Brussels, 13 May 2025: As the Economic and Financial Affairs Council meets today to discuss European security, competitiveness and simplification, a group of sixteen civil society, research and cleantech organisations have sent a joint letter to the European Commission and the Parliament with targeted proposals for an efficient, simplified and flexible EU budget that delivers climate and energy security.

The signatories call for the creation of a European Competitiveness Fund that builds on best-practices, climate mainstreaming and existing EU funds to fill the investment gaps in clean industrial competitiveness, climate resilience and affordable energy.

Large amounts of public and private money are used suboptimally to subsidise fossil fuels that are fueling conflict in Europe, while new wind and solar projects have saved €59 billion in import costs since 2019. EU subsidies are also benefiting higher-income households and larger companies more than is necessary, raising concerns about the additionality of that public funding.

The signatories also express concern over the Commission’s proposed amendments to Cohesion Policy and Invest EU that could reduce accessibility for vulnerable households in lower-income regions, SMEs and small cleantech innovators, while benefiting larger industrial players with easier access to finance. These amendments also risk shifting resources away from climate and energy security objectives.

Instead, the signatories propose four clear principles to guide the design of the European Competitiveness Fund that can be trialled in existing funds of the current EU budget:

1. Build flexibility in instrument availability via a strategic, asset-specific financial toolbox under the European Competitiveness Fund with EU Financial Instruments as a Service for Member States. Preserve the scope of existing EU programmes for strategic climate and energy investments. Increase the MFF’s climate mainstreaming target from 30% to 50%.

2. Simplify access for SMEs, cooperatives and households. Strengthen public and retail channels and integrate horizontal conditions to deliver EU finance for well-defined, priority end-beneficiaries with access difficulties. An asset-based approach to EU finance can help simplify reporting and be based on existing positive lists of clean assets.

3. Integrate efficiency-first in investment planning. Establish the right incentives and conditions for Member States to increase the uptake of EU Financial Instruments via the new European Competitiveness Fund, while reserving grants for where they are desperately needed and bring an EU added-value. Single National Plans, steered by the Competitiveness Coordination Tool and with effective participation of national and regional stakeholders, can drive reforms for efficient investments that are outcome-focused.

4. Avoid reinventing the wheel and boost what works: Channel more funding to successful, oversubscribed EU programmes like Horizon Europe, the Innovation Fund, and InvestEU, and build effective funding bridges among them. Cohesion Policy and the Common Agriculture Policy are critical resources that can support the “as a service” financial toolbox and require increased and reinforced climate mainstreaming targets.

“A more efficient and fair EU budget can boost the energy security of households and SMEs and build competitive European cleantech champions. We propose that the new European Competitiveness Fund integrates EU Financial Instruments as a Service for Member States to support them in delivering accessible finance for the transition, while prioritising and subsiding grants where they are most needed.” Adriana Rodríguez Rivera, Climate and Public Finance analyst at Climate Strategy & Partners

“A more ambitious green industrial policy demands harmonised, targeted EU public funding - which the Competitiveness Fund promises to provide. But the EU should proceed with caution. If this new architecture comes at the expense of climate action or research excellence, we will be putting our long-term competitiveness at risk.” Ciaran Humphreys, Research Fellow, EU Cleantech Industrial Policy, I4CE.

“The next Multiannual Financial Framework is a key opportunity to improve the delivery of EU funding for the smaller players driving Europe’s clean energy transition. Targeted support for regional one-stop-shops through the Competitiveness Fund would significantly boost project development capacity in small municipalities, enable pooled procurement, and improve access to finance. At the same time, de-risking tools are essential to unlock private investment for SMEs and clean energy innovators seeking to scale. The MFF must be designed with these frontline actors in mind if Europe is serious about delivering a just and effective transition.” Lina Konstantinopoulou, Executive Director of the Sustainable Energy Finance Association (SEFA)

"European funds are a key tool to support the development, scaling, and deployment of clean technologies that will be vital for Europe to achieve its dual decarbonisation and competitiveness targets. It is essential that the European Competitiveness Fund provides support to the deployment of innovative grid technologies, including high-capacity conductors, via an improved eligibility criterion, ensuring Europe can build the electricity grid it needs for a decarbonised future." Christian Kjaer, Chair of CurrENT

“The EU has one shot to get the European Competitiveness Fund right. That means making carbon removal a strategic priority and bringing technologies from lab to market or risk missing climate targets and ceding industrial leadership. The time to act is now." Rodica Avornic, Policy Director at Carbon Gap

"The next MFF and its different instruments, including the competitiveness fund, should ensure public investments are based on green and social conditionalities, supporting actors that truly contribute to local development, such as cooperatives. Overall, to ensure that funds really reach the ground, managing authorities of funds should co-manage the funds with social economy actors, such as federations of energy communities. This will boost absorption and reduce capacity crunches." Chris Vrettos, Financing Policy Advisor at REScoop.eu

Signatories: