Europe - the first climate-neutral continent

How Europe will approach infrastructure needs, and keep up with technological developments, will determine the bloc’s resilience to extreme temperatures, droughts, and floods which are becoming more frequent with climate change. Many technologies are already available, such as advanced water management systems, smart mobility solutions, and digital twins. The question is how fast Europe will be able to roll out infrastructure that is critical for the twin digital and green transitions.

Promoting and adopting cutting-edge technologies in infrastructure is crucial to overcome the EU’s current energy crisis and achieving the bloc’s green and digital goals. Infrastructure is like the ground we stand on: we only notice it when it gives in beneath our feet.

In the EU, infrastructure has become a top political priority in recent months. From the current energy crisis and the ramifications of Russia’s aggression on Ukraine, to record temperatures making railways inoperable, and flash floods prompting calls for a coordinated EU water policy, the importance of future-proofing our infrastructure has crystalized before our eyes.

As President Von der Leyen deliver her third State of the Union address, there is a realization that the vision laid out in the Green Deal of making Europe the first climate-neutral continent—and which critically depends on the ability to execute on infrastructure—has proved challenging.

In particular, the important link between the “green” and “digital” prongs of the twin transitions is often underestimated and misunderstood.

EU member states face different challenges when it comes to going digital in infrastructure. A quick review of the 27 National Recovery and Resilience Plans reveals that the word “digitization” is used to describe many different types of projects, from the conversion of public administration filing systems into electronic formats, to ambitious plans to modernize transport and water management infrastructure.

In no other field is this dichotomy between “green” and “digital” more relevant than in relation to the REPower EU Plan, published by the European Commission in May. Announced as a comprehensive set of measures to eliminate the EU’s dependency on Russian fossil fuels and accelerate the EU’s transition toward renewable energy, it is a once-in-a-generation plan in its ambition and scope.

At the same time, however, the Commission exempted member states from the 20% minimum spend requirement on digital for the new, energy-focused chapter, which they will now add to their respective national plans.

While the current crisis explains why the Commission sought to lower implementation requirements on member states, and EU officials have been at pains to publicly encourage national efforts on digital, there is a real risk that the need to move fast will result in a missed opportunity to modernize European energy infrastructure.

Take infrastructure digital twins for a sustainable grid, for instance—a realistic, dynamic digital representation of a physical asset, process, or system that connects the physical infrastructure asset and virtual world while synchronizing work to make sense of the right data at the right time across the entire lifecycle of the asset. By enabling seamless collaboration between different engineering disciplines and exponentially better visibility on outcomes through the power of AI and machine learning, digital twins lead to better decisions—whether these relate to an electrical grid, a hydroelectric dam, or a gas pipeline in need of retrofitting.

Going one step further, if such infrastructure digital twins are based on openness, interoperability, and robust cybersecurity principles, policymakers can manage energy infrastructure from a holistic perspective to achieve key EU objectives, such as energy security, resilience, and diversification. Digital technologies will enable the implementation of an “energy efficiency first” principle across all sectors of the economy.

This “ecosystem” approach to energy is key to the EU’s future. It is the difference between looking at static assets in isolation, removed from their context and surroundings, and looking at energy needs and outcomes collectively. It is through digital that the EU will move beyond discussing the energy needs of individual member states and execute on policies where the entire EU acts swiftly as one.

It is, therefore, vital that both the execution of REPower EU by member states and other EU initiatives, such as the Action Plan on the Digitalization of the Energy Sector, promote the adoption of cutting-edge technologies such as digital twins. Infrastructure technology has advanced since the days of CAD [CAD: Computer Aided Design] and BIM [BIM: Building Information Modelling] — and it is important that EU policy advances along with it.

The EU is a worldwide leader when it comes to ambition and long-term vision on infrastructure. And it is in infrastructure—the often-invisible things that make our society and economy run—that the biggest and most immediate welfare benefits from digital will be felt.

