China strategy + Electricity market reform + Mercosur agreements

Dear reader,

Tomorrow, July 15th, marks the first “EU Day for the victims of the global climate crisis“. The day was chosen because two years ago, on July 14th and 15th, 2021, a devastating flood catastrophe engulfed large parts of Western Europe, claiming the lives of over 220 people. It is intended as a memorial day for all the “deceased and affected by climate disasters”.

However, it seems that the day resembles more of a political showcase, providing opportunities to express sympathy and emphasize political positions rather than serving as a motivation boost for mitigating the consequences of climate change. Climate Commissioner Frans Timmermans will travel to three regions on Saturday that were particularly affected by the extreme weather at that time: Chaudefontaine in Belgium, Eschweiler in Germany and Valkenburg in the Netherlands. He intends to speak with the affected individuals and helpers there.

CDU representative Peter Liese uses the day to stir up political sentiment once again, following his European People’s Party (EPP) faction’s loss in the vote on the Renaturation Act on Wednesday. In a statement commemorating the memorial day, he pits climate action against nature conservation and criticizes the traffic light coalition in Berlin for blocking financial aid for the flood victims.

Of course, such a memorial day is not a bad thing, but one should not expect more than mere lip service. Against the backdrop of the impending heatwave summer, however, this is simply not enough.

China strategy: Sharper tone finds approval in Brussels

By

Till Hoppe

During Chancellor Angela Merkel’s time, the German government was seen in Brussels as too friendly towards Beijing. With its China strategy paper published on Thursday, Berlin is at least on paper shifting towards the hawkish camp: De-risking is “urgently needed”, writes the German government, aligning itself with EU Commission President Ursula von der Leyen.

This is viewed favorably in Brussels. The German strategy is in line with their own approach, according to the European Commission. Reinhard Buetikofer, Chairman of the China Delegation in the European Parliament, praises the paper for providing “a realistic positioning of German policy towards Beijing” and addressing the necessary European integration.

However, the Green Party member of parliament notes that the China strategy is not the end of the necessary process of reorientation but rather the beginning: “The de-risking to which it commits itself must be filled with concrete policies.” This will not happen without contradictions and further struggles. There is resistance to distancing from Beijing, especially within the German industry.

Berlin supports new instrument

The European Commission recently proposed specific measures in its strategy for economic security. The German government partially adopts these proposals:

Screening of European investments abroad: The Commission plans to propose a new instrument by the end of the year to prevent certain security-sensitive technologies from ending up with the Chinese military or intelligence services. In its strategy, the German government acknowledges that appropriate measures in this context “could be important as a complement to existing instruments”. Therefore, it intends to contribute constructively to the EU process. However, there are still reservations in Berlin regarding a far-reaching approach.
Export controls: The Commission also plans to propose improvements in the coordination among member states in the export controls of dual-use goods by the end of the year. The coalition government remains vague in its strategy: “We advocate close coordination in the EU as well as enhanced cooperation in the field of export control between the G7 and other partners.”

In addition, the German government intends to support EU-wide monitoring of critical dependencies on raw materials and intermediate products, as envisaged under the Critical Raw Materials Act. It also commits to supporting EU legislative initiatives targeting China, such as the directive on due diligence obligations for companies to ban products made from forced labor. “The German government’s position that human rights violations should not lead to competitive advantages is particularly welcome,” says René Repasi (SPD), Vice-Chair of the China Delegation in the European Parliament.

‘The weight of all of Europe’

The German government also generally commits to coordinating its China policy closely with EU partners: “Successful engagement with China requires the weight of all of Europe.” Therefore, it supports more frequent discussions in the European Council and its various formations to contribute to a common understanding of European interests. It also seeks consultation within the EU circle during the preparation of German-Chinese government consultations.

However, Buetikofer warns that the Europe-friendly rhetoric should not be forgotten in the implementation, as was the case with the government consultations in June: The European approach was “blocked by the Chancellery“.

Daniel Caspary, Co-Chair of the CDU/CSU delegation in the European Parliament, also calls for more effort from the German government to secure free trade agreements with other countries: “Those who want to reduce dependencies on China must also offer alternatives to companies.“

Parliament to provide permanent compensation for power plant capacities

By

Manuel Berkel

Joint EU tenders for renewable energy were a central point agreed upon by the rapporteurs in the ITRE committee last Friday. A look at the compromise paper of July 7, obtained by Table.Media, shows a number of developments compared to the Commission’s proposal – although details may still change before the official vote in the industry committee on July 19.

