(1)

In order to achieve smart, sustainable and inclusive growth, to stimulate job creation and to respect long-term decarbonisation commitments, the Union needs up-to-date, multimodal, high-performance infrastructure in its transport, energy and digital sectors to help connect and integrate the Union and all its islands and regions, including its remote, outermost, peripheral, mountainous and sparsely populated ones. Those connections should help to improve the free movement of persons, goods, capital and services. The trans-European networks should facilitate cross-border connections, foster greater economic, social and territorial cohesion, and contribute to a more competitive and sustainable social market economy and to combating climate change.

(2)

The aim of the Connecting Europe Facility (the “CEF”) is to accelerate investment in the field of trans-European networks and to leverage funding from both the public and the private sectors, while increasing legal certainty and respecting the principle of technological neutrality. The CEF should enable synergies between the transport, energy and digital sectors to be harnessed to the full, thus enhancing the effectiveness of Union action and enabling the costs of implementation to be minimised.

(3)

The CEF should also contribute to Union action against climate change and support environmentally and socially sustainable projects, including, where appropriate, climate change mitigation and adaptation actions. In particular, the contribution of the CEF to achieving the goals and objectives of the Paris Agreement adopted under the United Nations Framework Convention on Climate Change (4) (“Paris Agreement”), as well as the 2030 climate and energy targets and long-term decarbonisation objective, should be reinforced.

(4)

The CEF should guarantee a high level of transparency and ensure public consultation in compliance with applicable Union and national law.

(5)

Reflecting the importance of tackling climate change in line with the Union’s commitments to implement the Paris Agreement and the United Nations Sustainable Development Goals, this Regulation is intended to contribute to mainstreaming climate actions and to the achievement of an overall target of at least 30 % of Union budget expenditure supporting climate objectives. In addition, this Regulation should contribute to the ambition of committing 7,5 % of annual spending under the Multiannual Financial Framework (the “MFF”) 2021-2027 to biodiversity objectives in the year 2024 and 10 % of annual spending under the MFF 2021-2027 to biodiversity objectives in 2026 and 2027 while taking into consideration the existing overlaps between climate and biodiversity objectives. Through its actions, the CEF should contribute 60 % of its overall financial envelope to climate objectives, based, inter alia, on the following coefficients: (i) 100 % for expenditure relating to railway infrastructure, charging infrastructure, alternative and sustainable fuels, clean urban transport, electricity transmission, electricity storage, smart grids, CO2 transport and renewable energy; (ii) 40 % for inland waterways and multimodal transport, as well as gas infrastructure, provided that it enables the use of renewable hydrogen or bio-methane to be increased. The detailed climate expenditure tracking coefficients applied should be consistent with those set out in Annex I to Regulation (EU) 2021/1060 of the European Parliament and of the Council (5), where applicable. Relevant actions will be identified during the preparation and implementation of the CEF, and reassessed in the context of the relevant evaluations and review processes. In order to prevent infrastructure from being vulnerable to potential long term climate change effects, and to ensure that the cost of greenhouse gas emissions arising from the project is included in the project’s economic evaluation, projects supported by the CEF should be subject to climate proofing, where relevant, in accordance with guidance that should be developed by the Commission coherently with the guidance developed for other programmes of the Union.

(6)

According to Article 8 of the Treaty on the Functioning of the European Union (TFEU), in all its activities, the Union is to aim to eliminate inequalities, and to promote equality, between men and women. Gender equality, as well as equal rights and opportunities for all, and the mainstreaming of those objectives should be taken into account and promoted throughout the assessment, preparation, implementation and monitoring of the CEF.

(7)

In order to comply with the reporting obligations regarding the uptake of Union funds to support the measures taken with a view to complying with the objectives of Directive (EU) 2016/2284 of the European Parliament and of the Council (6), expenditure related to the reduction of emissions or air pollutants under that Directive should be tracked.

(8)

An important objective of the CEF is to deliver increased synergies and complementarity between the transport, energy and digital sectors. For that purpose, the CEF should provide for the adoption of work programmes that could address specific intervention areas, for instance as regards connected and automated mobility or sustainable alternative fuels. The enabling of digital communication could constitute an integral part of a project of common interest in the field of energy and transport. In addition, the CEF should allow, within each sector, the possibility to consider as eligible some synergetic elements pertaining to another sector, where such an approach improves the socioeconomic benefit of the investment. Synergies between sectors should be incentivised through the award criteria for the selection of actions, as well as through increased co-financing.

