The European Commission is actively responding to the new challenges faced by the European Union in the context of dynamic geopolitical changes, in particular due to Russia’s war against Ukraine, climate change and the energy crisis. The EC has presented new legislative proposals to update the EU’s cohesion policy. These proposals are based on the results of the interim review of the Cohesion Policy, which thoroughly analyzed the current state of affairs and new challenges that have arisen since the approval of the 2021-2027 programming documents. The Commission proposes to make Cohesion Policy more flexible, with a greater focus on strategic priorities such as security, energy transition, affordable housing, water sustainability and innovation, which is of particular importance for Ukraine as it deepens its cooperation with the EU.

Why is it important? For Ukraine, this update of the EU’s cohesion policy is an important example of a flexible response to changes in the external and internal environment, which is also relevant in the context of the revision of the State Strategy for Regional Development until 2027. In addition, it is an important signal in the negotiation process for Ukraine’s membership in the EU, especially with regard to Title 22 of the acquis, which covers regional development and cohesion policy. 

The adaptability and flexibility of the EU policy means that Ukraine, while formulating its own state regional policy, should take into account modern European approaches and new priorities. This will facilitate more effective integration of Ukrainian regions into the pan-European space and allow Ukraine to better prepare for future EU membership.

Experts of the Institute of Civil Society have analyzed how the cohesion policy has changed and how these changes will affect Ukraine’s progress towards the EU. Read the full article here, while we publish the key points. 

Changes for greater competitiveness

The Commission is extending its cohesion policy support to businesses of all sizes in response to industrial challenges, such as decarbonization, including the automotive sector. Given the central role of large enterprises in fostering innovation and technology transfer, the Commission proposes to provide them with cohesion policy support in critical areas such as defense, strategic technologies and decarbonization. This support will help businesses form local supply chains and technology clusters, ensuring that the EU has the infrastructure and technological capabilities to meet future challenges.

More focus on security

The announcement of the Cohesion Policy update comes amidst a changing geopolitical situation. Three years of support for Ukraine in its fight against full-scale Russian aggression, as well as the growing need for European defense capabilities, prompted the Commission to launch the ReArmEU initiative just a few weeks ago.

The EC’s announcement means that cohesion policies will be available to member states that choose to invest more in defense and critical infrastructure.

Water sustainability

Water management has become another priority in the proposed changes. As climate change leads to more frequent droughts and water shortages, the Commission has proposed measures to strengthen water resilience across the EU.

The European Regional Development Fund (ERDF) will support projects to improve water efficiency, digitalize water infrastructure, and mitigate the effects of desertification in line with, among other things, the Urban Wastewater Treatment Directive. This emphasis on water management recognizes the impossibility of overcoming future challenges without effective water infrastructure.

Addressing the housing crisis

While cohesion policy has already introduced initiatives to address this issue, the upcoming changes will allow Member States to access and mobilize more resources.

The Commission is proposing financial incentives for Member States to bridge this gap, especially in cities and regions where affordable housing is rare.

In particular, Member States and regions will also be able to attract private and concessional financing through a new financial instrument created jointly with the European Investment Bank. The instrument will combine cohesion financing with resources from the EIB, other international financial institutions, and national promotional and commercial banks.

Supporting the energy transition

The updated priorities reaffirm the emphasis on energy transition and investments in charging infrastructure and energy interconnectors – infrastructure elements that enable energy exchange between grids, electricity trade between territories, and peak load management.

This will be key to accelerating the energy transition and promoting clean mobility. In addition, the new proposals will make it easier for Member States and regions to finance decarbonization measures.

Flexibility and support for Member States

Finally, the Commission has responded to numerous calls for more flexibility in the use of funds. Member States will be able to transfer projects from the Recovery and Resilience Facility (RRF) to cohesion programs if they are not on track to be implemented by 2026. In addition, Member States will be able to receive up to 30% of funding upfront for projects addressing strategic priorities – and this funding is fully covered by the EU budget, without creating additional costs for countries and increasing financial flexibility.

Read the full article on the website of the Institute of Civil Society