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Summaries of EU Legislation

European Union Recovery and Resilience Facility

 

SUMMARY OF:

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

WHAT IS THE AIM OF THE REGULATION?

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

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

KEY POINTS

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

Amending Regulation (EU) 2023/435 adds to these aims by including specific reference to increasing the resilience, security and sustainability of the EU’s energy system through reducing dependence on fossil fuels and diversifying energy supplies at the EU level, including by increases in the use of renewables, in energy efficiency and in energy storage capacity.

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

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

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

The RRF’s €723.8 billion (in current prices) budget:

  • consists of €338 billion in grants, of which the Commission may allocate 70% up to 31 December 2022 and 30% during 2023;
  • consists of €385.8 billion in loans, which Member States may request until 31 August 2023 (a loan may not exceed 6.8% of the Member State’s 2019 gross national income);
  • does not replace recurring national budgetary expenditure, except in justified cases;
  • supplements financial support under other EU programmes;
  • respects the additionality principle* of EU funding.

Under Amending Regulation (EU) 2023/435, the additional finance for the REPowerEU investments and reforms will come from the following sources:

  • €20 billion in REPowerEU grants, 60% of which will come from the Innovation Fund (established under Directive 2003/87/EC, which set up the EU’s greenhouse gas emission allowance trading system – see summary) and 40% from frontloading Member States’ allowances;
  • up to €5.4 billion from the Brexit Adjustment Reserve: Member States may choose to make a transfer to the RRF for the purpose;
  • up to €17 billion from the cohesion policy funds, in line with the existing possibility to transfer 5% of those funds to the RRF;
  • €225 billion in loans under the RRF until 31 August 2023.

The economic governance rules state that:

  • the Commission may propose suspending all or part of the funding to a Member State if the Council of the European Union decides it has not done enough to correct its excessive deficit;
  • a proposal to suspend commitments* is adopted unless the Council rejects it by a qualified majority within 1 month;
  • a proposal to suspend payments* requires the Council’s approval;
  • suspension of funding must be proportionate and take account of a Member State’s economic and social circumstances;
  • the Council may lift a suspension following a Commission proposal.

Member States draw up national recovery and resilience plans, setting out their reform and investment agenda in a comprehensive and coherent package. These:

The Commission:

  • assesses the plans according to their relevance, effectiveness, efficiency and coherence;
  • if it proposes that the Council approves a national plan, sets out the milestones and targets that a Member State must meet in its reforms and investment projects, and the RRF’s financial contribution;
  • may reject or accept amendments to the plans;
  • transmits the national plans to the European Parliament and the Council without delay;
  • monitors the facility’s implementation and measures the achievements made;
  • establishes a recovery and resilience scoreboard;
  • submits annual reports to the Parliament and the Council.

Member States:

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

The relevant Parliament committee may invite the Commission every 2 months to discuss progress under the facility.

The Commission submits reports to the Parliament and the Council:

Recovery and resilience scoreboard

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

Delegated act

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

FROM WHEN DOES THE REGULATION APPLY?

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

BACKGROUND

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

For further information, see:

KEY TERMS

Additionality principle. One of the underlying principles of the EU structural and investment funds. This principle states that EU structural and investment funds’ contributions must not replace public or equivalent structural expenditure by a Member State in the regions concerned.
Commitments. The total cost of legal obligations (contracts, grant agreements/decisions) that could be signed in the current financial year.
Payments. Appropriations covering expenditure due in the current year, arising from legal commitments entered in the current year and/or earlier years.

MAIN DOCUMENT

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

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

RELATED DOCUMENTS

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

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

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

See consolidated version.

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

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

See consolidated version.

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

See consolidated version.

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

See consolidated version.

last update 03.04.2023

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