The 2022 Russian invasion of Ukraine has caused instability and hardship for millions throughout Europe. As a consequence, the EU Commission has outlined a triple-focus plan which seeks to sever European ties from Russian energy from 2030 onwards.
The EU Commission has forged an initiative to ensure the self-sufficiency of Europe’s energy in the coming years. Created in 2022, the REPowerEU Plan aims to ‘‘rapidly reduce dependence on Russian fossil fuels and fast forward the green transition, while increasing the resilience of the EU-wide energy system’’.
In a broader sense, the plan follows-up the EU’s endeavors to become ‘The first climate-neutral continent by 2050’ whilst also echoing the three long-standing pillars of European energy policy: affordability and accessibility, sustainability, and security of supply.
After immense uncertainty in recent times, the economic plan is necessarily backed by financial and legal measures to build the new energy infrastructure and system that Europe needs. In 2022, the EU slashed their reliance on Russian energy by 22.8% (from 35.7% to 12.9%) which was undoubtedly a step in the right direction.
According to the EU Commission, ‘‘85% of Europeans believe that the EU should reduce its dependency on Russian gas and oil as soon as possible to support Ukraine’’.
The transition to clean helps lower energy prices over time and reduce import dependency.
Ostensibly, the main elements of the REPowerEU Plan are to create:
- Energy Savings
- Clean energy production
- Diversification of Energy Supplies
- Overall spending associated with the measures in the Plan totals roughly €300bn, with €225bn in loans and €75bn in grants. €210bn to be spent by 2027, rising to €300bn by 2030.
- Roughly €12bn in fossil assets: €10bn earmarked for LNG and strategic pipeline gas infrastructure, with an additional €2bn for targeted oil developments.
- Savings from avoided purchasing of oil, coal, and gas could amount to roughly €100bn per year.
During the plan’s presentation, EU Commission President Ursula Von der Leyen, Commissioner Kadri Simson, and Executive Vice President Frans Timmermans clearly stated that the permitting for solar projects can take up to two years and wind farms can take up to nine. The EU commission has, however, outlined two key initiatives to help offset the bottleneck of permitting.
Firstly, the introduction of the European Solar Rooftop Initiative seeks to make rooftop solar infrastructure mandatory for commercial and public buildings by 2025 as well as residential buildings by 2029.
Secondly, the identification and prioritization of ‘go-to areas’ for renewable energy infrastructure enables fast-tracking to occur. In essence, this reduces planning time to less than 1 year without foregoing environmental due diligence, which is made possible by the recognition of renewable energy as in the ‘overriding public interest’.
The war in Ukraine, along with general global supply shortages (due to COVID-19) and a recent rebound in economic activity, in many parts of the world, has created shortages of certain critical raw materials, many of which are necessary for the energy transition. REPowerEU plan takes both a short-term and long-term view on this.
Firstly, in the short-term the EU is working to diversify its supply sources through strategic partnerships, including via ongoing Free Trade Agreements.
Secondly, the Commission proposes to prepare legislation on critical raw materials as well as ensuring circular economies are prioritized in the buildout of new infrastructure.
Under current conditions there are certain cost-effective and attractive technology swap solutions available to consumers that would help support key aims of the REPowerEU plan framework, such as heat pumps as an alternative to gas boilers. However, there are limitations on speed of uptake due to the unavailability of appropriately trained staff to install, manage, and maintain the infrastructure. The same problems are also evident at larger scales, such as for natural gas to hydrogen switching. Measures in REPowerEU look to target these bottlenecks through channeling resources into three training initiatives, the ‘Pact for Skills’, ‘ERASMUS+’, and ‘Joint Undertaking on Clean Hydrogen’.
(Florence School of Regulation, 2022)
Short Term Measures:
- Common purchases of gas, LNG and hydrogen via the EU Energy Platform for all Member States who want to participate as well as Ukraine, Moldova, Georgia and the Western Balkans
- New energy partnerships with reliable suppliers, including future cooperation on renewables and low carbon gases
- Rapid roll out of solar and wind energy projects combined with renewable hydrogen deployment to save around 50 bcm of gas imports
- Increase the production of biomethane to save 17 bcm of gas imports
- Approval of first EU-wide hydrogen projects by the summer
- An EU Save Energy Communication with recommendations for how citizens and businesses can save around 13 bcm of gas imports
- Fill gas storage to 80% of capacity by 1 November 2022
- EU-coordination demand reduction plans in case of gas supply disruption
- New national REPowerEU Plans under the modified Recovery and Resilience Fund – to support investment and reforms worth €300 billion
- Boosting industrial decarbonisation with €3 billion of frontloaded projects under the Innovation Fund
- New legislation and recommendations for faster permitting of renewables especially in dedicated ‘go–to areas’ with low environmental risk
- Investments in an integrated and adapted gas and electricity infrastructure network
- Increased ambition on energy savings by raising the EU-wide target on efficiency for 2030 from 9% to 13%
- Increase the European renewables target for 2030 from 40% to 45%
- New EU proposals to ensure industry has access to critical raw materials
- Regulatory measures to increase energy efficiency in the transport sector
- A hydrogen accelerator to build 17.5 GW by 2025 of electrolysers to fuel EU industry with homegrown production of 10 million tonnes renewable hydrogen
- A modern regulatory framework for hydrogen
(EU Commission, 2022)
In conclusion, the REPowerEU Plan is viable proposal to rectify the current European energy situation. The EU Commission appears to be assuming a major role in the current global energy climate. However, the plan doesn’t come without various challenges that could prove difficult to endure.
The plan has come under scrutiny in regards to the aggressive ramp-up in biomethane production, which analysis suggests could pose a risk to food security by creating competition for crops.
Funding streams also pose a potential challenge within the plan, whereby the opportunity cost of redirecting large quantities of, for example, RRP and Cohesion Policy funds could result in gaps elsewhere.
Overall, the ambitions of the EU Commission are proving to be innovative and forward-thinking amidst an uncertain time for Europeans.
(Florence School of Regulation, 2022)
Are you an entrepreneur, a start-up or a SME with the goal to start up between or in Africa and Germany? Then our team will happily assist you on the legal side! We are specialized both in supporting multicultural businesses in Germany, in supporting African businesses in Germany and in supporting businesses across various African jurisdictions. While our support starts with providing help on immigration and relocation matters, it does not stop there – taxes, tech, intellectual property…You heard us! Contact us today to find out more!