Now is the time to accelerate toward next-generation EU infrastructure. Going digital will help propel the EU out of this crisis in its truest form: open, resilient and, above all, united.

RePower EU / Pathway for 2030

 

The European Commission has presented the REPowerEU Plan, its response to the hardships and global energy market disruption caused by Russia's invasion of Ukraine. There is a double urgency to transform Europe's energy system: ending the EU's dependence on Russian fossil fuels, which are used as an economic and political weapon and cost European taxpayers nearly €100 billion per year, and tackling the climate crisis. By acting as a Union, Europe can phase out its dependency on Russian fossil fuels faster. 85% of Europeans believe that the EU should reduce its dependency on Russian gas and oil as soon as possible to support Ukraine. The measures in the REPowerEU Plan can respond to this ambition, through energy savings, diversification of energy supplies, and accelerated roll-out of renewable energy to replace fossil fuels in homes, industry, and power generation.

The green transformation will strengthen economic growth, security, and climate action for Europe and our partners. The Recovery and Resilience Facility (RRF) is at the heart of the REPowerEU Plan, supporting coordinated planning and financing of cross-border and national infrastructure as well as energy projects and reforms. The Commission proposes to make targeted amendments to the RRF Regulation to integrate dedicated REPowerEU chapters in Member States' existing recovery and resilience plans (RRPs), in addition to the large number of relevant reforms and investments which are already in the RRPs. The country-specific recommendations in the 2022 European Semester cycle will feed into this process.

Saving energy

Energy savings are the quickest and cheapest way to address the current energy crisis, and reduce bills. The Commission proposes to enhance long-term energy efficiency measures, including an increase from 9% to 13% of the binding Energy Efficiency Target under the ‘Fit for 55' package of European Green Deal legislation. Saving energy now will help us to prepare for the potential challenges of next winter. Therefore the Commission also published today an ‘EU Save Energy Communication' detailing short-term behavioural changes which could cut gas and oil demand by 5% and encouraging Member States to start specific communication campaigns targeting households and industry. Member States are also encouraged to use fiscal measures to encourage energy savings, such as reduced VAT rates on energy efficient heating systems, building insulation and appliances and products. The Commission also sets out contingency measures in case of severe supply disruption, and will issue guidance on prioritisation criteria for customers and facilitate a coordinated EU demand reduction plan.

Diversifying supplies and supporting our international partners

The EU has been working with international partners to diversify supplies for several months, and has secured record levels of LNG imports and higher pipeline gas deliveries. The newly created EU Energy Platform, supported by regional task forces, will enable voluntary common purchases of gas, LNG and hydrogen by pooling demand, optimising infrastructure use and coordinating outreach to suppliers. As a next step, and replicating the ambition of the common vaccine purchasing programme, the Commission will consider the development of a ‘joint purchasing mechanism' which will negotiate and contract gas purchases on behalf of participating Member States. The Commission will also consider legislative measures to require diversification of gas supply over time by Member States. The Platform will also enable joint purchasing of renewable hydrogen.

The EU External Energy Strategy adopted today will facilitate energy diversification and building long-term partnerships with suppliers, including cooperation on hydrogen or other green technologies. In line with the Global Gateway, the Strategy prioritises the EU's commitment to the global green and just energy transition, increasing energy savings and efficiency to reduce the pressure on prices, boosting the development of renewables and hydrogen, and stepping up energy diplomacy. In the Mediterranean and North Sea, major hydrogen corridors will be developed. In the face of Russia's aggression, the EU will support Ukraine, Moldova, the Western Balkans and Eastern Partnership countries, as well as our most vulnerable partners. With Ukraine we will continue to work together to ensure security of supply and a functioning energy sector, while paving the way for future electricity and renewable hydrogen trade, as well as rebuilding the energy system under the REPowerUkraine initiative.

