The European Commission presented, on Wednesday 18 May, the final version of its ‘REPowerEU’ plan, which aims to get the European Union completely off Russian fuels by 2027, by allocating almost €300 billion.
“We will first of all reduce our imports of Russian gas to one third already this year, and then working towards 2027, reduce our dependency to zero, if all works well”, said Frans Timmermans, Executive Vice-President of the European Commission responsible for the European Green Deal. The EU has already introduced an embargo on Russian coal and is discussing an oil embargo.
To this end, the ‘REPowerEU’ plan contains multiple initiatives on energy efficiency and renewable energies as well as on hydrogen, biomethane and the diversification of gas imports (see EUROPE 12951/3).
It includes a plan to promote energy saving, a strategy on solar energy (see EUROPE 12949/1) and a legislative proposal to speed up the licensing of renewable energy projects (see EUROPE 12949/2).
Several changes are to be noted in comparison with the draft texts that EUROPE had obtained and detailed.
320 GW of solar photovoltaic energy by 2025
The Commission’s final target for solar energy is to have more than 320 GW of solar photovoltaic capacity in the EU by 2025, more than double the current level, and almost 600 GW by 2030.
This will replace the consumption of 9 billion m3 of natural gas per year by 2027, according to the Commission.
Over this decade, the EU will need to install, on average, about 45 GW per year to meet the targets of ‘REPowerEU’ and the European Green Deal.
To achieve this goal, the Commission wants to make it compulsory to install solar panels on rooftops for: - all new public and commercial buildings with a floor area of more than 250 m2 by 2026; - all existing public and commercial buildings with a floor area of more than 250 m2 by 2027; - all new residential buildings by 2029.
Another objective of the strategy is to double the current deployment rate of heat pumps in the EU. This will result in a cumulative 10 million units over the next five years.
In order to strengthen the supply chains of solar, wind and heat pump technologies and make them more sustainable, the Commission intends to present ecodesign and energy labelling requirements for photovoltaic systems in the first quarter of 2023 and to revise the existing requirements for heat pumps.
It also intends to support Member States’ efforts to pool their public resources through possible Important Projects of Common European Interest (IPCEI) in these sectors.
The institution also proposes to consider electricity storage facilities as being of higher public interest and to facilitate the granting of permits for their deployment.
New legislative proposals for greening of freight transport
Compared to the preliminary draft detailed here (see EUROPE 12951/3), the final version of ‘REPowerEU’ also contains some legislative changes.
The Communication states that the Commission will adopt a legislative package on the ‘greening’ of freight transport in 2023.
It will consider, as well, a legislative initiative to increase the share of zero-emission vehicles in public and corporate fleets above a certain size, as well as legislative measures to require some diversification of energy supply over time.
It will also prepare a legislative proposal on the supply of critical raw materials.
A €300 billion plan
In terms of costs, the Commission’s analysis indicates that ‘REPowerEU’ requires an additional investment of €210 billion by 2027, on top of the investments needed to meet the targets of the ‘Fit for 55’ climate legislation package.
The Commission intends to mobilise nearly €300 billion by 2030. Seventy-two billion of this amount would be allocated in the form of grants and 225 billion in the form of loans under the ‘Recovery and Resilience Facility’ (RRF), the budgetary instrument of the Next Generation EU recovery plan.
The Communication puts forward some figures on the breakdown of this financial windfall: - €28 to €38 billion for hydrogen infrastructure; - €6 to €11 billion for storage; - €37 billion to increase biogas production in the EU and promote its conversion into biomethane by 2030; - €10 billion by 2030 to import sufficient LNG and pipeline gas from other suppliers; - €1.5 to €2 billion by 2030 to ensure security of oil supply for the EU; - €29 billion to adapt the electricity network by 2030.
On the other hand, the Commission estimates that ‘REPowerEU’ will allow the EU to save almost €100 billion per year in import costs by 2030, i.e. €80 billion for gas, €12 billion for oil and €1.7 billion for coal.
Financing mechanisms
In terms of funding instruments, the EU institution intends to use funds from the Connecting Europe Facility (CEF) and the Innovation Fund, as well as from the RRF, transferring funds from the Common Agricultural Policy and Cohesion Policy to this facility.
It thus proposes a targeted modification of the EU regulation establishing the RRF in order to allocate an additional €20 billion from the auctioning of carbon allowances from the Market Stability Reserve (MSR) of the EU Emissions Trading System (ETS).
This amount will be made available to Member States in the form of direct managed grant support, exclusively to support the reforms and investments included in the new ‘REPowerEU’ chapters that Member States will have to include in their National Recovery and Resilience Plan (NRRP).
In addition, if part of the €225 billion of loans currently available in the RRF is not requested by eligible Member States within 30 days following the entry into force of this legislative amendment, these resources will be made available to other Member States to contribute to the financing of the ‘REPowerEU’ objectives, the Commission believes.
“The money belongs to European taxpayers, not to any particular Member State”, said Mr Timmermans.
Finally, the EU institution proposes to offer greater flexibility to Member States to transfer resources from other funds to the RRF.
This would allow Member States to transfer up to 12.5% of their cohesion policy allocation to the Next Generation EU recovery plan. An additional voluntary transfer to the RRF for ‘REPowerEU’ objectives would also be allowed up to 7.5% of the national allocation “on the basis of demonstrable need and provided that Member States have used the 5% transfer possibility already available”.
With regard to the CAP, states would also have the possibility to transfer up to 12.5% of their ‘European Agricultural Fund for Rural Development’ allocation to the RRF.
In parallel to the ‘REPowerEU’ plan, the Commission unveiled the final versions of its international energy strategy (see EUROPE B129493) and its communication on energy prices and the functioning of the electricity market (see EUROPE 12953/10). EUROPE will continue to follow this story.
See the ‘REPowerEU’ Communication: https://aeur.eu/f/1pc
The solar energy strategy: https://aeur.eu/f/1pe
The energy saving plan: https://aeur.eu/f/1pd
The proposed amendment on licensing: https://aeur.eu/f/1pg
The recommendation on licensing: https://aeur.eu/f/1pf (Original version in French by Damien Genicot)