(1)

Croatia submitted its draft updated integrated national energy and climate plan on 4 July 2023.

(2)

Article 3 and Annex I to Regulation (EU) 2018/1999 (‘the Governance Regulation’) lay down the elements that are to be included in the updated integrated national energy and climate plans. In December 2022, the Commission adopted the Guidance to Member States on the process and the scope of preparing the draft and final updated national energy and climate plans (3). The Guidance identified good practices and outlined the implications of recent policy, legal and geopolitical developments in energy and climate policies.

(3)

In connection with the REPowerEU plan (4), and as part of the 2022 and 2023 European Semester cycles, the Commission has put a strong focus on Member States’ energy and climate-related reform and investment needs to strengthen energy security and affordability by accelerating the green and fair transition. This is reflected in the 2022 and 2023 Country Reports for Croatia (5) and the Council Recommendations to Croatia (6). Member States should take into account the latest country-specific recommendations in their final updated integrated national energy and climate plans.

(4)

The Commission’s recommendations with regard to the delivery of national targets under the Effort Sharing Regulation (7) (ESR) are based on the likelihood that the Member States will respect the 2030 targets, taking into account the rules for the use of flexibilities under the ESR.

(5)

The Commission’s recommendations regarding Carbon Capture, Utilisation and Storage (CCUS) aim at having an overview of the intended deployment of these technologies at national level, including information about annual volumes of CO2 planned to be captured by 2030, split by source of CO2 captured coming from installations covered by Directive 2003/87/EC of the European Parliament and of the Council (8) or from other sources, such as biogenic sources or direct air capture; about planned CO2 transport infrastructure; and about potential domestic CO2 storage capacity and injection volumes of CO2 planned to be available in 2030.

(6)

The Commission’s recommendations regarding the performance under Regulation (EU) 2018/841 of the European Parliament and of the Council (9) (Land Use, Land Use Change and Forestry Regulation – ‘LULUCF Regulation’) address the delivery by the Member State on the ‘no debit’ rule for the period 2021-2025 (Period 1) and its national target for the period 2026-2030 (Period 2), taking into account the rules governing the use of flexibilities as set out in that Regulation. The Commission’s recommendations also take into account that in Period 1 any excess in emissions under the LULUCF Regulation will automatically be transferred to the ESR.

(7)

For climate adaptation to properly support the achievement of energy and climate mitigation objectives, it is essential to identify the potential climate change hazards and analyse climate vulnerabilities and risks that may affect relevant areas, populations and sectors. The Commission’s recommendations on adaptation consider the extent to which Croatia integrated in its updated NECP adaptation goals that account for climate risks, that could prevent Croatia from meeting the objectives and targets of the Energy Union. Without specific adaptation policies and measures, planned and implemented, the achievement of objectives in Energy Union dimensions is at risk. Water management in changing climatic conditions requires particular attention due to risks of electricity disruption as floods, heat and drought impact the energy production.

(8)

The Commission’s recommendations regarding renewable energy ambition are based on the formula set out in Annex II to Regulation (EU) 2018/1999, which is based on objective criteria, and on the main policies and measures missing in Croatia’s draft updated NECP to enable a timely and cost-effective achievement of Croatia’s national contribution to the Union’s binding renewable energy target of at least 42,5 % in 2030, with the collective endeavour to increase it to 45 % pursuant to Directive (EU) 2018/2001 of the European Parliament and of the Council (10) as regards the promotion of energy from renewable sources. The Commission’s recommendations are also based on Croatia’s contribution to the specific targets of Articles 15a, 22a, 23, 24 and 25 of that Directive and the related policies and measures to rapidly transpose it and implement it. The recommendations reflect the importance of developing comprehensive long-term planning for the deployment of renewable energy, and in particular wind, to increase visibility for the European manufacturing industry and grid operators in line with the European Wind Power Package (11).

(9)

The Commission’s recommendations regarding the national contribution to energy efficiency are based on Article 4 of the Directive (EU) 2023/1791 of the European Parliament and of the Council (12) on energy efficiency; and the formula in Annex I to that Directive and the related policies and measures to implement it.

(10)

The Commission’s recommendations pay particular attention to the targets, objectives and contributions and related policies and measures to deliver on the REPowerEU plan in order to rapidly phase out dependence from Russian fossil fuels. They take into account lessons learnt from the implementation of the Save gas for a Safe winter Package (13). The recommendations reflect the imperative to make the energy system more resilient in light of the obligations stemming from Regulation (EU) 2019/941 of the European Parliament and of the Council (14) on risk preparedness in the electricity sector and Regulation (EU) 2017/1938 of the European Parliament and of the Council (15) on the security of gas supply, and in line with the Commission Recommendation on energy storage (16).

(11)

The Commission’s recommendations take into account the need to accelerate the integration of the internal energy market to strengthen the role of flexibility and empower and protect consumers. The Commission’s recommendations also consider the importance of assessing the number of households in energy poverty in line with the requirements of Article 3 of Regulation (EU) 2018/1999, and the Commission Recommendation (EU) 2023/2407 (17).

