European City Facility

Expected Impact:Proposals should present the concrete results which will be delivered by the activities and demonstrate how these results will contribute to the topic-specific impacts.

This demonstration should include a detailed analysis of the starting point and a set of well-substantiated assumptions and establish clear causality links between the results and the expected impacts.

Proposals should demonstrate how they will contribute to the follow-up and scaling up of the fundamental approach of the current European City Facility.

Proposals should quantify their results and impacts using the indicators provided for the topic, when they are relevant for the proposed activities. They should also propose indicators specific to the proposed activities. Proposals are not expected to address all the listed impacts and indicators. The results and impacts should be quantified for the end of the project and for 5 years after the end of the project.

The indicators for this topic include:

• Number of investment concepts delivered, and in particular number of investment concepts delivered to implement local heating and cooling plans.
• Number of investment concepts transformed into ambitious tangible investments as a result of the action.
• Number of public authority staff with increased capacity for developing investment concepts for energy efficiency, and integrated energy transition investments combining energy efficiency and renewables.

Proposals should also quantify their impacts related to the following common indicators for the LIFE Clean Energy Transition sub-programme:

• Investments in sustainable energy (energy efficiency and small-scale renewables) triggered by the project (cumulative, in million Euro).
• Primary energy savings triggered by the project (GWh/year).
• Renewable energy generation triggered by the project (GWh/year).
• Reduction of greenhouse gases emissions (in tCO2-eq/year).

Funding rate

Other Action Grants (OAGs) — 95%

Objective:Under this topic, a ‘European City Facility’ shall be run under the LIFE CET programme. This facility should build on the experiences of the current European City Facility[1] (EUCF) and envisage an appropriate follow-up and scaling up of its fundamental approach.

To achieve the ambitious objectives of the EU climate and energy policy, significant investments in energy efficiency and renewable energy are needed to reach the energy transition goals established in the EU energy transition legislative framework (Energy Efficiency Directive - EED, Renewable Energy Directive - RED, Energy Performance of Buildings Directive - EPBD). This is particularly important to meet the specific climate and energy targets set for 2030 and climate neutrality by 2050 and contribute to the Affordable Energy Action Plan[2] objective of lowering energy costs, particularly with regard to delivering energy savings and renewable electricity supply.

In this context, the revised EED and EPBD aim to increase the cost-effectiveness of public funding and the mobilisation of private investments in energy efficiency measures. In addition, the EU legislative framework establishes important obligations for local authorities and public bodies, such as Article 25 EED on local heating and cooling plans, Article 26 EED on district heating and cooling transition, Article 6 EED on public building renovations, as well as Article 10 EPBD on solar energy in buildings, including for existing public buildings.

European cities and municipalities play a key role in aggregating smaller projects into sizable packages and have a significant potential in the mobilisation of the substantial amount of finance needed for the energy transition. For instance, the current European City Facility has so far supported the development of more than 400 investment concepts for energy efficiency and renewable energy investments.

However, the significant challenges ahead demand further contributions from European cities and municipalities in developing and scaling up investment packages. An important and still persisting gap is the lack of capacity and/or resources of public authorities, especially in small and medium-sized municipalities, to transform their long-term climate and energy strategies, for instance Sustainable Energy and Climate Action Plans (SECAPs) or local heating and cooling plans[3], into mature investment concepts which can enable access to different finance sources. Public authorities in many cases lack (access to) financial, technical and legal expertise needed to collect relevant data, develop an investment programme of scale which, for instance, bundles projects with neighbouring constituencies, or design sufficiently mature finance strategies.

Such investment concepts should allow a larger number of European cities and municipalities to start or intensify the process of mobilising investments in energy efficiency and renewable energy in a tailored and target-oriented way. Depending on the underlying investment portfolio and structure, such concepts can be used to directly approach investors and/or financiers for more in-depth investment discussions and negotiations, and/or, where relevant, envisage combination/blending with other EU financing streams and services to trigger the expected investment[4].

Scope:Proposals should take into account the experience of the ongoing EUCF in addressing the above issues and envisage an appropriate follow-up and scaling up of its fundamental approach.

In this context, proposals are expected to run a 'European City Facility' which offers financial support and related services to European cities, municipalities or their groupings to develop investment concepts for energy efficiency and integrated energy transition investments combining energy efficiency and renewables.

