National recovery plans: sustainability perspectives through the EU support

The EU institutions have accelerated since the end of 2020 support for the states’ recovery-resilience plans with the ever biggest package of stimulus. In line with the member states recovery strategies and plans, agreed by the Commission during 2021, the states are implementing presently these plans under strict Commission’s surveillance. Some ideas behind the NextGenerationEU program and InvestEU Fund are expected to have positive results for progressive EU integration.  

The Union’s long-term NextGenerationEU program (NGEUP) and the InvestEU Fund represent vital supporting instruments in the states’ recovery and resilience process, in particular in the post-pandemic period. The preparation of the national recovery-resilient plans, RRPs was not an easy task: i.e. only about half of the EU member states presented to the Commission their recovery plans before the expected deadline (which was fixed by the end of April 2021). It was initially apparent that some states have had preliminary complexes in their planning and implementation processes. Thus, Portugal submitted its first RRP by the fixed deadline, i.e. by April 22, followed by Italy, Spain, France, Germany and Greece. The main difficulties in keeping to the deadline have been problems associated with the national RRPs needed to fulfill two important Commission’s conditions, e.g. investments for green and climate changes should be up to 37 percent of national budgets, and digital transitions with 20 percent; these two “conditions” have been compulsory for the national commitments to sufficient structural reforms. In order to monitor the correct process of public expenditures, the EU established an independent surveillance body to oversee states budget structures.
Source: https://ec.europa.eu/commission/presscorner/detail/en/ip_21_1869

However, there are still some issues to be resolved after about 15 months of the NGEU’s implementation: e.g. the novelty of its legal construction and national constitutional perspectives, borrowing and lending under NGEU, as well as questions of new own resources and challenges for budgetary control, ratifications of national recovery plans, the necessity of fundamental changes, borrowing and lending under NGEUP, the effect of new “own resources” and challenges for national budgetary control, etc.

European Semester and economic policy coordination
In the EU, the European Semester for economic policy coordination (EU Semester) is the framework to identify national reform priorities and monitor their implementation. In addition to measures that strengthen the competiveness, growth potential and sustainable public finances, reforms based on solidarity, integration, social justice and a fair distribution of wealth should also be introduced with the aim of creating quality employment and sustainable growth, ensuring equality of, and access to, opportunities and social protection, protecting vulnerable groups and improving citizens living standards. The EU states are to develop their own national multiannual investment strategies in support of those reforms; those strategies should be presented, where relevant, alongside the yearly national reform programs to outline and coordinate priority investment projects to be supported by national and/or Union funding.
More on legal background in: Regulation 2021/241 establishing the Recovery and Resilience Facility; Official Journal of the European Union, Series L 57/17; 18.2.2021.
Some of the EU member states have been receiving first payments during summer 2021 to start national post-pandemic investments; it was about a year after the EU-28 leaders agreed on issuing €750 billion in joint debt to reboot their pandemic-ravaged economies. Beyond the urgency for the states to get the EU funding, the success of the national recovery and resilience process has had huge ripple effects in talks on fiscal integration. Whether the EU states’ economies will succeed in rebooting socio-economic growth in line with the sustainable principles and climate requirements in the long term; the process will activate heavy and complicated discussion on the deepening of the Union. Its failure would have tremendous consequences for the EU’s image, the bloc’s governance, common market confidence, and possibly for the European integration process in general.
More on the Council’s decision in: https://www.consilium.europa.eu/en/documents-publications/treaties-agreements/agreement/?id=2020025&DocLanguage=en

There is also a world-wide surveillance mechanism: every year about 40 countries report on the SDG implementation by presenting voluntary national reviews. Through this process it is possible to learn about states’ engagement with the SDGs implementation and encourage all governments and networks –at global, regional, national and grass-roots levels to get involved.
See: https://sustainabledevelopment.un.org/mgos.

