What changed

on discharge in respect of the implementation of the general budget of the European Union for the financial year 2023, Section III - Commission, executive agencies and the ninth, tenth and eleventh European Development Funds

PA_NonLegDec

OPINION

The Committee on Regionalthe DevelopmentEnvironment, Climate and Food Safety calls on the Committee on Budgetary Control, as the committee responsible, to incorporate the following into its proposal for a decision:

1. Underlines that the Commission and the Court of Auditors have repeatedly stated that error is not synonymous with fraud; emphasises that the error rate does not necessarily indicate that the resources have been misspent, nor does it call into question the positive results and added value of cohesion policy; is worried that the Court of Auditors' estimate of the level of error in cohesion might be contributing to a negative image of the policy and of shared management in general; acknowledges that the risk of fraud is nevertheless a cause of concern and should be minimised; stresses therefore the importance of strengthening the single audit principle, reducing duplication, and clearly distinguishing between unintentional errors and fraud;

1. Is satisfied with the Commission's overall implementation of the budget in the areas of environment, climate action, public health and food safety in 2023;

2. Considers that the increase in the error rate for cohesion policy funds is rather symptomatic of the complexity of the rules applicable to this spending area and the insufficient administrative capacity of national, local and regional authorities; notes that overlapping eligibility periods and the simultaneous implementation of the Recovery and Resilience Facility (RRF) and of emergency response measures such as CRII(+), CARE and REACT-EU have created additional complexity for managing authorities;

2. Is satisfied with the work carried out by the five decentralised agencies under its remit, which perform technical, scientific or managerial tasks that support Union institutions in developing and implementing policies in the area of environment, climate action, public health and food safety, as well as with the way in which those agencies' budgets are implemented; stresses the need to ensure funding and staffing for the agencies and the Commission Directorates-General, given the growing scope of their responsibilities; highlights the value of exploring innovative funding mechanisms for the agencies, such as collaborative co-financing arrangements, and that these new funds could complement and enhance existing budgets;

3. Stresses that, in its most recent discharge opinions, the Committee on Regional Development called for an additional advisory support from the Commission to national, local and regional authorities to avoid a situation of administrative overload; recognises the Commission’s efforts but, observes that, regrettably, these have not been sufficient to mitigate the error risk; warns that a similar administrative overload might arrive at the end of the RRF eligibility period and the final years of the MFF; underlines the need to address the insufficient administrative capacity of national, local and regional authorities as a matter of urgency; calls on the Commission, in this regard, to provide them with clear guidance, and to increase its support for administrative capacity building, including through staff training, best practice sharing, peer-to-peer reviews and technical assistance to ensure effective fund management;

Environment and Climate Action

4. Reiterates that the above-mentioned factors, namely the overlapping programming periods and the simultaneous implementation of RRF, CRII(+), CARE and REACT-EU, have also contributed to the delays in the absorption of cohesion policy funds 2021-2027; notes that in 2023 payments for 2021-2027 programmes remained low, at 3.2%, which amounts to a one year delay when compared to the equivalent stage in the previous programming period;

3. Recognises that in 2023 about EUR 160 billion, approximately 38% of the Union budget, based on commitment appropriations, was dedicated to climate mainstreaming objectives, in line with the Interinstitutional Agreement of 13 April 2016 on Better Law-Making plans for at least 30 % of 2021-27 Multiannual Financial Framework (MFF) to be used for this purpose; notes that the largest contributions to those spendings come from the Recovery and Resilience Facility (RRF), the Common Agricultural Policy (CAP) and from cohesion policy programmes; notes that the Innovation Fund provided an additional EUR 6,5 billion in grants for projects advancing innovative low-carbon technologies;

5. Draws attention to the Court’s review on the main causes of errors in cohesion spending 2014-2020; welcomes the Court’s conclusion that the cohesion policy assurance framework has helped reduce the overall error level since 2007, but regrets it has not managed to bring it below the materiality threshold; points out that ineligible expenditure and projects were the most prevalent type of error, followed by non-compliance with state aid and public procurement rules;

