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16 June, 2024
 
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Cyprus eyes $1.22 billion for electric cars

Electric cars, energy grid upgrades, and EU nod await

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Cyprus is set to undergo a transformative phase with its revised Recovery and Resilience Plan, valued at $1.22 billion. The European Commission's positive assessment now awaits approval from the EU Council, paving the way for a greener and digitally advanced future.

The plan introduces measures to upgrade the energy grid and champion the use of electric cars. Aligned with the EU's REPowerEU program, Cyprus incorporates a dedicated chapter addressing energy issues and the gradual decarbonization of the EU.

This REPowerEU chapter includes two new reforms and five upgraded investments, emphasizing electric vehicle promotion, consumer participation in the electricity market, and reducing primary energy consumption. Additionally, initiatives focus on enhancing savings in public and private buildings, encouraging business involvement in research and innovation for the energy network upgrade.

With these additions, funds allocated for the green transition and climate-related targets surge from 41% to 45%. Digital transition targets also see a boost, increasing from 23% to 24.6%.

The EU Council now has approximately four weeks to endorse the commission's assessment. Upon approval, Cyprus can receive 20% pre-financing for the funds outlined in the REPowerEU chapter.

To date, Cyprus has already received 242 million euros from the Recovery and Resilience Fund. This includes 157 million in pre-financing and an additional 85 million euros as the first payment. Disbursements will be contingent on meeting milestones and targets specified in the plan.

The revised plan addresses challenges posed by rising inflation, the impact of the Russian invasion of Ukraine, and supply chain disruptions. Practical adjustments reduce the plan's size, reflecting positive developments in the Cypriot economy.

Objective difficulties, such as high inflation and supply chain disruptions, hinder specific measures' implementation. The downward revision of Cyprus's financing threshold, influenced by the recovery plan's formula update, also played a role in shaping the changes.

Cyprus seeks to leverage the Brexit adjustment reserve, amounting to 52 million euros, to bolster the plan further. The country's upward economic trajectory in 2020 and 2021 resulted in the removal or restriction of certain investments. Nevertheless, national funds continue to support most of these initiatives.

The REPowerEU chapter places a strong emphasis on the green transition, introducing reforms to increase renewable energy use and promoting electric vehicles. Investments are geared towards reducing primary energy consumption and fostering innovation to address energy production bottlenecks.

Digital transition objectives remain a priority, alongside measures supporting the social dimension of the National Recovery Plan. Initiatives such as extending early childhood education, social security system reform, and enhancing hospital capacity underscore Cyprus's commitment to a comprehensive recovery.

Policies targeting the next generation, children, and young people remain integral to the recovery plan. Education and employment measures underscore Cyprus's dedication to shaping a resilient and forward-looking future.

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Cyprus  |  money  |  economy  |  EU

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