The European Union's executive set out plans on Wednesday to invest 50 billion euros ($68 billion) by 2020 in new cross-border transport, energy and broadband projects which it said would boost growth and employment in the 27-nation bloc.
Total spending on the plan from 2014 and 2020 would amount to just 0.4 percent of EU annual GDP, but the European Commission said it expected the funds to attract extra public and private money by lowering the risk profile of key infrastructure projects.
Today we are making a down payment for Europe's future growth and jobs, Commission President Jose Manuel Barroso told a news conference in Brussels.
Europe must help to build the roads, railways, energy grids, pipelines, and broadband networks that are so important to our citizens and businesses, he said.
Barroso also confirmed plans to create European project bonds to be used for specific initiatives and designed to help generate additional cash for new infrastructure.
The bonds would be issued by infrastructure project companies -- not the Commission directly -- but EU and European Investment Bank funds would be used to cover part of the project risk, making the bonds more attractive to investors such as insurance companies and pension funds.
Initially, these will most probably be European investors, but interest from North American institutional investors and various sovereign funds can also be expected, the Commission said in a statement.
The bonds are needed to fill the funding gap left by the collapse in private project financing for infrastructure after the financial crisis, the Commission said, but the European Central Bank has said they could reduce transparency in public finances by increasing liability.
The Commission proposed allocating 230 million euros for project bonds during a pilot phase in 2012 and 2013, rising to a significant but unspecified sum as part of the 50 billion euro infrastructure plan from 2014.
All of the Commission's proposals for infrastructure spending and project bonds are subject to final approval by EU governments and lawmakers which, if granted, could take up to two years.
The largest share of the 50 billion euro infrastructure fund will go to transport projects, which will receive 32 billion euros up to 2020.
This will help to meet the estimated 250 billion euros of investment needed in Europe's transport infrastructure by 2020, with the rest expected to come from national governments and the private sector.
The list of projects identified by the Commission as eligible for EU funding include the upgrade of 15,000 km (9,000 miles) of existing railway line to high-speed, and extending road and rail links to 83 ports and 37 airport hubs.
The Community of European Railway and Infrastructure Companies (CER) said the plans would help direct funds to where they were needed most, for example integrating the rail networks of central and eastern EU states.
But technical proposals in the plans to increase rail interoperability across EU borders went beyond what was necessary and would prove costly, CER said.
At a time of economic and financial turmoil, such technical standards will pose a significant additional burden on national transport budgets, it said in a statement.
A total of 9 billion euros will be allocated for energy projects, including construction of the Southern Gas Corridor, a scheme designed to reduce EU dependency on Russian gas, and an offshore wind electricity grid in the North Sea and Baltic region.
It should definitely improve the grid. We have never built a common infrastructure by design. It shows we're learning from our mistakes, Sanjeev Kumar of environmental think tank E3G told Reuters.
A further 9 billion will be invested in high-speed broadband networks and related digital services throughout the EU, for example connecting less densely populated and rural areas ignored by commercial operators into Europe's broadband grid. ($1 = 0.731 Euros)
(Additional reporting by Barbara Lewis and Christopher Le Coq; Editing by Rex Merrifield, Karolina Tagaris)