EUROPEAN COMMISSION Brussels, 1.3.2022 COM(2022) 75 final REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the implementation of the Recovery and Resilience Facility



Contents 1. Introduction 3 2. Where do we stand with the implementation of the Facility? 5 2.1. State of play on the process of implementation 5 2.2. State of play on the financing of the Facility 10 3. What do the Recovery and Resilience Plans actually contain? 12 3.1. RRPs submitted - introductory overview 12 3.2. Contribution of the Facility to the green transition (pillar 1) 14 3.3. Contribution of the Facility to the digital transformation (pillar 2) 21 3.4. Contribution of the Facility to smart, sustainable and inclusive growth (pillar 3) 28 3.5. Contribution of the Facility to social and territorial cohesion (pillar 4) 32 3.6. Contribution of the Facility to health, and economic, social and institutional resilience, with the aim of, inter alia, increasing crisis preparedness and crisis response capacity (pillar 5) 37 3.7. Contribution of the Facility to policies for the next generation, children and the youth, such as education and skills (pillar 6) 45 3.8. Security self-assessments 47 4. Implementation framework of the RRF 49 4.1. Contribution of the RRF to implementing reforms and other EU policies 49 4.2. RRF contribution to multi-country projects 54 4.3. Implementation of the RRF and the involvement of all relevant stakeholders 57 4.4. Control system and protection of the financial interests of the Union 60

4.5. Complementarity with other EU funding 62 5. Conclusion 64



Tables and Figures Table 1: State of play on RRF implementation 6 Figure 1: Key steps in RRP assessment and pre-financing 7 Table 2: Processing of payment requests 8 Figure 2: Estimated timeline for completion of milestones and targets 12 Figure 3: Share of RRF funds contributing to each policy pillar 13 Figure 4: Climate and additional environmental tag by Member State 14 Figure 5: Breakdown of expenditure supporting the green transition (pillar 1) 15 Figure 6: Contribution to digital objectives as share of RRP 22 Figure 7: Breakdown of expenditure supporting the digital transformation (pillar 2) 23 Figure 8: Breakdown of expenditure supporting smart, sustainable and inclusive growth (pillar 3) 29 Figure 9: Breakdown of expenditure supporting social and territorial cohesion per policy area (pillar 4) 33 Figure 10: Breakdown of expenditure supporting health and resilience per policy area (pillar 5) 37 Figure 11: Number of measures supporting health and resilience per policy area (pillar 5) 38 Figure 12: Breakdown of expenditure supporting policies for the next generation per policy area (pillar 6) 45

Figure 13: Number of reforms per pillar 49 Figure 14: Reforms/Investments per Member State 50 Figure 15: Shares of CSRs covered by the RRPs, by policy areas (as defined in CeSaR) 50 Figure 16: NGEU GDP Impact (%) in QUEST simulations, EU countries 51 Figure 17: NGEU GDP Impact (%) in QUEST simulations 52 Table 3: Green multi-country projects in the adopted RRPs 55 Table 4: Digital multi-country projects 56



1.Introduction The Recovery and Resilience Facility, established by Regulation (EU) 2021/241 on 19 February 2021, is the centrepiece of “Next Generation EU”, the EU response to emerge stronger from the coronavirus pandemic. A year after, the objective of this report is to take stock of the implementation of this extraordinary agenda of reforms and investments. In one year, major steps have been accomplished and implementation is firmly underway. Following months of intense preparation due to their unprecedented scale and scope, Member States started to submit their recovery and resilience plans in April 2021. The Commission conducted the assessment phase expediently and the Council adopted the first Council implementing decisions in July 2021. So far, almost all Member States have submitted their recovery and resilience plans, 22 of which have been first positively assessed by the Commission and subsequently adopted by the Council. The Commission also launched the discussions with Member States to agree on operational arrangements, which set the framework for monitoring the plans’ implementation. The Commission raised funds on the capital markets and issued its first green bonds, disbursing EUR 66.6 billion to date, out of which EUR 56.6 billion in pre-financing, supporting Member States and the Union at a time when the coronavirus pandemic continues to affect their economies. The Facility has entered in the implementation phase, progressing quickly according to the timeline of reforms and investments set by the Member States. The first payment request was fully processed in 2021, with the disbursement of EUR 10 billion to Spain in December 2021, while more than 30 payment requests are expected to be submitted in 2022. The calendar of payments is in line with the expected implementation phase of the Facility. The Commission and Member States worked closely together to achieve this result. The progress in the implementation of the plans can be followed live on a platform, the ‘Recovery and Resilience Scoreboard’, set up by the Commission in December 2021. This report is the first of a series of yearly reports on the implementation of the Facility. It provides an overview of the current state of its implementation and of the plans adopted, and details the contribution of the Facility to the climate and digital targets, as required by Article 31 of the Regulation. At this juncture, as the Facility is still in its early stage of implementation, this report describes the Facility’s expected contribution to the six pillars according to the measures foreseen in the plans, which will be gradually implemented over the Facility’s lifetime. The report then considers the performance of the Facility, taking into account the commitment to investments and reforms embedded in this unique instrument, and discusses the involvement of all relevant stakeholders. It also describes the mechanisms in place for the protection of the Union’s financial interests and the articulation between the Facility and other sources of EU funds to avoid double-funding. The information provided in this report is based on the content of the adopted plans, as assessed by the Commission, on the data reported by Member States until end-November 2021 as part of their bi-annual reporting obligation, and on developments in the implementation of the Facility until end-January 2022. This report does not cover extensively the status of implementation of individual plans, nor the common indicators, given the still early stage in the implementation of the Facility. The examples given, notably the boxes in section 3, are included as an illustration but are not meant to be exhaustive.



2.Where do we stand with the implementation of the Facility? 2.1.State of play on the process of implementation Adoption of the recovery and resilience plans The majority of Member States submitted their recovery and resilience plans (RRPs) by summer 2021. To support Member States in the preparation of their plans, the Commission established informal contacts with Member States from October 2020 and published a Guidance in January 2021 on the information to be provided in the plans. In order to access financial support under the Facility, Member States had to prepare RRPs setting out a national agenda of reforms and investments to be implemented by 31 August 2026. The Regulation establishing the Recovery and Resilience Facility entered into force on 19 February 2021. So far, the Commission has officially received 26 RRPs (see Table 1 and Annex 1). The Commission assessed each plan expediently in a consistent and transparent manner, following the 11 criteria set out in Article 19(3) of the RRF Regulation. During the assessment process, the Commission was in close contact with the Member States to conduct a comprehensive assessment. The Commission supported Member States to put forward ambitious plans with clear and realistic milestones and targets to monitor their progress during the implementation. The Commission has concluded its positive assessment of 22 RRPs and tabled proposals for a Council Implementing Decision for each of them, accompanied by a Staff Working Document analysing the content of the respective plan. The Council Implementing Decisions and Commission Staff Working Documents can be found on the Commission website. The Commission’s assessment is ongoing for four plans, in cooperation with the respective Member States (Bulgaria, Hungary, Poland and Sweden), as provided for in Article 19(1) of the RRF Regulation.

Overall, the adoption of the 22 Council Implementing Decisions followed a swift and smooth process. Following intense discussions between the Commission and the Member States during the preparation phase of the plans, the Commission proceeded swiftly with its assessment. For most plans, the Commission adopted its positive assessment in less than the 2 months assessment period provided for in Article 19(1) of the Regulation following their official submission (see Table 1). The Council was then also able to approve the positive assessment of most RRPs within less than a month (see Table 1). Following the adoption of the plans, the Commission concluded a financing agreement – and where relevant, a loan agreement – with the Member State concerned, which define the rights and obligations of the Parties, including with regards to the protection of the financial interests of the Union and the requirements for Member States’ control system, as well as the commitment of the available amount of the financial contribution. Table 1: State of play on RRF implementation BE CY DE DK EL ES FR IT LU LT LV PT SI CZ HR AT IE SK MT RO FI EE PL HU SE BG NL 26 plans submitted to the Commission 22 plans approved by the Commission 22 CID adopted by the Council 21 pre-financing disbursed