National climate-energy plans
The EU’s energy security, transition to clean energy and sustainability are at the core of the European integration together with the EU gas and electricity markets. The EU plans are to cooperate closely with the member states (as well countries around the world, including the US) on energy policy, decarbonisation and security of supply; these plans are following the EU commitments to meet the goals of the Paris Agreement, through clean energy, in particular renewables, energy efficiency, and technologies, provide a path to energy security and reduced dependence on fossil fuels. The current challenges to European security underscore the states’ commitment to accelerating and carefully managing the transition from fossil fuels to clean energy.
Over the last decade, the EU has invested in diversification of supply through infrastructure and reinforcement of its internal energy networks, increasing the resilience and flexibility of EU energy markets. The European Commission is intensifying work with the member states for security of supply, within transparent and competitive gas markets in a manner compatible with long-term climate goals and reaching net-zero emissions by 2050.
The United States is already the largest supplier of liquefied natural gas (LNG) to Europe by way of collaborating with governments and market operators on additional volumes of natural gas to the EU from diverse sources. LNG in the short-term can enhance security of supply and continue to enable the transition to net zero emissions; the European Commission intends to improve transparency and utilisation of LNG terminals in the EU.
Source: https://ec.europa.eu/commission/presscorner/detail/en/statement_22_664.

Financial issues
The EU’s long-term budget, coupled with NextGenerationEU program (NGEUP), the temporary instrument designed to boost the post-COVID-19 recovery, was adopted in December 2020; the NGEUP is the largest stimulus package ever financed in the EU member states. Financial perspectives are not without some issues of concern, including such as connections between the European “recovery and resilience facility” with the ratifications process of national RRPs, states’ implementation of borrowing and lending under NGEU, budgetary control and combating fraud, etc.
Investing in economic activity is a priority in European integration; there is a specific EU’s instrument, so-called “taxonomy” (with a science-based transparency tool for companies and investors) in creating optimal steps for investors in socio-economic projects having a substantial positive impact on climate, environment and sustainability; the “taxonomy” will also help to disclose financial market participants. Existing energy mix in EU-27 varies greatly: some states are still heavily based on high carbon-emitting coal; in this regard, the “taxonomy” will assist these states towards climate neutrality. European Commission considers natural gas and nuclear energy as means to facilitate the transition towards predominantly renewable-based energy mix; the taxonomy framework would “classify” all energy sources under clear and tight conditions: e.g. gas must come from renewable sources or have low emissions by 2035 with a generally more low-carbon and “greener” energy mix.
Source: https://ec.europa.eu/commission/presscorner/detail/en/IP_22_2

InvestEU Program
The InvestEU Fund supports four policy areas which represent important policy priorities for the Union and bring high EU added value: sustainable infrastructure; research, innovation and digitisation; small and medium-sized businesses; and social investment and skills. Hence, the following financial support is envisaged for these policy areas in the coming five years: a) for sustainable infrastructure -€9.9 billion, b) for research, innovation and digitisation – €6.6 billion, c) for SMEs – €6.9 billion, and d) for social investment and skills – €2.8 billion.
Source: https://ec.europa.eu/commission/presscorner/detail/en/QANDA_22_1549.
The InvestEU fund in the form of guarantee amounts to €26.2 billion, with provisioning from the Multiannual Financial Framework (MFF) and NextGenerationEU resources. The overall investment to be mobilised on this basis is estimated at more than €372 billion.
On investment legislative guidelines, see: Regulation 2021/1078, supplementing Regulation 2021/523 setting out the investment guidelines for the InvestEU Fund; reference web-site at: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv%3AOJ.L_.2021.234.01.0018.01.ENG&toc=OJ%3AL%3A2021%3A234%3ATOC).
This EU investment program is a major element in the EU’s Recovery Plan; in this regard, the InvestEU supports sustainable investment, innovation and job creation; it aims to trigger more than €372 billion in additional investment over the period 2021-27. Generally, it brings together, under one roof, the European Fund for Strategic Investments and 13 other EU financial instruments. It ensures a strong focus of investors on the EU’s medium- and long-term investment policy priorities such as the European Green Deal and climate transition (30 percent of the total support), the EU Digital Strategy and the Strong Social Europe for Just Transitions. InvestEU also supports activities of strategic importance to the Union members, in particular in view of enhanced resilience and of strengthening strategic value chains.
The Recovery and Resilience Facility is the key instrument in the NextGenerationEU program in assisting the states on the process of stronger and more resilient economies in post-pandemic period. It will make €672.5 billion in loans and grants available to support reforms and investments undertaken by the states. The aim is to mitigate the economic and social impact of the coronavirus pandemic and make European economies and societies more sustainable, resilient and better prepared for the challenges and opportunities of the green and digital transitions.

