NextGenerationEU: Commission endorses Spain’s €163 billion modified recovery and resilience plan, including a REPowerEU chapter

This article is brought to you in association with the European Commission.

Today, the Commission has given a positive assessment of Spain’s modified recovery and resilience plan, which includes a REPowerEU chapter. The plan is now worth €163 billion (€83 billion in loans and €80 billion in grants) and covers 111 reforms and 142 investments.

Spain’s REPowerEU chapter consists of a new reform, a scaled-up investment drawing on three existing measures,and seven new investments to deliver on the REPowerEU Plan‘s objectives to make Europe independent of Russian fossil fuels well before 2030. These measures focus on diversifying away from fossil fuels, notably by accelerating the deployment of renewable energy, renewable hydrogen, decarbonising industry and investing in the value chain for the net-zero industry.

In addition, the revised recovery and resilience plan includes 59 measures that are new or aim to increase their level of ambition. The new measures seek to strengthen Spain’s business environment and attract skilled workers, improve the sustainability of the agricultural sector, promote the circular economy and counter desertification, streamline permitting procedures for renewable energy projects, strengthen cybersecurity rules and boost affordable housing. The proposed new or scaled-up investments cover new financial instruments to promote investments in the economy, including to support the green and digital transitions, as well as the competitiveness of SMEs.

Spain’s changes to the original plan are based on the need to factor in:

• objective circumstances hindering the fulfilment of certain measures as originally planned, including the high inflation experienced in 2022 and 2023 and supply chain disruptions caused by Russia’s war of aggression against Ukraine;
• the request to take up €83 billion in available RRF loans;
• the upward revision of its maximum RRF grant allocation, from €69.5 billion to €77.2 billion.

To finance the increased ambition of its plan, Spain has also requested to transfer to the plan its share of the Brexit Adjustment Reserve (BAR), in line with the REPowerEU Regulation, amounting to €58 million. These funds, added to Spain’s RRF and REPowerEU grants allocation (amounting to €77.2 billion and €2.6 billion respectively) and to its RRF loan request of €83 billion, make the approved overall modified plan worth €163 billion.

An additional boost to Spain’s green transition  

The modified plan has a strong focus on the green transition, allocating 40% of available funds to measures that support climate objectives. The revised plan includes 30 new measures on climate action, bringing the total green contribution to €65 billion (up from €27.6 billion in the original plan).

The new reform, the scaled-up investment and the seven new investments included in the REPowerEU chapter contribute significantly to the green dimension of the plan. The reform aims at facilitating the deployment of renewable energy sources and at streamlining the processing of permitting applications. The seven new investments focus on renewable hydrogen, the value chain for renewable energy, electricity networks and the decarbonisation of industry. The scaled-up investment will support energy self-consumption, energy storage and energy communities.

In addition, significant investments, structured as financial instruments, subsidy and support schemes, will also boost sustainable transport, energy efficiency, renewable energy, industry decarbonisation, the circular economy, climate change adaptation and sustainable tourism. Other investments will support water management and water re-use, making it more efficient through the digitalisation of ‘irrigation communities’ and of the processes related to the management of cities’ water cycle.

Reinforcing Spain’s digital preparedness and social resilience 

The Spanish plan’s digital ambition has also increased, thanks to 18 new measures that contribute to the digital transition by fostering the development of advanced technologies, supporting start-ups and investing in research and development (R&D). The revised plan devotes 26% of its total allocation to support the country’s digital transition.

The modified plan includes several new measures related to advanced digital technologies, with strategic investments across the entire value chain of advanced microprocessors, from R&D to manufacturing. Significant investments will also support the scaling up of technological start-ups, improving access to finance for companies in the audiovisual sector, as well as promoting the use of new technological tools in the media sector. Additional investments, including in cybersecurity, will boost the digitalisation of the water management sector and of public administration.

The modified plan’s important social dimension has also increased. In addition to the transformative reforms and investments of the original plan, new measures include increased supply and easier access to housing, attracting foreign talent and facilitating the entry into the country of skilled migrant workers. Improving the animal and human health standards for transport and the sustainable use of antibiotics in the livestock industry are also covered.

Next steps

The Council will now have, as a rule, four weeks to endorse the Commission’s assessment.   The Council’s endorsement will allow Spain to receive €1.4 billion in pre-financing of the REPowerEU funds. Under the RRF, Spain has so far received €37 billion: €9 billion in pre-financing and €28 billion disbursed in total for the first three payments.

The Commission will authorise further disbursements based on the satisfactory fulfilment of the milestones and targets outlined in Spain’s revised recovery and resilience plan, reflecting progress on the implementation of the investments and reforms.