(EUR 56.6 bn) * 5 payment requests submitted to the Commission 1 payment made by the Commission 10 bn Pre-financing The Commission proceeded with a pre-financing payment of up to 13% of the financial contribution and loan to 21 Member States which requested it, following the signature of the financing agreement, and loan agreement when relevant. In accordance with Article 13(1), the pre-financing payment only concerns Member States which RRPs were endorsed by the Council in 2021. In total, the Commission disbursed EUR 56.6 billion in pre-financing. Payments of the pre-financing were executed within 6 business days after the signing of the Financing (and/or Loan) Agreements (where relevant), well ahead of the 2-month period mentioned in the RRF Regulation (see Table 1). Given that the RRF is a performance-based instrument, any subsequent disbursement is conditional on fulfilling the relevant milestones and targets underpinning the reforms and investments set by the time of the payment request. Operational arrangements As required under the RRF Regulation, the Commission subsequently discussed, with each of the 22 Member States concerned, operational arrangements further specifying the modalities for monitoring and cooperation and covering essential aspects of the implementation. The operational arrangements provide for regular exchanges between the Commission and Member States, with at least quarterly exchanges to take stock of progress on the implementation of the RRP, as well as the organisation of an annual event to discuss the implementation of the RRP and other Union programmes, which may serve as an horizontal platform to discuss the plans’ implementation and ensure close cooperation between all actors involved. The operational arrangements also clarify the verification mechanism for each milestone and target, and when necessary, introduce monitoring steps to follow the implementation of the plan. To date, eight operational arrangements have been concluded (Spain, France, Slovakia, Greece, Italy, Portugal, Croatia, Latvia; see Annex 1). The signing of operational arrangements is a key step, as it is required before the Member State may submit its first payment request. Figure 1: Key steps in RRP assessment and pre-financing Disbursement process Once a Member State has fulfilled all the relevant milestones and targets to unlock a disbursement, as detailed in the respective Council Implementing Decision, and submits a duly justified payment request, the Commission has 2 months for assessing the satisfactory fulfilment of the relevant milestones and targets and the information underpinning their achievement submitted by the respective Member State. To conclude this assessment, the Commission provides its positive preliminary assessment to the Economic and Financial Committee. Within four weeks the Economic and Financial Committee should provide an opinion on these findings, after which the Commission implementing decision that authorises the disbursement is adopted in accordance with the examination procedure described in the Comitology Regulation. For this purpose, a RRF Committee was established, as provided under Article 35 of the RRF Regulation, to discuss the draft Commission implementing decisions concerning the payment requests of the Member States. The RRF Committee is composed of representatives of all Member States. At the end of the comitology procedure, the Commission adopts a Commission implementing decision taking into account the views expressed by the Members. Payment requests To date, the Commission has received five payment requests. The table below provides the state of play. Table 2: Processing of payment requests Payment request date Number of milestones & targets (M&T) Amount net of pre-financing Status Spain 11/11/21 52 M&T EUR 10 bn ·Commission’s preliminary positive assessment: 03/12/2021 ·EFC positive opinion: 21/12/2021 ·RRF Committee positive opinion: 22/12/2021 ·Commission’s disbursement: 27/12/2021 France 26/11/21 38 M&T EUR 7.4 bn ·Commission’s preliminary positive assessment: 26/01/2022 ·EFC positive opinion: 11/02/2022 ·RRF Committee positive opinion: 21/02/2022 Greece 29/12/21 15 M&T EUR 3.6 bn · Commission’s preliminary positive assessment: 28/02/2022 Italy 30/12/21 51 M&T EUR 21 bn ·Commission’s preliminary positive assessment: 28/02/2022 Portugal 25/01/22 38 M&T EUR 1.16 bn Commission’s assessment ongoing To date, the Commission has disbursed a first payment to Spain. Spain was the first Member State to submit a payment request on 11 November 2021, following the signing of the operational arrangements. Spain’s first payment request concerns the satisfactory fulfilment of 52 milestones, mainly relating to reforms that were already implemented by the second quarter of 2021. Given the backward-looking nature of most milestones and given that Spain had shared with the Commission most of the information required to conduct its assessment before the official submission of the payment request, the Commission was able to process the assessment of the payment request expeditiously and disbursed EUR 10 billion of the financial contribution (net of pre-financing) to Spain on 27 December 2021. Acknowledging the fulfilment of the milestones and targets underpinning the respective RRP measures, the first payment to Spain already illustrates the progress made in the implementation of the RRF. The milestones included in the payment demonstrate significant steps in the implementation of Spain's recovery and resilience plan, and of its broad reform agenda. They include important measures like the Law on Climate Change and Energy Transition (enshrining climate neutrality by 2050), the reform of minimum income support, measures to support the digitalisation of SMEs and boost digital skills, and reforms reinforcing the capacity to carry out and follow up on spending reviews. This example shows how the Facility is already having tangible impacts on the ground, supporting the implementation of significant reforms.

The framework for Member States reporting on the implementation of the RRPs The RRF has currently entered in the implementation phase and Member States have started to report on the implementation of their RRP. The Delegated Acts supplementing some of the Member States’ reporting requirements entered into force on 2 December 2021. The first delegated act (EU) 2021/2106 sets out common reporting indicators and the details of the Recovery and Resilience Scoreboard. It specifies that Member States will report by April and mid-October each year on the progress made in the achievement of their recovery and resilience plans. This bi-annual reporting consists in providing summary information on the achievement of the milestones and targets due by the quarter preceding the reporting, as well as the status of those due in the four quarters following the reporting period. Member States are expected to provide information on whether the relevant milestones and targets are completed, on track or delayed. Member States also have to report on the defined common indicators twice a year (by February and August). The first reporting will take place in February 2022. The second delegated act 2021/2105 lays down the methodology for reporting on social expenditure in Member States’ recovery and resilience plans. This delegated act is important to define a common methodology to provide information on the social expenditure, including on children and the youth, and on gender equality financed by the Facility. The methodology is based on the estimated expenditure provided in the approved recovery and resilience plans. Each reform and investment with a primary social dimension is associated to one of the nine specific social policy areas defined in the delegated act, each linked to four broader social categories (employment and skills, education and childcare, health and long-term care or social policies). Each measure of a social nature that includes a focus on children and the youth, or on gender equality, is also specifically flagged. The Commission set up an IT system, named FENIX, for Member States to report the relevant information on the implementation of the plans. As part of the bi-annual reporting, Member States reported the required information in FENIX for the first time by end-November 2021 (as this was the first bi-annual reporting exercise for Member States, the deadline was exceptionally extended by a month). This system allows Member States to update the information regarding the achievement of milestones and targets at any moment and to avoid providing several times similar information for the purpose of the bi-annual reporting or the submission of a payment request. Reporting under the RRF is now fully operational. The review of the bi-annual reporting information already reveals a positive picture regarding the implementation of the milestones and targets. This reporting exercise concerned all milestones and targets which were due from Q1 2020 to Q3 2022. Overall, of the backward-looking milestones and targets due by Q3 2021 (most recent reporting quarter), 91% (266) were reported as “completed” and 9% (25) were reported as not completed. Of the forward-looking milestones and targets due between Q4 2021 and Q3 2022, 4.4% (41) were reported as delayed, 79.7% (741) as “on track” and 14.9% (139) were reported as already completed. The next bi-annual reporting exercise will take place in April 2022. Data related to the bi-annual reporting is self-reported by Member States and does not prejudge the assessment of the Commission in the context of payment requests on the satisfactory fulfilment of milestones and targets. The Commission set up the Recovery and Resilience Scoreboard, a public online platform, as a performance reporting tool of the Facility, which transparently displays available information on the implementation of the RRF. Every citizen can follow the progress on the implementation of the RRF and the detailed progress for each RRP on the Commission website in an easily accessible way. The Scoreboard displays the impact of the Facility in the six policy pillars. It also includes data on the common indicators and information reported on social expenditure. A first version of the Scoreboard was published on 15 December 2021, containing data on the 22 RRPs endorsed by the Council to that date. 2.2.State of play on the financing of the Facility State of play on the Next Generation EU funding The Commission’s new role as an active issuer on the capital market is a key milestone for the implementation of the RRF. The Own Resources Decision entered into force on 1 June 2021 enabling the Commission to start borrowing for the Next Generation EU (NGEU) temporary recovery instrument (the first transaction took place in June 2021). The Commission has been empowered to borrow up to EUR 806.9 billion in the period 2021-2026 (current prices). This amount entails annual bond issuance of, on average, up to roughly EUR 150 billion per year between mid-2021 and 2026, making the EU one of the largest issuers of bonds denominated in euro. Up to EUR 250 billion of the stated amount will be issued in the form of green bonds (see below). So far, the Commission has raised EUR 78.5 billion in long-term funding through bonds and EUR 33 billion in short-term funding through 3-months and 6-months EU-Bills (of which EUR 12 billion have already matured). Based on the EU’s high credit rating, the Commission is able to borrow on advantageous conditions and hence minimise the cost of recovery fund related debt. The NGEU funding volumes have been well absorbed and demand for the new issuances has been strong. The Commission has been able to fund all planned payments/incoming requests, and in a very expedient manner. To date, EUR 66.6 billion have been disbursed to 21 Member States under the RRF. Payments of the pre-financing were executed within few days after the signature of the relevant Financing and/or Loan Agreements, well ahead of the periods foreseen in the RRF Regulation. The first payment to Spain was also executed swiftly (3 business days following the positive opinion of the RRF Committee). Green bond framework The Commission put together a comprehensive state-of-the-art green bond framework for its issuances under Next Generation EU and plans to issue up to 30% of NGEU funding as green bonds, confirming the EU commitment to sustainable finance. The framework is oriented along market standards and provides credible green bonds to investors. All measures included in the recovery and resilience plans have to respect the do-no-significant-harm (DNSH) principle for other environmental objectives. To achieve such a result, the Member States agreed in the financing and loan agreements signed as part of the RRF implementation to undertake regular reporting of their expenditures on investments contributing to climate change objectives. The Commission raised EUR 14.5 billion through its first ever green bond issuance that took place on 12 October 2021.



