Lithuania has added further investments to its original plan, notably two funds that will provide loans for the clean energy transition. One of these funds will incentivise the uptake of renewable energy by businesses, while the other will boost the transition of businesses towards green and high value-added technologies. Lithuania has also scaled up measures which were already included in the original plan, such as strengthening the state's cybersecurity capabilities. For four out of 48 measures related to taxation included in Lithuania's plan, the Commission has found that the reasons underpinning Lithuania's request for an amendment to the plan do not justify it. The Commission is therefore following the procedure outlined in Article 21(3) of the RRF Regulation: it has shared its preliminary conclusions with Lithuania, which now has one month to present possible additional observations on the matter.
Importantly, Lithuania has added a REPowerEU chapter to its plan, including one reform and three investments to deliver on the REPowerEU Plan's objectives to make Europe independent of Russian fossil fuels well before 2030, in light of Russia's invasion of Ukraine. Additional measures aim at accelerating the Renovation Wave, the European Green Deal's key initiative to improve energy efficiency by renovating both public and private buildings, and further boosting the transition towards renewable energy by streamlining permitting procedures and supporting the construction of solar and wind energy power plants. New investments will also cover the purchase of equipment that will help to decarbonise Lithuania's inland water transport sector.
Lithuania's changes to the original plan are based on the need to factor in:
- the increased costs of implementation due to high inflation;
- supply chain disruptions and changed market demand;
- more efficient ways to implement certain measures;
- the downward revision of its maximum RRF grant allocation, from €2.2 billion to €2.1 billion. This downward revision is a result of the June 2022 update to the RRF grants allocation key and reflects Lithuania's comparatively better economic outcome in 2020 and 2021 than initially projected.
To finance its revised plan, Lithuania has requested to transfer to the plan its share of the Brexit Adjustment Reserve (BAR), in line with the REPowerEU Regulation, amounting to €4.7 million. These funds, added to Lithuania's RRF and REPowerEU grants allocation (amounting to €2.1 billion and €194 million, respectively) and to its RRF loan request of €1.55 billion, will make the modified plan worth €3.85 billion.
An additional boost to Lithuania's green transition
The modified plan has a very strong focus on the green transition by devoting 37.4% of the available funds to measures that support climate objectives.
One reform and three investments included in the REPowerEU chapter will contribute to the green transition. The reform will facilitate the issuance of permits for renewable energy development, while the investments will accelerate the renovation of private buildings by financially supporting households, including through fully covered technical assistance expenses. New investments will also cover loans that will be provided to businesses and public entities to increase solar or wind electricity generation capacity. Support for the purchase of clean-energy boats will allow climate-friendly cargo transport between the river port of Kaunas and the seaport of Klaipėda.
Reinforcing Lithuania's digital preparedness and social resilience
Lithuania's revised plan includes additional investments to reinforce the scope and ambition of the digital measures. These will strengthen the state's cybersecurity capabilities, including the investigation of cybercrimes and support to cybersecurity education. Overall, the digital contribution of the plan is 23.3%, well above the 20% legal requirement.
The modified plan strengthens the social dimension by adding a new reform to improve the planning and delivery of social and employment services. The aim of the reform is to improve the quality of social and employment services, to make them more targeted to recipients and to better integrate them with other public services.
Next steps
The Council will now have, as a rule, four weeks to endorse the Commission's assessment. The Council's endorsement would allow Lithuania to receive €150 million in pre-financing of the REPowerEU funds. Under the RRF, Lithuania has so far received €289 million in pre-financing in August 2021 and €542 million as a first payment in May 2023.
The Commission will authorise further disbursements based on the satisfactory fulfilment of the milestones and targets outlined in Lithuania's recovery and resilience plan, reflecting progress on the implementation of the investments and reforms.
