COMMISSION NOTICE

Guidance on Cost-Benefit Sharing in Cross-border Renewable Energy Cooperation Projects

(2022/C 495/01)

CONTENTS

1.

Introduction

2

2.

Cooperation design elements and options for funding

5

3.

Cost-Benefit Analysis as the basis for cost-benefit sharing

8

4.

Cost-Benefit sharing approaches

9

Principles of cost-benefit sharing

10

Practical implementation of the cost-benefit sharing

12

Examples of cooperation

15

5.

Summary of recommendations for CBA and cost benefit sharing

18

6.

Template Intergovernmental Agreement

20

7.

Annex

22

1.   INTRODUCTION

The present guidance aims to support Member States willing to engage in cross-border cooperation projects in the area of renewable energy generation in finding a mutually beneficial solution for sharing the related costs and benefits. It outlines design options for cost-benefit sharing in cross-border cooperation renewable projects and provides recommendations and best practices, while allowing for Member States’ flexibility (1). The guidance can be applied in the context of the Connecting Europe Facility’s (CEF) window for cross-border projects in the field of renewable energy, as well as for renewable (RES) projects using cooperation mechanisms more generally. It is relevant to renewable electricity, as well as renewable heat and renewable gas projects.

Legal framework

The revised Directive 2018/2001 on the promotion of the use of energy from renewable sources (‘the Directive’) establishes a legal framework for the development of renewable energy in the European Union. As set in Article 3(1) of the Directive, Member States shall collectively meet the binding overall Union target for the share of energy from renewable sources in the Union’s gross final consumption of energy in 2030. This collective target is delivered through the national contributions to be set by all Member States as part of their integrated national energy and climate plans (NECPs). The Directive also recognises the cross-border dimension of the deployment of the renewable energy and encourages the Member States to cooperate in this respect using, inter alia, available cooperation mechanisms such as statistical transfers, joint projects between Member States, joint projects between Member States and third countries or joint support schemes (2).

As part of the Multiannual Financial Framework 2021-2027, CEF Energy has been complemented with an instrument aimed at supporting the deployment of renewable energy cross-border projects. The concept of renewable energy cross-border projects, as defined in the CEF Regulation (3), is based on the cooperation mechanisms established under the Directive.

Motives for cooperation

Cross-border cooperation can facilitate the achievement of the Union target as well as national contributions in a more cost-efficient way by scaling up the project pipeline, whilst providing additional flexibility to Member States in meeting their targets. Furthermore, cross-border regions have an important role of ‘laboratories of European Integration’ (4). As Member States have different geographical and natural resources to exploit renewable energy, production costs differ considerably from country to country. A Member State (the ‘host country’) that produces a surplus of renewable energy, i.e. more than it needs to fulfil its own contribution, can choose to cooperate with another Member State (the ‘off-taking country’) that is willing to co-finance the endeavour. Both will benefit from such cooperation. The host country will acquire additional financing and non-monetary benefits linked to the construction and operation of the new installation (e.g. enhanced security of supply, creation of jobs, positive spill-over effects from increased innovation), the off-taking country by reaching its target more cost-efficiently than domestically. Cooperation mechanisms also contribute to sharing of best practices, alignment of the regulatory frameworks and streamlining of the administrative procedure in the Member States.

The motives for choosing to cooperate on renewable energy vary from project to project. The most typical reasons for cooperation include achieving cheaper target compliance, increasing deployment of renewable energy, contributing to infrastructure enhancement, enhancing energy security, improving public acceptance of a certain technology, (joint) testing of innovative technologies or infrastructure solutions as well as fostering market integration of renewables with a view to enhancing the EU internal energy market.

Moreover, market values for renewable energy may substantially differ between Member States, depending, inter alia, on different generation mixes, existing capacities of installations and the amount of interconnection and internal grid transport capacities. By cooperating with one another, Member States with lower market values can access projects with higher market values than their own, which decreases support payments.

Cooperation may be between two or several countries / regions or cross-border territories (5), with complexity and coordination requirements usually increasing with the number of actors involved.

Example for cross-border cooperation: Mutually open auctions between Germany and Denmark (6) In 2016, Germany and Denmark implemented two cross-border PV auctions open for the participation from projects located in the other country. The mutually open auctions were based on a bilaterally negotiated cooperation agreement. The open auctions were each based on the support system in place for PV in the respective country. Furthermore, the cooperation agreement also included arrangements with regards to local site restrictions, data exchange and the contribution to renewable energy targets. With regards to the sharing of costs, the auctioning country pays the support payments to all awarded plants and receives the full RES statistics. No additional costs or benefits are included. The cross-border auctions led to the location of all successful projects in Denmark. The German open auction reached award prices significantly below the previous German national auctions. In Denmark no national auctions were conducted in the same period. No German projects participated in the Danish auction. This was among others due to the low maximum capacity foreseen for projects located in Germany (2,4 MW only out of a total auction volume of 20 MW), a national auction in Germany taking place only days later, transaction costs related to understanding the Danish auction system as well as the fixed premium used in Denmark which exposed plant operators to long term electricity price risks. For the projects located in Denmark, the participation in the German auction was attractive as no national auctions for PV took place in 2016. Reasons for more competitive bids from Denmark are not clear but are likely to include better PV resources at the sites participating in the auctions, the opportunity to build PV plants on farmland (excluded in Germany) as well as the lack of other options for receiving domestic support and thus more aggressive bids. These mutually open auctions have shown that cooperative approaches between Member States can achieve efficiency gains compared to national auctions. Furthermore, they also make explicit that national support schemes and auction schedules should be taken into account when timing and designing the cooperation agreement. Furthermore, countries also need to take into consideration market arrangements and other factors influencing the costs of projects in order to avoid surprises with respect to the distribution of awards between countries. Example for cross-border cooperation: Joint certificate scheme between Sweden and Norway In 2012, the cross-border green electricity support scheme between Sweden and Norway became operational with the goal of boosting the growth of renewables in both countries. So far, it is the only joint support scheme realised under the cooperation mechanisms foreseen in the Renewable Energy Directive (RED). The scheme’s entry into operation was preceded by a long phase of negotiations between the two countries. It proved particularly difficult to agree on a suitable sharing of costs and benefits. A political agreement on a 50:50 burden-sharing paved the way for the final agreement. The scheme benefited from Sweden’s year-long experience in operating a comparable domestic certificate market. A market-based instrument – the scheme rewards renewable energy producing facilities in both countries by allocating a green certificate for every MWh of renewable electricity produced which can then be traded on a market. Swedish and Norwegian electricity suppliers (and some end users) are obliged to purchase certificates proportionate to a share of their electricity production/consumption. Given the success of the scheme in (over-)achieving the targeted build-out of renewables, mainly wind and hydropower, the system closed to new participants in January 2022. Even though the scheme’s main characteristics were the same in both countries and Sweden and Norway worked towards a joint production goal expressed in TWh, they also retained a certain flexibility as to the scheme’s parameters. There is also no joint authority that is in charge of implementation and monitoring, but each country has appointed a domestic entity. This showed that acknowledging the need for flexibility in the design of a joint scheme can be helpful. In addition, the relatively similar potential for renewables as well as comparable cost structures made it easier to agree on the scheme’s key features. This also goes for the cost-benefit sharing negotiations which tend to be more challenging if costs and benefits significantly differ between the cooperating countries.

Barriers to cooperation

Despite the established and well investigated benefits of cooperation to jointly reach EU renewable energy targets, few cooperation projects using the cooperation mechanisms have actually been implemented since 2009 (7) and the use of the cooperation mechanisms is still low. Evidence (8) suggests that barriers in using cooperation mechanisms persist, which can be of political, technical, legal and regulatory as well as socio-economic and environmental nature. Member States and other stakeholders also report administrative barriers related to the procedural steps needed to plan and implement a cooperation project and barriers with regards to quantifying and sharing costs and benefits. Discussions between Member States on using cooperation mechanisms have intensified in recent years though and several potential projects are being discussed (9). The increased pressure to rapidly decarbonise in line with the European Green Deal, the ‘Fit-for-55’ package and the RePowerEU Plan calls for more frequent use of cooperation mechanisms.

Scope

This Guidance aims to support Member States in planning, designing and implementing cross-border cooperation projects using cooperation mechanisms (10). By shedding light on the options and design elements available for cost-benefit sharing, it aims to facilitate the overcoming of this barrier to further use of the cooperation mechanisms.

The previous guidance on the allocation of costs and benefits is limited to the cost-benefit analysis (CBA) methodology prepared by ENTSO-E for grid development projects as per Regulation (EU) 2022/869 and no guidance was focused on sharing costs and benefits of generation assets. Therefore, this Guidance aims to provide clarity on the available options and degrees of freedom for analysing and sharing costs and benefits applicable across different renewable energy technologies. Whilst it aims at covering renewables cooperation in general for all renewable energy technologies, it takes into account aspects specific to (radial) offshore wind projects due to such cooperation becoming increasingly significant while facing particular technical and practical implementation challenges. Cost-benefit analysis and sharing aspects of offshore hybrid projects will be dealt with extensively in a 2024 forthcoming Guidance on how to coordinate the sharing of costs and benefits per sea basin for offshore energy transmission projects combined with the development of energy renewable generation projects as well as for sharing of costs and benefits for individual hybrid projects (11).

This Guidance is structured as follows: first, the most important design elements for support schemes for renewable energy are outlined with a focus on relevant aspects for the sharing of costs and benefits in cross-border cooperation projects. In the following section, general approaches and principles of the CBA as the central tool to assess a renewable projects’ overall societal benefits and prerequisite for sharing costs and benefits are described. The Guidance then proceeds to provide information on how to approach the sharing of costs and benefits between cooperating parties, outlining recommendations, examples and best practices. A blueprint for a cooperation agreement can be found in section 6.

2.   COOPERATION DESIGN ELEMENTS AND OPTIONS FOR FUNDING

When agreeing on a cooperation project, Member States will need to align on an array of aspects, including the main goals and principles of cooperation, the cooperation mechanism(s) that can be used to reach these goals, as well as the scope and conditions of cooperation. With regards to the latter, Member States may need to choose a support scheme and will need to agree on the sharing of the resulting costs and benefits that the project will produce. Different design elements of the cooperation mechanism(s) and support scheme (where applicable) may lead to different outcomes in terms of costs and benefits.

As outlined above, Member States may want to pursue different goals when agreeing on a cooperation project. In any case though, they will want to ensure that the cooperation is mutually beneficial and that costs and benefits are shared in a way that reflects that goal. The overall logic is that the off-taking Member State will contribute to the support costs in return for receiving RES statistics. Sub-goals pursued by Member States may for example include the goal of reducing the costs of RES integration by shifting deployment into countries with lower system integration costs. Host Member States, on the other hand, will also take these costs into account as well as the extent to which they are reflected in the support payments, that means either borne by renewable project developers or incurred by other stakeholders such as TSOs or final consumers. As system integration costs may be substantive, host Member States may include the adequate compensation.

Choice of cooperation mechanism

The choice of cooperation mechanism depends on the specific goals that Member States pursue. In general, it can be said that if the sole objective is to seek lower-cost short-term target compliance, or rapidly closing a remaining gap to the target with limited domestic effort, statistical transfers are the most appropriate choice as they exhibit the lowest transaction costs and tend to be less complex. On the other hand, statistical transfer do not lead to the deployment of additional renewable capacity, unless the selling country earmarks the revenues for new renewable projects.

Joint projects may also be pursued if the objective is to develop or test (new) technologies. Joint support schemes are the most complex cooperation mechanism and entail the highest transaction costs. However, joint support schemes may improve cost efficiency and increase long-term market stability as well as liquidity. The higher the volume of cooperation in renewable electricity projects that shall be realised over time, the more the choice of a complex mechanism is justified.

It should also be noted that the cooperation mechanisms are not mutually exclusive and that Member States are free to combine more than one mechanism in one agreement. As for the sharing of costs and benefits, it is recommendable to keep costs and benefits strictly separated per project and not adding them up in combinations of projects.

Choice of form of support

Even though the market-based deployment of renewable energy is on the rise, it continues to be mostly based on a support scheme – this also applies for cross-border cooperation. In principle, Member States have the choice between using the host Member State’s support scheme, opening up the contributing Member State’s support scheme or setting up a new tailor-made joint support scheme. A range of design elements for this scheme needs to be defined. It should also be noted that a support scheme does not necessarily entail actual support payments, as these may become obsolete in a situation where there are zero-price bids, i.e. developers willing to go forward with the project without any subsidies.

Using the host country’s support scheme has the advantage of ensuring seamless embedding into the national regulatory context. Choosing the contributing Member State’s support scheme, on the contrary, will lead to two schemes existing in parallel in the Member State where the installation is located and may be at odds with its regulatory context. Setting up a new joint support scheme on the other hand entails higher transaction costs, but has the advantage of being fit-for-purpose and more efficient for larger cooperation plans. In that case, national or regional institutions that operate the scheme need to be identified. Member States may also choose the host or contributing country’s scheme as a starting point, but agree on deviating design elements for individual aspects.

The following elements are to be considered when defining a support scheme, noting that the exact set-up and specificities will differ on a case by case basis.

Pre-investigation, site selection, permitting and pre-development

Overall, one can distinguish between centralised (government-led) and decentralised (developer-led) approaches to pre-investigation, site selection, permitting and pre-development. The centralised approach is characterised by a state or state-owned body being in charge of, driving forward and bearing the costs and risks for these processes (12). In a decentralised model, sites are selected, pre-investigated and pre-developed by project developers in a pre-defined zone. Depending on who initially bears the costs for pre-investigation, site selection and pre-development, compensation might be necessary.

Grid cost allocation regime

Cooperating Member States will also need to decide on the interface between renewable developers and TSOs when it comes to the grid regime. In the shallow cost allocation approach, renewable project developers bear the connection costs to the closest suitable connection point in the already existing grid network, generally a sub-station, and TSOs – the costs of any necessary grid reinforcement. Shallow cost approaches are the lowest-cost option for project developers (because grid reinforcements are generally borne by TSOs/DSOs) and enable good cost transparency and consistency. However, projects may be delayed due to necessary reinforcements by TSOs/DSOs before a connection is possible.

In the deep cost allocation approach, renewable project developers have to bear all connection costs, as well as any further reinforcement costs, due to the integration of the new installation into the system. A major disadvantage in the deep cost allocation regime is that upfront connection costs can be very high and network reinforcement costs are usually uncertain and difficult to predict for developers (13). However, project developers are often not required to pay use of system charges for ongoing grid reinforcements under this approach.

Hybrid forms are possible as well. Depending on their exact specification, hybrid models may have disadvantages/advantages of both regimes.

Forms of financial support

The main options for forms of financial support are ‘operation support’ and ‘investment aid’ (upfront or recurring, e.g. annual). The most relevant forms of operating support are fixed premiums, one-sided sliding premiums and two-sided sliding premiums (contracts for difference) (14).

In the case of fixed premiums, total support does not depend on electricity prices. Also, fixed premiums are easier to administer, but come at the disadvantage of developers bearing potentially high market revenue risks and provide incentives to produce also at times where additional generation is not needed. Long-term market revenue risk may be addressed through sliding premiums which, however, may come at the expense of exposure of total support costs to electricity prices lower than the strike price, paid by consumers. In the case of upfront or annual investment aid, plants are in principle exposed to full electricity market revenue risks.

Investment aid or support differs from operational support by providing a share of the project’s investment costs before it actually enters into operation and begins generating. While investment aid is rarely seen at Member State level, it is expected to become more relevant in the context of EU funding mechanisms such as the new funding line for cross-border projects under the Connecting Europe Facility (CEF).

When deciding for a financial support design, it is recommended to start the discussion from the existing support scheme designs in the Member States involved, provided that at least one of the cooperating parties has a domestic scheme in place for the technology in question. In case there is no such scheme in place in the cooperating states, the experience of Member States sharing similar characteristics and objectives might serve as an example. In deciding on the design elements, the cooperating states should strive to ensure the regular operation and maintenance of the new plant, minimise the necessary support costs over its life span, limit the risk of over- or under-compensation, reduce financial risks in general and consider the implications of the support scheme to consumers.

In case of cross-border cooperation, Member States may use a sliding premium (one-sided or two-sided), such as contracts for difference. Contracts for difference, in particular, provide price stability while at the same time limiting excessive windfall profits that can be generated in case of very high market prices. It should be noted that where two electricity markets with two different electricity prices are involved, it complicates the calculation of support payments for the regulator(s) and likely increases the risks for renewables investors. This increases administrative and transaction costs and compensation payments might be necessary that cannot be easily estimated ex-ante. To mitigate these risks, the reference market should therefore be agreed on in advance between the Member States. If such barriers are overcome, joint support schemes may provide more efficient and lower support amounts for any necessary investment gaps of renewable projects than national support schemes, thus lowering the total support amounts financed by the taxpayers of each Member State.

While not in the scope of actions that may be conducted by Member States considering implementing cross-border renewable cooperation projects, it is relevant to note that renewable project promoters may have access to other sources of competitive financing, such as via EIB instruments or by agreeing on PPAs with offtakers.

Tender/auction design

Generally speaking, when it comes to supporting renewables in the EU, the importance of administratively set tariffs or quota is diminishing, while auctions are on the rise. There are numerous options available when it comes to designing tenders/auctions to allocate support for renewable energy. The most important design elements are the auction technology, volume, timing, bid size, the type of support paid, the pre-qualification and award criteria and if multi- or single-item tenders are used.

In the cooperation case, auctions can take different forms, most notably unilateral, mutual and joint auctions. The type of auction selected will in turn influence the support mechanism, e.g. in unilateral auctions, the off-taking or contributing Member State’s support scheme will be applied, i.e. corresponding to a unilateral opening of the support scheme to projects from the host Member State. In mutual auctions, both countries open up their respective support schemes while in joint auctions a bespoke support scheme is designed by the cooperating parties to align with all aspects of the cooperation project. As a general rule, the Member State paying the support costs should receive the corresponding RES statistics. Member States may also make differing agreements with regards to the time span for the transfer of the target achievements and whether the transfer of shares to the contributing Member State shall continue after the end of the support period until the technical end of life of the installation. This will have an impact on the resulting sharing of costs and benefits. Member States may, for example, agree that the installation will start to contribute to the host country’s target achievement after the end of the support period to compensate for the provision of the site and the fact that it incurs the system integration costs.

Funding the cooperation

In addition to selecting the cooperation mechanism and (where relevant) aligning the design elements of the support scheme, Member States will also need to agree on how to fund the cooperation and, potentially, how to recover the costs of support (15). The principal options for funding are public sources of funding (national budgets, EU financing mechanisms and funds), support levies on consumers or hybrid forms, i.e. combinations thereof. While public sources of funding are essentially a redistribution from all taxpayers to energy consumers, levies redistribute the costs of renewable energy to electricity consumers by topping up the electricity price. Member States can also choose to fund parts of the costs from one source, while using a different source for the rest. The Guidelines on State aid for climate, environmental protection and energy 2022 (16) provide the framework for public authorities to support the European Green Deal objectives efficiently and with minimum distortions of competition.

3.   COST-BENEFIT ANALYSIS AS THE BASIS FOR COST-BENEFIT SHARING

In the context of cooperation projects, the CBA systemically identifies and compares all the effects, positive or negative, intended or not, direct or indirect, of a given cooperation project. The CBA in principle covers the impact of the project in all of the involved Member States.

To discern whether an envisaged cooperation project generates net societal benefits, costs and benefits need to be determined, quantified and weighed against each other. When benefits outweigh costs over a defined time period, discounted to the present, the cooperation project has a positive net present value (NPV) and is deemed beneficial from a societal, holistic point of view.

Moreover, the project’s NPV shall be compared to that of an alternative project deploying renewables without cooperation (a counterfactual). A counterfactual project should first and foremost be a realistic representation of the project promoters’ likely alternative project set-up to reach their goals, in line with European and national climate and energy targets, in case the cooperation does not materialise. If the NPV of the cooperation project is larger than that of its counterfactual, the cooperation project is deemed beneficial to pursue from a systemic perspective and further steps can be initiated.

In order to decide whether to go forward with a cooperation project or not, a comprehensive CBA is indispensable.

As a starting point for conducting a CBA, cooperating Member States can refer to existing methodologies and practices. In general terms, this includes the Guide to Cost-Benefit Analysis of Investment Projects for Cohesion Policy 2014-2020 (17) and other approaches such as the approach for economic appraisal of investment projects used at the European Investment Bank (EIB) (18). For RES generation assets, relevant guidance is provided in the CBA principles for cross-border RES projects under the CEF, recommending a comprehensive yet manageable set of indicators (19). For grid development and investment projects, the most relevant resource is the energy system-wide cost-benefit analysis methodology used for grid investment projects as per Regulation (EU) 2022/869 (TEN-E) (20). Building on it, ENTSO-E shall perform a CBA as part of the TYNDP process. For cross-border electricity infrastructure, the established CBA methodology developed by ENTSO-E and approved by the European Commission shall be used as starting point.

CBA indicators for generation assets

In the interest of keeping transaction costs as low as possible, cooperating parties shall focus the CBA on the most significant direct and indirect cost and benefit categories stemming from their potential cooperation. While there are certain indicators that are likely to be included in all CBAs, e.g. generation costs of energy, Member States possess some freedom to jointly agree on those cost and benefit categories they want to consider. As a general rule, the more advanced the planning process, the more comprehensive the CBA and list of indicators considered. In principle, it is recommended for cooperating parties to start with a simple and less comprehensive CBA which can then be gradually extended with more indicators as the process progresses.

In general, when moving from ‘simple cooperation’ to more complex forms, e.g. projects combining infrastructure and generation assets, the approach of assessing costs and benefits of cooperation will also become more comprehensive and cover additional and different indicators.

Support costs are not to be included in the CBA as they constitute a net-societal transfer, however, their quantification is strongly recommended already at the stage of the CBA (21).

