Decarbonisation strategies – how EU countries are investing their recovery budget

The European Commission has responded to the COVID-19 emergency with its Recovery and Resilience Facility (RRF). This instrument makes more than €723.8 billion available to EU member states – in grants and loans – to help their economies not just restart, but do so in a greener way. and more digitized.

Looking at the plans presented by the countries – all countries have submitted one except the Netherlands – it appears that climate neutrality is trying to be achieved by revamping existing assets, rather than by massive investments in renewable energy. .

In fact, the expenditure devoted to the energy efficiency of buildings and to the renewal of mobility infrastructures amounts to more than 100 billion euros cumulatively. Yet despite a massive renovation wave, green energy remains one of the areas where the most money is being invested.

What countries are also addressing is social resilience. In this regard, more than half of the €723.8 billion pie is earmarked for better hospitals, labor market policies and more efficient public administration.

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Each country renovates buildings

In February 2020, the European Commission highlighted how 3 out of 4 buildings in the EU were energy inefficient. Most of them were built before the first energy regulations of 1970. According to the Commission’s calculations, the renovation of existing buildings could reduce carbon dioxide emissions by 5%.

More than 52 billion euros will be invested in the EU for the greening of housing. All countries – with the exception of Cyprus – devote part of their budget to the renovation of buildings.

Italy is the country that invests the most, with several measures aimed at modernizing schools, courts and residential buildings. The biggest investment is the Eco bonus 110% one, a subsidy scheme totaling around 14 billion euros.

Belgium invests more than one billion euros in energy-efficient buildings. This is a significant amount considering that the country has received 5.9 billion euros in subsidies. Among the actions they plan to carry out is the renovation of social housing and public buildings coupled with a system of subsidies for energy efficiency.

France invests more than 18% of its RRF budget in the modernization of its building stock. The health care infrastructure is upgraded with an injection of 1.8 billion euros.

Better railways across Europe

Another crucial area of ​​investment is mobility. In particular, countries are spending more than €63 billion on better infrastructure. Many measures aim to modernize existing assets to make them more powerful and efficient. Others involve the construction of new highways and railway lines.

Two Eastern European countries invest considerable parts of their RRF budget in mobility infrastructure: Poland and Romania.

Warsaw spends more than 5 billion euros out of the 31.6 billion euros it receives for this. Most of this money goes to railroads, with about half going to rail lines alone.

Similarly, Romania will use €7.7 billion for its mobility infrastructure – the Balkan country receives more than €29 billion – most of it for better rail connections.

Italy’s main investment in mobility infrastructure is in the rail sector. Specifically, tens of millions have been mobilized to renovate rail links in the south of the country.

Spain plans to invest more than 8 billion euros in the transport sector. As part of their action plan, they intend to boost the trans-European transport network and the digitization of transport.

Financing programs for greener vehicles

Besides investing in better highways, railways and cycle paths, how do Member States encourage green mobility? Around 30 billion euros are being invested in sustainable mobility, as Member States plan to renew vehicle fleets and launch subsidy programs for the purchase of less impactful vehicles and charging infrastructure.

In particular, Germany is investing around 5.5 billion euros, of which almost half in a bonus system for the purchase of electric vehicles. More than €1 billion is earmarked for the purchase of sustainable buses, while €700 million is earmarked for a subsidy program to build charging stations.

A major aid scheme for the purchase of electric vehicles and charging stations has been put in place by Spain. Madrid itself is investing around 5 billion euros in green mobility.

Hydrogen is the renewable energy par excellence

Investments in renewable energy amount to around €35 ​​billion across the Union. Hydrogen is the most supported technology, as almost all countries plan to use it to produce greener energy.

Germany and Austria are both funding IPCEI programs related to hydrogen, while Italy plans to use it in sectors where it is still difficult to replace fuels with sustainable alternatives. More than 1.5 billion euros is allocated by Spain to H2, while France is investing about 2 billion euros in it.

Offshore wind farms are part of Poland’s plan with an amount of 3.7 billion euros, while Croatia plans to build a biorefinery. Denmark devotes part of its budget to carbon capture and Bulgaria plans to support a geothermal energy project.

Next Generation UE

The corona crisis is one of the biggest challenges of our time. The European Union, through NextGenerationEU – the largest recovery plan ever with 806.9 billion euros – aims to help its member states come out of the crisis stronger. the Recovery and Resilience Facility (RRF) is at the heart of this plan (723.8 billion euros).

The RRF has two objectives: first, to pull the European economy out of the recession caused by the corona pandemic. At the same time, it aims to give impetus to major forward-looking investments and measures to roll out reforms.

The original deadline to submit a plan was April 30, 2021, but that date has since been pushed back to June 2022. Currently, 26 out of 27 countries have submitted a plan. The plans require member states to dedicate at least 37% of their budget to climate action and 20% to digitalisation.

On the way to climate neutrality

Other areas of spending relevant to innovation and sustainability relate to improving water treatment and waste management. Also, relevant payouts will be given for faster internet connections.

Member states must finalize their plans by the end of 2026, and their actions are being closely watched by the European Commission. In the event of non-compliance with the objectives and milestones that each country must respect, Brussels could decide to reduce the funding of those who do not reach these objectives semester by semester.

While Europe aims to become climate neutral by 2050, there is still a long way to go. The RRF plans are only the start of this long-term process.

Learn more about investments and plans here.

About Robert Pierson

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