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Over half of EU funding is channelled through five European Structural and Investment Funds, including the European Regional Development Fund (ERDF) and the Cohesion Fund (CF). These Cohesion Policy funds are jointly managed by the European Commission and Member States.
The Commission and Member States develop Partnership Agreements at the national level, and Operational Programmes at the regional level. The funds are then managed by responsible authorities in each Member State. In addition, cities have some funding at their disposal to implement integrated strategies for urban development. Across the 2014-2020 financing period, ESIFs dedicated around 20% of their overall allocations to clean urban transport, including €12.5 billion for urban public transport and €1.5 billion for walking and cycling. Both ERDF and CF constitue a traditional grant-based support and provide up to 85% of co-financing of the eligible costs.
As the first major fund, the European Regional Development Fund (€226 billion) aims to strengthen economic, social and territorial cohesion in the EU by correcting imbalances between its regions. ERDF grants are expected to contribute 30% of the overall financial envelope to climate objectives. Moreover, for the 2021-2027 period, at least 8% of ERDF will be allocated to sustainable urban development projects based on cities’ development strategies and their trajectories towards a climate-neutral economy. Within MFF 2021-2027, Specific Objectives related to ‘sustainable urban mobility’ and ‘sustainable transport’ are part of two extensive Policy Objective clusters, namely PO2 Greener Europe and PO3 Connected Europe.
As the second major fund, the Cohesion Fund (€48 billion) provides grants to Member States with a gross national income per capita below 90% EU-27 average to strengthen the economic, social and territorial cohesion. CF supports investments in urban and regional climate adaptation/mitigation and transport infrastructures, but also extends grants to TEN-T-based infrastructure projects under the Connecting Europe Facility. Flagship support areas include developing rail transport, supporting intermodality and strengthening urban and regional public transport. 37% of the overall CF financial allocations are expected to contribute to climate objectives.