4. Notes that the largest contribution to the climate-relevant spending in 2023 came from the Recovery and Resilience Facility (RRF); highlights that the delivery model of the RRF constitutes a significant change of EU financing in so far as the disbursement of funds is based on the fulfilment of targets and milestones and not linked to costs; in this context, is concerned about the Court of Auditors’(the ‘Court’) annual report for 2023 which, similar to previous years findings, states weaknesses in the design of measures and cases of vaguely defined milestones and targets, weaknesses in the Member States’ reporting and control systems and problems with the reliability of information that Member States included in their management declaration; also notes with concern the Court’s Special Report No 14/2024 that finds multiple shortcomings of the RRF framework and the national recovery and resilience plans as well as inconsistencies in the implementation of measures which call into question the achievement of its climate and environmental objectives, and that concludes that the contribution of the RRF to the green transition does not fulfil the intended objectives, particularly in the field of industrial decarbonisation;

6. Notes that a significant number of errors were detected on transactions related to 100% co-financed measures; notes that, without taking into account transactions with funding from REACT-EU, CRII+ and CARE, the error rate in Heading 2 would have been 4.3 %;

5. Emphasises that the climate and environmental objectives are an integral part of the RRF framework and national recovery and resilience plans and that spending and implementation must be aligned with, and contribute to, the fulfilment of the objectives of the green transition; expresses concern about the findings in the Court's Special Report No 14/2024 that a significant share of the audited measures in the national recovery and resilience plans did not have entirely justified climate coefficients, resulting in the likely overestimation of at least €430 million; agrees with the ECA's assessment that the Commission should have spotted these inconsistencies when assessing the plans;

7. Notes the uncertainties regarding the closure of the 2014-2020 programming period and welcomes that the Commission has taken additional steps to address this; emphasises the importance of a successful closure of the 2014-2020 programming period and urges the Commission to implement the Court’s recommendations (6.4) in this respect;

6. Stresses, in addition, the recommendations made by the Court of Auditors in its special report 15/2024 on climate adaptation in the EU; deplores the fact that more than a third of adaptation projects audited had little or no impact on increasing adaptive capacity, including projects on promoting large scale irrigation instead of switching to less water-intensive crops, constructing dykes and investing in artificial snow cannons; calls on the Commission in this regard to ensure that all relevant EU-funded projects are adapted to the current and future climate conditions, strengthening promotion of long-term cross-cutting and effective solutions for climate adaptation;

8. Notes that the latest long-term payment forecast produced by the Commission foresees substantial decommitments as of 2027 unless Member States undertake additional efforts and implement at a much faster pace than in the period 2014-2020; notes that for the CF, ERDF, and ESF+ cohesion policy funds, the Commission forecast total decommitments for 2024-2027 at €2.2 billion, more than five times its 2022 forecast of €0.4 billion; warns that for Just Transition Fund (JTF), the low implementation in 2023 puts important amounts at risk from 2025 onwards; calls on the Commission and on the Member States to use all the available possibilities to avoid decommitments;

7. Regrets the findings of the Court’s Special Report No 26/2023 regarding the performance monitoring of the RRF, which finds that milestones and targets vary in ambition and largely focus on outputs rather than results, that the common indicators used to monitor and report progress towards the RRF’s objectives do not cover all aspects of the RRF’s performance, and that reported data is limited and may not be reliable; furthermore, is concerned by the findings of the Court's Special Report No 14/2024 that the indicators used to monitor the performance towards the green transition are not designed to eventually track impacts for the performance of individual measures in terms of climate and environmental action and that, due to their limitations, the indicators cannot be used to assess the extent to which RRF climate-related measures are contributing to climate action;

9. Reiterates its previous calls for further simplification, which would make cohesion policy funding more accessible for beneficiaries and, at the same time, help reduce the risk of errors, especially in a context marked by the adoption of extraordinary legislative measures that have boosted flexibility in fund management;

8. Notes the findings of the Court’s Special report 13/2024 regarding the number of payment requests submitted and the limited funds of the RRF disbursed by the Commission to Member States and regrets the important gap between Member States in the administrative capacities to ensure absorption and implementation progress of that facility; recognises nevertheless the benefits of RRF pre-financing to facilitate the deployment of climate mitigation projects on the ground and for providing funding certainty to final recipients; acknowledges the responsibility for ensuring sufficient administrative capacity lies ultimately with each Member State;

10. Reminds that the 2021-2027 CPR already introduced far-reaching simplification and flexibility measures, but that it is still early to draw lessons from the current programming period; urges the Commission and the Member States to continue their cooperation in the current programming period to streamline unnecessarily complex rules and procedures wherever possible, work on a common interpretation of certain legal requirements and avoid gold-plating; furthermore, recalls the need for minimizing administrative burden for local and regional authorities, but for beneficiaries in particular; calls to avoid, in future, recurrent changes in the cohesion legal framework and the administrative burden they entail;

9. Underlines the importance of proper scrutiny of climate expenditure in the Union budget, and holds the Commission accountable for the implementation of a robust and reliable methodology, in line with the commitments undertaken in the MFF agreement and paragraph 16d of the Interinstitutional Agreement of 16 December 2020 between the European Parliament, the Council of the European Union and the European Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management, as well as on new own resources, including a roadmap towards the introduction of new own resources; calls on the Commission to follow the Court’s recommendations in the relevant reports to better estimate climate spending under future funding instruments, to ensure adequate design of future funding instruments that are to support the climate and environmental objectives and targets, to enhance the performance of green transition measures and to ensure comprehensive, consistent, reliable and transparent reporting on climate spending under the RRF;

11. Acknowledges that, to achieve genuine simplification, more drastic changes are needed in the post-2027 legislative framework; calls for the adoption, post-2027, of a simpler budgetary framework and of a single set of rules for beneficiaries to facilitate access and compliance; calls as well for the further expansion of Simplified Cost Options; furthermore, stresses the critical role of digitalisation in the management of EU funds;

10. Reiterates its concern that the significant risks to the security and protection of the registry and operating mechanism of the Union system for greenhouse gas emission allowance trading against cyberattacks have still not been adequately addressed; points out that this issue has been highlighted in the Annual Activity Reports (AARs) since 2010, with reservations raised in each report; notes that this concern is once again emphasised in the Directorate-General for Climate Action’s 2023 AAR, further underscoring the persistent failure to prioritise the security of the system;

12. Stresses that any simplification efforts must be pursued consistently by all relevant EU and national actors; insists on the importance of strengthening administrative capacities at national, local and regional level to ensure the proper implementation of funds in a simplified regulatory environment;

11. Notes that about EUR 20 billion, approximately 5% of the Union budget, was dedicated to the biodiversity mainstreaming objective, under various programmes e.g. the CAP, the RRF, cohesion policy programmes and the LIFE programme; urges the Commission to maintain its efforts to meet the targets for biodiversity mainstreaming of 7.5% for 2024 and 10% for 2026 and 2027 in particular following the revision of the CAP earlier this year ; welcomes the update to the biodiversity tracking methodology for expenditures under the CAP, but stresses that the Commission must take further action across all relevant programmes to ensure clear and transparent reporting on how these funds are delivering concrete and measurable biodiversity improvements;

13. Underlines that shared management, the partnership principle and subsidiarity should remain the cornerstone of any reform or simplification of cohesion policy;

Public health

14. With simplification in mind, urges the Commission and the Member States to adopt a more territorial and decentralised approach to regional development policy, ensuring that funding decisions are made by those closest to the ground, who have the best understanding of the regions where the funds are spent;

12. Recalls the EU4Health programme's transformative role in supporting public health policy objectives of the Union; regrets that the EU4Health programme suffered disproportionate cuts in 2023 of EUR 1 billion and that future public health actions in the Union will have to be downsized and the spending profile amended despite their importance for Union citizens; recalls the importance of the public health policies and the clear political commitment in the 2020 MFF agreement to prioritise health funding;

15. Calls on the Commission to apply partnership and evidence-based approaches to any future reform to simplify cohesion policy, with all simplification proposals developed through open and continuous dialogue with local and regional authorities and relevant stakeholders, including civil society organisations, SMEs and audit institutions; recalls, in this respect, that in line with Article 11 TEU, EU institutions must maintain an open, transparent and structured dialogue with civil society organisations and representative associations;

