<strong> Commission welcomed political agreement on REPowerEU under the Recovery and Resilience Facility last December</strong>

The European Commission welcomed last December the political agreement reached between the European Parliament and the Council on financing REPowerEU and enabling Member States to introduce REPowerEU chapters in their recovery and resilience plans. This agreement builds on the Recovery and Resilience Facility (RRF) to further respond to the economic hardship and global energy market disruption caused by Russia’s invasion of Ukraine.

Thanks to this agreement, Member States will be able to get their reforms and investments rolling, thereby phasing out imports of Russian fossil fuels and providing clean, affordable and secure energy to households and businesses across Europe.The agreement also covers the SAFE (Supporting Affordable Energy) measures under Cohesion Policy, which will enable Member States to use unspent funds under their 2014-2020 allocation to provide direct support to vulnerable families and small and medium-sized businesses (SMEs) to help them face increased energy costs, as proposed by the Commission in October.

Main elements of the agreement

To support REPowerEU, €225 billion is already available in loans under the RRF. The agreement, which requires final approval by the European Parliament and the Council, provides that the RRF financial envelope is increased with:

€20 billion in new grants to finance measures that Member States will be able to include in REPowerEU chapters in their recovery and resilience plans. These grants will be financed through the frontloaded sale of Emissions Trading System (ETS) allowances and the resources of the Innovation Fund, to be partly replenished through the Market Stability Reserve.
€5.4 billion of funds from the Brexit Adjustment Reserve that Member States will be able to voluntarily transfer to the RRF to finance REPowerEU measures. This comes on top of the existing transfer possibilities of 5% from the cohesion policy funds (up to EUR 17.9 billion).

Member States will have the possibility to request pre-financing of up to 20% of funds allocated to REPowerEU chapters, payable in a maximum of two tranches. The do-no-significant-harm (DNSH) principle will continue to apply to all the supported reforms and investments with a targeted derogation for energy infrastructure and facilities needed to meet immediate security of supply needs, subject to a positive assessment by the Commission that those measures using the DNSH derogation are strictly necessary.

To contribute to the European added value, Member States will be encouraged to include in their REPowerEU chapters measures with a cross-border or multi-country dimension or effect for an amount representing 30% of their REPowerEU Chapter. Member States will have to consult relevant stakeholders when drafting the REPowerEU chapters. When Member States will request to revise their RRP, they will have to submit a summary of the consultation process and outcome to the Commission. To further increase transparency, the agreement foresees the obligation for Member States to publish information on the 100 largest final recipients of RRF funds.

In the context of this legislative agreement, the European Parliament and Council also decided to give utmost priority to ensuring a sufficient size of the Innovation Fund, to adequately support the decarbonisation of industrial sectors, in the context of the ongoing negotiations on the revision of the ETS Directive.

Next steps

The text of the amended Regulation will now have to be finalised at technical level. The European Parliament and the Council must then formally approve the text so that the amended Regulation can enter into force as soon as possible.

Once the amended Regulation is in force, all Member States who wish to revise their RRP to receive additional funding will also have to include a REPowerEU chapter in their request to the Commission.

Background

The Commission has proposed to put the Recovery and Resilience Facility (RRF) at the heart of the REPowerEU Plan, supporting coordinated planning and financing of cross-border and national infrastructure, as well as energy projects and reforms. For this reason, in May 2022 the Commission proposed to make targeted amendments to the RRF Regulation to integrate dedicated REPowerEU chapters in Member States’ existing recovery and resilience plans (RRPs). The agreement concerns these amendments.

The measures included in the REPowerEU chapters will come on top of the large number of relevant reforms and investments which are already in the RRPs. The country-specific recommendations in the 2022 European Semester cycle will also feed into the design and assessment of these measures.

In October 2022, as part of its Energy Emergency Communication, the Commission proposed to make the Cohesion policy framework 2014-2020 more flexible to help Member States and regions face the current energy crisis. They proposed to provide support to SMEs affected by the high energy prices, address energy poverty by providing support to vulnerable households, as well as to finance short-time work and equivalent schemes in order to maintain jobs. President of the European Commission Ursula von der Leyen said: “[…] political agreement with Council and Parliament unlocks additional investments and reforms to further realise our REPowerEU Plan and secure a clean energy future. In response to the disruption and hardship caused by Russia’s invasion of Ukraine and Putin’s energy blackmail, we unanimously agreed to reduce our imports of Russian gas by two-thirds before the end of this year and to phase them out completely as soon as possible. Putin is losing his unjustified war of aggression and we are accelerating our clean energy transition for the benefit of the whole EU, and the planet. We will continue our work until all families and businesses in the EU have access to affordable, secure and clean energy.”

Original Post: https://ec.europa.eu/commission/presscorner/detail/en/ip_22_7717

Ream more about REPowerEU: https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/european-green-deal/repowereu-affordable-secure-and-sustainable-energy-europe_en