3.What do the Recovery and Resilience Plans actually contain? 3.1.RRPs submitted - introductory overview General overview To date, the 22 RRPs approved by the Council account for a total allocation of EUR 291 billion in non-repayable financing and EUR 154 billion in loans. Six Member States have an adopted plan including a loan (Cyprus, Greece, Italy, Portugal, Romania, Slovenia). These 22 RRPs include around one third of reforms and two thirds of investments, and a total of 5155 milestones and targets to be fulfilled by 2026. Figure 2: Estimated timeline for completion of milestones and targets

Contribution to the six pillars: methodological introduction Pursuant to Article 3 of the RRF Regulation, reforms and investments included in the RRPs should contribute to the six policy pillars defining the scope of the Facility, while taking into account the specific situation and challenges of the relevant Member State. The Commission developed a methodology to report on the contribution of each plan to the Facility’s six pillars, where each (sub-) measure was tagged under one primary and one secondary policy area (according to a list of policy areas established by the Commission) which are associated to one of the six pillars, reflecting that a reform or investment can be related to several pillars. To the extent possible, and as described below, the pillar reporting is consistent with other tagging exercises (climate, digital, social expenditure). Since each measure thus contributes towards two of the six policy pillars, the total estimated contribution to all pillars displayed on Figure 2 amounts to 200% of the RRF funds allocated to Member States. Figure 3: Share of RRF funds contributing to each policy pillar Legend: The darker-coloured parts of the columns represent those measures which have been tagged and assigned to the pillar as primary policy area, while the lighter-coloured parts represent measures tagged as secondary policy area. Moreover, the Commission has adopted a methodology to report on social expenditure in the Delegated Regulation 2021/2105 (see section 1). Reforms and investments with a social dimension have been associated to one of nine social policy areas, each linked to one of four social categories (namely, employment and skills, education and childcare, health and long-term care, and social policies) as set out in the Annex to the Delegated Regulation. This is complemented by the flagging of measures with a focus on children and youth or on gender equality in the endorsed plans. However, in order to maintain consistency across all policy areas supported by RRPs (beyond the social ones), this report presents measures and expenditures according to the pillar methodology. The RRF Regulation also required each Member State to dedicate at least 37% of its recovery and resilience plan’s total allocation to measures contributing to climate objectives and at least 20% of the total allocation to digital objectives. The RRPs specified and justified to what extent each measure contributes fully (100%), partly (40%) or has no impact (0%) on the climate and/or digital objectives. The contributions to climate and digital objectives have been calculated using Annexes VI (climate tracking) and VII (digital tagging) of the RRF Regulation, respectively, which provide a relevant ‘intervention field’ together with a coefficient for the calculation of support to climate or digital objectives (0%, 40% or 100%). Each measure of the RRPs has been tagged in line with these intervention fields. Combining the coefficients with the cost estimates of each measure allows calculating to what degree the plans contribute to the climate and digital targets. 3.2.Contribution of the Facility to the green transition (pillar 1) Climate target About 40% of the total plans’ allocation is related to measures supporting climate objectives and a number of RRPs exceed by a substantial margin the 37% climate target set in the Regulation (see Figure 4). The total climate expenditure in the 22 adopted plans amounts to EUR 177.4 billion. In addition, the plans include EUR 16.3 billion of additional environmental expenditure, taking the total amount of expenditure that is tagged as making a contribution to either climate or environmental objectives to EUR 193.7 billion (or 43,5% of the total allocation), as calculated according to the climate tracking methodology. Figure 4: Climate and additional environmental tag by Member State Overall expenditure towards the green transition in all RRPs The RRF will help achieve the EU’s targets to reduce net greenhouse gas emissions by at least 55% by 2030 and to reach climate neutrality by 2050. Along with contributing to deliver on the climate ambition, the measures supported by the RRF will also ensure progress towards other environmental objectives such as reducing air pollution, promoting the circular economy or restoring and protecting biodiversity, promoting energy efficiency and higher deployment of renewable energy sources. According to the pillar reporting methodology, a total of EUR 224.1 billion of expenditure is estimated to be allocated to the green transition pillar (equivalent to 50% of the total expenditure in the 22 plans). Through the lens of the six-pillar approach, the overall amount of expenditure under the green pillar can be broken down in 11 policy areas, as shown in Figure 5 below. Overall, the measures included in the RRPs address a wide of array of areas, from e.g., sustainable mobility, energy efficiency, renewable energy and networks, to biodiversity, circular economy, green skills and jobs, and climate change adaptation. Figure 5: Breakdown of expenditure supporting the green transition (pillar 1) This chart shows a breakdown of the estimated contribution to the policy pillar according to a list of policy areas established by the European Commission. The percentage relates to the overall expenditure tagged under each policy area as a share of the green transition pillar. Sustainable mobility

Sustainable mobility accounts for 32% of the total expenditures under the green transition pillar (total cost of EUR 71.3 billion). Large investments are made to upgrade and extend the railway infrastructure, in particular on the Trans-European network (TEN-T), and for the purchase of modern rail rolling stock. They constitute a crucial vector for a modal shift towards an environment-friendly mode of transport and support both passenger and freight transport. A more limited number of measures in favour of the greening of the waterborne and aviation sectors are also present, with investments for the greening of ports, for instance the installation of on-shore power supply, and of airports, with the electrification of ground handling systems. Italy’s RRP includes 3,400km of the European Rail Traffic Management System (ERTMS) deployment. The deployment of ERTMS will allow for seamless cross-border rail freight and passenger operations. ERTMS investments contribute to both the green and digital transitions. Significant investments also aim at improving the sustainability of road transport, including through support to the deployment of alternative fuel infrastructure and vehicles and to the development of green public transport. Some of these investments are centred on helping consumers purchase zero emission vehicles, through financial incentives to help with the high upfront costs of purchasing electric vehicles. Germany’s recovery and resilience plan will help citizens shift to clean electric vehicles by giving financial support to buy 560,000 decarbonised vehicles. The measure will reduce the purchase prices of electric vehicles and stimulate the market. It is complemented by other measures, such as financing the installation of 50,000 publicly accessible recharging points and of 400,000 further recharging points in residential buildings. Transport sector reforms are an important part of most RRPs. They tackle the overall regulatory framework and include strategies to support sustainable urban mobility and collective transport as well as measures supporting the roll out of charging infrastructure or the procurement of clean vehicles. The plans also include reforms introducing competition in port services and reform the maritime sector and inland waterways. Romania’s RRP includes key regulatory changes to incentivise zero-emission road transport, incentives for zero-emission and low-emission vehicles, scrapping schemes to replace the most polluting vehicles, improvements to the governance and efficiency of state-owned enterprises in transport sectors, road safety stricter rules and enforcement measures, incentives for sustainable urban transport. It also includes significant investments for zero-emission and upgraded railways rolling stock, for the modernisation and renewal of railways infrastructure, in particular along the TEN-T corridors, for the improvement of the quality and efficiency of road infrastructure on specific sections of the core TEN-T network, road safety improvements, and sections of the underground transport network in the municipalities of Bucharest and Cluj-Napoc. Energy efficiency Energy efficiency accounts for 29% of the total expenditures under the green transition pillar (total cost of EUR 64.4 billion). The majority of investments in this area concern the energy efficiency of residential buildings (total cost of EUR 28.4 billion), typically targeting a reduction in primary energy demand of 30% or more. Some of these relevant investments also include measures aimed at addressing energy poverty, by targeting vulnerable groups for whom the significant upfront costs make it almost impossible to invest in the energy efficiency of their homes. Renovations of public buildings are well represented across the majority of plans (total cost of EUR 20.2 billion), such as in schools, sport halls and historical buildings. Lastly, there are also investments for the construction of new highly energy efficient public and private buildings. Beyond buildings, energy efficiency investments in other sectors will help the decarbonisation of production processes in SMEs, larger enterprises and district heating systems, e.g., by promoting the integration of cleaner and more energy efficient technologies for manufacturing processes and centralised heat production with a total cost of EUR 6.5 billion. Spain will support more than half a million energy renovation actions in residential buildings by 2026. These energy renovations will achieve on average a primary energy demand reduction of at least 30%. The investments are complemented by a coherent package of reforms, including tax incentives and renovation offices (“one-stop-shops”) to facilitate renovations. The RRP of Belgium will stimulate energy efficient renovations of buildings with a total support of over EUR 1 billion. The wave of renovation will concern more than 200,000 private and social housing units and will cover more than one million m² of public buildings. Belgium faces important renovations needs to meet climate objectives. Energy-efficient renovations of private and social housing will also help addressing energy poverty. RRPs include several reforms to encourage building renovation in all sectors: private and public buildings, residential and companies. The reforms aim at making financial support available for renovation more efficient (e.g., one stop shop) and more environmentally friendly. In particular, they include conditions for replacing outdated heating systems and encourage their replacement by renewable energy or district heating. Renewable energy and networks Overall, total estimated expenditure in clean power – renewable energy and networks –accounts for 12% of the total expenditures under the green transition pillar (total cost of EUR 26.7 billion). Approximately two thirds of the overall investment in this area will be spent on renewables technologies, with the remaining amount allocated to investments in energy networks and infrastructure (such as deployment of energy storage and smart grids). The measures focus on the construction of offshore or onshore wind energy farms (and associated infrastructure such as energy islands), photovoltaic panels, and the construction of industrial sites using renewable energy. Lithuania’s plan will support private businesses, farmers and renewable energy communities for the acquisition and installation of onshore solar and wind power plants, together with storage installations. Biomass based renewable schemes are also foreseen, as well as biofuel and bio methane facilities. 15 RRPs include measures dedicated, either partly or exclusively, to hydrogen, which is expected to play an important role to reach climate neutrality in the long run. Against this background, Member States’ RRPs will contribute to scaling up investments in renewable and low-carbon hydrogen (including using electricity from the grid, which in parallel should be decarbonised) by at least EUR 9.3 billion. Many investments in the RRPs address the whole hydrogen value chain – from production to transport, storage and finally end-use in hard-to-abate industrial sectors and transport. RRPs also include reforms of the policy framework supporting renewable energy, such as the adoption of new or prolongation of existing support schemes or the simplification of administrative procedures such as permitting or spatial planning to facilitate deployment. Reforms included in the RRPs aim generally at creating a stable regulatory environment and appropriate synergies between public and private investment. RRPs also include dedicated reforms to streamline the efficient operation of the electricity markets and the development of new renewable power plants to reach the targets set out in the national energy and climate plans (NECP). Reforms included in the RRPs will accelerate the development of new renewable power plants to reach the targets set out in the NECP, notably through the facilitation of the permitting of renewable projects and enhanced financial support mechanisms. RRPs also include dedicated reforms to streamline the efficient operation of the electricity markets, in particular to facilitate the development of a more flexible energy system. This is essential to support the expected high share of renewable energy. Reforms of the electricity market legislation are included in several RRPs to enable, in particular, the deployment of networks, energy storage and demand response to increase reliability of the system. Reforms will also improve market competition and help creating a stable regulatory environment. Ultimately, these reforms will participate to a more reliable, self-sufficient energy market in Europe, capable of addressing the increasing energy demand. To support and facilitate the deployment of renewable hydrogen, Romania will amend the existing legislative and regulatory framework with a focus on the transport and energy (gas and electricity) sectors. The reform foresees the adoption of a National Hydrogen Strategy and Action Plan, will remove any legislative and administrative obstacles for the development of the renewable hydrogen technology and contribute to the achievement of the future national and European targets for the production, storage, transport and use of renewable hydrogen by 2030.

