Regulation (EU) 2023/435 of the European Parliament and of the Council of 27 February 2023 amending Regulation (EU) 2021/241 as regards REPowerEU chapters in recovery and resilience plans and amending Regulations (EU) No 1303/2013, (EU) 2021/1060 and (EU) 2021/1755, and Directive 2003/87/EC

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 175, third paragraph, Article 177, first paragraph, Article 192(1), Article 194(2) and Article 322(1) thereof,

Having regard to the proposal from the European Commission,

After transmission of the draft legislative act to the national parliaments,

Having regard to the opinion of the European Economic and Social Committee (1),

After consulting the Committee of the Regions,

Having regard to the opinion of the Court of Auditors (2),

Acting in accordance with the ordinary legislative procedure (3),

Whereas:

(1) Since the adoption of Regulation (EU) 2021/241 of the European Parliament and of the Council (4), which established the Recovery and Resilience Facility (the ‘Facility’), unprecedented geopolitical events triggered by Russia’s war of aggression against Ukraine and their direct and indirect aggravation of the consequences of the COVID-19 crisis have considerably affected the Union’s society and economy, its people and its economic, social and territorial cohesion. In particular, it is clearer than ever that the Union’s energy security and energy independence are indispensable for a successful, sustainable and inclusive recovery from the COVID-19 crisis, as they are also major factors contributing to the resilience of the Union’s economy.

(2) Due to the direct links between a sustainable recovery, building the Union’s resilience and energy security, reducing dependence on fossil fuels, in particular from Russia, and the Union's role in a just and inclusive transition, the Facility is an instrument well suited to contribute to the Union’s response to those emerging challenges. This is also the case in light of Union climate and environmental legislation and of the Union’s international commitments, and in particular the Paris Agreement adopted under the United Nations Framework Convention on Climate Change (5).

(3) In the Versailles Declaration of 10 and 11 March 2022, the Heads of State and Government invited the Commission to propose by the end of May of the same year a REPowerEU plan to phase out the Union’s dependency on Russian fossil fuel imports, which invitation was reiterated in the European Council Conclusions of 24 and 25 March 2022. That goal should be achieved well before 2030 in a way that is consistent with the European Green Deal, set out in the communication of the Commission of 11 December 2019, and with the climate objectives for 2030 and 2050 enshrined in Regulation (EU) 2021/1119 of the European Parliament and of the Council (6).

(4) The Facility’s ability to support reforms and investments dedicated to diversifying energy supplies, in particular fossil fuels, as well as to increase the resilience, security and sustainability of the Union’s energy system, thereby contributing to energy affordability and strengthening the strategic autonomy of the Union alongside an open economy, should be enhanced. To achieve those objectives, the Union needs to increase energy efficiency and the reliability and resilience of transmission and distribution networks, to promote system flexibility, to minimise congestions, including by means of increased grid and electricity storage capacity, to promote digitalisation, and to ensure resilient supply chains, cybersecurity and the protection and climate adaptation of all infrastructure, while reducing strategic energy dependencies.

(5) To maximise complementarity, consistency and coherence of policies and actions taken by the Union and Member States to foster independence, security and sustainability of the Union’s energy supply, those energy-related reforms and investments should be established through a dedicated ‘REPowerEU chapter’ of the recovery and resilience plans.

(6) The effective transition towards green energy and the rapid reduction in dependency on fossil fuel energy in an inclusive way call for measures to boost energy efficiency and savings in buildings and related critical energy infrastructure and decarbonise industries faster. It is imperative to increase rapidly investment in energy efficiency measures, such as the uptake of sustainable and efficient heating and cooling solutions, which present an effective means to address some of the most pressing challenges of energy supply and energy cost. Therefore, support should also be given to reforms and investments increasing energy efficiency, decarbonising industry – including by the use of low-carbon fuels, such as low-carbon hydrogen, and by the uptake of renewable hydrogen and other renewable fuels of non-biological origin – and increasing energy savings of the Member States’ economies, in line with the Union’s energy and climate targets and legal framework. The Commission should, in particular, encourage Member States to include in their REPowerEU chapters measures supporting the decarbonisation of industry.

(7) The phasing out of the dependency on Russian fossil fuel imports is expected to lead to a reduction in the overall energy dependency of the Union. The REPowerEU chapters should contribute to increasing and strengthening the strategic autonomy of the Union without excessively increasing its dependency on imports of raw materials from third countries.

(8) In the preparation of the recovery and resilience plans as well as of the REPowerEU chapters, Member States should coordinate their economic policies in such a way as to attain the objectives on economic, social and territorial cohesion set out in Article 174 of the Treaty, aiming to reduce disparities between the levels of development of the various regions and the backwardness of the least favoured regions, paying particular attention to remote, peripheral and isolated areas and islands, which already experience additional constraints.

