What’s EUp? Fresh news from the Brussels policy machine!

Back in July 2021, the European Commission had already unveiled its massive “Fit for 55” package of energy and climate legislation (still under negotiation in the EU Parliament and Council) to make key directives and legislation fit for its updated 55% CO2 reduction ambitions (by 2030). 

Now, the EU executive is back with the REPowerEU package, which this time seeks to make sure the EU is fit for responding to a major energy security and price crisis (as a response to the Russian invasion of Ukraine and the energy price surge that preceeded it).

New targets on buildings, renewables and energy efficiency

• The three directives already under revision as part of the Fit for 55 package on energy efficiency (EED), renewables (RED) and buildings (EPBD) are amended through a new one just proposed last week by the Commission.
• On renewables, the Commission proposes to increase the EU-wide target to 45% from the original 40% by 2030 (which already supposed a doubling of capacity within one decade). It also proposes to reduce permitting lengths to less than a year (while 9 is the current average for wind and 4 for solar) in so-called “favourable zones”.
• On efficiency, the Commission increases the target from 9% annually to 13%, under the impulse of the President but against the recommendation of the Energy Commissioner who feels delivery will be tough.
• A lot of sector-specific quantitative targets are put forward including on photovoltaic power (320 GW by 2025), hydrogen (20 million additional tones of green hydrogen by 2030) biomethane (35 million cubic meters by 2030) and heat pumps (10 million in the next 5 years).

New proposals for hydrogen, gas and electricity markets

The EU executive proposed new alliances and “accelerators” to deliver intra-EU hydrogen pipelines and storages (notably through a Project of Common European Interest) and also encourages Member States to engage in joint procurement of hydrogen and gas.

The controversial issue of putting a price cap on gas is put on the table as a potential EU-wide measure to provide temporarily responses to the current crisis. Brussels will however remain cautious that these caps don’t push away the new gas suppliers it is aiming to trade with, the US being on top of the list.

On electricity markets, the European Commission authorizes Member States to put forward temporary and marginal adjustments to the functioning of electricity markets but without proposing deeper reforms (like uncoupling electricity and gas prices).

Repurposing money from the EU recovery plan

The measures announced in the REPowerEU plan would translate in some 210 billion of additional investments by 2027, according to the European Commission. The national post-Covid recovery plans that the Member States have already submitted are therefore expected to be slightly tweaked to include a dedicated chapter on REPowerEU-related investments including by ring-fencing 12.5% of the cohesion policy and common agricultural policy envelopes.

On governance, the European Commission plans to issue new recommendations to Member States as part of the submission of their National Energy and Climate Plans due in June 2023.

Energy Cities intends to ramp up efforts to ensure that this new money allocation is actually dedicated to what is really needed on the ground, including additional capacity and expertise to design and deliver local energy sovereignty and sufficiency plans.