Biodiversity, circular economy, sustainable water and pollution prevention and control RRPs include measures relevant for environmental policies, mainly in four areas: biodiversity and ecosystems; circular economy, waste prevention and recycling; water and marine resources; and pollution prevention and control. These four policies account for 13% of the total expenditures under the green transition pillar (total expenditure of EUR 28.8 billion). On biodiversity, measures target the conservation of terrestrial and marine biodiversity, the restoration of ecosystems and green infrastructure, ecological connectivity based on nature-based solutions, sustainable forest management as well as the fight against invasive alien species. Ireland will for example support the restoration of peatlands, a measure which has the potential to promote and encourage the return of flora and fauna in these areas. It is estimated in the Irish plan that over a 30-year timescale 3.3 million tonnes of CO2 emissions should be avoided thanks to the implementation of the enhanced rehabilitation measures. On circular economy and waste management, RRPs include investments related to both short-term actions and R&D activities. Examples include investments aiming to increase the circularity of specific sectors, such as plastics, construction or textiles, while R&D activities aim to develop longer-term solutions on the reduction of plastic waste and the promotion of bio economy. Many investments and reforms aim to improve waste management through retrofitting waste sorting and waste management facilities, dedicating particular attention to the treatment of bio-waste. For instance, several Member States have committed to improve their national legislative framework to promote a more circular economy by taxing landfilling or incinerating waste and promoting the reuse of electric equipment or plastic food containers. Belgium will support the minimisation of radioactive waste generated during the decommissioning of the Belgian nuclear power plants through the demonstration of decontamination techniques. Italy aims to adopt a National Programme for Circular Economy, and one for Waste Management. In order to support and incentivise recycling practices, Italy will introduce a new digital waste traceability system and include a revision of environmental taxation to make recycling cheaper compared to landfilling. The plan also introduces technical support to local authorities to help them with the procurement in the domain of waste management, such as the development of waste plans or the transparency of public procurement procedures. On the sustainable use and protection of water, a significant part of measures focuses on water management, also by including metering devices for water abstraction, thereby combining both climate and digital objectives. Other types of water management include measures to target the supply of safe, clean and abundant drinking water as well as the treatment of wastewater collection. Some measures have also related to the enhancing irrigation efficiency. Pollution prevention and control measures relate to the implementation of low emission zones or the reduction of pollution in ports. Climate change adaptation Climate change adaptation measures in green activities accounts for approximately 6% of the total expenditures under the green transition pillar (total estimated expenditure of EUR 12.5 billion). Measures in the plans relate mostly to mitigation of flood risks, forest management and prevention of fires. Cyprus, being a particularly vulnerable country to the impacts of climate change, foresees protective and preventative measures against floods and forest fires. It includes an action plan on water resource management with adaptation measures. Anti-flood and water collection measures will create or upgrade existing anti-flood infrastructure. Overall, it will aim to improve water use and to enhance the safety and sustainable operation of water infrastructures. There are also measures related to increasing country’s responsiveness to forest fires, based on delivering firefighting vehicles and equipment, with the ambition of reducing the risk and expansion of forest fires, and the strengthening protection against the risks faced by citizens, infrastructure and forests from these incidents. Greece includes a specific measure to protect selected cultural heritage sites and monuments, through the implementation of targeted projects and the construction of tailored infrastructures for the prevention of specific climate risks and associated dangers related to climate change. Other climate-related investment (R&D&I, green skills and green jobs and decarbonisation of industry) Many RRPs include measures on R&D&I in green activities which make up 6% of the total expenditures under the green transition pillar (total estimated expenditure of EUR 13.4 billion) related for example to green hydrogen energy production, carbon-capture and storage, circular economy, and the aerospace field with a focus on low and zero emissions. RRPs also include reforms related to green skills and green jobs (EUR 1.5 billion). They cover investments contributing to reskilling and upskilling initiatives, as well as reforms on developing and implementing new targeted active employment policy measures for the needs of the green transition. These include employment support, educational policies and further active labour market policies. Croatia aims to adopt new frameworks to boost employment linked to the green transition, through grant support for green traineeships, as well as employment and self-employment subsidies for green jobs, and will establish skills vouchers for long-term unemployed and less employable people from vulnerable groups, to provide amongst others green skills. Spain aims to adopt an Action Plan against youth unemployment, which will introduce three innovative programs targeting young jobseekers, including work-based training in public school workshops, a first professional experience in public administrations and professional opportunities for young researchers. RRPs also include other investments aiming at mitigating climate change (EUR 5.4 billion), but not captured in the categories listed above, such as the introduction of emission taxes on the industry, the entry into force of broad national climate action plans, the design of regulatory frameworks to hydrogen and CO2 markets, and the promotion of organic farming. Do no significant harm principle (DNSH)

The DNSH principle is a key design feature of the RRF Regulation that ensures that the RRF results in ambitious plans contributing to the green transition and a sustainable recovery, whilst avoiding the lock-in of unsustainable assets and activities. The RRF Regulation provides that no measure included in a RRP should lead to significant harm to any of the six environmental objectives within the meaning of Article 17 of the Taxonomy Regulation. These six environmental objectives are: climate change mitigation, climate change adaptation, sustainable use and protection of water and marine resources, transition to a circular economy, pollution prevention and control, and protection and restoration of biodiversity and ecosystems. For each measure, the Member State performed and presented in the plan a detailed DNSH self-assessment based on DNSH Technical Guidance published by the Commission to ensure that measures under the plan do no significant harm to any of the six environmental objectives. The self-assessment served as a basis for the DNSH assessment of the plans by the Commission. For several measures, the Commission carried out extensive discussions with the Member States to determine and assess compliance with the DNSH principle prior to the approval of the plans, and to identify the specific conditions required to ensure the respect of the DNSH principle. The Council Implementing Decision approving the national RRPs include detailed milestones and targets to verify the implementation of the plan. Disbursements under the Facility will be tied to the satisfactory fulfilment of these implementation steps. The Council Implementing Decisions include specific DNSH provisions in the milestones and targets corresponding to several measures (e.g., measures in the areas of energy renovations; energy generation; water management; transport; support to decarbonisation; horizontal schemes and financial instruments). These provisions ensure that the Member States are required to provide the evidence to fulfil compliance with the DNSH conditions for a given milestone or target. 3.3.Contribution of the Facility to the digital transformation (pillar 2) Digital target The RRF Regulation requires that at least 20% of the total allocation in each RRP shall support digital objectives. The reforms and investments proposed by Member States have exceeded the 20% target; total digital expenditure in the adopted plans amounts to EUR 117 billion, about 26% of the total plan allocation as calculated according to the digital tagging methodology. Figure 6: Contribution to digital objectives as share of RRP Digital transformation The RRPs include a range of measures supporting the Digital Transformation pillar, such as very high capacity and 5G network deployment, digital skills development for the population and the workforce, integration of digital technologies in government processes, support to the digitalisation of SMEs as well as R&D and deployment of advanced technologies. According to the pillar reporting methodology, a total of almost EUR 130 billion of expenditure is allocated to the digital transformation pillar (29% of the total expenditure in the 22 plans). More than a third of digital expenditure is allocated to the digitalisation of public services, including the digitalisation of transport (36%, EUR 47 billion), followed by measures supporting the digitalisation of businesses (20%, EUR 26 billion) and human capital (20%, EUR 26 billion), see Figure 7 below. Figure 7: Breakdown of expenditure supporting the digital transformation (pillar 2) This chart shows a breakdown of the estimated contribution to the policy pillar according to a list of policy areas established by the European Commission. The percentage relates to the overall expenditure tagged under each policy area as a share of the digital transformation pillar. E-government and digital public services Measures supporting the digitalisation of public services and e-government represent more than a third of the digital expenditure financed by the Facility for the 22 adopted RRPs (EUR 47 billion, which amounts to 36% of the digital transformation pillar). These measures seek to modernise and improve public administration processes, in order to make them more user-friendly, citizen-oriented and interoperable and to boost the access to and uptake of digital public services by individuals and businesses. Many RRPs include reforms aimed at introducing or improving e-government solutions, such as eID deployment, at ensuring the interoperability of digital public platforms, as well as improving data collection and management. Croatia’s plan includes an investment to enable citizens to easily use online public services on their smartphones by creating a digital mobile e-service platform. It promotes the use of electronic signatures in citizens’ interaction with the public administration and includes an investment for the deployment of Croatia’s digital identity card to enable users of e-IDs to sign documents on mobile platforms. Croatia’s RRP also includes a measure dedicated to setting a “one-stop-shop” harmonising and centralising the helpdesk system of all public administrations’ online services, to allow a better communication with public administrations, quicker access to information and possibilities to send feedback and assess the quality of interaction with civil servants. A number of RRPs include investments aimed at integrating advanced technologies (such as government cloud) in government processes, as well as strengthening the public sector’s cybersecurity capacity. Governmental clouds are expected to simplify citizen interaction with public authorities by reducing information processing time, lowering the cost of government services and enhancing the security of sensitive data. Due consideration is also given in a number of plans to strengthening the state’s cybersecurity capacity, given that cyber-crimes have demonstrated their potential to block critical public services. Greece’s plan includes a component dedicated to the digital transformation of public entities, which includes wide-ranging cybersecurity and data governance strategies as well as an extended use of advanced technologies, such as cloud computing and big data. Malta’s RRP includes an investment to further digitalise Malta’s Merchant Shipping Directorate by developing a number of IT tools and systems (such as the document management system, including the digitalisation of 15 000 physical shipping files, the vessel management system, a digital maritime interface, seafarers’ management system and maritime analytics tool). The investment in digital services and a cloud-based infrastructure will help ensure more efficient regulatory practices and improve the internal operations, customer relations and administration within the directorate, in a sector of paramount importance to Malta’s economy. Many RRPs contain measures aimed at the digitalisation of national healthcare systems, including extending the scope of telemedicine services, the consolidation of fragmented national health registries and ensuring the interoperability and security of digital health platforms.

