NextGenerationEU: Questions and Answers on REPowerEU and on the revision of national recovery plans
What is REPowerEU and how is it linked to the Recovery and Resilience Facility?
The REPowerEU Plan, introduced in May 2022 as the EU’s response to the global energy crisis, recognised the role of NextGenerationEU, and at its heart the Recovery and Resilience Facility (RRF), in achieving secure, affordable and clean energy. Under this Plan, the RRF will support Member States in putting forward critical reforms and investments to rapidly phase out the EU’s dependence on Russian fossil fuels and foster zero-carbon sources and energy resilience.
These new or scaled-up measures, to be included in dedicated REPowerEU chapters of national recovery and resilience plans, will come on top of the already ambitious green agenda put forward by Member States in their existing plans.
How does REPowerEU work in practice?
Under the REPowerEU regulation, which entered into force in March 2023, Member States wishing to benefit from the increased financial envelope of the RRF have to modify their recovery and resilience plan to include therein a REPowerEU chapter, listing reforms and investments that will deliver on the objectives of the REPowerEU Plan.
In February 2022, the Commission published its Guidance on recovery and resilience plans in the context of REPowerEU. This guidance explains the process for modifying existing plans, as well as how Member States can prepare REPowerEU chapters and their potential funding sources and eligible measures.
This guidance replaces the one published by the Commission in May 2022. The Commission’s Guidance of January 2021 on the preparation of recovery and resilience plans remains valid.
How much money is available for Member States under REPowerEU?
Overall, close to €270 billion REPowerEU funds are available for Member States.
- EUR 20 billion in new grants to finance measures that Member States are able to include in REPowerEU chapters. These grants are to be financed through the sale of Emissions Trading System allowances.
- EUR 5.4 billion of funds from the Brexit Adjustment Reserve that Member States can 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 billion).
- These new grant possibilities come in addition to the remaining EUR 225 billion of RRF loans that Member States can use for REPowerEU purposes.
With the submission of the revised recovery and resilience plan including a REPowerEU chapter, Member States have the possibility to request pre-financing of up to 20% of funds allocated to REPowerEU chapters, allowing for a swift disbursement of the funds.
How does REPowerEU help to deliver on the green transition?
The RRF has brought the green transition and support for the competitiveness of the clean tech sector to the centre of the EU’s post-pandemic recovery. The 27 national recovery and resilience plans’ total estimated climate contribution is EUR 252 billion, 50% of their overall allocation, including transformative measures to facilitate the EU industry’s decarbonisation.
As outlined in the Green Deal Industrial Plan to sharpen Europe’s competitive edge for the net-zero age, RRF funds are available to Member States to finance measures promoting the greening of industry, supporting EU net-zero industry projects, and assisting energy-intensive industries in the face of high energy prices.
How does REPowerEU contribute to the Green Deal Industrial Plan?
The 27 national recovery and resilience plans that were approved under the RRF already contain EUR 250 billion in measures that contribute to the green transition, including several investments supporting the decarbonisation of industry in the transition towards climate neutrality.
The RRF and its new REPowerEU component offers significant additional funding opportunities to reinforce the competitiveness of the EU. It enables an acceleration of EU industry’s transition to climate neutrality.
Member States are encouraged to integrate investments and reforms in their REPowerEU chapters that support the present and future competitiveness of EU clean tech industries. In this context, the Commission encourages Member States to include three types of measures in their modified plans to support clean tech industries/value chains and enhance competitiveness:
- A one-stop-shop for permitting of renewables and clean tech projects to simplify and speed up the approval process for building and operating clean tech projects.
- Tax breaks or other forms of support for green, clean tech investments, such as tax credits, accelerated depreciation, or subsidies linked to the acquisition or improvement of green investment assets.
- Investment in reskilling the workforce for a greener future.
How does REPowerEU contribute to tackling the energy crisis?
The REPowerEU chapters in the revised plans should provide a framework, accompanied by financial support, with dedicated investments and reforms strengthening the EU’s industrial base and energy resilience.
Those measures accelerate the green transition by, among others, diversifying energy supplies, increasing the uptake of renewables, improving energy efficiency performance, scaling-up energy storage capacities, and reducing dependence on fossil fuels.
On what grounds can Member States revise their existing plans?
The first priority remains the swift implementation of the existing plans. However, the geopolitical context has changed considerably since the adoption of the RRF Regulation. The February 2023 Guidance describes to Member States how they can revise their plans based on the available legal grounds.
A revision can be linked to financial aspects, that is, to benefit from additional REPowerEU funds; it can reflect a change in a Member State’s maximum financial allocation under the RRF; or it can be needed in order to take up additional RRF loans.
Member States can also amend their plan if they can demonstrate that objective circumstances render the implementation of certain milestones and targets unfeasible. For example, those objective circumstances could be linked to inflation, shortages in the supply chain or the fact that there is a better alternative to fulfil the intended policy objective of a measure.
The aforementioned guidance gives sufficient flexibility to Member States to adjust the plans to the current context while making sure that the overall ambition of the plans is maintained.
What principles apply when Member States revise their plans?
Overall, there are a few key principles that the Commission encourages Member States to take on board when introducing changes to their recovery and resilience plan. These include:
- The priority remains the implementation of the measures in the existing recovery and resilience plans. Member States should ensure sufficient progress with reforms and investments and make all efforts to submit payment requests on time.
- Member States should prioritise measures in their revised plan whose implementation is already under way and can be undertaken by the 2026 deadline. This should contribute to progress more quickly towards the REPowerEU objectives.
- Member States are also invited to take stock and discuss with the Commission their experience in the implementation of the Facility so far, to determine whether any changes could help to accelerate the implementation of existing measures.
Is there a deadline for Member States to revise their recovery plans?
To ensure a swift roll-out of REPowerEU measures, Member States are encouraged to submit their modified plans with REPowerEU chapters as soon as possible, and ideally by 30 April 2023.
Furthermore, Member States’ allocation of the remaining 30% of the overall RRF grants must be committed at the latest by the end of 2023 (the other 70% of RRF grants had to be committed by December 2022).
This means that all Member States wishing to benefit from an increased allocation of RRF grants following the June 2022 update need to revise their plans to take that into account, with a Council Implementing Decisionadopted and a Financing Agreement signed by the end of 2023.
Similarly, for loans, commitments need to take place by 31 December 2023. The RRF Regulation requires that the request for loans be made by Member States at the latest by 31 August 2023.
In any case the RRF Regulation states that payments under the Facility cannot be made after December 2026. Hence, further commitment under the RRF can take place after that date.