Regarding capacity mechanisms, the Members of Parliament are exerting as much pressure as the Council. As expected, they do not touch the emission limit for power plants, which Poland would like to use to promote its coal-fired power plants for longer. However, the MPs set a tight schedule for the Commission.

ACER to expedite capacity analysis

One or three months after the regulation comes into force, the Commission is already required to submit two reports with proposals for simplification. In particular, ACER should simplify the “assessment of the adequacy of resources at the European level”. Energy Commissioner Kadri Simson had already revealed that the Commission is working on simpler rules.

By mid-2024, the MPs expect the Commission to provide an assessment of how capacity mechanisms can become a “structural element of the electricity market”, supplemented by a legislative proposal if necessary. The gradual end of the energy-only market is thus heralded.

Revenue recapture not entirely off the table

In the document, the MPs indicate further reform needs for the next parliamentary term. The current reform’s main objective should have been the strengthening of long-term markets, while the short-term merit order should remain untouched.

However, by mid-next year, the Commission is expected to present at least an analysis on the introduction of a “temporary security valve” for electricity markets. This means nothing other than a temporary price cap or revenue recapture, as the Spanish Socialists have not completely given up their fight for a price ceiling.

Commission to evaluate short-term markets

At the beginning of the year, a report by the European Court of Auditors also criticized the generally weak supervision of European electricity markets. Taking this into account, the MPs now want to bring forward the regular evaluation of the Electricity Market Regulation by the Commission from the end of 2030 to mid-2026. At the request of the EPP, the Commission should also evaluate the rules for short-term markets, as well as the regulatory framework for distribution networks.

Regarding the promotion of nuclear energy, the MPs adopt the principle of proportionality, as favored by renewable-friendly states in the Council. According to the formulation introduced by the Social Democrats and Greens, two-sided contracts-for-difference (CfDs) should be limited to the portion of generation capacity corresponding to the ratio of new investments to original investments.

Proportionality for nuclear investments

The initial investments are crucial in this regard. Critics consider the current book value of French nuclear power plants to be zero, which means that any investment could be significant. In addition, the increase in generation capacity should be substantial.

A new addition that would affect renewable projects in Germany is the proposal that direct price support be discontinued in the event of negative prices. While such payment claims were scheduled to be abolished in 2027 according to the EEG 2023, the provision from the new Electricity Market Regulation would take effect as early as 2025.

Reintroduction of spatial criteria for CfDs

The MPs have also reintroduced “spatial criteria” for CfDs, which were already included in the Commission’s initial drafts. New generation capacities should be spatially distributed in a way that does not exacerbate grid congestion. Within one year, the Commission should also provide guidelines for CfDs to the member states.

In the contentious issue of the distribution of CfD revenues, the MPs want to allow more possibilities for their use. In addition to financing CfDs themselves, the revenues could also flow into the promotion of multiple technologies: distribution networks, renewable energy, charging infrastructure, energy efficiency and storage. The provision for “all” electricity consumers to benefit from the returns has been removed.

Returns to energy-intensive industrial plants

While vulnerable consumers should receive particular attention regarding the returns, the “energy-intensive industry” is explicitly mentioned as a possible recipient, as it is threatened by carbon leakage. The limitation of support to the share of these industries in total electricity consumption has apparently been deleted, although the formulation is not entirely clear. However, energy-intensive businesses will have to provide a “significant reduction in greenhouse gas emissions” and create a transformation plan as a countermeasure. However, the assistance should not be limited to energy price crises.

To promote market-based contracts between producers and consumers of renewable energy (PPAs), the MPs rely more on standardization and pooling, as announced by Casares. Therefore, by the end of 2024, the Commission, together with the spot markets, should establish a trading platform in which market participants can voluntarily participate.

Short-term PPAs for SMEs

Both parties should also develop standardized contracts to make them more manageable for SMEs. Surprisingly, the aim is to have products with durations of up to five years – despite the reform aiming to strengthen contracts with significantly longer durations to secure investments in renewables and reduce market volatility.

To monitor whether the PPA market is finally gaining momentum, ACER should establish an EU-wide PPA database within one year and publish an annual report on market development.

Mercosur: summit unlikely to yield breakthrough

The EU summit with Latin American countries next week is expected to bring little progress in the planned trade agreements. According to sources in Brussels, there is no sign of the expected momentum in negotiations with the Mercosur countries (Argentina, Brazil, Paraguay and Uruguay) or with Mexico.

The EU side had high expectations for the first summit with the Community of Latin American and Caribbean States (CELAC) since 2015. Commission President Ursula von der Leyen traveled to South America in mid-June to give new impetus to the relationships.