Slovenia’s plan includes measures to integrate new digital services into healthcare, promote the use of information technology to communicate with patients and stakeholders, introduce quality monitoring based on real-time data, improve capacity and patient-management planning, and improve the planning of hospital facilities, medical services and material requirements. The digitalisation of public services concerns several policy areas and provides synergies with the five other pillars supported by the Facility. For instance, supporting the green pillar, some investments reflect the key role of digitalisation in making the EU transport systems more sustainable and resilient, for example through intelligent transport systems (ITS) technologies, urban mobility management tools, multimodal ticketing and multimodal passenger information systems and extension of the coverage of the European Rail Transport Management System. Finland’s RRP supports the Digirail project to introduce the European Rail Traffic Management System on the entire national railway network by 2040, along with the 4G and 5G-based Future Railway Mobile Communication System. Human capital in digitalisation RRPs include a wide range of measures to support the development of digital skills, for a total estimated cost of EUR 26 billion, which represent 20% of the digital transformation pillar. Most plans include measures to increase the digital skill levels in the general population and in the workforce. Some plans also include measures to foster advanced digital skills and to train ICT professionals, with the development of training modules in advanced digital technologies for higher education and vocational training. The Covid-19 pandemic has highlighted the need for digitalisation of education, and a number of RRPs include relevant measures. Portugal’s RRP includes an investment, “Digital Academy” which will offer tailored training to the Portuguese workforce to increase the number of digitally skilled workers. A total of 800 000 participants will undergo a personalised diagnosis of digital skills needs and follow targeted digital skills training. Latvia’s RRP includes a measure aimed at significantly increasing the number of specialists with advanced digital skills. The measure consists of developing approximately 20 training modules in advanced digital skills for advanced technologies such as quantum, high performance computing, and language technologies. The training modules will be included in higher education programmes (bachelor, master, and doctoral) as well as educational programmes for professionals in enterprises. The investment will support 3000 participants in the developed modules. Ireland’ RRP includes a measure supporting digital transformation of Irish education and training at all levels (schools, tertiary, lifelong learning), mainstreaming essential digital skills across all settings, and addressing the risk of a digital divide. Digitalisation of businesses All adopted RRPs include measures supporting the digitalisation of businesses, for a total of EUR 26 billion, which represent 20% of the digital transformation pillar. Measures in this area include key reforms, the most important being those aimed at simplifying the administrative procedures for businesses and at creating the foundation of a digital business environment, with actions in the area of digital business creation and registration, trust and cybersecurity. These measures are expected to increase the level of trust on the adoption of digital technologies, with a positive effect both on their take up and on the intensity of their use. Reforms related to the digitisation of invoicing are also expected to have a positive impact on the digitalisation of businesses. Germany will implement the Online Access Act and the modernisation of registers, which are expected to reduce the administrative burden for companies and notably for SMEs. These reforms pave way for the introduction and effective application of the ‘once-only principle’ through digital means. Spain will adopt regulatory sandboxes to regulate the use of Artificial Intelligence including the legislative actions on the use of data, privacy and ethical issues. A number of plans include investments to support the integration of advanced digital technologies in firms’ production processes (e.g., automation, artificial intelligence). This type of support can take several forms such as general support like coaching and consultancy services (including through European Digital Innovation Hubs), loans, grants or tax credits for the purchase of tangible (machinery/technical equipment) and intangible (software/trainings) assets or structural measures (including regulatory sandboxes). Moreover, several plans include domain-specific (for example for new processes in commercial activities) as well as industry-specific investments (for example for the tourism or the vehicle manufacturer/supplier sector). Austria’s plan includes a robust package of measures aiming at supporting and facilitating the digitalisation of companies. In particular, the plan contains targeted investments to help SMEs adopt digital technologies, which has proven to be a bottleneck for productivity growth. Denmark’s plan contains measures to foster the digitalisation of SMEs by prolonging the existing “SME: Digital” scheme, which provides subsidies for SMEs to digitalise their business and expand the use of new and advanced technology as well as e-commerce solutions. Italy has re-organised and overhauled a number of existing measures into the so-called ‘Transition 4.0’ scheme, which provides a tax credit for firms investing in Industry 4.0 tangible (digital and automated machinery) and intangible (software) goods, thereby aiming at fostering the modernisation and digitalisation of the production sector. Overall, both large and small firms benefit from the investments supporting the digitalisation of businesses. However, in addition, most of the plans include measures targeting specifically SMEs, as smaller firms face higher challenges in adopting digital technologies. Connectivity The vast majority of RRPs includes investments in connectivity, which account for an estimated cost of EUR 13 billion and represent 10% of the digital transformation pillar. This covers a wide range of actions whose objectives contribute to the deployment of very high-capacity fixed and wireless networks, in line with the EU objectives for the Digital Decade to ensure that by 2025 all European households will have access to high-speed internet coverage and that by 2030 they will have access to gigabit connectivity. Many RRPs include investments supporting the deployment of 5G or fixed ultra-fast or very-high capacity networks to reduce the digital divide. With ‘Broadband Austria 2030’, Austria’s RRP includes investments in Gigabit networks reaching half of Austrian households with gigabit-capable connections supplying download and upload speed of at least 100Mbit/s and the deployment of new symmetrical Gigabit connectivity, which will benefit in particular rural regions. Croatia’s RRP will finance the development of broadband infrastructure in areas where there is insufficient commercial interest, which will contribute to reducing the digital divide in Croatia – with a target to reach 700 000 inhabitants in those areas.

