Amendments to the recovery plan approved by the European Commission

The amendments to the recovery plan, originally approved in autumn 2021, were initiated in response to the reduction in the RRF support amount and the drastically changed geopolitical and economic situation. Minister of Finance Mart Võrklaev explained that Russian aggression in Ukraine, the energy crisis, disruptions in supply chains and the overall rise in inflation meant that the plan could no longer be implemented in the timeframe and on the scale originally approved. ‘In the changed circumstances, it was necessary to revise the plans that were made during peacetime and focus on what is most relevant and effective using the limited possibilities and timeframe,’ the minister added.

The RRF support amount allocated to Estonia was decreased by 12% compared to initial expectations and now stands at €863 million. However, the REPowerEU support launched by the European Commission in May 2022 will be added to this, which focuses on rapidly reducing dependence on fossil fuels from Russia and boosting the green transition, and is an important step towards alleviating the energy crisis. The total amount of the REPowerEU support for Estonia is €83.3 million. A reassignment of €6.62 million from Brexit will be added to this. The total support for Estonia under the recovery plan now amounts to €953.2 million. ‘This is an important extra boost for our economy. The investments it brings will create jobs for our entrepreneurs and the smart technologies will also increase our export competitiveness,’ said Võrklaev.

Estonia was the first country in the European Union to submit the REPowerEU plan to the European Commission and, after its approval by the Council of the European Union, will soon start implementing it. Under the REPowerEU plan annexed to the recovery plan, €31.84 million will be devoted to reforming the acceleration of renewable energy deployment and €38 million to grid investments to speed up authorisation procedures and bring new renewable energy capacity to the market. €20.2 million will be invested into increasing the production and uptake of biogas. The reform and investments will be carried out in the coming years and will be completed by spring 2026 at the latest.

‘The rise in energy prices has highlighted the need to invest more in renewable energy and to make people's households more energy efficient. Many of the amendments to the plan will help us meet these targets and save energy in our homes,’ emphasised Mart Võrklaev.

With this in mind, the amendments to the recovery plan increased energy efficiency subsidies for detached homes by €20 million, extra funds were also allocated to 5 measures from the original plan to cover the cost increases, such as the construction of the Tallinna Vanasadam tram line, energy measures, and the introduction of resource-efficient green technologies, and 8 new measures to alleviate the energy crisis were added. In addition, the timing or ambition of the results of some reforms and investments of the plan were partly adjusted.

The government approved the formal submission of the recovery plan amendment to the European Commission in February this year. As a result of the negotiations that followed, the European Commission today approved the amendments to Estonia's recovery plan and submitted a proposal to the Council of the European Union to approve it, which we expect in mid-June.

An overview of the financial amendments to the recovery plan is provided in the table below:

Notice of the European Commission: https://ec.europa.eu/commission/presscorner/detail/en/ip_23_2709