InvestEU’s composition
The InvestEU Program consists of, first, the InvestEU Fund, which aims to mobilise more than €372 billion of public and private investment through an EU budget guarantee of €26.2 billion that backs the investment of implementing partners such as the European Investment Bank (EIB) Group and other financial institutions.
More on the InvestEU Fund in: https://europa.eu/investeu/investeu-fund_en
Second, the InvestEU Advisory Hub, which complements the InvestEU Fund by supporting the identification, preparation and development of investment projects in the EU-27. Together with the InvestEU Portal – the EU’s online matchmaking tool – it aims at strengthening European investment and business environment. Managed by the European Commission and financed by the EU budget, the InvestEU Advisory Hub connects project promoters and intermediaries with advisory partners, who work directly together to help projects reach the financing stage. The InvestEU Advisory Hub is the central entry point for project promoters and intermediaries seeking advisory support and technical assistance related to centrally managed EU investment funds. The InvestEU Advisory Hub provides technical support and assistance including capacity building to project developers and entities – private and public – helping with the preparation, development, structuring and implementation of investment projects. For example, the InvestEU Portal brings together investors and project promoters on a single EU-wide platform, by providing an easily-accessible and user-friendly database of investment opportunities available within the EU.
More on the portal in: https://europa.eu/investeu/investeu-portal_en.
Thus, generally, the InvestEU program gives an additional boost to investment, innovation and job creation in Europe during 2021-27. It builds on the successful model of the Investment Plan for Europe, the Juncker Plan which mobilised more than €500 billion in the period 2015-20. Present aim is to trigger a new investment wave of more than €372 billion using EU budget guarantee.
Legal background: Regulation (EU) 2021/523 of the European Parliament and of the Council of 24 March 2021 establishing the InvestEU Programme and amending Regulation (EU) 2015/1017, in: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32021R0523&qid=1617090511360.

Supporting sustainable states’ infrastructure
The following spheres of national sustainable development can be supported by the InvestEU program:
= transport, in particular clean and sustainable transport modes, multimodal transport, road safety, renewal and maintenance of rail and road infrastructure;
= Energy, in particular renewable energy, energy efficiency and building renovation projects focused on energy savings and the integration of buildings into a connected energy source, storage, digital and transport system, improving energy infrastructure interconnection levels;
= Digital connectivity and access including in rural areas,
= Supply and processing of raw materials, space, oceans, water, including inland waterways, waste management in line with the waste hierarchy and the circular economy;
= Nature and other environment infrastructure,
= Cultural heritage, tourism;
= Equipment, mobile assets and deployment of innovative technologies that contribute to the environmental climate resilience or social sustainability objectives of the EU, and meet the environmental or social sustainability standards of the EU
Source: https://europa.eu/investeu/about-investeu/what-investeu-programme_en

In addition, the states are able to use InvestEU resources as a tool to implement their recovery and resilience plans under the Recovery and Resilience Facility (RRF), if they have indicated so in their recovery and resilience plans. Concretely, funds from RRF allocations may be channeled through the states’ governance under the InvestEU to help with the implementation of the states’ recovery and resilience plans, while respecting the plan’s milestones and targets. In this way the member states can benefit from the EU guarantee and its high credit rating, giving national and regional investments more firepower.
Source: https://ec.europa.eu/commission/presscorner/detail/en/QANDA_22_1549

