Last November, EU President Jean-Claude Juncker announced his investment plan to kick-start the European economy (a previous blog post looked at these initial plans, and what opportunities they may hold for Wales). Since then, further details have emerged. The European Commission has begun the legislative process required to put some of these plans into action and politicians in the National Assembly for Wales and the European Parliament have had the chance to discuss the proposals with officials from the European Commission.
To recap, the plan consists of three main strands:
- The creation of a new European Fund for Strategic Investments (EFSI). This fund is intended to mobilise at least a €315 billion over the next 3 years, using an investment of €21 billion of public money.
- A “Project Pipeline” of viable projects awaiting investment, to allow public and private investors to access information about these projects. These project proposals would receive technical assistance from Commission staff.
- A “Road Map” to remove red-tape and other barriers that hold back investment in Europe.
What sort of projects in Wales could get funding?
Before Christmas, the EU Task Force on Investment published a report identifying potential investment projects in each Member State. Although inclusion on this list does not guarantee financing under the EFSI, it can be seen as fleshing out the sorts of projects that may be eligible for funding once the specific criteria are in place. Potential projects which would be based wholly or partly in Wales included:
- Anglesey Energy Island: an integrated suite of investments in low carbon energy anchored by an £8bn investment in nuclear.
- Swansea Bay Tidal Lagoon: construct a tidal lagoon in Swansea Bay between the ports of Swansea and Neath.
- Heat network development: a number of large scale heat networks projects are under development, including in Stoke-on-Trent, Tees Valley, Manchester, Enfield, Exeter, Cardiff and Gateshead.
- Flood and Coastal Risk management: build defences, sustainable urban drainage systems and use land management techniques to prevent flooding, raise awareness of flooding and increase resilience to flooding in Wales.
- Green Growth Fund: to increase and accelerate projects to deliver green investment in Wales.
- Environmental Protection Scheme: to contribute to sustainable development by increasing the level of environmental protection in Wales.
- Cardiff Capital Region Metro: a £3bn integrated transport programme in south-east Wales.
- Many of these projects also appear in the Welsh Government’s Wales Infrastructure Investment Plan.
What legislation has the Commission introduced?
On 13 January 2015 the European Commission adopted the legislative proposal for the EFSI. This is the beginning of the legislative process that will need to see the proposal agreed by the European Parliament and the Council of the European Union for it to become law.
This proposal included details of the governance structures that will be in place to determine funding allocations made under the EFSI. These include a Steering Board that will decide on the criteria to be used to award funding, in line with the Commission’s political guidelines. An Investment Board – composed of independent experts – will then decide on individual applications to the EFSI. The Investment Board will work to the criteria agreed by the Steering Board, with no geographic or sectoral quotas.
The proposal also includes a European Investment Advisory Hub, which will be an EU-wide service to help identify and develop potential projects for investment.
The Commission hopes that the Parliament and Council will agree the proposal by June so that the EFSI can be operational by mid-2015.
What opportunities are there for Wales?
Crucially, as there will be no geographical pre-allocation of funds, the success of Welsh bids into the EFSI will depend solely on the extent to which they meet the criteria set by the Steering Board.
In a session of the European Parliament’s Economic and Monetary Affairs Committee on 26 January, the EU’s Investment Commissioner Jyrki Katainen responded to a question from Christian Democrat MEP Eva Paunova as to how the Commission will ensure that the EFSI will not deepen regional wealth disparities. He stated that the technical assistance available from the Commission to develop bids in all Members States will help to level the playing field. He also suggested that projects based in poorer areas of the EU – such as Romania and Bulgaria – could be more attractive due to the high growth potential of these areas.
However, the extent to which projects can stimulate economic growth is not the sole criteria used to determine funding under the EFSI. The Commission has said that financing from the EFSI should support EU policy priorities such as the Europe 2020 strategy. This means that the Steering Board’s criteria will also encourage projects that, for example, help create jobs, tackle poverty and move towards a low-carbon economy.
Further details of the Commission’s proposals for the EFSI are available in a Question and Answer Fact Sheet produced by the European Commission.
Article by Robin Wilkinson, National Assembly for Wales Research Service.