(9)

Regulation (EU) No 1315/2013 of the European Parliament and of the Council (7) lays down guidelines for the trans-European transport network (“TEN-T”) (“TEN-T guidelines”) that identify the infrastructure of the TEN-T, specify the requirements to be fulfilled by it and provide for measures for the implementation of the TEN-T. In particular, the TEN-T guidelines envisage the completion of the core network by 2030 through the creation of new infrastructure and the substantial upgrading and rehabilitation of existing infrastructure necessary in order to ensure network continuity.

(10)

In order to ensure connectivity throughout the Union, actions contributing to the development of projects of common interest in the transport sector which are financed by the CEF should build on the complementarity of all modes of transport to provide for efficient, interconnected and multimodal networks. This should include roads in those Member States where there is still a significant need for investment in order to complete their TEN-T core road network.

(11)

In accordance with Article 193(2) of Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council (8) (“the Financial Regulation”), it is possible to award a grant for an action which has already begun, provided that the applicant can demonstrate the need for starting the action prior to the signature of the grant agreement. However, the costs incurred prior to the date of submission of the grant application are not eligible, except in duly justified exceptional cases. In order to avoid any disruption in Union support which could be prejudicial to Union’s interests, it should be possible, for a limited period of time at the beginning of the MFF 2021-2027, for costs incurred in respect of actions supported under this Regulation which have already begun to be considered eligible as of 1 January 2021, even if they were incurred before the grant application was submitted.

(12)

In order to achieve the objectives laid down in the TEN-T guidelines, it is necessary to support, as a priority, the ongoing TEN-T projects, as well as the cross-border links and the missing links and to ensure, where applicable, that the supported actions are consistent with the corridor work plans established pursuant to Regulation (EU) No 1315/2013 and with the overall network development regarding performance and interoperability.

(13)

In particular, the full deployment of the European Rail Traffic Management System (“ERTMS”) on the core network by 2030, as provided for by Regulation (EU) No 1315/2013, requires the support to be increased at Union level and the participation of private investors to be incentivised.

(14)

Moreover, the connection of airports to the TEN-T core network is an important precondition for successful completion of the TEN-T core network and for ensuring effective intermodality. Therefore, priority should be given to establishing such connections where they are missing.

(15)

For the implementation of cross-border actions, a high degree of integration with regard to planning and implementation is needed. Without prioritising any of the following examples, this integration could be demonstrated through the establishment of a single project company, a joint governance structure, a joint venture, a bilateral legal framework, a framework based on an implementing act pursuant to Article 47 of Regulation (EU) No 1315/2013, or any other form of cooperation. Establishment of integrated management structures, including joint ventures should be encouraged, including through a higher level of co-financing.

(16)

Streamlining measures to advance the realisation of the TEN-T, which are currently under development, should support the more efficient implementation of projects of common interest in the field of transport.

(17)

In order to reflect increasing transport flows and the evolution of the TEN-T, the alignment of the core network corridors and their pre-identified sections should be adapted. Such adaptations to the core network corridors should not affect the completion of the core network by 2030, should improve the corridors’ coverage of the Member States’ territory and should be proportionate in order to preserve the consistency and the efficiency of the corridor development and coordination. For that reason, the length of the core network corridors should not increase by more than 15 %. In due course, the alignment of the core network corridors should take into account the results of the review of the implementation of the core network provided for by Regulation (EU) No 1315/2013. The review should take into account regional cross-border rail connections on the TEN-T that have been abandoned or dismantled, as well as other changes in the comprehensive network and the impact of the United Kingdom’s withdrawal from the Union.

(18)

It is necessary to promote public and private investments in all modes of transport in order to promote smart, interoperable, sustainable, multimodal, inclusive, accessible, safe and secure mobility throughout the Union. In its Communication of 31 May 2017 entitled “Europe on the move: An agenda for a socially fair transition towards clean, competitive and connected mobility for all”, the Commission presented a wide-ranging set of initiatives to make traffic safer, to encourage smart road charging, to reduce CO2 emissions, air pollution and congestion, to promote connected and autonomous mobility and to ensure proper conditions and rest times for workers. Those initiatives should be accompanied by Union financial support through the CEF, where relevant.

