On March 8, 2022, the European Commission announced REPowerEU, a strategy to reduce European energy dependence on imported fossil fuels from Russia before 2027. EU leaders in the European Council agreed on the idea and asked the European Commission to draw up a detailed plan. On May 18th, the Commission presented its roadmap. This article looks at three aspects to follow moving forward as the REPowerEU plan enters its next phase.

With the REPowerEU plan, the EU has reacted to calls from member states and allies like the US and the UK to reduce dependence on Russian coal, oil and gas to hurt the Russian economy and reduce Putin’s leverage over EU members. The plan has dozens of recommendations and amended targets from energy efficiency to renewable energy generation and diversification of natural gas sources.

Some aspects of REPowerEU’s mission, like the EU Energy Purchase Platform, are already moving ahead, while others will go through further deliberations in the European Parliament and the Council.

Three things to watch moving forward are: how the financing of the projects needed to accomplish the plan will work in practice; how electrification of heating, industry and transportation will be balanced with more ambitious energy consumption reduction targets; and what priorities the already established regional task force (established with Bulgaria) sets itself.

Coal, oil and gas dependence: Progress so far

Before giving an overview of the details of the REPowerEU plan, here’s the current status of Russian fossil fuel imports to the EU.

Some progress in reducing dependency on Russian fossil fuels has already been made. But further reductions of Russian energy imports via an embargo is proving politically difficult since it would drive up energy prices further and weaken the economies of the EU members most dependent on Russian energy.

Coal imports from Russia to the EU were banned in early April as part of the fifth round of sanctions, with imports set to stop in August. Since the war began, coal imports from Russia have already dropped 40%.

Imports of Russian oil to the EU, with a near complete EU import ban agreed to by the European Council on May 30th, 2022, had also seen a 20% drop since the start of the war in Ukraine. With an official ban taking months to negotiate, this has been due mainly to some EU members’ unilateral decisions to stop importing Russian oil. By the end of the year, the Commission predicts, 90% of Russian oil imports to the EU will end.

Attribution of Gas Imports to Individual Sources and Gas Share in Final Energy Consumption in 2021, in EU Members and the UK
graph: gas imports
Source: European natural gas imports | Also see this blog post

Of the three, natural gas imports from Russia have been the most difficult topic for EU members, but some have already stopped buying Russian gas for various reasons. Some countries that had high dependencies on Russian natural gas, like Lithuania (70% of its natural gas imports from Russia in 2021), Latvia (97%) and Estonia (100%), voluntarily stopped importing Russian natural gas in April.

Others like Poland and Bulgaria were cut off by Moscow for refusing to abide by the demand to pay for gas in rubles. Finland got the same treatment for deciding to join NATO. But other EU members are against a natural gas embargo before the end of this year.

What has already taken place with the Baltics, Poland and Bulgaria has impacted deliveries of natural gas from Russia to the EU. While in the weeks following the invasion of Ukraine, gas imports from Russia increased, they have since dropped to about one-half to two-thirds of the volume during the same time frame in 2021.

REPowerEU: Increase efficiency, electrification and investment

The REPowerEU plan proposes a plan for the EU to reduce dependence on Russian fossil fuels to zero by 2027. It does not mention a ban on Russian gas; instead, it aims to make the question of a boycott irrelevant by starting a serious move toward replacing Russian gas entirely. To achieve this, the plan proposes that member states undertake projects to:

  • improve energy efficiency (particularly in gas heating) to reduce energy consumption by 13% by 2030 compared to 2020;
  • increase renewable energy generation to reach 45% renewable energy generation by 2030, up from the 40% in the Fit for 55 proposals;
  • electrify transportation, industrial processes, and home heating, including installing 10 million heat pumps over the next five years;
  • diversify natural gas supply to substitute Russian gas in the short term through an EU Energy Platform to aggregate demand;
  • develop hydrogen gas production and scaling up of biogas;
  • large-scale investment in electricity grids, particularly long-pending projects for cross-border connections;
  • investment in Trans-European energy networks to give each EU member access to at least three gas sources or LNG terminals;
  • and improve electricity grids, especially their storage abilities and flexibility.

This list is just an overview of the dozens of proposals in the REPowerEU plan, but it points to the overarching strategy for reducing gas imports: improve energy efficiency, make electricity a larger part of EU energy consumption, increase renewable electricity generation and find alternative sources of gas in the short term.

