Connecting European railways

The European Commission is considering whether to maintain the Connecting Europe Facility (CEF) in the next budget. As the only dedicated financial instrument for cross-border connections, extending its use is vital to achieving real interconnectivity of rail throughout Europe. However, accomplishing this will only be possible through a serious overhaul of its funding priorities.

Of the €15.5 billion dedicated to rail between 2021 and 2023, nearly half went to just seven megaprojects. Yet smaller-scale projects focused on key upgrades are essential to meeting the infrastructure quality targets set for the Trans-European Transport Network (TEN-T). Among these upgrades, electrification received the largest share of funding—accounting for 20% of all CEF transport rail funds—followed by line speed improvements at 18%.

However, these necessary upgrades have failed to secure funding levels comparable to megaprojects, even as Member States continue to fall behind on their objectives. For example, only €0.7 billion has been allocated to the deployment of the EU’s standardised signalling system (ERTMS), while full implementation could cost tens of billions. ERTMS funding increased significantly in the 2024 call, a positive development that puts it on a hopeful path. But it is still trailing behind other essential upgrades, as it received only close to a third of the funds directed to rail electrification. ERTMS will require a stronger push to gain the momentum it needs.

Large megaprojects like the Eurotunnel and the Øresund Fixed Link have revolutionised cross-border travel. Their full potential, however, remains untapped, with additional capacity available to increase rail services through them. The EU should therefore continue to invest in transformative projects, but not at the expense of the broader upgrades needed to achieve interoperability throughout the entire corridors.

A future CEF 3 should have a reduced emphasis on flagship megaprojects in order to free up capacity to fund a much larger number of projects, resulting in an acceleration of TEN-T implementation. A 25% increase in the CEF’s budget for rail could nearly double the funds available for the broader upgrades needed to deliver the TEN-T. By committing or frontloading fewer funds at the start , the programme would allow for better resource allocation and more flexibility to respond to strategic needs throughout the budget period.

The Connecting Europe Facility

Breaking down the barriers in European railway between countries is one of the EU’s aspirations. To achieve this, considerable funding will be needed to upgrade signalling, electrification and gauges to a harmonised European standard. Missing links will also need to be built in order to unlock effective cross-border connections. The Trans-European Transport Network (TEN-T) lays out the planning and obligations to accomplish this and since 2014 the Connecting Europe Facility (CEF) has provided funding to help member states comply with this framework. But Europe has advanced very slowly with the integration of its railway networks.

The CEF was created in 2014 to provide a dedicated funding mechanism for the infrastructure needed to realise the Trans-European Networks (TEN). In 2021 the instrument was continued as part of the present EU long-term budget period by the name of CEF 2, ending in 2027. The CEF is managed by the Climate, Infrastructure and Environment Executive Agency (CINEA).

It is divided into three sections:

• CEF Transport: Supports projects in the Trans-European Transport Network concerning the construction of new links or the upgrade of existing connections along these corridors.

• CEF Energy: Aims to scale up cross-border energy infrastructure across Europe through the Trans-European Networks for Energy, as well as reinforce the existing links.

• CEF Digital: Promotes investment in key European digital connectivity infrastructure.

The instrument is consistently oversubscribed, up to three times over the total budget available in one of its latest calls. However, the slow advancement in the implementation of the TEN-T after two iterations of the CEF underlines that without significant changes the program will fail to deliver its milestones in time.

The European Commission will release its proposal for the next Multiannual Financial Framework (MFF) in July 2025 and it is uncertain in which shape or form the CEF will be continued beyond 2027. According to the initial communication, more EU funding would be distributed via “national and regional investment plans” which could lead to a ‘nationalisation of the EU budget’. In this context, a continuation of the CEF will be ever more important to secure funding for cross-border network connections.

Consistently with the ambition to make the EU budget simpler, more focused and more impactful, our report analyses the rail expenditure in the current CEF 2 to understand if the spending is sufficiently prioritising key infrastructure upgrades that can achieve widespread interoperability in the short and medium term. To do so we analyse how much money flagship megaprojects absorb from the EU budget and whether they are ultimately slowing down the modernisation of the network.

Methodology

In their 2020 report, the European Court of Auditors refers to megaprojects as “Transport Flagship Infrastructures”. They define such projects as EU co-funded large projects with a cross-border dimension, relevant for the completion of the TEN-T network and with an overall cost superior to €1 billion.

For this study, we focus specifically on megaprojects that are particularly capital-intensive and can take decades to be completed. As a consequence, our analysis targets seven of the largest ongoing infrastructure megaprojects. Throughout this report, we refer to such megaprojects as “Rail flagship megaprojects”. We purposely excluded smaller megaprojects, those that do not absorb a significant share of EU funding and those focused on the upgrade and modernisation of existing railway lines.