Some RRPs also include investments for the installation of fiber optic infrastructures in buildings, and investments which may also have a cross-border dimension, such as those in 5G corridors and submarine fiber cables. In addition, several RRPs also include accompanying reforms in line with the best practices for timely rolling out 5G and fast broadband, as foreseen in the ‘Connectivity Toolbox’. Such reforms are expected to facilitate investments in very high-capacity networks by private operators, in particular by removing unnecessary administrative hurdles to investments in networks, by expediting permit licensing procedures for investments in the rollout of wireless and fixed VHCN networks, and by reducing the deployment cost and facilitating network deployment processes. Cyprus’ RRP will finance the installation of new submarine cables to connect Cyprus with the Greek system, through which Cyprus will have access to some of the region’s most important internet exchanges and will improve connectivity on the island. Italy’s RRP will finance five measures that are expected to contribute to the national ultra-fast and 5G telecommunications network throughout the national territory: Italia 1 Giga, Italia 5G, Connected Schools, Connected Healthcare facilities and Connected smaller islands. As regards accompanying reforms, Austria’s and Greece’s plans are in line with the Connectivity toolbox and include for instance reforms to simplify procedures for broadband deployments, in particular by removing unnecessary administrative hurdles, by expediting licensing procedures and by reducing deployment costs. Digital R&D, digital capacities and deployment of advanced technologies Most RRPs include measures supporting research and development in digital technologies and/or investments in digital capacities and the deployment of advanced technologies, for a total of around EUR 18 billion, which represent about 14% of the total contribution to the digital transition pillar. These measures mainly consist in investments in R&D&I activities in areas such as microelectronics, cloud, cybersecurity, and artificial intelligence, as well as infrastructures, including notably supercomputers and quantum communication networks. These investments will at times be carried out in the context of multi-country projects (see section below). Some RRPs also include reforms to complement these investments, with the aim to adjust the R&I policy tools to better support the development of these technological areas, or the legal and administrative framework (notably for what concerns data governance and management) to enable the adoption of the corresponding technologies. Germany’s plan includes a large-scale cross-border European initiative to invest in the next generation of cloud services and infrastructure, to foster the industrial deployment of smart cloud and edge solutions that are highly innovative, highly secure, energy efficient and fully compliant with data protection. The Austrian RRP will finance research infrastructures and collaborations to, among others, expand the knowledge base for the (further) development of technological concepts as well as hardware and software for quantum computing, simulation and communication. Belgium, Spain and Slovenia will support the digitisation of the cultural and media sectors. Significant investments will equip cultural and media operators with technological tools for digitalisation and support and promote major cultural institutions’ digital transformation, thereby increasing the accessibility of cultural heritage. 3.4.Contribution of the Facility to smart, sustainable and inclusive growth (pillar 3) Measures contributing to the smart, sustainable and inclusive growth pillar concern more than a thousand measures of the 22 RRPs, for a total of around EUR 223 billion. These measures concern very diverse areas, from support to SMEs to research and development and innovation, to reforms to improve the business environment or competitiveness. They also cover large investments to support smart, sustainable growth such as Spain’s support to digitalisation and innovation (EUR 3 billion), Italy’s Transizione 4.0 (EUR 10.8 billion), Portugal’s capitalisation of its national promotional bank Banco Nacional de Fomento (EUR 1.5 billion). These measures also cover a broad spectrum of reforms notably in core areas of the Single Market, like regulated professions (Portugal, Croatia), the status of artists and cultural workers (Czech Republic, Greece, Spain, or Romania), intellectual property (Italy, Greece), market surveillance (Italy), insolvency (Italy, Spain, Portugal, Greece, Slovakia) and public procurement (Italy, Greece, Slovakia, Slovenia, Romania and Latvia). Figure 8: Breakdown of expenditure supporting smart, sustainable and inclusive growth (pillar 3) This chart shows a breakdown of the estimated contribution to the policy pillar according to a list of policy areas established by the European Commission. The percentage relates to the overall expenditure tagged under each policy area as a share of the smart, sustainable and inclusive growth pillar. R&D&I All RRPs include measures related to research, development and innovation, for a total of EUR 44 billion. The amount of R&I investments represents typically between 4% and 13% of the RRF grants allocation of a Member State, with a few outliers below or above this range and an average of about 10%. Several RRPs include both investments and reforms that can have a real transformative impact on the development of Member States’ R&I system, shaping it in the years to come. For example, in several Eastern and Southern Member States, which combine high RRF grants allocation and low R&D intensity, the investments included in the RRPs amount to over one year of (pre-Covid) public investments in R&I. Moreover, in some of those countries, these investments are linked to important R&I policy reforms. The proposed reforms often plan to reduce the fragmentation of the scientific research system through the consolidation of scientific research institutions or to increase the attractiveness of research careers in public institutions through changes to the recruitment, salary and career management policies. The RRP of Slovakia includes a reform which will foster the concentration of excellent educational and research capacities by bringing together universities into larger units. The reform should also allow increasing the cooperation between academic research entities and business. The RRP of Croatia includes a reform agenda aimed at strengthening the public science base by introducing a new performance-based funding system of universities and public research organisations and by enhancing the attractiveness of research careers and revising the career advancement framework of researchers. Reforms also aim to reduce the administrative burden related to the access to public funding for R&I activities and to support knowledge and technology transfer (from public research institutions to private companies) through the creation of appropriate entities (offices, agencies) and the removal of barriers to academia-business collaboration. Last but not least, reforms included in the RRPs also aim to improve the coordination between the different levels of governance of R&I and education policies, so as to respond to skills needs and enhance employability, especially for the young. A large number of RRPs contain thematic R&I investments which will allow mobilising R&I capacities in view of accelerating the green and digital transitions and enhancing resilience, in line with EU-level agendas (about 37% and 22% of the estimated cost of R&D&I-related measures has indeed been tagged as contributing to green and digital objectives respectively). These thematic investments will mostly consist in providing financial support to R&I activities and infrastructures. Some Member States also included investments to support Horizon Europe Partnerships and the funding of excellent projects having received the ‘Seal of Excellence’ under Horizon Europe. Denmark’s RRP aims to provide the public and private sectors with incentives to boost R&D, particularly in innovative green technologies through the set-up of four public-private partnerships called “green partnerships” to develop solutions to four mission-based challenges of reducing emissions in the transport, agriculture, food and waste sectors.

Support to enterprises (including SMEs, Access to finance and financial instruments) Most RRPs (19 out of 22) include measures which provide direct support to SMEs, amounting to EUR 44 billion which represent approximately 22% of the total estimated expenditure for pillar 3. However, SMEs will also benefit from a larger pool of measures that have a wider policy focus. For example, call for projects supporting R&I in the green and digital areas, financial instruments open to all companies, reforms of the business environment with an impact on SMEs as well as larger firms, or broad measures like the digitalisation of public administration services which will have a positive impact on the operations and costs of many SMEs but will not be exclusive to SMEs. Accounting for these additional measures, all the RRPs include measures that are relevant for SMEs, with a total estimated expenditure of about EUR 109 billion or close to 24% of the total estimated expenditure. Overall, the scope of the SME measures included in the RRPs covers a wide range of areas, from improvement of the business environment and access to public procurement, to digitalisation of SMEs and improvement of their environmental sustainability. A number of measures also aim at improving SMEs’ growth and resilience through improved access to finance, reskilling and upskilling of their employees or strengthening their research and development capacities. Besides the measures which target SMEs explicitly - and exclusively in some cases – a number of RRPs’ measures are also expected to indirectly benefit SMEs. This is the case for the large investments supported by the RRP in sectors with high share of SMEs, like construction and tourism or the call for projects for R&D activity to which innovative SMEs can participate. Croatia will establish a number of financial instruments to provide more favourable financing conditions, with the objective of distributing 1,300 loans/interest rates subsidies to SMEs. Croatia will also invest in the management capacity of SMEs by providing them with business consultancy support. Latvia will support SMEs with actions on digital skills, reskilling and upskilling, as well as supporting innovative digital infrastructures such as Industry 4.0 solutions. France’s RRP will support the energy renovation of SMEs with a tax credit measure and a specific scheme to support artisans, small traders and self-employed people in their energy renovation works. Finland’s plan specifically targets SMEs by focusing on accelerating the growth of Finnish micro and small enterprises, as well as boosting their internationalisation capabilities by providing business development grants. In Spain’s plan, support to SMEs is significantly focused on digitalisation with a broad scheme (EUR 3 billion) to provide a basic and more advanced digitisation packages to a significant share of SMEs (Digital Toolkit). Greece’s plan also includes several investments aimed at promoting access to finance for Greek firms including SMEs through an ambitious Loan Facility scheme. These investments will be aligned with the five strategic pillars set for the Loan Facility, namely green transition, digitalisation, extroversion, economies of scale through mergers and acquisitions, and innovation (R&D). In the deployment of their RRPs, Member States also have ample room for manoeuvre to foster the participation of SMEs in large-scale projects as well as the cooperation between small and large enterprises or academia. The strategic project for the electric and connected vehicle envisaged in the recovery and resilience plan of Spain, PERTE, envisages the implementation of several large, integrated projects covering the entire value chain for the electric and connected vehicle, denominated “tractor projects”. It requires that at least 40 % of the participants in tractor projects be SMEs, and that at least 30 % of all aid will benefit SMEs. The measure is expected to contribute to maintaining and developing the participation of SMEs in the automotive industry value chain and to create new business opportunities for start-ups and SMEs. Business environment Most RRPs include measures to improve the business environment, with reforms and investment representing EUR 17.2 billion and 8.5% of estimated expenditure in this area. In particular, measures aim to improve the easiness of doing business by reducing the red tape for firms and entrepreneurs and with a liberalisation of business regulation and to reduce restrictions in highly regulated professions. Measures also aim to attract foreign investments and talents or to develop key sectors like culture and tourism. Some RRPs introduce packages of reforms to increase the competitiveness of public concession and public procurement. Greece’s RRP includes a reform under aimed at reducing the administrative and regulatory burden on businesses. The reform comprises a series of interventions to simplify procedures such as getting credit, obtaining an electricity connection, registering property, and getting a construction permit. Spain is planning to adopt a new start-up law which will create favourable conditions for the creation and growth of innovative start-ups. Austria also includes a start-up package tailored to the needs of start-ups, innovative SMEs and social entrepreneurship. The majority of RRPs include measures in the area of business infrastructure, industrialisation and reindustrialisation, for a total worth EUR 26 billion in these policy areas. These measures notably concern the improvement of rail and road connection to ports, tor to industrial parks and the development of multimodal transport hubs; the rehabilitation of industrial sites including water and waste management; measures to support the circular economy in industrial sites, including recycling hubs; logistic hubs to support the agri-food industry; broadband and 5G connectivity for industrial sites and business districts; creation of data spaces for industrial application or for specific industrial sectors. 3.5.Contribution of the Facility to social and territorial cohesion (pillar 4) Measures supporting social and territorial cohesion amount to EUR 193 billion of estimated expenditure. Measures aiming at territorial cohesion include in particular large infrastructure investments thus representing more than half of the expenditures contributing to pillar 4 (72%). Social cohesion expenditures in pillar 4 are shared broadly equally between social policies (social protection and social housing) and measures contributing to employment and skills (non-youth employment support, modernisation of labour market institutions and adult education). Figure 9: Breakdown of expenditure supporting social and territorial cohesion per policy area (pillar 4) This chart shows a breakdown of the estimated contribution to the policy pillar according to a list of policy areas established by the European Commission. The percentage relates to the overall expenditure tagged under each policy area as a share of the social and territorial cohesion pillar. Territorial infrastructure and services, development of rural and remote areas (including islands) A large number of reforms and investments aims to improve territorial infrastructure and services provided at local level, as well as to fill the gap between urbanised and rural areas. These include measures to support the agricultural sector, to improve infrastructures that can boost the local economy and national competitiveness (such as railways and harbours), and the delivery of services which have a direct impact on the quality of daily life. Many of the measures on territorial infrastructures and services concern the enhancement and innovation of mobility and transport, by improving air traffic management systems, investing in construction, upgrade and electrification of railways, modernising port and harbour infrastructures, and supporting sustainable urban mobility projects, such as high-capacity public transport services and the construction of cycling lanes. RRPs also include a number of measures to improve the use of natural resources and preserve the environment at local level. This is the case of reforms on sewerage and waste management in the islands, investments to expand water treatment systems in big agglomerations as well as the irrigation networks in rural areas, measures to increase sustainability of agriculture, livestock farming and fisheries and to support the creation of consortia in functional rural areas. As for the territorial services, RRPs envisage measures to strengthen the capacity of municipalities to deliver good quality services through decentralisation reforms and investments to improve performance of public administration at local level. The plans of Belgium, Denmark and Italy include investments to encourage the construction of bike paths in state roads. This will support access to a more coherent bicycle road network for citizens and the tourism sector and thereby better opportunities to choose the bicycle rather than other modes of transport. In addition, the measures will support a scheme targeting municipal bicycle construction projects. Cyprus will implement anti-flood and water collection measures targeting Livadia, Kladeri and the centre of Nicosia. More precisely, this investment will support the upgrade of flood channels in Livadia, the construction of a rainwater collection network of 4 600 meters in length in Kladeri, and of a sewer system in Nicosia, including the reconstruction of streets and pavements and the expansion of the rainwater network. Latvia’s RRP foresees an administrative territorial reform to improve the quality of services by reducing the number of administrative units and increasing the efficiency and accessibility of service delivery. The measure includes the adoption of a new Municipality Law reviewing the functions and tasks of local governments. The new law shall ensure better governance at the municipal level, a clearer separation and division of competences between the decision-making and the executive powers, and the increase of the participation of citizens in the decision-making of local communities.

