The European Commission on Tuesday positively assessed Croatia's modified recovery and resilience plan, which includes a REPowerEU chapter.

The plan is now worth €10 billion (€5.8 billion in Recovery and Resilience Facility (RRF) grants and €4.2 billion in RRF loans) and covers 84 reforms and 253 investments.

Croatia’s proposed REPowerEU chapter, worth €2.9 billion, includes one new reform, three scaled-up reforms, and five new and three scaled-up investments drawing on existing measures.

The chapter also covers three existing investments, including one scaled-up investment, transferred from the original plan. These measures help deliver on the REPowerEU Plan’s objectives to make Europe independent of Russian fossil fuels well before 2030.

They focus on promoting energy efficiency in buildings, reducing the dependency on fossil fuels by increasing the production and uptake of renewables such as sustainable biomethane, renewable hydrogen and geothermal energy, accelerating the deployment of renewable energy, addressing energy poverty, addressing bottlenecks in electricity distribution, zero-emission transport, requalifying the workforce towards green skills and improving security of energy supply and diversifying the Union’s gas supply.

Croatia’s modified plan also includes new and scaled up reforms and investments in the business environment, water management, education, digital transition, as well as building reconstruction.

Croatia’s changes to the original plan take into account 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 €4.2 billion in available RRF loans, and the revision of its maximum RRF grant allocation from €6.3 billion to €5.5 billion.

The downward revision is a result of the June 2022 update to the RRF grants allocation key and reflects Croatia’s comparatively better economic outcome in 2020 and 2021 than initially foreseen.

To finance the increased ambition of its plan, Croatia  requested to transfer to the plan its share of the Brexit Adjustment Reserve (BAR), in line with the REPowerEU Regulation, amounting to €7.2 million. These funds, added to Croatia’s RRF and REPowerEU grants allocation and to its RRF loan request of €4.2 billion, make the approved overall modified plan worth €10 billion.

The new reform aims to increase green skills and competences in the construction sector for non-EU workers. The scaled-up reforms encourage the uptake of renewable energy sources by introducing a new self-consumption system, envisage new activities contributing to raising citizens’ awareness on the green transition and provide additional funds for the development of additional green urban renewal strategies.

The five new investments will increase the transmission and distribution capacities of the electricity network, establish a hydrogen-based economy through the North Adriatic Hydrogen Valley, strengthen the use of renewable energy sources in transport and heating, expand the capacity of the LNG Terminal on the Island of Krk and strengthen the gas transmission network towards Slovenia and Hungary.

The scaled-up investment aims to support sustainable transport, the energy efficiency and post-earthquake reconstruction of buildings and energy poverty.

The revised Croatian plan’s digital ambition has remained at the same level as the original plan, allocating 20% of its available funds to support the country’s digital transition. It includes the digitalisation of public services through the establishment of the registry of population, families, and households, which provides statistics essential for the work of all public bodies, including the Tax Administration.

The transport sector is also covered through the new electronic tolling system project. Additional investments in smart energy systems and related storage also contribute to the digital ambition of Croatia’s plan.

The revised plan also envisages significant scaled-up investment in schools in order to support single-shift and full day teaching.

The Council of the EU now has four weeks to endorse the Commission’s assessment. The Council’s endorsement will allow Croatia to receive €585 million in pre-financing of the REPowerEU funds.

Under the RRF, Croatia has so far received €2.2 billion: €818 million in pre-financing and €1.4 billion disbursed in total for the first two payments.