EU Parliament Approves 2021-2027 Cohesion Policy Updates Focusing on Housing, Energy, and Regional Resilience

The European Parliament's Regional Development Committee has approved updates to the EU’s cohesion policy for the 2021–2027 budget period. The vote, held on June 25, saw 26 Members of the Parliament in support, 10 opposed, and 5 abstaining. The revisions aim to address recent social and geopolitical challenges by introducing new priorities such as housing, energy markets, and regional resilience, particularly near EU external borders. The overall structure of the cohesion policy remains unchanged, but the updates reflect a strategic response to current global issues.

Under the revised guidelines, several new sectors may become eligible for funding. These include defence industrial capacity, military mobility, and water resilience. Projects in decarbonisation and affordable housing are also set to receive financial support. Regions near Russia, Belarus, and Ukraine are expected to receive special attention, and support for the Strategic Technologies for Europe Platform (STEP) is part of the plan. The update does not introduce new funds but reallocates existing resources earlier than planned, with a total of €16.1 billion projected for pre-financing to be used by 2026.

The Committee has proposed several financial flexibility tools to support these changes. Member states may access 100% co-financing and a 30% pre-financing rate for targeted investments. They could also qualify for a 9.5% fund payout if 15% of the funds are redirected. MEPs suggest lowering this threshold to 10% to allow easier access to incentives. These financial mechanisms aim to help countries react more efficiently to emerging needs, allowing funding use to shift without departing from the main cohesion goals. This structure ensures quicker responses while maintaining long-term regional development objectives.

Improvements in European infrastructure also play a key role in the updated proposal. The Committee recommends support for dual-use projects serving both civilian and military functions. New definitions in the water sector now include irrigation and desalination systems. In housing, the focus shifts to sustainable construction and renovation efforts. Critical energy systems and civil emergency facilities may also receive targeted support. These changes are part of efforts to strengthen European infrastructure through existing cohesion funding, aiming to improve both regional stability and emergency preparedness across the EU.

To maintain fairness, certain limits have been added to the new funding priorities. Defence and decarbonisation funding should focus on less developed or transition regions. Larger businesses may only receive support if they hire local workers from the region. Local and regional authorities must approve any redirection of development funds. This measure ensures that decisions reflect regional needs and maintain transparency. The updates attempt to avoid increasing inequality between more and less developed EU areas, helping preserve the original goals of the EU’s cohesion policy.

Funding cannot benefit from the new flexibilities if subject to EU conditionality rules, including cases involving rule of law violations or breaches of EU values. MEPs approved starting talks with the Council, with 31 votes in favour. These negotiations will be confirmed during the European Parliament’s July plenary session. Talks will proceed if members don’t raise formal objections during that session. The negotiations aim to finalize updates before the funding cycle progresses further.