The TEN-T Executive Agency and the financing of railway projects

The Trans-European Transport Network Executive Agency (TEN-T EA) is an Executive Agency of the European Union which was created in 2006 by the European Commission to implement the TEN-T programme on its behalf and in particular to monitor the technical and financial implementation of all TEN-T projects. The Agency is in charge of all open TEN-T projects under the 2000-2006 and 2007-2013 funding schemes. The projects represent all transport modes – air, rail, road, and waterborne (maritime/inland waterway) – plus logistics and intelligent transport systems and involve every EU Member State. For the EU’s 2007 to 2013 funding period, or financial framework, €7.2 billion has already been allocated out of a maximum possible budget of €8 billion. The lion’s share of the financing has been allocated to the rail sector, in recognition of the necessity to develop high-speed lines in Europe, to upgrade existing ones and to introduce a common approach to management and safety issues through intelligent transport systems solutions like the European Rail Traffic Management System (ERTMS).

So how do the Member States get access to this funding?

The Agency is also responsible for organising yearly calls for proposals to allow Member States to use EU co-financing to build and upgrade their transport infrastructure. The calls are the tool used to competitively allocate funding to the best possible project proposals within predetermined project areas. These are laid down each year in the Annual and Multi-Annual work programmes by the Directorate General for Mobility and Transport of the European Commission (DG MOVE).

From drawing board to project: financing infrastructure through calls for proposals

The Multi-Annual Calls aim to give an important impetus to the implementation of the 30 infrastructure axes – the TEN-T Priority Projects – and to address some horizontal priorities. For this purpose, EU funding aims to mobilise as much public and private financing as needed to meet the challenging task. In general, Multi- Annual projects are of a larger size and longer in duration than their Annual counterparts and this is why the bulk of the funding – 80-85% of the TEN-T budget – is allocated in this way.

Annual Calls are intended to complement the Multi-Annual Calls, thus giving priority to projects that address key issues such as bottlenecks or cross-border sections. Since a smaller portion of the TEN-T budget (15-20%) is dedicated to Annual Calls, these are not suited to cover large projects over a long period of time. This however means that they have a greater degree of flexibility to meet emerging policy priorities. The flexibility offered by the Annual Call has been used to develop innovative ways to finance infrastructure projects, notably through Public- Private Partnership (PPP) schemes. This solution was presented for the first time in the 2010 TEN-T Annual Call for Proposals and will see private capital partly finance infrastructure projects. In the future, a growing share of transport infrastructure projects may be financed as PPPs.

In practical terms, each call has a predetermined schedule that can be briefly summarised as: publication, information, evaluation and decision.

After the publication of the relevant call text in the Official Journal of the European Union, an information day is organised by the Agency, usually in Brussels, to allow potential applicants to know more about the process and field their questions.

The European Commission (DG MOVE), with the assistance of the Agency, then carries out the evaluation and selection of submitted proposals. The process is supported by independent external experts. Their role is to ensure that only the most high-quality proposals which best meet the award criteria, as described in the relevant work programme and call text, are selected for funding.

After the external evaluation by the independent experts, there are usually more projects selected than funding available. Thus, an internal evaluation is carried out to finalise a list of proposals recommended for funding, which is then subject to co-decision by Member States and scrutiny of the European Parliament’s Transport Committee.

Successful applicants are then invited by the Agency to collaborate to prepare individual Commission Decisions that establish the support for individual projects. The Decisions are the legally binding instruments between the beneficiaries and the European Commission, setting out the objectives to be achieved, the timeframe to achieve them and the financial contribution involved.

Once the funding Decision has been signed, the project can be said to have officially started and the Agency manages its implementation until its completion. This includes making all of the pre-financing until the very last payment to close the project. Continuous follow-up of the status of its projects is one of the most important tasks entrusted to the Agency, as it needs to make sure EU funding is used in the agreed manner and that EU taxpayers get good value for their money. This is especially important for the Multi-Annual work programme portfolio as it plays a crucial role because it targets the highest priorities of the TEN-T network.