13. Notes that in 2023, the budget of the EU4Health programme, the main financial instrument to support Union health initiatives, was EUR 735 million, mainly managed by Directorate-General for Health and Food Safety and the Health Emergency Preparedness and Response Authority (HERA) and implemented through the European Health and Digital Executive Agency; acknowledges the progress of initiatives funded under this programme, notably in the areas of health emergency preparedness, the Beating Cancer Plan, the Pharmaceutical Strategy for Europe and in the implementation of Union health legislation;

16. Recalls the importance of a stronger gender mainstreaming and gender budgeting in cohesion policy that represent a real benefit to the distribution of funds;

14. Notes that HERA, established in 2021, has continued in 2023 to grow the number of its staff and to expand its operations; welcomes the progress of HERA’s efforts in ensuring the Union’s preparedness and crisis response readiness for health emergencies as well as its involvement in collaborations with international partners to increase global preparedness, prevention and detection of health emergencies;

17. Highlights the important role of the European Anti-Fraud Office and the European Public Prosecutor’s Office (EPPO) in protecting the financial interests of the Union; welcomes that in 2023 working arrangements have been signed between the EPPO and Denmark, and that cooperation started with Poland and Ireland; calls for an enhanced cooperation between OLAF, EPPO and national authorities to strengthen the detection and prevention of fraud in cohesion policy spending; stresses the need to keep supporting the EPPO with the necessary financial and human resources; is of the opinion that a strengthened EPPO is essential for the legislator to be able to further simplify the regulatory framework for cohesion; encourages the use of Artificial Intelligence (AI) for detecting frauds in financial transactions;

15. Recalls the Commission’s commitment to carry out a thorough review of the implementation of HERA’s operations by 2025 and to consider changing its structure and governance, including in order to transform it into a genuine agency with an autonomous budget;

18. Underlines that cohesion policy must not contribute to misuse of EU funds or further deterioration of the Rule of Law and democracy in Member States;

16. Regrets the findings of the Court's Special Report No 26/2023 that several policy areas in the RRF's pillar containing health policies lack a corresponding common indicator to measure progress; is concerned that this impedes the proper monitoring and understanding of progress made towards achieving milestones and targets linked to health policies;

19. Acknowledges that, thanks to the short-term, targeted flexibilities introduced through CRII(+), CARE and REACT-EU, cohesion policy played a key role in addressing the consequences of the Covid-19 pandemic, Russia's aggression in Ukraine and the resulting energy crises; stresses, however, that the role of cohesion policy is to reduce disparities across the EU by contributing to competitiveness, the just transition and climate change mitigation and adaptation; considers that cohesion policy should, in the post-2027 framework, be established as the foremost expenditure priority of the EU, reflecting its critical role in contributing to the EU’s strategic priorities, such as reducing development disparities, and to the functioning of the Single Market; reiterates, therefore, that the EU’s response to crises or to emerging priorities should not come at the expense of the long-term structural cohesion objectives;

17. Calls on the Commission to take corrective action addressing the shortcomings identified by the European Court of Auditors and the concerns expressed by the European Parliament;

20. Underlines the need for the new multiannual financial framework to be better designed to allow the use of relevant instruments, outside of cohesion policy, to respond to crises and adapt to emerging needs in the post-2027 period;

18. Is of the opinion, on the basis of the data and reports available, that discharge can be granted to the Commission in respect of expenditure in the areas of environment, climate action, public health and food safety for the financial year 2023.

21. Stresses that, in the next programming period, local and regional authorities should be more involved in the design and implementation of cohesion policy to ensure that funds are effectively targeted and address the specific needs of communities; calls for a revision of the European Code of Conduct on Partnership to enhance its application and extend its reach to the European Semester, in order to enable investment and reform priorities to be developed in collaboration with local and regional governments, ensuring alignment with the needs of the EU’s regions;

22. Calls for the establishment of mechanisms to facilitate direct access to cohesion funds for local authorities, in an appropriate manner, always in line with cohesion policy long-term objectives;

23. Stresses the need to draw up new regulations and a financial framework, as part of the cohesion policy, which would include aid instruments for border regions at the eastern border of the European Union, in countries bordering Russia, Belarus and Ukraine.