(19)

The TEN-T guidelines require, with regard to new technologies and innovation, that the TEN-T enables the decarbonisation of all modes of transport by stimulating energy efficiency and the use of alternative fuels while respecting the principle of technological neutrality. Directive 2014/94/EU of the European Parliament and of the Council (9) establishes a common framework of measures for the deployment of alternative fuels infrastructure for all modes of transport in the Union in order to reduce as far as possible the dependence on fossil fuels and to mitigate the environmental and climate impact of transport. That Directive also requires Member States to ensure that recharging or refuelling points accessible to the public are made available by 31 December 2025. As the Commission outlined in its Communication of 8 November 2017 entitled “Delivering on low-emission mobility A European Union that protects the planet, empowers its consumers and defends its industry and workers”, a comprehensive set of measures to promote low-emission mobility is necessary, including financial support where the market conditions do not provide a sufficient incentive.

(20)

In the context of its Communication of 17 May 2018 entitled “Sustainable Mobility for Europe: safe, connected, and clean”, the Commission highlighted that automated vehicles and advanced connectivity systems will make vehicles safer, easier to share and more accessible for all citizens, including those who may be cut-off from mobility services today, such as the elderly and people with reduced mobility. In this context, the Commission also proposed an “EU Strategic Action Plan on Road safety” and the amendment of Directive 2008/96/EC of the European Parliament and of the Council (10).

(21)

In order to improve the completion of transport projects in less developed parts of the network, an allocation from the Cohesion Fund governed by Regulation (EU) 2021/1058 of the European Parliament and of the Council (11) should be transferred to the CEF to finance transport projects in the Member States eligible for financing from the Cohesion Fund. In an initial phase and within a limit of 70 % of the transferred envelope, the selection of projects eligible for financing should respect the national allocations under the Cohesion Fund. The remaining 30 % of the transferred envelope should be allocated on a competitive basis to the greatest possible number of projects located in the Member States eligible for financing from the Cohesion Fund with priority to cross-border links and missing links. Member States should be treated equally, and disadvantages resulting from permanent geographic vulnerabilities should be duly taken into account. The Commission should support Member States eligible for financing from the Cohesion Fund in their efforts to develop an appropriate series of eligible projects, in particular by strengthening the institutional capacity of the public administrations concerned.

(22)

In its conclusions of 21 July 2020, the European Council agreed that, in the broader context of the MFF 2021-2027, EUR 1 384 000 000 (in 2018 prices) from the CEF is to be used for the completion of missing major cross-border railway links between cohesion countries to support the functioning of the internal market and that the co-financing rules of the transfer from the Cohesion Fund to the CEF are to apply to that amount.

(23)

Following the Joint Communication of 10 November 2017 entitled “Improving Military Mobility in the European Union”, the Joint Communication of 28 March 2018 on Action Plan on Military Mobility highlighted that transport infrastructure policy offers a clear opportunity to increase synergies between defence needs and the TEN-T with the overall aim of improving military mobility across the Union, taking into account geographical balance and the potential benefits for civil protection. In 2018, in accordance with the Action Plan on Military Mobility, the Council considered and validated the military requirements in relation to transport infrastructure and, in 2019, the Commission services identified the parts of the TEN-T which are suitable for dual use, including necessary upgrades of existing infrastructure. Union funding for the dual-use projects should be implemented through the CEF on the basis of work programmes, taking into account the applicable requirements established in the context of the Action Plan on Military Mobility and any further indicative list of priority projects that are identified by Member States in accordance with that Plan.

(24)

The TEN-T guidelines recognise that the comprehensive network ensures the accessibility and connectivity of all islands and regions in the Union, including remote and outermost regions. Furthermore, in its Communication of 24 October 2017 entitled “A stronger and renewed strategic partnership with the EU’s outermost regions”, the Commission highlighted the outermost regions’ specific transport, energy and digital needs and the necessity to provide adequate Union funding to match those needs, including through the CEF by applying co-financing rates up to a maximum of 70 %.

(25)

Considering the significant investment needs to be met in order to make progress towards completing the TEN-T core network by 2030 (estimated at EUR 350 billion during 2021-2027), completing the TEN-T comprehensive network by 2050 and decarbonisation-digitalisation-urban investments (estimated at EUR 700 billion during 2021-2027), it is appropriate to make the most efficient use of the various Union financing programmes and instruments, thereby maximising the added value of investments supported by the Union. This would be achieved via a streamlined investment process, enhancing visibility on the transport pipeline and consistency across relevant Union programmes, notably the CEF, the European Regional Development Fund (ERDF), the Cohesion Fund and the InvestEU Programme. In particular, the enabling conditions as detailed under Annex IV of Regulation (EU) 2021/1060 should be taken into account, where relevant.