(9) To maximise the scope of the Union’s response, all Member States which submit a recovery and resilience plan after the entry into force of this Regulation, requesting the use of additional funding in the form of loans, or, in accordance with new rules to be established under this amending Regulation, from auctioning of allowances from the emissions trading system under Directive 2003/87/EC of the European Parliament and of the Council (7) or from transfers from the Brexit Adjustment Reserve established by Regulation (EU) 2021/1755 of the European Parliament and of the Council (8), should be required to include a REPowerEU chapter in their recovery and resilience plan. In line with the existing possibility, under Regulation (EU) 2021/241, of submitting a draft recovery and resilience plan, and in order to ensure proper preparation of the REPowerEU chapters, Member States can submit a draft REPowerEU chapter before the submission of a modified recovery and resilience plan. Unnecessary administrative burden should be avoided.

(10) REPowerEU chapters should include new reforms and investments, starting from 1 February 2022, contributing to the REPowerEU objectives and tackling the crisis caused by recent geopolitical events. However, measures included in the already adopted Council implementing decision that contribute to the REPowerEU objectives can be included in the REPowerEU chapter if, following the update of the maximum financial contribution, the Member State concerned is subject to a decrease of its maximum financial contribution. In that case, the Member State should be able to include such measures in its REPowerEU chapter up to an amount of estimated costs equal to the decrease in the maximum financial contribution.

(11) A Member State should be able to include in its REPowerEU chapter the scaled-up part of measures included in the already adopted Council implementing decision, together with the corresponding milestones and targets. Such scale-up should introduce a substantive improvement in the level of ambition of the measures, as reflected in the design or level of the corresponding milestones and targets, while building on the measures included in the already adopted Council implementing decision.

(12) A Member State should submit its REPowerEU chapter in the form of an addendum to its recovery and resilience plan. A REPowerEU chapter should contain an explanation of how the measures included therein are coherent with the efforts of the Member State concerned to achieve the REPowerEU objectives, taking into account the measures included in the already adopted Council implementing decision, as well as an explanation of the overall contribution of those measures and other nationally funded and Union-funded complementary or accompanying measures to the REPowerEU objectives.

(13) REPowerEU chapters should inter alia contribute to increasing the share of sustainable and renewable energies in the energy mix and to addressing energy infrastructure bottlenecks. As regards natural gas infrastructure, the reforms and investments in the REPowerEU chapters to diversify supply away from Russia should build on the needs currently identified through the assessment conducted and agreed by the European Network of Transmission System Operators for Gas, established in the spirit of solidarity as regards security of supply, and take into account strategic energy security needs of the Member State concerned and the reinforced preparedness measures, including energy storage, taken to adapt to new geopolitical threats, without undermining the long-term contribution to the green transition.

(14) An appropriate assessment criterion should be added to serve as a basis for the Commission to assess reforms and investments in the REPowerEU chapters and to ensure that those reforms and investments are fit to achieve the specific REPowerEU objectives. An A rating should be required under that new assessment criterion for the relevant recovery and resilience plan to be positively assessed by the Commission.

(15) Investments in infrastructure and technologies alone are not sufficient to ensure a reduction in dependency on fossil fuels in view of existing labour and skill shortages. In that context, it is already possible to dedicate resources to the reskilling and upskilling of people, to further equipping the workforce with green skills as well as to the research and the development of innovative solutions linked to the green transition. Member States are encouraged to further invest in reskilling and upskilling, especially for green and related digital skills and technologies, to ensure that no one will be left behind throughout the green transition. Where a Member State includes in its REPowerEU chapter measures related to reskilling and upskilling of people, the Commission should consider whether such measures significantly contribute to supporting a requalification of the workforce towards green and related digital skills.

(16) In light of the economic and social impact of the current energy crisis, where persistently high and volatile energy prices are aggravating the impact of the COVID-19 crisis by further increasing the financial burden for consumers, in particular for the most vulnerable, including households with low income, and for vulnerable companies including micro-, small and medium enterprises, and in recognition of the principles of the European Pillar of Social Rights, it should be possible to include, in the REPowerEU chapters, measures to help structurally address situations of energy poverty, through long-lasting reforms and investments. Reforms and investments that aim to tackle energy poverty should provide a higher level of financial support to energy efficiency schemes, including via dedicated financial instruments, clean energy policies and schemes to reduce energy demand for those households and companies including micro-, small and medium enterprises facing severe difficulties due to high energy bills.

(17) Energy-demand reduction measures taken by Member States should incentivise investments in energy savings.

(18) The application of a new regime on REPowerEU chapters should be without prejudice to all other legal requirements under Regulation (EU) 2021/241, unless otherwise provided.

(19) The recovery and resilience plan, including the REPowerEU chapter, should contribute effectively to addressing all or a significant subset of the challenges identified in the relevant country-specific recommendations, including the country-specific recommendations adopted under the 2022 European Semester cycle which refer inter alia to the energy challenges that Member States are facing.