(12)

The Commission’s recommendations reflect the importance of ensuring sufficient investments in clean energy research and innovation to boost their development and manufacturing capacities, including appropriate policies and measures for energy intensive industries and other businesses; and the need to upskill workforce for a net-zero industry in order to consolidate a strong, competitive and clean economy within the Union.

(13)

The Commission’s recommendations build on the commitments taken under the Paris Agreement to phase down the use of fossil fuels, as well as on the importance of phasing out fossil fuel subsidies.

(14)

The Commission’s recommendation on investment needs follows its assessment of whether the draft updated plan provides a general overview of investment needs to achieve the objectives, targets and contributions for all dimensions of the Energy Union; indicates the sources of financing, distinguishing private and public sources; and outlines investments consistent with Croatia’s Recovery and Resilience Plan, Croatia’s Territorial Just Transition Plan and the 2022-2023 country-specific recommendations issued under the European Semester; and includes a robust macroeconomic assessment of planned policies and measures. The NECP should ensure the transparency and predictability of national policies and measures to support investment certainty.

(15)

The Commission’s recommendations reflect the crucial importance of a wide regional consultation, and of ensuring early and inclusive consultation on the plan, including effective public participation with sufficient information and timeframe, in line with the Aarhus Convention (18).

(16)

The Commission’s recommendations on just transition reflect the assessment of whether the Croatia’s plan identifies in sufficient depth the relevant social, employment and skills impacts of the climate and energy transition and outlines adequate accompanying policies and measures to promote a just transition, while contributing to the promotion of both human rights and gender equality.

(17)

The Commission’s recommendations to Croatia are underpinned by the assessment of its draft updated NECP (19), which is published alongside this Recommendation.

(18)

Croatia should take due account of the present recommendations when developing its final updated integrated NECP to be submitted by 30 June 2024.

(19)

Pursuant to Regulation (EU) 2021/1119 (the European Climate Law), the Commission is required to assess the consistency of national measures with the climate-neutrality objective and with ensuring progress on adaptation. The Commission assessed the consistency of Croatia’s measures with these objectives (20). The below recommendations are based on that assessment. Croatia should take due account of the present recommendations and follow up on them in accordance with the European Climate Law.

(20)

While the Union’s net greenhouse gas emissions (including from land use, land use change and forestry (LULUCF) and excluding international transport) show a steady downward trend overall, broadly in line with the linear trajectory achieving the Union’s 2030 climate target of -55 % and the Union’s 2050 climate-neutrality objective, the pace of emission reduction needs to accelerate and action by Member States is essential. Progress across Member States has been mixed with several sectoral challenges and weaknesses that need to be remedied without further delay. The assessment, based on the available information, shows that progress towards the Union’s climate-neutrality objective appears largely insufficient for Croatia. Reliable long-term strategies are the cornerstone for achieving the economic transformation needed to move towards the Union’s climate-neutrality objective.

(21)

To ensure effectiveness of climate adaptation strategies and plans, it is essential to properly establish what potential climate change hazards may affect a certain area or sector. Effective adaptation at the necessary scale and across all exposed sectors requires a clearly mandated governance and coordination structure with high-level political support. This structure may include an interdepartmental taskforce or committee. Adaptation policies should focus on areas or sectors particularly vulnerable to climate change, or whose activities are key to the resilience of other sectors, or which have significant importance to the national economy or public health. Priority response is required on impacts and risks that are expected to affect critical infrastructure or systems with long life span, or are expected to affect systems irreversibly, taking into account interaction with socioeconomic development or other non-climatic drivers. Monitoring and evaluation of adaptation efforts is necessary for maintaining accountability and improving adaptation policy. Various EU funding instruments can be mobilised to fund adaptation. Climate resilience considerations should be put in the forefront when Member States design their national plans under the relevant EU funds. None of the spending should do harm to adaptation: that is, increase vulnerabilities either for the beneficiaries or for others.

(22)

The most vulnerable communities are those with elevated likelihood of being impacted by climate change. Unequal exposure and vulnerability to climate impacts of different regions and socioeconomic groups worsens pre-existing inequalities and vulnerabilities. Just resilience should reduce the unequal burden of climate risk and ensure equity in the distribution of the benefits of adaptation. The systemic ability to adjust to climate change is a key feature to avoid or moderate potential damage, to take advantage of opportunities, and to cope with the consequences. Physical impacts of climate change are evolving at a faster pace than expected. Progress in adaptive capacity is needed at all levels of the government, and in the public and private sectors, and requires increased awareness on vulnerabilities and risks. Private stakeholders are agents of change by providing information, resources, capacities, and funding. Even when a climate-related hazard affects only the territory of one EU Member State, it can trigger a cascade of consequences that cross national borders to affect people’s lives and livelihoods in another. Thus, building just resilience does not only occur on the national scale, but also on the regional, cross-border and international scale. The local level has competences which can impact climate resilience more broadly. The preparation and implementation of sub-national adaptation policies is of significant importance.

(23)

Nature-based solutions offer efficient and cost-effective adaptation and mitigation options, if their deployment is incentivised through strategic frameworks, policy and funding. They can be implemented independently or integrated in other adaptation and mitigation measures, combined with more technological or infrastructure-based solutions. Implementation needs to consider the complexity of ecosystems and the projected effects of climate change, the local context, linked interests and values, as well as socioeconomic conditions,

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