JESSICA Urban Development Funds – Public Private Investment Funds for Providing Financial Support


Joint European Support for Sustainable Investment in City Areas (JESSICA) is a partnership between the Council of European Development Bank (CEDB) and the European Investment Fund, which has provided EUR2.1b (USD2.5b) in co-investment in circular economy projects since 2015. 

The EU JESSICA Urban Development Funds (UDF) contain financial contributions from EU member states, cities, and other public and/or private sources. 

These are invested in the form of equity, loans, and guarantees for projects that support sustainable urban development and regeneration in cities. 

Stakeholders involved 

  • European Commission (Initiated program) 
  • European Investment Bank (EIB, Co-partner) 
  • Council of Europe Development Bank (CEDB, Co-partner) 


  • Traditional grants, such as those provided through the European Union’s European Regional Development Fund (ERDF), have several limitations such as time constraints and annual spend requirements. 
  • The importance and need for project financing rather than simple gap funding grants is not highlighted enough.  
  • Projects with limited commercial viability must rely nearly entirely on grants, reflecting lack of financing flexibility. 


  • Recycling of funds: Any return generated from a JESSICA funded project can be either retained by the UDFs or returned to Managing Authorities for reinvestment in new urban regeneration projects.  
  • As opposed to simple one-off grants, JESSICA utilises a series of locally controlled, perpetually self-sustaining investment funds. The strategic rationale behind the program was to convert a grant mechanism (the ERDF) into a program participatory investing, lending, and loan guarantee. 


Results and impact 

  • JESSICA delivers value not only to the EIB and ERDF but also to the citizens of the EU. Through JESSICA, the EIB was able to extend the value of the ERDF program far beyond its scheduled decommissioning in 2015. In addition, by providing a form of evergreen mezzanine risk capital, JESSICA is enabling local authorities to progress economic development goals that would have otherwise stalled during the economic downturn. 
  • In London, the city co-funded the Tate Modern’s extension via the London Energy Efficiency Fund,  
    a subset of the JESSICA London Green Fund, made up of funding from the European Regional Development Fund, London Development Agency, and London Waste and Recycling Board. The extension was designed for energy efficiency, using 54% less energy and generating 44% less carbon than regulations demanded. The design included natural air circulation, daylight, and the use of  
    building materials that can store heat naturally. 

Key lessons learnt 

  • Public-private partnerships, especially collaborative investment funds, allow to share, reduce, and mitigate associated risks of costly projects. 
  • Financially supporting sub-commercial” projects, those who are unable to obtain commercial financing and raise private development financing, is pivotal to lessen the reliance on “grand handouts”. JESSICA’s investments in these projects could therefore generate a return, at least enough to preserve the investment capital employed. 

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