(26)

Regulation (EU) No 347/2013 of the European Parliament and of the Council (12) identifies the trans-European energy infrastructure priorities which need to be implemented in order to meet the Union’s energy and climate policy objectives, identifies projects of common interest necessary to implement those priorities and lays down measures concerning the granting of permits, public involvement and regulation to speed up and/or facilitate the implementation of those projects, including criteria for the eligibility of such projects for Union financial support. The identification of projects of common interest in accordance with that Regulation will continue to follow the “energy efficiency first” principle, with projects being assessed against energy demand scenarios that are fully consistent with Union energy and climate targets.

(27)

Directive (EU) 2018/2001 of the European Parliament and of the Council (13) stresses the need to set up an enabling framework comprising the enhanced use of Union funds, with explicit reference to enabling actions to support cross-border cooperation in the field of renewable energy.

(28)

While completion of network infrastructure remains the priority in order to achieve the development of renewable energy, integrating cross-border cooperation on renewable energy and developing a smart and efficient energy system that includes storage and demand response solutions that help balance the grid reflects the approach adopted under the Clean Energy for all Europeans package, with collective responsibility to reach an ambitious target for renewable energy in 2030, and the changed policy context, ensuring a fair and adequate transition, with ambitious long-term decarbonisation objectives.

(29)

Innovative infrastructure technologies that enable the transition to low emission energy and mobility systems and that improve security of supply, while seeking greater energy independence for the Union, are essential in view of the Union’s decarbonisation agenda. In particular, in its Communication of 23 November 2017 entitled “Strengthening Europe’s energy networks”, the Commission emphasised that, given that renewable energy is to constitute half of the electricity generation by 2030, the role of electricity will increasingly be to drive the decarbonisation of sectors which have so far been dominated by fossil fuels, such as transport, industry and heating and cooling, and that accordingly the focus under the trans-European energy infrastructure policy must be on electricity interconnections, electricity storages, smart grids projects and gas infrastructure investments. To support the Union’s decarbonisation objectives, internal market integration and security of supply, due consideration and priority should be given to technologies and projects which contribute to the transition to a low emission economy. The Commission will aim to increase the number of cross-border smart grid and innovative storage, as well as CO2 transport projects to be supported under the CEF.

(30)

Cross-border projects in the field of renewable energy are to enable the cost-effective deployment of renewable energy in the Union and the achievement of the Union’s binding target of at least 32 % renewable energy in 2030 as referred to in Article 3 of Directive (EU) 2018/2001, and are to contribute to the strategic uptake of innovative technologies concerning renewable energy. Illustrative examples of eligible technologies include the generation of renewable energy from on- and offshore wind, solar energy, sustainable biomass, ocean energy, geothermal energy or combinations thereof, their connection to the grid and additional elements such as storage or conversion facilities. Eligible action is not limited to the electricity sector and can cover other energy carriers and potential sector coupling with, for example, heating and cooling, power-to-gas, storage and transport. This list is non-exhaustive in order to keep flexibility with regard to technological advances and developments. Such projects do not necessarily entail a physical link between the cooperating Member States. Those projects can be located on the territory of only one of the Member States involved, provided that the general criteria of Part IV of the Annex to this Regulation apply.

(31)

In order to support cross-border cooperation in the area of renewable energy and the market uptake of projects, the Commission should facilitate the development of cross-border projects in the field of renewable energy. In the energy sector, in the absence of sufficient market uptake of cross-border projects in the field of renewable energy, unused budget envisaged for cross-border projects in the field of renewable energy should be used to meet the objectives of the trans-European energy networks for actions relating to projects of common interest as set out in Regulation (EU) No 347/2013, before considering a possible use for the Union renewable energy financing mechanism established in Regulation (EU) 2018/1999 of the European Parliament and of the Council (14).

(32)

It is necessary to support smart grid projects that integrate electricity generation, distribution or consumption using real time system management and influencing cross-border energy flows. Support from the CEF for such projects should also reflect the central role of smart grids in the energy transition and should help to overcome funding gaps that are currently hampering investment in the large-scale deployment of smart grid technology.

(33)

In the context of Union support, special consideration should be given to cross-border energy interconnections, including those necessary to reach the 10 % electricity interconnection target for 2020 and the 15 % target for 2030 established by Regulation (EU) 2018/1999. The deployment of electricity interconnectors is crucial for integrating markets and ending energy isolation by allowing more renewable energy into the system and thereby benefiting from their different demand and renewable supply portfolio, as well as from off-shore wind networks and smart grids, and integrating all countries into a liquid and competitive energy market.

