In March 2022, EU heads of state agreed to phase out the EU’s dependency on Russian fossil fuel imports as soon as possible. The Commission has developed a plan, called RePowerEU, to achieve this goal. Its publication is scheduled for 18 May 2022.
It is clear that investment in efficiency and renewables needs to be accelerated and that this will require increased public spending between 2022 and 2027. Less clear, however, is whether EU solidarity will be sufficient to cover the additional public funding needs. Our analysis quantifies the additional public-sector expenditure required to accelerate investments that structurally reduce fossil gas consumption. We argue that without fresh EU funds some Member States will have difficulty delivering on the RePowerEU plan, as they have limited fiscal capacity given the effects of the pandemic and impending economic slowdown.
This paper aims to stimulate discussion on the need to match elevated green and energy security ambition with new EU funds. Our analysis of national financing needs and available EU funds suggests that bolstering the existing Recovery and Resilience Facility by €100 billion would appear sufficient to deliver on the RePowerEU plan and regain Europe’s energy sovereignty by 2027.