However, the EU Commission is still awaiting an official response from the Mercosur countries regarding the proposed additional declaration to the trade agreement, which is intended to strengthen commitments to climate action. The main reason for the delays is said to be discussions within the Brazilian government about how far their own demands should go, according to EU sources.

Debates in Brazil hinder further progress

President Lula da Silva has publicly rejected the EU’s demands. He will resist, for example, the opening of public tenders for European companies as envisaged in the agreement. He warned that this would harm Brazilian SMEs. The president also has concerns about opening up the domestic healthcare sector to competition from Europe. However, other voices in the government apparently warn against jeopardizing the entire agreement through far-reaching demands.

It is not yet clear whether Lula himself will attend the EU-CELAC summit on Tuesday. A planned meeting with the Mercosur countries at the ministerial level is also still uncertain. According to sources in Brussels, not much more than a rather general commitment to the trade agreement can be expected at the summit next week. Therefore, individual agreements, such as cooperation on raw materials with Chile, are likely to be signed. tho

Raw materials: way soon to be clear for negotiations with the USA

The EU member states are expected to approve the Commission’s official negotiating mandate for a raw materials agreement with the USA next week. According to EU diplomats, the mandate will be discussed by ambassadors on Wednesday and approved by the Council of Foreign Ministers on Thursday.

The Commission and the US government have been engaged in discussions on a raw materials agreement for months in a task force, which would grant European companies access to subsidies under the Inflation Reduction Act (IRA). However, the US law links this to the existence of a free trade agreement with the United States. The raw materials agreement is intended to bridge this gap.

Such a deal is also aimed at further harmonizing environmental and labor standards to facilitate joint raw materials projects. The common goal is to reduce dependence on individual supplier countries such as China. tho

Right to repair: IMCO discusses draft report

At the beginning of next week, the Internal Market and Consumer Protection Committee (IMCO) in the European Parliament will discuss for the first time the draft report on the directive with provisions to promote the repair of goods (Right to repair). Rapporteur René Repasi (S&D) strengthens the proposal presented by the European Commission at the end of March in several aspects and enhances consumer rights.

The directive focuses on the use phase of products and establishes a right for consumers to have their products repaired by manufacturers if they are technically repairable under EU law. Repasi’s draft report includes the following changes to the Commission’s proposal:

Repair should be carried out as close to the consumer as possible to save on delivery costs and emissions.
Independent repair workshops and consumers should have access to spare parts, necessary information, and tools at a fair price and for a period that covers at least the expected lifespan of the product.
Repasi wants to extend the obligation to repair, which according to the Commission’s proposal, should also apply to manufacturers outside the EU, logistics service providers and online platforms.
Member states should provide the European Commission with the link to their online repair platform twelve months after the directive comes into effect. The Commission should then maintain a database of all registered platforms.
Member states should create financial incentives for repairs, following examples such as the repair bonus in Austria. The Commission should enable a reduced VAT rate for the products covered by the directive.
Repair should not exceed 15 calendar days. During the repair period, the seller should provide the consumer with a free replacement product.
In the event of non-conformity that existed at the time of delivery and is discovered within the liability period, direct liability of the manufacturer should apply. In this case, the seller should be relieved of liability for the defect. Furthermore, the legal warranty period for repairs should be extended by an additional two years from the moment the consumer receives the repaired goods.

Members of the IMCO committee can submit amendments until Sep. 5. The committee vote is scheduled for October. leo

COP28 president presents his plans in Brussels

Less than five months before COP28 in Dubai, the designated president of the World Climate Conference, Sultan al Jaber, presented his plans. During a ministerial meeting on climate protection in Brussels, jointly organized by the EU, China and Canada, al Jaber delivered a speech on Thursday. In his speech, he called for:

tripling renewable energy capacity to 11,000 gigawatts,
doubling energy efficiency,
doubling low-carbon hydrogen production to 180 million tons per year by 2030,
establishing new nationally determined contributions (NDCs) consistent with the Paris Agreement by September 2023.

He also called on national and international oil producers to reduce their methane emissions to zero by 2030. Al Jaber has also appointed South African Minister of Environment, Barbara Creecy, and Danish Minister of Climate, Dan Jørgensen, to consult on critical aspects of the Global Stocktakes.

Al Jaber reiterated the “inevitability of the phase-out of fossil fuels” and called for a “comprehensive transformation” of climate finance rather than “piecemeal reform“. A particular focus should be on supporting “climate-positive development” in the global South.

Timmermans: only limited role for CCS

Meanwhile, EU climate chief Frans Timmermans emphasized that the EU will advocate for a global commitment to phase out unabated fossil fuels “well before 2050” in Dubai. The EU aims for governments to sign a commitment with three key elements:

tripling the expansion of renewable energy by 2030,
doubling annual growth rates in energy efficiency,
accelerating the phasing out of fossil fuels with a “limited role” for carbon-reducing technologies (CCS/CCU).

