The six EaP countries differ significantly in terms of governance, territorial division, degree of decentralization and most importantly, approximation to and integration with the EU in the sectors of energy, climate and environment. The European Neighbourhood Policy review of 2015 confirmed the need to differentiate partnerships with EaP countries, allowing partners to determine the degree and pace of cooperation and approximation. This approach has meant that the ambitions and outcomes of EU projects vary across the six countries, including in support to local authorities (LAs).
The overall objective of this contract was to a
ssess the gaps in municipal investments in the renewable energy, energy efficiency, climate and environment sectors in EaP countries and present recommendations for future EU interventions, which would help to address this gap and contribute to better sustainability of municipal investments in these sectors. This meant assessing the viability of a variety of instruments that go beyond action grants and budget support, including blended finance, financial instruments, and de-risking tools for projects.
The specific objectives of this contract were as follows:
1 - To provide an analysis of the state of play of municipal financing in all EaP countries, with particular focus on renewable energy, energy efficiency, climate, and environment.2 - To identify the magnitude of investment needs in municipalities and the investment gaps in these sectors, while taking into account absorption capacity and other limitations in municipalities.3- To develop an overview of and recommendations for 1) different financing modalities and instruments and 2) thematic sub-sectors of municipal investments that could be supported by the EU through those financial modalities. This shall include recommendations for optimal scale and scope for EU interventions.
The
main findings of the team include : They are too many small municipalities, this would require merging or projects to be grouped for an increased potential for innovation with Energy Efficiency and Renewable Resources Energies;Municipal budgeting in the EaP countries is hampered by single-year budgets;
Local government borrowing is limited not only by centrally imposed restrictions but also by the lack of creditworthiness since municipal creditworthiness varies by country;Visionary urban planning is needed as well as sectoral plans to see wider than just patching the current facilities and planning.
All countries have underdeveloped competitive generation and retail energy markets, which reduce the opportunities for municipalities to adopt innovative solutions
Municipalities are focusing on renovating existing systems and buildings, this has limited technologies innovation potential. Information exchange with EU needs improvement.
The recommendations integrated a reflection on the future actions supported by DG Near in the EAP and the suggestion to take a broader view of the support and activities that are needed for municipal investments. The importance of a shared vision relying on more than providing grants, loans, and energy technical support to repair facilities is highlighted. This relies on the three imperatives below:
The fundamentals of the Eastern Partnership:
The European Council
stresses the importance of the future Eastern Partnership being a more strategic, ambitious, flexible and inclusive framework for cooperation, allowing participants to tackle common and global challenges jointly in a wide range of areas, especially in the current unprecedented situation caused by the COVID-19
pandemic.The European Commission’s Green Recovery Plan focusing on building renovation, renewables and hydrogen as well as clean mobility and the circular economy; this should cover the needs arising directly from the COVID -19 pandemic and the resulting economic recession for the EaP region.
Application of equivalent measures of the EU Green Deal to the Eastern Partnership (including massive funding for building renovation to scale up, a Just Transition Fund and a climate Pact).
On top of this overall strategy, the study recommends: For national authorities to be responsible for bringing support to local authorities and ensuring proper decentralisation;
For municipalities to build on inter-municipal cooperation and use the Covenant of Mayors an opportunity for stronger knowledge sharing; Additional support with regards to capacity building at national and local levels;Continuation in using successful municipal financing models and trying new ones such as competitions for new buildings and EU cities grants for project concepts;Bundling similar technical projects, including with centralised project management; The exploration of new technologies for future adoption such electricity generation from biogas from WWTP sludge digestion, floating photovoltaics - PV - water supply reservoirs, Land for land-based PV, Broad-scale net-metering and/or Renewable Energy Clusters, etc;Information exchange and people-to-people activities should be given more importance in order to spread technical awareness and knowledge sharing.