(34)

The achievement of the Digital Single Market relies on the underlying digital connectivity infrastructure. The digitalisation of Union industry and the modernisation of sectors like transport, energy, healthcare and public administration depend on universal access to reliable, affordable, high and very high capacity networks. Digital connectivity has become one of the decisive factors in closing economic, social and territorial divides, supporting the modernisation of local economies and underpinning the diversification of economic activities. The scope of the intervention of the CEF in the area of digital connectivity infrastructure should be adjusted to reflect its increasing importance for the economy and for society at large. Therefore, it is necessary to set out the digital connectivity infrastructure projects of common interest needed to meet the Union’s Digital Single Market objectives and to repeal Regulation (EU) No 283/2014 of the European Parliament and of the Council (15).

(35)

In its Communication of 14 September 2016 entitled “Connectivity for a Competitive Digital Single Market – Towards a European Gigabit Society” (the “Gigabit Society Strategy”), the Commission sets out strategic objectives for 2025 with a view to optimising investment in digital connectivity infrastructure. Directive (EU) 2018/1972 of the European Parliament and of the Council (16) aims, inter alia, to create a regulatory environment which incentivises private investments in digital connectivity networks. It is nevertheless clear that network deployments will remain commercially non-viable in many areas throughout the Union due to various factors such as remoteness and territorial or geographical specificities and low population density and to various socioeconomic factors, and therefore urgently require closer attention. The CEF should therefore be adjusted to contribute to the achievement of those strategic objectives in the Gigabit Society Strategy which aim to contribute to a balance between rural and urban developments, and to complement the support provided for the deployment of very high capacity networks by other programmes, in particular the ERDF, Cohesion Fund and the InvestEU Programme.

(36)

While all digital connectivity networks that are connected to the internet are intrinsically trans-European, which is due mainly to the functioning of the applications and services which they enable, priority for support via the CEF should be given to actions with the highest expected impact on the Digital Single Market, inter alia, through their alignment with the objectives of the Gigabit Society Strategy, as well as on the digital transformation of the economy and society, having regard to market failures and implementation obstacles observed.

(37)

Schools, universities, libraries, local, regional or national administrations, main providers of public services, hospitals and medical centres, transport hubs and digitally intensive enterprises are entities and places that can influence important socioeconomic developments in the areas in which they are located, including rural and sparsely populated areas. Such socioeconomic drivers need to be at the cutting edge of Gigabit connectivity in order to provide access to the best services and applications for households, businesses and local communities in the Union. The CEF should support access to very high capacity networks, including 5G systems and other state-of-the-art connectivity capable of providing Gigabit connectivity for those socioeconomic drivers with a view to maximising their positive effects on the wider economy and society within their areas, including by generating wider user demand for connectivity and services.

(38)

Unconnected territories throughout the Union represent bottlenecks and unexploited potential for the Digital Single Market. In most rural and remote areas, high-quality internet connectivity can play an essential role in preventing digital divide, isolation and depopulation by reducing the costs of delivery of both goods and services and in partially compensating for remoteness. High-quality internet connectivity is necessary for new economic opportunities such as precision farming or the development of a bio-economy in rural areas. The CEF should contribute to providing all households in the Union, whether rural or urban, with very high-capacity fixed or wireless connectivity, focusing on those deployments in respect of which a degree of market failure is observed that can be addressed using low intensity grants. The synergies of actions supported by the CEF should be maximised, giving due regard to the level of concentration of socioeconomic drivers in a given area and to the level of funding needed to generate coverage. Moreover, the CEF should aim to achieve comprehensive coverage of households and territories, as it is uneconomic at a later stage to address gaps in an area that has already been covered.

(39)

In addition, building on the success of the WiFi4EU initiative, the CEF should continue to support the provision of free, secure, high-quality, local wireless connectivity in centres of local public life, including entities with a public mission such as public authorities and providers of public services, as well as outdoor spaces accessible to the general public, in order to promote the Union’s digital vision in local communities.

(40)

Digital infrastructure is an important springboard for innovation. In order to maximise its impact, the CEF should focus on funding the digital infrastructure. Individual digital services and applications, such as those involving various distributed ledger technologies or applying artificial intelligence, should therefore be outside the scope of the CEF and instead be addressed through other instruments such as the Digital Europe Programme, established by Regulation (EU) 2021/694 of the European Parliament and of the Council (17), as appropriate. It is also important to maximise the synergies between different programmes.