The Ministerial on Climate Action (MoCA) is an annual ministerial meeting on international climate action involving ministers from G20 countries and other key parties in UN climate negotiations. cst/luk

Competition authority: France wants Vestager to reconsider

France’s foreign minister and government minister have called EU antitrust chief Margrethe Vestager to reconsider her appointment of a US economist and former antitrust official, Fiona Scott Morton, as the new chief economist for the competition agency in the European Commission.

In the high-level EU job at the Commission, Scott Morton is expected to oversee big tech, among other things. She is scheduled to take office on Sep. 1, when current Chief Economist Pierre Régibeau retires. Her appointment was criticized before it was announced, with many pointing to possible conflicts of interest due to her consulting work at Charles River Associates, a consulting firm that advises a number of technology companies.

Appointment ‘raises legitimate questions‘

French foreign minister Catherine Colonna said she was astonished at the appointment. “Digital regulation is a key issue for France and for Europe. This appointment deserves to be reconsidered by @EU_Commission,” she said in a tweet.

French government minister Jean-Noel Barrot issued the same call. “At a time when Europe is embarking on the most ambitious digital regulation in the world, the recent appointment of the chief economist of DG Competition is not without raising legitimate questions,” he said in a tweet. “I invite the @EU_Commission to reconsider their choice.”

Vestager on Tuesday announced the hiring of Fiona Scott Morton, the former chief economist at the US Department of Justice during former President Barack Obama’s tenure. rtr

Increased interest in joint gas purchases

The interest in joint gas purchases in the EU has grown even further in the second round of bidding, both from companies and suppliers. According to the EU Commission, 25 gas suppliers submitted offers totaling 15.19 billion cubic meters of gas in the second round of bidding. Previously, EU member states had collectively requested 15.92 billion cubic meters. The Commission stated that companies and suppliers had been brought together for a volume of nearly 12 billion cubic meters, allowing the companies to negotiate supply contracts directly with the gas suppliers.

“We have a demand for almost 16 billion cubic meters, which is over four billion more than in the first round,” said Maroš Šefčovič, Vice-President of the EU Commission, in Brussels on Thursday. The quantities targeted for the entire year had already been exceeded in the first two rounds.

In the first round of joint purchases in the spring, by mid-May, 25 gas suppliers had submitted offers totaling 13.4 billion cubic meters of gas. This exceeded the collective demand of EU member states, which was 11.6 billion cubic meters. The program was launched after the outbreak of the Ukraine conflict to achieve lower prices and replenish gas storage through joint gas purchases. The third round of joint gas purchases is scheduled to take place after the summer break. dpa

EU removes curbs on Japan food imports

The European Union agreed on Thursday to remove restrictions on Japanese food imports imposed after the 2011 Fukushima nuclear accident, with the hope that Japan will ease its controls on EU farm produce.

The EU has required pre-export testing of food products for radioactivity since an earthquake and tsunami wrecked the Fukushima Dai-ichi nuclear plant on Japan’s east coast. Since 2021, it has required certificates showing levels of radioactive isotopes in wild mushrooms, some fish species and edible wild plants, such as bamboo shoots, from Fukushima and nine other prefectures.

Japan continues to monitor for radioactivity

The European Commission said these restrictions had been fully lifted, while noting Japan continued to monitor for radioactivity and stressing Japan should publish its findings.

In return, the EU hopes to ease trade with Japan. European Commission President Ursula von der Leyen said both sides had also agreed to work on removing Japanese trade barriers to EU beef, fruit and vegetables, whose access to Japan is limited by food safety rules.

At the summit, the EU and Japan also committed to deeper cooperation in green and digital transitions, research and other fields. rtr

What’s cooking in Brussels? The Nature Restoration Law as a political turning point

By Claire Stam

The vote on the nature restoration text from last Wednesday still lingers in the minds of many parliamentarians. Not only because of the 136 amendments that were also voted on by MEPs, not only because of the trilogue that will now begin, but also, above all, because of the political repercussions of this vote, which has already sparked much discussion.

For Terry Reintke, co-chair of the Greens/EFA group in the European Parliament, it is clear that the MEPs have also voted on how they want to “do politics together within the European Parliament” and “find positive European majorities” in the future. The meteoric rise of the farmer-friendly Farmers-Citizen Movement (BBB) in the Netherlands may explain the political strategy of the EPP to align with the far and extreme right. But Reintke asserts in an interview with Table.Media: “That’s not how to do it, and that has become evident.”

