REPowerEU plan charts course for energy transition and reduced Russian dependency

Garrett Monaghan of Pinsent Masons was commenting after the European Commission set out its REPowerEU plan – an unprecedented package of measures designed to achieve the twin aims of ending the EU's dependence on Russian fossil fuels and tackling the climate crisis. He said the implications will be across sectors, pan-European and will likely require far greater integration between, and possibly consolidation of, national transmission operators.

Monaghan said: “Although the REPowerEU plan was formulated and released as a basis to urgently reduce EU reliance on Russian fossil fuels; the pre-Covid importance of the 2020 EU Green Deal should not be overlooked. The plan has enormous significance but, arguably, it is better described as an ambitious but concrete step in delivering on the EU Green Deal. The REPowerEU is already showing signs of being a massive lever for the delivery of the energy transition and wider EU decarbonisation.”

One notable project was announced on Wednesday. Under the Esbjerg Declaration, the Danish, Dutch, German and Belgian governments have committed to rapid development of new North Sea offshore wind and green hydrogen production – 65GW by 2030. 

Public policy expert Mark Ferguson of Pinsent Masons said: “This is just the start – REPowerEU is the overarching document from which legislation, plans, actions and targets will stem for all sectors. It won’t just be at EU level – policies contained within the plan will call for action by member states which will impact on business.”

Plans to decouple Europe from reliance on Russian fossil fuels were almost immediately articulated by the Commission in the aftermath of Russia’s invasion of Ukraine, amidst concern that EU countries were effectively funding the war through its consumption of Russian oil and gas. The REPowerEU strategy – a Commission action plan for change published in early March – highlighted that Russia provides more than 40% of the EU’s total gas consumption currently, with 27% of oil imports and 46% of coal imports to the EU also arriving from Russia.

The REPowerEU plan now published advances the direction set in the strategy with concrete proposals to diversify the EU’s energy supplies and phase out Russian energy from Europe before 2030. Further measures, such as new legislation to require the diversification of gas supply in EU member states over time, are also under consideration.

While the REPowerEU plan envisages a role for nuclear power during the energy transition, much of the plan focuses on initiatives designed to ramp up the production of renewable energy within the EU and deliver greater energy efficiency. Those initiatives are to be underpinned by new legally binding targets. The Commission has proposed increasing the existing target of 40% of EU energy from renewable sources by 2030 to 45%. It has also proposed increasing the binding energy efficiency target it has set for 2030 from 9% to 13%, publicising energy-saving measures in tandem.

The existing targets were products of the ‘Fit for 55’ proposals outlined by the Commission last summer, which underpin the European Green Deal – a 2020 action plan to decarbonise nearly every sector of the European economy. The REPowerEU plan does not modify the headline ‘Fit for 55’ ambitions of achieving at least a 55% net greenhouse gas emissions reduction by 2030, compared to 1990 levels, and climate neutrality by 2050.

There are several strands to the REPowerEU plan that promise to impact businesses in the energy sector and beyond.

A new solar strategy published by the Commission, for example, outlines plans to more than double solar photovoltaic power capacity to more than 320GW by 2025, and achieve almost 600GW of capacity by 2030. A new European solar rooftop initiative is also envisaged which would consist of legally binding solar rooftop obligations for new public and commercial buildings and new residential buildings. An EU Solar Industry Alliance is to be set up too, bringing together stakeholders such as those from industry and academia. The Alliance will be tasked with supporting the scale-up of solar PV manufacturing by, among other things, identifying and coordinating “investment opportunities, project pipelines and technology portfolios”.

New targets for EU domestic hydrogen production and for hydrogen imports have also been set – 10 million tonnes of each by 2030.

Two Delegated Acts on the definition and production of renewable hydrogen are to be prepared by the Commission to promote decarbonisation from greater use of hydrogen, and the Commission has further called on industry to accelerate its work on new hydrogen-related standards. To drive an increase in hydrogen imports, the Commission said it will also “support the development of three major hydrogen import corridors via the Mediterranean, the North Sea area and, as soon as conditions allow, with Ukraine”. The new EU external energy strategy also details other initiatives aimed at boosting hydrogen trade.

Further plans to map hydrogen infrastructure needs by March 2023 were also detailed in the REPowerEU plan, alongside plans to mobilise EU funding for hydrogen and facilitate joint purchasing of renewable hydrogen – in addition to other gas supplies – by EU member states.

Plans to boost production of biomethane to 35bcm by 2030 were also outlined in an action plan.

There was recognition within the package of REPowerEU plan measures of the need to reduce the time it takes developers to obtain the necessary permits for new energy infrastructure projects.

In particular, the Commission said that EU countries should “ensure that the planning, construction and operation of plants for the production of energy from renewable sources, their connection to the electricity, gas and heat grid and the related grid itself and storage assets qualify for the most favourable procedure available in their planning and permit-granting procedures and are presumed as being in the overriding public interest and in the interest of public safety” by implementing the Renewable Energy Directive.

The Commission also called on member states to identify areas of land and sea ripe for renewable energy development fit for permitting. It urged the introduction of “fully digital permit-granting procedures” too.

Further initiatives announced include plans to curb emissions in transport. The Commission has encouraged EU member states to introduce additional tax reductions and exemptions for electric and hydrogen vehicles and urged EU legislators to adopt existing proposals to support the use of alternative fuels. It plans to table further proposed new legislation on greening freight transport in 2023.

Measures to boost finance for and investment in renewable energy projects were also outlined. These include plans to amend the Recovery and Facility Regulation to allow allocation of additional funding from the auctioning off of certain Emissions Trading System allowances.