Written by Balazs Andras Szechy.
If you live in a city, you may experience some of the common disadvantages of urban life in your daily environment, such as air pollution, traffic congestion, noise or a lack of green spaces. The United Nations designated 31 October as World Cities Day. Observing this annual day aims to create awareness of the role of urbanisation in global sustainable development and social inclusion. The theme of the day is ‘Better City, Better Life’, while each year a different sub-theme and location are selected. This year’s theme is ‘Financing a sustainable urban future for all’, and the host city is Üsküdar in Turkey. Marking a world day provides an opportunity to look at how the EU helps cities to grow sustainably through sharing knowledge, and most importantly, funding transformative investment in urban planning.
Urban challenges and opportunities
In our fast-changing world, urban areas across the EU face a wide range of challenges, including providing affordable housing, integrating migrants, combating social segregation, reducing their environmental footprint, and coping with the effects of climate change, and an ageing urban population. Cities are often on the frontline in delivering solutions. Urban areas offer a wide range of jobs, goods and services. They are the engines of the European economy and act as catalysts for creativity and innovation throughout the Union.
Europe’s urban areas are home to over two-thirds of the EU’s population, they account for about 80 % of energy use, represent 70 % of European CO2 emissions, and generate up to 85 % of Europe’s GDP. The urban agenda for the EU (aimed at giving cities a greater say in how policy is decided on issues affecting them directly), recognises cities’ importance in driving the transition towards a sustainable way of living. It seeks to support urban partners to improve the quality of life by transforming transport, energy, industry and housing – not least because no single entity can manage this complex transition process alone.
How does the EU support its cities?
The EU has taken many initiatives to help national governments to enhance urban dwellers’ quality of life. The European Parliament, in particular, has long been a strong advocate of inclusive, sustainable, and innovative cities. The EU adopts legislation and policies with a direct impact on the urban level, for instance in environment or transport, by encouraging cooperation between cities and exchanges of experience, and by providing financial support for projects improving urban infrastructure.
From 2014 to 2020, around €115 billion in EU cohesion policy funding was invested in cities, towns or suburban areas. Of the total urban investment, around €17 billion was implemented locally, through more than 900 integrated and sustainable urban development (SUD) strategies using funding programmed under different EU territorial investment tools (Integrated Territorial Investments, Community-Led Local Development).
Which EU funds are involved?
Cohesion policy support for SUDs has been reinforced from 2021 to 2027, with funds now amounting to €28 billion. The resources come from four EU funds: the vast majority, €24.4 billion, are allocated through the European Regional Development Fund (ERDF). However, EU Member States have significantly exceeded the 8 % target set for the allocation of ERDF resources for urban projects, as they have earmarked almost 12 % for these purposes. Other EU funds, such as the European Social Fund (ESF+), the Cohesion Fund (CF), the Just Transition Fund (JTF) and the Interreg (ERDF) will contribute the remaining €4 billion needed. Sustainable urban development features in all ERDF policy objectives, as shown in the chart below.
Figure – Cohesion sustainable urban development investment by policy objective
In addition, the European urban initiative provides direct support for cities, to help them turn their most ambitious, creative projects into reality. The EUI operates Portico, a ‘gateway to urban learning’ – a knowledge-sharing and community platform for sustainable urban development. The platform provides easy access to the latest knowledge and practical resources to help cities make the most of the possibilities provided by the EU to strengthen economic and social cohesion between regions. It also hosts the Portico Community, providing networking and peer exchange opportunities for urban practitioners. The goal is to generate innovation and prototypes, which can be replicated across Europe.
Below, we take a look at some examples of EU cohesion policy initiatives to support green and social urban development.
In one example, the European Commission announced in June 2023 that 14 cities would receive support, in the context of the New European Bauhaus, for their plans for green construction, green renovation, affordable housing, cultural heritage, and many other innovative projects. The New European Bauhaus initiative aims at helping to link sustainability, aesthetics and inclusion in building design across the EU.
Cities can also benefit from EU-led schemes, tools, initiatives and technical assistance partnerships. The EU programme for integrated urban development, URBACT IV, enables cities to develop integrated solutions to common urban challenges by networking, learning from experience, drawing lessons and identifying good practices to improve urban policies.
The REGIO Peer2Peer + tool enables public body staff involved in managing and implementing ERDF, CF and JTF programmes to meet and exchange knowledge and good practice on both a bilateral and multilateral level.
A joint European Commission and European Investment Bank initiative, in collaboration with the Council of Europe Development Bank, JESSICA provides Member States with the option to use some of their EU grant funding to make (repayable) investments in projects forming part of an integrated plan for sustainable urban development. These investments, which may take the form of equity, loans and/or guarantees, are delivered to projects via urban development funds and, if required, holding funds.
ELENA provides technical assistance for energy efficiency and renewable energy investment targeting buildings and innovative urban transport. Typically, ELENA supports investment programmes worth over €30 million, with a three-year implementation period for energy efficiency (including residential) projects and a four-year period for those on urban transport and improving mobility. ELENA encourages and supports the aggregation of different projects to increase their attractiveness for contractors and financers. Activities eligible for ELENA grants include: technical studies, energy audits, business plans and financial advice, legal advice, tendering procedure preparation, project bundling and project management.
A technical assistance partnership between the European Commission, the European Investment Bank and the European Bank of Reconstruction and Development (EBRD), JASPERS also helps cities and regions deliver high-quality projects. It provides independent advice to beneficiary countries to help prepare high-quality major projects for co-financing under two EU structural and investment funds, the ERDF and the Cohesion Fund.
The EU also recognises the role of small and medium-size cities and functional area approaches (addressing urban areas that straddle national or administrative borders), as important driving forces for regional and rural attractiveness. Development dynamics rarely follow neat administrative boundaries, so functional urban areas encompass densely inhabited cities and their less densely populated commuting zones. This is a field where integrated strategies have a clear added value, as they cross administrative boundaries. Functional urban areas are instrumental in tackling urban-rural linkages.
The EU not only supports cities through its cohesion policy, but a significant amount of money from the Next Generation EU recovery instrument is devoted to urban projects. Other European policies and programmes also provide direct support for cities. Key recent examples are the EU initiatives on climate-neutral and smart cities, as well as the Horizon Europe programme strand on adaptation to climate change.