Reintke: EPP used tool of the extreme right

Indeed, for many in the bubble, the political debate surrounding the Nature Restoration Law in recent weeks represents a turning point in how politics is conducted in the EU. Not least because of the rather curious Santa Claus tweet from the EPP. And all this less than a year before the next European elections. The political battle was often overshadowed by a debate that was conducted “not based on factual arguments” but “as a kind of culture war,” Reintke continues. “Disinformation” and “populist arguments” were used very deliberately to fuel fears and uncertainty. And that, according to Reintke, usually belongs in the toolkit of the extreme right. The fact that the EPP now wants to use these tools as well is “a very, very dangerous development”.

In the future, other important files from the Green Deal will be on the negotiating table, especially those related to the agricultural sector. For example, the reduction of pesticide use (sustainable use of pesticides in EU jargon), the rules for new genomic techniques (NGTs), or the Soil Health Directive. And time is running out to finalize these files before the next EU elections.

‘Appetite’ for this kind of politics likely dampened for now

So, will we have to witness such intense political confrontations as the one surrounding the Nature Restoration Law again? “My feeling is that test balloons are repeatedly being launched to try out how it goes to discuss with the right and take positions based on disinformation campaigns,” says Reintke. Nevertheless, the head of the EU Greens believes that with the vote that took place on Wednesday, the appetite for such political convergence and the style of politics it entails has diminished. And she hopes that EPP members who were skeptical of this strategy will now speak up and say, “Let’s do it differently next time, let’s try to find compromises with others.”

Reintke also observes positive developments, for example in the world of industry. Reintke, a native of the Ruhr region, visited Thyssenkrupp and medium-sized companies last week. “It was the complete opposite; it was really very hopeful,” she enthuses. These are energy-intensive companies undergoing transformation. “It’s not that they don’t have any problems. But they say, ‘I’m going to tackle this now.’ And if it doesn’t work, then we’ll find another way,” she reports.

EUROPE.TABLE EDITORS

Till
Hoppe

Charlotte
Wirth

Falk
Steiner

Timo
Landenberger

Corinna
Visser

Lukas
Knigge

Eric
Bonse

Sarah
Schaefer

Manuel
Berkel

Lisa-Martina
Klein

Markus
Grabitz

Stephan
Israel

Claire
Stam

Dear reader,

Tomorrow, July 15th, marks the first “EU Day for the victims of the global climate crisis“. The day was chosen because two years ago, on July 14th and 15th, 2021, a devastating flood catastrophe engulfed large parts of Western Europe, claiming the lives of over 220 people. It is intended as a memorial day for all the “deceased and affected by climate disasters”.

However, it seems that the day resembles more of a political showcase, providing opportunities to express sympathy and emphasize political positions rather than serving as a motivation boost for mitigating the consequences of climate change. Climate Commissioner Frans Timmermans will travel to three regions on Saturday that were particularly affected by the extreme weather at that time: Chaudefontaine in Belgium, Eschweiler in Germany and Valkenburg in the Netherlands. He intends to speak with the affected individuals and helpers there.

CDU representative Peter Liese uses the day to stir up political sentiment once again, following his European People’s Party (EPP) faction’s loss in the vote on the Renaturation Act on Wednesday. In a statement commemorating the memorial day, he pits climate action against nature conservation and criticizes the traffic light coalition in Berlin for blocking financial aid for the flood victims.

Of course, such a memorial day is not a bad thing, but one should not expect more than mere lip service. Against the backdrop of the impending heatwave summer, however, this is simply not enough.

China strategy: Sharper tone finds approval in Brussels

By

Till Hoppe

During Chancellor Angela Merkel’s time, the German government was seen in Brussels as too friendly towards Beijing. With its China strategy paper published on Thursday, Berlin is at least on paper shifting towards the hawkish camp: De-risking is “urgently needed”, writes the German government, aligning itself with EU Commission President Ursula von der Leyen.

This is viewed favorably in Brussels. The German strategy is in line with their own approach, according to the European Commission. Reinhard Buetikofer, Chairman of the China Delegation in the European Parliament, praises the paper for providing “a realistic positioning of German policy towards Beijing” and addressing the necessary European integration.

However, the Green Party member of parliament notes that the China strategy is not the end of the necessary process of reorientation but rather the beginning: “The de-risking to which it commits itself must be filled with concrete policies.” This will not happen without contradictions and further struggles. There is resistance to distancing from Beijing, especially within the German industry.

