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Dear Readers,
on wednesday, Olaf Scholz will be sworn in as the ninth Chancellor of the Federal Republic of Germany. Since the end of September, while the government was being formed, there has been a power vacuum at the top of the most powerful country in the European Union. A void that other Member States in the south of the continent have skilfully used to their advantage.
At the end of November, France’s President, Emmanuel Macron, and Italy’s leader, Mario Draghi, met in Rome to sign the so-called Quirinale Treaty. Coming after years of mutual distrust, this is no ordinary pact. It sets the seal on closer cooperation between Italy and France in many areas - and thus on a new centre of power beyond the hitherto dominant Berlin-Paris axis.
Whether Germany can regain lost ground will depend not least on whether the European policy measures, set out in the coalition agreement between the SPD, Greens and FDP, are actually put into effect without delay. For example, the EU is to become a federal state. Amendments to the Lisbon Treaty will abolish the unanimity principle in foreign and defence policy. These are truly ambitious plans.
What is needed is a clear direction and a clear compass. As usual, we will be keeping our constructively critical eye on further developments for you.
Stay tuned!
Best wishes
Dr. Jörg Köpke
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In times of a lack of leadership, bilateral treaties between EU member states are becoming more important. The most recent example is the Quirinal Treaty between France and Italy. Paris and Rome are creating a counterweight to the traditional Paris-Berlin axis.
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Latest EU Proposals in Focus
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Methane emissions in the energy sector: Binding EU requirements
On 14 December, as part of its Methane Strategy, the Commission will propose [COM(2020) 663; see cepPolicyBrief 2/2021] a new Regulation to reduce methane emissions in the energy sector. Methane has a more powerful greenhouse effect than a corresponding amount of CO2. In the energy sector, methane emissions arise from the production and transport of fossil fuels (oil, gas, coal). For the first time, the Regulation will establish binding EU rules on monitoring, verifying and reporting methane emissions as well as on repairing leaky pipelines.
Internal gas market: Easier market entry for “climate friendly” gases
On 14 December, the Commission will propose changes to the EU rules for the internal gas market [Directive 2009/73/EC and Regulation (EC) No. 715/2009; see cepInput 6/2019]. Suppliers of “climate friendly” gas such as biomethane and hydrogen, which are produced with no or relatively low carbon emissions, will be given easier access to the market through the removal of legal obstacles.
Energy performance of buildings: Support for renovations
On 14 December, as part of its “Renovation Wave” strategy [COM(2020) 662; s. cepPolicyBrief 4/2021], the Commission will propose changes to the Energy Performance of Buildings Directive [2010/31/EU; see cepPolicyBrief 6/2017]. This will facilitate financial support for energy-saving building renovations from the Member States.
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Biodiversity Targets for the restoration of damaged ecosystems
On 14 December, as part of its EU Biodiversity Strategy 2030 [COM(2020) 380; see cepPolicyBrief], the Commission will propose legally binding targets for restoring damaged ecosystems. These could be incorporated into existing EU legislation – such as the Birds Directive [2009/147/EC], the Habitats Directive [92/43/EEC], the Water Framework Directive [2000/60/EC] and the Marine Strategy Framework Directive [2008/56/EC].
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Climate neutrality: Removal, storage and use of CO2
On 14 December, in a Communication, the Commission will present its plans on how CO2 can be removed from the atmosphere and then either stored permanently in forests and bedrock, or used. This will balance out unavoidable greenhouse gas emissions arising from agriculture and certain industrial sectors and will contribute to achieving the EU climate target of reducing greenhouse gas emissions to net zero by 2050 (“climate neutrality”) [Regulation (EU) 2021/1119; see cepPolicyBrief 3/2020].
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Intelligent Transport Systems: Adapting to technical developments
On 14 December, the Commission will propose changes to the Directive on “Intelligent Transport Systems” (ITS) [2010/40/EU; see cepPolicyBrief] in order to bring it into line with technical developments - e.g. driverless vehicles. ITS deploy information and communication technology in road vehicles and infrastructure in order to make road transport safer and more efficient. For this purpose, the Commission has established, in delegated acts, EU-wide technical requirements based on the ITS Directive.
Transport infrastructure: Supporting emissions reduction and digitalisation
On 14 December, the Commission will propose changes to the Regulation on the trans-European transport network (TEN-T) for air, road, rail and shipping transport [(EU) No. 1315/2013; see cepPolicyBrief]. It is planning to ensure that the provisions of the TEN-T Regulation, relating to the financing of transport infrastructure by the EU and its Member States, are geared more towards emissions reduction and digitalisation in the transport sector.
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Aid for climate, energy and environmental protection: New guidelines
In December, the Commission will publish new guidelines on aid for climate action, energy and environmental protection. These guidelines establish the - de facto binding - requirements which the aid provided by Member States, e.g. to support renewable energy, must meet in order to be compatible with EU competition law. In future, subsidies for fossil fuels will be made more difficult and those for creating a circular economy [COM(2020) 98; see cepPolicyBrief 5/2020] and protecting biodiversity [COM(2020) 380; see cepPolicyBrief] made easier. The new requirements will replace the guidelines issued in 2014 [2014/C 200/01; see cepStudy].