ANNEX: ENTITIES OR PERSONS FROM WHOM THE RAPPORTEUR HAS RECEIVED INPUT

The Chair in his capacity as rapporteur for the opinion declares under herhis exclusive responsibility that shehe did not receive input from any entity or person to be mentioned in this Annex pursuant to Article 8 of Annex I to the Rules of Procedure.

INFORMATION ON ADOPTION BY COMMITTEE ASKED FOR OPINION

Date adopted

28.1.2025

18.2.2025

Result of final vote

0:

32

56

0

24

2

1

Members present for the final vote

Pascal Arimont, Fredis Beleris, Adrian-Dragoş Benea, Daniel Buda, Andi Cristea, Klára Dobrev, Christian Doleschal, Kathleen Funchion, Raquel García Hermida-Van Der Walle, Gabriella Gerzsenyi, Sérgio Gonçalves, Krzysztof Hetman, Ľubica Karvašová, Isabelle Le Callennec, Nora Mebarek, Ciaran Mullooly, Elena Nevado del Campo, Andrey Novakov, Vladimir Prebilič, Sabrina Repp, Marcos Ros Sempere, Antonella Sberna, Mārtiņš Staķis, Şerban Dimitrie Sturdza, Rody Tolassy, Raffaele Topo, Francesco Ventola, Marta Wcisło

Grégory Allione, Vytenis Povilas Andriukaitis, Pascal Arimont, Bartosz Arłukowicz, Sakis Arnaoutoglou, Anja Arndt, Thomas Bajada, Alexander Bernhuber, Barbara Bonte, Stine Bosse, Lynn Boylan, Delara Burkhardt, Pascal Canfin, Annalisa Corrado, Antonio Decaro, Ondřej Dostál, Pietro Fiocchi, Emma Fourreau, Anne-Sophie Frigout, Heléne Fritzon, Gerben-Jan Gerbrandy, Andreas Glück, Hanna Gronkiewicz-Waltz, Anja Hazekamp, Esther Herranz García, Martin Hojsík, Pär Holmgren, Romana Jerković, Radan Kanev, Stefan Köhler, Ewa Kopacz, András Tivadar Kulja, Katri Kulmuni, Peter Liese, Javi López, César Luena, Elżbieta Katarzyna Łukacijewska, Ignazio Roberto Marino, Tilly Metz, Dolors Montserrat, Dan-Ştefan Motreanu, Jana Nagyová, Rasmus Nordqvist, Jacek Ozdoba, Jutta Paulus, Carola Rackete, Massimiliano Salini, Silvia Sardone, Majdouline Sbai, Lena Schilling, Jonas Sjöstedt, Sander Smit, Claudiu-Richard Târziu, Ingeborg Ter Laak, Beatrice Timgren, Dimitris Tsiodras, Filip Turek, Ana Vasconcelos, Aurelijus Veryga, Kristian Vigenin, Alexandr Vondra, Emma Wiesner, Michal Wiezik, Milan Zver

Substitutes present for the final vote

Maravillas Abadía Jover, Cristina Guarda, Elsi Katainen, Elena Kountoura, Julien Leonardelli, Denis Nesci

Stefano Cavedagna, Per Clausen, Valérie Deloge, Gabriella Gerzsenyi, Jens Gieseke, Sunčana Glavak, Nicolás González Casares, Michalis Hadjipantela, Matteo Ricci, Chloé Ridel, André Rodrigues, Bruno Tobback, Raffaele Topo, Laurence Trochu

FINAL VOTEMembers BYunder ROLLRule CALL216(7) INpresent COMMITTEEfor ASKEDthe FORfinal OPINIONvote

Salvatore De Meo, Nora Junco García, Alexander Jungbluth, Julien Leonardelli

FINAL VOTE BY ROLL CALL BY THE COMMITTEE ASKED FOR OPINION

Key to symbols: