The JESSICA initiative (Joint European Support for Sustainable Investment in City Areas) was launched in 2006 and in February 2007 the dedicated team of the JESSICA Task Force was created at the EIB. Until the end of 2008, the focus of the Task Force's activity was on improving and clarifying the European Structural Fund regulatory framework for deploying the JESSICA instrument and delivering technical assistance to Member States through JESSICA Evaluation Studies. These were aimed at assisting Managing Authorities in the respective Member States to employ part of their Structural Fund resources as financial engineering instruments, with investment delivered through Urban Development Funds (UDFs)[1] and, where applicable, Holding Funds (HFs), in support of sustainable investment in cities.

To date, 40 Evaluation Studies have been launched in 18 Member States, 23 of which are now completed. Requests for further studies are anticipated for 2009-2010, with the majority expected to be finalised by 2011. As a result of this work, awareness of the JESSICA programme has grown, with an increasing number of Managing Authorities expressing an interest in establishing Holding Funds to expedite JESSICA implementation and in appointing the Bank for that purpose, as provided for in the Community regulations. So far, this interest has resulted in the signature of the first six HF mandates, totalling approximately EUR 600m, with a further four HF mandates expected by the end of the year, bringing the total volume of funds under management to more than EUR 1bn.

JESSICA has thus well and truly moved into operational mode, with the prospect of increased asset management volumes and requests for new advisory services. This trend is reinforced by the expectation that in the future a higher proportion of Structural Fund resources could be channelled into financial engineering mechanisms such as JESSICA, a possible outcome of the mid-term review of the current programming period (expected in 2010) and the formulation of the 2014-2020 financial perspectives.

An illustration of the increasing need for effective asset management in cities is most notably in the area of energy efficiency, as the EU recognises the need to rapidly mobilise cost-effective energy efficiency improvements in the built environment to achieve the relevant targets. Among other instruments involving the EIB and the Commission, JESSICA is already set to play an important role in this area and the JESSICA Holding Fund investment strategies for Lithuania, Andalucía, London and Greece are already seeking to address this concern and are expected to channel more than EUR 500m of long-term capital investment into energy efficiency for housing, public buildings and other urban infrastructure. This exemplifies the flexibility in the scope of the JESSICA instrument and represents a scalable model, which could assist in creating synergies between different but complementary instruments in sustainable energy investment.

Against this backdrop, technical assistance and advisory services are increasingly in demand as the Task Force begins to capitalise on the knowledge and experience gained in undertaking JESSICA Evaluation Studies, managing Holding Funds, and taking part in cross-European networking and knowledge-sharing platforms.

The future of JESSICA therefore appears to be moving in the direction of supporting European cohesion objectives and meeting the long-term need for investment and advice in sustainable urban development by exploiting three areas of expertise: institutional technical support for Member States and Managing Authorities through evaluation studies; asset management functions for urban sustainable development on their behalf; and tailored technical assistance and advisory services, primarily to European cities and regions, on the establishment and management of Urban Development Funds. 

[1] Urban Development Funds invest in public-private partnerships (PPPs) and urban projects included in an integrated plan for sustainable urban development. Holding Funds are funds set up to invest in several UDFs.