The European Parliament Committees on Budgets (BUDG) and Economic and Monetary Affairs (ECON) will adopt their position on Tuesday 25 October on the legislative proposal that will allow Member States to insert ‘REPowerEU’ chapters in their national recovery plans to reduce their dependence on Russian fossil fuels and accelerate the climate transition.
“We have found an agreement among the three co-rapporteurs on the main elements” of the legislative proposal, Siegfried Mureşan (EPP, Romanian) told EUROPE on Monday 24 October.
MEPs will take up the Commission’s suggestion that Member States should be asked to indicate whether they wish to make use of the Recovery and Resilience Facility (RRF) loans they are entitled to. They will set a deadline of 30 days after the entry into force of the future regulation for a decision to be made. After that, the envelope formed of the unused loan amounts would be distributed on a ‘first come, first served’ basis, according to a parliamentary source.
Almost €225 billion of available loans have not been committed so far, with only a few countries such as Italy and Greece having mobilised all their loans.
According to Mr Mureşan, Member States will be allowed to apply for up to “20%” of pre-financing for projects included in the ‘REPowerEU’ chapter. For its part, the Council of the European Union introduces a pre-financing of up to 15% (see EUROPE 13035/14), a possibility that the Commission did not initially foresee.
ETS. Another possibility of financing the ‘REPowerEU’ chapters is through the ETS. The Commission for the Environment, which has competence in this area, wants all €20 billion of grants available through this method to be raised by frontloading the auctioning of carbon allowances planned for the period 2027-2030 by the end of 2025 (see EUROPE 13035/23).
To finance this €20 billion, the Council recommends that 75% of the total amount should come from the Climate Change Innovation Fund and the remaining 25% from the anticipated auctioning of ETS allowances.
On Tuesday, the BUDG and ECON committees are expected to decide that 35% of the grants and 35% of the loans given to projects with the ‘REPowerEU’ label should go to projects with a cross-border dimension. “We want to encourage Member States to undertake cross-border projects. We need to interconnect”, Mr Mureşan stressed.
He also indicated that MEPs would take on board the distribution key as agreed by the Member States, thus removing this issue from the upcoming interinstitutional negotiations.
Environmental impact. In its initial proposal, the Commission creates an exception to the application of the ‘do no significant harm’ environmental principle for investments to improve oil and gas facilities in order to ensure immediate security of supply.
The Greens/EFA Group has worked to limit the scope of this exception as much as possible. A compromise amendment would restrict the exception to gas projects, although a separate vote to include oil projects will take place on Tuesday.
In addition, projects that will benefit from the ‘do no significant harm’ exemption will be allowed if there is no viable alternative project involving renewable energy, Mr Mureşan said. They would be required to be operational by the end of 2024.
The Commission would also be asked to set a maximum limit on the amount spent on projects that deviate from the environmental principle on the basis of updated needs analyses. And no money from the ETS should be used to finance projects that do not respect the ‘do no significant harm’ principle.
It should be noted that the Committee on Industry (ITRE), which has shared competence on one element of the proposal, is of the opinion that the ‘REPowerEU’ chapters of the recovery plans should boost the production of low-carbon energy sources, mainly hydrogen produced from electricity from nuclear power plants or from fossil gas combined with carbon capture and storage (CCUS) technologies (see EUROPE 13042/10 and 13041/2).
The position to be determined on Tuesday by the BUDG and ECON committees will be put to the vote at the European Parliament’s mini-plenary session on Wednesday 9 and Thursday 10 November in Brussels. The aim of MEPs and the Czech Presidency of the EU Council is to reach an interinstitutional agreement by the end of the year.
“We want to move fast” so that Member States can benefit from financial support from ‘REPowerEU’ “still in the winter months” in early 2023, Mr Mureşan said. (Original version in French by Mathieu Bion)