Europe’s railway infrastructure needs to rise up and play a significant role in transport decarbonisation to face the climate crisis. Nowadays European trains have to overcome different signalling systems, track gauges and electrification systems when attempting to cross borders. This severely limits their ability to provide strong and reliable international connections.

In a previous report, T&E identified 6 key indicators that need to be undertaken to efficiently upgrade the European rail network:

• Accelerate European Rail Traffic Management System (ERTMS) deployment for high quality, efficient infrastructure

• Increase maximum speeds to 160 km/h for conventional lines

• Increase capacity through additional tracks where needed

• Boost rail electrification

• Advance in the standardisation of track gauges in a phased manner

• Develop key missing high-speed links (HSL)

It is important to note that the 160 km/h speed threshold is based on the TEN-T regulation, which mandates that every line included in the core and extended TEN-T need to allow a speed of 160 km/h. According to the minimum speed requirement of the TEN-T high-speed rail network, we used a threshold of 200 km/h to consider a project as high-speed rail.

In this report, we refer to projects aiming to develop at least one of these six key actions as “Key upgrades”. 

Our analysis focused on CEF Transport funds, for the ongoing funding period (2021 - 2023, as at the time of the analysis projects funded under the 2024 call were not yet publicly available). The list of projects funded under CEF Transport between 2021 and 2023 was downloaded from the CINEA project portfolio dashboard (the cutoff date for data download was the 16th of May).

For this period, 630 proposals were supported by CEF Transport. Among these, 277 were identified as rail proposals. On these rail proposals, 27 were identified as being linked with one of the seven rail flagship megaprojects, and 120 were identified as being linked with at least one of the six key upgrades.

After proposal categorisation, we grouped together proposals belonging to the same infrastructure project (for instance, the Y Vasca project received CEF Transport funds thanks to two proposals, and Rail Baltica through 9 proposals).

Projects funded under the 2021, 2022, and 2023 calls amount to €21.1 billion, representing 82% of the €25.8 billion of CEF Transport budget available for 2021–2027. Between 2021–2023, €5.7 billion were allocated to rail key upgrades, which represent 27% of CEF Transport expenditures in that period.

Data for 2024

On the 3rd of July of 2025, CINEA announced that 94 projects were selected for the CEF Transport 2024 call. These results are provisional, as the Commission still has to formally approve the selected projects, which should be done by October 2025. The list of selected projects contains a succinct description, as well as “Recommended Fundings”, as final agreements are still pending on the exact money allocated to each project.

Analysis

As shown in the figure below, between 2021-2023 CEF Transport funds totalled €21.1 billion. During this period, more than 200 rail projects were funded through CEF Transport, for a total of €15.5 billion, which represent more than 70% of CEF Transport funds for this period. The seven flagship megaprojects received €6.6 billion, while €5.7 billion were allocated to 84 key upgrade projects.

CEF Transport funds are not evenly shared between rail flagship megaprojects and key upgrades

Our analysis showed that a third (31% or €6.6 billion) of CEF Transport funds are allocated to only seven rail flagship megaprojects. The envelope going towards key upgrades looks roughly similar to megaproject funds (€5.7 billion, so 27% of CEF Transport funds). However, key upgrade funds are shared between 84 projects. This implies that on average €70 million were allocated per key upgrade projects, while megaprojects received an average of almost €1 billion per project from CEF Transport between 2021-2023.

With close to €3 billion of funds, Rail Baltica was the most supported project under CEF Transport between 2021-2023. This sole project accounted for close to a fifth of CEF Transport funds for rail (19%) and is expected to require a similar amount from the next budget due to being delayed until 2035.

It is worth noting that several rail flagship megaprojects were also funded by CEF Transport through the previous financial framework (2014-2020), with Stuttgart 21 and the Y Vasca receiving the majority of their funding in that period. The Brenner Base Tunnel and Lyon-Turin tunnel, both absorbing together 10% of the funds, are scheduled for completion by the end of the next MFF. With the majority of the construction work being done by 2028, they will require much less funding in the next MFF, just like Stuttgart 21 and the Y Vasca.

With a single proposal the new Porto-Lisbon line received €800 million from CEF Transport. Since the start of heavy construction is still pending, it is likely that support for this project will also absorb a notable part of the next CEF.

CEF Transport funds allocated to key upgrades

Between 2021-2023, €5.7 billion were allocated to 84 projects targeting at least one key upgrade (without taking into account flagship megaprojects). As displayed below, our analysis shows that ERTMS was one of the key upgrades receiving the least funds: only €0.7 billion in total for 30 projects. In our previous study we showed that ERTMS deployment is extremely uneven across member states. Indeed in their 2024 report, the European Union Agency for Railways also highlights that despite countries like Luxembourg and Belgium having deployed ERTMS on a significant share of their network, for most member states less than 20% of their TEN-T lines are equipped with ERTMS.

