The EU will cut off gas from Russia? EU auditors have doubts. The plan has a lot of holes

The greatest doubts of the European Court of Auditors, i.e. the audit body of the European Union, are primarily caused by the inconsistency of the plan. This – according to the auditors – rather than proposing system solutions, to a large extent relies on the will of the Member States to cooperate. In addition, the auditors also point to the too short timeframe of the program and its uncertain funding.

“The current REPowerEU plan may not be able to efficiently select and then implement those strategic projects that would most and immediately increase the independence and security of the EU’s energy sector,” says Ivana Maletić, ECA member responsible for the opinion.

The EU wants to move away from raw materials from Russia. The auditors have doubts

Eurostat data shows that in 2020, 43 percent. natural gas, 54 percent fossil fuels (mainly coal) and 29 percent. crude oil in the EU came from Russia, while Germany was the largest importer of Russian energy, followed by Italy and the Netherlands, and Poland came fifth.

So, in May, the European Commission unveiled the EU’s REPower plan, urgently reducing dependence on Russian fossil fuels, diversifying energy supplies at EU level and accelerating the clean energy transition, including increased investment in green energy sources that will enable the replacement of fossil fuels with renewable energy sources in homes, industry and electricity production.

– Russia’s invasion of Ukraine drew attention to the problem of the EU’s dependence on gas, oil and coal imports. There is no doubt that the EU had to take immediate action and react in the face of growing concerns about energy security – estimates Ivana Maletić from the ECA. However, he warns that the implementation of REPowerEU may encounter great difficulties.

According to the draft of the European Commission, the EU cut-off plan from fossil fuels from Russia is to be implemented through the Instrument for Reconstruction and Increasing Resilience (RRF), and activities aimed at its implementation would be included in the national reconstruction plans in the form of the REPowerEU chapter. However, the auditors point out that REPowerEU focuses on the EU as a whole, while the RRF is implemented through actions proposed by Member States. It may therefore happen that Member States focus on their own priorities instead of the priorities of the Union as a whole.

This can make it difficult to find structural solutions to emerging problems, warn the auditors.

Where to get funds and more. The EU plan has many holes

The ECA also notes the uncertainty of project financing. The Commission has estimated that additional investment from REPowerEU – in particular aimed at phasing out imports of Russian fossil fuels by 2027 – will amount to € 210 billion. Meanwhile, the additional funds made available for this purpose currently amount to only EUR 20 billion. The rest are to come from, among others from unused RRF loans to EU countries or from the transfer of funds from other EU policy areas, including cohesion policy and rural development.

However, this – the auditors are alarming – means that most of the funding will be beyond the control of the Commission, and the availability of funds will depend entirely on the will of the Member States and whether they will be willing to allocate money to this very purpose. As a result, the amount allocated to financing the project may turn out to be insufficient, and some of the strategic energy projects for the entire EU may simply not be implemented. Member States can focus simply on implementing and promoting their own projects, rather than on cross-border projects.

The auditors also highlight another problem, which is the way in which funds are expected to be distributed to the Member States. The point is that the funds are to be distributed in line with the original assumptions of the EU’s reconstruction plan, which was created in response to the COVID-19 pandemic and did not even assume the outbreak of war in Ukraine. Therefore, it does not reflect the current challenges and energy goals of the Community, or the specific needs of individual Member States as regards being cut off from supplies from Russia.

In addition, as the auditors point out, the RRF’s timeframe ends in just four years, i.e. 2026, and may be too short to achieve REPowerEU’s long-term goals. Anyway, at the moment it is not even possible to verify what actions could actually contribute to strengthening energy security and independence in the EU, because REPowerUE lacks any guidelines for monitoring and assessing the effects of the program.

Although the first EU report on the RRF is due to be published in mid-2024, the auditors believe it will be too early to assess the effectiveness of REPowerEU measures.

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Author: Jowita Kiwnik Pargana