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Energy is one of the main issues for the European Union, both in terms of industrial developments in the field of green technologies and in terms of security, as the war in Ukraine and the consequent energy crisis showed to the EU member states. The European Commission stated that funds from the 2025 budget will be spent “where they can make the greatest difference,” based on the needs of EU countries and the EU’s partners worldwide, and thus the money “will foster the green and digital transitions.” Since her first term as President of the European Commission, Ursula von der Leyen has focused on energy transition as a tool to fight climate change and assure a process of innovation and development for the EU economies. In this perspective, the EU budget for 2025 reflects Brussels’ continued commitment to addressing pressing challenges, particularly in the wake of the ongoing geopolitical tensions, as the document agreed by the European Parliament and the European Council prioritises investments in renewable energy sources, energy efficiency, and research and innovation, aiming to accelerate the green transition and bolster energy security all over Europe.

An important role is the one played by the REPowerEU plan, a cornerstone of the EU’s energy policy. Thus, the REPowerEU program remains a key driver of the 2025 budget. This initiative, launched in May 2022 as the EU response to Russia’s invasion of Ukraine, seeks to reduce Europe’s reliance on Russian fossil fuels while accelerating the transition to clean energy sources. This is why the budget allocates significant funds to support the deployment of renewable energy technologies, such as solar and wind power, as well as the development of hydrogen infrastructures in the whole European Union. Additionally, the 2025 budget will continue to support energy efficiency measures in buildings, industry, and transportation in an attempt to reduce energy consumption and lower greenhouse gas emissions.

At the same time, research and innovation are central to the EU’s long-term energy strategy, as the green transition needs advanced technologies in order to always stay at the forefront. Let’s not forget that the 2025 budget will provide substantial funding for Horizon Europe, probably the EU’s flagship research and innovation program. This funding will in fact support cutting-edge research in fields such as renewable energy, energy storage, and carbon capture and storage (CCS). With huge investment in research and innovation, the EU clearly aims to develop new—and hopefully groundbreaking—technologies that can drive down the cost of clean energy and accelerate the decarbonisation of the European economy.

Finally, the EU’s Just Transition Fund is another key component of the 2025 budget. Such a fund is an instrument that enables the European Commission to provide support to those territories within the member states that are expected to be the most negatively impacted by the transition towards climate neutrality. Thus, the Just Transition Fund supports the economic diversification and reconversion of the territories concerned, as the EU Commission states in a note. Finally, the EU is expected to provide financing for the development of strategic energy reserves and crisis-response mechanisms, which shall include the creation of strategic gas storage, considered a key tool for mitigating energy shortages during times of high demand or political instability.

Written by: Francesco Marino