Limitations of CBA

Whilst a CBA is indispensable to decide on whether to proceed with the cooperation project or not, it has to be noted that it has some considerable limits that the cooperating parties have to bear in mind. As outlined above, the CBA needs to strike the balance between limiting complexity and transaction costs to a manageable level while striving for the inclusion of all relevant factors. This can be a challenging endeavour, especially if the project is still at an early stage. The use of assumptions and value judgements thus becomes indispensable.

Finally, the CBA will also not give any insights on the project’s effects on different stakeholder groups. Despite a positive NPV it is possible and even likely that not all affected actors will be better off with the project. This is especially important when it comes to the next step, the sharing of costs and benefits.

4.   COST-BENEFIT SHARING APPROACHES

Cross-border cooperation projects will typically produce a unique array of costs and benefits which are asymmetrically distributed. Using the CBA approach, cooperating parties can determine whether a project is beneficial from a societal point of view and thus, in principle, worthwhile to pursue. However, CBAs do not make statements about the distributional effects between the countries involved as well as individual stakeholders.

The use of the cooperation mechanisms generates benefits, such as lowering target compliance costs. Nonetheless, these advantages might be distributed unevenly between the Member States involved. This essentially creates a benefit allocation problem, and the challenge is to find a solution to the problem of allocation in such a way that all the Member States involved can participate in the benefits of cooperation and that the allocation is considered just for the cooperating parties, reflecting each party’s contribution. As there is no central market for this allocation, the cooperating parties must negotiate a cost-sharing approach or adopt a benefit-allocation mechanism according to previously agreed criteria, rules or formulas.

Overall, two central questions need to be answered by the cooperating countries. First, by which financial mechanism and at which price will the off-taking country contribute to the project’s support costs? Second, if and by which mechanism will the off-taking country compensate the host country for costs incurred domestically? Both of these questions have direct implications on the resulting sharing of costs and benefits, where typically one party will compensate the other.

That said, the underlying logic of compensation is simple, indicating that stakeholders who bear costs but do not (sufficiently) benefit from the cooperation project should be compensated accordingly. To date, most cases of cost sharing or compensation have been limited to grid infrastructure where there are recommendations and guidance available provided by the Agency for the Cooperation of Energy Regulators (ACER) (22), while the sharing of benefits and costs from generation assets has been based on a selective and pragmatic approach to identify the main costs and benefits to be considered. The key elements addressed are usually support costs and RES statistics on a Member State level. The resulting compensation is then agreed during a negotiation process of the main parties involved and/or their representatives.

Principles of cost-benefit sharing

The cost-benefit sharing should be based on fairness i.e. no party receiving an unproportionate benefit / bearing unproportionate costs due to the cooperation which can be achieved by compensating all parties commensurate to their contribution, practicability i.e. reducing complexity and thereby transaction costs to a manageable amount through limiting parties as well as cost and benefit categories to the most important ones, and reflection of actual costs and benefits (and agree on potential arrangements deviating from these only at a later stage).

In addition to taking into account the three aforementioned principles, stakeholders should ideally assume a long-term perspective and assess not only the short-term, but also the long-term outcomes of cooperation.

Stakeholders affected

In general, the overall impetus for cooperation projects would be coming from governments. Therefore, they will ultimately want to achieve an overall net benefit from the cooperation (including all asset components). For most cross-border cooperation projects, it can also be assumed that Member States or third countries are the ones bearing the highest costs and receiving the majority of the benefits. They are thus the natural negotiating parties and will represent their stakeholders by default.

While a larger number of stakeholders might be affected by the cooperation project, it is likely that only a few will bear major impacts. The key stakeholders affected by cooperation projects are Member States/third countries (representing their citizens, i.e. consumers of electricity), generation asset developers, TSOs or other infrastructure project promoters (e.g. in the case of hybrid projects and sometimes for radial offshore projects) and NRAs. It is also recommendable to proactively and early involve civil society in the preparation of the cooperation projects.

In order to simplify the negotiations and keep transaction costs low, the cooperating parties should, however, keep the number of parties involved in the actual negotiations as low as possible, especially for less complex settings. Usually, representatives of the national governments should be involved. Other national stakeholders can be included directly in the negotiations or in parallel processes at national level.

Other stakeholders, may, for example, be included if they reach a certain threshold, e.g. a certain percentage of the total net costs. In some cases, stakeholders in third-party countries may be affected by the cooperation project and might have to be factored into the process.

Considerations on sharing support costs and RES statistics

The cooperating parties will ultimately have to agree on a sharing mechanism that allocates the gains from the cooperation. Cost and benefit sharing models will differ mostly depending on how they treat support costs.

In most cooperation cases, the support costs will be split between the off-taking or contributing country and the host country, however, there might also be cases in which support costs are unilaterally borne by the contributing country. If the host state is interested in retaining a part of the RES statistics to meet its own target, the contributing and host states could make an agreement to both contribute to support costs. To compensate the host country for any locally incurred costs, e.g. system integration costs, the RES shares that it receives would have to outweigh the share of support costs that it contributed. On the other hand, also locally incurred benefits such as benefits for security of supply, can be considered.

Pro-rata approach

The extent to which the contributing party contributes to the support payments then defines the share of RES statistics being transferred. According to this pro-rata approach, a Member State that pays half of the support costs would also be transferred half of the RES target statistics. This may be adjusted in case there are other cost or benefit indicators deemed significant by the cooperating parties.

Fixed transfer premium approach

Alternatively, cooperating countries might find it more convenient to agree on a transfer price. That would mean that the hosting Member State would add a fixed premium per transferred renewable energy statistical unit, e.g. EUR per kWh, to recover its (indirect) costs. The premium would have to be borne by either the off-taking Member State or directly by the project developer and could also be technology-specific.

Physical vs. virtual transmission of electricity in cooperation projects Cooperation projects can also be distinguished by whether they require the physical transmission of electricity produced or not. Especially countries that would like to increase their long-term energy security might find physical transmission attractive. Also, it might increase the public endorsement of the cooperation project in the off-taking country and make the project more ‘tangible’. However, physical transmission might not always be an option as it poses specific technical challenges, requiring sufficient interconnection and grid infrastructure between the cooperating countries. Requiring the physical transmission of electricity can become complex when the cooperating countries are not neighbours as other countries will have to be included in the design and negotiation of the cooperation. Therefore, many countries find it easier to not require physical transmission of electricity. Another argument in favour of not requiring physical transmission is that the European electricity markets are becoming more and more intertwined through market coupling. In that logic, physical transmission could interfere with the principles of the internal electricity market i.e. the most efficient use of cross-border capacities. As for joint projects with third countries, it should be noted that RED Art. 11 requires sufficient interconnection capacity in order for the produced electricity to count towards the renewable energy share of the Member State (23).

Boundary conditions

There are a number of factors that have major impact on the distribution of costs and benefits in RES cooperation projects and need to be taken into account. Any boundary conditions that impact the operation of the project and its embedding into the wider energy system must be specified, as they will influence cost and benefit indicators.

Cooperation mechanism and support payments: In addition to the cooperation mechanism selected, one key consideration is the potential cost for support payments. While support costs can be neglected from a societal perspective as they constitute a mere transfer from one party to another (e.g. from government to developer), they do come into play when a transfer of RES shares is planned.

Site selection and grid connection regime: The process for site selection and the grid connection regime also has major impacts on the initial distribution of costs and benefits and the need for compensation, as the related costs will either be borne by TSOs and appear in grid tariffs, or will be included in the bid in an auction and be financed by the support scheme and, as a result, by levy payers. This has implications on which party needs to be compensated.

Type of support payment: Depending on the type of support payment, i.e. a fixed premium, a sliding premium, the RES support costs are clear from the start or will depend on the development of electricity market prices in the host country or of the countries agreed by the cooperating parties. Payments might also differ between single plants that form part of the joint project if different support rates are awarded. These differences need to be considered when allocating the values for specific RES statistics.

Practical implementation of the cost-benefit sharing

Figure 1 gives an overview of the concrete steps for implementing the cost-benefit sharing for cooperation projects focusing on generation assets. These are explained in more detail in the following sections.

Figure 1

Steps of cost-benefit sharing for generation assets

Step 1: Revisiting the original CBA

A thorough societal CBA is the prerequisite for the allocation of costs and benefits between Member States and other parties. However, it might not be sufficient as a basis to negotiate their distribution. The conducted CBA will thus need to be revisited and extended. The cooperating countries shall depart from the list of costs and benefits identified in the CBA and add support costs. They will have to consider whether to add further cost and benefit indicators that will impact the initial distribution of costs and benefits per stakeholder re-considered.

In order to maintain coherence with the major effects identified, the sharing of costs and benefits should build on the CBA as much as possible and the main boundary conditions kept. Due to technical or regulatory reasons and the setup details of the project, costs and benefits will be initially allocated to one or another party. These net costs and benefits per stakeholder identified in the CBA will serve as the starting point for any further considerations. After understanding the initial allocation of costs and benefits, a coordinated approach for their reallocation will have to be agreed between all parties concerned, with each cooperating country being free to reallocate national costs according to national specificities.

The following table lists cost and benefit indicators, affected parties and how these might be adjusted or introduced moving from CBA to cost-benefit sharing. The simplest approach is to depart from the original CBA and merely replace generation costs with support costs.

Cost and benefit indicator	Affected Party	Effect
Capital expenditures and operating expenses (CAPEX/OPEX) of generation	Generation asset developers	CAPEX/OPEX for generation are initially borne by the generation asset developer and usually refinanced via market revenues and/or support scheme payments.
Market revenues	Generation asset developers	Depending on the market arrangement, the developer will earn revenues from the electricity market.
Support payments	States / Generation asset developers	Renewable energy facilities usually benefit from support payments. In principle, the funding system of the State in which the plant is located applies. The possible sharing of support payments between States is not a market-based redistribution effect, but a fundamental decision in the framework of the cooperation approach.
RES Target Achievement	Member States	At first, RES target achievements are allocated to the Member State in which the plant is located. Similar to support payments, the allocation of RES target achievements in the form of RES statistics will be a negotiation outcome between Member States.
Electricity price effects (wholesale market price)	States	Cooperation projects may have an impact on electricity prices in the bidding zones concerned. This in turn has an impact on electricity prices for consumers. Although it is unlikely that these effects will be compensated, it could be part of the political considerations for a cooperation project.
CO2 and other emissions	States	Changes in CO2 and non-CO2 emission levels due to the cooperation project.
Use of RES potential	States	The State in which the cooperation facility is located, might have less potential available for domestic target achievement.
Investment deferral of additional RES production capacity	States	Postponement of other (domestic) projects due to entering into the cooperation project.
Additional effects	States	There might be other impacts, such as labour market effects, environmental effects, effects on innovation, etc. Depending on their nature, these additional effects might be hard to quantify, but could play a role in the political negotiations.
Capital expenditures and operating expenses (CAPEX/OPEX) of infrastructure	TSOs	In most cases, TSO(s) are in charge of pre-financing the infrastructure asset, including connection to shore and onshore reinforcement. CAPEX/OPEX for infrastructure include interconnector and potentially grid connection costs. Initially allocated to one or several TSOs, they are refinanced via congestion rents and network charges in the respective bidding zones/countries.
Congestion rents	TSO	Depending on the market arrangement, earnings in the form of congestion rents might ensue.
Additional redispatch or redispatch reserves	TSO	TSOs may increase or decrease redispatch as a result of the cooperation project. Redispatch costs are recovered by the TSO via grid tariffs.
Additional effects, such as effects on system flexibility or investment deferral of infrastructure	TSO	Positive or negative effects on system flexibility or effects such as the postponement of infrastructure reinforcements.

In order to simplify the negotiations on cost-benefit sharing, the negotiating parties should try to keep the list of indicators to be factored into the sharing of costs and benefits to a manageable amount. The most important indicators for cooperating countries are support costs as well as RES statistics. Cooperating parties are free to include further impacts or make them a topic in the negotiations in case they expect them to be significant in terms of impact or political weight.

Step 2: Allocation of costs and benefits to the countries involved

In the next step, cooperating countries shall proceed to allocate all costs and benefits, including support costs, between themselves according to the results of the CBA and depending mainly on where RES installations are realised/located (with the host country bearing the majority of indirect impacts). It should be noted that other countries which are neither host nor off-taking countries, may also be affected, e.g. by grid congestion issues. In such cases, the cost-benefit sharing agreement could be extended to those countries.

The type of allocation rule is strongly influenced by the choice of support scheme. Cooperating countries can agree to create a joint fund/scheme or to extend one of the cooperating states’ national support schemes for the administration of support payment flows to the cooperation project and put in place a transfer price as way of compensation. In case of a joint support scheme, cooperating countries will naturally set up a joint fund. Statistical transfers and joint projects, on the contrary, are more prone to compensation via transfer prices. Governments will ultimately have to agree on whether to first allocate all new installations to one country, or whether to ‘distribute’ them according to which country bears the support costs. An additional difficulty arises in case the final location of the installations has not yet been decided, in which case the final allocation can only be performed once the tendering is done. In any case, it is recommendable that governments already agree on the general terms of allocation ex-ante and do an ex-post adjustment.

Step 3: Allocation of costs to units of energy produced

Building on the CBA that has established the prospective total output in terms of energy produced (in GWh), the cooperating states shall proceed to allocate costs to units of energy produced. First, they will need to sum up all costs and benefits for each of the cooperating parties, leading to a total net benefit / net cost per country. The next step is to allocate this sum to the prospective electricity generation from the installation(s) in each country to derive a ‘cost’ per unit of the renewable energy produced. The cooperating states could assume average costs per installation.

Step 4: Agreement on transferred renewable statistics to the other country and transfer price (EUR/kWh)

In the next step, Member States should then set the amount of transferred electricity and price per kWh transferred. The transfer might take place physically or in a virtual manner only, via RES statistics. The transfer price will be calculated based on the total prospective amount of electricity generated. The calculation of the transfer price provides a good indication of the appropriate magnitude, but cooperating states have some room for negotiating which is given by the net cost savings of cooperation.

Member States engaging in a statistical transfer may agree to use different types of contracts, such as ex-post spot agreements, ex-ante spot agreements or option contracts. Combinations of these contract types are also possible and could serve to mitigate risks for both parties. A unit price has to be negotiated, departing from the domestic reference support prices for different renewable energy technologies and account for transaction costs as well as potential grid reinforcement costs. Indirect benefits for the host country shall be subtracted.

It is also important to acknowledge that there will always be a degree of uncertainty in the ex-ante analysis of cross-border cooperation projects that cannot be eliminated. Uncertainty can be dealt with by the parties in various ways and can be attenuated by sensitivity analysis and robustness checks. In less complex cooperation cases, project promoters may decide to simply accept the uncertainty and resulting differences in costs and benefits and politically negotiate an ex-ante contribution. For more complex and comprehensive cases of cooperation it is, however, advisable to include a review clause into the cooperation agreement that can be activated by one or either party to revisit the sharing of costs and benefits in case of significant deviations. It may be triggered for example if deviations reach an agreed threshold. A third option is to define sharing rules for compensation which could for example depend on the actual necessary support costs as determined ex-post.

Step 5: Institutionalisation of financial transfers

Finally, the means of financial transfer will have to be agreed upon between the cooperating parties. In terms of ‘currency’, compensation can take the form of either cash payments or transfer of RES statistics. While compensation between TSOs usually happens via cash payments, states may choose to be compensated in cash, statistical transfers or a mix of both.

Whilst setting up a joint fund for support payments is costly, it may benefit the sharing of risks between the participating states and thus lowering the individual risk of each, and may be advantageous to streamline procedures, especially in the case of more than two cooperating parties and follow-up cooperation projects with similar parameters. In case a joint fund is set up, payments to it should be commensurate to the RES target amount sharing and the allocation of costs and benefits. In any case, it could be beneficial to appoint single contact points for such transfers.

Examples of cooperation

Example 1: Statistical transfer

Consider two Member States (Member State A and Member State B) that agree on using the statistical transfer mechanism. Member State A (the selling country) is expected to have a surplus of renewable energy due to its large potential of hydropower and onshore wind and would like to sell the expected excess amount. Its main objectives are to thereby contribute to covering the costs of local RES production and reduce the burden on domestic electricity consumers. A national legal basis to use statistical transfers is in place – this would be the first time of actually using it. Member State B (the off-taker) is not on track to meet its national targets using its own resources only and has enshrined the use of statistical transfers in national legislation and key strategic documents anticipating that it will need to resort to them in order to comply with its national RES targets.

In order to increase planning security, both Member States opt for fixing the transfer price ex-ante and also fixing a minimum volume of renewable energy to be traded. Member State A is willing to enter into this agreement because it is on track to significantly over-fulfil its own domestic RES target and is certain to achieve a RES surplus.

In terms of cost-benefit sharing, the main costs to be considered are support costs. The level of support costs to be considered depends on whether average or marginal costs are used and which are the reference technologies used.

There are also transaction costs arising from the cooperation. As these can be expected to be comparatively small and also equally split between Member State A and B, they could be negleced for the cost-benefit sharing. In terms of indirect effects, the host country might be affected by a number of those, such as GHG emissions savings, system integration costs and security of supply, however, it can be disputed whether these can be credited to the cooperation mechanism as Member State A had already incurred a RES surplus before entering into the statistical transfer with Member State B. Hence, Member State A and B agree on discarding these effects for the cost-benefit sharing and only concentrate on support costs.

Member State A and B will first need to agree on the floor and cap of the transfer price. To determine the floor price for the negotiations, Member State A should consider the national support level for different technologies. If there is agreement on underpinning the statistical transfer with a technology, then the support price for this particular technology should be selected. If there is no such agreement, it is an option to calculate an average support price for RES in Member State A. This calculated price would then serve as the floor price. As for the cap price, it is determined by the price for local RES deployment in Member State B. In theory, the maximum price that Member State B is willing to pay is also influenced by the transfer price that other Member States offer for statistical transfers. Once the theoretical price corridor is agreed, the cooperating Member States should proceed to negotiate the actual transfer price which will likely be within the corridor. They will need to find the middle ground with high enough revenues for Member State A and a low enough price for Member State B, thus creating benefits for both sides.

Example 2: Joint project and statistical transfer considering a radially connected offshore wind farm (without physical cross-border transfer of electricity)

Consider three Member States (Member State A, Member State B and Member State C) that agree on a large-scale joint project using the respective cooperation mechanism. The joint project consists in an offshore wind park to be built and located in the exclusive economic zone (EEZ) of Member State A (henceforth: the host country) with Member State B (henceforth: the off-taking country) contributing to the support costs. Further, the off-taking country and Member State C agree on an additional statistical transfer, corresponding to 10 % of the generated renewable electricity benefits of the joint project at a negotiated price. Member State C is merely interested in purchasing a pre-defined amount of RES statistics to meet its domestic RES targets faster, but has no other particular interest in the joint project.

The off-taking country is the driving force behind the project and coordinates the involvement of the other parties. It does not require physical import of electricity and no interconnector functionality is part of the project and the wind farm will be connected radially to the shore of the host country. By cooperating in this joint project, the host and off-taking country expect to meet their RES trajectory up to 2030 and beyond more cost-effectively, while receiving economic, environmental and social co-benefits in term of job creation and enhancing security of supply.

Since both the host and the off-taking Member States wish to receive RES statistics from the project counting towards their national targets, they agree to both contribute to the support payments. We assume that they do not set up a joint support scheme, but instead agree to use their domestic schemes already in place for offshore wind, meaning that each Member State will treat the offshore wind farm as if it were part of its renewable support scheme. The project is awarded through a joint tender. It is agreed that the reference price of the host Member State will be applied, i.e. the off-taking Member State will accept the reference price of the host Member State in their support system as basis for premium determination. Due to the first-mover character of the project, an exception is granted under the national support scheme of the off-taking country which would normally not allow for this.

The host and the off-taking Member States sign a cooperation agreement for the joint project. The high-level political agreement states that each of them shall be allocated the amount of RES statistics from the project that corresponds to the amount of electricity supported by that country. Since the offshore wind farm is located in the EEZ of the host country, it will by default be allocated the RES statistics which would then need to be redistributed according to the agreement.

The host and the off-taking country conduct a cost-benefit analysis, identifying the most relevant cost and benefit items and their effects. In their cost-benefit analysis, they decide to focus on costs of energy generation, system integration costs, GHG emissions, air and other local pollution, security of supply and innovation effects. To determine their effects for the cost-benefit sharing, they also include and assess support costs as well as effects on RES statistics.

	Member State A (host)	Member State B (off-taker)	Member State C (statistical transfer)
Renewable energy generated	40  %	60  %	N/A
RES statistics	40  %	50  %	10  %
Support costs	40  %	60  %	N/A
System integration costs (24)	100  %	N/A	N/A
GHG Emissions savings	40  %	60  %	N/A
Air and other local pollution	40  %	60  %	N/A
Security of supply	40  %	60  %	N/A

The two cooperating parties agree to focus on support costs, RES statistics and system integration costs solely for the cost-benefit sharing and discard all other cost and benefit elements.

In the next step, the host and the off-taking country proceed to sum up all costs and benefits for each of them, leading to a total net benefit/cost per Member State. As the host country bears the entirety of system integration costs, it incurs a net cost and demands for system integration costs to be factored into the transfer price.

In general, the negotiation space for the transfer price is determined by the relative contribution of the cooperating Member States to the support costs. Depending on whether support costs are higher in the off-taking or host Member State relative to one another, either one or the other will have a benefit from the cooperation with regards to the support payments. In general, the floor for the transfer price is determined by the additional support costs incurred by either Member State A or B, the cap is the total support cost savings.

Let us assume that technology-specific support costs are higher in the off-taking Member State compared to the host Member State. Cooperation thus leads to cost savings in the off-taking Member State, while the support costs in the host Member State might increase (as compared to the non-cooperation case). However, the cooperation leads to a net cost saving as the total support costs are lower in the cooperation case as compared to the non-cooperation case. In the example, the host Member State incurs higher support costs than it would have in the case of non-cooperation which would result in a financial compensation in the form of a transfer to the host Member State. The level of the transfer price will be determined by negotiation, but it should be set in such a way that it provides sufficient incentives for both countries to deem the cooperation beneficial, i.e. for the host Member State it needs to be at least as high, ideally higher, as the additional support costs incurred, and for the off-taking Member State it needs to be lower than its total cost savings. Of course, countries might also have non-financial motives to pursue the cooperation which might influence their willingness to accept a lower/higher transfer price.