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Sustainable corporate governance: EU supply chain law
On 8 December, the Commission will submit its legislative package on sustainable corporate governance, originally planned for 27 October. It thereby wants to oblige companies to reduce risks in their supply chains affecting the environment, climate and human rights. In addition, company boards will be required to take greater account of the interests of all stakeholders, e.g. environmental and employee interests, rather than focussing purely on short-term profits.
Tax I: Commission wants to curb fraudulent tax structures
On 22 December, the Commission will submit a proposal for a Directive which aims to prevent letterbox companies, i.e. legal persons without any real company premises, from enjoying tax advantages.
Tax II: Directive on minimum tax for large companies
The international tax reform, agreed in October 2021 by the Heads of State and Government of the G20 countries, provides for a minimum tax of 15% on the profits of large companies. In addition, these companies will pay tax in countries in which they do not have a registered office but nevertheless generate a large amount of turnover. On 22 December, the EU Commission submitted a Minimum Tax Directive in order to implement this tax reform in the EU.
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Coercive action by third countries: Protective mechanism introduced
On 8 December, the Commission will submit its proposal for a “Mechanism to deter & counteract coercive action by non-EU countries”. The background to the proposal is that some third countries try to use coercive action, contrary to international law, to pressure the EU or individual Member States into taking or withdrawing particular policy measures. Such coercive action includes e.g. restraints on trade and investment such as customs duties or sanctions. The protective mechanism will deter third countries from taking such coercive action, or will minimise its negative impact.
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Platform work: Improving working conditions
On 8 December, the Commission will submit its proposal on platform work. It will improve the working conditions for people working via platforms such as Uber or Lieferando and ensure that they have adequate social protection.
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EU Corona Certificate: EU Commission plans expiry date
In December, the Council will decide on a Recommendation on a coordinated approach to facilitate safe free movement during the COVID-19 pandemic [COM(2021) 749]. In particular it provides for the “fully vaccinated” status, which will expire after nine months [No. 12 (a)].
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The Commission, the Council and the European Parliament are regularly negotiating in the so-called trilogue on EU legislative proposals in order to find a common position. We have put together a summary of the most important trilogue decisions since the last Newsletter.
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Trilogue agreement on Regulation for a pilot regime regarding DLT market infrastructure
On 24 November, the European Parliament and the Council reached a policy agreement on the Regulation for a pilot regime for market infrastructure based on distributed ledger technology (DLT) [COM(2020) 594]. DLT is a class of technologies which support the decentralised storage of encrypted data. The Regulation sets out specific provisions for certain trading venues and securities settlement systems which use DLT. It will enable market operators to gain experience of using this technology by allowing for temporary derogations from certain requirements under the EU’s financial services legislation. The pilot regime is part of the Commission’s Digital Finance Strategy which also includes the proposal for a Regulation on Markets in Crypto-Assets (MiCA) [COM(2020) 593, see cepInput 7/2021).
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Trilogue Agreement on the European Data Governance Regulation (Data Governance Act)
On 30 November, a political agreement was reached on the Regulation on European Data Governance (Data Governance Act) [COM(2020) 767, see cepPolicyBrief 6/2021]. In particular, it creates rules on the re-use of certain data held by the public sector, a notification and oversight regime for data brokering service providers, and a set of rules for organisations that collect and process data for altruistic purposes. The new requirements of the legal act are intended to increase confidence among public authorities, businesses and citizens to share data with each other.
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Trilogue agreement on the Regulation extending the mandate of the ECDC
On 29 November, a political agreement was reached on the Regulation amending the competences of the EU Centre for Disease Prevention and Control (ECDC) [COM(2020) 726, see cepPolicyBrief 17/2021]. The work of the ECDC in the areas of surveillance, early warning, preparedness and response will be strengthened. Among other things, it provides for the establishment of an "EU Health Task Force" to provide local support to Member States in the event of communicable disease outbreaks. The extension of the ECDC mandate is part of the package for an EU Health Union, which also includes a regulation on serious cross-border health threats [COM(2020) 727; see cepPolicyBrief 19/2021], which will be discussed by the Council in December.
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The EU Commission asks decision-makers and interested parties from civil society for their opinion on European policy proposals. Here is our short-list of the most important consultations:
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Bathing water: Review of the EU minimum standards
The EU Commission wants to revise the 2006 Bathing Water Directive [2006/7/EC] in order to bring it into line with scientific and technical developments. The Bathing Water Directive sets out minimum standards for bathing water quality in order to protect human health and the environment.
The submission period for opinions ends on 20 January 2022.
Go to consultation
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Corporate reporting: Improving quality and enforcement
In reaction to, among other things, the Wirecard scandal, the EU Commission wants to revise the EU framework for corporate governance and at the same time the Regulation on annual financial statements 537/2014, the Directive on statutory audits 2006/43/EG and the Balance Sheet Directive 2013/34/EU. Annual financial statements include the annual accounts and management report. The consultation concentrates in particular on reports from listed companies and the statutory audits of companies of public interest, i.e. listed companies, banks and insurance companies.
