NextGenerationEU: Commission endorses Portugal’s €22.2 billion modified recovery and resilience plan, including a REPowerEU chapter

Today, the European Commission has given a positive assessment of Portugal’s modified recovery and resilience plan, which includes a REPowerEU chapter. The plan is now worth €22.2 billion in grants and loans and covers 44 reforms and 117 investments.

Portugal’s REPowerEU chapter consists of 6 reforms and 16 investments to deliver on the REPowerEU Plan’s objectives to make Europe independent from Russian fossil fuels well before 2030. These measures focus on energy efficiency in buildings, support to green industry, renewables and renewable gases, sustainable transport and the electricity grid.

In addition to this, Portugal has also proposed 34 new or scaled up investments to its original plan and five new reforms. The proposed reforms aim to enhance the efficiency of both the social protection system and the tax system, promote circular economy and waste management, and further boost the digital transition of the public administration. No investment or reform has been removed from the initial recovery and resilience plan.

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

the high inflation experienced in 2022;
supply chain disruptions caused by Russia’s war of aggression against Ukraine, which have made investments more expensive and caused delays; and
the upward revision of its maximum RRF grant allocation, from €13.9 billion to €15.5 billion. This upward revision is a result of the June 2022 update to the RRF grants allocation key.
To finance the increased ambition of its plan, Portugal has requested to transfer to the plan the totality of its share of the Brexit Adjustment Reserve, in line with the REPowerEU Regulation, amounting to €81 million. Portugal also requested €3.2 billion in additional loans, which come on top of the €2.7 billion in loans already included in Portugal’s plan. Together with REPowerEU and RRF grants for Portugal (respectively amounting to €704 million and €15.5 billion), these funds make the submitted overall modified plan worth €22.2 billion.

An additional boost to Portugal’s green transition

The modified plan has a stronger focus on the green transition, devoting 41.2% (up from 37.9% in the original plan) of the available funds to measures that support climate objectives.

The measures included in the REPowerEU chapter strongly contribute to reducing the reliance on fossil fuels. The proposed reforms range from streamlining the permitting of renewables to the adoption of legislation which will help the take-up of biomethane and renewable hydrogen in the country. REPowerEU investments aim at strengthening energy efficiency in residential, service and public buildings, and at developing a one-stop-shop model for energy efficiency interventions. Key measures include supporting the implementation of a Bus Rapid Transit system in the city of Braga, mostly with decarbonised vehicles, as well as the modernisation of 75 public educational establishments. Other strategic reforms and investments aim to decarbonise transport both in the mainland and in the autonomous regions, as well as to build storage capacity to increase the flexibility of the energy system. In addition, an observatory for energy poverty will be set up to monitor and help setting policies to aid households in need.

In addition to the REPowerEU chapter, the deployment of ambitious research and innovation agendas developed by business-academia consortia that focus on green transition will strengthen Portugal’s scientific and technological capabilities.

All these measures are expected to have a lasting impact for the green transition.

Reinforcing Portugal’s digital preparedness and social resilience

Portugal’s plan remains ambitious in the digital sphere too. Indeed, it devotes 21.1% of its total allocation to support the digital transition.

Some of the new investments that contribute to this goal are aimed at accelerating the process of digital transformation and digitalisation of science. They will foster the development of the innovation and entrepreneurship ecosystem of higher education institutions by for example reducing precariousness of researchers, and supporting data-driven public policies.

Also, the modified plan’s social dimension remains very ambitious, with significantly strengthened measures to address long-standing social challenges. These cover the responsiveness and accessibility of healthcare and long-term care services, and the access to affordable and social housing. A new reform will simplify the social benefits system to facilitate support to the most vulnerable. The plan continues to provide a wide range of social services focusing on the elderly, people with disabilities and migrants, as well as integrated programmes aimed at supporting disadvantaged communities in deprived metropolitan areas.

Next steps

The Council will now have, as a rule, four weeks to endorse the Commission’s assessment.

The Council’s endorsement would allow Portugal to present the next payment request(s) under the RRF and a request for €157 million in pre-financing of the REPowerEU funds.

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

Background

Under the RRF, Portugal has so far received €5.1 billion, comprising pre-financing (€2.2 billion disbursed on 3 August 2021) as well payments following the positive assessment of the first and second payment requests (€1.16 billion on 9 May 2022, followed by €1.8 billion on 8 February 2023).