Departing from the total volume of prospective renewable energy generated and the costs incurred by both countries, they calculate a transfer price (EUR/kWh) that also takes into account an equal split of system integration costs.

Example 3: Joint project considering solar PV installations and physical transfer of electricity

Consider two Member States (Member State A and Member State B) that agree on a large-scale joint project using the respective cooperation mechanism. The joint project consists in a large ground-mounted solar plant located in Member State A (henceforth: the host country) with Member State B (henceforth: the off-taking country) paying for the support costs. The host country has abundant sites available for the deployment of solar PV and high solar potential. It is on track to overfulfil its own national RES targets and is interested in cooperating with other Member States to make use of its overpotential as well as boost its local labour market. Member State B, on the contrary, is not on track to meet its target and interested in making use of the cooperation mechanisms to reach its RES target at a lower cost. On the political level, it has already created the prerequisites to make use of the cooperation mechanisms, by allowing the opening of its domestic, technology-neutral RES support scheme to foreign projects. Member State A is not interested in keeping any of the RES statistics related to the cooperation project for itself which means that the support costs will be entirely borne by Member State B who will integrate the plant into its own domestic scheme.

Member State A requires the physical transfer of electricity in order to ensure that the project does not affect the domestic market balancing. This makes it necessary that there is sufficient cross-border transmission and interconnector capacity between the cooperating Member States. For the analysis of costs and benefits of the cooperation projects, this is of relevance as the necessity of physical export of the generated electricity will likely come at a considerable cost.

The host and the off-taking country sign a cooperation agreement for the joint project and conduct a CBA. In their cost-benefit analysis they decide to focus on costs of energy generation, system integration costs, GHG emissions, air and other local pollution, security of supply and innovation effects. As for the cost-benefit sharing they decide to only focus on the most important ones, i.e. support costs (borne by Member State B exclusively), costs for the physical transfer of energy (to be borne by Member State B), employment effects (for Member State A) and system integration costs (Member State A as well). As for Member State A, the main benefit that it wishes to obtain from the cooperation is to stimulate the local labour market, as for Member State B, the main interest is to lower support payments necessary to reach its domestic RES targets. As both Member States are positive that a win-win situation is possible with major costs and benefits cancelling each other out, they agree to merely consider the costs of support.

The countries will also need to agree on a reference market price. Since the agreement is that Member State B will incorporate the plant into its domestic support scheme, the reference market price of Member State B could be used. As for the costs of the transfer of electricity, the most straightforward way to deal with this is to have the developers factor this cost into their bids which means that the support costs will increase accordingly.

To determine the likely transfer price to be paid by Member State B to Member State A, the first consideration is to calculate the savings that Member State B is able to make due to the cooperation project, i.e. savings in support costs. This entails calculating the direct support costs to solar PV (25) in Member State A as well as in Member State B. The difference between the two represents the basis for negotiating the transfer price.

5.   SUMMARY OF RECOMMENDATIONS FOR CBA AND COST BENEFIT SHARING

To summarise, Member States and third countries dispose of a range of options and degrees of freedom for analysing and sharing costs and benefits when engaging in cooperation projects in the field of renewable energy to their mutual benefit.

Overall, two central questions need to be answered by the cooperating countries. First, by which financial mechanism and at which price will the off-taking country contribute to the project’s support costs? Second, if and by which mechanism will the off-taking country compensate the host country for costs incurred domestically? As a general rule, the Member State paying the support costs should receive the corresponding RES statistics.

The following sections recap the main steps and recommendations for cost-benefit sharing, building on a cost-benefit analysis. This list and criteria are without prejudice to the criteria for CBA under the CEF Regulation, which are relevant for applications to receive the status of renewable energy cross-border project.

General approach and required steps for initial CBA

These non-exhaustive steps are recommended to be followed by project promoters when conducting a CBA:

—	Identify relevant stakeholders

—

Specify project set-up of cross-border cooperation project — Cooperating parties and entities, — Other relevant authorities and stakeholders that may be affected by costs or benefits such as developers, TSOs, DSOs, etc., — Location of the project, — Technology used and design, — Other relevant technical features or characteristics, — Capacity/project size, — Time horizon, — Type of output and services envisaged, and — Relevant additional components

—	Define appropriate counterfactual, including its set-up (same aspects as above)

—	List all cost and benefits to be included

—	Agree on calculation approach and methodologies for CBA indicators

—	Gather latest data from verified national, European and international sources

—	Quantify and monetise quantifiable indicators if not too costly and verbally describe the effect of non-monetised indicators

—	Calculate delta of NPVs of the cross-border cooperation project and its counterfactual

—	Write up analysis and accompanying explanations

—	Verify results with relevant authorities and other (independent) experts

—	Refine analysis as necessary by adjusting data and/or methodology

The order of steps is not necessarily sequential and may be iterative in some cases. Member States may consider to set up single contact points to support project promoters in these steps, in particular the specification of the project set-up of cross-border cooperation projects.

Building on the CBA as much as possible

A thorough societal CBA is the prerequisite for the allocation of costs and benefits between Member States and other parties. However, it might not be sufficient as a basis to negotiate their distribution. The conducted CBA will thus need to be revisited and extended.

Cooperating parties should make sure to build on the CBA as much as possible in order to maintain coherence with the main effects identified. The project definition, data used, underlying scenario and boundary conditions may not be changed and the net values calculated in the CBA should be used as the starting point for further discussions. Any boundary conditions that impact the operation of the project and its embedding into the wider energy system must be specified, as they will influence cost and benefit indicators.

The cost-benefit sharing arrangement will ultimately be the outcome of a negotiation process between the cooperating parties. They should have flexibility to agree on which costs and benefits to include. The CBA needs to strike the balance between limiting complexity and transaction costs to a manageable level while striving for the inclusion of all relevant factors.

Principles of cost-benefit sharing

The cost-benefit sharing should be based on fairness i.e. no party receiving an unproportionate benefit / bearing unproportionate costs due to the cooperation which can be achieved by compensating all parties commensurate to their contribution, practicability i.e. reducing complexity and thereby transaction costs to a manageable amount through limiting parties as well as cost and benefit categories to the most important ones, and reflection of actual costs and benefits (and agree on potential arrangements deviating from these only at a later stage).

Reducing complexity

Past experience on cooperation mechanisms has shown that complexity can be a show-stopper and that highly complex negotiation set-ups with multiple stakeholders have a higher likelihood of failing. This can, however, be mitigated if cooperating countries first agree on the basic principles and terms of cooperation and only then proceed to negotiate the details. Also, high-level political agreements on the sharing of costs and benefits may help as was the case of Sweden and Norway, negotiating their joint support scheme.

Dealing with uncertainty and factoring it into the decision-making

As information on costs, benefits and risks cannot be known with certainty, uncertainty is a natural part of the process and needs to be factored in accordingly. It can be attenuated by sensitivity analysis and robustness checks.

Public acceptance

As for public acceptance, it is recommendable for any cooperation project to address public engagement early on and proactively to avoid later setbacks. Any direct and indirect costs and benefits related to the cooperation as well as the overall approach to their allocation between the cooperating partners should be clearly described and communicated to the public.

6.   TEMPLATE INTERGOVERNMENTAL AGREEMENT

Part I. Objective and Definitions

Article on the objective

—	Member States should note the objective of the Intergovernmental Agreement (IGA). An example in the context of NSEC may be to enable the construction of additional renewable energy generation capacity in the North Sea. The objective is decided between the cooperating Member States.

Article on definitions

—	Member States should define the most important terms included in the Intergovernmental Agreement. This ensures a common understanding of the involved parties and improves the legal robustness of the agreement.

Part II. Cooperation mechanism

Article on the cooperation mechanism

—	This element should describe the legal embedding of the cooperation in the RED context, i.e. whether statistical transfer, a joint project (with another EU Member State or a third country) or a joint support scheme is chosen.

Part III. Specifications of the cooperation

Article on the scope of cooperation

—	Member States should specify the scope of cooperation: 1) RES deployment only, 2) adding infrastructure to the cooperation, 3) adding innovation aspects to the cooperation (such as storage, conversion facilities, etc.).

Article on the chosen support scheme

—	Member States should specify the support scheme applied (host, contributing MS or a new support scheme). If an existing scheme is used, Member States should include reference to the relevant legal basis.

Article on new support scheme (applicable only for joint support schemes)

—

Member States should specify technical elements of the support scheme. Elements to consider are: (a) Single project / multi-project cooperation (b) Maximum capacity/volume (amount of MW installed or MWh to be transferred) (c) Eligible technology (technologies) (d) Location or process for site selection and pre-development (e) Grid connection regime (f) Form of support (g) Tender / Auction design (h) Agreement on state aid notification

Article on relevant market arrangement

—	Member States should specify the relevant market arrangement (e.g. designated reference market) for the cooperation project and any relevant additional provisions this may include.

Article on the cost-benefit analysis and cross-border cost allocation

—

Member States should agree on the cost-benefit analysis and cross-border cost allocation. — In case of simple cooperation, the RES statistics may be transferred on the agreed transfer price. In this cooperation case, the analysis of costs and benefits should be kept as simple as possible, reducing transaction costs. — For more complex cooperation (or when seeking access to cross-border RES funding by the Connecting Europe Facility and / or infrastructure funding) a more comprehensive CBA may be required. In the Intergovernmental Agreement, this section should make reference to available CBA calculations and resulting CBCA approach. — Identification of net social benefit — Distribution of key costs and benefits among parties — Resulting compensation payments between Member States (including share of support costs financed by each cooperation partner, resulting distribution of RES statistics for target contribution purposes) — Payment procedure — Notification to the European Commission as required by the RED

Article on the obligations of the parties

—	Here, the cooperating Member States should define the responsibilities according to the form of cooperation chosen as well as procedures and a system allowing monitoring, tracking and issuing of proof and verifications (including data transfer: content, format and timing).

Article on a responsible body (applicable for joint projects or joint support schemes)

—

This element should describe the responsible body (e.g. an agency, or a single contact point) and its responsibilities. The responsibilities may include the identification of projects, the definition of the tendering procedure, the selection of the bidder, the supervision of the implementation of awarded projects, the payment of support payments and the reporting to the cooperating states.

Article on the notification to the European Commission

—	According to the RED, the selling/host Member State should notify the European Commission of the agreement and the exact amount of the resulting statistical transfer.

7.   ANNEX

Available cooperation mechanisms and basic principles of cooperation

In accordance with Articles 8, 9, 11 or 13 of the Renewable Energy Directive, there are three main cooperation mechanisms that Member States can choose to make use of:

Statistical transfers (Article 8): In the case of statistical transfers no more than two Member States agree to cooperate and virtually attribute a specified amount of renewable energy produced in excess in the one Member State to the other. This is done ex-post via a negotiated transfer price. The energy ‘bought’ by one Member State will count towards its national contribution under the Directive. No transfer or delivery of physical energy is involved. Statistical transfers are usually not related to specific projects, even though Member States may decide to enter into such an agreement if deemed mutually beneficial. Also, statistical transfers are, in principle, technology-neutral. Member States engaging in a statistical transfer have to notify the Commission no later than 12 months after the end of the year in which the transfer has effect. Transaction costs for statistical transfers are relatively low as these are comparatively easy to set up and negotiate and allow Member States to enter into limited cooperation without having to make any changes to their domestic support vehicles. Due to their lower degree of complexity less guidance is needed on statistical transfers, but public acceptance may be an issue due to the fact that no renewable generation is transferred in exchange for the payment. Private actors are excluded from participating in statistical transfers, i.e. they are reserved to public entities.

Joint projects between Member States (Article 9): Member States may also enter into joint projects with one another to cooperate on renewable energy projects with regards to the production of electricity or heating and cooling from renewable sources. Joint projects go beyond mere statistical transfers and cooperation always takes place in reference to a specific new project. A joint project may or may not provide for the physical transmission of electricity. In addition to single cooperation projects, e.g. large-scale offshore wind projects, multi-project arrangements are also possible when a set-up relating to small- or medium-size installations is repeated. Nevertheless, these multi-project arrangements need to be distinguished from joint support schemes due to their finite nature. Projects may either concern refurbishments of existing installations or relate to new ones. Benefits and costs from these projects are shared between the cooperating parties via agreed rules. Member States may agree to implement the project via an existing support scheme of either cooperating party or create a bespoke scheme.

Joint projects may also be suitable to jointly invest in and gather experience in new technologies. The degree of cooperation and level of transaction costs are higher as compared to statistical transfers, but usually lower than that of joint support schemes, as the cooperation is limited to an agreed number of projects. Unlike statistical transfers, joint projects may also involve private operators.

Joint projects between Member States and third countries (Article 11): Member States may also implement joint projects with third countries which might become particularly relevant in the context of cooperating with Energy Community countries or the United Kingdom. Joint projects with third countries, however, are limited to electricity from renewable sources (heating and cooling are not covered) and need to establish an actual physical link with the third country. To ensure an in-feed into the EU electricity system, the respective interconnector capacity needs to be booked in time. With the exception of investment aid granted to the installation, the amount of electricity produced and exported may not have received support from a support scheme of a third country.

Joint support schemes (Article 13): Another possible cooperation mechanism at the disposal of Member States are joint support schemes. This means the partial or full coordination and/or merging of national support schemes of two or more Member States. As joint support schemes may entail considerable transaction costs, they typically cover multiple projects. However, they may also be used for large single projects with a very specific set-up. Joint support schemes may also relate only to one segment of the national renewables market, for example a specific technology or geographical area, e.g. a border region. Unless otherwise specified, the agreed joint support scheme does not supersede the existing national support schemes which continue to exist in parallel. Joint support schemes are usually more demanding and complex than joint projects and typically require changes in national legislation and/or regulation.

Principles of renewable energy cooperation

In general, renewable energy cooperation of Member States is governed by the following principles:

Optionality: Two or more Member States that enter into cooperation with one another or a third country do so on a voluntary basis. Moreover, when Member States choose to join forces on renewable energy, they are free to design the details and conditions of such cooperation.

Creation of socio-economic benefits: Cross-border cooperation projects have to create value from a holistic, societal perspective. In general terms, the socioeconomic benefits generated by the project have to outweigh its costs when comparing it to renewables deployment without cooperation.

Establishing mutually beneficial cooperation: In addition to creating net societal benefits, cross-border cooperation projects will only materialise if projects ensure mutual benefits for all participating countries and key stakeholders within countries. In general, it is unlikely that all stakeholders will be better off with the project than without it, hence countries need to agree which stakeholders should be compensated and which not.

Agreement on terms of cooperation: Member States that intend to implement cooperation must conclude a cooperation agreement setting out the terms and conditions.

Application of local-specific conditions: Whilst cooperating countries shall strive to align relevant rules and regulations as much as necessary, there may be natural limits to this. Such limits will particularly apply for location-specific conditions such as licensing and taxes. Therefore, the default is that the rules of the country where the project is physically located shall apply, unless otherwise agreed and specified by the cooperating countries.

Ensuring tangible impact: Member States may choose to structure the cooperation such that it has tangible impacts on their power systems and markets. Cooperating Member States may for example require the physical import of electricity (which becomes a must in joint projects with third countries).

Sharing of costs and benefits: According to the Directive, the renewable energy generated should be counted towards the country that funds the installation. Depending on the technology, other costs and benefits in addition to support costs will be relevant as well. Grid connection and system integration costs are particularly relevant for offshore wind projects, while the relevance of support costs typically decreases with maturing technologies and degree of market integration. Different options for the accounting are possible. Partner countries are free to set out the details in the cooperation agreement.

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(1)  It builds on the earlier ‘Guidance on the use of renewable energy cooperation mechanism’, SWD(2013) 440 final, available at https://ec.europa.eu/energy/sites/ener/files/documents/com_2013_public_intervention_swd05_en.pdf

(2)  A more detailed description of the cooperation mechanisms can be found in the Annex. Only the Court of Justice of the European Union is competent to authoritatively interpret Union law.

(3)  Regulation (EU) 2021/1153 of the European Parliament and of the Council of 7 July 2021 establishing the Connecting Europe Facility (OJ L 249, 14.7.2021, p. 38).

(4)  COM(2021) 393: ‘EU Border Regions: Living labs of European integration’.

(5)  Border regions are territories on each side of the same border (definition available at: https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Glossary:Border_region).

(6)  This case descriptions builds on the report ‘Design options for cross-border auctions’, elaborated under the AURES II project on auctions for renewable energy support. The full report can be retrieved at http://aures2project.eu/wp-content/uploads/2019/06/AURES_II_D6_1_final.pdf

(7)  As of today, twelve cooperation projects have been implemented/agreed (thereof ten statistical transfers, one joint project and one joint support scheme). Whilst this indicates that implementation might be speeding up, the use of the cooperation mechanisms is still below expectations. The following projects have been implemented and/or agreed: statistical transfers between Luxemburg and Lithuania, Luxemburg and Estonia, Malta and Estonia, the Netherlands and Denmark, Ireland and Denmark, Ireland and Estonia, Denmark and Belgium, Finland and Belgium, Czechia and Slovenia and Lithuania and Belgium; a joint project between Germany and Denmark and a joint support scheme between Sweden and Norway. When looking at Member States’ National Renewable Energy Action Plans (NREAPs) for 2020, it is obvious that due to the novelty of the mechanisms and lack of implemented projects, plans to make use of the cooperation mechanisms were still vague, cautious or even non-existent. A few years later, in their NECPs, Member States’ plans for the use of the cooperation mechanisms were already more concrete, most notably due to consultations held between Member States on a bi- or multilateral basis, individually or via different groups and forums. In this regard, the work in regional energy forums, including the High-Level Groups of North Seas Energy Cooperation (NSEC), the Baltic Energy Market Interconnection Plan (BEMIP), the Central and South Eastern Europe Energy Connectivity (CESEC) or the Interconnections for South-West Europe (SWE), or the Pentalateral Forum, should be stressed. The fora have managed to bring together key stakeholders and facilitate dialogue. Nevertheless, there is still a lack of concrete reported plans, reflecting the perceived difficulties in applying the cooperation mechanisms.

(8)  Studies and projects include, amongst others, the project on Cooperation Mechanisms between EU Member States and interaction with support schemes under the Renewable Energy Directive (2009/28/EC) (https://res-cooperation.eu/), the CA-RES project (https://www.ca-res.eu/), or the MUSTEC project (https://mustec.eu/). See also the study on ‘Cooperation between EU countries under the RES directive’, 2014, available at https://energy.ec.europa.eu/topics/renewable-energy/renewable-energy-directive-targets-and-rules/cooperation-mechanisms_en#documents

(9)  Known examples include a Memorandum of Understanding on one or more offshore energy hubs between Denmark and the Netherlands, a Memorandum of Understanding between Latvia and Estonia on a joint offshore project, a Letter of Intent on analysing joint and hybrid offshore projects between Denmark and Germany and a Memorandum of Understanding on exploring options for energy islands between Denmark and Belgium.

(10)  For most cross-border cooperation projects, it can be assumed that Member States or third countries are the ones bearing the highest costs and receiving the majority of the benefits. They are thus the natural negotiating parties and will represent their stakeholders by default.

(11)  Acknowledging the growing focus on complex forms of renewable energy cooperation, such as in the context of hybrid offshore wind parks, ‘guidance on how to coordinate the sharing of costs and benefits across borders for energy transmission projects combined with the development of energy generation projects’ shall be provided. This Guidance is related to the TEN-E Regulation Article 15(1) [Regulation (EU) 2022/869] as well as to the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions ‘An EU Strategy to harness the potential of offshore renewable energy for a climate neutral future’ COM(2020) 741 final, available at: https://ec.europa.eu/energy/sites/ener/files/offshore_renewable_energy_strategy.pdf

(12)  Elements of the centralised model are part of the Commission’s proposal of 18 May 2022 to revise the provisions related to permitting of RES projects in the Renewable Energy Directive (COM(2022) 222 final).

(13)  This is mainly due to network effects, but uncertainty can also relate to regulatory changes.

(14)  In a one-sided premium system, if market price is below auction strike price, producers receive support that covers the gap, and if market price is higher, they can keep the excess revenue. The two-sided premium operates in a similar fashion, however excess revenue must be paid back by the producer. In the fixed premium scheme, producers receive fixed amount of excess revenue on top of the market price.

(15)  How to recover the costs of support can also be decided nationally by each cooperating country, except in the case of joint support schemes.

(16)  2022/C 80/01.

(17)  See https://ec.europa.eu/regional_policy/en/information/publications/guides/2014/guide-to-cost-benefit-analysis-of-investment-projects-for-cohesion-policy-2014-2020

(18)  ‘The Economic Appraisal of Investment Projects at the EIB. Version March 2013 – Under review’, available at https://www.eib.org/attachments/thematic/economic_appraisal_of_investment_projects_en.pdf

(19)  ‘Methodologies for assessing the contribution of cross-border projects to the general criteria and for producing the cost-benefit analysis specified in Part IV of the Annex to the Regulation (EU) 2021/1153 establishing the Connecting Europe Facility’, available at https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52021SC0429&qid=1564520971474

(20)  See https://tyndp.entsoe.eu/cba

(21)  If State aid is necessary to carry out the renewable project, the funding gap analysis carried out according to the CEEAG should be consistent with the main assumptions of the CBA.

(22)  As for infrastructure, the Fourth Monitoring Report on CBCA decisions published by ACER revealed that the majority of trans-European energy projects involving cross-border infrastructure, choose ‘traditional’ cost allocation approaches. Most onshore projects follow the so-called ‘territorial principle’ where each country bears the costs associated with the implementation of the project on its own territory, notwithstanding any benefits the project may bring across countries, while ‘50/50 cost allocation’ is prevalent for offshore. This approach might not prove effective in cases such as new offshore meshed grids potentially affecting a larger amount of parties.

