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25th Jun 2022

Commission grilled on RePowerEU €210bn pricetag

  • 'Sooner or later' member states will have to decide on a new EU wide financing tool 'as we have done with Covid,' commissioner Frans Timmermans said (Photo: European Parliament)
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After months of frantic plan-making, EU leaders on Wednesday (18 May) unveiled a strategy aiming to cut Russian gas out of the European energy equation before 2027 and by two-thirds before the end of the year.

One of the many consequences of Russia's "criminal" invasion of Ukraine, European Commission executive vice-president Frans Timmermans told press, is a "massive disruption" to the European and global energy markets.

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"On top of Covid, on top of the climate and biodiversity crisis, we now have to deal with aggression, thuggery and straight-up barbarism inflicted on a peaceful and democratic European nation," he said. "Today we will show how it will be done."

To end dependence on Russian fossil fuel imports as soon as possible, the commission presented its fleshed out RePowerEU strategy, which sets aside an additional €210bn worth of investment between now and 2027.

According to the document, €86bn is to be spent on renewables; €27bn on green hydrogen infrastructure; €56bn on boosting the energy efficiency of homes and installing heat pumps; €10bn on liquified natural gas imports and more.

€75bn will be made available to member states in the form of grants.

This will in part be financed by auctioning off additional carbon allowances to industry, allowing polluters to temporarily emit more carbon dioxide — a scheme Green MEP Bas Eickhout described as a "desperate" way to get money.

"Europe doesn't have a lot of money itself, but member states expect the EU to foot the entire bill," he said on Monday.

Retrofitted loans

The remaining €135bn can be financed with retrofitted loans out of the pandemic fund, which were earmarked to member countries that have never used them.

Drawing on these loans will be voluntary.

"I know many member states will be looking for the possibility of spending this money," Timmermans said, but it is unclear how many countries will apply for loans they already had access to.

Under the so-called €750bn Reconstruction and Resilience Facility (RRF), the largest EU pandemic recovery fund, €225bn in loans have not yet been used — which the commission now proposes to revise and repurpose for RepowerEU.

Greece, Italy and Romania have used up the full amount of their loans, but 20 countries, including Germany and the Netherlands, never applied for EU loans because they could issue government bonds against lower or even negative interest rates, which made additional EU loans unnecessary.

But with interest rates on government bonds edging higher across the continent, previously borrowed EU loans are becoming comparatively attractive, even in wealthier countries.

"The initially allocated countries will have 30 days to decide whether to use them or not. If not, other countries might use them," Simone Tagliapietra, an energy expert at Brussels-based think tank Bruegel, told EUobserver.

When asked if this would allow Italians to borrow "Dutch money," Timmermans said the remaining loans were "EU taxpayers" money and did not belong to a specific country.

"If some countries decide not to use those possibilities, are we going to say nobody can use it?" Timmermans said.

Highlighting the probability more money will be needed in the future, Timmermans said that "sooner or later" member states would have to decide on a new EU wide financing tool "as we have done with Covid."

EU not doing enough to help Ukraine, Yellen says

EU must increase funding to "help ensure Ukraine prevails over Putin's aggression," US treasury secretary Janet Yellen said in Brussels — but some EU leaders are starting to sound less warlike and have instead called for an early peace.

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