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Cyprus Recovery and Resilience Plan falls short on energy goals

pilides very happy
Cyprus minister of energy, commerce and industry Natasa Pilides

Too many measures have only a short-term effect and major goals are neglected.

By Dr. Charles Ellinas

Cyprus’ government has put forward an ambitious ‘Recovery and Resilience Plan’ (RRP), with the strategic goal of “strengthening the resilience of the economy and the potential of the country for economic, social and environmentally sustainable long-term growth and prosperity.” It adds that the RRP seeks to promote Cyprus as a lead country in Green and Digital Transition.

That is ambitious, given that so far Cyprus’ sustainable development and clean energy performance has been woefully inadequate, coming close to the bottom of most EU and internationally recognised reviews and assessments. Cyprus has been good in terms of words but poor on delivery.

The European Commission (EC) required that “Plans should include a summary of the consultation process at national level.” Unfortunately in Cyprus such a consultation process has been rather limited, confined to generalities and not details. An indication of this is the rather general information presented for such a critical Plan for the country on the government’s ‘cyprus-tomorrow.gov’ website – detail is missing.

Without it, one has to take the government’s word that the RRP’s strategic goal will be achieved through its proposals. That hardly constitutes ‘consultation’. As a result, it will not be surprising if it attracts comments and criticism from those that may differ or not agree with the details as they emerge. This may include political parties but, more importantly, the House of Representatives that will have to approve relevant legislation related to the proposed reforms.

Overall, Cyprus’ RRP includes a total of 58 reforms and 76 investment projects, to be funded out of the €1.2billion budget over the period 2021-2027. Undoubtedly such an injection into Cyprus’ ailing economy should lead to short-term benefits.

But let’s look at the potential impact of the RRP on Cyprus’ energy transition longer-term, especially achievement of EU’s 2030 and 2050 clean energy goals beyond the modest goals in Cyprus current ‘National Energy and Climate Plan’ (NECP) for the period 2021-2030.

Key to this are two parts of the RRP:

  • Sustainable transport
  • Climate neutrality, energy efficiency and penetration of renewable energy sources

Sustainable transport

Electrification of Cyprus’ transport system, included in the RRP, is an essential step towards energy transition. But without a substantially more ambitious adoption of renewables and biofuels, it risks merely leading to substitution of petrol and diesel by electricity produced largely by fossil fuels, thus failing to significantly reduce transport-related emissions – with potential penalties from the EC.

Greece intends to increase the share of renewable energy in electricity consumption from 29.2 per cent to 61 per cent and the share in transport from 6.6 per cent to 19 per cent, according to its NECP for the period 2021-2030, with the overall target for renewables set at 35 per cent.

If Cyprus is serious about renewables and climate change, it should follow Greece’s example – setting ambitious, tangible, clean energy targets, rather than vague, unquantifiable, statements.

Climate neutrality, energy efficiency and penetration of renewable energy sources

Unfortunately the RRP does not give grid modernisation the attention it needs. Without it, expansion in renewable energy will always be limited. As a result, Cyprus will not only be stuck with expensive electricity longer-term, but will also be unable to respond to the new, more challenging, climate targets set by Europe – a 55 per cent cut in emissions by 2030 and net zero emissions by 2050 – incurring increasing EC emission trading system (ETS) penalties.

The impact of the proposed RRP projects on emissions, increase in renewables and energy efficiency does not appear to have been quantified. As a result, general statements by ministers, such as “speedy transition to a green economy built on renewable energy”, ring hollow.

Certainly, many of the measures being proposed will have a beneficial short-term effect, but will not achieve the strategic long-term change envisaged by the EU. They are also unlikely to achieve “the national goals for climate neutrality, energy efficiency, and renewable energy sources,” claimed by the ministers.

One of the few long-term RRP projects is support of the Euro-Asia Interconnector is worthwhile, that will help end Cyprus energy isolation and could contribute to the wider adoption of renewables.

 

How will the EC assess the RRPs

The EC states that it will “translate the RRP content into legally binding acts… which will constitute the implementation yardstick of the plans for the years to come.”

In terms of energy, the Commission strongly encourages Member States to include in their RRPs investment and reforms in the following areas:

  1. Power up– The frontloading of future-proof clean technologies and acceleration of the development and use of renewables.
  2. Renovate– The improvement of energy efficiency of public and private buildings.
  3. Recharge and Refuel– The promotion of future-proof clean technologies to accelerate the use of sustainable, accessible and smart transport, charging and refuelling stations and extension of public transport.

Provided Cyprus’ RRP is approved, first payments could be made starting from mid-2021, subject to all necessary legal acts being in place.

But further payments will be linked to performance. The EC will authorise disbursements based on the satisfactory fulfilment of milestones and targets reflecting progress on the reforms and investments proposed in the RRP – to the satisfaction of the EC. If a Member State has not satisfactorily implemented the milestones and targets, the EC will not pay all or part of the financial contribution to that Member State.

“Member States will have to ensure compliance with EU and national laws, including the effective prevention, detection and correction of conflict of interests, corruption and fraud, and avoidance of double funding.” This will include “collecting data on final recipients of funds and make this available upon request by the EC.” The EC states that Member States’ national control systems will serve as the main instrument for safeguarding the financial interests of the Union. Presumably this means involvement of the Auditor General.

Cyprus’ energy transition

Soon Cyprus will be asked by the EC to revise the climate targets in its NECP upwards, at a time when it cannot even meet current modest targets, incurring ever increasing ETS penalties.

The proposed RRP reforms and investments should contribute to this and to energy transition, but do not go far enough to meet EC’s more demanding climate targets. Sooner than later, Cyprus will be confronted with the implementation of more drastic measures to substantially increase renewables and biofuels.

The proposed RRP may prove to be a missed opportunity – producing politically-expedient short-term benefits but not fulfilling the longer-term strategic clean energy goals envisaged by the EC.

 

 

 

 

 

 

 

 

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