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Highlights

Backing for Eur750 billion recovery fund, Eur1 trillion budget

Target 30% spend of fund, budget to meet climate goals

Eur5.18 billion under CEF2 for priority energy projects

Brussels — EU leaders have backed a Eur750 billion ($864 billion) recovery fund to be focused on the next three years, as well as a Eur1 trillion budget for 2021-27, and to target spending 30% of these supporting the EU's climate goals.

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The EU wants to become climate neutral by 2050, which means decarbonizing its energy sector by investing heavily in low-carbon technologies like clean hydrogen, renewables, batteries and carbon capture and storage, as well as grids and interconnectors.

EU leaders kept the total of the recovery fund, known as Next Generation EU, unchanged from the European Commission's proposal in May, they said July 21 after meeting in Brussels.

But they increased the share within it for the new Recovery and Resilience Facility to Eur672.50 billion, up from Eur560 billion in the EC's proposal.

EU governments can access this money by submitting national Recovery and Resilience Plans to the EC showing how they would spend the money to help recover from the pandemic lockdowns.

This means it is not possible to say yet how much of the money will be spent on energy and decarbonization projects.

The EC has to assess the plans, however, against criteria including that they are in line with the 2050 climate goal and will help the EU meet its new 2030 climate targets.

The EU has a binding 2030 target to cut its emissions by at least 40% from 1990 levels, and the EC plans to propose in September raising this ambition to a 50-55% cut.

The EC also plans to propose changes to the EU's climate and energy legislation next year to support the more ambitious 2030 CO2 target.

CEF funding cut

EU leaders made cuts to the EC's proposed 2021-27 budget, and various programs within it.

This included cutting the EC's proposed Eur8.7 billion for the energy share of the Connecting Europe Facility for 2021-27 to Eur5.18 billion.

The 2014-2020 CEF budget was Eur5.35 billion, including Eur4.6 billion in grants.

The CEF funds EU energy infrastructure projects of common interest, which are defined and selected using the EU's trans-European networks for energy regulation.

The EC plans to propose changes to the TEN-E regulation in December, including potentially expanding it to enable hydrogen, low-carbon gas and power-to-gas infrastructure projects to become PCIs.

EU leaders also cut the EC's proposed Eur100 billion for the Horizon Europe research and innovation program to Eur75.9 billion.

Horizon Europe includes a specific cluster targeting climate, energy and mobility research.

The current Horizon 2020 research program also supports climate and energy research, with the EC planning to open an estimated Eur1 billion European Green Deal call after the summer.

The EC's European Green Deal strategy aims to help the EU become climate neutral by 2050.

The EU leaders' views on the recovery fund and budget are not binding, and have to be enshrined into legislation to take effect.