Supporting business
EU funding is available for all types of companies of any size and sector including entrepreneurs, start-ups, micro companies, SMEs and larger businesses; a wide range of financing is available: business loans, microfinance, guarantees and venture capital. Every year the EU supports more than 200 000 businesses. However, the decision to invite EU financing is to be made by the local financial institutions such as banks, venture capitalists or angel investors; thus, through the EU’s available support the local institutions can provide additional financing to businesses. The exact financial conditions, i.e. the amount, duration, interest rates and fees – are determined by national financial institutions (there are over 1000 financial institutions in the EU).
   Note. In order to understand a company’s financial position and improve its chances to obtain EU’s financing in the future, it is possible to refer to the EU Capital Requirement Regulation (art. 431). Additional information on getting funding from EU is available in: https://europa.eu/youreurope/business/finance-funding/getting-funding/access-finance/search/en/financial-intermediaries?shs_term_node_tid_depth=206.

As to supporting SMEs, the InvestEU program provides the following assistance in the national SMEs activities:
a) Access to and availability of finance primarily for SMEs, including innovative ones and those operating in the cultural and creative sectors, as well as for small mid-cap companies;
b) Supporting in particular businesses with difficulties of access to finance: start-ups, younger and smaller companies, businesses with a perceived higher risk and lacking (sufficient) collateral, and innovative ones
https://europa.eu/investeu/about-investeu/what-investeu-programme_en

In protecting intellectual property, the EU capitalizes on the value of the intangible assets its companies create, develop and share, by helping them manage these assets more effectively and by providing financial support and better access to finance. The Commission published the Action Plan on Intellectual Property to support the EU’s recovery and resilience in November 2020. Among the priorities of the Action Plan, the Commission committed to promote an effective use and deployment of intellectual property tools, in particular by SMEs. Concretely, the Commission offered financial support for SMEs impacted by the COVID-19 crisis, helping them to manage their IP portfolios as well as helping them move towards green and digital technologies. Thus, the IP protection can cover many different assets, including trademarks, designs, patents, corporate identities, products, services, and processes.
In 2021, the Commission together with EUIPO launched a first EU-SME Fund to reimburse the costs of IP-scan in national trademark and design-registration costs. A total of €6.8 million of the EU budget has been used by about 13.000 SMEs in EU-27; in total, 28.000 services (through vouchers) acquired assistance during first year of the SME Fund.
In January 2022, the Commission and the European Union Intellectual Property Office (EUIPO) launched the new EU SME Fund, which offers vouchers for EU-based SMEs to help them protect their intellectual property (IP) rights. This is the second EU SME Fund aiming at supporting SMEs in the COVID-19 recovery and green and digital transitions for the next three years (2022-2024).
Source: https://euipo.europa.eu/ohimportal/en/online-services/sme-fund

Post-Covid recovery, human rights and the UN “decade of actions”
The Sustainable Recovery Pledge, SRP was launched in June 2021 in conjunction with the 47th session of the UN Human Rights Council. Signatories to the pledge, expressed their commitment to a post-pandemic recovery strategy aligned with the 2030 Agenda for Sustainable Development and the Paris agreement, important is safeguarding fundamental human rights.
More on SRP in: https://www.humanrights.dk/publications/launch-pledge-building-better-future-all-human-rights-its-heart

In the post-pandemic period, the modern challenges heightened the ongoing climate and digital emergency and existing social inequalities; only through two years in the UN Decade of Action to deliver on the Sustainable Development Goals, the pandemic has shown strains in reaching the decade’s gains and lack of sufficient progress in SDGs implementation. In this context, re-emphasizing the social contract between decision-makers and wide public, and necessary trust in governance is important in states’ recovery strategy based on human rights; besides, this is what the 2030 Agenda and the Paris Agreement have underlined.
The UN Human Rights Council’s inter-session meeting devoted to the UN-2030 Agenda and Human rights (January 18, 2022) provided a vital opportunity to reaffirm the Sustainable Recovery Pledge and commitments: global community, as well as and non-state actors have to reflect on socio-economic development, good practices and lessons learned in implementing SDGs.
The European Union’s long-term NextGenerationEU program and the InvestEU Fund represent vital supporting instruments in the states’ recovery and resilience process, in particular during the post-pandemic period.

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