Everything cities want to know about the next EU budget in one Q&A

In the proposal, the LIFE programme is no longer a standalone programme. Its activities will move to the Clean Transition and Industrial Decarbonisation pillar (67.4 bn€) of the Competitiveness Fund under “LIFE-type activities” that will aim at “providing support to bottom-up projects for the demonstration, testing and market uptake of innovative solutions and best practices in clean transition and industrial decarbonisation and awareness raising on climate and environment to relevant governance level”.

The EU support is proposed to be up to 100% of eligible cost with a possibility to authorise or impose “in the form of flat-rates, funding of the beneficiary’s indirect costs up to a maximum of 25 % total eligible direct costs, excluding direct eligible costs for subcontracting, financial support to third parties and any unit costs or lump sums which include indirect costs” (see article 34 of the European competitiveness Fund proposal) which would be more than in the current period. Other modalities and eligibility criteria are to be defined.

The biodiversity and natural resources dimensions of the former LIFE programme are only mentioned as inspiration for the National Regional and Partnership Plans.

Yes. Horizon Europe will continue as a standalone programme and will work in close connection with the European Competitiveness Fund (ECF) to cover the innovation cycle from research to market deployment. Horizon Europe is the largest sub-programme of the ECF with €175 billion, doubling size compared to the current MFF.

It will maintain the 4-pillar structure: 1)Excellent Science; 2) Competitiveness and Society; 3) Innovation; 4) European Research Area (ERA). Horizon Europe will continue to organise multi-annual work programmes, and finance new Mission initiatives and some continuation of the current ones: the Climate-neutral Cities Mission and the New European Bauhaus, in which local governments and neighbourhoods are central. Also, some specific clusters identified are very relevant for local governments such as the cluster on decarbonisation, circular economy, housing, democracy, and digital transitions (pillar 2).

In the proposal, cities are unfortunately not a specific category for beneficiaries nor a strategic actor but are part of the implementation environments, innovation ecosystems, and testbeds for transformation category.

Yes. The proposal foresees €10.26 billion for European territorial cooperation, namely an Interreg programme (small increase). Member States will have to draft a single Interreg Plan that will be integrated into the National regional and partnership Fund but have a separate plan. The Interreg Plan will include chapters for specific geographical areas supporting cross-border, transnational and interregional cooperation that will be implemented with shared management. The plans will integrate elements from the Global Europe Instrument to work with outermost regions.

For more details, check the proposal for regulation.  

Not as such. The ERDF is proposed to be part of the new European Fund for economic, social, and territorial cohesion, agriculture and rural, fisheries and maritime, prosperity and security, operated via the new National and Regional Partnership Plans. The ERDF would therefore operate strictly under the NRP plans. It is expected to continue serving similar objectives to help to redress the main regional imbalances in the EU, particular attention is required to address challenges of disadvantaged regions and areas and support integrated urban development strategies.

Concretely, local governments might no longer benefit directly from ERDF but could indirectly via the NRP plans. Thus, the characteristics, structures, chapters, and earmarking of the NRPPs will be decisive for local authorities.

No. The European Social Fund (ESF) will be one of the funds grouped under the 27 National and Regional Partnership Plans (NRPPs). It is expected to pursue the same objectives and include measures related to “education, employment and social objectives such as reforms and investments to reskill and upskill people, improve the quality of education and training systems, fighting poverty and homelessness”.

In general, in the proposal, the idea of “just transition” is reframed as a “clean transition”. Also, the European Commission proposes a social earmarking for 14% of the NRPPs.   

No. It can be integrated in the National and Regional Partnership Fund, in which an earmarking (€217.8 billion) is foreseen for less developed regions (i.e. regions whose GDP per capita is less than 75 % of the average GDP per capita of the EU-27).

Regions benefiting from the Just Transition Mechanism today have committed to implement a strategy that runs until 2030 or 2040,  but would not have a dedicated earmarking. Indeed, less developed regions are not all the same as transitions regions. This is alarming.

The Social Climate Plans will be integrated into the National and Regional Partnership Plans (NRPPs) as of 2028.

