Smart cities: EU support is too fragmented

“Lighthouse”, the EU’s €400 million research and innovation programme to help European cities become smarter, has supported many of them in their bid to save resources, reduce pollution, and improve city services through the use of technology, according to a new report by the European Court of Auditors. The funded projects mostly achieved what was expected of them, and delivered concrete smart-city solutions in areas such as air quality, energy efficiency, and e-mobility. However, other cities may not benefit from these innovative solutions because the programme was poorly synced with other EU initiatives, and public and private funding is scarce and fragmented. Better coordination is therefore needed if the 100 EU cities that are currently supported are to become climate-neutral by 2030.

In the 2014-2020 period, the European Commission managed various programmes supporting smart-city projects. One of them, the “Lighthouse” programme under the Horizon 2020 research and innovation framework, supported 120 cities in 24 member states, including Barcelona, Dresden, Rotterdam and Vienna. Its successor programme for the 2021-2027 period is the Mission on Climate-Neutral and Smart Cities under the Horizon Europe research and innovation programme, which aims to deliver 100 climate-neutral cities by 2030 and ensure that all EU cities follow suit by 2050.

“To help more EU cities become smarter and greener through technology, the EU should better tap the potential for replicating the results already achieved,” said Ildikó Gáll-Pelcz, the ECA member in charge of the report. “It is positive that we can see tangible solutions coming from the ‘Lighthouse’ programme, but fragmentation acts as a brake on wider adoption.”

The auditors found that the “Lighthouse” programme was well designed, responded to cities’ needs, and was suitable for demonstrating close-to-market technologies from different fields. The funded projects delivered several hundred smart-city solutions in participating cities, most of which were energy-related, e.g. energy-efficient buildings and lighting, and smart grids. Based on a sample of completed projects, the auditors found they had achieved or exceeded around two thirds of their
expected targets.

However, the “Lighthouse” programme does not fund the replication of these solutions in other cities, which is precisely one of the means by which the “Mission” programme pursues climate neutrality, i.e. to replicate solutions developed in past R&I initiatives. The “Mission” could thus help the “Lighthouse” project solutions to be fully exploited or replicated. However, this is not the case because the two programmes are not well coordinated, and the experience gained is also underexploited as a result. The auditors now ask the Commission not only to assess the replication of “Lighthouse” project solutions, but also to coordinate both programmes better.

A lack of citizen engagement, or actual resistance or opposition from citizens, can cause smart-city solutions to fail. The auditors stress that obtaining citizen engagement has proven crucial, but often difficult. Many “Lighthouse” projects faced a major challenge in engaging citizens, and three quarters reportedly experienced either resistance or a lack of citizen engagement while deploying their planned solutions. The auditors call on the Commission to ensure that citizens are sufficiently engaged in future urban demonstration projects.

EU funding has proven valuable for cities, but they lack certainty about the overall EU funding that is actually available. This applies especially to the resources that the Commission will make available to cities supported under the “Mission” programme. The auditors look to the EU’s executive, which should assess what their funding capacity is and support cities with funding weaknesses by creating synergies with national and regional sources of funding and private investment.


Background

Smart cities can bring benefits to citizens and businesses by reducing their carbon-footprint and transforming traditional processes and services through the use of technology. For example, a smart city aims to make its services more responsive and public spaces safer, while improving transportation, water and waste management, street lighting, and heating in buildings. “Lighthouse” projects are large urban-demonstration initiatives that should innovatively integrate close-to-market technologies from different fields with a view to testing and replicating solutions and business models. The estimated investment needed for cities to achieve climate-neutrality far exceeds the funding the EU can provide. According to some estimates, 100 European cities with an average population of 100 000 would need to invest €96 billion in order to become climate-neutral by 2030.

ECA special report No 24/2023 “Smart cities - Tangible solutions, but fragmentation challenges their wider adoption” is available on the ECA website in 24 EU languages.