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Summaries of EU Legislation

European Union Recovery and Resilience Facility

 

SUMMARY OF:

Regulation (EU) 2021/241 establishing the Recovery and Resilience Facility

WHAT IS THE AIM OF THE REGULATION?

The regulation establishes a Recovery and Resilience Facility (RRF) for the European Union (EU) and sets out the facility’s aims and the criteria for receiving funding.

In May 2022, following Russia’s invasion of Ukraine, the European Commission unveiled its REPowerEU plan to make the EU independent from Russian fossil fuels. Amending Regulation (EU) 2023/435 allows EU Member States to introduce REPowerEU chapters into their recovery and resilience plans in order to accelerate the EU’s clean energy transition.

A further amending regulation, Regulation (EU) 2024/795, which establishes the Strategic Technologies for Europe Platform (STEP) initiative, allows Member States to introduce measures supporting investment operations that contribute to the objectives of STEP in their recovery and resilience plans.

KEY POINTS

The RRF aims to promote the EU’s economic, social and territorial cohesion by:

RRF funding is available for measures that ‘do no significant harm’, i.e. that do not harm the environment and do not involve recurrent expenditure, in the following six policy areas:

  • the green transition,
  • the digital transformation,
  • smart, sustainable and inclusive growth,
  • social and territorial cohesion,
  • health, economic, social and institutional resilience,
  • policies for the next generation, such as education and skills.

Some temporary exceptions may be granted with regard to the REPowerEU chapters for measures that address immediate EU energy security concerns, minimise potential environmental damage and do not jeopardise the EU’s climate objectives.

The RRF’s €648 billion (in 2022 prices) budget:

  • consists of €357 billion in grants;
  • consists of €291 billion in loans;
  • does not replace recurring national budgetary expenditure, except in justified cases;
  • supplements financial support under other EU programmes;
  • respects the additionality principle* of EU funding.

With the amendment of the RRF regulation to include REPowerEU, additional grants under the emissions trading system (ETS) and Brexit Adjustment Reserve (BAR) have been made available to Member States. Therefore, the €357 billion in grants is now split into €338 billion in original RRF grants, €17.3 billion in ETS grants and €1.6 billion in BAR grants. Furthermore, Member States could request loan support until August 2023. Of the total available envelope of €385 billion, close to €291 billion had been committed by the end of 2023. These two changes (more grants available through the ETS and BAR and fewer loans requested than the total available envelope) resulted in a total RRF envelope of €648 billion by the end of 2023. The previously mentioned amount of €723 billion represented the maximum amount of RRF grants (€338 billion) and RRF loans (€385 billion) in accordance with the RRF regulation.

Amending Regulation (EU) 2024/795 establishes the STEP initiative, which seeks to strengthen the EU’s sovereignty and security, accelerate its green and digital transitions, enhance its competitiveness and reduce its strategic dependencies in three strategic industrial fields: digital and deep tech innovation, clean and resource-efficient technologies, and biotechnologies. The amending regulation allows resources from existing EU programmes, such as the RRF, to be leveraged without the need to create new funds. The new rules allow Member States to include in their recovery and resilience plan, as estimated costs, the amount of the cash contribution for the purpose of the Member State compartment. This is exclusively the case for measures supporting investment operations that contribute to the objectives of STEP. Member States may opt to allocate as much as 10% of their national allocation to STEP-relevant instruments under InvestEU (see summary).

To benefit from support under the facility, Member States have prepared and submitted national recovery and resilience plans, outlining the reforms and investments they would implement from the start of the pandemic in February 2020 until 31 December 2026, with clear milestones and targets. Member States can receive financing up to a previously agreed maximum amount. The plans had to allocate at least 37% of their budget to green measures and 20% to digital measures. The plans also had to be consistent with:

Member States can also revise their plans based on the available legal grounds set out in the RRF regulation, including their ability to demonstrate that objective circumstances render the implementation of certain milestones and targets unfeasible.

The RRF is performance based. This means that the Commission only pays out the amounts to each Member State when they have achieved the agreed milestones and targets towards completing the reforms and investments included in their plan. When they have completed such agreed milestones and targets, governments request payment on this basis (up to twice a year).

The Commission:

  • assesses the Member States’ plans according to their relevance, effectiveness, efficiency and coherence;
  • if it proposes that the Council approve a national plan, it sets out the milestones and targets that a Member State must meet in its reforms and investment projects, along with the RRF’s financial contribution;
  • may reject or accept amendments to the plans;
  • transmits the national plans to the European Parliament and the Council without delay;
  • monitors the facility’s implementation and measures the achievements made;
  • assesses the requests for payment from Member States to check that the milestones and targets have been fulfilled, and if so, it disburses the corresponding funds to Member States or can otherwise decide to (partially) suspend the payment until the Member State correctly fulfils the relevant milestone or target;
  • establishes a recovery and resilience scoreboard;
  • submits annual reports to the Parliament and the Council.

