EU Recovery Plan - “Next Generation EU”

Thursday 3 December 2020

Following the compromise reached between the European Parliament and the EU Council under German Presidency on 10 November, both institutions still have to formally approve the final deal. Two Member States (Poland and Hungary) are posing conditions to giving their green light to the Council’s formal approval, which delays the adoption of the Plan and of the new EU Multiannual Financial Framework (MFF) for the period 2021-2027.

The EU Recovery Plan is granted with a total amount of €750 billion distributed between the following areas:

Recovery and Resilience Facility €672.5 billion (of which 312.5 in the form of grants and €360 in the form of loans)
REACT-EU €47.5 billion (this programme extends the EU Coronavirus Response Investment Initiative and the Coronavirus Response Investment Initiative Plus adopted in April 2020 to make access to the EU budget more flexible for Member states to address the COVID-19 crisis).
The other elements of the Recovery Plan (€7.5 billion for rural development, €10 billion for the Just transition Fund, €5.6 for InvestEU, €1.9 for rescEU and 5 billion for Horizon Europe will come in complement to the MFF).

The Recovery and Resilience Facility, that forms the largest part of the Recovery Plan, will be distributed by the Commission between the Member States following a calculation key, for them to integrate their share into national Recovery and Resilience Plans. These national Plans have to be drafted by the Member States and submitted to the Commission between 15 October 2020 and 30 April 2021. Member States are also encouraged to organise broad consultations, notably with the social partners and societal stakeholders, on the preparation of these Plans.

The plans will finally have to be approved by the Council.

Access to the EU Recovery Plan will therefore essentially occur at national level.

Member States are requested to draft these plans following a guidance document and a template prepared by the Commission. The guidance document invites them to spend at least 37% of the funds on green investments and a minimum of 20% on digital expenditures, and to focus on “projects operated at national level and of a large size that are in a quite advanced phase of preparation, with priority to the following seven “flagship projects”:

Power up - Frontloading future-proof clean technologies, and accelerating the development and use of renewables, with focus on hydrogen
Renovate - Improving the energy efficiency of public and private buildings.
Recharge and Refuel - Promoting future-proof clean technologies to accelerate the use of sustainable, accessible and smart transport, charging and refuelling stations and extension of public transport.
Connect - Fast rollout of rapid broadband services to all regions and households, including fibre and 5G networks.
Modernise - Digitalising public administration and services, including judicial and healthcare systems.
Scale-up - Increasing the European industrial data cloud capacities and the development of the most powerful, cutting edge, and sustainable processors.
Reskill and upskill - Adapting education systems to support digital skills and educational and vocational training for all ages.

The Commission aims to start the distribution of the first 10% of funds by mid-2021.

Both “Power-up” and “Renovate” flagships are completed by an EU Commission assessment module (under preparation) and two Commission initiatives:

“A Renovation Wave for Europe”

In order to boost renovation and increase the rate of energy renovation of buildings from 1% currently to 2% in 2030, the Commission presented on 14 October a “Renovation Wave” plan combining regulation, financing and technical support to reduce the buildings’ greenhouse gas emissions by 60% in 2030.

The plan will cover public administration and private buildings. Its financial part will tap into the “Renovate” flagship and focus on three targets:

tackling energy poverty and worst-performing buildings,
public buildings (schools, hospitals, general administration facilities), and
decarbonisation of heating and cooling.

Areas for action as listed in the Communication Annex will include, amongst others:

Strengthening information, legal certainty, and incentives for renovation
Reinforced funding supported by technical assistance
Creating green jobs, upskilling workers and attracting new talent
Supporting with digital tools a sustainable built environment

As part of the Renovation Wave, the Commission is also launching the “New European Bauhaus”, an initiative promoting projects based on sustainable design and nature-bases materials. Calls for proposals will be launched as of 2021.

“A Hydrogen Strategy for a climate-neutral Europe”

Earlier in the year, on 8 July, the Commission presented a Hydrogen Strategy aiming at supporting the emergence of a value chain around clean (or renewable) hydrogen technology manufacturing, which is still not cost competitive compared to fossil-based hydrogen, but which price is falling rapidly.

The strategy envisages three phases of development: 2020-2024: the decarbonisation of existing hydrogen production for specific sectors (chemicals) with the installation of at least 6 Gigawatt of electrolysers compared to one today and the production of 1 million tonne of renewable hydrogen; 2024-2030: installation of at least 40 Gigawatt and the production of 10 million tonnes of renewable hydrogen, to be used in steel production and some transport applications; 2030-2050: large scale deployment of renewable hydrogen technologies in “hard-to-decarbonise sectors”.

The strategy will be financed by using the possibilities offered by the “Next Generation EU” Recovery Plan and the next Multiannual Financial Framework, for example to develop local network and, at a later stage transport infrastructures, including but not only by repurposing existing gas infrastructures.

Pierre Lucas
CEIR Secretary General