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REPowerEU Plan

REPowerEU Plan
19 May 2022

Yesterday, the European Commission presented the REPowerEU Plan to end the EU’s dependence on Russian fossil fuels and tackle the climate crisis. This plan will be carried out through:

  • Energy savings: The Commission proposed to enhance long-term energy efficiency measures, including an increase from 9% to 13% of the binding Energy Efficiency Target under the Fit for 55 package of European Green Deal legislation. Besides, the Commission has published an ‘EU Save Energy Communication’ detailing short-term behavioural changes which could cut gas and oil demand by 5% and encourage Member States to start specific communication campaigns targeting households and industry. Also, Member States are encouraged to use fiscal measures for energy savings, such as reduced VAT rates on energy-efficient heating systems, building insulation or appliance and products.

 

  • Diversification of energy supplies: The EU has created a new EU Energy Platform, supported by regional task forces, which will enable voluntary common purchases of gas, LNG and hydrogen by pooling demand, optimizing infrastructure use and coordinating outreach to suppliers. The EU Commission will consider the development of a ‘joint purchasing mechanism’ to negotiate and contract gas purchase on behalf of the Member States and, also, a legislative measure to require diversification of gas supply over time by the Member States. This Platform will also enable joint purchasing of renewable hydrogen.

 

  • Quickly substitute fossil fuels by accelerating Europe’s clean energy transition: Energy savings, efficiency, fuel substitution, electrification and enhanced uptake of renewable hydrogen, biogas and biomethane by industry could save up to 35 bcm of natural gas by 2030 on top of what is foreseen under the Fit for 55 proposals. The Commission will roll out carbon contracts for difference to support the uptake of green hydrogen by industry and specific financing for REPowerEU under the Innovation Fund, using emission trading revenues to further support the switch away from Russian fossil fuel dependencies. The Commission is also giving guidance on renewable energy and power purchase agreements to maintain and regain technological and industrial leadership in areas such as solar and hydrogen and to support the workforce, the Commission proposes to establish an EU Solar Industry Alliance and a large-scale skills partnership. The Commission will also present a Greening of Freight Package to enhance energy saving and efficiencies in the transport sector.

 

  • Smartly combine investments and reforms: Delivering the REPowerEU objectives requires an additional investment of €210 billion between now and 2027. To support REPowerEU, €225 billion is already available in loans under the RRF. The Commission has adopted legislation and guidance to Member States on how to modify and complement their RRPs in the context of REPowerEU. Under the current MFF, cohesion policy will already support decarbonization and green transition projects with up to €100 billion by investing in renewable energy, hydrogen and infrastructure. The Trans-European Energy Networks (TEN-E) have helped to create a resilient and interconnected EU gas infrastructure.  An estimated €10 billion investment is needed to complement the existing Projects of Common Interest (PCI) List and fully compensate for the future loss of Russian gas imports.

Image © European Commission

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