Commission endorses Cyprus’ €1.22 billion modified recovery and resilience plan, including a REPowerEU chapter
Today, the Commission has given a positive assessment of Cyprus’ modified recovery and resilience plan, which includes a REPowerEU chapter. The plan is now worth €1.22 billion (€0.2 billion in loans and €1.02 billion in grants)
Cyprus’s REPowerEU chapter consists of two new reforms, five scaled-up investments drawing on five existing measures, and two new investments to deliver on the REPowerEU Plan’s objectives to make Europe independent of Russian fossil fuels well before 2030. by diversifying away from fossil fuels.
Changes to Cyprus’ original plan going beyond the newly added REPowerEU chapter concern 28 reforms and 50 investments. These changes are based on the need to factor in:
objective circumstances hindering the fulfilment of certain measures as originally planned, including the high inflation experienced in 2022 and 2023 and supply chain disruptions caused by Russia’s war of aggression against Ukraine;
the downward revision of Cyprus’ maximum RRF grant allocation, from €1.01 billion to €0.92 billion, following the June 2022 update to the RRF grants allocation key. This reduction reflects Cyprus’ comparatively better economic outcome in 2020 and 2021 than initially foreseen. As a result, a number of investments have been removed from the plan or downsized, although most of them will continue to be supported with national funds.
Cyprus has also requested to transfer to the plan its share of the Brexit Adjustment Reserve (BAR), in line with the REPowerEU Regulation, amounting to €52 million. These funds, added to Cyprus’ RRF and REPowerEU grants allocation (amounting to €916 million and €52 million, respectively) and to its RRF loan request of €0.2 billion, make the approved overall modified plan worth €1.22 billion.
An additional boost to Cyprus’ green transition
As a result of the addition of a REPowerEU chapter, the modified plan has a stronger focus on the green transition, devoting 45% (up from 41% in the original plan) of the available funds to measures that support climate objectives.
The new and upscaled measures included in the REPowerEU chapter contribute significantly to the green dimension of the plan. The two new reforms it includes will significantly contribute to the green transition by enabling the uptake of renewable energy projects in the country, facilitating the rollout of electric vehicles and enabling final consumers to actively participate in the electricity market. One new investment and three upscaled investments should significantly contribute to reduced primary energy consumption and increased energy savings in many public and private buildings. One upscaled investment should incentivise businesses and individuals to shift to zero-emission vehicles and thus reduce consumption of fossil fuels for transport, whereas two investments (one upscaled, one new) will increase the number of businesses engaged in research and innovation (R&I) activities feeding into the green transition. They should also spur targeted R&I activities aiming to provide solutions to bottlenecks identified in energy production, storage, transmission and distribution. The latter set of R&I activities will make the country’s national grid infrastructure more efficient, accelerate the integration of renewable energy technologies and significantly reduce the country’s energy needs.
Upholding Cyprus’ digital preparedness and social resilience
Cyprus’ modified plan’s ambition remains unchanged, though the addition of the REPowerEU measures has nominally pushed up the overall proportion of digital measures. The plan now devotes 24.6% (up from 23% in the original plan) of its funds to support the digital transition,.
The modified plan’s important social dimension is also upheld. Measures such as the extension of compulsory pre-primary education to the age of 4, reform of the social insurance system and those to enlarge the capacity and efficiency of hospitals and promoting a more effective and fair tax system continue to benefit health and economic, social and institutional resilience, and policies for the next generation, children and young people also continue to be prominent in the RRP, for instance covering education and employment measures.