maximum co-financing rate for dedicated priorities supporting these objectives is 100%.
·In order to enhance energy security and accelerate the transition across the Union and also to promote clean mobility, a new specific objective should be created to promote energy interconnectors and related transmission infrastructure, and the deployment of recharging infrastructure from ERDF and Cohesion Fund resources.
·Given the challenges of the eastern border regions since Russia’s war of aggression against Ukraine, programmes under the Investment for jobs and growth goal - financed by the ERDF or the Cohesion Fund with NUTS 2 regions that have borders with Russia, Belarus or Ukraine - should benefit from the possibility of a one-off 9.5% pre-financing and a 100% Union financing, if programmes reallocate at least 15% of their resources for the newly introduced specific objectives and STEP. Where the corresponding programme covers the entire territory of the Member State, these financial flexibilities should only apply if the programme covering the entire territory of the Member State is the only programme in the Member State that includes the concerned NUTS 2 regions.
·The European Urban Initiative is strengthened by allowing the attribution of a Seal of Excellence for innovative actions that were assessed and comply with the minimum quality requirements but could not be financed due to budgetary constraints and by allowing Member States to allocate part of their initial national allocation of the ERDF to the European Urban Initiative. This reallocation would not count towards the ceilings set out in Article 26 of Regulation (EU) 2021/1060.
Thematic concentration
·The ERDF thematic concentration requirements are revised to accommodate the introduction of the new and amended specific objectives and the specific objectives that were introduced as part of the STEP Regulation. However, the requirements set out in Article 6 of Regulation (EU) 2021/1060 in relation to climate-related investments will continue to apply.
·In order that Member States could effectively make use of the new priorities and flexibilities, it is proposed they be allowed to re-submit their mid-term review proposal by 2 months after the entry into force of these regulatory amendments.
·To help accelerate the implementation of the ERDF and the Cohesion Fund, all programmes that reallocate at least 15% of their resources for the newly introduced specific objectives and STEP would receive a one-off pre-financing of 4.5% on the basis of their amended programme budget (with the exception of NUTS 2 regions that have borders with Russia, Belarus or Ukraine, that benefit of the higher one-off prefinancing of 9.5%). The additional pre-financing related to the above set new priority areas would come in addition.
·In addition, the end-date for eligibility of expenditure is extended by one additional year for ERDF and Cohesion Fund programmes for which at least 15% of the envelope is refocused towards the new priority areas.
·In order to provide flexibility regarding the calculation of climate contribution, where the climate contribution as referred to in Article 6(1) of Regulation (EU) 2021/1060 is exceeded for either the Cohesion Fund or the ERDF, the amount exceeding the target could be taken into account when calculating the climate contribution for the other fund.
Further amendments aimed at streamlining the implementation include:
·The possibility for Member States to reallocate resources from the ERDF to the Interregional Innovation Investments Instrument;
·The possibility to support activities that contribute to the implementation of reforms;
·The duly justified revision of output indicator targets as part of a JTF programme amendment while ensuring that such revisions do not affect the transition to climate neutrality and fossil fuel phase out commitments.