The European Union reached an agreement on Wednesday morning (December 14th) on a new law that makes energy projects eligible for funding from the EU’s €800 billion recovery fund, agreed two years ago following of the COVID-19 pandemic.
The plan, called REPowerEU, “will allow us to finance the necessary investments” to diversify energy supplies and accelerate Europe’s exit from Russian oil and gas, said Zbyněk Stanjura, the Czech finance minister who represented the 27 states EU members in the negotiation. .
The deal, which has yet to be formally endorsed by EU institutions, means EU member states “will be able to add a new REPowerEU chapter to their national recovery and resilience plans” presented in Brussels to take advantage of the fund of 800,000 million euros. according to a press release from the Council of the EU.
The European Commission’s REPowerEU plan was unveiled on May 18 with the goal of eliminating all Russian fossil fuel imports “well before 2030.” Achieving this goal will require a total investment of €300 billion by the end of the decade, the EU executive said at the time.
Europe is still too dependent on Russia for its oil and gas, said Peter Liese, a center-right German MEP who was part of Parliament’s negotiating team. “We have paid more than the Russian military budget since the war started. And we have to get rid of that,” he told reporters at a news conference on Wednesday.
Eligible projects will include those aimed at accelerating the integration of renewable energy into the grid, enhancing the energy efficiency of buildings, as well as supporting electricity storage and emission-free transport, such as rail.
Thirty percent of the funding will go to cross-border projects, said Siegfried Mureşan, a Romanian MEP who was among Parliament’s negotiators.
More controversially, the funding will also cover energy security goals, including investments in liquefied natural gas (LNG) as well as “petroleum infrastructure and facilities”, although investments in oil will be strictly limited to “essential of immediate security of supply” and are only available to the three EU countries that are currently heavily dependent on Russian oil, according to the statement.
Other eligible projects include investments in fossil-free biomethane and hydrogen production, as well as those that address energy poverty.
€20 billion of fresh money from the EU carbon market
There will also be new money to fund REPowerEU targets, with an additional €20 billion in grants available to EU countries and funded by the bloc’s carbon market, the Emission Trading Scheme (ETS).
Of this sum, €8 billion (40%) will come from the front-loading of national allowances auctioned under the ETS, while €12 billion (60%) will come from the Carbon Market Innovation Fund , according to a press release from the European Parliament.
To compensate for this, “the MEPs obtained the commitment of the Council and the Commission to replenish the Innovation Fund above its current size, with 2,000 million euros already agreed” and the rest to be decided as part of the ongoing negotiations to reform the ETS. Parliament said.
Funding from the REPowerEU program will be available retroactively from February 1, 2022, while projects must be completed by December 31, 2026 to be eligible, said Eider Gardiazabal Rubial, a Spanish MEP who he was among the three co-negotiators of the Parliament.
As Europe moves away from Russian fossil fuels, some investments need to be made to adapt oil infrastructure, the Spanish MEP admitted, saying such projects would be exempt from the principle of do no significant harm (DNSH) that underpins the EU funds.
However, he said the exemption is “very clearly circumscribed” and will only be granted if “there is no genuinely viable alternative” and for projects that are “strictly necessary to maintain energy security”.
The projects “must not undermine the EU’s climate goals for 2030 and 2050,” he added, saying EU member states benefiting from the exemption would be asked to “take compensatory measures” to ensure that Europe “does not take a step back, but a step forward” in the fight against climate change.
[Edited by Nathalie Weatherald]