(23)  See in particular the conditions set out in Art. 11.2 a) and c) of Directive (EU) 2018/2001.

(24)  Borne by TSO.

(25)  An alternative technology can be used for the calculation in case a direct comparison is not possible or not realistic.

Commission Notice on the Guidance to Member States for the update of the 2021-2030 national energy and climate plans

(2022/C 495/02)

Record high energy prices since the second half of 2021, exacerbated by Russia’s unjustified and unlawful military aggression against Ukraine, give a strong impetus to accelerate the implementation of the European Green Deal and reinforce the resilience of the Energy Union by speeding up the clean energy transition and ending any dependence on Russian fossil fuels. At the same time, recent extreme weather conditions have put additional pressure on energy supplies, affected crop yields and inland navigation, and impacted the wellbeing of citizens, giving a stark warning on the need to adapt to the impacts of climate change.

Those recent developments highlight the relevance of integrated planning for energy and climate policies. Today, more than ever, a strong Energy Union and coordinated climate action are the prerequisite for solidarity, prosperity and sustainability in the European Union. To rapidly enhance energy security and speed up the transition towards climate neutrality in a fair manner, Member States and the European Union need to build on the strength of the governance system established at European level.

The Regulation on the Governance of the Energy Union and Climate Action (Governance Regulation) (1) establishes a flexible yet robust governance system for transparent and mutually reinforcing collaboration between the EU Member States and the European Commission. This helps ensure a consistent approach between energy and climate policies and coordinated action across Member States.

The national energy and climate plans (hereafter national plans or NECPs) are the central strategic planning tool under the Governance Regulation. The NECPs provide short, medium and long-term investment predictability, especially in uncertain times, and are crucial for mobilising the massive investment needed to achieve the collective ambition of climate neutrality and for having a fair and just transition, while preserving energy security and affordability. They help Member States deliver together on the energy and climate objectives under the European Green Deal, the European Climate Law (2) and the Fit for 55 package of proposals (3) including the higher ambition on energy efficiency and renewable energy as well as the EU’s international commitments under the Paris Agreement.

The NECPs also play a key role in delivering on the REPowerEU plan (4) , in the light of the increased challenges for a more resilient Energy Union. Since the start of the energy price rise in mid-2021, the EU has adopted a comprehensive and tailored emergency response to address the energy crisis, triggered by the latest geopolitical developments. This will reshape the Energy Union in the run-up to 2030 and beyond. National plans must capture the critical challenges of energy security and affordability. This includes the need to swiftly diversify energy supply, to develop a consistent timetable for gas storage (5), to reflect the emergency demand reduction (6) and emergency intervention to address high energy prices and enhance solidarity (7).

Member States shall update their national plans for 2021-2030 by June 2023 (draft plans) and June 2024 (final plans) (8). Considering the significantly evolved policies and geopolitical circumstances in energy and climate since the preparation of the initial NECPs in 2019-2020, the updates should focus on the need for more ambitious climate action, a faster clean energy transition, and increased energy security. The updated NECPs should allow the EU to move towards a more resilient and sustainable Energy Union, including by rapidly reducing dependence on Russian fossil fuels, while leaving no one behind.

This document offers guidance to Member States on the process and the scope of preparing the draft and final updated NECPs, notably by identifying good practices and outlining the implications of recent policy and geo-political developments, within the legal framework established by the Governance Regulation, and in particular its Annex I (9).

In the process of preparing this guidance, the Commission fully engaged with Member States at technical level and consulted with stakeholders through a dedicated stakeholder workshop on 8 September 2022 (10), external events and bilateral contacts. This guidance should be seen as one element of the continuous exchange and cooperation throughout the process.

Box 1: Principles and good practices for updating national energy and climate plans — Set higher ambition to speed up the green transition to climate neutrality and reinforce resilience of the energy system in line with the Climate Law, Fit for 55 package and REPowerEU. Particular attention should be devoted to renewable energy, energy efficiency, energy security, and curbing greenhouse gas emissions. — Strengthen planning within the NECPs to ensure a fair and just transition, mitigating social and employment impacts, tackling labour and skills shortages, reducing energy poverty, and ensuring affordable access to essential services for all. — Provide national objectives and targets, including on funding, that show concrete pathways to 2030 and to 2050, in alignment with the national long-term strategies. — Integrate adaptation goals and reflect them wherever relevant in the five dimensions of the updated NECPs. — Set out objectives and targets to reduce methane emissions and integrate increased targets as well as mitigation and adaptation measures in the land-use, forestry and agriculture sectors, with regard to CO2 and non-CO2 emissions and carbon removals. — Exploit synergies between the energy and digital agenda to trigger the digitalisation of the energy system. — Improve the research, innovation and competitiveness dimension in particular with specific targets and objectives while integrating the diversification of production capacity and the skills development to accelerate the clean energy transition. — Engage in wide and inclusiveness consultation with civil society, local authorities, social partners, and sectoral stakeholders early in the process. — Strengthen regional cooperation as an integral aspect of the national plans: in particular regarding the Energy Security dimension, to identify consistent policies and in-depth solidarity. — Explore synergies between the objectives, targets and contributions, and policies and measures of the five dimensions of the Energy Union (11). — Draw lessons from the initial NECPs, their assessment from the Commission and the status of their implementation, to identify gaps and areas for improvements towards increased ambition and delivery. — Ensure consistency with other planning instruments and reflect the relevant policies, measures and investments in the updated NECPs (12). — Formulate a comprehensive, updated and granular analytical basis, embedding economic, employment, social, research, innovation, competitiveness and environmental impacts as well as the contribution that will be made by the circular economy. — Provide a detailed financing plan addressing the investment needs for each of the five dimensions, through the cost-efficient use of public budget support and the mobilisation of private investment, including via financial instruments and innovative financing schemes. — Take into consideration and ensure consistency with the Country Specific Recommendations issued in the context of the European Semester.

1   Reflecting the new legal, socio-economic, policy and geopolitical context

This section addresses how the significant changes since 2019 in the legislative, socio-economic and geopolitical framework for energy and climate policies affect the updates of the NECPs in terms of ambition and scope. This is complemented with a list of references in Table 1, summarising the main objectives, targets and contributions, and policies and measures needed to achieve them, put forward in the legislation, strategies and proposals. Member States are invited to reflect these references in their draft updated national plans. The final updated plans should reflect any new significant developments in a continuously changing legislative, socio-economic and geopolitical context, and must duly consider the Commission recommendations issued on the draft updated plans (13).

1.1    Raising 2030 ambitions towards climate neutrality

The European Green Deal has provided strong momentum to increase the energy and climate ambition, while leaving no one behind. With the European Climate Law, the goals of reaching climate neutrality at EU level by 2050 and reducing net greenhouse gas emissions by 2030 by at least -55 % compared to 1990 have become a legal obligation. These targets are substantially more stringent compared to those on which Member States based their initial NECPs (14).

To deliver on the European Climate Law ambition, the Fit for 55 Package upgrades the 2030 framework for energy and climate. It will necessarily induce Member States to update the objectives and targets set out in their initial NECPs and the policies and measures for attaining them, particularly in the dimensions of decarbonisation (including renewable energy), energy efficiency, and the internal energy market.

In parallel, and to implement the increased ambition, key European energy and climate strategies have also been adopted, notably on energy system integration (15), hydrogen (16), offshore (17), solar renewable energy (18), climate change adaptation (19), sustainable carbon cycles (20), the EU Action plan for the digitalisation of the energy system (21) .. Other relevant strategies, namely on zero pollution (22), biodiversity (23), forests (24) and sustainable and smart mobility (25) have also been put forward by the Commission to help achieve the climate and energy objectives.

Earlier this year, the REPowerEU plan put forward specific measures to reduce the EU’s energy dependence on Russian fossil fuels, and to speed up the implementation of the European Green Deal with new actions, while building on the Fit for 55 package. It aims at more affordable, secure and sustainable energy, to create a more resilient energy system and a true Energy Union. Under this plan, the Commission called on the co-legislators to increase the targets in the Energy Efficiency and Renewable Energy Directives. The implementation of the REPowerEU plan will accelerate the deployment of alternatives to natural gas and renewable sources, notably sustainable biomethane, renewable hydrogen, solar photovoltaics and offshore wind, and will trigger structural mid- to long-term energy efficiency measures.

The draft updated national plans should reflect this increase of ambition. Member States should fully embed the new and revised energy and climate targets included in the Fit for 55 and the REPowerEU proposals (26), even though the legislative process for adoption is not yet concluded. Member States should already consider the proposed increased national targets under the Effort Sharing Regulation (ESR) and the Land Use, Land Use Change and Forestry Regulation (LULUCF) where under both acts the co-legislators endorsed the ambition level proposed by the Commission. Member States should also consider the new targets under the recast Energy Efficiency Directive and the revised Renewable Energy Directive.

Since the initial NECPs were prepared, Member States also worked on their own national long-term strategies under the Governance Regulation. In line with the Governance Regulation, the updated NECPs should be consistent with these long-term strategies, as well as with the climate-neutrality objective set out in the European Climate Law.

The updated plans should also reflect the international developments related to the Paris Agreement, in particular the process set out by the Glasgow Climate Pact for raising mitigation ambition (27). This contains several decisions on energy and climate planning, including the phasing down of coal power, the phasing out of fossil fuel subsidies, and the consideration of further actions to reduce non-CO2 emissions, including methane, by 2030.

1.2    Increase energy security and affordability, towards a more resilient Energy Union

The updated NECPs need to reinforce preparedness and strengthen measures in the EU that work towards collective energy security. The recent geopolitical situation has driven an unprecedented surge in wholesale and retail energy prices, with year-on-year changes peaking at 360 % and 55 % respectively (August 2022). This extreme volatility in the energy market concerns all Member States, affecting the purchasing power of households and the competitiveness of the economy. At the same time, the situation is increasing pressure on European energy security.

The updated national plans should reflect measures stemming from the REPowerEU plan that will deeply transform the energy system in the long run.

The new Regulation on gas storage (28) requires Member States to reinforce the planning of their energy security. Diversifying energy supplies by exploring new options for energy imports, including for nuclear fuels and substitute fossil fuels, is critical. Member States should integrate security of supply considerations when reflecting on the energy mix in their updated NECPs.

Member States are also encouraged to reflect progress and planning on the infrastructure projects that are identified as significant to meet the European Green Deal and the REPowerEU objectives. The TEN-E (29) and the Projects of Common Interest (PCIs) have made our energy markets more secure, better integrated and more competitive. The 5th PCI list (30) and the limited additional infrastructure identified in Annex 3 of the REPowerEU plan, will help address the remaining bottlenecks in the grids and further diversify gas routes and resources, reinforce the onshore electricity grids and help pursue ambitious offshore renewable goals across all European sea basins. At the same time infrastructure projects should not lead to a lock-in of fossil fuels and stranded assets that inhibit the long-term transition to a climate-neutral economy.

In addition, Member States should use the full potential of the immediate response to the energy crisis to consolidate the energy security dimension of the national plans.

The updated NECPs should reflect the ‘Save Gas for a Safe Winter’ Communication (31) and the Council Regulation on coordinated demand reduction measures for gas (32) , which set out measures to prepare for potential disruptions in the gas supply. These short-term measures are aimed at reinforcing the EU’s collective preparedness, in a spirit of solidarity. Measures adopted under this framework are interlinked with the REPowerEU plan, and in particular the EU Save Energy Communication.

The Commission also tabled immediate actions to address the surge in energy prices. On 6 October 2022, the Council adopted emergency measures to address high energy prices (33). Reducing electricity demand in peak hours, combined with adequate support for final consumers, resulting from the cap on revenues of inframarginal technologies and the solidarity contribution, will contribute to secure and more affordable energy for the coming months. On 18 October 2022, the Commission tabled further emergency proposals to curb the energy prices and to ensure more solidarity in preparedness (34).

Solidarity and collective actions are central to the NECPs, as they affect the energy security of each Member State, the energy affordability and, ultimately, the EU’s collective resilience.

The updated national plans should reflect how emergency measures to limit the impact of high energy prices are: (i) integrated into medium-term planning towards 2030 and (ii) consistent with all five dimensions of the Energy Union. While aiming to provide relief to end-consumers, these measures should be designed not to distort the longer term overarching objectives of the European Green Deal, including decarbonisation, zero pollution, biodiversity, resource efficiency and energy efficiency objectives. They also need to be fiscally sustainable and should not compromise security of supply and the level playing field in the internal energy market.

Member States should describe in their updated NECPs how they intend to bring the benefits of lower cost renewables and low carbon technologies to consumers. To fully decarbonise the electricity sector, Member States should investigate investment incentives in flexibility, (smart) grids, digital enabling solutions for the electricity grids, and firm capacity. It also appears relevant to ensure more liquid forward markets, and better protect consumers against excessive price volatility, high prices and excessive risk taking by suppliers. The NECPs should also explore how to improve the efficiency of cross-border trade, while ensuring that all forms of electricity can be freely traded between Member States. In parallel, the Commission is engaging urgently in a deep and comprehensive reform of the electricity market design.

Member States are invited to make the best use of the integrated approach of the national plans, and fully explore synergies across the relevant dimensions in the plans. For instance, rapid progress on storage, diversification of energy supply and demand response will increase energy security and help speed up the roll-out of renewable energy, increase energy efficiency in the overall energy system and improve the integration of the internal energy market.

Where relevant regional cooperation and relevant forum must be fully mobilised to develop collective action and solidarity mechanisms that will ensure alternative supplies, prevent disruptions and increase preparedness and resilience.

Finally, in line with the REPowerEU plan, the updated national plans should reflect the EU external energy engagement (35). Member States should refer to relevant initiatives or projects which have been undertaken or implemented in line with the Global Gateway strategy (36).

Box 2: Using the springboard of the European Semester The Governance Regulation requires Member States to take into consideration the latest country-specific recommendations issued in the context of the European Semester (37). The 2022 European Semester Country reports21 identify key outstanding or newly emerging macro-economic challenges, not sufficiently covered by commitments undertaken in the Recovery and Resilience Plans (RRPs). The 2022 country-specific recommendations for each Member State focus on those structural challenges, including for implementing the REPowerEU plan, with due attention to the social fairness of the clean energy transition (38). In the area of energy and climate policy, these recommendations aim first and foremost at reducing dependency on Russian fossil fuels and further decarbonising the economy. They call for accelerating the deployment of renewable energy and the necessary infrastructure, supporting the necessary reskilling and upskilling of the workforce, tackling labour and skills gaps, increasing energy efficiency and increasing the capacity of interconnections across the EU. For a considerable number of Member States, the recommendations are also related to sustainable mobility, while for a few Member States the recommendations relate to environmental aspects, such as circular economy. In updating their NECPs, Member States shall take full account of the 2022 and 2023 country-specific recommendations issued under the European Semester. They should also include information on how relevant policies and measures in each dimension of the updated national plans contribute towards the fulfilment of the energy and climate country-specific recommendations.

1.3    Ensure a fair and just transition

1.3.1   Mitigating the social and employment impacts and delivering on a just and fair energy and climate transition

The updated NECPs should reflect better the socio-economic impacts than the initial national plans. Fairness and solidarity are key objectives and an integral part of the European Green Deal, which recognises that no person and no place should be left behind. Addressing from the outset the socio-economic impacts of the energy and climate transition and protecting households, exposed industries and workers throughout the process is a prerequisite for tackling the current energy crisis and paving the way for a fair transition.

The Council Recommendation on ensuring a fair transition towards climate neutrality outlines policy packages to support a fair green transition, and invites Member States to fully take it into consideration for the process of updating their NECPs (39). In particular, Member States should develop clear strategies identifying and measuring the social, employment and skills consequences (or any other distributional impacts) of the energy and climate transition and give proper consideration on how to effectively address these challenges. The updated national plans should clearly prioritise funding for a fair transition, for reskilling and upskilling, and for supporting labour market adjustments.

The development and implementation of policies and measures should follow both a whole-of-society approach and a granular approach that focuses on the most affected regions, industries, and population groups, especially those already in vulnerable situations.

Box 3: Key fair transition policies and measures for updated NECPs — promote energy efficiency improvements, including in the affordable social housing sector; provide financial incentives and advice to individuals, paying due attention to split incentives among owners and tenants and to the evolution of housing costs; — provide tailored information and advice to all consumers, and especially vulnerable households, including by using digital tools, on how to reduce energy demand and lower their energy bills. Target energy savings measures towards consumption and production activities with high energy demand; — empower energy consumers by facilitating access to energy from renewable sources, by simplifying permitting procedures and further developing self-supply via citizen and renewable energy communities, accompanied by campaigns, with a special focus on vulnerable groups and consumers living in rural and remote areas (e.g. EU outermost regions (40)); — prevent challenges to sustainable transport, including affordability for vulnerable households, through direct support measures and by developing the necessary infrastructure; — support access to quality employment, in particular through public employment services, tailored job search assistance and other active labour market policy measures (e.g. learning courses, hiring and transition incentives, targeted and time-bound employment programmes, support schemes for apprenticeships and quality traineeships); — promote job creation and entrepreneurship in green activities, for instance through financial and non-financial measures, ensuring accessible support for underrepresented and vulnerable groups and encouraging the promotion of green award criteria for entrepreneurs; — equip people with the right skills to access quality jobs and tackle labour shortages for the green and digital transitions, by promoting (1) inclusive education and training, in line with skills forecasts and through stakeholder partnerships, as the Pact for Skills (41); (2) schemes for apprenticeships, paid traineeships and job shadowing schemes; (3) adult training for upskilling and reskilling, for instance through individual learning accounts (42), widely recognised courses or joining the EU Pact for Skills (43); — ensure balanced and equal access to education and job opportunities at all levels and in all sectors, for instance by reducing the current gender imbalance that has so far characterised STEM students and the energy sector; — ensure fair tax-benefit systems and social protection to support the most affected people and households, in particular those in vulnerable situations, including through (1) targeted and temporary direct income support to complement investment measures, (2) shifting the tax burden away from labour incomes towards green objectives and (3) providing innovative job-to-job transition schemes to ensure income security during labour market transitions.

1.3.2   Addressing the pressing challenges of energy poverty

Affordability is a priority of the Energy Union, and it should be reflected in the updated NECPs. All Member States are encouraged to set a clear, specific, attainable, measurable and time-bound objective for reducing energy poverty. Member States shall assess the number of households in energy poverty (44). The Commission’s recommendation on energy poverty (45) provides guidance on suitable indicators for its measurement. Explanation on how this definition and indicators are used and on how the data on energy poverty is collected, including at national and local level, is encouraged.

The updated NECPs should take account of the latest legislative developments, especially the proposed definition of energy poverty in the Energy Efficiency Directive and the proposed Social Climate Fund, and the above-mentioned Council Recommendation on ensuring a fair transition towards climate neutrality.

Based on such an assessment, if a Member State finds that a significant number of households are in energy poverty, it must include in its updated national plan a national indicative objective for reducing energy poverty, including a timeframe by when the objectives are to be met (46). However, considering the current spike in energy prices, all Member States are encouraged to set an objective for reducing energy poverty. If an objective is not considered necessary, Member States should justify this decision and determine the minimum number of households that would qualify as ‘significant’ in this context. Additionally, the national plans should outline the policies and measures addressing energy poverty, including social policy measures and other relevant national programmes. Member States should outline how the objective was determined, and, to account for the current energy price spike, they should use the latest available data.

2   Thematic issues

2.1    Boost the clean energy transition

The established energy governance framework has proven positive, as the EU energy efficiency and renewable energy targets for 2020 were overachieved. The rapid and imperative substitution of Russian fossil fuels will require a massive scale-up in the clean energy transition, giving priority to structural measures for energy efficiency and building on a strong boost to the roll-out of renewable energy. Moreover, the deployment of digital solutions for energy will play an important role in supporting the transformation of the energy sector; fostering cooperation between energy and digital players and creating synergies between the energy and digital agenda is instrumental to achieve the climate objective. The potential of the governance mechanism needs to be fully mobilised while updating the national plans in that direction.

2.1.1   Accelerating the roll-out of renewable energy and hydrogen

Updated NECPs should align with the increased ambition proposed in the revised Renewable Energy Directive by providing a national contribution towards the binding overall EU target. The national plans should also include sectorial contributions commensurate with this overall target, and meeting the sub-targets for the transport sector, district heating and cooling and the industry and buildings sectors. Accelerated and massive take-up of renewables across the EU is necessary in order to make a decisive contribution to the EU ambition of phasing out fossil fuels from Russia and achieving the climate neutrality objective.

In line with the REPowerEU plan, particular attention should be given to natural gas substitution by scaling up sustainable biomethane production (i.e., mainly based on organic waste and forest and agricultural residues) and accelerating the deployment of renewable hydrogen in the hard-to-decarbonise sectors of transport and industry.

The updated NECPs should reflect the deployment of the necessary infrastructure and incentives, in line with the REPowerEU target of 10 million tonnes of domestic renewable hydrogen and 35 bcm of sustainable biomethane production by 2030. Furthermore, the pathway for oil-based transport fuel substitution through electrification and renewable hydrogen in land transport should be described. In line with the objective of 10 million tonnes of imported hydrogen by 2030, the updated national plans should also reflect initiatives or actions that have been undertaken or are planned, or international partnerships which will or have been established, with the aim to facilitate imports of renewable hydrogen.

In their updated NECPs, Member States are also encouraged to integrate a component on sustainable biogas and biomethane production and use, assessing the national potentials and defining trajectories to reach those by 2030 and 2050 (47).

A comprehensive framework of policies and measures promoting the deployment of renewables across all relevant sectors of the economy is needed. The faster roll-out of renewables is particularly relevant for sectors where progress has been slower so far (such as transport, buildings and industry, especially in hard-to-abate industrial sectors). The focus should be on promoting the uptake of electrification, renewable technologies (including renewable hydrogen in industrial sectors) energy storage, and demand response adding flexibility to the energy system and facilitating system integration for renewables.

A particular challenge to developing and deploying most renewable energy projects that needs to be addressed by the NECPs concerns permitting. In this respect, Member States should align their national policies and measures with the proposal to amend the Renewable Energy Directive (48) from May 2022, the EU solar strategy and the associated Recommendation on speeding up permit-granting procedures for renewable energy projects (49).