Accelerating the rollout of renewables

A massive scaling-up and speeding-up of renewable energy in power generation, industry, buildings and transport will accelerate our independence, give a boost to the green transition, and reduce prices over time. The Commission proposes to increase the headline 2030 target for renewables from 40% to 45% under the Fit for 55 package. Setting this overall increased ambition will create the framework for other initiatives, including:

• A dedicated EU Solar Strategy to double solar photovoltaic capacity by 2025 and install 600GW by 2030.
• A Solar Rooftop Initiative with a phased-in legal obligation to install solar panels on new public and commercial buildings and new residential buildings.
• Doubling of the rate of deployment of heat pumps, and measures to integrate geothermal and solar thermal energy in modernised district and communal heating systems.
• A Commission Recommendation to tackle slow and complex permitting for major renewable projects, and a targeted amendment to the Renewable Energy Directive to recognise renewable energy as an overriding public interest. Dedicated ‘go-to' areas for renewables should be put in place by Member States with shortened and simplified permitting processes in areas with lower environmental risks. To help quickly identify such ‘go-to' areas, the Commission is making available datasets on environmentally sensitive areas as part of its digital mapping tool for geographic data related to energy, industry and infrastructure.
• Setting a target of 10 million tonnes of domestic renewable hydrogen production and 10 million tonnes of imports by 2030, to replace natural gas, coal and oil in hard-to-decarbonise industries and transport sectors. To accelerate the hydrogen market increased sub-targets for specific sectors would need to be agreed by the co-legislators. The Commission is also publishing two Delegated Acts on the definition and production of renewable hydrogen to ensure that production leads to net decarbonisation. To accelerate hydrogen projects, additional funding of €200 million is set aside for research, and the Commission commits to complete the assessment of the first Important Projects of Common European Interest by the summer.
• A Biomethane Action Plan sets out tools including a new biomethane industrial partnership and financial incentives to increase production to 35bcm by 2030, including through the Common Agricultural Policy.

Reducing fossil fuel consumption in industry and transport

Replacing coal, oil and natural gas in industrial processes will reduce greenhouse gas emissions and strengthen security and competitiveness. Energy savings, efficiency, fuel substitution, electrification, and an enhanced uptake of renewable hydrogen, biogas and biomethane by industry could save up to 35 bcm of natural gas by 2030 on top of what is foreseen under the Fit for 55 proposals.

The Commission will roll out carbon contracts for difference to support the uptake of green hydrogen by industry and specific financing for REPowerEU under the Innovation Fund, using emission trading revenues to further support the switch away from Russian fossil fuel dependencies. The Commission is also giving guidance on renewable energy and power purchase agreements and will provide a technical advisory facility with the European Investment Bank. To maintain and regain technological and industrial leadership in areas such as solar and hydrogen, and to support the workforce, the Commission proposes to establish an EU Solar Industry Alliance and a large-scale skills partnership. The Commission will also intensify work on the supply of critical raw materials and prepare a legislative proposal.

To enhance energy savings and efficiencies in the transport sector and accelerate the transition towards zero-emission vehicles, the Commission will present a Greening of Freight Package, aiming to significantly increase energy efficiency in the sector, and consider a legislative initiative to increase the share of zero emission vehicles in public and corporate car fleets above a certain size. The EU Save Energy Communication also includes many recommendations to cities, regions and national authorities that can effectively contribute to the substitution of fossil fuels in the transport sector.

Smart Investment

Delivering the REPowerEU objectives requires an additional investment of €210 billion between now and 2027. This is a down-payment on our independence and security. Cutting Russian fossil fuel imports can also save us almost €100 billion per year. These investments must be met by the private and public sector, and at the national, cross-border and EU level.

To support REPowerEU, €225 billion is already available in loans under the RRF. The Commission adopted legislation and guidance to Member States today on how to modify and complement their RRPs in the context of REPowerEU. In addition, the Commission proposes to increase the RRF financial envelope with €20 billion in grants from the sale of EU Emission Trading System allowances currently held in the Market Stability Reserve, to be auctioned in a way that does not disrupt the market. As such, the ETS not only reduces emissions and the use of fossil fuels, it also raises the necessary funds to achieve energy independence.

