CEE Special Report | REPowering CEE
The European Commission implemented REPowerEU Plan in May 2022 in response to Russia’s invasion of Ukraine with four objectives: diversification of energy sources, securing energy supply, saving energy and investing into renewables.
After the invasion, the EU rushed to find new suppliers of gas. While Czechia claims that it has successfully replaced all supplies from Russia, Hungary’s industry minister declared that the supplies will be fully cut only in 2050. Over the past 12 months, the CEE region has made significant progress in curtailing its gas consumption, with annual reductions of more than 10% since June 2022, peaking at approximately 25% during the winter months, partially attributed to mild winter conditions. On the other hand, share of renewables in energy and electricity mix increased but remains very low apart from Croatia. In 2022, more substantial increase in newly installed renewable power capacity was reported only in Poland.
The EU has identified that in the short-run, investments worth EUR 210bn would be needed to phase out Russian fossil fuel imports and reach the new target for share of renewables in energy mix. Member States can use the remaining RRF loans (currently EUR 225bn) and new RRF grants worth EUR 20bn. Other sources include transfer of funds from Cohesion Policy as well as European Agricultural Fund for Rural Development to RRF.
CEE region has commitment to comply with the European Green Deal, targeting to reduce net greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels. The CEE region has made modest progress in reducing its greenhouse gas emissions, with a mere 6.6% decrease over the past decade. Given that quantity of the EU-wide allowances will be continuously reduced over next 10 years and free allowances for industry will be eliminated by 2034, the costs for emission-producing enterprises will rise, incentivizing them to modernize their production.