Recovery & Resilience Facility (RRF)

The Recovery and Resilience Facility (RRF), which entered into force in February 2021, is the core reactor of NextGenerationEU – the EU’s economic recovery plan in response to the COVID19 pandemic. It is therefore in essence a temporary system, which will terminate at the end of 2026. The RRF is a gigantic fund of 724 billion euros that the European Commission has set up by financing itself on the capital market, and which it is allocated to the Member States to finance reforms and investments that will strengthen their resilience and boost their climate, energy and digital transition, in accordance with the priorities of the European Union. The RRF aims in particular to finance projects that contribute to the 2022 RepowerEU plan, with the goal to free the European Union from imported fossil fuels. It includes grants to Member States worth €338 billion and loans worth €386 billion.

The RRF allocation is based on a principle of solidarity, focusing on the countries that have been hardest hit by Covid19. Hence, Italy, Spain, Poland, Portugal, Romania, Greece and Croatia are among the main beneficiaries of the first funding allocated in 2021-2022 (see the map here). To receive support, Member States presented national recovery and resilience plans to the European Commission, outlining the reforms and investments they will implement by 2026, with clearly defined milestones and targets: the Commission only pays the amounts to the different countries when they have reached the agreed milestones and targets. National plans must devote at least 37% of their budget to green measures and 20% to digital measures. The Bruegel Institute has collected and analyzed all data relating to national recovery and resilience plans (here).

The RRF is structured around six pillars:

1. green transition
2. digital transformation
3. smart, sustainable and inclusive growth
4. social and territorial cohesion
5. health, economic, social and institutional resilience
6. policies for the next generation.

The pillar 1 “green transition” focuses a large part of the demands formulated in national plans (43%) followed by pillar 3 “smart, sustainable and inclusive growth” (29%) and by pillar 2 “digital transformation” (25%). The map accessible here provides examples of reforms and investments supported by the RRF in the different EU Member States, by pillar.

For companies wishing to benefit from public funding, the RRF is relatively transparent. For example, the support that a company will obtain following a national call for projects may come from the RRF (this is more precisely a reimbursement to the State, by the European Commission, of the funding granted). However, it is important to pay attention to a regulatory point: the final allocation of RRF funds – that is to say the financing of the projects themselves – is decided by the Member States, hence it falls within the scope of European State aid regulations. Notification to the European Commission according to competition rules is therefore required for significant funding amounts (typically above €30 million). Furthermore, companies whose State aid is financed by the RRF are not entitled to benefit from complementary support under other Union programs and instruments covering the same costs (e.g. Innovation Fund or the Connecting Europe Facility).

european economics mobilises its unique expertise in State aid for its clients who wish to apply for State aid financed by the RRF. We support them to carry out project engineering in order to maximise the request for funding and minimise the risk of failure, to prepare application files, and throughout the notification procedure to the European Commission to obtain its validation – an area in which European Economics has a 100% success rate.