This low level of investment and this slow pace of deployment is particularly concerning, especially considering that ERTMS is a cornerstone of the TEN-T regulation. Deployment of ERTMS on the entire TEN–T network (Core, Extended Core and Comprehensive) could cost between €24 billion, according to the Commission, to more than €180 billion according to the 2017 report from the European Court of Auditors. Even if these two estimates paint clearly different pictures, the comparison with the €0.7 billion from CEF Transport is striking.

Our analysis also highlights that an overall €3.1 billion was allocated to track electrification. This represents 20% of CEF Transport funds for rail, shared among 33 projects, which makes rail electrification the most funded key upgrade through the current financial framework of CEF Transport. Upgrades of line speeds to a maximum of 160 km/h also received significant funding from CEF Transport, with a total of €2.8 billion (i.e. 18% of CEF Transport funds for rail), shared among 15 projects.

Between 2021-2023, only €0.7 billion was directed to missing links on the HSR network. Among the 12 HSR projects, 10 are related to preliminary studies, highlighting that the infrastructure works for these projects have not started yet. The small amount of HSR projects in the construction phase being funded by the CEF could be a result of the arrival of Next Generation EU funds during these years, that multiple countries used to fund the construction of their HSR projects. Railway infrastructure managers were consistently among the top recipients of the funds in many countries.

Increasing the reach of the CEF

The CEF has been an instrumental tool for the development of the TEN-T Network. With its focus on cross-border mobility, it is helping to finance missing links that will finally connect the dots to achieve an interconnected network in Europe. Securing its continuity is a must.

But it’s also clear that the pace is not at the necessary level to meet the objectives set out in the TEN-T regulation. A reconfiguration of the CEF is needed to provide for a greater coverage of the European network and to respond to future crises.

What a new CEF 3 should look like

A future CEF 3 should receive a larger budget to reflect the higher ambition that resulted from the revision of the TEN-T regulation. But it should also use those funds more efficiently.

Flagship megaprojects can be very transformative by slashing travel times, reducing operating costs for railway undertakings and improving interoperability. But they are also generally delayed and overbudget, which means they end up absorbing a large number of EU funds over time. For instance, the Brenner Base Tunnel has been delayed by close to 20 years and is now aiming to be completed in 2032. Every flagship megaproject suffered significant budget overruns. To illustrate, the European Court of Auditors reported in 2020 that the Lyon-Turin tunnel had experienced an 85% cost increase over initial estimates. And costs for Rail Baltica are set to more than quadruple from 5.8 to 23.8 billion euros. Consequently, they are dependent on the CEF for a longer period of time than anticipated, soaking up funds that could have gone to small and medium sized projects that were not able to make the cut.

To avoid reproducing this problem, the EU should make sure that rail expenditure is not so heavily concentrated on just a few projects. Reducing the proportion of rail spending directed towards flagship megaprojects in the next iteration of the CEF is feasible without direct cuts to ongoing projects. As the majority of the megaprojects selected in this study are expected to be either finalised or close to completing their most expensive superstructure works by 2028, the year where the new funds would kick in, they would therefore require less EU co-funding.

But the EU will also need to ensure that they are not just replaced by new grand megaprojects offering small benefits for international rail despite their high cost. The new Messina Bridge project has received CEF funds for studies despite its unclear EU added value and lack of cross-border connectivity. In Sicily, 85% of railway lines are single track and only half of them are electrified. Prioritising a bridge that is not expected to have a big impact on the Rome-Palermo connection, as it will still take 7 hours, will not deliver a significant improvement in cross-border mobility and will not address the main issues in the sicilian railway network.

Limiting the amount of funds dedicated to flagship megaprojects can free up funds to boost key upgrades like ERTMS that are in need of a quick acceleration in order to improve safety and facilitate cross-border travel across the continent. This will result in more short and mid term gains that can benefit Europeans before the CEF’s run is over.

As shown on the figure below, directly allocating more funds to rail key upgrades would also be an efficient solution to accelerate TEN-T development. For instance, increasing CEF Transport budget by just 10% could raise funding for rail key upgrades by a third, or by nearly double if the budget was increased by 25%.

An instrument fit for the future

The Preparedness Union Strategy showcases how the EU is aiming to face the threats of unexpected events such as the growing amount of climate disasters or the external security challenges. A potential CEF 3 would have to adjust to the needs of a resilient network. But this cannot be done if a large part of its budget is frontloaded. With more than three quarters of CEF funds having been spent in its first three years, it is currently unable to properly fund the adaptations needed to adapt the infrastructure to the challenges of today.

While frontloading investments makes sense to effectively kick start infrastructure projects, it leaves the CEF vulnerable to unexpected developments. Maintaining a more balanced expenditure throughout the run of the program will help to reinforce the program’s responsiveness.

Recommendations