Portugal’s recovery and resilience plan

RRF FUNDED PROJECTS IN PORTUGAL

WHAT’S IN THE PLAN?

The reforms and investments in Portugal's plan, approved by Council on 13/07/2021, are helping it to become more sustainable, resilient and better prepared for the challenges and opportunities of the green transition and digital transition.

Following Council approval of Portugal’s plan on 13 July 2021, Portugal's recovery and resilience plan was updated on 17 October 2023 also to introduce a REPowerEU chapter.

• 117 investment streams and 44 reforms
• 41% of the plan will support climate objectives
• 21% of the plan will foster the digital transition 

The transformative impact of Portugal’s plan is the result of a strong combination of reforms and investments which address the specific challenges of Portugal. The reforms address bottlenecks to lasting and sustainable growth, while investments are targeted to address barriers to productivity and potential growth, such as those addressing restrictions of regulated professions and gaps in human capital, including in digital skills and education, as well as, enhancing public financial management and the efficiency of the public administration and of the judicial system. Other important investments relate to health infrastructure, support for employment of young people, decarbonisation of the energy sector, energy efficiency in buildings, sustainable transport, green transition in enterprises, and digitalization of the public administration as well as of the private sector. Finally, the Portuguese revised plan proposes reforms aimed to enhance the efficiency of both the social protection system and the tax system, promote circular economy and waste management, and further boost the digital transition of the public administration.

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.

Portugal’s plan now includes 6 reforms and 16 investments to reduce its reliance on fossil fuels, in line with one of the REPowerEU Plan's objectives.

To finance this increased ambition, Portugal has asked for a share of its Brexit Adjustment Reserve to be transferred to the plan, amounting to €81.3 million, and additional grants for €  70.7 million. These funds are added to Portugal’s REPowerEU grant of €703.4 million.

Key measures for REPowerEU

REPowerEU reforms:

• The creation of the National Energy Poverty Observatory, monitoring households in energy poverty and proposing relevant policy actions; One-stop shops for energy efficiency and renewables to support citizens in the implementation of energy efficiency and renewable energy measures, and uptake of energy sustainable behaviours;
• Regulatory framework for renewable hydrogen management to encourage the promotion of renewable hydrogen;
• A Biomethane Action Plan: an integrated strategy aiming at the promotion of production and consumption and the simplification of the legal and regulatory framework for renewable energy projects, namely for electrical and environmental licensing of renewable energy and storage projects, with a particular focus on go-to-areas.
• Vocational training offer for the development of green skills.

RepowerEU investments:

• Energy efficiency in residential, service and public buildings;
• Energy transition to support to the development of green industry;
• Decarbonisation of industry;
• One-stop-shop for the licensing and monitoring of renewable energy projects;
• Incentives for the purchase and installation of renewable energy storage;
• Incentives for the production and storage of RES in the autonomous regions;
• Decarbonisation of public transport;

Example project:

The REPowerEU chapter includes a reform concerning the set-up of the Energy Poverty Observatory. It aims to set up a body for national, regional and local authorities to monitor the situation of energy poverty in Portugal and to analyse and develop public policies for its eradication in Portugal. It will do so through capacity-building, analysis, policy coordination and analysis in different ways. As a result, the reform aims also to ensure the establishment of a financing instrument for energy efficiency measures in the residential sector to tackle energy poverty for the identified household profiles.

In the area of climate and environmental policies, Portugal’s challenges include the need to make the building stock more energy-efficient, diversify energy sources and improve forest fire prevention.

Key measures for the green transition

• Portugal’s plan supports the green transition through a large-scale investment programme of €420 million to improve the energy-efficiency of residential buildings.
• This investment is accompanied by further investments in the energy-efficiency of public buildings. 
• Extensions of the metro networks in Lisbon and Porto for over €700 million will make transport more sustainable, in addition a Bus Rapid Transit Line in Braga and other investments in sustainable transport across the whole Portugal.
• The plan involves the private sector deploying 15,000 electric vehicle charging stations by 2025. 
• €255 million support Portugal’s ambition to expand the production of renewable hydrogen and other renewable gases.
• Projects for the greening of industry will also be supported with more than €800 million.
• Support for the development of green research agendas, for over €1.2 billion.
• Key reforms include the facilitation of permitting for renewable energy related projects, the set-up of one-stop-shops for energy efficiency interventions and the development of an energy poverty observatory, all part of the REPowerEU chapter.

The modified plan, including the REPowerEU chapter, has further strengthened the focus of the plan on the green transition, devoting 41.2% of the available funds to measures that support climate objectives (up from 37.9% in the original plan).

Digital challenges for Portugal include the need to invest in the digital transition, particularly in the development of digital skills, both basic and advanced, in the use of digital technologies to ensure equal access to quality education and training, and to boost firms’ competitiveness. This is especially relevant in Portugal, where the economy is characterised by micro-enterprises concentrated in traditional sectors.

Key measures for the digital transition

• Portugal’s recovery and resilience plan supports the digital transition with investments and reforms in the areas of skills, digitalisation of education and business as well as digitalisation of the public sector (general public administration, health, justice system and tax administration).
• In the area of qualifications and skills a reform aims at updating the offer of courses and qualifications for vocational education and training and for lifelong learning programmes. The reform is supported by investments of €710 million for the modernisation of vocational education and training institutions.
• In the area of digital health there are investments of €300 million to modernise the computer systems of the National Health Service and increase the digitalisation of medical records.
• The business sector digitalisation benefits from €650 million supporting small and medium enterprises and their workers with tailored digital skill trainings and tailored coaching and support to adopt digital technologies, reforms and investment will also contribute to create a safe digital environment for the digital transition of society and business.

Key macro-economic challenges for the Portuguese economy include high public and private debt levels, and sluggish productivity growth which is held back by, inter alia, relatively low levels of investment (particularly in intangibles), low R&D intensity, overall low skill levels of the population and a business environment hampered by inefficiencies in the justice system and regulatory restrictions.

Key measures in reinforcing economic and social resilience

• The plan has a strong social dimension, with investments aimed, inter alia, at strengthening the National Health Service (€1.4 billion) and increasing the supply of social housing solutions for various target groups (overall €3.2 billion), at boosting skill levels of the population, including for the twin transition, and extending the coverage of social services, including long-term care and actions for people with disabilities. In addition, the plan envisages €250 million to support social interventions in disadvantaged Metropolitan Areas.
• On the reform side, the vocational education reform includes the modernisation of vocational education institutions with an expected permanent impact on skills and the upgrading public financial management to improve the quality and sustainability of public finances.
• Key measures aimed at reinforcing economic resilience include, inter alia, investments aimed at boosting research and innovation (such as the Research Agendas, with support of over  €2.8 billion), at improving access to finance and equity investments (€1.4 billion of equity and quasi-equity support provided through Banco Portugues de Fomento) and institutional and business environment reforms aimed at boosting productivity, notably the reform of the judicial system, aimed at increasing efficiency, the reform of regulated professions and the review of the licensing procedures.

More information on the event can be found here

Portugal’s 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)

DOCUMENTS