Europe’s emergency exit out of Russian energy supply

What is in the REPowerEU plan?

REPowerEU is an ambitious and far-reaching plan that aims to achieve full energy independence from Russia by 2030. The core aim of REPowerEU is twofold:

1. ending Europe’s dependence on Russian fossil fuels as quickly as possible, in principle by 2027, with a ⅔ cut in Russian-gas consumption by the end of 2022
2. securing the long-term sustainability, cost-effectiveness and energy supply to the EU energy system through a controlled departure from this long-entrenched relationship with Russia.  

In this sense, the plan sets out a concrete series of measures based on four key pillars:

1. diversifying energy supply
2. saving energy
3. accelerating the deployment of renewable energy
4. investing and financing

This series of measures can also be classified into short-term and medium-term categories:

Short-term measures

• Common purchases of gas, LNG and hydrogen through the EU Energy Platform for all Member States that want to participate, as well as Ukraine, Moldova, Georgia and the Western Balkans
• New energy partnerships with reliable suppliers, including future cooperation on renewables and low-carbon gases
• Rapid rollout of solar and wind energy projects, combined with renewable-hydrogen deployment to save around 50 bcm of gas imports
• Increase the production of biomethane to save 17 bcm of gas imports
• Approval of first EU-wide hydrogen projects by the summer
• An EU Save Energy Communication with recommendations for how citizens and businesses can save around 13 bcm of gas imports
• Fill gas storage to 80% of capacity by 1 November 2022
• EU coordination of demand-reduction plans in case of gas supply disruption

Medium-term measures to be completed before 2027

• New national REPowerEU Plans under the modified Recovery and Resilience Fund – to support investment and reforms worth €300 billion
• Boost industrial decarbonisation with €3 billion of frontloaded projects under the Innovation Fund
• New legislation and recommendations for faster permitting of renewables, especially in dedicated ‘go–to areas’ with low environmental risk
• Investments in an integrated and adapted gas and electricity infrastructure network
• Increased ambition on energy savings by raising the EU-wide target on efficiency for 2030 from 9% to 13%
• Increase the European renewables target for 2030 from 40% to 45%
• New EU proposals to ensure industry has access to critical raw materials
• Regulatory measures to increase energy efficiency in the transport sector
• A hydrogen accelerator to build 17.5 GW by 2025 of electrolysers to fuel EU industry with homegrown production of 10 million tonnes of renewable hydrogen
• A modern regulatory framework for hydrogen

Bottlenecks and challenges 

The Commission recognises that this ambitious plan has to alleviate the challenges and the bottlenecks that it is critical to solve if the EU wants to keep up with the speed of transformation foreseen in the REPowerEU plan. According to the Florence School of Regulation, there are three key structural challenges in terms of REPowerEU implementation – namely permitting, critical raw materials, and the workforce.

Regarding the first challenge, permitting for solar projects can take up to two years and wind farms can take up to nine – far too long under current conditions. To tackle this, there are three key measures proposed in the REPowerEU. Firstly, the introduction of the ‘European Solar Rooftop Initiative’ aims to make rooftop solar infrastructure mandatory for all existing commercial and public buildings by 2027, and all new residential buildings by 2029. This overcomes much of the permitting and planning issues associated with solar farms, as well as alleviating pressure on the transmission and distribution grids by localising production. Secondly, identifying and promoting ‘go-to areas’ for renewable-energy infrastructure, whereby fast-tracked permitting and planning time is reduced to less than 1 year without foregoing environmental due diligence. This is made possible by recognising renewable energy as being in the ‘overriding public interest’. Thirdly, the Commission is proposing a formal Recommendation on permitting procedures to support effective and timely administrative procedures by sharing best practices, and regional cooperation. 

In terms of raw materials, the world is currently facing shortages of certain critical raw materials, many of which are necessary for the energy transition. REPowerEU takes both a short-term and long-term view on this.  Firstly, in the short-term, the EU is working to diversify its supply sources through strategic partnerships, as well as pooling the influence of certain commercial EU stakeholders to reclaim more of the supply chain and be in a better position to compete at an international level.  Secondly, moving forward the Commission proposes to prepare legislation on critical raw materials, as well as ensuring circular economies are prioritised in building new infrastructure, so materials can be recovered and reused multiple times. 

As for the workforce, there are certain cost-effective and attractive technology swap solutions available to consumers that would help support key aims of the REPowerEU framework, such as heat pumps as an alternative to gas boilers. However, there are limitations on speed of uptake, due to the unavailability of appropriately trained staff to install, manage and maintain the infrastructure. The same problems are also evident at larger scales, such as for switching from natural gas to hydrogen. Measures in REPowerEU look to target these bottlenecks by channelling resources into three training initiatives: the ‘Pact for Skills’, ‘ERASMUS+’ and ‘Joint Undertaking on Clean Hydrogen’. However, at this point, more details in this area have not been revealed.

