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|SF into Renewables in New EU Member States "2007-2013"|
Structural Funds in the new Member States
Updated May, 2010
With 347 billion EUR allocated for the 2007-2013 period, the structural and cohesion funds represent more than a third of the EU's budget. Just over half of the total – 177 billion EUR – is available for the ten new member states in Central and Eastern Europe (CEE). (Accession funds ISPA, SAPARD and PHARE during the period 2000-2003). After their accession to the EU in 2004 the SF were followed with cohesion and rural development funds (approximately 30 billion EUR in 2004-2006). The main role of EU cohesion policy has been to redistribute wealth between regions and to help poorer regions to catch up with the rest. The main indicator and measure for the Cohesion policy is GDP. Following this logic, around 50% of the total funds will be allocated to the 10 CEE countries. Besides this basic objective, the funds have developed a “life of their own” and specific objectives have been developed and reviewed with each financial period.The allocation is partly based on population and need. The member states distribute the funding through the Operating Programs (OP) to eligible projects through a government department, ministries or committees at national and local level, usually a mixture of the above. There are differences between CEE EU member states policies in terms of who is eligible for funding and how the funds can be used.
Source: European Commission, 2008
The current changes in the EU regulations will allow for acceleration and advance payments from EU funds to ensure the availability of financial resources during the economic crisis – although member states will still have to pay back the required co-financing at a later stage within the 2007-2013 framework. The funds can be used for all types of projects: transport infrastructure, sewage treatment plants, new technologies for enterprises, research, education, etc. The candidate countries such as Croatia and Macedonia receive much less – but still significant – pre-accession funding from the EU.
In March 2007, the European Union unilaterally committed to reducing its CO2 emissions by 20% by 2020 compared to 1990, and by 30% if other developed countries adopt comparable targets. A target of 20% renewables in the energy consumption was also adopted. This commitment was made operational through the final adoption in 2009 of a Climate and Energy legislative package by the European Parliament and Council including national mandatory targets to be reached by 2020 for GHG emissions from sources not covered by the EU ETS and for the share of energy from renewable sources.
Report: Potential Unfulfilled, March 2010, 30p (pdf file 460 kB) by Bankwatch Network, FoE-Europe.
Friends of the Earth Europe and CEE Bankwatch Network are monitoring plans for the use of EU Structural and Cohesion funds in the energy and transport sectors of Central and Eastern European countries over the next seven years. The analysis is being continuously updated based on changing governments' plans in collaboration with our NGO colleagues in Central and Eastern Europe.
The beginning of the implementation of the 2007-2013 EU funds coincided with the economic crisis. This situation presented an opportunity for investing in long term development, in particular by redirecting some of the EU money into sustainable energy investments. Some CEE Member States did react to the economic crisis by redefining their funding priorities and reorganising the OPs. In addition, the Russian-Ukraine gas crisis of January 2009 struck CEE countries and stressed further the need for enhanced energy security of supply. The countries most hit by the economic crisis in the CEE region first realised the possible win-win effects of energy saving measures for economic recovery and social benefits. They have placed EE/RE projects at the core of national stimulus packages, in which EU funds appear as a central fiscal instrument. The demand for EU funding is therefore increased as a preferred option for member states whose budgets are hit hard by the crisis.
Yet, Little has been Spent
While interest and demand in EU funding for EE and RE measures is on the rise, the research findings show one major trend across all countries subject to this study - EU funds available for EE and RE projects are being contracted and spent very slowly. Nearly three years into the 2007-2013 programming period, the number of contracted projects is still low and very little actual spending has been done.
The following graphs compare the contracted EU financed projects aimed at reducing energy use and increasing the use of renewable energy against the total available EU funds for the 2007- 2013 programming period for such measures. Hence, the graphs demonstrate the low rate of absorption at a country level. They also compare the use of EU funds for such measures across selected CEE countries and show the similarity in the trend for slow absorption.
Report: Potential Unfulfilled, March 2010,
file 460 kB) by Bankwatch Network,
“Contracted projects” corresponds to the total EU funding for EE or RE projects which were contracted by September 2009. The figures are based on the field research conducted by Bankwatch and Friends of the Earth Europe national groups in the selected new Member States. It should be noted that due to lack of available data in Slovakia, the figures under “contracted projects” show the EU funds support for all ‘approved’ EE and RE projects in the open competitions, which is higher than the actual contracted projects. In Latvia, the available data for RE projects was also limited to the EU funds contribution for ‘approved’ projects so this value was used in the analysis. Therefore, by September 2009, the actual spending in these two countries should be considered even lower.
It must be also noted that although research was conducted in Bulgaria,
data is not included in the quantitative analysis because there was no
clearly discernible available data on the spending of EU funds specifically
for EE and RE measures. Therefore, the data presents findings on the absorption
rate of EU funds in Czech Republic, Hungary, Estonia, Latvia, Lithuania,
Poland and Slovakia.
In the field of RE the situation is even more striking. From the total RE allocations, which account for 1751 million EUR, merely 99.72 million EUR EU funding was contracted. This shows that only 5.7% of the EU funds for RE measures had been absorbed by September 2009. In Poland, which is the biggest recipient of EU funding for RE measures, only a couple of small scale projects have been contracted in the countryside whereas most investments have not been contracted so far. The Czech Republic does not perform as well compared to the absorption of EE projects showed in the previous graph.
The analysis, therefore, so far shows two major trends regarding the use of EU funds in renewable energy and energy saving projects in selected CEE countries. It showed that the demand for funding from the EU is on the rise for such measures. However, at the same time, these same countries struggle to absorb the available funding.