Your brief guide to the 7 EU programmes funding the energy transition in cities

The programmes, the amounts and their focus


Publication date

September 15, 2020

The EU has a number of funding sources available to cities. They have their own focus, operational guidelines and requirements. This is a brief rundown of each of those programmes to help cities access the help they need in building a decarbonised, decentralised and democratised future.

Name: Horizon Europe

Amount: €86 billion

Dates: Runs from 2021-2027

Goal: Incorporate research and innovation missions to increase the effectiveness of funding by pursuing clearly defined targets.

In general: Things are getting easier. The new Horizon Europe proposal features a simplified process for two-stage calls with streamlined and reduced templates for financial and technical reporting. Horizon Europe includes multilingual support through a portal for funding and tenders with a climate, energy and mobility cluster with two relevant call areas:

  1. Communities & Cities (focus on zero-emission mobility, positive energy districts, urban social innovation and a global cities research agenda)
  2. Energy systems & Grids (focus on integrated approaches to match renewables production & consumption locally, based on new services & community initiatives)

Name: Cohesion Policy (& REACT-EU from recovery plan)

Amount: €55 billion

Dates: Runs from 2020 to 2027 with extra recovery funds provided in the first three years.

Goal: The two main priorities (receiving 65% and 85% of ERDF and Cohesion funding) are Smarter Europe, meaning innovation, digitalisation, economic transformation and support to small and medium-sized businesses and a Greener, carbon free Europe, implementing the Paris Agreement and investing in energy transition, renewables and the fight against climate change. A secondary priority is a Europe closer to citizens, which supports locally-led development strategies and sustainable urban development across the EU.

In general: While the allocation per member state is decided by the EU Commission, there is no obligation for countries to allocate the money to priorities (e.g. sustainable urban development or to green transition projects. On the plus side, there is 100% co-financing for the additional recovery package money. The governance mechanism remains the same as in the previous period, which means a monitoring committee, the partnership principle and in some countries the cities/metropolitan areas involved are allowed to manage funds on their own.

Name: Just Transition Mechanism           

Amount: €17,5 billion

Dates: Runs from 2021 (for the submission of plans) to 2027

Goal: Alleviate the socio-economic impact of the transition in regions dependent on carbon intensive fuels and industry.

In general: Proposed Territorial Just Transition Plans must be submitted in 2021 and the Mechanism then runs until 2027. The Just Transition Fund is under shared management by EU & Member States and is a dedicated scheme under InvestEU (EU investment instrument). There is a public sector loan facility by EIB which combines the grants from EU funding to support the Just Transition in the regions listed here. Eligible territories also benefit from a technical assistance facility while the overall governance is similar to the Cohesion Policy. Calls for projects will be launched in each Member State, so be sure to contact the relevant authority in your country to take advantage of the subsidised loans (i.e. concessional loans) provided by the EIB. Projects must contribute to territorial just transition plans, require an EU contribution and preference will be given to projects that also contribute to the climate transition.

Name: INTERREG programme    

Amount: € 8,5 billion      

Dates: First calls expected in 2021 and runs until 2027

Goal: Help regional and local governments across Europe to develop and deliver better policy by ensuring that government investment, innovation and implementation efforts all lead to integrated and sustainable impact for people and place.

In general: The framework of the previous INTERREG programme is largely carried over with a maximum co-financing rate set at 70%. There will be Interregional Innovative Investments (known as I3) as a new way to create regional clusters across Europe specialised in a certain area (e.g. circular economy, connected mobility, big data, hydrogen, etc.)

Name: Horizon Europe mission on climate neutral cities 

Amount: €2 billion (proposed)

Dates: Call launched in 2021/2022 and city selection/implementation from 2022 to 2030.

Goal: Support 100 cities to become climate-neutral by 2030

In general: Climate-neutral cities are built around the concept of a Climate city contract that includes a multi-level co-creation process. Crucially, cities need to join with stakeholders and citizens to answer the call for proposals, and the threshold to get funding will have to include a very convincing contract that addresses Scope 1, Scope 2 & Scope 3 emissions.

Selected cities will receive Horizon Europe funding, combined potentially with national funding (if any) and funding from the EIB. The Mission Board has proposed a Climate City Lending & Blending facility, but this has not yet been adopted by EU institutions. Decisions on which cities get selected & funded under the Mission will be made by the Mission Board, Commission & Member States.

Name: LIFE clean energy transition sub-programme        

Amount: €1 billion proposed     

Dates: First calls expected in 2021 and runs until 2027

Goal: Increase capacity-building and market-uptake for renewables by working with local, regional and national government while protecting consumers and citizens.

In general: There are a lot of important details still unconfirmed about this sub-programme. Two of the big outstanding questions are whether the burdensome administrative conditions will be maintained and what the co-funding rate will be – according to Energy Cities’ sources, it seems Member States are fine with the 95% co-funding for CSA projects in energy, but this co-funding rate must also be implemented in the other LIFE areas (nature, biodiversity, circular economy) to avoid discrimination

Name: EU Urban Initiative (URBACT, JPI Urban Europe, UIA)

Amount: €500 million

Dates: First calls expected in 2021 and runs until 2027

Goal: Strengthen integrated and participatory approaches to sustainable urban development and provide a stronger link to relevant EU policies

In general: The upcoming EU Urban Initiative largely carries over & clusters together URBACT, JPI Urban EU, Urban Innovative Actions & Urban Development Network. It supports the thematic areas of the Urban Agenda in 3 different ways:

– support of capacity building (20% of budget)

– support of innovative actions (60% of budget)

– support of knowledge, policy development & comms (20% of budget)