Regulation (EU) 2025/1914 of the European Parliament and of the Council of 18 September 2025 amending Regulations (EU) 2021/1058 and (EU) 2021/1056 as regards specific measures to address strategic challenges in the context of the mid-term review

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Articles 175, 177, 178 and 322 thereof,

Having regard to the proposal from the European Commission,

After transmission of the draft legislative act to the national parliaments,

Having regard to the opinion of the European Economic and Social Committee (1),

Having regard to the opinion of the Committee of the Regions (2),

Acting in accordance with the ordinary legislative procedure (3),

Whereas:

(1) In recent years, geopolitical dynamics have been marked by profound uncertainty, necessitating a fundamental re-evaluation of the Union’s strategic autonomy and resilience and the safeguarding of democratic principles and the rule of law alongside the challenges stemming from the green, social and technological transitions. Those simultaneous transitions demonstrate the urgent need to close the innovation gap, to accelerate decarbonisation efforts, to reinforce economic competitiveness and to reduce external dependencies, by diversifying supply chains, scaling up domestically produced green energy, and investing in critical sectors.

(2) As the Union’s main investment instrument within the multiannual financial framework, cohesion policy drives targeted investments that contribute to economic, social and territorial cohesion, as set out in Article 3(3) of the Treaty on the European Union (TEU) and Article 174 of the Treaty on the Functioning of the European Union (TFEU), while at the same time addressing emerging challenges. Moreover, the mid-term review is committed to the partnership principle and the principle of multi-level governance to safeguard an effective, regional and citizen-centred implementation of cohesion policy. Therefore, any reallocation under the mid-term review should be carried out in accordance with the European code of conduct on partnership (4).

(3) The legal framework for cohesion policy programmes provides for a mid-term review in 2025, which offers a timely and unique opportunity to refocus programmes on addressing new challenges and opportunities, to accelerate implementation and to increase their effectiveness to respond to both old and new Union priorities, without prejudice to other Union legal acts or to the next multiannual financial framework.

(4) In light of the importance of horizontal enabling conditions applicable to all specific objectives and the criteria necessary for the assessment of their fulfilment, within the meaning of Article 15(1), second subparagraph, of and Annex III to Regulation (EU) 2021/1060 of the European Parliament and of the Council (5) for the effective and efficient use of the overall Union support granted by those Union Funds and the need to ensure the practical effect of those Union Funds, the amounts exceeding the flexibility amount referred to in Article 86(1), second subparagraph, of that Regulation, which correspond to specific objectives that are subject to a negative assessment by the Commission on the basis of the application of those horizontal enabling conditions should not be subject to a programme amendment or transfer on the basis of the new priorities and flexibility provided for in the amending provisions set out in this Regulation. Such a proportionate measure constitutes a necessary incentive, intended to ensure that Member State law and practice continues to comply with the horizontal enabling conditions and that the expenditure covered by the Union Funds meets the Union’s objectives. Since Regulation (EU, Euratom) 2020/2092 of the European Parliament and of the Council (6) is of horizontal application, the same requirement should apply to the amounts corresponding to commitments suspended by measures adopted on the basis of that Regulation. Amounts within the flexibility amount referred to in Article 86(1), second subparagraph, of Regulation (EU) 2021/1060 and corresponding to the specific objectives subject to a negative assessment by the Commission on the basis of the application of the horizontal enabling conditions can be subject to a programme amendment or transfer on the basis of new priorities, provided that such new priorities comply with the objectives pursued by the horizontal enabling conditions.

(5) In its communication of 29 January 2025 entitled ‘A Competitiveness Compass for the EU’ as well as its communication of 26 February 2025 entitled ‘The Clean Industrial Deal: A joint roadmap for competitiveness and decarbonisation’ and the accompanying Action Plan for Affordable Energy, the Commission presented a concrete path for Europe to regain its competitiveness and secure sustainable prosperity. The European Regional Development Fund (ERDF) and the Cohesion Fund, established by Regulation (EU) 2021/1058 of the European Parliament and of the Council (7), already support investments to climate objectives as laid down in Regulation (EU) 2021/1060. However, Member States should step up their efforts in order to ensure that decarbonisation is a driver for growth for European industries and the prosperity of European citizens by, inter alia, scaling up support for clean technology and the transition to clean energy, investing in energy infrastructure projects that can ensure a true Energy Union, and supporting decarbonisation of production processes and products.

