Commission endorses Greece’s modified recovery and resilience plan, including a REPowerEU chapter
Today, the Commission announced its positive assessment of Greece’s modified recovery and resilience plan, which includes a REPowerEU chapter. The plan is now worth €35.95 billion, with €18.22 billion in Recovery and Resilience Facility (RRF) grants and €17.73 billion in RRF loans. It covers 76 reforms and 103 investments.
The REPowerEU chapter consists of seven new reforms and four investments, including a scaled up existing investment. These will enable Greece to deliver on the REPowerEU Plan‘s objective of making Europe independent from Russian fossil fuels well before 2030. REPowerEU measures focus on facilitating the deployment of more renewable energy, including hydrogen and offshore wind power, and enabling the swift integration of renewable energy into the electricity grid.
In addition, Greece has proposed several changes to its original plan. In particular, the modified plan includes four newly added or enhanced reforms in the areas of primary healthcare, combating tax evasion, property rights and the financial sector. The modified plan also includes four new investments, three of which are underpinned by the need to factor in the damage caused by the catastrophic wildfires and floods that hit Greece in August and September 2023.
In particular, Greece has decided to re-allocate funds to finance two investments in flood protection and anti-erosion in the regions of Evros and Rhodope that were affected by wildfires. Another investment aims to restore the rail and road networks that were damaged in the devastating floods in the region of Thessaly last September. The revised plan also includes an investment in seismic prevention to increase the resilience of infrastructure to natural disasters. These measures are set to help address the challenges of climate change and complement the civil protection measures already included in the original plan.
Greece’s proposed changes to the original plan are based on the need to factor in:
- the downward revision of Greece’s maximum RRF grant allocation, from €17.77 billion to €17.43 billion. This downward revision is a result of the June 2022 update to the RRF grants allocation and reflects Greece’s comparatively better economic outcome in 2020 and 2021 than initially expected;
- objective circumstances hindering the fulfilment of certain measures as originally planned, including the high inflation affecting the construction sector in particular;
- the request to take up €5 billion in available RRF loans and incorporate €768 million in additional RRF grants under REPowerEU.
To finance the increased ambition of its plan, Greece has requested to transfer to the plan its share of the Brexit Adjustment Reserve (BAR), in line with the REPowerEU Regulation, amounting to €25.6 million. These funds, as well as Greece’s RRF and REPowerEU grants allocations (€17.43 billion and €768 million respectively) and its request to take up new loans (amounting to €5 billion), in addition to the loans included in the original plan (amounting to €12.73 billion), make the overall modified plan worth €35.95 billion.
An additional boost to Greece’s green transition
The modified plan retains a very strong focus on the green transition, allocating 38.1% (up from 37.5% in the original plan) of the available funds to measures that support climate objectives.
Most notably, the newly added and scaled-up reforms and investments included in the REPowerEU chapter strongly contribute to the green transition. Overall, they reinforce the ambition to decarbonise the economy by increasing energy efficiency and renewable capacity. The reforms aim to facilitate the production of renewable hydrogen and bio-methane, optimise land and sea space usage for the development of renewables, promote energy sharing and increase self-consumption, and introduce new non-grant based financial instruments to further support energy efficiency investments. In addition, significant investments aim to support energy efficiency measures, including the installation of solar water heaters and renovations, and the promotion of renewables for self-consumption. Other investments include the scaling up of an existing measure to increase energy storage capacity, pilot projects for bio-methane and renewable hydrogen production, and support for carbon capture and storage infrastructure. Moreover, as regards the additional loans requested by Greece, there is a commitment for financial institutions to invest at least 38.5% of the funds in support for the climate transition.
Reinforcing Greece’s digital preparedness and social resilience
Greece’s modified recovery and resilience plan continues to significantly contribute to the digital transition in the areas of connectivity, digital public services, human capital and digital skills, digitalisation of businesses and adoption of advanced digital technology. While the share of digital spending of the modified plan has gone down in relative terms (from 23.3% to 22.1%), the contribution to the digital transition in absolute terms is increased compared to the original plan adopted in July 2021.
In particular, part of the additional loans requested by Greece are expected to be used for digital investments in very high-capacity broadband networks, digitalisation of SMEs and large businesses, development and deployment of cybersecurity technologies, advanced digital technologies and other types of ICT infrastructure, in light of the commitment for financial institutions to invest at least 20.8% of the funds in such interventions.
The modified plan’s social dimension remains ambitious, with a flagship reform of the primary healthcare system that is expected to increase access to healthcare, reduce inequalities, and promote disease prevention. The additional infrastructure investments in fire-protection, anti-flood and anti-erosion that complement civil protection measures in the original plan, and the new upskilling programmes to integrate refugees into the labour market are also expected to have a positive social impact.
Moreover, through the planned investments in energy renovations of residential buildings and renewable energy produced by energy communities, over 60,000 energy-poor households are expected to benefit, while through expanding energy storage capacities and the preliminary inspection of seismic resistance of public sector buildings, Greece’s recovery and resilience plan is contributing towards addressing the country’s socio-economic challenges and making Greece more resilient.
The Council will now have, as a rule, four weeks to endorse the Commission’s assessment. The Council’s endorsement will allow Greece to receive €158.7 million in pre-financing of the REPowerEU funds.
Greece has so far received €11.2 billion in RRF funds: €4.0 billion in pre-financing and €7.2 billion disbursed in total for the first two payments.
The Commission will authorise further disbursements based on the satisfactory fulfilment of the milestones and targets outlined in Greece’s revised recovery and resilience plan, reflecting progress on the implementation of the investments and reforms.
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