The ambitious REPowerEU strategy, which combines the reduction of the European Union’s dependence on Russian hydrocarbons and the climate transition (see EUROPE 12955/4 and 12956/2), risks not achieving its objectives, mainly because of insufficiently identified European strategic projects and uncertainties concerning its financing, the European Court of Auditors said in an opinion published on Tuesday 26 July.
The REPowerEU strategy is mainly based on the Next Generation EU Recovery Plan set up in 2020 to revive the economy hit hard by the Covid-19 pandemic, by inviting Member States to include a chapter on the energy projects they wish to implement in their national recovery plan. Additionally, each country can mobilise its portion of the 210 billion euros envelope of European loans still available through the Recovery and Resilience Facility (RRF), the budgetary instrument at the heart of the European Recovery Plan, with the exception of a few countries such as Italy, which has already requested all of the loans reserved for the country.
As projects are to be carried out by Member States, there is a risk that priority will not be given to projects of European scope that can really make a strategic difference, warned Ivana Maletić, the member of the Court of Auditors responsible for the report, in an interview with EUROPE on Monday 25 July.
In terms of timing, the legislative proposal amending the RRF Regulation does not impose a deadline for Member States to submit their chapter amending their Recovery Plan. As the procedure is “a little bit time consuming and cumbersome”, it is reasonable to expect the adoption of the amendments to the national plans “by mid-2023”, Mrs Maletić said. “We do not see this as an immediate response” to the energy emergency, she added.
Citing experience with the Connecting Europe Facility for network infrastructure investments, she envisaged the possibility of having “some kind of centrally managed fund” to speed up the identification and realisation of strategic projects for the EU.
Regarding the financing of the REPowerEU strategy, the member of the Court of Auditors noted that a small part - 20 billion euros - is to come from a reallocation of funds from agriculture and cohesion, while the vast majority of the envelope is made up of EU loans under Next Generation EU. This situation creates uncertainty about the mobilisation of funds in relation to investment needs.
Most importantly, the EU institution published a table in its opinion highlighting the discrepancy between the distribution of subsidies granted via the RRF by Member State and the real dependence of each country on Russian hydrocarbons. This can highlight a discrepancy between the amounts collected and the real needs to reduce a State’s dependence on Russian fossil fuels.
“It would be good to see different allocation criteria” for the Next Generation EU strategy, Mrs Maletić said, while indicating that it was not the Court’s role to make concrete proposals on these criteria or on funding.
Furthermore, the Court of Auditors points out the possibility for projects that will be identified in the REPowerEU chapter of the national recovery plans not to comply with the ‘do no significant harm’ environmental principle. Such an exemption may call into question one of the main values of the European Recovery Plan, she points out.
Finally, Mrs Maletić regretted the lack of specific “indicators” that would allow for the analysis of how the REPowerEU strategy is applied on the ground and to assess its impact in fine. In her view, the reporting process should be adapted to the strategy instead of being based on the classic system used for monitoring the consumption of EU cohesion funds.
See the European Court of Auditors’ report: https://aeur.eu/f/2qn (Original version in French by Mathieu Bion)