(6) In light of the unprecedented geopolitical instability and the need for the Union to ensure its own defence and civil preparedness, cohesion policy funding should be swiftly mobilised to directly support investments in defence capabilities and civil security. It is therefore necessary to create new specific objectives for support from the ERDF and the Cohesion Fund to finance industrial capacities in the defence sector and to allow for investments in resilient defence or dual-use infrastructure, including with a view to fostering military mobility and enhancing civil preparedness including cyber and civil security that are not necessarily related to mobility, in line with the scope of those funds and the ‘do no significant harm’ principle and in cooperation with regional and local authorities. In addition, it should be possible to support civil preparedness as part of territorial and local development strategies. Industrial capacities to foster defence capabilities should relate to the technological development and production of defence products and other products for defence purposes, as defined in Council Regulation (EU) 2025/1106 (8), in particular those referred to in Article 1 of that Regulation. Member States are encouraged to use the possibility provided for in the current legal framework to voluntarily transfer resources allocated to them under shared management to directly managed programmes with defence and security objectives. In that context, transfers to the military mobility envelope under the Connecting Europe Facility (CEF) would ensure coordinated interventions along the military mobility corridors referred to in the Joint White Paper of the High Representative for Foreign Affairs and Security Policy and the Commission of 19 March 2025 on European Defence– Readiness 2030. When supporting such investments, Member States are to consider, where applicable, the eligibility criteria set out in Article 9 of Regulation (EU) 2021/697 of the European Parliament and of the Council (9), the eligibility rules set out in Article 16 of Regulation (EU) 2025/1106, or the relevant provisions of European defence industry programmes. Investments in dual-use infrastructure and capacities should be prioritised.

(7) Particular attention and exceptional support should be dedicated to the Union’s Eastern border regions neighbouring Russia, Belarus and Ukraine, given their unique security challenges and geopolitical significance. Those regions are particularly exposed to external threats, including hybrid attacks. Strengthening local defence capabilities and community resilience in those regions is essential not only to deter potential aggression and safeguard European security, but also to support regional development, promote social cohesion, generate employment, and improve living conditions.

(8) In the allocation and implementation of cohesion policy resources directed towards defence-related objectives, Member States should prioritise projects that promote employment, skills development and industrial diversification at regional level. Particular emphasis should be placed on supporting small and medium-sized enterprises (SMEs) and regional clusters active in dual-use technologies, cybersecurity and artificial intelligence, ensuring that such investments serve the Union’s strategic interests and the objective of economic, social and territorial cohesion.

(9) Investments in upgrading transport networks to meet military requirements also deliver significant benefits for civilian mobility, economic connectivity and crisis response capacities within the Union. Such investments improve cross-border infrastructure, reduce bottlenecks, enhance preparedness and contribute to the resilience of regions and critical supply chains. Furthermore, transport hubs enabling the rapid deployment of emergency services and the distribution of essential supplies, contribute significantly to the continuity of vital functions and national security.

(10) Furthermore, in order to quickly inject liquidity to cover the most pressing needs, for investments in enhanced defence capabilities and infrastructure by, in particular, prioritising capabilities and infrastructure of a dual-use nature, and civil preparedness, additional financing possibilities should be offered. In particular, it is necessary to provide for additional one-off pre-financing of 20 % of the amounts programmed under such dedicated priorities under the relevant policy objectives of the ERDF and the Cohesion Fund and the possibility of applying a higher Union co-financing rate.

(11) The ERDF and the Cohesion Fund can, within their respective scope of support, already provide support for investments that contribute to the objectives of the Strategic Technologies for Europe Platform (STEP) established by Regulation (EU) 2024/795 of the European Parliament and of the Council (10), which aims to strengthen Europe’s technological leadership. In order to provide further incentives for investments from the ERDF and the Cohesion Fund in those critical fields, the limitation for the overall contribution of the ERDF and the Cohesion Fund to those priorities should be removed and the possibility for Member States to receive a higher pre-financing for related programme amendments should be extended. The priorities which support investments contributing to STEP objectives under a request for a programme amendment that was submitted to the Commission by 31 March 2025 are to receive the exceptional one-off pre-financing applicable at the time of the submission of that request. Furthermore, the possibilities for the financing of productive investments contributing to STEP objectives in enterprises other than SMEs should apply to all Member States and regions with a GDP per capita below the EU-27 average, while preserving a focus on SMEs. Such investments should also be possible in regions where they facilitate industrial adjustment linked to the digital transition, including digital capacities in cloud computing, AI and supercomputing, and the decarbonisation and circularity of production processes and products, such as in the automotive industry or energy intensive industries. In addition, the possibility provided for investments contributing to STEP objectives to finance productive investments in enterprises other than SMEs from the Just Transition Fund (JTF) established by Regulation (EU) 2021/1056 of the European Parliament and of the Council (11) should be extended to all investments, while preserving a focus on SMEs, where such investments are necessary for, inter alia, the implementation of the just transition plan and for job creation.