While updating their national plans, Member States should also develop measures to facilitate power purchase agreements and guarantees of origin. Policies should also address the roll-out of renewable solutions in buildings, following the proposal of recast of the Energy Performance of Buildings Directive, particularly in relation to heating (e.g., heat pumps) and solar on rooftops, in line with the REPowerEU ambition.

2.1.2   Building on structural energy efficiency measures

Energy efficiency measures can often be the cheapest, safest and cleanest way to reduce our reliance on fossil fuel imports from Russia and ensure a fair path towards the clean energy transition. Moreover, using less energy supports security of supply and energy storage, helps reducing energy poverty, and increases competitiveness in the global landscape.

The updated NECPs should align with the increased ambition proposed in the recast of the Energy Efficiency Directive, by providing a national contribution towards the overall EU binding target and the energy consumption shares of end-use sectors. The updated national plans should also include details on the calculation and methodology of the energy savings obligation, and the required information on the total floor area to be renovated or equivalent annual energy savings for public buildings.

Policies, measures and programmes on energy efficiency in the updated national plans should encompass all energy demand sectors, including buildings (residential and tertiary), industry and transport. The energy efficiency first principle (50) should be used as an overarching principle and its application should be explained. Additionally, the calculation methodology and the underlying data for calculating the Primary Energy Factor should be provided.

As regards buildings, the updated NECPs should be aligned with the updated and increased ambition and requirements in the Energy Performance of Buildings Directive proposal, and the increased efforts in the energy renovation of buildings, with the objective to double renovation rates (Renovation Wave (51)). The updated NECPs, following the commitments in the national long term renovation strategies, should include the measures taken to progressively decarbonise the building stock, including the supportive financial and technical assistance measures, which are also related to the availability of a skilled workforce.

In line with REPowerEU and the EU Save Energy Communication (52) , Member States should include information on their contributions and how they are implementing REPowerEU by including measures on behavioural change, communication campaigns and fiscal measures implemented or planned to encourage energy savings.

2.1.3. Exploring the full potential of the twin green and digital transition

A deep digital transformation of the EU energy system is also one of the crucial elements to deliver on the REPowerEU and on the European Green Deal objectives. Energy and resource efficiency, decarbonisation, electrification, sector integration and decentralisation of the energy system all require a tremendous effort in digitalisation.

Members States are invited to identify synergies between energy and digital national activities, targets and objectives, and to reflect on how to further exploit them through policies and measures in line with the ‘Digitalising the energy system – EU action plan’ (53). Digitalisation will be key for enhance the consumer engagement and the development of an electricity infrastructure that is fit for the future energy system. Investing in the digitalisation of the electricity grid will also allow for a cost-effective transformation of the energy system.

Building on the experience of their Recovery and Resilience Plans, Member States are also encouraged to seek synergies between the NECPs and the national Digital Decade strategic roadmaps submitted under the Digital Decade Policy Programme 2030 (DDPP) (54), to ensure that digital infrastructure and technologies contribute to a sustainable circular and climate-neutral economy and society in line with the European Green Deal. Member States are invited to reflect on how they will leverage the Digital Decade process and tools, and in particular multi-country projects, to accelerate the green transition.

2.2    Integrate the imperatives of climate adaptation

The frequency and severity of weather extremes is increasing. Since the preparation of the initial NECPs, the importance of climate adaptation has been increasingly recognised globally (55). In 2021, the Commission published a new EU strategy on adaptation to climate change, which underlined the importance of integrating climate resilience in national fiscal frameworks, and of nature-based solutions. The European Climate Law stresses the importance of sectoral measures being resilient to the potential adverse impacts of the changing climate (56).

Member States are invited to set out adaptation goals in their updated national plans to support the achievement of national objectives, targets and contributions under the Energy Union (57) , in line with the EU Adaptation Strategy. Climate change related risks must be integrated into investment and planning decisions, and increase Member States’ adaptive capacity, strengthen resilience and reduce vulnerability to climate change. Importantly, adaptation action, if properly designed, can also bring climate mitigation co-benefits, and improve social and economic resilience in a fair manner, considering the uneven regional and societal impacts of climate change and weather extremes. Mitigation investment needs to be climate-proof.

The adaptation goals should be quantified where possible and clearly linked to the specific Energy Union objectives and policies they support. References to the national adaptation strategy or plan could be included in the relevant sections of the policies and measures chapter in the updated NECPs. For example, updated NECPs could set out which measures will safeguard the carbon sequestration potential of land use (decarbonisation dimension), electricity generation capacity (energy security dimension), or residential energy savings (energy efficiency dimension) in the face of water stress and scarcity, droughts, floods forest fires or heatwaves. The planned and implemented nature-based solutions can be described, together with their actual or expected impacts in terms of climate adaptation (e.g., protection against desertification, urban heat, floods, etc.). A particular emphasis should be placed on water, notably on the resilience of energy systems to structural or seasonal water scarcity. Innovative approaches such as insurance policies and fiscal measures addressing the climate protection gap, may also be considered, as well as investments aimed at preserving biodiversity that would contribute to climate adaptation.

2.3    Improve the planning for land-use, forestry and agriculture sectors

The land-use, forestry and agriculture sectors will play a crucial role in achieving the EU’s climate-neutrality and adaptation objectives, through significant reductions of greenhouse gas emissions, enhanced carbon removals and ecosystem services to improve resilience. The EU carbon sink has been steadily declining. The drivers include an increase in wood demand, forests reaching harvest maturity, and an increase in forest disturbances. At the same time, the progress on emissions reduction in the EU agriculture sector has stagnated despite increased support for climate action. Key sources of greenhouse gas emissions in the agriculture sector are methane emissions from livestock – both from enteric fermentation and manure management- and nitrous oxide emissions due to the use of chemical fertilisers and manure management.

As outlined in section 1.1, the updated NECPs should reflect the increased ambition proposed for the revision of the LULUCF Regulation by setting out the pathway towards the national targets. The national plans should indicate how they intend to increase the contribution of their land-use, forestry and agriculture sectors to the EU’s enhanced climate target, through policies and measures and enhanced ambition. Member States should better integrate mitigation, adaptation and nature restoration measures in their land-use, forestry and agriculture sectors in a context with related initiatives for biodiversity and bioenergy. Most recently, the proposal for a Nature Restoration Law (58) also addresses aspects of land management pertinent for climate change mitigation and adaptation.

Policies and measures should reflect raised ambition regarding climate change adaptation and mitigation, covering CO2 emissions 2 and non-COand carbon removals in relation to energy efficiency, renewable energy production and use, and preservation, protection and restoration of ecosystems.

Box 4: Content of the updated NECPs related to LULUCF. Planning and quantifying the following activities: — Identification of the improvements for the system of information collection and monitoring needed for effective policy choices, design and implementation in the land use, forestry and agriculture sectors (e.g., through satellite images). The system should include the need to ensure the effective implementation with respect to the objectives of protecting and restoring ecosystems; — Reducing greenhouse gas emissions in the agriculture non-CO2 sector, including as regards enteric fermentation, manure management and fertiliser management; — Increasing net removals in the land-use, forestry and agriculture sectors including through carbon farming, and long-lasting carbon storing materials (such as wood-based construction products), with a focus on integrated approaches such as nature-based solutions in order to also contribute to the objectives of ecosystems protection and restoration, as well as other environmental objectives (e.g., biodiversity, zero pollution, stopping natural resources depletion); — Promoting and implementing energy efficiency measures related to biomass, including the supply of bio-based insulating materials.

2.4    Tackling methane emissions

The Commission encourages Member States to set out sectoral objectives and targets to reduce methane emissions and corresponding policies and measures in their updated NECPs, considering the objectives of the EU methane strategy (59).

Reducing methane emissions contributes directly to slowing down the rate of warming. Moreover, as methane is a precursor of ozone, its reduction also decreases air pollution. Methane has a global warming potential that is 28 times larger than CO2 over a 100-year timeframe. In the EU, more than half of anthropogenic methane emissions come from agriculture, with the livestock responsible for 54 % of total EU methane emissions (over 6 % of total EU GHG emissions) (60). Around a fourth of methane emissions come instead from solid waste and wastewater, and almost a fifth from energy.

Methane is covered by the Effort Sharing Regulation (61) , which gives Member States flexibility to choose the appropriate policies to mitigate methane emissions. In addition, the EU has several sectoral policies that help reducing methane emissions (62), such as the Common Agriculture Policy, the Landfill Directive and the proposed as well as planned revisions of the Industrial Emissions Directive, the Urban Waste Water Treatment Directive, and the Renewable Energy Directive, and the new proposed Regulation on methane reductions in the energy sector.

Box 5: Examples of policies and measures to reduce methane emissions: — Agriculture – introduce incentives for breeding that improve health and fertility, feed management and feed additives to mitigate methane from enteric fermentation while preventing trade-offs with other environmental issues, such as ammonia emissions; promote manure storage techniques (e.g., cooling slurry, slurry acidification, covering manure and slurry stores, introducing emission limit values and monitoring requirements) and anaerobic digestion with biogas recovery to mitigate methane from manure management, with the additional benefit of reducing dependence on natural gas imports and preventing ammonia emissions; promote more sustainable diets with less red and processed meatand more plant-based protein sources. — Solid waste and wastewater – reduce landfilling of organic waste through a full and swift implementation of the waste and landfill legislation; source separation and anaerobic digestion with biogas recovery, to mitigate methane from solid waste; anaerobic digestion of sludge with biogas recovery, to mitigate methane from wastewater. — Energy – in line with the proposed Regulation on methane emissions reductions (63), the measurement, reporting and verification of methane emissions in the energy sector need to be improved and emissions need to be mitigated through mandatory leak detection and repair, and a ban on venting and flaring.

2.5    Integrating long-term geological storage of CO2

Member States are encouraged to include in their updated NECPs the efforts planned to enable their industries to capture and store their inherent process emissions permanently in geological storage sites, in accordance with Directive 2009/31/EC. Reaching the climate-neutrality objective requires that EU-wide remaining greenhouse gas emissions and removals from hard-to-abate sectors are balanced within the EU at the latest by 2050 and that the EU achieves negative emissions thereafter.

Several activities, including energy intensive industries, such as cement, iron and steel, aluminium, pulp and paper and refineries, as well as agriculture, have inherent process emissions resulting from the production processes themselves. Carbon capture and storage, or carbon capture and use can provide a key contribution to tackling these sectors’ emissions.

Furthermore, it can help remove CO2 from the atmosphere through carbon removals such as bioenergy coupled with carbon capture and storage (BECCS) and through Direct Atmospheric Carbon Capture (DACCS). BECCS deployment should be approached in the updated NECPs in full consideration of the limits and availability of sustainable biomass.

Box 6: Setting objectives, targets and contributions for carbon capture and storage. Member States are encouraged to provide the following information: — the annual aggregated projection of inherent process emissions that will have to be abated through CO2 capture; — the annual biogenic and direct air CO2 that will be available for geological storage of CO2; — the geological CO2 storage capacity that can be made operationally available annually; — annual CO2 storage capacity that may become available at the end of exploitation of hydrocarbon reservoirs; — planned CO2 transport infrastructure; — public funding support available for investment in CO2 capture, transport and storage; — any other measures to support the deployment of long-term geological CO2 storage opportunities.

2.6    Promoting the research, innovation and competitiveness dimension

Building on the 2020 assessment of the initial NECPs (64) and considering the current geopolitical circumstances and the recent policy developments, Member States are invited to strengthen the research innovation and competitiveness dimension in their updated plans.

A successful research and innovation (R&I) pathway in clean energy and low carbon technologies requires sufficient experts and entrepreneurs, supported by the synergistic use of EU, national and regional programmes. Clear national R&I targets and objectives to 2030 (and where appropriate 2050), increased cooperation between Member States and a continuous monitoring of national R&I activities are crucial to reinforce the EU competitiveness and to deliver on the Green Deal objectives. These elements are also of the essence to bridge the gap between R&I and market uptake, to reinforce EU competitiveness, and eventually lead to an accelerated roll-out of technologies expected to impact on the Green Deal objectives. R&I strategies should also embrace and nurture non-technological, transdisciplinary aspects that are critically important for accelerating the ecological and energy transitions; stimulating behavioural change, climate-conscious lifestyle choices, promoting institutional, governance and policy innovations to create enabling conditions for a climate-neutral transformation.

The updated national plans should describe Member States’ objectives and policies to facilitate the manufacturing scale-up of commercially available low-carbon technologies, equipment and components (for instance by reflecting the current situation and trends for investments, value added) within their territory – as well as their objectives and policies to achieve this through diversification efforts in third countries. The REPowerEU plan specifies that its achievement requires diversifying the supply of renewable energy equipment and of critical raw materials, reducing sectoral dependencies, overcoming supply chain bottlenecks, and expanding the EU’s clean energy technology manufacturing capacity. The updated NECPs should better reflect the needs related to manufacturing capacities and industrial value chains in key low-carbon energy technologies.

Box 7: Best practice for improving the research, innovation and competitiveness dimension — Identify and describe clean energy R&I needs for delivering on energy and climate objectives, including environmental impacts and just transition aspects (65) and the assessment of socio-economic impacts of the green transition. — Describe national R&I objectives and funding targets that show concrete and quantitative pathways to deliver on the 2030 and 2050 objectives for specific key clean energy technologies and carbon capture and storage. — Integrate the industrial steps of clean energy value chains, for instance by addressing manufacturing capacities for renewable energy technologies, thus also supporting the competitiveness of the European industry. — Explore synergies between relevant national funds and activities, with Innovation Platforms and with the Strategic Energy Technology (SET) Plan Implementation Working Groups and where appropriate with the four EU Green Deal Missions (66). — Improve cooperation between the SET plan countries, especially but not exclusively through the Horizon Europe Clean Energy Transition Partnership. — Describe how to enhance cooperation with global partners on clean energy R&I. — Improve support and access to finance for business innovation including start-ups, scale-ups and SMEs. — Integrate the manufacturing scale-up and diversified production capacity of clean energy and low carbon technology value chains in national objectives and policies and measures as regards competitiveness. — Integrate skills development required for the clean energy transition, connecting for instance with the Pact for Skills on renewable energy. — Integrate the notions of recyclability and circularity and the need to reduce dependency, and effectively diversifying the sourcing of on imported raw materials, components required to manufacture clean energy technologies. — Identify and describe how to improve competitiveness of clean energy technologies in the global market, including main drivers and challenges both in the internal and global markets.

2.7    Integrating the climate-neutrality objective

Member States are required to include in their updated NECPs elements that enhance coherence and consistency with the EU’s climate-neutrality objective, building on their national long-term strategies. To ensure consistency and coherence with the EU’s climate-neutrality objective, the European Climate Law amended the Governance Regulation to include the climate-neutrality objective in the relevant provisions of the Governance Regulation (67). Elements where Member States can improve coherence and consistency include:

—	In their assessment of the impacts of the planned policies and measures, by analysing the consistency with the EU’s climate-neutrality objective set out in Article 2(1) of the Climate Law (Art. 3(2)(f) Governance Regulation);

—

In the analytical basis for the plan, by describing the way existing policies and measures and planned policies and measures contribute to the achievement of the EU’s climate-neutrality objective, as set out in Article 2(1) of the Climate Law (Art. 8(2)(e) Governance Regulation, and Annex 1, Part 1, Section B, point 5.5 Governance Regulation);

—	When setting out the policies and measures related to greenhouse gas emissions and removals, by providing an outlook towards the EU’s climate-neutrality objective (Annex I, Part 1, Section A, point 3.1.1.i Governance Regulation).

3   Cross-cutting points for attention when updating the NECPs

3.1    Building on lessons learnt from the initial NECPs

The initial national energy and climate plans submitted by Member States lay the foundation for stepping up the ambitions and achieving the objectives of the European Green Deal and the REPowerEU plan. Their preparation followed the iterative process set out in the Governance Regulation, building on extensive consultations between the Commission and Member States as well as consultations with stakeholders and civil society. The Commission assessed the first draft plans individually and at EU-level (68) and issued recommendations to the Member States (69) for finalising the plans. The final plans were submitted, albeit some with delays, by 31 December 2019, and the Commission assessed the final plans individually and in aggregate (70).

3.1.1   Improving national energy and climate plans to 2030

The ‘whole of government approach’ is a central part of the initial plans’ preparation and one of the leading principles of the Governance Regulation. It helps improve consistency across the Energy Union’s five dimensions and create synergies between different policy areas.

Member States are invited to reach out to all relevant authorities and stakeholders when preparing the update of their integrated draft and final national plans. These relevant authorities should work together across their different portfolios to update the national plans and achieve the shared goals of the Energy Union, the European Green Deal, the European Semester, the Recovery and Resilience Facility, the REPowerEU plan and other developments in the EU energy and climate policies. Such a process should ensure that the authorities take ownership of implementing the integrated national plans.

Member States are encouraged to build on their initial national plans while fully considering the related assessment carried out by the Commission.

3.1.2   Synergies with integrated progress reports

Member States are encouraged to use the first integrated national energy and climate progress reports (NECPRs) when preparing their updated NECPs. The reports can be used to: (i) help describe the current situation, including on adaptation to climate change; (ii) estimate remaining gaps to achieve the objectives, targets and contributions set out in the first national plans; and (iii) draw conclusions on the adequacy of policies and measures and investments the NECPRs contain in each dimension and sector, including their impact on air quality and emissions of air pollutants.

By 15 March 2023, Member States will, for the first time, submit NECPRs to the Commission (71). Reporting and monitoring progress are two of the main features of the Governance Regulation. NECPRs will contribute to an evidence-based assessment of progress in implementing the initial NECPs and are thereby a valuable way to identify potential areas for improvement. The format of the progress reporting and monitoring was developed to analyse implementation of the energy and climate policies in the NECPs, bearing in mind to limit the administrative burden for Member States and the Commission.

The analytical part of updated national plans, as well as planned policies and measures, may benefit from the information collected for reporting on progress. However, if referring to electricity and gas markets, energy prices and the breakdown of current price elements (in energy, network, taxes/levies price components), Member States should provide an updated analysis compared to the time of submitting the NECPRs.

3.2    An early and inclusive public participation in line with the Aarhus Convention

As was the case for the initial plans, Member States must develop the update of the NECPs in a dialogue with local authorities, civil society organisations, social partners, the sectoral business community, investors and other stakeholders. Article 10 of the Governance Regulation requires Member States to give the public early and effective opportunities to participate in the elaboration of the NECPs. Member States are parties to the Aarhus Convention (72) and so, they are obliged to ensure that the public is given early and effective opportunities to participate in preparing the draft updated national plans in a transparent and fair framework (73). In particular, the public must be given reasonable time to participate in the different phases and must be consulted when all options are still open (74). Sound consultation implies that the public should have access to all relevant documents, reports and assumptions at the start of the consultation period. Member States are invited to reflect on best practices, such as setting up the consultation through a dedicated NECP website, which contains all the information.

Under Article 11 of the Governance Regulation, Member States must establish a multilevel energy and climate dialogue. They must provide a platform to discuss with stakeholders the different scenarios envisaged for energy and climate policies and achieving the EU’s climate-neutrality objective set out in the Climate Law (75). Member States will report on the progress in establishing this dialogue in the NECPRs. For public consultations, Member States are encouraged to strengthen the multilevel dialogue and work with regional and local individuals and groups who can bring forward concrete measures. They should also explore synergies with existing forums, such as the EU Covenant of Mayors. Member States also need to ensure full and timely consultation and involvement of social partners, in accordance with the relevant national rules and practices. Social dialogue and a whole-of-society approach are key for developing and implementing effective energy and climate policies in line with the principles of the European Pillar of Social Rights.

In the updated NECPs, Member States are required to include a summary of the consultations and of the public’s view or provisional views. Member States should explain how the views of the public were considered ahead of submitting the draft and final national plans. Member States are also expected to describe how the process allowed the public to participate transparently and fairly.

3.3    Strengthen regional cooperation for a better coordinated response and promotion of solidarity

Member States are encouraged to strengthen regional cooperation when preparing the updated national plans. To the extent possible, it is recommended to coordinate such cooperation through established regional cooperation forum. Regional groups set up under the EU Energy Platform (76), as well as regional risk groups linked to the security of gas supply on the EU market may also provide support where needed. Even though the governance mechanism has been designed to stimulate cooperation between Member States at cross-border and regional levels (77), Member States did not seize the full potential of regional cooperation during the preparation of the initial NECPs.

Member States are also encouraged to engage voluntarily in joint drafting of parts of their NECPs, both at territorial and sectoral level. This is the opportunity to alleviate the administrative burden on Member States and improve the content of the NECPs. The Commission is ready to facilitate this cooperation if Member States request it during the preparation of the draft updated NECPs. Regional cooperation on energy and climate policies enables exploring synergies to efficiently reach national energy and climate objectives, ensuring plans are more consistent. Areas for coordination can include, for instance, joint projects or support schemes for renewables (e.g., consistent timeframes and measures for setting up the establishment of a joint scheme) and consistent approaches in developing renewable energy within a region or cooperation within the SET Plan framework.

Member States are invited to summarise the outcome of regional consultations in their draft updated national plans, including comments from other Member States, and explain how such comments have been considered.

Member States are also invited to involve regional partners to ensure consistent planning and address risks related to security of supply. This is also important to ensure the deployment of sufficient electricity infrastructure and energy transmission infrastructure (physical dimension), as well as to foster market integration. Recent energy policy developments have demonstrated the need for regional cooperation to boost the resilience and preparedness of the energy system and speed up the clean energy transition. Today, more than ever, regional cooperation and European solidarity are the strongest EU asset to achieve a diversified energy supply, strengthen the energy security dimension of the NECPs, and ultimately achieve a more resilient Energy Union. To facilitate regional cooperation, the Commission is publishing specific guidance on cost-benefit sharing in renewable energy cooperation projects.

