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Vice-President Katainen's speech at TEN-T Days 2016: Boosting EFSI Investments in Transport

Date: 21/07/2016

Transport is one of the key EU network infrastructures connecting the EU internal market. More than EUR 600 billion is needed to complete EU transport corridors by 2030.

Before 2020, it is estimated that EUR 250 billion is needed only for the main bottlenecks, cross-border sections on the core network, and for the deployment of EU traffic management systems such as SESAR[1].

Current minimum capital investment requirements in Europe in the transport sector are estimated at around EUR 130 billion per year, while the actual level has been, since the beginning of the crisis, on average EUR 100 billion. Over a 5 year period, the accumulated “investment shortfall” in the transport sector since the crisis is thus estimated to be around EUR 150 billion.

In addition, the fight against climate change requires a change in our transport systems. Decarbonisation of transport is not a threat. It is a major opportunity for innovation, to create high quality jobs, in particular in urban areas, where major investments are necessary to improve the daily quality of life of European citizens.

As I speak, the Commission services are working on a communication on low emission mobility, which will outline next steps for the transport sector and provide channels for investments.

By attracting additional private and public investments, the Investment Plan for Europe is pivotal to ensuring that transport is a key driver for socio-economic growth and jobs. Investments to support a Single European Transport Area are essential for the achievement of the European single market.

Significant progress has been made in implementing the transport pipeline of the European Fund for Strategic Investments. The transport sector is on track to deliver the Investment Plan for Europe. As of May 2016, it ranks second after energy in the overall EFSI Infrastructure and Innovation Window.

There is a very significant pipeline of transport projects in Europe and a clear need to unleash additional investments, as evidenced by heavy oversubscriptions of the two Calls for Proposals under the Connecting Europe Facility (CEF).

However, there is scope for improvement. The pipeline faces sectoral challenges and specific investment barriers, in particular in the areas of permitting, procuring, Public Private Partnerships (PPPs), and in the case of cross borders projects.

We are working closely with the EIB on ways to reinforce the transport pipeline of the European Fund for Strategic Investments and develop new financing solutions, with focus on transport sustainability and innovation. We are looking into options to support the deployment of alternative fuel infrastructure (such as green buses) and smart and sustainable urban mobility, in the context of our work on decarbonisation of the transport sector.

It is important also to mention the other two elements of the Investment Plan, apart from the Fund:

On 1 June this year, the Commission launched the transparent and user-friendly European Investment Project Portal (EIPP), providing EU based project promoters the opportunity to boost the visibility of their projects to potential international investors. We have already received more than 100 investment projects for publication, again many of them from areas relevant for the transport sector.

The European Investment Advisory Hub (EIAH) went live in September 2015 and offers project promoters a single point of entry for technical assistance, guidance and advice. This is also the place where both public authorities and private project promoters can find the tools and knowledge necessary to structure and plan a project fit for financing from the European Fund for Strategic Investments but also for any other financing. Transport is well represented in the Advisory Hub with more than 20 projects having been submitted by May 2016.

The Investment Plan: what are the next steps?

The next steps include bringing the European Fund for Strategic Investments to the micro level of every sector to address their financing needs while mobilising private investment. One way to do this is to combine existing financing resources such as the European Structural and Investment Funds and the products to be made available via the European Fund for Strategic Investments.

The Commission has published guidance on how this combination can work.

In addition, contributions from the European Structural and Investment Funds to EU level instruments could be a practical option for Member States. The Commission is currently discussing with Member States and Managing Authorities the various possibilities of their potential contributions to these instruments.

We are also working towards streamlining regulatory frameworks to facilitate private investment flows into infrastructure projects, including in transport. There is a considerable number of EFSI projects using Public Private Partnerships, especially in the transport sector. We expect an increasing number of projects across-Europe to use this model in the future. It is thus important to find solutions to ensure that these projects are structured in a way that makes best use of public resources. Later this year, further guidance will be issued by Eurostat with regards to the commercial terms of Public Private Partnership contracts, which will provide enhanced clarity on the rules in place.

We call for engaging proactively in emerging areas such as smart urban mobility, deployment of alternative fuels and electro-mobility, including making better use of investment platforms and with the support of the European Investment Advisory Hub.

This year's TEN-T Days 2016 dedicated to bringing a diverse range of investors and project promoters together is a real window of opportunity to make transport projects more visible and open to financing opportunities.

Investment Plan 2.0: from 2018 onwards

Feedback from investors and companies who are benefiting from the Investment Plan has been positive.

The numbers presented on 1 June in the Communication on the achievements after one year support this view.

Building on the positive results, we propose the following way forward in the medium term:

A reinforced European Fund for Strategic Investments will continue beyond the initial three-year period to address remaining market gaps and failures and continue to mobilise private sector financing in investments crucial for Europe's future job creation, growth and competitiveness, with strengthened "additionality". The Commission will present legislative proposals in autumn to extend the duration of the Fund.

One of the biggest success stories of European Fund for Strategic Investments has been the strong interest and participation by intermediary banks across the EU to provide finance to SMEs, the so-called EFSI SME-window. This will be scaled up quickly, under the current framework, for the benefit of SMEs and mid-cap companies in all Member States. The Commission will work with the EFSI Steering Board to use all the existing possibilities under the EFSI Regulation to reinforce the SME window.

The Commission will explore the possibility of using an EFSI-type model for investments in developing third countries.

The combination of support from European Fund for Strategic Investments and the European Structural and Investment Funds will be further simplified and legislative and other obstacles to such combinations removed.

The Advisory Hub will be enhanced to be able to work more locally and to enhance its work with National Promotional Banks.

Establishing Investment Platforms will be further encouraged, with strong engagement from the Commission, the EIB Group, National Promotional Banks and other relevant actors. This is particularly important for small projects to reach scale.

The Commission will continue to deliver on its Single Market priorities.

We will provide further clarity and review, where appropriate, relevant guidance as regards accounting aspects of Public Private Partnerships.

Member States should also establish clear priorities, prepare concrete investment projects with the help of the Advisory Hub – in particular on cross-border projects – and structure their projects in an optimal way to ensure a greater use of financial instruments.

Conclusions

Let me conclude by saying that the European Fund for Strategic Investments is triggering investments in Europe that would not have happened without it.

We are getting positive endorsements and constructive feedback from investors, academics and governments. Of course, the Fund on its own will not be enough to get investment back on track and to put Europe's recovery on a firm footing.

But combined with efforts by the EU and Member States to improve the business environment and make Europe an attractive place to invest again; and with efforts to help investors find projects and vice versa, the Investment Plan for Europe is making a difference.

 
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