Negotiators from the European Parliament and the Czech Presidency of the Council of the European Union will try to reach a political agreement on Tuesday 13 December or Wednesday 14 December in Strasbourg on the proposal for a regulation to develop ‘REPowerEU’ chapters in national recovery plans as part of the Next Generation EU Plan.
These chapters will include projects that will reduce the EU’s dependence on Russian hydrocarbons and accelerate the energy transition to a low-carbon economy. They will be financed to the tune of €20 billion by subsidies from the ‘ETS’ system of greenhouse gas (GHG) emission quotas, transfers from cohesion policy and the redistribution of loans allocated to Member States, but not used, under Next Generation EU.
This question of financing will inevitably be addressed during the trilogues, as the positions of the two institutions remain far apart. The European Parliament wants to finance the €20 billion in subsidies solely via an anticipation of the auctioning of ‘ETS’ allowances (see EUROPE 13061/4), whereas the EU Council advocates above all for mobilising the European Innovation Fund (75% of the total), with the remainder to be covered by anticipating the auctioning of ‘ETS’ allowances (25%) (see EUROPE 13035/14).
In a note on the state of play of the discussions, dated Tuesday 6 December and of which EUROPE received a copy, the Czech Presidency of the EU Council establishes a link between the allocation key of the funds to the Member States and the sources of financing. According to the Commission, “a significant share of frontloading would alter the fragile balance reached on the allocation key defeating the purpose of supporting Members States suffering most from the energy crisis”.
Nevertheless, many European industrial federations (Cefic, Eurofer...) are concerned about the EU Council’s position on the financing of the ‘REPowerEU’ chapters, which they consider to be “in harsh contradiction with an industrial policy making the green transition a business case for our companies”.
It should be noted that during the negotiations, the Commission submitted proposals for greater flexibility in the use of unused EU cohesion funds from the 2014-2020 period. Regarding the 2021-2027 cohesion funds, the European Parliament proposes co-financing up to 100%, which the Commission rejects, while the EU Council insists on voluntary transfers.
Still on the issue of financing the ‘REPowerEU’ chapters, the President of the European Commission, Ursula von der Leyen, announced on Monday, December 12, that the EU institution will present “in the short term” to increase the firepower of ‘REPowerEU’ and, in the medium term, to set up “a European sovereign wealth fund” to support the energy transition of the European industry, in response to the US Inflation Reduction Act (IRA) (see other news).
Eligible projects. According to the Czech Presidency, the European Parliament and EU Council negotiators have reached agreement on the scope of the ‘REPowerEU’ chapters. However, two measures that may be supported still need to be discussed, namely infrastructure projects that ensure security of oil supply and promote ‘low-carbon’ energy sources.
“Oil is a ‘no’ for the parliament”, a parliamentary source had said on Thursday 8 December. As for the wording ‘low carbon’, the Commission is concerned that it allows support for nuclear power generation, which it says is not allowed under the legal basis of the legislative text (Article 175 TFEU).
MEPs remain convinced that 35% of the projects supported through ‘REPowerEU’ chapters should be cross-border in nature. The Czech Presidency is not against encouraging cross-border projects, but is not in favour of a digital minimum threshold, while the current average level of cross-border infrastructure in national recovery plans is 6%.
‘Do no significant harm’. The Parliament also wants the strictest possible framework for the exception to the ‘do no significant harm’ principle which could be applied to certain projects labelled ‘REPowerEU’ which would accelerate the reduction of dependence on Russian hydrocarbons without being irreproachable in environmental terms.
On the other hand, the EU Council considers that the cumulative provisions - no cleaner energy alternative available, mandatory compensation measures to minimise environmental impact, commissioning of the infrastructure before the end of 2024 - required by the European Parliament “are not realistic and would exclude projects necessary to reduce dependence on fossil fuels”, the Czech note says.
Finally, the Parliament and EU Council agreed to set February 2022 as the starting date for the eligibility of new ‘REPowerEU’ labelled projects. Projects to expand some existing infrastructure could have been started in February of 2020. Exceptions would also be made for countries that had their stimulus allocation reduced in the June reassessment. (Original version in French by Mathieu Bion)