(41)

The viability of the anticipated next generation of digital services, such as ‘Internet of Things’ services, and digital applications, which are expected to bring significant benefits across various sectors and for society as a whole, will require uninterrupted cross-border coverage with 5G systems, in particular to allow users and objects to remain connected while on the move. However, the cost sharing scenarios for 5G deployment across those sectors remain unclear and the perceived risks of commercial deployment in some key areas are very high. Road corridors and train connections are expected to be key areas for the first phase of new applications in the area of connected mobility and therefore constitute vital cross-border projects for funding under the CEF.

(42)

The deployment of backbone electronic communications networks, including submarine cables connecting European territories to third countries on other continents or connecting European islands, outermost regions or overseas countries and territories, including via Union territorial waters and the exclusive economic zones of the Member States, is needed in order to provide necessary redundancy for such vital infrastructure, to increase the capacity and resilience of the Union’s digital networks and to contribute to territorial cohesion. However, such projects are often commercially non-viable without public support. In addition, support should be available to complement European high-performance computing resources with adequate terabit-capacity connections.

(43)

Actions contributing to projects of common interest in the area of digital connectivity infrastructure should deploy the best available and best suited technology for the specific project, which offers the best balance between state-of-the-art technologies in terms of data flow capacity, transmission security, network resilience and cost efficiency. Such deployments should be prioritised by way of work programmes, taking into account the criteria set out in this Regulation. Deployments of very high capacity networks can include passive infrastructure, with a view to maximise socioeconomic as well as environmental benefits. Finally, when prioritising actions, the potential positive spill-overs in terms of connectivity should be taken into account, for example when a project deployed can improve the business case for future deployments leading to further coverage of territories and population in areas which have remained uncovered so far.

(44)

The Union has developed its own satellite Positioning, Navigation and Timing (PNT) technology (the Galileo and EGNOS programmes) and its own Earth observation and monitoring programme (Copernicus). Galileo and EGNOS programmes and the Copernicus programme offer advanced services which provide important economic benefits to public and private users. Therefore, any transport, energy or digital infrastructure funded by the CEF, that makes use of PNT or Earth observations services, should be technically compatible with those programmes.

(45)

The positive results of the first blending call for proposals launched under the current programme in 2017 confirmed the relevance and added value of using Union grants for blending with financing from the European Investment Bank or National Promotional Banks or other development and public financial institutions, as well as from private-sector finance institutions and private-sector investors, including through public private partnerships. Blending should contribute to attracting private investment and to providing leverage of the overall public sector contribution, in line with the goals of the InvestEU Programme. The CEF should therefore continue to support actions that can be financed by a combination of Union grants and other sources of financing.

(46)

In the transport sector, the amounts used for blending operations should not exceed 10 % of the amount from Heading 1(2) of the MFF 2021-2027. It should be possible to use blending operations, for instance, for actions relating to smart, interoperable, sustainable, inclusive, accessible, safe and secure mobility.

(47)

The policy objectives of the CEF are also to be addressed through financial instruments and budgetary guarantee under the policy windows of the InvestEU Programme. The CEF actions should be used to boost investment by addressing market failures or sub-optimal investment situations, in a proportionate manner, without duplicating or crowding out private financing, in particular where actions are not commercially viable but where they have a clear Union added value.

(48)

In order to favour the integrated development of the innovation cycle, it is necessary to ensure complementarity between the innovative solutions developed in the context of the Union research and innovation framework programmes and the innovative solutions deployed with support from the CEF. For this purpose, synergies with the Horizon Europe Programme, established by Regulation (EU) 2021/695 of the European Parliament and of the Council (18), are to ensure that research and innovation needs in the transport, energy and digital sectors within the Union are identified and established during Horizon Europe’s strategic planning process. Moreover, synergies with Horizon Europe are to ensure that the CEF supports large-scale roll-out and deployment of innovative technologies and solutions in the fields of transport, energy and digital infrastructure, in particular those resulting from Horizon Europe. Furthermore, synergies with Horizon Europe are to ensure that the exchange of information and data between Horizon Europe and the CEF will be facilitated, for example by highlighting technologies from Horizon Europe with a high market readiness that could be further deployed through the CEF.

(49)

The duration of the CEF should be aligned to the duration of the MFF. This Regulation should lay down a financial envelope for the entire period 2021-2027 which is to constitute the prime reference amount, within the meaning of point 18 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 (19) for the European Parliament and the Council during the annual budgetary procedure.