(20) An effective transition to green energy and a reduction in energy dependency involves significant digital investments. In light of Regulation (EU) 2021/241, Member States should provide an explanation of how the measures in the recovery and resilience plan, including those in the REPowerEU chapter, are expected to contribute to the digital transition and to addressing the resulting challenges and whether they account for an amount contributing to the digital target based on the methodology for digital tagging. However, given the unprecedented urgency and importance of energy challenges faced by the Union, reforms and investments in the REPowerEU chapter should not be taken into account when calculating the plan’s total allocation for the purpose of applying the digital target requirement set by Regulation (EU) 2021/241. Nevertheless, Member States should endeavour to include in the REPowerEU chapters, to the maximum extent possible, measures that contribute to the digital target based on the methodology for digital tagging.

(21) Lengthy administrative procedures are some of the main obstacles to the deployment of renewable energy. Those barriers include the complexity of the applicable rules for site selection and administrative authorisations for projects, the complexity and duration of the assessment of the environmental impact of the projects, grid connection issues, and staffing constraints of the permit-granting authorities or grid operators. Further simplification and speeding up of the administrative permit-granting processes for renewables and related power grid infrastructure is necessary to ensure that the Union achieves its energy and climate targets. Recommendations were made to Member States in the context of the 2022 European Semester to accelerate the deployment of renewable energy. As announced in the communication of the Commission of 18 May 2022 entitled ‘REPowerEU Plan’, the Commission has proposed to amend Directive (EU) 2018/2001 of the European Parliament and of the Council (9) on energy from renewable sources, aiming to establish a faster permit-granting process for renewables. In addition, Council Regulation (EU) 2022/2577 (10), which lays down a framework to accelerate the deployment of renewable energy, has introduced temporary emergency rules.

(22) Pursuant to Article 18(4), point (q), of Regulation (EU) 2021/241, the Member States should provide a summary of the consultation process, conducted in accordance with national legal frameworks, of local and regional authorities, social partners and other relevant stakeholders concerned with the implementation of their recovery and resilience plans. That consultation should be complemented to address reforms and investments to be included in a potential REPowerEU chapter, in a way that allows stakeholders sufficient time to react while ensuring a speedy finalisation of the REPowerEU chapter by the Member State concerned. The updated summary should set out the stakeholders consulted, explain the outcome of the complementary consultation and outline how the input received from the stakeholders was reflected in the REPowerEU chapters.

(23) The application of the principle of ‘do no significant harm’ within the meaning of Article 17 of Regulation (EU) 2020/852 of the European Parliament and of the Council (11) (the principle of ‘do no significant harm’) is essential to ensure that the reforms and investments undertaken as part of the recovery from the COVID-19 crisis are implemented in a sustainable manner. It should continue to apply to the reforms and investments supported by the Facility, with one targeted exemption to safeguard the Union’s immediate energy security concerns. Considering the objective of diversifying energy supplies away from Russian suppliers, the reforms and investments set out in the REPowerEU chapters which are necessary to improve energy infrastructure and facilities to meet immediate security of supply needs for gas should be eligible for financial support under the Facility even if they do not comply with the principle of ‘do no significant harm’. As a rule, oil infrastructure and facilities are excluded from the REPowerEU chapter. By derogation, a Member State that has been subject to the exceptional temporary derogation in Article 3m(4) of Council Regulation (EU) No 833/2014 (12) until the entry into force of this amending Regulation, due to its specific dependence on crude oil and geographical situation, should be able to include in the REPowerEU chapter oil infrastructure and facilities necessary to meet immediate security of supply needs. The Commission should assess whether measures expected to address immediate security of energy supply needs are eligible for the derogation from the principle of ‘do no significant harm’. For the purpose of that assessment, the Commission should consider, among other conditions, the risk of lock-in effects and the unavailability of cleaner, technologically and economically feasible alternatives that could be deployed within a comparable timeline. Such assessment should be proportionate, taking into account the urgency of achieving the REPowerEU objectives. In case of doubts, the Commission should be able to request Member States to provide relevant information to support the assessment. The evaluation of cleaner alternatives should be performed within reasonable limits.

(24) All measures in the recovery and resilience plans should be undertaken in compliance with the applicable Union and national environmental acquis, in particular relating to environmental impact assessment and nature protection. For measures benefitting from the derogation from the principle of ‘do no significant harm’, Member States should undertake satisfactory efforts to limit the potential harm to environmental objectives within the meaning of Article 17 of Regulation (EU) 2020/852, where feasible, and to mitigate the harm through other measures, including measures in the REPowerEU chapters.

(25) The REPowerEU chapters should be consistent with the national energy and climate plans of Member States and with the Union climate targets set out in Regulation (EU) 2021/1119.