How to fund the energy transition: NextGenerationEU funds
The EU has launched an ambitious recovery plan to help address today's major energy, climate neutrality, and digitalization challenges. How to successfully tackle the fight against climate change and the evolution towards a just energy transition are two key questions that will mark the future of the EU and its member states. However, achieving the EU’s sustainability and renewable energy targets is no simple task, and requires the implementation of far-reaching structural reforms in each country to successfully address the main challenges in this area.
Economic, social, commercial, or industrial reforms, based on the specific needs of each state, which can be effectively financed through the NextGenerationEU funds. An essential tool in the EU’s renewal process, which is helping to create a much more greener and more sustainable community environment.
What are the NextGenerationEU funds?
The NextGenerationEU recovery plan is a temporary recovery instrument, created in the wake of the coronavirus crisis to alleviate its economic and social effects. It was approved in May 2020, with an investment of €806.9 B within the Multiannual Financial Framework for 2021–27.
The aim of the funds is to provide states with the necessary resources to create a much more sustainable, greener, and resilient post-Covid-19 Europe, capable of adapting to the new changes that lie ahead.
In particular, those related to the energy transition towards an energy model based on renewables and the effective fight against climate change and its adverse effects.
How are they used?
The first thing to know is that the NextGenerationEU funds are divided into two areas. On the one hand, a small sum is set aside for contributions to other European programs such as Horizon 2020, InvestEU, Rural Development, the Just Transition Fund (JTF), or Recovery Assistance for Cohesion and the Territories of Europe (REACT-EU).
However, the bulk of the funding — €723.8 B — goes to the Recovery and Resilience Facility, aimed at supporting reforms and investments undertaken by surrounding countries in the area of the green and digital transition. It covers measures aimed at the implementation of renewable energies or the energy rehabilitation of buildings, but also the promotion of sustainable transport, connectivity, or the expansion of digitalization and modernization of public administration. This mechanism is also responsible for financing education and training programs in digital skills, as well as everything related to research and innovation, the protection of biodiversity, gender equality, and the protection of the health of citizens.