Under the current MFF, cohesion policy will already support decarbonisation and green transition projects with up to €100 billion by investing in renewable energy, hydrogen and infrastructure. An additional €26.9 billion from cohesion funds could be made available in voluntary transfers to the RRF. A further €7.5 billion from the Common Agricultural Policy is also made available through voluntary transfers to the RRF. The Commission will double the funding available for the 2022 Large Scale Call of the Innovation Fund this autumn to around €3 billion.

The Trans-European Energy Networks (TEN-E) have helped to create a resilient and interconnected EU gas infrastructure. Limited additional gas infrastructure, estimated at around €10 billion of investment, is needed to complement the existing Projects of Common Interest (PCI) List and fully compensate for the future loss of Russian gas imports. The substitution needs of the coming decade can be met without locking in fossil fuels, creating stranded assets or hampering our climate ambitions. Accelerating electricity PCIs will also be essential to adapt the power grid to our future needs. The Connecting Europe Facility will support this, and the Commission is launching today a new call for proposals with a budget of €800 million, with another one to follow in early 2023.

Background

On 8 March 2022, the Commission proposed the outline of a plan to make Europe independent from Russian fossil fuels well before 2030, in light of Russia's invasion of Ukraine. At the European Council on 24-25 March, EU leaders agreed on this objective and asked the Commission to present the detailed REPowerEU Plan which has been adopted today. The recent gas supply interruptions to Bulgaria and Poland demonstrate the urgency to address the lack of reliability of Russian energy supplies.

The Commission has adopted 5 wide-ranging and unprecedented packages of sanctions in response to Russia's acts of aggression against Ukraine's territorial integrity and mounting atrocities against Ukrainian civilians and cities. Coal imports are already covered by the sanctions regime and the Commission has tabled proposals to phase out oil by the end of the year, which are now being discussed by Member States.

The European Green Deal is the EU's long-term growth plan to make Europe climate neutral by 2050. This target is enshrined in the European Climate Law, as well as the legally binding commitment to reduce net greenhouse gas emissions by at least 55% by 2030, compared to 1990 levels. The Commission presented its ‘Fit for 55' package of legislation in July 2021 to implement these targets; these proposals would already lower our gas consumption by 30% by 2030, with more than a third of such savings coming from meeting the EU energy efficiency target.

On 25 January 2021, the European Council invited the Commission and the High Representative to prepare a new External Energy Strategy. The Strategy interlinks energy security with the global clean energy transition via external energy policy and diplomacy, responding to the energy crisis created by Russia's invasion of Ukraine and the existential threat of climate change. The EU will continue to support the energy security and green transition of Ukraine, Moldova and the partner countries in its immediate neighbourhood. The Strategy acknowledges that Russia's invasion of Ukraine has a global impact on energy markets, affecting in particular developing partner countries. The EU will continue to provide support for a secure, sustainable and affordable energy worldwide.

For More Information

REPowerEU Communication

Annexes to REPowerEU Communication

Staff Working Document: Investment needs, hydrogen accelerator and bio-methane plan

EU Save Energy Communication

EU External Energy Engagement Strategy

EU Solar Strategy

Amendments to Renewable Energy, Energy Performance of Buildings and Energy Efficiency Directives

Recommendation on permitting procedures and Power Purchase Agreements

Guidance on permitting procedures and Power Purchase Agreements  

Regulation establishing the Recovery and Resilience Facility

Proposal for a Regulation on REPowerEU chapters in recovery and resilience plans

Guidance on recovery and resilience plans in the context of REPowerEU

Q&A Memo on REPowerEU

Factsheet on REPowerEU Actions

Factsheet on financing REPowerEU

Factsheet on the EU External Energy Strategy

Factsheet on energy savings

Factsheet on clean energy

Factsheet on clean industry

REPowerEU video