Member States:

  • must prevent, detect and correct any fraud, corruption or conflict of interest when using EU funds;
  • report twice a year on the progress of their plans in the context of the European semester.

Every 2 months, the relevant Parliament committee may invite the Commission to discuss progress under the facility.

The Commission has submitted the following reports to the Parliament and the Council:

Recovery and resilience scoreboard

In December 2021, the Commission launched the recovery and resilience scoreboard, a public online platform that is designed to show progress made in the implementation of the RRF as a whole and of the individual national recovery and resilience plans.

Delegated acts

Delegated Regulation (EU) 2021/2105 supplements Regulation (EU) 2021/241 by defining a methodology for reporting social expenditure. This methodology, which includes social expenditure relating to children and young people and to gender equality under the facility, is based on the estimated expenditure provided in the approved recovery and resilience plans.

Delegated Regulation (EU) 2021/2106 supplements Regulation (EU) 2021/241 by setting out the common indicators and the detailed elements of the recovery and resilience scoreboard.

FROM WHEN DOES THE REGULATION APPLY?

  • Regulation (EU) 2021/241 has applied since 19 February 2021.
  • Amending Regulation (EU) 2023/435 has applied since 1 March 2023.
  • Amending Regulation (EU) 2024/795 has applied since 1 March 2024.

BACKGROUND

  • The RRF is the centrepiece of the EU’s NextGenerationEU stimulus package. This allows the Commission to raise funds to help repair the immediate economic and social damage brought about by the COVID-19 pandemic.
  • It is closely aligned with the Commission’s priorities to ensure a sustainable and inclusive recovery that promotes the green and digital transitions.

For further information, see:

KEY TERMS

Additionality principle. One of the underlying principles of the EU’s Structural and Investment Funds. This principle states that EU Structural and Investment Funds’ contributions must not replace public or equivalent structural expenditure by a Member State in the regions concerned.

MAIN DOCUMENT

Regulation (EU) 2021/241 of the European Parliament and of the Council of 12 February 2021 establishing the Recovery and Resilience Facility (OJ L 57, 18.2.2021, pp. 17–75).

Successive amendments to Regulation (EU) 2021/241 have been incorporated into the original text. This consolidated version is of documentary value only.

RELATED DOCUMENTS

Regulation (EU) 2021/523 of the European Parliament and of the Council of 24 March 2021 establishing the InvestEU Programme and amending Regulation (EU) 2015/1017 (OJ L 107, 26.3.2021, pp. 30–89).

See consolidated version.

Commission Delegated Regulation (EU) 2021/2105 of 28 September 2021 supplementing Regulation (EU) 2021/241 of the European Parliament and of the Council establishing the Recovery and Resilience Facility by defining a methodology for reporting social expenditure (OJ L 429, 1.12.2021, pp. 79–82).

Council Regulation (EU) 2020/2094 of 14 December 2020 establishing a European Union Recovery Instrument to support the recovery in the aftermath of the COVID-19 crisis (OJ L 433I, 22.12.2020, pp. 23–27).

Regulation (EU, Euratom) 2020/2092 of the European Parliament and of the Council of 16 December 2020 on a general regime of conditionality for the protection of the Union budget (OJ L 433I, 22.12.2020, pp. 1–10).

See consolidated version.

Communication from the Commission to the European Parliament, the European Council, the Council, the European Economic and Social Committee and the Committee of the Regions – The European Green Deal (COM(2019) 640 final, 11.12.2019).

Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012 (OJ L 193, 30.7.2018, pp. 1–222).

See consolidated version.

Regulation (EU) 2018/1999 of the European Parliament and of the Council of 11 December 2018 on the Governance of the Energy Union and Climate Action, amending Regulations (EC) No 663/2009 and (EC) No 715/2009 of the European Parliament and of the Council, Directives 94/22/EC, 98/70/EC, 2009/31/EC, 2009/73/EC, 2010/31/EU, 2012/27/EU and 2013/30/EU of the European Parliament and of the Council, Council Directives 2009/119/EC and (EU) 2015/652 and repealing Regulation (EU) No 525/2013 of the European Parliament and of the Council (OJ L 328, 21.12.2018, pp. 1–77).

See consolidated version.

Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (OJ L 275, 25.10.2003, pp. 32–46).

See consolidated version.

last update 30.04.2024

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