Berlin supports new instrument

The European Commission recently proposed specific measures in its strategy for economic security. The German government partially adopts these proposals:

Screening of European investments abroad: The Commission plans to propose a new instrument by the end of the year to prevent certain security-sensitive technologies from ending up with the Chinese military or intelligence services. In its strategy, the German government acknowledges that appropriate measures in this context “could be important as a complement to existing instruments”. Therefore, it intends to contribute constructively to the EU process. However, there are still reservations in Berlin regarding a far-reaching approach.
Export controls: The Commission also plans to propose improvements in the coordination among member states in the export controls of dual-use goods by the end of the year. The coalition government remains vague in its strategy: “We advocate close coordination in the EU as well as enhanced cooperation in the field of export control between the G7 and other partners.”

In addition, the German government intends to support EU-wide monitoring of critical dependencies on raw materials and intermediate products, as envisaged under the Critical Raw Materials Act. It also commits to supporting EU legislative initiatives targeting China, such as the directive on due diligence obligations for companies to ban products made from forced labor. “The German government’s position that human rights violations should not lead to competitive advantages is particularly welcome,” says René Repasi (SPD), Vice-Chair of the China Delegation in the European Parliament.

‘The weight of all of Europe’

The German government also generally commits to coordinating its China policy closely with EU partners: “Successful engagement with China requires the weight of all of Europe.” Therefore, it supports more frequent discussions in the European Council and its various formations to contribute to a common understanding of European interests. It also seeks consultation within the EU circle during the preparation of German-Chinese government consultations.

However, Buetikofer warns that the Europe-friendly rhetoric should not be forgotten in the implementation, as was the case with the government consultations in June: The European approach was “blocked by the Chancellery“.

Daniel Caspary, Co-Chair of the CDU/CSU delegation in the European Parliament, also calls for more effort from the German government to secure free trade agreements with other countries: “Those who want to reduce dependencies on China must also offer alternatives to companies.“

Parliament to provide permanent compensation for power plant capacities

By

Manuel Berkel

Joint EU tenders for renewable energy were a central point agreed upon by the rapporteurs in the ITRE committee last Friday. A look at the compromise paper of July 7, obtained by Table.Media, shows a number of developments compared to the Commission’s proposal – although details may still change before the official vote in the industry committee on July 19.

Regarding capacity mechanisms, the Members of Parliament are exerting as much pressure as the Council. As expected, they do not touch the emission limit for power plants, which Poland would like to use to promote its coal-fired power plants for longer. However, the MPs set a tight schedule for the Commission.

ACER to expedite capacity analysis

One or three months after the regulation comes into force, the Commission is already required to submit two reports with proposals for simplification. In particular, ACER should simplify the “assessment of the adequacy of resources at the European level”. Energy Commissioner Kadri Simson had already revealed that the Commission is working on simpler rules.

By mid-2024, the MPs expect the Commission to provide an assessment of how capacity mechanisms can become a “structural element of the electricity market”, supplemented by a legislative proposal if necessary. The gradual end of the energy-only market is thus heralded.

Revenue recapture not entirely off the table

In the document, the MPs indicate further reform needs for the next parliamentary term. The current reform’s main objective should have been the strengthening of long-term markets, while the short-term merit order should remain untouched.

However, by mid-next year, the Commission is expected to present at least an analysis on the introduction of a “temporary security valve” for electricity markets. This means nothing other than a temporary price cap or revenue recapture, as the Spanish Socialists have not completely given up their fight for a price ceiling.

Commission to evaluate short-term markets

At the beginning of the year, a report by the European Court of Auditors also criticized the generally weak supervision of European electricity markets. Taking this into account, the MPs now want to bring forward the regular evaluation of the Electricity Market Regulation by the Commission from the end of 2030 to mid-2026. At the request of the EPP, the Commission should also evaluate the rules for short-term markets, as well as the regulatory framework for distribution networks.

Regarding the promotion of nuclear energy, the MPs adopt the principle of proportionality, as favored by renewable-friendly states in the Council. According to the formulation introduced by the Social Democrats and Greens, two-sided contracts-for-difference (CfDs) should be limited to the portion of generation capacity corresponding to the ratio of new investments to original investments.

Proportionality for nuclear investments

The initial investments are crucial in this regard. Critics consider the current book value of French nuclear power plants to be zero, which means that any investment could be significant. In addition, the increase in generation capacity should be substantial.

A new addition that would affect renewable projects in Germany is the proposal that direct price support be discontinued in the event of negative prices. While such payment claims were scheduled to be abolished in 2027 according to the EEG 2023, the provision from the new Electricity Market Regulation would take effect as early as 2025.