Social protection, inclusion, social housing and social infrastructure The RRPs cover a broad range of reforms and investments that strengthen Member States’ social protection systems. These measures focus on the effectiveness, quality and resilience of social protection systems, depending on country-specific needs as highlighted in the 2019/2020 CSRs. The majority of social protection investments under the RRF relate to upgrading, expanding or improving the social services network and facilities provided by public and private social institutions. They also include specific measures addressing, for instance, the inclusion of people with disabilities, increasing the adequacy and sustainability of social benefits, and improving the living conditions of elderly people in need of care. A number of Member States also include important investments to increase the supply of social housing and social infrastructure to vulnerable groups. Some Member States also included in their RRPs steps for the reform of the minimum income and pension systems to increase their adequacy and sustainability. The measures in favour of social protection and social housing account for around EUR 27 billion of estimated expenditure. Portugal: ‘Support Programme for Access to Housing’ is an investment to safeguard decent and adequate housing for families with the greatest needs and for the most vulnerable groups, with the objective to mostly support social housing accommodation for at least 26 000 households in need by 2026. The investments envisage the construction of new buildings, the renovation of existing dwellings, as well as, whenever necessary, the acquisition and leasing of additional buildings to provide social housing. Lithuania: reform to increase coverage of the unemployment insurance scheme, introducing additional benefits to single elderly and disabled people, as well as improving the pension indexation mechanism to alleviate old-age poverty. Croatia: the RRP includes a reform and an investment on social mentoring, to roll out an individualised mentoring service at social welfare centres targeted at individuals at risk or in a marginalised position. This new service will focus on the integration of persons with disabilities, victims of violence, homeless people, migrants, Roma, young people, persons serving prison sentences and members of other socially vulnerable groups. Spain: reform on protecting families and recognising their diversity, which provides legal recognition of the different types of family structures and determine the benefits and services that they are entitled to depending on their characteristics and income levels. Employment support, modernisation of labour market institutions and adult education and training for target groups other than youth Almost all Member States included in their RRPs a range of reforms and investments to support job creation, upskilling and the modernisation of their labour market. These measures respond to the country-specific recommendation linked to employment support and labour market in the last two years addressed to almost all Member States. In particular, a majority of Member States were asked in 2020 to ‘mitigate the employment impact of the crisis and to strengthen jobs support’, while various more specific structural challenges were also identified. Employment and active labour market policies represent a key aspect of almost all RRPs, also in line with the Commission Recommendation on Effective Active Support to Employment (EASE) following the COVID-19 crisis. The plans include investments and reforms to increasing the participation of women, young people, and vulnerable groups in the labour market, support job creation and the transition to new sectors and occupations, to boost employment and improve the performance, functioning and resilience of labour markets. In total, measures supporting employment and the modernisation of labour market institutions account for around EUR 11.3 billion, which correspond to 6% of the allocation under pillar 4. Adult learning will be key to boost social and economic resilience. National plans include reforms to improve lifelong learning, assessment and recognition of skills, upskilling and reskilling to strengthen career pathways, as well as investments to encourage trainings in the private sector (around EUR 16.4 billion). Italy: investment to support women’s participation in the labour market, in particular by investing in childcare facilities and supporting women’s entrepreneurship. The latter investment will provide support to female entrepreneurs, foster the creation and expansion of innovative business projects, provide mentoring and training opportunities, and communication actions. France: the FNE-Training scheme will help companies to invest in training for employees in partial employment, benefitting both the employee, enhancing his employability, and the company, improving its competitiveness. Greece: horizontal upskilling programmes in digital skills, green skills and financial literacy for over half a million beneficiaries in total will support the employability of the Greek workforce in the green and digital transition. The investment will be preceded by a reform of the life-long learning system that will ensure high quality and labour market relevance of trainings. Slovenia: the RRP includes a measure supporting the entry into the labour market of young workers, with the provision of financial incentives for employers to hire young people up to 25 years of age on open-ended contracts, conditional to mentoring and job-specific training, including focussing on digital skills. Ireland: activation support for long-term unemployment to provide a quality work experience to at least 10 000 persons who have been unemployed for six months or more. Temporary subsidised work placements are combined with mentoring, access to training and support from public and private employment services to improve longer-term employability. Spain: reform of employment contracts, amending existing regulations on the use of temporary contracts to promote the use of open-ended contracts. The reform will simplify and reduce the types of work contracts available (open-ended, temporary and training/apprenticeship) and limit the conditions under which temporary contracts can be used. It will provide an adequate framework for apprentices to enter the labour market, reinforce the use of open-ended contract for seasonal activities, strengthen controls to prevent irregular working time and fight against labour fraud, including by updating the sanctioning system. RRPs also include measures to strengthen and modernise public employment services and provide more efficient and targeted support to jobseekers, such as via digitalisation, process optimisation, staff training, and recruitment of temporary staff to face the effects of the crisis. 3.6.Contribution of the Facility to health, and economic, social and institutional resilience, with the aim of, inter alia, increasing crisis preparedness and crisis response capacity (pillar 5) The 22 adopted RRPs include measures supporting pillar 5 for a total amount of EUR 78 billion. While funding is focused on strengthening health care and reforming public administration, the number of measures is distributed more evenly among the policy areas. Pillar 5 can be broken down in 14 policy areas, as shown in Figure 10 below. Health care and public administration are clearly the areas that are benefitting the most, with health care coming first as regards expenditure and public administration regarding the number of measures. Some areas like fiscal policy, fraud prevention or rule of law are allocated only very small amounts of overall expenditure, but they instead benefit from targeted policy reforms. Figure 10: Breakdown of expenditure supporting health and resilience per policy area (pillar 5) This chart shows a breakdown of the estimated contribution to the policy pillar according to a list of policy areas established by the European Commission. The percentage relates to the overall expenditure tagged under each policy area as a share of the health, and economic, social and institutional resilience pillar. Figure 11: Number of measures supporting health and resilience per policy area (pillar 5) Health and long-term care All RRPs include measures related to health care, showing Member States’ strong commitment towards improving health systems across the Union. The total expenditure linked to these measures amounts to approximately EUR 37 billion, representing 49.15% of the pillar 5 total allocation. RRPs include a wide array of health investments in their plans. First and foremost, approximately EUR 25 billion are dedicated to the construction of new or the upgrading of existing health infrastructures, including related medical equipment.