The Commission invites Member States to summarise their participation in the EU Energy Platform in their draft updated national plans, and possible action resulting from this work. The EU Energy Platform was created to coordinate the work to diversify EU gas supplies away from Russian sources. This will partly involve creating a voluntary mechanism for buying gas and renewable hydrogen for the EU, making optimal use of the EU’s collective political and market weight. In addition, five regional groups were created (South-East Europe, Central Eastern Europe, North-West, South-West and Baltics), to draw up action plans to operationalise the EU Energy Platform’s endeavour.

3.4    Exploring the full potential of synergies and interlinkages with other planning instruments for the green and just transition

The updated NECPs should reflect the new planning funding instruments that have been set up since the first final NECPs were submitted in 2019. Access to some funds is conditional on the approval of dedicated Member States’ plans. The NECPs should reflect in a consistent and integrated manner all the relevant policies and measures that contribute to achieving the national energy and climate objectives, targets and contributions, including the actions and funding opportunities stemming from other funding and planning instruments (78).

3.4.1   Recovery and Resilience Facility

It is important that Member States fully reflect the energy and climate investments and reforms of the national recovery and resilience plans (RRPs) in the updated NECPs (79) and build on them to achieve their updated 2030 targets, objectives and commitments. In quantitative terms, the Recovery and Resilience Facility (RRF) provides the largest new funding source for energy and climate policy. Up to August 2026 (80), the RRPs will continue to drive Member States’ energy and climate reform and investment agendas to different degrees. The RRPs were prepared to contribute to the NECPs’ objectives, targets and contributions, in view of the increased ambition for 2030 and 2050. Under the REPowerEU plan, Member States should reflect additional policies and measures in their RRPs by including a specific REPowerEU chapter.

To ensure transparency and consistency, the Commission invites Member States to clearly describe the role of the RRPs, including the REPowerEU chapters, in implementing the updated NECPs. To this end, the updated national plans should provide quantitative information with respect to the contribution of the RRP measures to the updated climate and energy objectives and targets, also in terms of financing. In addition, Member States are invited to cross-reference the RRP and REPowerEU chapter for each relevant policy and measure in their updated NECPs. Member States should indicate whether the policy or measure is fully or partially part of the RRP and REPowerEU chapter and the role of the NECP in complementing the RRPs and REPowerEU Chapters.

Where applicable, they should include a reference to the Council Implementing Decision (CID) on the approval of the assessment of their recovery and resilience plan. Member States should reflect on any extension of investments and reforms that can further contribute to the 2030 objectives, targets and contribution of their updated national plans.

The Commission also encourages Member States to use their experience of the RRP process. This can further improve the level of detail of investments and reforms in the updated NECPs in terms of cost estimates, financing, scope description, and including specific milestones and targets. The consistency between the two instruments will need to be maintained.

Although not a requirement under the current Governance Regulation, the Commission encourages Member States to apply the ‘do-no-significant-harm’ (DNSH) criteria when defining policies and measures for the updated NECPs. Full compliance with the DNSH criteria is a key design feature of the RRF. It ensures that the plans contribute to the green transition and to a sustainable recovery, while limiting damage to biodiversity, water and marine resources, boosting circularity and preventing pollution, avoiding the lock-in of unsustainable assets and activities. The Commission provided technical guidance on applying DNSH criteria in the context of the RRPs (81).

3.4.2   Just Transition Fund

The Just Transition Mechanism (82), particularly the Just Transition Fund (JTF), has been created to mobilise investments between 2021 and 2027. This investment tool will help European regions most affected by the transition to climate neutrality, given their high dependence on fossil fuel extraction – including coal, peat and oil shale – and on carbon-intensive industrial processes. The JTF, part of cohesion policy, also applies the DNSH principle and excludes investments in fossil fuels. It sets a strong governance framework centred on TJTPs, which are being finalised. The TJTPs are strategic documents explaining the just transition process in each Member State and the activities to mitigate the expected socio-economic consequences in the most affected territories. The TJTPs will be the framework for the measures and investments in coal-dependent regions and/or regions with high GHG emissions industries (such as chemical, steel and cement industries) most negatively impacted by the transition.

Member States shall reflect in the updated NECPs the transition process outlined in the Territorial Just Transition Plans (TJTPs). Member States should explain the synergies between the 2030 climate and energy targets and the transition from fossil fuels. They should also describe how the achievement of the national targets will mitigate socio-economic impacts in a targeted manner at the regional level.

3.4.3   Social Climate Fund

The Commission encourages Member States to include the underlying analysis needed to prepare the social climate plans in the updated NECPs to the extent possible. They should explain how they plan to use revenue from the Social Climate Fund (SCF) to achieve the relevant objectives, targets and contributions. The SCF (83) is proposed under the Fit for 55 package to address the social impacts on vulnerable households, transport users and micro-enterprises that may arise from the inclusion of buildings and road transport in an emission trading system (ETS). The aim of the SCF is to support vulnerable groups in reducing their reliance on costly fossil fuels by making buildings more efficient, decarbonising heating and cooling of buildings (including integrating energy from renewable sources) and increasing access to sustainable transport. The SCF also aims to support vulnerable groups through national measures, providing targeted temporary direct income support, while investment measures are being deployed.

When the negotiations on the Fit for 55 package are finalized, there will be a close link between the NECPs and the SCF plans because the NECPs outline the policy framework in which the SCF will operate. The SCF plans will be framed by the planned reforms and commitments made by the Member States in the NECPs. The SCF plans themselves will focus on concrete measures and investment financed by the SCF. They will also ensure consistency and develop synergies with the NECPs and other relevant EU programmes and instruments.

3.4.4   Common agriculture policy

The Commission encourages Members States to seek synergies between the common agriculture policy strategic plans (CSPs) and NECPs. Through their national CSPs, Member States have designed support schemes, which include addressing climate, energy, health, and biodiversity objectives. The Commission has provided recommendations and observations on each Member State’s CSP. Member States furthermore identified or planned national measures outside the CSPs that could contribute these ambitions. With these objectives in mind, Member States are obliged to reassess and, where necessary, adjust their CSPs once the more ambitious targets introduced by the LULUCF Regulation and amended Effort Sharing Regulation (still to be adopted) enter into force (84). Member States should update the NECPs and CSPs and explore synergies between them wherever possible.

The link between the two processes can be further improved by: (i) strengthening efforts to assess the impacts of agricultural policies and measures on reducing greenhouse gas emissions; (ii) increasing carbon removals; and (iii) identifying relevant renewable energy sources such as biomethane. The Commission and the European Environment Agency are organising capacity-building as part of the activities to improve reporting on climate policies and measures (85).

3.4.5   Cohesion policy

In their updated NECPs, Member States are invited to reflect on synergies with existing planning documents drawn up under EU cohesion policy for 2021-2027. EU cohesion policy (delivered through the European Regional Development Fund, Cohesion Fund, European Social Fund Plus and Just Transition Fund) contributes to strengthening economic, social and territorial cohesion (86).

In 2021-2027, cohesion policy (mobilising EUR 392 billion of EU investments) focuses on five policy objectives (including one on a green, low-carbon transition towards a climate neutral economy) and the European Green Deal. To benefit from cohesion policy funds, Member States are required to prepare partnership agreements followed by operational programmes. The latter need to take the NECPs into account and address any challenges identified in them. Member States are also required to fulfil the enabling conditions, including those related to having a complete NECP, energy efficiency, renovation of residential and non-residential buildings and renewable energy, energy efficiency, renovation of residential and non-residential buildings and renewable energy.

3.5    A strong analytical basis

Reliable updated national plans need to reflect a strategic vision and be underpinned by a sound and robust quantitative analysis of current and projected situations. A strong analytical basis will also ensure that the different parts of the plan are comprehensive and comparable. The NECP’s analytical section begins with the current situation, including projections with existing policies and measures (87), which has significantly evolved since the initial NECPs. The ‘current situation’ section of the updated plan, for each of the Energy Union’s five dimensions, needs to reflect any relevant change based on the latest available information. In particular, the social and economic impact of the COVID-19 pandemic should be factored in, as well as the current geopolitical situation affecting energy prices, and the internal energy market and energy security and emission trends more broadly.

Member States are encouraged to make use of the most up-to-date modelling tools and approaches. To ensure a consistent approach, Member States should use the same key parameters for oil, gas, and coal import prices as well as carbon prices under the EU emission trading system as those used for reporting under Article 18 of the Governance Regulation. Member States should clearly reference the sources underpinning their analysis to ensure transparency of the data used. Whenever possible, the Commission invites Member States to use official European statistics.

3.5.1   Scenarios and timeframe

The updated NECPs shall describe the current situation (88) by including greenhouse gas projections of sectoral developments and projections for other dimensions of the Energy Union, with existing measures (i.e. a ‘WEM’ scenario) at least until 2040, including 2030 (89). In addition, the updated NECPs should include projections with additional planned policies and measures (i.e. a ‘WAM’ scenario) (90). These projections will allow to assess the impact of such planned policies and measures, and compare their impact with those of existing policies and measures, running at least to 2040 (91) (92). Member States must also describe the way existing and planned policies and measures contribute to achieve the EU’s climate-neutrality objective set out in Article 2(1) of the European Climate Law (93).

The European Climate Law changes the requirements for projections of anthropogenic greenhouse gas emissions (94) to a sequence of 6 instead of 4 future years ending with 0 or 5, immediately following the reporting year. As Member States will prepare greenhouse gas emissions projections until 2050 for the submission under Article 18 of the Governance Regulation by 15 March 2023, they are encouraged to provide projections until 2050 for both WEM and WAM scenarios in their updated NECPs, to show the trends towards the climate neutrality in the EU.

Member States must make available to the public a detailed description of the assumptions, parameters and methodologies used for the final scenarios and projections, taking into account statistical restrictions, licensing restrictions of commercial datasets, and compliance with data protection rules (95). Open access tools and data should be used as much as possible to promote transparency, validation and comparability of the results.

3.5.2   Assessing economic, social and environmental impacts

In the updated national plans, Member States shall assess the national, and where applicable, regional level macroeconomic impact of the planned policies and measures or groups of policies and measures. Where possible, their impacts on health, the environment, competitiveness, employment, skills and society shall also be assessed. This should include a comparison with the projections based on existing policies and measures or groups of measures (96) with a specific focus on the assessment of distributional impacts (97) and energy poverty (98). The Commission regularly makes available the results of research projects in this area, including macro and micro modelling for assessing employment, social and distributional impacts of the clean energy transition, or geopolitical developments (e.g., energy price scenarios) (99). Those elements can support the update of the national plans.

Member States are encouraged to consider issues such as possible economy-wide or sectoral bottlenecks, in particular for energy supply, water and raw materials, and workforce and skills availability. Moreover, expected changes in the sectoral composition of Member States’ economy should be described because some industries will decline, some will emerge and/or grow, and others will transform. In this regard, considerations on the research, innovation and competitiveness of the clean energy sector should be included. The positive impact of the energy transition should also be fully assessed.

The environmental impact addressed in the updated plans should reflect the findings of the national energy and climate progress reports (NECPRs) (100). The plans should also consider the current and future interactions between decarbonisation and the reduction of pollutants emissions (depollution). The connections between water, energy and climate play a critical role in achieving the Energy Union objectives. Extreme events such as droughts and high temperatures create stress on power systems, affecting power plant operations. Low water levels are exacerbating Europe’s energy crisis, affecting hydropower and nuclear generation and inland navigation. Member States are invited to describe the impact of the planned policies and measures in the updated NECPs on water management (including droughts, floods and water demand) and aquatic ecosystems, notably on the energy security dimension. Member States are encouraged to develop the updated NECPs in accordance with the relevant planning documents for water management, such as River Basin Management Plans, Flood Risk Management Plans and Drought Management Plans.

The Commission encourages Member States to develop the updated NECPs closely with the update of their national air pollution control programmes (NAPCPs) (101). Compared to the initial NECPs, there is still scope in the update to improve and strengthen the assessment of the impact of planned policies and measures on air pollutant emissions. As part of the integrated NECPRs, Member States will also report information on the quantification of the impact of policies and measures (or groups of policies and measures) on air quality and on air pollutant emissions. Nevertheless, an assessment in the NECPs enables Member States to prioritise those measures that maximise aggregate benefits. In addition, the policies and measures should be consistent with the EU biodiversity strategy (102), the circular economy action plan (103), the zero pollution action plan (104) and Europe’s Beating Cancer Plan (105).

The environmental impacts addressed in the updated plans should also reflect the impacts of the climate and energy policies on biodiversity. Climate change and biodiversity loss are interrelated. Energy and climate policies can lead to synergies but also trade-offs with biodiversity (e.g., nature restoration or nature-based solutions to increase sinks vs. deforestation or forest degradation to produce biomass for energy). These impacts should be reflected and quantified in the updated national plans.

3.5.3   Integrating and modelling the contribution of the circular economy to the climate transition

In their updated national plan, Member States are encouraged to set out their key circular economy policies and measures that affect greenhouse gas emissions, energy consumption and the use of critical raw materials. The circular economy reduces waste (including organic waste, source of methane emissions) and the use of virgin resources (including energy and critical raw materials) and so decreases greenhouse gas emissions. It creates jobs in proximity to the products that need to be maintained, refurbished or shared (106). Moreover, circularity improves the availability of raw materials, reducing the European economy’s dependence on imports. The circular economy also creates new jobs and opportunities at different skill levels, including for often under-represented groups in the labour-market such as women, persons with disabilities and vulnerable groups. The updated NECPs should cross-reference those strategies, action plans and legislation related to circular economy with impacts on energy and greenhouse gas emissions. NECPs should also estimate the actual and expected greenhouse gas emission reductions obtained thanks to circular economy measures, using available modelling tools.

Member States should report on key waste and wastewater policies and measures, aiming to reduce methane emissions. They should include the quantification of the actual or estimated impact of such policies and measures on greenhouse gas emissions. Member States are also encouraged to provide information on the models used to estimate the impact.

3.6    Financing the energy and climate transitions: Matching investment needs with available public and private financing

Member States are encouraged to include a comprehensive and consistent overview of the public and private investment needed to meet their energy and climate objectives, targets and contributions in their updated national plans. When submitting the national plans in 2020, all Member States set out energy investment needs, including sectoral breakdowns. However, not all Member States covered investment needs for all five dimensions of the Energy Union or provided a comprehensive overview of the investment needs for the climate transition, including climate adaptation measures. Moreover, the methodologies and templates used to present the various figures were often inconsistent. The differences in approaches and depth of analysis made it difficult to compare investment estimates across all national plans. This meant there was insufficient predictability for investors and that the overall robustness of the national plans were lowered.

To ensure a consistent overview between investment needs and financing, Member States are encouraged to consolidate the overview at the level of each individual or groups of policies and measures. For each of them, information on the investment expected to be delivered and its financing from the public side (national and EU level) and the private side shall be described. The template in Annex XIII on Progress towards financing of the NECPR could be used as a reporting structure.

3.6.1   Estimating investment needs

Member States shall provide information in their updated NECPs on the investment volumes they expect to require regarding the planned policies and measures (107) . The Commission invites Member States to outline the sources of financing to implement planned key policies and measures or groups of policies and measures (see Section 3.6.2 below). For policies and measures that have already been adopted and implemented, Member States should provide an overview of the initial investment estimated and where available, actual investment using, where possible, information collected through the NECPRs. If possible, this overview should be broken down by key policies and measures or groups of policies and measures. A good analytical basis helps identify investment needs. Such needs can be estimated in different ways, using complementary top-down or bottom-up approaches. While top-down approaches are best suited to compare alternative policy scenarios, bottom-down approaches help track the needs for individual investment and reforms.

Box 8: Good practices to describe the estimated investment needs To improve transparency, Member States are particularly encouraged to include the following elements in their updated NECPs: — A description of the methodology used to calculate the estimates; — A description of the baseline (i.e. a scenario without the additional investment); — A clear indication of what the numbers refer to (e.g. cumulative vs annual additional investment, nominal versus discounted values) and, possibly, the types of investment included (e.g. capital, durable goods, operating expenses); — A break-down of investment along well-defined groups of key policies and measures, possibly the five dimensions of the Energy Union and/or sectors in line with the integrated progress reporting; — Information on the investment volume expected to be triggered and expected to be required to achieve each policy and measure (PaM), and the source of financing (public (national, EU, including RRF) and private – where available). — The base year of the investment value and the relative discount rate.

3.6.2   Public and private financing

Member States are encouraged to describe in both quantitative and qualitative terms the financing of each policy and measure included in the updated NECPs. This includes information on how the EU and national funding instruments will be used (108). For instance, how to use programmes under the EU budget, such as the RRF, revenues generated through the EU ETS (including the Modernisation Fund, the Innovation Fund as well as national auctioning revenues) and other nationally available resources. Since various EU and national instruments can complement each other, Member States are encouraged to describe how they have created cost-efficient synergies and blended solutions for public financial support how is double funding avoided, and how public instruments are expected to further mobilise private investment.

Member States are invited to describe the role development banks play in financing energy and climate investments, as well as in crowding in private capital. For instance, the European Investment Bank has set a series of objectives (both within the EU and in its global operations) as the EU’s ‘climate bank’: 50 % of its operations will support climate action and environmental sustainability by 2025; all of its financing since the end of 2020 has been aligned with Paris Agreement; and it has set an overall target of mobilising at least EUR 1 trillion in climate and environment projects in the current decade.

The updated NECPs should also provide an overview of how much the private sector is expected to finance planned policies and measures. For example, for energy efficiency, Member States should provide detailed information on the expected volume of private investment, and the uptake by consumers of energy efficiency lending products (green loans, energy efficiency mortgages).

4   An iterative process with the Commission and the way forward

The Commission expects that all Member States respect the timing set out in Article 14 of the Governance Regulation. Member States should prioritise preparing the draft final updated plans given the higher ambitions and the limited time that remains before 2030.

The Commission is fully engaged to support Member States in updating the NECPs. In particular, the Commission will continue to engage with Member States at technical level, to ensure further in-depth exchanges and provide additional details on specific aspects of this guidance. The Commission will organise relevant working groups, bilateral exchanges, and engage in sectoral and regional settings to support good cooperation throughout the process.

Beyond regular exchanges, the Commission uses several instruments, including the European Semester and the Technical Support Instrument, as well as several supporting measures and studies, such as support contracts for preparing and assessing the NECP updates. After Member States submit the draft updated national plans (109), the Commission will assess them and may issue country-specific recommendations to Member States, as provided for in the Governance Regulation.

As part of the iterative process between Member States and the Commission, the Commission will assess the NECPs against the requirements of the Governance Regulation and will take full account of the guidance provided in this document. The Commission will pay particular attention to whether the objectives, targets and contributions set by Member States are sufficient for the collective achievement of the Energy Union, including those in the relevant legislation currently being negotiated as well as in assessment of the individual plans.

Table 1

Key objectives, targets and contributions and policies and measures put forward in legislation, strategies and proposals

Note:

this table is not exhaustive, but rather summarises key elements to consider for the update of the NECPs.