Reintroduction of spatial criteria for CfDs

The MPs have also reintroduced “spatial criteria” for CfDs, which were already included in the Commission’s initial drafts. New generation capacities should be spatially distributed in a way that does not exacerbate grid congestion. Within one year, the Commission should also provide guidelines for CfDs to the member states.

In the contentious issue of the distribution of CfD revenues, the MPs want to allow more possibilities for their use. In addition to financing CfDs themselves, the revenues could also flow into the promotion of multiple technologies: distribution networks, renewable energy, charging infrastructure, energy efficiency and storage. The provision for “all” electricity consumers to benefit from the returns has been removed.

Returns to energy-intensive industrial plants

While vulnerable consumers should receive particular attention regarding the returns, the “energy-intensive industry” is explicitly mentioned as a possible recipient, as it is threatened by carbon leakage. The limitation of support to the share of these industries in total electricity consumption has apparently been deleted, although the formulation is not entirely clear. However, energy-intensive businesses will have to provide a “significant reduction in greenhouse gas emissions” and create a transformation plan as a countermeasure. However, the assistance should not be limited to energy price crises.

To promote market-based contracts between producers and consumers of renewable energy (PPAs), the MPs rely more on standardization and pooling, as announced by Casares. Therefore, by the end of 2024, the Commission, together with the spot markets, should establish a trading platform in which market participants can voluntarily participate.

Short-term PPAs for SMEs

Both parties should also develop standardized contracts to make them more manageable for SMEs. Surprisingly, the aim is to have products with durations of up to five years – despite the reform aiming to strengthen contracts with significantly longer durations to secure investments in renewables and reduce market volatility.

To monitor whether the PPA market is finally gaining momentum, ACER should establish an EU-wide PPA database within one year and publish an annual report on market development.

Mercosur: summit unlikely to yield breakthrough

The EU summit with Latin American countries next week is expected to bring little progress in the planned trade agreements. According to sources in Brussels, there is no sign of the expected momentum in negotiations with the Mercosur countries (Argentina, Brazil, Paraguay and Uruguay) or with Mexico.

The EU side had high expectations for the first summit with the Community of Latin American and Caribbean States (CELAC) since 2015. Commission President Ursula von der Leyen traveled to South America in mid-June to give new impetus to the relationships.

However, the EU Commission is still awaiting an official response from the Mercosur countries regarding the proposed additional declaration to the trade agreement, which is intended to strengthen commitments to climate action. The main reason for the delays is said to be discussions within the Brazilian government about how far their own demands should go, according to EU sources.

Debates in Brazil hinder further progress

President Lula da Silva has publicly rejected the EU’s demands. He will resist, for example, the opening of public tenders for European companies as envisaged in the agreement. He warned that this would harm Brazilian SMEs. The president also has concerns about opening up the domestic healthcare sector to competition from Europe. However, other voices in the government apparently warn against jeopardizing the entire agreement through far-reaching demands.

It is not yet clear whether Lula himself will attend the EU-CELAC summit on Tuesday. A planned meeting with the Mercosur countries at the ministerial level is also still uncertain. According to sources in Brussels, not much more than a rather general commitment to the trade agreement can be expected at the summit next week. Therefore, individual agreements, such as cooperation on raw materials with Chile, are likely to be signed. tho

Raw materials: way soon to be clear for negotiations with the USA

The EU member states are expected to approve the Commission’s official negotiating mandate for a raw materials agreement with the USA next week. According to EU diplomats, the mandate will be discussed by ambassadors on Wednesday and approved by the Council of Foreign Ministers on Thursday.

The Commission and the US government have been engaged in discussions on a raw materials agreement for months in a task force, which would grant European companies access to subsidies under the Inflation Reduction Act (IRA). However, the US law links this to the existence of a free trade agreement with the United States. The raw materials agreement is intended to bridge this gap.

Such a deal is also aimed at further harmonizing environmental and labor standards to facilitate joint raw materials projects. The common goal is to reduce dependence on individual supplier countries such as China. tho

Right to repair: IMCO discusses draft report

At the beginning of next week, the Internal Market and Consumer Protection Committee (IMCO) in the European Parliament will discuss for the first time the draft report on the directive with provisions to promote the repair of goods (Right to repair). Rapporteur René Repasi (S&D) strengthens the proposal presented by the European Commission at the end of March in several aspects and enhances consumer rights.