35% of the budget must go to climate and environment (43% for the Competitiveness Fund and the National and Regional Plans). The European Commission also proposes extending the Do Not Significantly Harm (DNSH) to the entire EU long-term budget.

Partly. €158.2 billion is foreseen strictly for energy and climate projects across different envelopes (according to the media Contexte) and in particular Connecting Europe Facility, the Competitiveness Fund, the nuclear safety decommissioning programme and Euratom (nuclear research and innovation). The new programme will fund nuclear technologies that were taboo in the past.

But big industrial and infrastructure projects may take priority over smaller local ones. Cities may struggle to access funds for their own investment, and a lot will depend on how Member States manage National and Regional Partnership Plans.

The Commission propose that at least 14% of National and Regional Partnerships Plans are dedicated to social expenditure. The specific objectives of the fund that will finance the NRP plans include social issues such as housing and social cohesion (e.g. employment, skills, access to infrastructure…). The plans would have to address the country-specific recommendations ( EU semester) in the social policy area, and contribute to the implementation of the European Pillar of Social Rights.

There is currently some possible direct EU funding foreseen for the NRP. Unlike previous ERDF programmes, the National and Regional Partnership (NRP) Plans do not include binding earmarking for urban areas—only for less developed regions.

The Commission’s proposal for the NRP encourages Member States to apply a shared management approach (involving both the European Commission and Member States), similar to previous arrangements under ERDF, the Cohesion Fund, and ESF+. Regions might be able to continue to be Managing Authorities. The proposal reaffirms that “Regions will remain at the centre of the Fund, with the partnership principle and multi-level governance as key elements.” However, the inclusion of regional chapters in the NRP is only suggested “when relevant,” and not mandatory.

But the proposal creates a new “EU facility” for direct funding programme, under which , it is expected to continue initiatives like the Urban innovation action (UIA), it is nevertheless not specified as such.

In the European Competitiveness Fund, local governments are not explicitly recognised as key beneficiaries and actors of the competitiveness and innovation but are rather seen as “deployment environments ». They would have access to the fund via consortia and would therefore depend on national authority or large industrial players to access such consortia and the fund.

Overall, the role of cities and local governments remains weak, due to limited multilevel governance mechanisms, the absence of urban earmarking, and the lack of a mandatory territorial chapter.

Yes, for the National, Regional and Partnership Plans. But it has not been strengthened and is not present in other instruments (Competitiveness Fund). Energy Cities is working with the other cities networks to change this.

Kind of. They follow a similar model: Member States will draw up a plan that will be approved by the European Commission. This is a reform against the investment model, with conditions, milestones and decompositions (if not spend the money go to the general EU budget managed by the European Commission). But the NRPPs include partnership and mention multi-level governance (although it should include stronger safeguards), while the RRP only suggested consultation with local and regional authorities. Also, their purpose and timescale are quite different.

Looking at the poor spending results / absorption of the RRPS, Energy Cities believes that the NRPs plans should be very much improved to ensure place-based investments.

A decommitment mechanism (i.e. if a Member State fails to implement a reform required for investment, the money go back to the EU money pot managed by the European Commission) is proposed in the National and Regional Partnership (NRP) Plans. But there is no guarantee that local or regional authorities from the concerned Member State will still be able to access EU funding in concerning their role and responsibilities. The safeguards must therefore be improved.

The Commission made its proposal on 16 July 2025. The Parliament and the Council will now work on it and negotiate on both separately and together on each aspect of the EU budget. The negotiations are expected to continue until 2027, before the entrance into force of this new budget in January 2028.

Member States should submit draft National and Regional Plans from June 2027.

It is essential to make local governments’ voices heard! Energy Cities will do so with its partners and other cities network (Local Alliance) as the European level. And we will organise monthly webinar with our members to inform on the latest negotiation’s development.

If you are interested in influencing the next MFF at the EU level, reach out to Claire or Mélanie.

If you are willing to influence the position of your government, reach out to any national associations of cities or regions, send a letter and request a meeting with the Finance or European Affairs ministries to share your views. Contact us for support!