(50)

At Union level, the European Semester of economic policy coordination is the framework within which national reform priorities are identified and their implementation monitored. Member States develop their own national multiannual investment strategies in support of those reform priorities. Those strategies should be presented alongside the yearly National Reform Programmes as a way to outline and coordinate priority investment projects to be supported by national or Union funding, or both. They should also serve to use Union funding in a coherent manner and to maximise the added value of the financial support to be received notably from the ERDF and Cohesion Fund, the European Investment Stabilisation Function, InvestEU Programme and the CEF, where relevant. Financial support should also be used in a manner consistent with Union and national energy and climate plans, where relevant.

(51)

Horizontal financial rules adopted by the European Parliament and the Council on the basis of Article 322 TFEU apply to this Regulation. Those rules are laid down in the Financial Regulation and determine in particular the procedure for establishing and implementing the budget through grants, prizes, procurement and indirect implementation, and provide for checks on the responsibility of financial actors. Rules adopted on the basis of Article 322 TFEU also include a general regime of conditionality for the protection of the Union budget.

(52)

The types of financing and the methods of implementation under this Regulation should be chosen on the basis of their ability to achieve the specific objectives of the actions and to deliver results, taking into account, in particular, the costs of controls, the administrative burden and the expected risk of non-compliance. When making such choices, consideration should be given to the use of lump sums, of flat rates and of unit costs, as well as of financing not linked to costs as referred to in Article 125(1) of the Financial Regulation.

(53)

Legal entities established in the Union should as far as possible be able to participate on a reciprocal basis in equivalent programmes of third countries that participate in the CEF.

(54)

Third countries which are members of the European Economic Area (EEA) may participate in Union programmes in the framework of the cooperation established under the Agreement on the European Economic Area (20) (the “EEA Agreement”), which provides for the implementation of the programmes on the basis of a decision adopted under that Agreement. Third countries may also participate on the basis of other legal instruments. A specific provision should be introduced in this Regulation requiring third countries to grant the necessary rights and access required to enable the authorising officer responsible, the European Anti-Fraud Office (OLAF) and the Court of Auditors to comprehensively exercise their respective competences.

(55)

The Financial Regulation establishes the rules concerning the award of grants. In order to take into account the specificity of the actions supported by the CEF and to ensure consistent implementation among the sectors covered by the CEF, it is necessary to provide additional indications as regards the eligibility and award criteria. The selection of operations and their financing should only be subject to the conditions provided for in this Regulation and the Financial Regulation. Without prejudice to the Financial Regulation, it should be possible for the work programmes to provide for simplified procedures.

(56)

In accordance with the Financial Regulation, selection and award criteria are established in the work programmes. In the transport sector, the quality and relevance of a project should also be assessed taking into account the project’s expected impact on European connectivity, its compliance with accessibility requirements and its strategy as regards future maintenance needs.

(57)

In accordance with the Financial Regulation, Regulation (EU, Euratom) No 883/2013 of the European Parliament and of the Council (21) and Council Regulations (EC, Euratom) No 2988/95 (22), (Euratom, EC) No 2185/96 (23) and (EU) 2017/1939 (24), the financial interests of the Union are to be protected by means of proportionate measures, including measures relating to the prevention, detection, correction and investigation of irregularities, including fraud, to the recovery of funds lost, wrongly paid or incorrectly used, and, where appropriate, to the imposition of administrative penalties. In particular, in accordance with Regulations (Euratom, EC) No 2185/96 and (EU, Euratom) No 883/2013, OLAF has the power to carry out administrative investigations, including on-the-spot checks and inspections, with a view to establishing whether there has been fraud, corruption or any other illegal activity affecting the financial interests of the Union. The European Public Prosecutor’s Office (EPPO) is empowered, in accordance with Regulation (EU) 2017/1939, to investigate and prosecute criminal offences affecting the financial interests of the Union as provided for in Directive (EU) 2017/1371 of the European Parliament and of the Council (25). In accordance with the Financial Regulation, any person or entity receiving Union funds is to fully cooperate in the protection of the financial interests of the Union, grant the necessary rights and access to the Commission, OLAF, the Court of Auditors and, in respect of those Member States participating in enhanced cooperation pursuant to Regulation (EU) 2017/1939, the EPPO, and ensure that any third parties involved in the implementation of Union funds grant equivalent rights.

