T&E’s report argues that the EU’s current rail funding model is imbalanced. Between 2021 and 2023, €6.6 billion in total was allocated to large-scale projects including Rail Baltica, the Brenner Base Tunnel, and the Fehmarnbelt tunnel — each with price tags over €1 billion and timelines stretching into the 2030s. In contrast, dozens of lower-cost but critical upgrades received far less support, ERTMS upgrades in particular, says T&E.

Big projects, big delays

According to the report, these megaprojects, though essential to completing the Trans-European Transport Network (TEN-T), are “capital-intensive” and slow to deliver benefits. Rail Baltica alone accounted for nearly one-fifth of all CEF rail funding in the period, yet its completion has now been pushed to 2035. The Brenner Base Tunnel has been delayed by close to 20 years and is now aiming to be completed in 2032.

In one recent funding round, demand for CEF transport funds was triple the available budget, underscoring the need for more strategic allocations. T&E argues that placing greater focus on short- and medium-term projects could accelerate connectivity and reduce emissions more quickly.

Carlos Rico, rail policy officer at T&E, said: “Megaprojects have helped give rail the boost it needs, but they’re draining resources from other vital parts of the network. The EU must address this imbalance and ensure that the Connecting Europe Facility supports all necessary upgrades.”

‘Key upgrades’, less money

Among non-megaproject initiatives, track electrification emerged as the top-funded upgrade, securing €3.1 billion (20% of CEF funds which went to rail), followed by line speed improvements with €2.8 billion (18%). However, most projects aiming to fill missing high-speed rail links are still at the study stage, with construction not yet underway.

The report identifies 84 projects as “key upgrades”, targeting goals such as boosting capacity, improving line speeds, and standardising track gauges. Yet the average funding per upgrade project was just €70 million, far below the nearly €1 billion average for each megaproject.

Signalling stuck in the slow lane

Perhaps most concerning to T&E is the lack of progress on rolling out the EU’s standardised signalling system, the European Rail Traffic Management System (ERTMS). Between 2021 and 2023, just €0.7 billion—or 3% of the CEF Transport envelope—was directed toward ERTMS deployment.

2024’s preliminary figures show a boost for ERTMS, which the NGO calls a “positive development that puts it on a hopeful path”. However, they state “ERTMS funding is still trailing behind other essential upgrades, as it received only close to a third of the funds directed to rail electrification”.  That is despite its role as a legal requirement on core TEN-T corridors by 2030 and a pillar of cross-border rail interoperability.

The report notes that countries such as Germany, France, and Poland continue to lag behind on ERTMS implementation. T&E recommends integrating the system into military mobility funding to enhance cyber resilience and dual-use potential.

The next EU budget

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, says the report.  “While frontloading investments makes sense to effectively kick-start infrastructure projects, it leaves the CEF vulnerable to unexpected developments.”

Looking ahead to the next EU Multiannual Financial Framework (MFF) in July 2025, T&E is calling for a rebalanced approach. First of all, the next round of CEF should have a larger budget to reflect the higher ambition that resulted from the revision of the TEN-T regulation, argues T&E. The advocate group for clean transport and energy estimates that a 25% increase in the CEF rail budget could double funding for crucial upgrades, without cutting off support to necessary megaprojects.

The future of dedicated transport funding under CEF has been shaky recently, with the European Commission initially dubbing whether to instead go for national and regional investment plans and thus dissolve the fund into a broader pot. From recent leaked draft legislation outlining the next long-term budget strategy, reported by Euractiv and Politico, it appears that CEF Transport will still have its place, however.

In T&E’s view, CEF Transport is more important than ever, but the current model is oversubscribed, fragmented, and not delivering the rapid integration the EU needs.  Carlos Rico: “Boosting rail is vital for Europe’s economy and defence, but funding must match infrastructure goals. The EU budget, high-speed rail plan, and the Military Mobility strategy should prioritise key upgrades and dual-use projects.”