Stakeholders still lack measures for protecting vulnerable households and addressing the urgent need for a skilled workforce

The majority of stakeholders welcomed the ambition to speed up the deployment of renewables. At the same time, they also emphasised the key points on which the Commission failed to deliver. For example, European Trade Unions represented by ETUC welcome REPowerEU, but ask for more measures to shield workers and citizens from rising energy prices. Even though the Communication insists on the fairness and solidarity principles of the plan, the ambition of REPowerEU remains quite limited. ETUC believes that rising energy prices and the risk of shortages will not only have an impact on consumers. European workers are also likely to be very much affected, as companies will see their production costs drastically increase. In this respect, trade unions call on the European Commission to develop policy measures and recommendations to prevent and properly address any negative consequences that rising energy prices and potential shortages would have on workers and employment. One such measure, according to ETUC, could be the active involvement of trade unions in order to anticipate those negative consequences and prevent any restructuring process that would result from this situation.

Environmental organisations such as Greenpeace have criticised REPowerEU for being overly focused on importing fossil fuels from other partners, rather than ending dependence entirely. Friends of the Earth also argued that the proposals risked “locking-in climate-wrecking fossil fuels and offer inadequate comfort to people who already cannot afford rising energy bills.” The European Consumer Organisation (BEUC) welcomed the emphasis on energy-efficiency measures and renewables, but also said that “this shift to renewables and energy efficiency won’t happen overnight, so it’s important now to ensure that households are not left in the cold if Russia cuts Europe off gas next winter. National energy regulators must ensure that gas supply to households is prioritised, as a lack of energy may bring serious harm to people’s health. The Commission should ensure that energy regulators adequately protect consumers.” CAN Europe also highlighted that, although electrification of industries and targeted use of renewable hydrogen for ‘hard-to-abate’ sectors is very important and a good means of taking industries towards fuel switches, the REPowerEU plan lacks promoting sufficiency measures as the first step to decrease demand for precious energy in industries. Moreover, according to CAN Europe, the EU should have learned by now that it should not completely depend on energy resourcesfrom third countries that are possibly geopolitically unstable and potentially linked with social and environmental damage. The efficiency and sustainability of producing large quantities of renewable hydrogen in Africa for Europe, compared to using the electricity directly in Africa, is overlooked in the plan. The same position has been expressed by the European federation of renewable energy cooperatives (REScoop.eu). In its statement, REScoop underlined the fact that, unfortunately, the plan does not do enough to effectively move the EU towards ending its reliance on imported fossil energy, which has been causing turmoil for markets and energy prices. It also fails to fully elaborate on how vulnerable and energy-poor households will be protected and moved away from gas.

The perspective of European cities has also been highlighted by Eurocities, the network that represents the largest cities in Europe. In its reaction, Eurocities made it clear that cutting Europe’s dependence on fossil fuels will not succeed without cities on board, which are responsible for around 75% of global CO₂ emissions. Specifically, while no new money is associated with REPowerEU, the core amount assigned to it will come from the existing National Recovery and Resilience Plans, with an extra chapter added to each one. However, this will not necessarily lead to an even distribution across the EU. Mayor of Budapest, Gergely Karácsony, said, “Security of supply as well as energy independence from Russia are particularly important issues in the Central and Eastern European region, and cities, as major energy consumers, can do the most for it. Hence, no effective REPowerEU proposal is possible without specific attention to cities and setting up direct financing channels to cities to reduce their energy demands.” Without direct funding, it can be difficult to see how cities such as Budapest, which have not been party to their National Recovery Plans, will receive any funding.

Next steps

European governments have to implement the Commission’s proposed measures in the REPowerEU plan. Following the Special meeting of the European Council on 30-31 May 2022, Member States have also emphasised the urgency to rapidly examine the Commission proposals to deliver on the REPowerEU objectives.

Conclusion

It is critical to ensure the proposed measures are implemented rapidly. While the REPowerEU plan is quite ambitious, on the individual level, the governments should also scale up the direction set by the EU and effectively address the bottlenecks that still remain unsolved. At the same time, the principle of solidarity has been highlighted once again. At the latest special meeting of the European Council mentioned above, EU governments agreed that, in a spirit of European solidarity, preparedness for possible major supply disruptions and the resilience of the EU gas market should be improved, in particular by swiftly agreeing on bilateral solidarity agreements and a coordinated European contingency plan, which should ensure that major supply disruptions are mitigated. In this context, the EU once again proves that solidarity matters and that a fragmented response will not solve the energy crisis.