Czechia’s recovery and resilience plan

RRF FUNDED PROJECTS IN CZECHIA

WHAT’S IN THE PLAN?

The reforms and investments in Czechia’s plan are helping it become more sustainable, resilient and better prepared for the challenges and opportunities of the green transition and digital transition. Following Council approval of Czechia’s plan on 8 September 2021, Czechia’s recovery and resilience plan was updated on 17 October 2023 also to introduce a REPowerEU chapter.

• 105 investment streams and 58 reforms
• 43% of the plan will support climate objectives 
• 23% of the plan will foster the digital transition.    

The transformative impact of Czechia’s plan is the result of a strong combination of reforms and investments which address the specific challenges of Czechia.

The reforms address bottlenecks to lasting and sustainable growth, while investments are targeted to accelerate the transition towards low-carbon and climate-resilient economy, to maximise the benefits of the digital transformation and improve the quality of public administration. The plan also aims at fostering social cohesion and resilience by increasing the availability and quality of healthcare, tackling inequalities in education and investing in pre-school facilities.

All measures have to be implemented within a tight time frame, as the Regulation establishing the Recovery and Resilience Facility requires all milestones and targets within the national plans to be completed by August 2026.

Czechia’s plan now includes 15 reforms and 9 investments to reduce its reliance on fossil fuels, in line with one of the REPowerEU Plan's objectives.

To finance this increased ambition, Czechia has asked for its Brexit Adjustment Reserve to be transferred to the plan, amounting to €55 million. These funds will be added to Czechia's REPowerEU grant of €681 million.

Key measures for REPowerEU

The REPowerEU measures include 15 reforms and 9 investments that strongly contribute to the green transition.

The 15 reforms will, for example:

• Facilitate the Renovation Wave by supporting and advising households, businesses and public sector entities in the renovation of their buildings;
• Streamline and accelerate permitting for renewables;
• Simplify the linking of renewables to the grids; and
• Provide support to energy communities.

The 9 investments will facilitate the modernisation and digitalisation of the electricity grid, develop new photovoltaic energy sources, electrify railways, support the purchase of electric or hydrogen vehicles and cargo e-bikes by private companies, and promote green skills and sustainability in universities.

Together, these measures are expected to increase Czechia’s share of renewable energy and accelerate decarbonisation of energy generation, building and transport sectors

In the area of climate and environmental policies, Czechia faces the challenge of increasing the share of renewable energies in the energy mix, improving the energy efficiency of its building stock and making mobility and the transport sector more sustainable. Nature protection, in particular with respect to biodiversity, forestry and water bodies, also requires more attention.

Key measures for the green transition

• Around 25% of the plan is allocated to investments in energy efficiency and renewable energy: 
  • €1.6 billion will finance large-scale renovation programmes to increase the energy efficiency of residential and public buildings, including childcare and long-term care facilities. 
  • €907 million will be invested in installation of renewable energy sources for both households and businesses.
  • €316 million will finance the modernisation and digitalisation of electricity distribution grids strengthening the integration of renewable energy.
• The plan supports the green transition also through investments of €1.2 billion in sustainable mobility, notably in low-emission vehicles for the business sector, improving railway infrastructure, and promoting electric charging stations and cycling pathways. 
• Further €121 million are to be invested in circular economy, including recycling infrastructure and support for circular economy solutions and water savings in businesses.
• The investment in forestry management aims at increasing sustainability of Czech forests for €335 million.

The modified plan, including the REPowerEU chapter, has further strengthened the focus on the plan on the green transition, devoting 43% of the available funds to measures that support climate objectives (up from 42% in the original plan).

Digital challenges for Czechia include improving connectivity through very high-capacity networks, increasing the offer and uptake of e-government services and supporting the digitalisation of companies, notably SMEs. Advanced digital skills need to improve to address the growing need of organisations and companies to quickly go through the digital transformation.

Key measures for the digital transition

• Czechia’s recovery and resilience plan supports the digital transition with investments and reforms in digital skills, e-government, digital connectivity and digital transformation of businesses.
• Besides revamping the digital curricula in education, digital skills are supported by investment of €585 million in digital equipment for schools, training for teachers, new university programmes in fast-growing digital fields and upskilling and reskilling courses for citizens.
• The construction of university infrastructure is supported with €368 million.
• The plan is investing €790 million in cyber-security and the digital transformation of public administration, the justice system and health care.
• The digital transition is also being supported by investing €662 million in the digital transformation of businesses, digital innovation hubs and very high-capacity networks and 5G networks.

The modified plan has further strengthened the focus on the plan on the digital transition, devoting 23% of the available funds to measures that support digital objectives (up from 21% in the original plan).

Key macro-economic challenges for the Czechia’s economy include the industry’s exposure to the risks posed by automation and the green transition, the low levels of R&D funding for early-stage innovative firms, inefficiencies in public administration, growing inequalities in education, skill mismatch, low labour market participation of women and the low skilled and low affordability of housing.

Key measures in reinforcing economic and social resilience

• In order to reinforce economic and social resilience, the plan foresees:
  • €222 million to improve the business environment, in particular through improving access to finance for companies, reforming and accelerating construction permitting procedures, reinforcing anti-corruption measures and boosting cooperation between public and private research.
  • Reforms and investment of €451 million shall help ensure equal access to education, notably through increasing access to affordable pre-school care, reinforced support for disadvantaged schools and additional tutoring for children at risk of failure.
  • Czechia will also invest €826 million in increasing the resilience of healthcare and social services, be it through building new hospitals and social care facilities, acquiring new medical equipment, strengthening cancer screening programmes or rolling out e-Health.
  • Finally, €358 million will be dedicated to supporting new construction of affordable housing, flanked by an adoption of the housing affordability act.

More information on the event can be found here

The plan is consistent with the challenges and priorities identified in the European Semester, the annual cycle of coordination and monitoring of each EU country’s economic policies. For a detailed explanation of the European Semester see the following link: The European Semester explained | European Commission (europa.eu)

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