(58)

Pursuant to Council Decision 2013/755/EU (26) persons and entities established in overseas countries and Territories (OCTs) are eligible for funding subject to the rules and objectives of the CEF and possible arrangements applicable to the Member State to which the relevant overseas country or territory is linked.

(59)

The Union should seek coherence and synergies with the Union programmes for external policies, including pre-accession assistance following the engagements undertaken in the context of the Commission Communication of 6 February 2018 entitled “A credible enlargement perspective for and enhanced EU engagement with the Western Balkans”.

(60)

When third countries or entities established in third countries participate in actions contributing to projects of common interest or to cross-border projects in the field of renewable energy, financial support should only be available if it is indispensable to the achievement of the objectives of those projects. With regard to cross-border projects in the field of renewable energy, cooperation between one or more Member States and a third country (including within the Energy Community) should respect the conditions set out in Directive (EU) 2018/2001 on the need for a physical link to the Union.

(61)

In its Communication of 3 October 2017 entitled ‘Making Public Procurement work in and for Europe’, the Commission notes that the Union is the world’s most open market for procurement, but that other countries do not always reciprocate by granting access to Union companies to their markets for procurement. Beneficiaries of the CEF should therefore make full use of the strategic procurement possibilities offered by Directive 2014/25/EU of the European Parliament and of the Council (27).

(62)

Pursuant to paragraphs 22 and 23 of the Interinstitutional Agreement of 13 April 2016 on Better Law-Making (28), the CEF should be evaluated on the basis of information collected in accordance with specific monitoring requirements, such as on climate tracking, while avoiding an administrative burden, in particular on Member States, and overregulation. Those requirements, where appropriate, should include measurable indicators as a basis for evaluating the effects of the CEF on the ground. Evaluations should be carried out by the Commission and communicated to the European Parliament, the Council, the European Economic and Social Committee and the Committee of Regions in order to assess the effectiveness and efficiency of the funding and its impact on the overall goals of the CEF and make any adjustments necessary.

(63)

Transparent, accountable and adequate monitoring and reporting measures, including measurable indicators, should be implemented in order to assess and report on the progress of the CEF towards the achievement of the general and specific objectives set out in this Regulation. Those measures should also ensure that the achievements of the CEF are recognised. This performance reporting system should ensure that data for monitoring the implementation of the CEF and its results are suitable for an in-depth analysis of the progress achieved and of the difficulties encountered and that those data and results are collected efficiently, effectively and in a timely manner. It is necessary to impose proportionate reporting requirements on recipients of Union funds in order to collect relevant data for the CEF.

(64)

The CEF should be implemented through work programmes. By 15 October 2021, the Commission should adopt the first multiannual work programmes, which should include the timetable of the calls for proposals for the first three years of the CEF, their topics and indicative budget, as well as a prospective framework covering the entire programming period.

(65)

In order to ensure uniform conditions for the implementation of this Regulation, implementing powers should be conferred on the Commission as regards the laying down of specific rules on co-funding between the parts on cross-border projects in the field of renewable energy; the specifying, where necessary, of the infrastructure requirements applicable to certain categories of dual-use infrastructure actions and the evaluation procedure regarding the actions connected with dual-use infrastructure actions; the adoption of work programmes; and the granting of Union financial support. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council (29).

(66)

In order to adapt, where necessary, the indicators used for the monitoring of the CEF, the indicative percentages of budgetary resources allocated to each specific objective in the transport sector and the definition of the transport core network corridors, the power to adopt acts in accordance with Article 290 TFEU should be delegated to the Commission in respect of amendments to Parts I, II and III of the Annex to this Regulation. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making. In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council receive all documents at the same time as Member States’ experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts.

(67)

Since the objectives of this Regulation, namely to build, develop, modernise and complete the trans-European networks in the transport, energy and digital sectors and to facilitate cross-border cooperation in the field of renewable energy, cannot be sufficiently achieved by the Member States but can rather, by reason of the scale or effects of the action, be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve those objectives.

(68)

Regulation (EU) No 1316/2013 of the European Parliament and of the Council (30) and Regulation (EU) No 283/2014 should therefore be repealed. However, the effects of Article 29 of Regulation (EU) No 1316/2013, which amends the Annex to Regulation (EU) No 913/2010 of the European Parliament and of the Council (31) as regards the list of freight corridors, should be maintained.

(69)

In order to ensure continuity in providing support in the relevant policy areas and to allow implementation to start from the beginning of the MFF 2021-2027, this Regulation should enter into force as a matter of urgency and should apply, with retroactive effect, from 1 January 2021,