These concepts should be developed within a limited period of time and cover, among the others, a clear identification of the potential project pipeline, a legal analysis, a governance analysis, a description of how the investments will be financed and a design of the process to launch the investments.

In particular:

• proposals are expected to deliver financial support to third parties, in the form of lump sum grants to cities, municipalities or their groupings which should represent 70-75% of the budget.
• in accordance with the general call conditions on financial support to third parties, applicants should clearly specify why financial support to third parties is needed and how it will be managed and provide a list of the different types of activities for which a third party may receive financial support. The process and criteria for allocation of financial support to third parties need to conform to EU standards concerning transparency, equal treatment, conflict of interest and confidentiality. The proposal must also clearly describe the results to be obtained and include the possibility of organising calls with a regional/sectorial focus;
• applicants should demonstrate the capacity to run a financial support scheme at large scale in accordance with LIFE CET standards and that they are able to select the most cost-efficient and appropriate applications considering, among other things, the scale of the potential investment and energy savings, as well as the number of inhabitants covered in the specific context targeted;
• the European City Facility should offer services at the national level to support cities and municipalities in call applications, investment concept development, identification of financing streams and investment implementation processes.
• the European City Facility should also implement appropriate capacity building schemes, in particular to help beneficiaries of the lump sum grants to use the financial support in the most effective manner and guide them in the post-investment concept phase;
• additionally, the European City Facility should offer opportunities for exchange of best practices among cities and municipalities, including at national level, with a view to remove existing barriers and enable the uptake and efficient operationalisation of the investment concepts;
• furthermore, the European City Facility should establish an appropriate framework for comprehensive monitoring, analysis, capitalisation, communication and dissemination of results and success stories, notably the monitoring of the investment potential represented by the investment concepts, as well as the investment volumes secured and actually implemented after the end of the lump sum grant; this should include the targeted investment sectors and the related source(s) of funding/financing.

Applicants should be deeply rooted in municipal sustainable energy/climate planning and financial engineering of energy efficiency investments and integrated energy transition investments combining energy efficiency and renewables.

Applicants should also demonstrate a deep understanding of the strategic nature of this initiative, including the different challenges for upscaling finance and, in particular, for mobilising private financing sources.

In addition, applicants should also demonstrate that they are able to mobilise a critical mass of cities/municipalities or their groupings and have a sound and inclusive outreach strategy to cities and municipalities across Europe.

In order to qualify for support through the European City Facility, cities and municipalities or their groupings should, among other things, provide proofs of political commitment, clarify existing planning processes and resources, demonstrate - on the basis of politically approved SECAPs, local heating and cooling plans, or plans of similar ambition - a substantial potential of investment and energy savings in the context targeted. Additionally, they should describe the investment sectors addressed, the type of financial solutions envisaged and the governance to develop the investment concept. Furthermore, they need to develop a convincing strategy to engage key stakeholders in technical and financial areas, as well as citizens, plan long-term capacity building actions within the public administration, and commit to a monitoring of investment implementation for at least 1 year.

The EUCF should work hand in hand with existing DG Energy initiatives, such as the Smart Cities Marketplace[5] and the Covenant of Mayors[6], ensuring integrated approaches, exploring synergies on tools and services offered, and pursuing complementarity when facilitating the financing and implementation of the developed investment concepts.

Proposals must be submitted by at least 3 applicants (beneficiaries; not affiliated entities) from 3 different eligible countries.

The Commission intends to select one single proposal under topic LIFE-2025-CET-EUCF.

The Commission considers that proposals requesting a contribution from the EU of up to EUR 15 million would allow the specific objectives to be addressed appropriately. Nonetheless, this does not preclude submission and selection of proposals requesting other amounts.

[1] https://www.eucityfacility.eu/

[2] https://energy.ec.europa.eu/strategy/affordable-energy_en

[3] In case of district heating and cooling, plans referred to in Article 26.5 EED should be taken into account.

[4] For instance, Cohesion Policy Funds, InvestEU Fund, National Recovery and Resilience Plans, Project Development Assistance Facilities such as LIFE CET PDA or EIB ELENA and National Investment Platforms.

[5] https://smart-cities-marketplace.ec.europa.eu

[6] https://eu-mayors.ec.europa.eu/en/home