Recovery Plan for Europe: tentative agreement on REPowerEU
The EU is accelerating the end of its dependence on Russian fossil fuel imports. Negotiators from the Council and the European Parliament have reached a provisional agreement on the REPowerEU proposal, which aims to strengthen the Union’s strategic autonomy by diversifying energy supply and reinforcing the independence and security of the Union’s energy supply. The agreed text is submitted to the Council and the European Parliament for approval before undergoing the formal adoption procedure.
Specifically, member states will be able to add a new REPowerEU chapter to their national recovery and resilience plans (RRPs) under NextGenerationEU to fund key investments and reforms that will help achieve the REPowerEU plan’s goals.
“I am very pleased that the Czech Presidency is now delivering on one of our key promises: to end the EU’s dependence on Russian fossil fuels and pave the way for a radical reform of the Union’s energy sector. REPowerEU will enable us to finance the necessary investments and reforms,” said Zbyněk Stanjura, Czech Minister of Finance.
One of the main objectives of REPowerEU will be to increase the resilience, security and sustainability of the Union’s energy system through the necessary reduction of dependence on fossil fuels and the diversification of energy supply at the Union level, in particular by increasing the use of renewable energy, energy efficiency and energy storage capacity.
The REPowerEU chapters of member states’ recovery and resiliency plans (RRPs) describe new reforms and the new investmentslaunched on or after February 1, 2022, and/or the enhanced portion of the reforms and investments contained in the already adopted recovery and resiliency plans, with their corresponding milestones and targets.
The scope of the chapters is further clarified and will include
- improve the energy efficiency of buildings and critical energy infrastructure
- to decarbonize the industry
- increase the production and use of sustainable biomethane and renewable or non-fossil hydrogen
- increase the share of renewable energies and accelerate their deployment
- improve energy infrastructure and facilities to meet immediate security of gas supply needs, including liquefied natural gas (LNG), in particular to allow for diversification of supply in the interest of the Union as a whole
- oil infrastructure and facilities necessary to meet immediate security of supply needs may be included in the REPowerEU chapter of a Member State that has been granted an exceptional temporary derogation due to its specific dependence on crude oil and its geographical location
- to fight against energy insecurity
- encourage the reduction of energy demand
- remove internal and cross-border bottlenecks in energy transmission and distribution
- support electricity storage
- accelerate the integration of renewable energy sources
- support zero-emission transportation and its infrastructure, including railroads
With respect to the funding of the subsidies, the co-legislators agreed that the sources will be the Innovation Fund (60%) and the front-loading of the ETS auction (40%).
The distribution key will be a formula that takes into account the cohesion policy, the dependence of Member States on fossil fuels and the increase in the price of investments, in accordance with the Council’s position.
Member States will have greater incentives to request loan support, including requests above 6.8% of GNI where applicable conditions apply. Member States will have the possibility of voluntary transfers from the Brexit adjustment reserve.
Member States that did not spend cohesion funds from the previous multiannual financial framework (2014-2020) will have the opportunity to use them to support SMEs and vulnerable households particularly affected by energy price increases.
The agreement is provisional as it still needs to be confirmed by the Member States in the Council and by the European Parliament to be final.