Initiative	Reference	Type	Objectives and targets	Policies and measures
European Green Deal European Climate Law	COM(2019) 640 final Regulation (EU) 2021/1119	Communication Adopted Legislation	— Climate neutrality at EU level by 2050. — Increase the EU’s greenhouse gas emission reductions target for 2030 to at least 50 % and towards 55 %.	n/a
Powering a climate-neutral economy: An EU Strategy for Energy System Integration	COM(2020) 299 final	Communication	— No additional objectives	Measures to: — use energy system integration to balance the electric grid and ensure the integration of renewable electricity; — connect the heating and electricity sector to ensure higher integration of renewables in both; — connect various end-use sectors, and the energy sector, to ensure the use of waste heat; — ensure access to data for electric vehicle users.
A hydrogen strategy for a climate-neutral Europe	COM(2020) 301 final	Communication	— 6 GW of renewable hydrogen electrolysers in the EU by 2024 and 40 GW of renewable hydrogen electrolysers by 2030.	n/a
Commission recommendation on energy poverty	COM(2020) 9600	Communication	— No additional objectives	Measures to: — reduce and/or alleviate energy poverty through energy efficiency; — safeguard energy access of all groups of consumers, especially the most vulnerable.
An EU Strategy to harness the potential of offshore renewable energy for a climate-neutral future	COM(2020) 741 final	Communication	— Installed capacity of at least 60 GW of offshore wind and at least 1 GW of ocean energy by 2030, with a view to reach 300 GW and 40 GW by 2050. — Member States to integrate objectives of offshore renewable energy development in their national maritime spatial plans.	n/a
Forging a climate-resilient Europe – the new EU Strategy on Adaptation to Climate Change	COM(2021) 82 final	Communication	— A climate-resilient society, fully adapted to the unavoidable impacts of climate change.	— There are 48 public policy commitments in the strategy. — Nature-based solutions roll-out, to help reduce climate risk, health treats, increase climate protection, and safeguard freshwater access. — Drought management plans, measures to increase the water retention capacity of soils and safe water reuse.
Fit for 55: delivering the EU’s 2030 Climate Target on the way to climate neutrality	COM(2021) 550 final	Communication	n/a (objectives are in accompanying proposals)	n/a (measures are in accompanying proposals)
Recast of the Energy Efficiency Directive (110)	COM(2021) 558 final	Legislative proposal	— EU-level target of 9 % for energy efficiency in 2030 and Member States’ revised contributions to this target. — Energy savings obligation – sub-target for energy savings coming from energy poverty and affordable social housing. — Target on reducing total final energy consumption of all public bodies. — Requirement to renovate all public buildings to nearly-zero-emission building levels.	— Measures reflecting the ‘energy efficiency first principle’. — Measures to remove barriers to energy-efficient public procurement. — List of public bodies that must contribute to the target on decreasing total final energy consumption of public bodies. — Measures for achieving the energy savings requirement. — Measures on energy transformation, distribution and transmission sectors, including efficient district heating and cooling infrastructure. — Measures to promote energy audits and energy management systems. — Comprehensive heating and cooling assessment (to be applicable for final NECP 2024). — Measures to promote and facilitate an efficient use of energy by final customers and final users. — Measures to encourage public bodies to use energy performance contracting for renovating large buildings. — Measures to promote energy services in the public sector. — Certification and/or equivalent qualification schemes for energy efficiency professions. — Financing energy efficiency programmes and schemes.
Revision of the Renewable Energy Directive (main) [1]	COM(2021) 557 final	Legislative proposal	— The upward-revised 40 % EU-level target for renewable energy sources (RES) in 2030 and Member State’s revised contributions to this target. — The upward-revised greenhouse gas intensity and reduction target in the transport sector. — The upward-revised sub-target for advanced biofuels for 2025 and 2030. — The new sub-targets for renewable fuels of non-biological origin in transport. — The new annual increase in the share of renewables in heating and cooling, including binding part of the increase and Member States’ voluntary addition increase rates. — The upward-revised indicative annual increase in district heating and cooling. — The new indicative. benchmarks for the share of renewables in the national building sector in 2030. — The new indicative annual increase of the RES share in industry for 2021-2030. — The new RFNBO target in industry for 2030 and 2035.	— Joint projects for renewable energy production (Art. 9). — Certification schemes for RES designers and installers (Art. 18). — Measures on system integration (Art. 20 and 20a). — Measures to achieve the annual average increase in the share of renewables in heating and cooling in line with Art. 24(1)-(2), and measures applied from the list under Art. 23(4). — Assessment of the national potential of energy from renewable sources (Art. 23(1a)). — Measures to achieve the annual average renewables’ share increase in district heating and cooling. — Measures to increase renewables’ share in cooling and district cooling. — Framework to enable sector integration between energy networks. — Credit mechanism under the transport obligation (Art. 25). — Measures related to the sustainability criteria, including on no-go areas for forest biomass. — Measures ensuring the biomass cascading principle.
Methane emissions reduction in the energy sector	COM(2021) 805 final	Legislative proposal	n/a	— Methane mitigation plans and measurement of abandoned mine methane mines and inactive wells.
Carbon border adjustment mechanism	COM(2021) 564 final	Legislative proposal	— Addressing greenhouse gas emissions embedded in specific goods, when they are imported into the EU’s customs territory to prevent the risk of carbon leakage.	n/a
Revision of Energy Taxation Directive	COM(2021) 563 final	Legislative proposal	— Ensure that clear taxation rules for energy products and electricity continue to contribute to the smooth functioning of the internal market while at the same time ensuring that the taxation better reflects the impact they have on the environment and on health.	— Measures to impose taxation on energy products and electricity in line with the Directive.
Ensuring a level playing field for sustainable air transport (RefuelEU aviation) (111)	COM(2021) 561 final	Legislative proposal	— Sustainable aviation fuels are mandated to account for 2 % of aviation fuel in 2025, 5 % in 2030, and 63 % in 2050.	n/a
Use of renewable and low-carbon fuels in maritime transport (FuelEU maritime) (111)	COM(2021) 562 final	Legislative proposal	— Limit on the greenhouse gas intensity of energy used on-board a ship. — Obligation to use on-shore power supply or zero-emission technology in ports.	n/a
Deployment of alternative fuels infrastructure (111)  (112)	COM(2021) 559 final	Legislative proposal	— National targets for the deployment of sufficient alternative fuels infrastructure in the Union, for road vehicles, vessels and stationary aircraft.	n/a
Emissions trading system (ETS) (main) – including maritime, buildings and transport	COM(2021) 551 final	Legislative proposal	— Contribution of the sectors covered by the EU ETS of -61 % in 2030 compared to 2005. — Emission reductions of 43 % in 2030 compared to 2005 for the buildings and road transport sectors.	— Carbon pricing and providing climate funding through auction revenues, the Modernisation Fund and the Innovation Fund, together with the market stability reserve (MSR) as a tool to ensure the stability of the carbon market.
ETS Market Stability Reserve	COM(2021) 571 final	Legislative proposal	— Keeping current parameters of the MSR post-2023 to ensure market predictability: intake rate of 24 % and minimum amount of 200 million allowances to be placed in the reserve.	n/a
ETS aviation	COM(2021) 552 final	Legislative proposal	— Phase out free emission allowances for aviation to 100 % in 2027, and consolidate the total quantity of aviation allowances at current levels applying the ETS linear reduction factor.	n/a
ETS as regards notification on CORSIA	COM(2021) 567 final	Legislative proposal	n/a	n/a
Social Climate Fund	COM(2021) 568 final	Legislative proposal	n/a	— National social climate plan. — Measures to increase energy efficiency of buildings. — Measures to increase the decarbonisation of heating and cooling of buildings. — Measures granting improved access to zero- and low-emission mobility and transport.
Just Transition Fund	Regulation (EU) 2021/1056	Adopted legislation	n/a	— Activities supported under art. 8.
Revision of Effort Sharing Regulation	COM(2021) 555 final	Legislative proposal	— Increased EU greenhouse gas emission reduction target by 2030 in effort sharing sectors to 40 % compared to 2005 levels, and split EU targets into binding national allocations.	n/a
Revision of Land use, land use change and forestry Regulation	COM(2021) 554 final	Legislative proposal	— Increased EU’s carbon removals target by 2030 in land-use, land-use change and forestry sector to 310 Mt and national binding targets for 2026-2030. — Aim for climate neutrality for 2035 in the land sector.	— Integrated mitigation plans for the land sector. — Link with biodiversity and nature restoration.
CO2 for cars and vans	COM(2021) 556 final	Legislative proposal	— Passenger cars: 2030 EU fleet-wide target equal to a 37,5 % reduction of the target in 2021. 2035 target is a 100 % reduction. — Commercial vehicles: 2030 EU fleet-wide target equal to a 31 % reduction of the target in 2021. 2035 target is a 100 % reduction.	n/a
Recast Energy Performance of Buildings Directive	COM(2021) 802 final	Legislative proposal	— Nationally established targets to ensure a highly energy efficient and decarbonised national building stock and transforming existing buildings into zero-emission buildings by 2050. — New minimum energy performance standards. — Update of the definition of nearly-zero energy building for new and existing buildings.	— National building renovation plan. — Measures on support compliance with minimum energy performance standards (Art. 9(3)).
Hydrogen/gas Regulation revision	COM(2021) 804 final	Legislative proposal	n/a	— Preventive and emergency measures for security of gas supply. — Measures related to cyber-security.
Hydrogen/gas Directive revision	COM(2021) 803 final	Legislative proposal	n/a	— Measures enabling a hydrogen market, in particular the infrastructure. — Measures on consumers right for hydrogen.
Recommendation on ensuring a fair transition towards climate neutrality	2022/C 243/04	Council Recommendation	— Ensure that the EU’s transition towards a climate-neutral and environmentally sustainable economy by 2050 is fair and leaves nobody behind.	— Comprehensive and consistent policy packages on: (a) active support to quality employment; (b) education, training and life-long learning; (c) fair tax benefit systems and social protection; (d) access to essential services/housing.
Security of supply and affordable energy prices: Options for immediate measures and preparing for next winter	COM(2022) 138 final	Communication	n/a	— Financial compensation on retail and wholesale market such as income support, reduced taxation, aggregation model. — Fixed price for generators.
Gas storage level obligations	Regulation (EU) 2022/1032	Regulation	— Minimum 80 % gas storage level by 1 November 2022, rising to 90 % in the following years. — National objectives to increase the flexibility of energy systems, including energy storage.	— Measures to ensure that the filling trajectories and targets are met in the following years, and ensure the filling of underground storages. — Measures in place to coordinate with Member States.
RepowerEU Plan	COM(2022) 230 final	Communication	— National objectives to phase out Russian gas. — National objectives on diversifying energy sources and supply from non-EU countries. — National objectives to substitute Russian fossil fuels by deploying domestic energy sources, in particular renewable energy and low carbon gases. — Targets to produce renewable gases, in particular by contributing to boosting methane production to 35 bcm by 2030. — Targets for hydrogen production.	— Revised preventive action plans and emergency plans. — Diversifying of gas and oil supply routes. — Diversifying of heating sources. — Solidarity mechanisms among Member States. — Measures to foster regional cooperation and relation with international partners. — Policies and measures delivering on creating the conditions for a shift from fossil fuels to renewable and low-carbon gases, in particular sustainable biomethane, and renewable hydrogen.
EU ‘Save Energy’	COM(2022) 240 final	Communication	n/a	— Measures on short term demand reduction. — Measures to strengthen energy efficiency as listed in Section 3.2 of the Communication. — Measures to increase energy efficiency in transport and encourage the switch to efficient renewable initiatives. — Financing measures to accompany such investment.
EU Solar Energy Strategy	COM(2022) 221 final	Communication	— EU solar photovoltaic capacity at almost 600 GW by 2030. — National objectives to set up renewables-based energy community in every municipality with a population of more than 10 000 people.	— Measures to enable an effective self-consumption in multi-apartment buildings (implementation of Renewable Energy Directive II). — Measures to ensure energy poor households and vulnerable consumers have access solar energy. — Investments framework and action to speed up solar investments in combination with renovations, storage and heat pumps. — Measures to eliminate administrative obstacles for cost-effective extensions of systems already installed. — Measures to support building-integrated photovoltaics for new buildings and renovations. — Measures to assess and remove unjustified barriers to developing renewable and citizen energy communities. — Measures to lift barriers to innovative forms of solar energy deployment.
EU external energy engagement in a changing world	JOIN(2022) 23 final	Communication	n/a	— Measures to prepare the EU for renewable hydrogen trade, prioritising the energy and water needs of local populations. — Measures to facilitate the availability of and the access to finance for energy efficiency and saving investments.
Amendments to Renewable Energy, Energy Performance of Buildings and Energy Efficiency Directives	COM(2022) 222 final	Legislative proposal	— The upward-revised 45 % EU-level target for RES in 2030. — EU-level target of 13 % for energy efficiency in 2030 and the Member States’ revised contributions to this target. — National objectives on the determination of ‘go to areas’.	— Mapping the areas necessary for meeting national contributions towards the EU’s 2030 renewable energy target. — Measures on renewables go-to areas. — Measures to comply with the time limits for granting permits. — Measures to limit the length of time to permit rooftop solar installations (REDII revision). — Measures to ensure all new buildings are ‘solar ready’, and to make solar compulsory for categories of buildings (EPBD revision).
Recommendation on permitting procedures and Power Purchase Agreements	C(2022) 3219 final	Recommendation	— National objectives and targets for upskilling and reskilling staff to bridge the skills gap of staff working on permit-granting procedures and environmental assessments. — Long term trajectories for planned expansion for renewable energy.	Measures to: — accelerate and simplify permit-granting processes; — simplify regimes for renewable energy communities; — streamline authorisation procedure and design a one-stop shop; — roll out digitalised procedures; — streamline environmental procedures; — simplify repowering existing renewable energy; — encourage innovative projects; — facilitate corporate power-purchasing agreements.
Guidance on permitting procedures and Power Purchase Agreements	SWD(2022) 149	Guidance	— Same as for the Recommendation on permitting.	— Same as for the Recommendation on permitting.
RRF amendment (REPowerEU chapters)	COM(2022) 231 final	Legislative proposal	n/a	— REPowerEU chapter to be included in the recovery and resilience plan.
Guidance on Recovery and Resilience Plans in the context of REPowerEU	C(2022) 3300 final	Commission notice	n/a	— New measures contributing to the REPowerEU objectives (list of possible investments and reforms provided in the notice).
Save gas for a safe winter	COM(2022) 360 final	Communication	— National objectives to achieve the 15 % gas demand reduction plan.	— Measures to reduce heating and cooling in buildings. — Measures to save gas in electricity and heat production. — Measures to encourage fuel switching in industry.
Coordinated demand reduction measures for gas	Regulation (EU) 2022/1369	Regulation	— Reduction of national gas consumption from 1 August 2022 to 31 March 2023 by at least 15 % compared to the average gas consumption from 1 August to 31 March in the 5 consecutive years.	n/a
Emergency intervention to address high energy prices	COM(2022) 473 final	Legislative proposal	— Reducing of electricity consumption by 10 % compared to the reference period. — Reducing of electricity consumption in peak hours by 5 %.	— Measures to accelerate the uptake of renewables power purchase agreements, in particular by SMEs.
Digitalisation of Energy System EUAction Plan	COM(2022) 552 final	Communication	n/a	Measures to: — increase R&I investment in digital solutions for energy, including scale-ups; — increase investments in developing, deploying, testing and piloting, and market uptake of digital solutions for energy; — increase investment in the smartness of the electricity grid; — promote energy system integration and planning of digital infrastructure, for example by reusing waste heat from data centres. — Explore all options of public networks (notably 5G bases) and f spectrum bands for energy grid solutions requiring European wide connectivity — empower consumers, raise digital skills, and offer them smart energy services; — address the carbon footprint of information and communication technologies; — foster cooperation between energy and digital players and create synergies between the energy and digital agendas.

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(1)  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 (Governance Regulation) (OJ L 328, 21.12.2018, p. 1).

(2)  Regulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021 establishing the framework for achieving climate neutrality (European Climate Law) (OJ L 243, 9.7.2021, p. 1).

(3)  Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions ‘Fit for 55’: delivering the EU’s 2030 Climate Target on the way to climate neutrality, COM(2021) 550 final; Hydrogen and Decarbonized Gas Package, COM(2021) 803 and COM(2021) 804.

(4)  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, REPowerEUplan, 18 May 2022, COM(2022) 230 final.

(5)  Following the adoption of Regulation (EU) 2022/1032 of the European Parliament and of the Council of 29 June 2022 amending Regulations (EU) 2017/1938 and (EC) No 715/2009 with regard to gas storage (OJ L 173, 30.6.2022, p. 17).

(6)  Communication from the Commission to the European Parliament, the Council, the European Economic and social Committee, the Committee of the Regions ‘Save gas for a safe winter’ COM(2022) 360 final and Council Regulation (EU) 2022/1854 of 6 October 2022 on an emergency intervention to address high energy prices (OJ L 261 I, 7.10.2022, p. 1).

(7)  Proposal for a Council Regulation Enhancing solidarity through better coordination of gas purchases, exchanges of gas across borders and reliable price benchmarks, COM(2022) 549 final.

(8)  See Article 14 and requirements of Chapter 2 and Annex I of the Governance Regulation.

(9)  Only the Court of Justice of the European Union is competent to authoritatively interpret Union law.

(10)  Stakeholder workshop on updates of national energy and climate plans | European Commission (europa.eu).

(11)  The five dimensions of the Energy Union, as referred to in Article 1(2) of Governance Regulation are closely related and mutually reinforcing: energy security, internal energy market, energy efficiency, decarbonisation and research, innovation and competitiveness.

(12)  See section 3.4.

(13)  Pursuant to Article 9(2) of the Governance Regulation, the Commission will assess the draft updated NECPs no later than 6 months before the deadline for submitting the final plans.

(14)  Article 2(11) of the Governance Regulation.

(15)  Powering a climate-neutral economy: an EU Strategy for Energy System Integration, COM(2020) 2999 final.

(16)  A hydrogen Strategy for a climate-neutral Europe, COM(2020) 301.

(17)  An EU Strategy to harness the potential of offshore renewable energy for a climate-neutral future, COM(2020) 741.

(18)  An EU Solar Energy Strategy, COM(2022) 221.

(19)  Forging a climate-resilient Europe – the new EU Strategy on Adaptation to Climate Change, COM(2021) 82 final.

(20)  Sustainable Carbon Cycles, COM (2021)800.

(21)  Digitalising the energy system – EU Action plan, COM(2022) 552.

(22)  Pathway to a Healthy Planet for All EU Action Plan: ‘Towards Zero Pollution for Air, Water and Soil’, COM(2021) 400.

(23)  EU Biodiversity Strategy for 2030 Bringing nature back into our lives, COM(2020) 380.

(24)  New EU Forest Strategy for 2030, COM(2021) 572.

(25)  Sustainable and Smart Mobility Strategy, COM(2020) 789 final.

(26)  Regulation (EU) 2022/1032.

(27)  Decision 1/CMA.3.

(28)  Regulation (EU) 2022/1032.

(29)  Regulation (EU) 2022/869 of the European Parliament and of the Council on 30 May 2022 on guidelines for trans-European energy infrastructure, amending Regulations (EC) n°715/2009, (EU) 2019/942 and (EU) 2019/943 and Directives 2009/73/EC and (EU) 2019/944, and repealing Regulation (EU) n°347/2013 (OJ L 152, 3.6.2022, p. 45).

(30)  Commission Delegated Regulation (EU) 2022/564 of 19 November 2021 amending Regulation (EU) No 347/2013 of the European Parliament and of the Council as regards the Union list of projects of common interest (OJ L 109, 8.4.2022, p. 14).

(31)  Communication from the Commission to the European Parliament, the Council, the European Economic and social Committee, the Committee of the Regions ‘Save gas for a safe winter’, COM(2022) 360 final.

(32)  Council Regulation (EU) 2022/1369 of 5 August 2022 on coordinated demand-reduction measures for gas (OJ L 206, 8.8.2022, p. 1).

(33)  Council Regulation (EU) 2022/1854 of 6 October 2022 on an emergency intervention to address high energy prices (OJ L 261 I , 7.10.2022, p. 1).

(34)  Proposal for a Council Regulation enhancing solidarity through better coordination of gas purchases, exchanges of gas across borders and reliable price benchmarks, COM(2022) 549 final.

(35)  EU external energy engagement in a changing world, JOIN(2022) 23 final.

(36)  The Global Gateway, JOIN(2021) 30 final.

(37)  Article 14(5) of Regulation (EU) 2018/1999.

(38)  See Annex 8 of the 2022 Semester Country Reports.

(39)  Council Recommendation of 16 June 2022 on ensuring a fair transition towards climate neutrality (OJ C 243, 27.6.2022, p. 35).

(40)  The EU counts nine outermost regions located in the western Atlantic Ocean, the Caribbean basin, the Amazonian forest and the Indian Ocean. In total, they are home to 4,8 million citizens. The outermost regions are islands, archipelagos and one land territory (French Guiana) and are not part of the European continental grid. Pursuant to Art. 5(1)(e)(iv) of the Governance Regulation, Member States should take account of geographical, environmental and natural constraints, including those of non-interconnected areas and regions in setting renewable energy targets.

(41)  https://pact-for-skills.ec.europa.eu/index_en

(42)  Council Recommendation on individual learning accounts.

(43)  See also JRC Report, Czako V. Skills for the clean energy transition, Publication Office for the European Union, Luxembourg, 2022, JRC129676.

(44)  Article 3(3)(d) of the Governance Regulation.

(45)  Commission Recommendation (EU) 2020/1563 of 14 October 2020 on energy poverty (OJ L 357, 27.10.2020, p. 35).

(46)  Article 3(3)(d) of Governance Regulation.

(47)  Implementing the Repower EU Action Plan: investment needs, hydrogen accelerator and achieving the bio-methane targets, SWD(2022) 230 final, p. 35.

(48)  Proposal for a Directive of the European Parliament and of the Council amending Directive (EU) 2018/2001 on the promotion of the use of energy from renewable sources, Directive 2010/31/EU on the energy performance of buildings and Directive 2012/27/EU on energy efficiency, COM(2022) 222 final.

(49)  EU Solar Strategy COM(2022) 221 final, Guidance to Member States on good practices to speed up permit-granting procedures for renewable energy projects and on facilitating Power Purchase Agreements SWD(2022) 0149 final.

(50)  Article 2(18) of the Governance Regulation.

(51)  Renovation wave communication, COM(2020) 662 final.

(52)  Communication from the Commission to the European Parliament, the Council, the European Economic and social Committee and the Committee of the Regions EU ‘Save Energy’ COM(2022) 240 final.

(53)  Digitalising the energy system – EU Action plan COM(2022) 552.

(54)  Proposal for a Decision of the European Parliament and of the Council establishing the 2030 Policy Programme ‘Path to the Digital Decade’, COM(2021) 574 final.

(55)  For example, at the UN Climate Summit, the Global Adaptation Summit and different COPs of the UNFCCC and Paris Agreement.

(56)  Under Article 5 of the European Climate Law, Member States must ensure that policies on climate adaptation are coherent, mutually supportive and provide co-benefits for sectoral policies, and work towards better integration of adaptation to climate change in a consistent manner in all policy areas.

(57)  Article 4(a)(1)(iii) and Annex I of Governance Regulation.

(58)  Proposal for a Regulation of the European Parliament and of the Council on nature restoration COM(2022) 304 final.

(59)  EU Methane strategy COM(2020) 663 final.

(60)  European Environmental Agency.

(61)  Regulation (EU) 2018/842 of the European Parliament and of the Council of 30 May 2018 on binding annual greenhouse gas emission reductions by Member States from 2021 to 2030 contributing to climate action to meet commitments under the Paris Agreement (OJ L 156, 19.6.2018, p. 26).

(62)  Such as the Common Agriculture Policy, the Landfill Directive and the proposed as well as planned revisions of the Industrial Emissions Directive, the Urban Waste Water Treatment Directive, and the Renewable Energy Directive.

(63)  Proposal for a Regulation of the European Parliament and of the Council on methane emissions reduction in the energy sector and amending Regulation (EU) 2019/942, COM (2021) 805 final.

(64)  An EU-wide assessment of the National Energy and Climate Plans Driving forward the green transition and promoting economic recovery through integrated energy and climate planning.

(65)  See the Council Recommendation of 16 June 2022 on ensuring a fair transition towards climate neutrality (OJ C 243, 27.6.2022, p. 35).

(66)  Adaptation to Climate Change, Restore our Ocean and Waters, Climate-Neutral and Smart Cities, A Soil Deal for Europe.

(67)  Article 13 of the European Climate Law.

(68)  United in delivering the Energy Union and Climate Action – Setting the foundations for a successful clean energy transition, COM(2019) 285. See also Economidou, M., Ringel, M., Valentova, M., Zancanella, P., Tsemekidi Tzeiranak, S., Zangheri, P., Paci, D., Ribeiro Serrenho, T., Palermo, V. and Bertoldi, P., National Energy and Climate Plans for 2021-2030 under the EU Energy Union, EUR 30487 EN, Publications Office of the European Union, Luxembourg, 2020, ISBN 978-92-76-27013-3, doi:10.2760/678371, JRC122862.