The success of the REPowerEU plan will depend on many factors. Here are three to watch:

1. How to pay for REPowerEU?

To fund REPowerEU, the Commission proposes to:

  • utilize the remaining €225 billion in loans in the Recovery and Resilience Facility (RRF),
  • auction a new round of Emissions Trading System carbon allowances, the proceeds of which will be made available as grants (an estimated €20 billion),
  • and allow up to 12.5% from member states’ cohesion policy allocations to be transferred to the RFF for REPowerEU objectives.

The Commission envisions these and other sources will amount to around €300 billion total in loans and grants available to EU members for REPowerEU.

If and how member states will use the options available is unclear. While grants would be attractive, raising funds by selling carbon allowances is controversial and works against Fit for 55 emissions goals.

On the RRF reallocations, these loans were already not used as part of the member states’ national Recovery and Resilience Plans (RRPs) tackling COVID-19 recovery and the green and digital transition. EU Member States have until August 2023 to request the RRF funds and repurposing these loans could potentially lead to funding gaps in countries’ COVID recoveries.  How  this largest source of REPowerEU funding will be used in amended RRPs to achieve energy independence will be crucial to the plan’s success.

2. Electrifying Europe and Reducing Energy Consumption

Repower EU’s success also depends on coordinating the dozens of recommendations in tandem to suit national and regional energy networks. Piecemeal efforts that address only some of the goals will have a reduced impact on achieving energy independence by 2027.

Taking electricity as an example, REPowerEU calls on member states to: increase renewable electricity generation to prepare for electricity to replace fossil fuels in heating, transport, and industry; invest heavily in electric grids to prepare for increased use (the plan predicts €29 billion is needed); and reduce energy use by increasing the EU Energy Efficiency Directive target.

Projects to fortify electric grids, as the REPowerEU plan itself says, “are required to make them fit for increased use and production of electricity” from the further electrification of heating, industry, and transport. And if energy efficiency targets are not met, even more, renewable energy generation must be built up to accommodate increased use, placing more of a burden on the power grids. With just a five-year timeline, these measures must happen quickly and in harmony both at the national and transnational levels.

3. The Regional Task Force in Bulgaria

After Russia cut off gas to Poland and Bulgaria on April 27, Sofia and the European Commission acted quickly to create the first REPowerEU regional taskforce. The goal of this group, organized by Bulgaria and the European Commission but which now includes many regional partners (Greece, North Macedonia, Romania, Turkey, Serbia, Ukraine, and Azerbaijan), aims to make Bulgaria a coordinating point for regional natural gas networks via its Trans-Balkan pipeline and to provide support for green REPowerEU measures.

So far, the task force has dealt solely with replacing lost natural gas imports, but moving ahead, it will be important for this task force—and others if they emerge—to make progress on the greener aspects of REPowerEU as well.

Bulgaria, which got 77% of its natural gas from Russia before the war, is actually well-positioned to replace Russian gas in electricity generation. Its portion of gas in electricity generation is 14% – well below the EU average of 23.7%.

This gives Bulgaria an opportunity that other member states do not have—the ability to focus on other REPowerEU goals relatively soon and guide investment in coordination with neighbors on projects like renewable energy and interconnected and flexible electricity grids.

Furthermore, Bulgaria has relatively underdeveloped renewable energy generation. Its portion of energy generated from renewable sources is around 15%, below the EU average of 17%. And of that, less than half is solar and wind power—hydropower is Bulgaria’s largest single source of renewable electricity. Adding more wind and solar can immediately make an impact on its natural gas import dependence.

Portion of Wind, Solar and Hydropower in Electricity Generation by EU Member
graph: production of electricity
Source: Production of electricity by source (europa.eu)

Don’t lose sight of the green side of REPowerEU

As we wrote in our blog post on the green transition in April, identifying regions with renewable energy potential will be important to understand how regions can navigate the green transition and benefit their economies. Bulgaria, with its potential to increase the role of renewables in its energy generation, will be a country to watch as REPowerEU and the green transition moves ahead. The success of the EU’s energy independence plan relies not just on taking quick action to replace Russian gas with other gas imports but also on following through with electrification and renewable energy generation as well.

About the author

Nathan Crist is Project Manager in the Europe’s Future Program at the Bertelsmann Stiftung working on the Europe’s Economy Project.

Read more on the EU’s transition to energy independence

Watch our State of the Union Conference Panel on Greening and Digitalizing the European Economy

A Green Europe: Regional Strengths and Weaknesses and the Green Transition

Green, Smart and Fair: Rethinking European Cohesion in an Era of Structural Change