The submission period for opinions ends on 4 February 2022.
Go to consultation
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Stock exchange listing: Easier access to capital for SMEs
Financing via the capital markets is generally difficult and expensive for small and medium-sized enterprises (SMEs). They often therefore look to financing via bank loans. In the Commission’s view, the listing requirements for SMEs in particular should therefore be simplified. The Commission is now taking a two-track approach to the consultation. An initial consultation contains seven general questions and is aimed at the general public. A second consultation contains more technical questions and is aimed primarily at capital-market practitioners, supervisory authorities and academics.
The submission period for opinions ends on 11 February 2022.
Regarding the consultations
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Residential property: Revision of the Directive on mortgage credit
The Directive on residential property credit agreements for consumers 2014/17/EU has been in effect since 2014 (see cepPolicyBrief). The Directive applies particularly to commercial loans granted to consumers that are secured by a mortgage, comparable security or by a right related to residential property. The Commission will revise the Directive in the 4th quarter 2022. In this regard, it wants to adapt the existing provisions so that consumers receive “simple, timely and relevant information” and that the requirements take account of increasing digitalisation. Lessons on consumer protection also need to be drawn from the Covid-19 pandemic and support given to the use of mortgage loans to increase the energy efficiency of residential property.
The submission period for opinions ends on 14 February 2022.
Go to consultation
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Broadband networks: Revised guidelines on state aid
The Commission wants to revise the guidelines on state aid for broadband networks and for this purpose published an initial draft of the new guidelines on 19 November 2021. The revision of the guidelines focuses in particular on the introduction of new speed thresholds regarding public support for gigabit fixed networks and new requirements on support for the deployment of the mobile telephone network. Legal certainty will also be increased with regard to aid that is intended to increase the demand-side take-up of fixed and mobile networks, e.g. via voucher solutions.
The submission period for opinions ends on 11 February 2022.
Go to consultation
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7 December 2021
Brussels
Meeting of the economic and finance ministers (ECOFIN). This concerns proposals by the commission about the capital markets union as well as the anti-money laundering.
7 December
Brussels
The Health Committee will deliberate the proposals for an EU Health Union. This will include attempting to reach a political agreement regarding the Regulation on serious cross-border threats to health [see cepPolicyBrief 19/2021].
8 December
Online
New start in Berlin - fresh wind for the EU? Vice-President of the EU Parliament Nicola Beer talks with cep Director Prof. Dr. Henning Vöpel about the significance of the traffic light coalition for Europe's financial and economic policy. The event is organised by Table.Media and the Centrum für Europäische Politik and will take place online. The discussion will be held in German.
14 December
Strasbourg
The EU Parliament will meet in plenary and, among other things, deliberate the proposal for a Regulation on health technology assessment (“HTA” Regulation). It only remains for the Regulation to be accepted by Parliament for it to enter into force. The Council already approved it at the beginning of November.
16 December
Strasbourg
The EU Parliament is sitting in plenary and voting on the committee report on the Digital Markets Act (see cepPolicyBrief 14/2021 and 15/2021). The Council has already adopted its position on 25 November. The Council and the EU Parliament must now agree on a common position.
16-17 December 2021
Brussels
Meeting of the European Council. This concerns COVID-19, crisis management and resilience, energy prices, security and defence and external relations.
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Selected cep Publications to Current Topics
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cepInput: Off-Patent Medicines
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The European Union wants to better exploit the potential of off-patent medicines. The Centre de Politique Européenne recommends adopting the British system, which provides strong incentives for industry to use off-patent medicines elsewhere at a profit. Meanwhile, proven anti-inflammatories and antipyretics are used off-patent against Covid.
To cepInput 15/2021
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cepStudy: Climateclubs: Opportunities and Pitfalls
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A climate club, as proposed by Germany at the UN Climate Change Conference, should spur as many states as possible to agree on a minimum CO2 price to protect their industries. On the way to curbing CO2 emissions, however, it must be ensured that the shifting of production and CO2 emissions within and outside the climate club is avoided.
To cepStudy 3/2021
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cepInput: Risks and Dangers of the EU's "Sustainable" Financing Strategy
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The EU wants to make the financial sector more sustainable with an action plan. The cep considers many of these measures questionable. For example, the Commission proposes quality labels to prevent greenwashing. According to cep, these would displace established quality labels that are preferred by investors. The cep calls for legislative action only in the case of private quality labels that are questionable from a supervisory point of view.
To cepInput 15/2021
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Dear Readers,
chancellor Olaf Scholz says he will “dare to make more progress”. Up to now, he has been very good at keeping his head down, remaining silent and playing things down, which gave rise to a new verb in Berlin political circles: “scholzen”. However, leadership and governance are more important than ever especially with regard to the intensifying Corona crisis. Germany’s top man must now deliver. “Scholzen” will not do.
Best wishes
Dr. Jörg Köpke
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