(12) In order to enhance energy security, accelerate the energy transition and promote clean mobility, investments under STEP and the Alternative Fuels Infrastructure Facility provided for by Regulation (EU) 2023/1804 of the European Parliament and of the Council (12) should be complemented by creating a new specific objective for the ERDF and the Cohesion Fund under policy objective 2 to promote energy interconnectors and related transmission, distribution, storage and supporting infrastructure, as well as to protect and safeguard that infrastructure and to enhance the deployment of charging infrastructure. Supporting energy infrastructure refers to any facilities, equipment, and systems that support the interconnection of Member States’ transmission systems by enabling the generation, transmission, distribution, and storage of energy. In order to accelerate investments in those fields, priorities dedicated to that specific objective should benefit from additional one-off pre-financing of 20 % of the amounts programmed under those priorities and from the possibility of applying a higher Union co-financing rate. Managing authorities are expected to aim to leverage a maximum amount of private finance, where relevant. That enhanced investment effort will enable energy-intensive sectors to access more stable and diverse energy sources in a less fragmented internal energy market, buttressing their sustainability and competitiveness. Moreover, expanding the ERDF’s support for decarbonisation projects allows energy-intensive industries to prioritise high-impact innovations that are aligned with the Union’s climate objectives.

(13) Important projects of common European interest (IPCEIs), namely projects that support and promote large-scale, cross-border projects that are considered to be essential for the economic growth, innovation, and competitiveness of the Union, are deemed to be compatible with the internal market where they enable cross-European cooperation for innovative technologies or pan-European infrastructures. To help accelerate the design of new and the implementation of existing IPCEIs, support from the ERDF for investments in projects participating in an IPCEI which the Commission has found to be compatible with the internal market pursuant to Article 107(3), point (b), TFEU having taken into account the Commission communication of 25 November 2021 entitled ‘Criteria for the analysis of the compatibility with the internal market of State aid to promote the execution of important projects of common European interest’, should be allowed in all categories of regions. Furthermore, operations contributing to an IPCEI approved by the Commission should benefit from simplified selection procedures.

(14) Affordable and sustainable housing is another challenge that has come to the forefront due to the significant increase in prices and rents in recent years. Disadvantaged groups and low-income and middle-income families are particularly affected and face more difficulties in accessing housing and a growing risk of homelessness. With a view to providing incentives for Member States and regions to double investments from the ERDF and the Cohesion Fund, within their respective scope of support, in the construction and renovation of the affordable and sustainable housing stock, including social housing, new specific objectives should be created under different policy objectives to provide flexibility for the programming of housing interventions under dedicated priorities, while acknowledging that the definition of affordability can vary according to the circumstances of each Member State. Such priorities should be compatible with Directive (EU) 2024/1275 of the European Parliament and of the Council (13) and should entail the possibility of applying a higher Union co-financing rate and of an additional one-off pre-financing of 20 % of the amounts programmed in order to alleviate the burden on public budgets in all categories of regions. For example, investments under the principles and values of the ‘New European Bauhaus’ initiative should make full use of those new possibilities. Costs resulting from the temporary renting of alternative accommodation for the occupants during the time of the renovation can also be eligible for support under such priorities. It is also appropriate to clarify the support of the JTF in that context.

(15) Water has a vital role as a resource for the security of food, energy and economic systems. Its role as a resource is also a key aspect of ensuring climate resilience. Given the challenges posed by the impact of climate change on water resources, further investments in water resilience should be encouraged. The implementation of water and marine protection legislation should be enhanced, water efficiency should be improved, water scarcity should be addressed, and progress towards a water-resilient Europe should be made, urgently. That implementation requires significant investments, including in water reuse for non-agricultural purposes, blue biotechnology, infrastructure for addressing water stress and drought prevention, the deployment of nature-based solutions, the ecological restoration of freshwater ecosystems, and the improvement of wastewater treatment. For populations living in regions particularly affected by water scarcity, desalination, if carried out in a sustainable manner, as referred to in the Commission communication of 4 June 2025 entitled ‘European Water Resilience Strategy’, can also play a key role in ensuring secure access to water and should therefore be eligible for support. It is therefore appropriate to include a reference to secure access to water, sustainable water management, including integrated water management, and water resilience in the specific objective under policy objective 2 to allow for proactive, risk-based management and increased preparedness. New dedicated priorities established for that specific objective should also benefit from additional one-off pre-financing of 20 % of the amounts programmed and the possibility of a higher co-financing rate in order to provide incentives for crucial investments in that field. It should also be possible to provide support from the JTF for water-related investments where such investments address acute water stress, enhance climate resilience, and support the transition to a sustainable and diversified local economy, even when not directly linked to land restoration projects.