European Union member states and the European Parliament reached a dawn agreement on a fresh €20 billion boost in investment subsidies aimed at accelerating the climate transition and reducing dependence on fossil fuels from Russia. About €2.6 billion of this new funding is earmarked for Spain as part of Repower EU, a plan rolled out by the European Commission after the onset of Russia’s invasion of Ukraine. The plan requires member states to update their recovery strategies with chapters focused on climate initiatives and resilience.
“We have an agreement on RepowerEU, the tool to finance Russia’s green energy transition and energy independence. Determination and ambition,” said Eider Gardiazábal, a Spanish member of the European Parliament who helped drive the legislation, after a lengthy negotiation night described as pivotal.
The €20 billion direct transfer will be funded through the accelerated sale of emissions allowances. Sixty percent comes from the EU Innovation Fund and forty percent from the CO2 emissions trading system, with the option not to use the rights in the reserve of this mechanism, as Brussels initially proposed.
These resources will be allocated with attention to each state’s fossil fuel dependence and the rising costs of investment, aligning with the Council’s stance reached in October, according to the agency reporting today.
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This distribution key allocates about €2.6 billion for Spain, making it the third-largest beneficiary of these funds. It can also add the corresponding €7.7 billion in direct recovery fund assistance and the €85.0 billion loan a member state may request to drive these investments.
Lawmakers also introduced incentives for states to apply for bailout grants to fund RepowerEU, allowing some countries to exceed a threshold of 6.8% of gross national income under certain conditions. Countries that did not fully use all allocations for the 2014-2020 period amid energy price surges can use the remaining funds to support affected small and medium enterprises and vulnerable households.
Improving energy efficiency and decarbonization
The aim is to boost the EU’s resilience by cutting reliance on fossil fuels and diversifying energy supplies. This includes raising the share of renewables, expanding storage capacity, and improving efficiency.
To accomplish this, member states will need to embed new Repower chapters in their recovery plans. In addition to new measures, actions adopted since February 1, 2022 may be included, as requested by the European Parliament. States may request an advance of 20% of their donation.
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The agreement ensures reforms and investments within these chapters focus on improving energy efficiency in buildings and critical infrastructure, decarbonizing industry, producing biomethane and green hydrogen, deploying renewables, and upgrading energy networks, including liquefied natural gas facilities.
States that have exemptions due to geographic considerations can also fund measures against energy poverty, encourage lower consumption, strengthen cross-border energy transmission, or support zero-emission infrastructure such as rail-focused energy projects to address urgent supply security needs.
For the measure to take effect, formal approval is required from both the European Parliament and the Council.