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EU: ‘REPowerEU’ energy plan calls for additional € 210 billion investment by 2027

The European Commission today presented the “REPowerEU” Plan, which aims to phase out the EU’s dependence on Russian fossil fuels and transform Europe’s energy system.

REPowerEU is the answer to the disruption of the global energy market caused by Russia’s invasion of Ukraine, the Commission said, noting that Russian fossil fuels are used as an “economic and political weapon and cost European taxpayers almost 100 billion euros a year.

Achieving the REPowerEU targets requires an additional investment of € 210 billion by 2027, which will be covered by the private and public sectors, as well as at national, cross-border and EU level. The Recovery and Sustainability Mechanism (RRF) is at the heart of the Commission’s energy plan.

REPowerEU measures could lead to phasing out of EU dependence on Russian fossil fuels by saving energy, diversifying energy supply and accelerating the development of renewable energy sources to replace fossil fuels, industrial fossil fuels and energy production.

ENERGY SAVING

The Commission is proposing energy-saving measures to “prepare for the possible challenges of next winter”, noting that “it is the fastest and cheapest way to deal with the current energy crisis and reduce bills”. In particular, the Commission proposes to increase the energy efficiency target from 9% to 13% under the “Fit for 55” package of European Green Agreement legislation. According to the Commission, short-term changes in energy-saving behavior (described in detail in another document) could reduce gas and oil demand by 5%. At the same time, Member States are advised to launch specific communication campaigns targeting households and industry. Member States are also encouraged to use tax incentives for energy savings, such as reduced VAT rates for energy efficient heating systems, building insulation, appliances and products.

DIFFERENTIATION OF SUPPLY AND COMMON MARKET MECHANISM

The Commission notes that for several months now the EU has secured record levels of LNG and pipeline gas imports from international partners. The newly established EU Energy Platform, supported by regional working groups, will enable voluntary common purchases of gas, LNG and hydrogen. As a next step, and reiterating the ambition of the common vaccine purchase program, the Commission will consider developing a “common market mechanism” to negotiate and conclude gas purchase contracts on behalf of the participating Member States.

In addition, the Commission will facilitate energy diversification and build long-term partnerships with suppliers, including cooperation on hydrogen or other green technologies. Priority is given to the EU’s commitment to global green and equitable energy transitions, increasing energy savings and efficiency in reducing price pressures, stimulating the development of renewable energy sources and hydrogen, and strengthening energy diplomacy. Large hydrogen corridors will be developed in the Mediterranean and the North Sea. In the face of Russia’s aggression, the EU will support Ukraine, Moldova, the Western Balkans and the Eastern Partnership countries, as well as its most vulnerable partners. “We will continue to work together with Ukraine to ensure security of supply and a functioning energy sector, while paving the way for future trade in electricity and renewable hydrogen, as well as for the reconstruction of the energy system under the REPowerUkra initiative. “, the Commission emphasizes.

ACCELERATE THE DEVELOPMENT OF RENEWABLE ENERGY SOURCES

“A massive escalation and acceleration of renewable energy sources in electricity generation, industry, buildings and transport will accelerate our independence, boost the green transition and reduce prices over time,” the Commission said. , which proposes to increase the 2030 key target for renewable energy from 40% to 45% under the “Fit for 55” package.

At the same time, the Commission is presenting an EU strategy for solar energy, with doubling solar photovoltaic power by 2025 and installation of 600 GW by 2030, as well as the “Solar Rooftop Initiative” with a gradual legal obligation to install solar panels in new public buildings. and commercial buildings and new residential buildings. It also proposes measures to integrate geothermal and solar thermal energy into modernized district and communal heating systems, as well as a Commission recommendation to address the slow and complex licensing of large renewable energy projects, as well as an amendment to the Directive on renewable energy sources for their recognition as a “supreme public interest”.

The Commission proposes a target of 10 million tonnes of domestic production of renewable hydrogen and 10 million tonnes of imports by 2030, to replace gas, coal and oil in industries and transport sectors. In order to accelerate the hydrogen market, sub-targets in specific areas need to be agreed by the co-legislators. The Commission also publishes two delegated acts on the definition and production of renewable hydrogen to ensure that production leads to a net exemption from carbon emissions. An additional € 200 million in research funding is available to accelerate hydrogen projects.

ACTION PLAN FOR BIOMETHANE

New tools are being identified, such as a new Biomethane Industrial Alliance and financial incentives to increase biomethane production to 35 bcm by 2030, including through the Common Agricultural Policy. According to the Commission, the replacement of coal, oil and gas in industrial processes will reduce greenhouse gas emissions and enhance security and competitiveness. Energy savings, efficiency, fuel substitution, electricity and improved absorption of renewable hydrogen, biogas and biomethane sources by industry could save up to 35 bcm of gas by 2030, in addition to those provided in the Fit for 55 proposals .

INVESTMENTS

Achieving the REPowerEU targets requires an additional investment of € 210 billion by 2027. € 225 billion is already available in loans under the Recovery and Sustainability Mechanism (RRF). The Commission today adopted legislation and directives to Member States on how to amend and supplement national recovery plans (RRPs) under REPowerEU. In addition, the Commission proposes to increase the RRF’s resources by € 20 billion in grants from the sale of EU Emissions Trading Scheme (ETS) rights currently in the Market Stability Reserve, which will be auctioned in a way that does not disrupt the Buy.

Under the current multiannual financial framework (MFF), cohesion policy will already support carbon offset and green transition projects of up to € 100 billion by investing in renewable energy, hydrogen and infrastructure. An additional 26.9 billion euros from the cohesion funds could be allocated to voluntary transfers to the RRF and another 7.5 billion. from the Common Agricultural Policy through voluntary transfers to the RRF. The Commission will double the funding available for the Innovation Fund’s 2022 large-scale call this autumn to around € 3 billion. Limited additional gas infrastructure is also needed, which is estimated at an investment of around € 10 billion.

Source: Capital

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