Slovenia’s plan contains large investments in hospital infrastructure to improve the effective treatment of communicable diseases. Belgium’s plan includes important investments in nuclear medicine initiatives aimed at constructing a prototype facility for a sustainable production of medical radioisotopes, and targeted at developing a research programme for the next generation of therapeutic radioisotopes in cancer treatment. In addition, around EUR 15 billion in investments are specifically allocated to improving primary care and prevention, in particular in rural and deprived areas. Greece’s plan foresees the implementation of a comprehensive system of primary, secondary and tertiary prevention to improve access to high-quality health services for all citizens. In synergy with the second pillar, many RRPs include measures aimed at the digitalisation of national healthcare systems, including extending the scope of telemedicine services, the consolidation of fragmented national health registries and ensuring the interoperability and security of digital health platforms. The total expenditure for investments contributing to the digital transition in healthcare amounts to EUR 12 billion across the plans. Romania’s RRP will support the development of an integrated e-health system, connecting over 25 000 healthcare providers and telemedicine systems. Finland’s plan will support national and regional actors to develop digital services targeting citizens (e.g., preventive services, symptom assessments, self-care services, digital mental health services, etc.), professional systems (e.g., digital service models based on patient data analysis) and management solutions (e.g., advanced knowledge management and analytics solutions). To complement investments, Member States also plan to adopt and implement an ambitious reform agenda. Key reforms focus on (i) re-organising health systems to strengthen their capacity; (ii) improving the governance of health systems to increase sustainability of healthcare services, and (iii) establishing mechanisms to attract and retain health professionals in specific regions. This is particularly the case for general practitioners and community nurses, as important shortfalls are reported in available health workforce in some countries. For example, Spain’s plan includes a reform aimed at addressing shortages of nurses and doctors, reduce the use of temporary contracts, improve working conditions and enhance training and professional development in certain geographical areas. 15 RRPs include measures related to long-term care (LTC). In total, 43 measures are included in the plans, for a total expenditure of approximately EUR 4.2 billion. Investments in social care homes, nursing homes and related LTC infrastructure and services that are included in the 15 plans aim to support national deinstitutionalisation strategies by promoting a model geared towards community care and home care solutions. As a case in point, the French includes a large investment for the renovation, transformation and equipment of the French medical-social sector, in particular Establishments for Dependent Elderly Persons (EHPAD) over the period 2021-2025. Effectiveness of public administration Over a third of the measures and around two thirds of the expenditure linked to the effectiveness of public administration and to business and public service continuity relate to the digital transformation. The measures furthering the public administration´s digital transformation with the largest expenditure as a percentage of total RRP allocation can be found in Germany’s and Malta’s plans. Indeed, 10% of Germany’s total RRP allocation is devoted to a reform which seeks to make public services digitally available by 2022. Similarly, Malta’s plan includes an investment accounting for almost 6% of its total RRP allocation to enhance customer experience with online services. Across RRPs, measures to enhance the civil service, diminish regulatory and administrative burdens and improve public procurement contribute to enhancing the effectiveness of public administration. 10 RRPs contain measures to improve the training, development and work conditions of civil servants by facilitating flexible working arrangements, implementing a better pay system in the public service or modernising recruitment processes for example. In turn, 5 RRPs include public administration reforms to ease or reduce the regulatory and administrative burden for businesses by simplifying procedures and requirements relating to business activity, simplifying regulatory requirements for professional services or implementing the “SME test”. Finally, 10 RRPs aim to improve public procurement by developing electronic procurement or streamlining the awarding process. Romania’s RRP includes measures to improve the quality and effectiveness of the public administration, notably with measures to reinforce the effectiveness of the judicial system and fighting corruption. Latvia’s RRP includes reforms and investments for the modernisation of public administration, centralising administrative support functions and investing in training staff in public administration. Croatia’s RRP lays out a reform for the continuous provision of public procurement training. This reform will contribute to the enhanced prevention of corruption and the improvement of the capacity and efficiency of the Croatian public administration. Effectiveness of judicial systems Measures to improve the effectiveness of the judicial systems are found in 13 RRPs. More than half of these measures are investments worth EUR 3.75 billion. Notably, 75% of the total expenditure in this area is allocated to the Italian RRP which devotes a total of EUR 2.268 billion for investment in human capital to strengthen the Judicial Office and overcome disparities between the different judicial offices. A third of these measures and almost half of these measures’ total expenditure are related to the digital transformation. Investments in the RRPs of Cyprus, Greece, Romania, Slovakia and Croatia are focused on improving judicial infrastructure. Three RRPs (Cyprus, Croatia and Italy) also include reforms to reduce the backlog of cases pending before courts. Some RRPs (Cyprus, Latvia, Croatia, and Romania) contain measures to improve the quality of judicial systems by training employees. Romania’s RRP includes an investment to support the preparation and transition of the Romanian judicial system to a centralised electronic case management system. It also spells out a reform to strengthen the independence of magistrates, and which will provide for the admission to the profession and career advancement of magistrates on meritocratic grounds, among other things. Malta’s plan devotes numerous reforms to combatting weaknesses with respect to the independence of the judiciary, the lack of a separate prosecution service from the investigative branch and the challenges linked to the effective detection and prosecution of corruption. To name a few examples, the plan contains measures to reform the method of appointment and dismissal of the judiciary, create a separate prosecution service and reform the Permanent Commission Against Corruption (PCAC). Slovakia’s plan contains a reform which entails a package of legislative changes aimed at further increasing the efficiency, integrity and independence of the justice system and fighting corruption and money laundering more effectively. In Slovakia’s plan in particular, four investments aim to expand, upgrade, build or procure new suitable premises for key courts in the new judicial map introduced under the RRP and modernise the courts’ IT equipment. Croatia’s plan contains a reform to establish a legal, organisational and technological framework that will contribute to reducing backlogs and shortening court proceedings and focus on the transparent and efficient administration of the justice system. This reform’s goal is to increase citizens’ trust in the justice system. Italy’s plan includes various measures to reduce the backlog of cases for Civil Ordinary Courts, Administrative Regional Courts, the Civil Court of Appeal and the Council of State. These measures aim to make the judicial system more efficient by reducing the length of proceedings and bringing Italy closer to the EU average in terms of duration of proceedings. Cyprus’ plan includes an investment to train judges on various legal topics and judicial skills to address the low level of training and lifelong learning for judges. Latvia’s plan contains an investment to establish a single training centre for the development of the qualifications of judges, court staff, prosecutors, assistant prosecutors and specialised investigators. Fraud prevention /Anti-money laundering supervision 17 RRPs contain measures associated with the fight against fraud and anti-money laundering and most of the measures included in the plans are reforms. Estonia’s plan includes an investment to establish the strategic analysis of money laundering and terrorist financing in Estonia. This measure aims to strengthen the capacity of the Financial Intelligence Unit to identify money laundering schemes and channels at an early stage. Slovakia’s plan includes an investment aimed at providing the tools and capacity for the fight against corruption and money laundering. Croatia’s plan also displays many anti-money laundering measures, among which a reform to enhance cooperation between the Anti-Money Laundering Office and the supervisory authorities. Finland intends to implement a reform aiming at facilitating the collection and exchange of information between the competent authorities for the prevention and detection of money-laundering, including through the automation of data processing and analysis. Bank and payment accounts control system will be amended to increase the efficiency and the prevention detection and prosecution of money-laundering and terrorist financing. Greece’s plan contains a reform aiming at setting up a digital platform for the collection of statistical data held by judicial, supervisory and law enforcement authorities and at improving the special registry for the record-keeping of beneficial ownership information. Another reform is part of Ireland’s plan that consists in the publication of a sectoral anti-money laundering risk assessment of Trust or Company Service Providers (TCSP) and in an increase of the number of inspections of TCSPs. In addition, a working group will review the Regulatory enforcement toolkit under the Criminal Justice Act 2010 (money laundering and terrorist financing), including recommendation on expanding the toolkit to include administrative financial sanctions regime. Luxembourg also introduced a reform in its plan pursuing two main objectives. First, to strengthen the framework for fighting money laundering and terrorist financing that is applicable to professionals providing trust and company services and investment services by reinforcing the national provisions. Second, to better identify, assess and understand money laundering and terrorist financing. In addition, the Luxembourg Business Register, as the body administering the Register of Beneficial Owners and the Trade and Company Register, will undergo an extensive transformation with a view of extending its sanctioning, controlling, and executive powers, and facilitating the use of its data for the assessment of AML risks.

A few RRPs also include measures related to fraud prevention, for example to fight cybercrime or tax avoidance. Croatia’s plan includes an investment to strengthen the capacity of the police to tackle cybercrime. Spain’s plan spells out a reform for the adoption of an anti-fraud law, which aims to strengthen rules against tax avoidance practices that directly affect the functioning of the single market. Tax measures More than half of RRPs (14 out of 22) include reforms related to environmental taxes to address the green transition. Most of these measures cover specific tax reforms to be put in place during the plan’s lifetime. Some also concern preparatory actions (analyses, assessments, evaluations, reviews or studies regarding the possible introduction of new taxes). Taxes cover a variety of targeted sectors which can be listed as follows: 24 measures relate to energy taxes (including 6 related to preparatory actions), 15 measures are transport taxes (including 3 related to preparatory actions), 9 measures refer to pollution taxes (including 2 related to preparatory actions), 4 measures refer to resource taxes (including 2 related to preparatory actions). In addition to the green taxa