If a project is however deemed unable to achieve some of the agreed objectives, the resources allocated can be withdrawn and used to finance new projects through future Calls. This way, EU funds will be used in an optimal manner, shifted from underperformers to boost additional infrastructure investment in Europe.

Rail funding

Financing rail (and in particular high-speed lines), is a key step to improve the mobility of European citizens and shift freight and passengers to a more environmentally friendly mode of transport. The emphasis placed on rail transport stems directly from the priorities outlined by the European Commission in its Transport White Paper, released in spring 2011, in which the importance of modal shift to greener modes of transport is stressed. In particular, the Commission has singled out specific rail targets which will allow the reduction of greenhouse gas emissions by 60% by 2050, notably:

• Completing a high-speed rail network (2050)
• Tripling the length of the high-speed rail network (2030) and maintaining a dense railway network in all Member States
• Having a majority of medium distance passenger transport by rail (2050)

Since 2007, almost €4.4 billion has been allocated to rail projects (both preimplementation studies and actual works), ranging from ambitious large scale undertakings, such as the Brenner Base tunnel in the Alps, to simple line upgrades on the national level. (See Table 1 for the five largest current rail projects by grant size).

Table 1: Top five rail projects by grant size

To give some concrete examples, the TEN-T EA managed a project which constructed a 44.4km section of high-speed line between the Spanish town of Figueras and Perpignan in France. The project, which included the construction of an 8.2km tunnel and a number of viaducts, received just over €60 million in EU TEN-T co-financing and was completed in 2009, improving mobility across the Franco-Spanish border and increasing the overall safety of rail transport.

The TEN-T programme also funds smaller infrastructure improvements if these are deemed to have a positive impact to European mobility. Another Agency managed project is building a new 2.2km section of single track line between Cattolica and Pesaro on the Italian Adriatic coast. The project will remove a bottleneck which is slowing down north-south passenger and freight rail traffic in Italy and will receive a total amount of EU TEN-T co-financing of €3.1 million.

Funding channelled to rail infrastructure does not only include improvements to lines and laying down new tracks. As part of the EU priority to make transport smarter, €450 million has been allocated to projects focusing on ERTMS (see Figure 2), in order to foster the adoption of a common European train management standard which will ensure faster connections and an increased level of safety. This yields an impressive €4.8 billion for the broader rail sector as a whole.

Figure 2 Total current TEN-T contribution by transport mode. (Legends: ITS: Intelligent Transport Systems / IWW: Inland Waterway / MOS: Motorways of the Sea / RIS: River Information Services

In June 2011, an ERTMS Multi-Annual Call for Proposals was launched with a budget of €100 million in order to upgrade infrastructure and rolling stock to the new European standard for train control systems.

In order to have an idea of the importance placed by the EU on creating a modern, fast and competitive rail sector in Europe, we only need to compare the sector’s funding to the next highest mode of transport. In fact, rail projects roughly received seven times more funding than the next transport mode. Out of the total allocated to date from the TEN-T budget, 61% has been granted to the 130 rail projects which the TEN-T EA has managed since 2007.

Conclusions/future outlook

The future will continue to see the TEN-T Executive Agency managing rail infrastructure projects to improve the European rail sector’s performance and increase its attractiveness, in line with the European Commission’s priorities outlined in the Transport White Paper. The prioritisation of rail over other modes of transport reflects the importance vested in this mode for the reduction of the environmental impact of the sector. The Agency will strive to ensure that the financing it manages on behalf of the European Commission is released in a timely manner and that the related objectives are completed. This will ensure a continuous flow of funding and ensure that more environmentally performing modes of transport, like rail, are supported in light of the policy priorities of the European Commission. The Agency will continue on its mission to promote the TEN-T programme and its achievements with its stakeholders and support the realisation of the TEN-T network as a whole.

About the Author

Dirk Beckers was nominated by the Commission as Executive Director of TEN-T EA, taking up his post in September 2007. He has been a Commission Official since 1988, occupied for 17 of those years with responsibilities in the field of transport, mainly concerning the management of financial and human resources.