Accelerating the green transition: Governance through funding and the RePowerEU instrument

European Union (EU) budget politics is considered a relatively stable domain of EU policymaking. Yet, a closer look at recent events and developments reveals a more interesting story. First, the creation of the pandemic recovery plan “NextGenerationEU” (NGEU) marked a pathbreaking innovation. Then, in the face of the war in Ukraine and an EU energy crisis, member states adopted “REPowerEU” to finance and accelerate the Union’s green transition. Putting forward a historical institutionalist perspective, we theorize the reasons and driving forces behind these new budgetary instruments. We see a double-dynamic at work: on the one hand, sudden exogeneous shocks, like a pandemic or war, create momentum for rather radical institutional and policy innovation. NGEU, with the Recovery and Resilience Facility (RRF) at its heart, is a case in point. On the other hand, the new instruments build upon, and further stimulate, established patterns of EU budget politics. They are thus embedded into longer-term transitions. Empirically, we document that the concepts of ‘layering’ and ‘conversion’ help to understand the EU’s reaction to the current energy crisis, notably the amendment of the RRF via RepowerEU. Together, the EU’s new budgetary tools suggest gradual, though decisive steps towards more supranational forms of governance through funding.