Event report

This seminar was hosted jointly be Committee of the Regions’ RegHub and the Economics Department of the European Investment Bank. Around 30 attendees, mainly officials from the local and regional level, involved in EU affairs, were virtually present. Local infrastructure investment is key when it comes to the successful implementation of the green and digital transition in Europe: Only if municipalities manage to provide green and digital infrastructure and thereby enhance their digital and green capacity they will be able to both maintain their economic activity and to mitigate climate change. This has been emphasized in their opening remarks by the EIB's Vice-President Lilyana Pavlova, and the president of the CoR's ECON commission, Michael Murphy. The workshop focused on challenges facing municipalities on the regulatory front as they seek to tackle the twin transition challenges of climate change and digitalisation, with a particular focus on investment. To this end, the workshop brought together experts from the two institutions. Peter McGoldrick (Senior Economist, EIB) drew on the EIB’s 2020 Municipality Survey. Rafael Mondelaers (Policy Officer, CoR) detailed findings of recent consultations carried out by the CoR's RegHub network. Emily Sinnott moderated the event, ensuring an interactive flow between audience and presenters and fostering a more in-depth discussion. The EIB Municipality Survey shows that EU municipalities are looking to increase investment in digital and climate change related areas as well as in social infrastructure. In parallel, municipalities in regions with lower income per capita tend also to flag investment needs in basic infrastructure areas, such as water and waste utilities. The pandemic has reinforced the drive for digitalisation and improved social infrastructure. While lack of funding was flagged as the principal barrier to investment, it is critical to overcome a complex of non-financial barriers. This complex of interlinked issues includes regulatory burden, administrative capacity and technical capacity to investment remain. This complex of regulation and capacity is particularly relevant for the twin transition. Regulation is critical for ensuring that aspirations are implemented in a certain manner. Yet, understanding regulation as well as designing and implementing plans accordingly requires certain administrative capacities. For instance, in order for municipalities to map out their path to carbon neutrality, they need to understand a set of complex regulatory requirements and standards, e.g. the EU taxonomy for sustainable activities, and set out a development plan accordingly, including prioritisation and sequencing. The EIB municipality survey shows that green administrative capacity, such as green procurement, is an area where many municipalities are looking to develop. eProcurement is an equally important aspect, also from a digitalisation and level playing field point of view, such as for SMEs. These considerations place important demands on administrative capacity. In addition, certain projects require specific technical capacities, which may be scarce, especially in the domains of digitalisation and climate change. Identifying and complementing existing resources and ensuring efficient coordination are critical to efficient project implementation. Finally, while NextGeneration EU funds will help overcome the primary barrier, these will bring into sharper relief the need to address the complex of regulation and capacity, since the release of these funds is linked to satisfying specific requirements. In his presentation, Rafael Mondelaers (Policy Officer, CoR) linked the general findings of the EIB survey are linked closely with the more detailed findings of recent consultations carried out by the CoR's RegHub network. In 2021, RegHub surveyed its member regions, cities and municipalities to find out more about the implementation of certain EU legislation at local level and whether this legislation is still future-proof or whether there are unnecessary regulatory burdens that make it inefficient. The replies to the consultations on the implementation of eProcurement and INSPIRE indicate that – despite the general approval of the legislation – there remain many obstacles to an efficient and appropriate application of tools and measures provided for by the two policies. Some of those obstacles are again closely linked to the financial situation of municipalities, but they are also linked to regulatory over-complexity (e.g. in the case of the European Single Procurement Document or INSPIRE data specifications) and to a lack of technical capacity. The latter of which applies in particular to smaller municipalities in lesser-developed regions. Both presentations revealed a clear overlap of findings from two different survey instruments, which can shed light on the correlation between digital and green infrastructure development on the one hand, and technical capacity and the regulatory framework on the other hand. To bring these approaches together and foster the cooperation between the EIB and the CoR thus promises to come to a better understanding of barriers to local infrastructure investment and ways to tackle them. In this light, Thomas Wobben (Director for Legislative Work, Dir. C, CoR) emphasized the great potential of future cooperation between the two institutions in his closing remarks. During the workshop, it became clear that close cooperation between the European Investment Bank (EIB) and the Committee of the Regions (CoR) can be an important tool to better understand the conditions for digital and green transition in the context of municipalities. While financial barriers to investment remain the biggest obstacle for municipalities, non-financial barriers, such as regulatory burden and insufficient technical and administrative capacity, can also pose serious challenges to infrastructure development at the local and regional level. Understanding these barriers - for example through the consultative work of the CoR's Network of Regional Hubs (RegHub) - is a concrete step towards improving evidence-based policy-making and reducing non-financial barriers to investment, which can help achieve the goals of the twin transition.