Smart city and sustainable development grants for a greener Europe

August 12, 2022

Table of contents

With the most critical phase of the pandemic over, Europe is returning to the path of growth by making smart cities and sustainable development two important pivots of the recovery strategy.

Promoting projects in these two areas is crucial as they open the door to achieving one of the EU’s red targets: climate neutrality by 2050.

One of the main ways to help achieve this goal is through financing, the approval of aid and loans to developing projects to decarbonise the economy or air quality improvement. And, unlike in other recent crises, Europe has been able to face up to the challenge and has approved one of the largest economic injections in its history, perhaps comparable only to the economic effort involved in recovering the continent from the ruins of the Second World War.

Recovering Europe from the ravages of the coronavirus is the goal. To do so along the path of innovation, resilience and adaptation to climate change, and especially environmental protection is the hope we all harbour.


Multiannual financial framework and Next Generation EU

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Where does the money for smart cities and sustainable development come from?

The financial instruments designed by the EU come from the so-called “Multiannual financial framework (MFF)“. This is, in other words, the EU’s long-term budget.

However, for the current period (2021-2027), in addition to the MFF, Next Generation funds have been made available. This is an additional, exceptional and temporary instrument to stimulate economic recovery and boost resilience.

The objective of both mechanisms is to finance programmes in the 7 areas listed in the attached infographic.


What programmes are these grants for?

The EU’s long-term budget and Next Generation funds will support almost 40 programmes, including initiatives such as Horizon Europe and the Recovery and Resilience Facility (RRF).

But what do many of these plans have in common? The importance of the environmental perspective should come as no surprise considering that the European Green Deal is set to position Europe as one of the leaders in environmental protection.

However, some programmes offer a more favourable framework for the development of projects related to smart cities and sustainable development. We want to focus on these programmes, as Kunak sees them as opportunities where our air quality monitoring solutions can be of great value.


EU Missions, finding solutions to main challenges

The Horizon Europe programme is one of Europe’s flagships. Its main objective is to invest in research and innovation to make the EU a science and technology leader that will

  • accelerate the green and digital transition;
  • increase competitiveness, and
  • strengthen resilience and preparedness for future crises.


But during the current budget period, the Horizon Europe programme will also support so-called “EU Missions”. These missions seek concrete solutions by 2030 to 5 challenges considered to be of particular relevance:

  • Adaptation to climate change
  • Fight against cancer
  • Restoring oceans and water resources
  • Creation of 100 smart and climate-neutral cities
  • Developing a Soil Pact for Europe


100 cities, 100 urban living labs from which opportunities arise


EU missions - climate-neutral and smart cities

From our product perspective, one of the most interesting missions is the one for smart and climate-neutral cities. Its development is still at an early stage, but its launch attracted the interest of hundreds of cities, exceeding expectations.


Once all the applications had been evaluated, the European Commission announced on 28 April the 100 cities that will be part of the initiative. It should be noted, however, that the rest of the applications will also receive support through the NetZeroCities platform that manages the mission.

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These cities will now have to develop “city climate contracts that will specify general plans for climate neutrality in transport, waste management or energy production sectors.


National recovery and resilience plans, the key to unlocking Next Generation funds

As mentioned in a previous section, the Next Generation Funds (NGEU) are peculiar due to their temporary and exceptional nature. They basically consist of two instruments:

  • Recovery and Resilience Facility (RRF), which aims at sustainable and resilient recovery, and
  • REACT-EU, aimed at restoring cohesion between all European territories.


How can the Member States unlock this funding channel? By submitting their recovery and resilience plans to the European Commission, specifying the investments to be made before 2027.

These plans are country-specific and therefore each one reflects different priorities or actions. However, they share common objectives such as the main axes or the weight of the tasks to be contemplated. Thus, for example, it was agreed that 37% of expenditure should be earmarked for climate measures, a percentage that the countries have raised in practice to 40%.

An example of the relevance of this aid is Spain, which is going to invest a significant amount of money in the implementation of low-emission zones (LEZs). Barcelona, for example, has obtained 75 million euros to develop actions to improve environmental quality and sustainable mobility.


Other European funds where smart city and sustainable development can be covered

In addition to the programmes and instruments mentioned above, Europe also has other funding sources such as ERDF funds, Cohesion Funds or InvestEU, managed by the European Investment Bank (EIB).

ERDF funds are of a shared nature. In other words, it is the Member States that decide which projects to fund. However, the priorities for the current budget period are the same for all countries and are aimed at achieving more:

  • Competitive and smart (Policy Objective 1)
  • Green (Policy Objective 2)
  • Connected (Policy Objective 3)
  • Social and inclusive (Policy Objective 4)
  • Close to its citizens (Policy Objective 5)


Cohesion Funds are intended to support countries with a Gross National Income (GNI) per capita below 90% of the EU-27 average. For the period 2021-2027, the beneficiary countries are Bulgaria, Czechia, Estonia, Greece, Croatia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Portugal, Romania, Slovak and Slovenia.

As you can see, Europe has bet hard on its pandemic recovery strategy. It is true that the current situation, with the armed conflict in Ukraine and the energy crisis, may alter the initial plans a bit, but the commitment made seems solid.

And we at Kunak are ready to contribute to the challenge of making Europe more sustainable and more prepared for whatever the future holds.