(69)  National energy and climate plans | European Commission (europa.eu).

(70)  An EU-Wide assessment of National Energy and Climate Plans – Driving forward the green transition and promoting economic recovery through integrated energy and climate planning, COM(2020) 564.

(71)  Pursuant to Articles 17 to 25 of the Governance Regulation.

(72)  Aarhus (europa.eu).

(73)  Article 6 of the Aarhus Convention.

(74)  Article 7 of the Aarhus Convention.

(75)  The NECPlatform project funded under the LIFE Program aims at supporting six EU Member States (Bulgaria, Croatia, France, Italy, Portugal and Romania) in setting-up and managing permanent multi-level Climate and Energy Dialogue (CED) Platforms, helping them comply with Article 11 of the Governance Regulation by fostering vertical and horizontal integration of energy and climate policies, more info: Funding & tenders (europa.eu).

(76)  EU Energy Platform (europa.eu).

(77)  Article 12 of the Governance Regulation.

(78)  For an overview of EU funding tools and instruments for a fair green transition, see Annex 3 of the Staff Working Document accompanying the Commission proposal for a Council Recommendation on ensuring a fair transition towards climate neutrality, SWD(2021) 452 final.

(79)  Established by 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, p. 17).

(80)  About 40 % of the Recovery and Resilience Plans’ (RRP) allocations relate to measures supporting climate objectives and several RRPs exceed by a substantial margin the 37 % climate financing threshold set in the Regulation. Total climate expenditure in the 26 plans adopted by 5 October 2022 amounts to EUR 199,9 billion. In addition, the plans include EUR 18,4 billion of additional environmental expenditure, taking the total amount of expenditure tagged as contributing to either climate or environmental objectives to EUR 218,2 billion or 44,1 % of the total allocation.

(81)  COM(2021) 1054 final.

(82)  Announced as part of the European Green Deal Investment Plan Communication on 14 January 2020.

(83)  Proposal for a Regulation of the European Parliament and of the Council establishing a Social Climate Fund, COM(2021) 568.

(84)  Strategic Plan Regulation (EU) 2021/2115, Article 120.

(85)  Webinar on the evaluation of agricultural greenhouse gas policies and measures, July 2022, see https://www.eionet.europa.eu/etcs/etc-cm/products/webinars-and-workshops/2021-webinar-on-the-evsaluation-of-agricultural-greenhouse-gas-policies-and-measures.

(86)  In 2014-2020, it has been the main EU source of funding for investments in climate and energy, with nearly EUR 70 million invested. Cohesion policy supporting the Energy Union, European Structural and Investment Funds (europa.eu).

(87)  Article 8 of the Governance Regulation.

(88)  In line with Section B of Annex I to the Governance Regulation.

(89)  Annex I, Section B.4.2.1.ii. of the Governance Regulation.

(90)  Annex I Section B.5 of the Governance Regulation.

(91)  At least until 10 years after the period covered by the plan.

(92)  Annex I, Section B, 5.1.i. of the Governance Regulation.

(93)  Article 8(2)(e) of the Governance Regulation.

(94)  National energy and climate plans | European Commission (europa.eu).

(95)  Article 8(3) of the Governance Regulation.

(96)  Article 8(2)(b) of the Governance Regulation.

(97)  See Communication on Distributional Impact Assessment, COM(2022) 494 final.

(98)  Article 3(3)(d) of the Governance Regulation.

(99)  See for instance the GD-AMEDI and the AMEDI+ projects, jointly run by DG EMPL and DG JRC. The main outputs of both projects will be presented and made accessible on a joint project website.

(100)  Article 14(4) of the Governance Regulation.

(101)  This update will be due in 2023 for most Member States, i.e. four years after the adoption of the first NAPCP, in line with Article 6(3) of Directive 2016/2284 on the reduction of national emissions of certain atmospheric pollutants.

(102)  COM(2020) 380 final.

(103)  COM(2020) 98 final.

(104)  COM(2021) 400 final.

(105)  https://ec.europa.eu/health/sites/health/files/non_communicable_diseases/docs/eu_cancer-plan_en.pdf

(106)  Circular Economy Action Plan, COM(2020) 98.

(107)  Annex I, Section.5.3.(i) to the Governance Regulation.

(108)  The 2022 State of the Energy Union, COM(2022) 547, contains a list of EU funding instruments available.

(109)  Article 31 of the Governance Regulation.

(110)  COM(2022) 222 final (see elsewhere in the table) has proposed to further increase some of the targets in this proposal.

(111)  Proposal with a different legal base than the Governance Regulation. Member States should ensure consistency between the NECP and objectives/targets, and the policies and measures to achieve them, as required under this proposal. Member States are encouraged to include policies and measures related to this proposal in the NECP if they have important climate and energy features.

(112)  Member States should ensure consistency between the NECP and the national policy framework in this proposed Regulation.

Conclusions of the Council and the representatives of the Governments of the Member States meeting within the Council on promoting the intergenerational dimension in the youth field to foster dialogue and social cohesion

(2022/C 495/03)

THE COUNCIL AND THE REPRESENTATIVES OF THE GOVERNMENTS OF THE MEMBER STATES MEETING WITHIN THE COUNCIL

RECOGNISING THAT:

1.

The European Youth Goal # 3 in the EU Youth Strategy, entitled ‘Inclusive societies’, sets out to ‘provide more spaces, opportunities, resources, and programmes to foster dialogue (1) and social cohesion, and combat discrimination and segregation’ and the European Youth Goal # 4 entitled ’Information and constructive dialogue’ has the objective to ensure that young people engage in participatory and constructive dialogue.

2.

Building on existing possibilities at European, national, regional, and local level, the European Year of Youth (2022) acknowledges the need to empower, honour, support and engage with young people to ensure that their interests and needs are duly taken into account in political actions across policy areas (2). The intergenerational dimension of youth policies reveals itself crucial to the achievement of the Year’s objectives and securing its legacy in a socially cohesive manner.

3.

Youth work has, among other things, the potential to help engage young people with diverse backgrounds and living conditions, including those with fewer opportunities, in different types of intergenerational projects and activities and can serve as a valuable instrument for promoting intergenerational dialogue, intergenerational solidarity and intergenerational equity as well as for building positive relationships between people of different generations.

4.

Youth councils, youth organisations, youth work structures, youth networks and non-formal groups of young people can play an important role in promoting intergenerational dialogue, equity, and solidarity. With their youth expertise (3) and youth know-how they create space for experimentation and can contribute to the discovery of innovative solutions and modes of intergenerational collaboration.

5.

The COVID-19 pandemic and the Russian war of aggression against Ukraine - which has caused an unprecedented influx of Ukrainian refugees in Europe in 2022 - have shown that volunteers of all ages are important for societies in promoting societal resilience in the face of crisis situations. Young people volunteering in Member States during the pandemic and the influx of refugees have proved their potential to promote intergenerational solidarity and create intergenerational bonds between young people and other age groups (4).

6.	Intergenerational volunteering brings younger and older people together in purposeful, and mutually beneficial activities, programmes and projects that promote solidarity, deeper understanding, and respect between generations, and helps to build more cohesive communities.

7.

The digital divide illustrates a longstanding inequality in developing skills and providing access to new technologies. The Commission’s Green Paper on Ageing acknowledges that ‘investing in digital skills, community development and intergenerational cohesion can prevent the deterioration of mental health and well-being and reduce inequalities’ (5). Sharing of digital skills and knowledge is an area where younger people can play a leading role and help create a stronger sense of intergenerational connection with people older than them (6).

8.

EU programmes and initiatives such as Erasmus+, the European Solidarity Corps, the EU Youth Dialogue, the European Year of Youth 2022, the Conference on the Future of Europe, the New European Bauhaus, as well as the European Structural and Investment Funds (ESIF), including ALMA (Aim, Learn, Master, Achieve) under the European Social Fund+ and the European Union Recovery Instrument (NextGenerationEU), have the potential to be valuable instruments for promoting intergenerational dialogue and encouraging intergenerational solidarity in the youth field at local, regional, national and European level. Projects based on volunteering and solidarity activities are living proof of young people’s commitment to being actively engaged in intergenerational dialogue and solidarity, among other things.

9.

Promoting intergenerational equity through youth-related policies (7) at all levels is highly relevant, especially in rural, remote, peripheral, less-developed areas and outermost regions. The shrinking proportion of younger generations across different Member States (8) and the ‘brain drain’ represent a serious challenge for many of these communities, for which it is crucial to give a higher priority to intergenerational equity by formulating supportive youth-related policies (9) for ensuring cohesion.

10.

Gender equality (10) needs to be ensured when facilitating an intergenerational dimension in youth-related policies and youth work provision. This requires efforts not just by governments, but also by civil society including youth organisations, youth leaders, youth workers, the media, and the private sector.

11.

The EU Youth Dialogue as the biggest youth participatory mechanism in the EU and the Council of Europe’s co-management system provide spaces for conceptualising intergenerational dialogue as a process in which people of different ages have a space for common reflection and co-production. During the EU Youth Conference in Prague on 11-13 July 2022, young people expressed the view that intergenerational dialogue should not replace a direct youth dialogue with policymakers but should take place alongside it.

CONSIDER THAT:

12.

It is important to promote dialogue both among young people and between them and older generations. The benefits of bringing together the experience and competencies of different generations are significant and contribute to building peaceful and cohesive societies based on mutual respect, empathy, solidarity, and an understanding of the needs of all age groups.

13.

The engagement of young people in intergenerational dialogue and in intergenerational solidarity projects, including volunteering activities enables young people to acquire transversal competencies and social skills, which can be applied in other areas of their lives. Active engagement of different generations in intergenerational dialogue contributes to the development of interpersonal skills and reciprocal adaptability and helps build societal resilience and well-being through social engagement, cultivation of social connections and prevention of social isolation.

14.

Promoting intergenerational equity through a holistic and forward-looking approach to developing youth-related policies contributes to social cohesion. Policymakers supported by researchers, youth workers, youth organisations, other professionals (11) and other relevant stakeholders should demonstrate strong political commitment to act upon inequalities both within and between different generations and address intergenerational challenges. They should have access to existing national or European data and evidence, disaggregated by age, which monitor inequalities between young people from diverse backgrounds and living conditions and across age groups.

15.

Policymakers, youth organisations including local youth councils, young people, youth workers, youth leaders, researchers, educators, and other relevant stakeholders should consider, where relevant, additional measures and innovative approaches that can bring young people together with other age groups in decision-making processes.

16.

The heterogeneity of generations, in terms of diverse individual and group characteristics including mental and physical abilities, socio-economic conditions, and the identities they espouse, must be respected so that all generations have an equal opportunity to enjoy full and effective participation in an intergenerational dialogue at all levels of decision-making affecting their personal, professional, and social life.

17.

It is important to support paid and volunteer youth workers in the promotion and implementation of the intergenerational dimension in their work. The education and training of paid and volunteer youth workers on the intergenerational dimension should be adapted, where appropriate, to promote intergenerational solidarity and equity in youth work provision and volunteering activities.

18.

The involvement of researchers in developing long-term structural measures to promote intergenerational solidarity and justice, for example through the provision of indicators regarding intergenerational equity or through periodical research publications examining intergenerational equity should be explored.

19.

Innovative intergenerational dialogue initiatives on developing digital skills can encourage young Europeans to facilitate the involvement of their peers and older people in the digital transition. Such initiatives, aimed at empowering communities to strengthen their digital literacy skills, can reduce community members’ loneliness, contribute to their well-being and increase their social inclusion and thus help to build cohesive communities.

20.

The concept of sustainable development, as referred to in the United Nations Sustainable Development Goals, and the need to strengthen its social dimension, entails the active engagement of citizens of all ages in building safe, inclusive, and cohesive communities. Societal recognition of the diverse needs and responsibilities of various age groups can be reinforced through events and volunteering activities that bring together representatives of different age groups, so as to provide younger and older generations with the opportunity to interact and exchange views on the topics associated with a sustainable Europe.

21.

Understanding generational diversity has important implications in terms of building capacities for developing healthy intergenerational relations and social cohesion. To promote dialogue between younger and older generations, the opportunity to engage in intergenerational dialogue should also be provided to children, with a view to creating a shared experience of constructive dialogue whilst developing mutual respect and empathy from an early age.

INVITE MEMBER STATES AT THE APPROPRIATE LEVELS TO:

22.	Raise awareness of intergenerational equity considerations among policymakers and provide them with the evidence, information, data, and other relevant resources needed to reinforce age-based equality in policymaking.

23.

Explore possibilities to include in youth strategies and policies, where appropriate, objectives and measures, that reflect the intergenerational dimension. These objectives and measures should be developed on the basis of knowledge, evidence, and good practices, and in consultation with diverse groups of young people, their representative organisations, and other relevant stakeholders, so as to achieve more responsive and inclusive policy outcomes.

24.

Promote and facilitate, in close cooperation with youth organisations, youth councils, and local, regional, and national authorities and communities, consultations with young people and their active and meaningful participation in developing, implementing, and evaluating the intergenerational dimension of all youth-related policies.

25.

Facilitate the creation of opportunities and accessible spaces for young people to engage in meaningful intergenerational dialogue in public decision-making processes across all policy areas that affect their lives and well-being by implementing targeted measures that enable the involvement, in particular, of young people with fewer opportunities and underrepresented groups of young people.

26.

Explore ways to provide space for bringing policymakers, researchers, youth workers and young people together so that they can develop intergenerational dialogue tools such as intergenerational dialogue toolkits and facilitate equal access to information on how young people’s voices can be heard through intergenerational dialogue opportunities.

27.

Make use of the opportunities provided by the European Solidarity Corps and Erasmus+ programmes to support the development and the implementation of capacity-building strategies of youth organisations and young people which help develop community volunteering by creating partnerships that reflect the diversity of the whole community and the needs of different generations.

28.	Explore possibilities whereby existing competence-based frameworks (12) for formal and non-formal youth work education, learning and training can help reflect the intergenerational dimension in youth work activities.

INVITE THE MEMBER STATES AND THE EUROPEAN COMMISSION, IN THEIR RESPECTIVE AREAS OF COMPETENCE AND AT THE APPROPRIATE LEVELS, ADHERING TO THE PRINCIPLE OF SUBSIDIARITY, TO:

29.	Explore the use of existing guidelines, toolboxes (13) and mechanisms such as citizens panels (14) to support the integration of the youth dimension into sectoral policies and thus enhance policy coherence, so as to deliver policies and services that are more responsive to young people’s needs.

30.

Continue the use of existing participatory mechanisms and platforms, such as youth parliament simulation sessions and policy dialogue with policymakers at local, national, regional, and European level to promote intergenerational dialogue between young people and stakeholders with decision-making mandates at all levels.

31.

Use existing networks and tools, including Eurodesk and the European Youth Portal for promoting user-friendly information about the various EU possibilities for developing and implementing projects and initiatives supporting intergenerational dialogue, intergenerational solidarity, and intergenerational equity.

32.

Facilitate the exchange of good practices which cover joint engagement of younger and older citizens in solidarity activities as well as community planning, as developed in programmes such as Erasmus+ and the European Solidarity Corps, and lifelong learning through existing EU tools and platforms, in order to increase social cohesion in local communities.

33.

Organise mutual learning activities, such as seminars, peer-learning activities, or other relevant forms of cooperation between stakeholders from different policy areas, young people, and youth organisations on promoting intergenerational dialogue, intergenerational solidarity, and intergenerational equity.

34.	Within the existing financial framework and programmes, support and, where possible, explore setting up spaces and initiatives for young people. In order to reinforce social cohesion, enable them to develop and participate in activities that promote intergenerational dialogue.

INVITE THE EUROPEAN COMMISSION IN ACCORDANCE WITH THE PRINCIPLE OF SUBSIDIARITY TO:

35.

Foster synergies between youth policy and other youth-relevant policies and programmes in order to meet the objectives of the EU Youth Strategy, including European Youth Goals # 3 ‘Inclusive societies’, and # 4 ‘Information and constructive dialogue’, with the latter’s targets to include dialogue and social cohesion as well as engagement in respectful and non-violent dialogue.

36.	Highlight the role of the EU Youth Coordinator in raising awareness of the need to address intergenerational considerations across all relevant policy areas.

37.

Facilitate the exchange of good practices between Member States on fostering intergenerational dialogue and intergenerational solidarity by making use of the European Youth Portal, the Youth Wiki, and EU programmes and initiatives such as Erasmus+, the European Solidarity Corps, Creative Europe and the New European Bauhaus.

INVITE ALL ACTORS INVOLVED IN EUROPEAN COOPERATION ACTIVITIES IN THE YOUTH FIELD TO:

38.

Promote the European Day of Solidarity between Generations which has been celebrated annually on 29 April since 2009 and provides a good opportunity for the Union to renew its commitment to strengthening solidarity and cooperation between generations in order to promote a fair and sustainable society (15).

39.	Stimulate intergenerational dialogue in order to fight age discrimination and ageism by bringing different age groups together and enabling them to get to know each other better, learn from each other and cooperate in their everyday lives.

40.

Make joint efforts to implement European Youth Goal #4 by engaging different generations through joint activities aimed at involving local communities in combating targeted disinformation and propaganda campaigns. Where appropriate, media literacy programmes aimed at building societal resilience in the face of targeted disinformation and misinformation campaigns should be evaluated and considered for expansion in both formal education and non-formal learning settings. This is particularly important in the context of disinformation and misinformation campaigns in crisis situation such as in the case of the Covid-19 pandemic and the Russian war of aggression against Ukraine in 2022.

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(1)  For the purposes of these Council Conclusions, “dialogue” is understood to mean “intergenerational dialogue”.

(2)  Decision (EU) 2021/2316 of the European Parliament and of the Council of 22 December 2021 on a European Year of Youth (2022), OJ L 462, 28.12.2021, p.1.

(3)  Youth expertise is understood to mean young people’s insights into what they have seen to work and function well.

(4)  Responses of Member States in periodically updated questionnaires on the measures adopted by Member States in the field of education and youth during the COVID-19 pandemic under the HR, DE, PT and SI presidencies.

(5)  Commission’s Green Paper on Ageing: Fostering solidarity and responsibility between generations, COM(2021) 50 final, OJ C 50, 27.1.2021, p.21.

(6)  EURACTIV special report Golden years: Opportunities for Europe’s ageing population, 22 June 2022, with a reference to Edwards Lifesciences’ Unifying Generations: Building the Pathway to Intergenerational Solidarity, 21 June 2022.

(7)  Youth-related policies are policies that affect the lives of young people and whose integral component is the improvement of young people’s living conditions and opportunities, alongside support for equal possibilities to participate in economic, social and political life.

(8)  UNECE Policy Brief on Ageing No. 18, March 2017.

(9)  Supportive youth-related policies are based on the assessment of young people’s needs and address different aspects of public policies which are not covered by more general policy documents, for instance well-being, mental health, housing, access to infrastructure or services etc.).

(10)  The Gender Equality Strategy 2020-2025 provides a framework for the European Commission’s work on gender equality and sets out the policy objectives and key actions for the 2020-2025 period. Communication from the Commission, COM(2020) 152 final.

(11)  For the purposes of these Council conclusions, ‘other professional’ is understood to mean a person, usually seen - depending on different national context - as a mentor, educator, academics, instructor or trainer, who provides instruction or training to policymakers, youth workers and volunteers working in the youth field aimed at enabling them to learn the skills they need for their job or activities.

(12)  Council of Europe, Recommendation CM/Rec(2017)4 of the Committee of Ministers to Member States on youth work.

(13)  OECD (2020), Governance for Youth, Trust and Intergenerational Justice: Fit for All Generations? OECD Public Governance Reviews, OECD Publishing, Paris or United Nations Youth Strategy, youth marker methodology, Youth 2030 Working with and for young people.

(14)  COM(2022) 404 final: Citizens’ Panels enable citizens to jointly think about topics relevant to them. For example, the European Citizens’ Panels were a key feature of the Conference on the Future of Europe. As was the case in this Conference, participants should be randomly selected. But they should also reflect Europe’s diversity and demography. Young people should form a third of the participants. Where appropriate, a ‘citizen report’ will be integrated in the impact assessment, summarising the outcomes of these participatory and deliberative processes. When all participants are young people, this would be dubbed a ‘youth test’. The first of this new generation of Citizens Panels will be launched in the context of the 2022 State of the Union address.

(15)  Decision No 940/2011/EU of the European Parliament and of the Council of 14 September 2011 on the European Year for Active Ageing and Solidarity between Generations (2012), OJ L 246/5, 23.9.2011.

Euro exchange rates (1)

28 December 2022

(2022/C 495/04)

1 euro =

	Currency	Exchange rate
USD	US dollar	1,0640
JPY	Japanese yen	142,21
DKK	Danish krone	7,4365
GBP	Pound sterling	0,88058
SEK	Swedish krona	11,1038
CHF	Swiss franc	0,9863
ISK	Iceland króna	151,90
NOK	Norwegian krone	10,4495
BGN	Bulgarian lev	1,9558
CZK	Czech koruna	24,252
HUF	Hungarian forint	403,30
PLN	Polish zloty	4,7008
RON	Romanian leu	4,9460
TRY	Turkish lira	19,9144
AUD	Australian dollar	1,5660
CAD	Canadian dollar	1,4361
HKD	Hong Kong dollar	8,2931
NZD	New Zealand dollar	1,6772
SGD	Singapore dollar	1,4323
KRW	South Korean won	1 348,59
ZAR	South African rand	18,2890
CNY	Chinese yuan renminbi	7,4224
HRK	Croatian kuna	7,5365
IDR	Indonesian rupiah	16 765,93
MYR	Malaysian ringgit	4,7055
PHP	Philippine peso	59,613
RUB	Russian rouble
THB	Thai baht	36,953
BRL	Brazilian real	5,6109
MXN	Mexican peso	20,6856
INR	Indian rupee	88,0943

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(1)  Source: reference exchange rate published by the ECB.