The European Commission is planning a sweeping overhaul of how the EU allocates its long-term budget to sharpen industrial competitiveness, and while many sector-specific funds may soon be rolled into a new catch-all investment mechanism, there’s some good news for rail: the Connecting Europe Facility (CEF) — the bloc’s dedicated transport infrastructure fund — appears to have survived.

According to the draft legislation, leaked to Euractiv and Politico, the Commission wants to merge up to 14 existing programmes into a single, strategic funding vehicle called the European Competitiveness Fund (ECF). This new instrument will become the centrepiece of the EU’s next seven-year Multiannual Financial Framework (MFF) covering 2028–2034 — a trillion-euro spending plan that shapes everything from research and defence to digital infrastructure.

Under earlier proposals, CEF was at serious risk of being scrapped and absorbed into this new umbrella fund. That would have marked a major setback for EU rail, forcing transport projects to compete directly with start-ups, clean tech, and defence initiatives under a more nationally focused system. But the leaked draft confirms that CEF Transport — unlike CEF Digital — will continue as a standalone funding stream, preserving the long-term, cross-border logic that has underpinned European rail megaprojects like Rail Baltica, the Lyon–Turin base tunnel, and the ERTMS digital signalling rollout.

Still, the reprieve comes with conditions. According to the draft regulation, the future of European transport spending will be increasingly framed through the lens of military mobility, with rail expected to play a critical role in linking civilian and defence needs across borders.

CEF survives EU axe

Earlier this year, internal discussions within the Commission pointed to a serious possibility that CEF — including its core transport pillar — might be dissolved and repackaged within the ECF as part of a broader simplification drive. The idea was to streamline funding access with a “single rulebook” and maximise investment impact through strategic pooling of EU and national resources, which is what has happened to many other EU sector-specific funding mechanisms.

But that would have sacrificed one of Europe’s most effective tools for building a connected cross-border rail network. Without dedicated, centrally managed funding, they argued, multi-country rail projects could fall victim to diverging national priorities and fragmented planning. CEF, after all, directed 5.7 billion euros to rail in 2023 alone — 80 % of its total transport envelope that year, with much of the funding going to multi-national projects.

A coordinated campaign by member states, rail manufacturers, and European lawmakers followed. Eleven of Europe’s national leaders even urged Commission President Ursula von der Leyen to retain a “robust, centrally managed CEF” in a joint letter — a sign of just how seriously the warnings were taken. UNIFE, representing Europe’s rail supply industry, described the fund’s potential removal as an existential threat to the rail sector.

The leaked text now confirms a shift in Brussels’ thinking. “A strong connection between the European Competitiveness Fund (ECF) and the modernised Connecting Europe Facility (CEF) is crucial,” the draft states. It highlights cross-border infrastructure in “energy, transport, and military mobility” as essential to European competitiveness, security, and strategic autonomy. Synergies between CEF-supported projects and the new ECF are to be “ensured.”

While CEF Digital will be fully integrated into the ECF framework, the Transport and Energy strands will remain largely intact. That distinction matters: it means continued legal and operational clarity for rail infrastructure planners. However, amid major geopolitical shifts, the new budget strategy also marks a big change in how Brussels is set to justify its infrastructure spending, particularly for rail.

Military mobility: the rail opportunity no one can ignore

Military mobility — which not too long ago was a far more niche policy issue — is now a central pillar of EU budget strategy. The draft legislation repeatedly references the need to support “military movements and access to military mobility capabilities,” including through dual-use infrastructure, pooling of logistics assets, and stronger transport networks that can serve both civilian and defence purposes.

This policy shift comes as EU leaders face mounting pressure to boost defence spending — particularly in anticipation of a possible second Trump presidency in the US, which could upend NATO commitments and force Europe to take on more military responsibility. With many EU states already stretched on infrastructure budgets, aligning transport investment with defence goals offers a politically feasible way to fund both.

The ECF’s structure reflects this convergence. Its four “policy windows” prioritise defence and security alongside AI, digital, clean tech, and biotech — a group of sectors now seen being promoted as vital for Europe’s competitiveness and sovereignty. Rail, as a high-capacity, cross-border transport mode, is likely to benefit — but increasingly under the logic of readiness and resilience, not just climate and connectivity.

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