The directive focuses on the use phase of products and establishes a right for consumers to have their products repaired by manufacturers if they are technically repairable under EU law. Repasi’s draft report includes the following changes to the Commission’s proposal:

Repair should be carried out as close to the consumer as possible to save on delivery costs and emissions.
Independent repair workshops and consumers should have access to spare parts, necessary information, and tools at a fair price and for a period that covers at least the expected lifespan of the product.
Repasi wants to extend the obligation to repair, which according to the Commission’s proposal, should also apply to manufacturers outside the EU, logistics service providers and online platforms.
Member states should provide the European Commission with the link to their online repair platform twelve months after the directive comes into effect. The Commission should then maintain a database of all registered platforms.
Member states should create financial incentives for repairs, following examples such as the repair bonus in Austria. The Commission should enable a reduced VAT rate for the products covered by the directive.
Repair should not exceed 15 calendar days. During the repair period, the seller should provide the consumer with a free replacement product.
In the event of non-conformity that existed at the time of delivery and is discovered within the liability period, direct liability of the manufacturer should apply. In this case, the seller should be relieved of liability for the defect. Furthermore, the legal warranty period for repairs should be extended by an additional two years from the moment the consumer receives the repaired goods.

Members of the IMCO committee can submit amendments until Sep. 5. The committee vote is scheduled for October. leo

COP28 president presents his plans in Brussels

Less than five months before COP28 in Dubai, the designated president of the World Climate Conference, Sultan al Jaber, presented his plans. During a ministerial meeting on climate protection in Brussels, jointly organized by the EU, China and Canada, al Jaber delivered a speech on Thursday. In his speech, he called for:

tripling renewable energy capacity to 11,000 gigawatts,
doubling energy efficiency,
doubling low-carbon hydrogen production to 180 million tons per year by 2030,
establishing new nationally determined contributions (NDCs) consistent with the Paris Agreement by September 2023.

He also called on national and international oil producers to reduce their methane emissions to zero by 2030. Al Jaber has also appointed South African Minister of Environment, Barbara Creecy, and Danish Minister of Climate, Dan Jørgensen, to consult on critical aspects of the Global Stocktakes.

Al Jaber reiterated the “inevitability of the phase-out of fossil fuels” and called for a “comprehensive transformation” of climate finance rather than “piecemeal reform“. A particular focus should be on supporting “climate-positive development” in the global South.

Timmermans: only limited role for CCS

Meanwhile, EU climate chief Frans Timmermans emphasized that the EU will advocate for a global commitment to phase out unabated fossil fuels “well before 2050” in Dubai. The EU aims for governments to sign a commitment with three key elements:

tripling the expansion of renewable energy by 2030,
doubling annual growth rates in energy efficiency,
accelerating the phasing out of fossil fuels with a “limited role” for carbon-reducing technologies (CCS/CCU).

The Ministerial on Climate Action (MoCA) is an annual ministerial meeting on international climate action involving ministers from G20 countries and other key parties in UN climate negotiations. cst/luk

Competition authority: France wants Vestager to reconsider

France’s foreign minister and government minister have called EU antitrust chief Margrethe Vestager to reconsider her appointment of a US economist and former antitrust official, Fiona Scott Morton, as the new chief economist for the competition agency in the European Commission.

In the high-level EU job at the Commission, Scott Morton is expected to oversee big tech, among other things. She is scheduled to take office on Sep. 1, when current Chief Economist Pierre Régibeau retires. Her appointment was criticized before it was announced, with many pointing to possible conflicts of interest due to her consulting work at Charles River Associates, a consulting firm that advises a number of technology companies.

Appointment ‘raises legitimate questions‘

French foreign minister Catherine Colonna said she was astonished at the appointment. “Digital regulation is a key issue for France and for Europe. This appointment deserves to be reconsidered by @EU_Commission,” she said in a tweet.

French government minister Jean-Noel Barrot issued the same call. “At a time when Europe is embarking on the most ambitious digital regulation in the world, the recent appointment of the chief economist of DG Competition is not without raising legitimate questions,” he said in a tweet. “I invite the @EU_Commission to reconsider their choice.”

Vestager on Tuesday announced the hiring of Fiona Scott Morton, the former chief economist at the US Department of Justice during former President Barack Obama’s tenure. rtr

Increased interest in joint gas purchases

The interest in joint gas purchases in the EU has grown even further in the second round of bidding, both from companies and suppliers. According to the EU Commission, 25 gas suppliers submitted offers totaling 15.19 billion cubic meters of gas in the second round of bidding. Previously, EU member states had collectively requested 15.92 billion cubic meters. The Commission stated that companies and suppliers had been brought together for a volume of nearly 12 billion cubic meters, allowing the companies to negotiate supply contracts directly with the gas suppliers.

“We have a demand for almost 16 billion cubic meters, which is over four billion more than in the first round,” said Maroš Šefčovič, Vice-President of the EU Commission, in Brussels on Thursday. The quantities targeted for the entire year had already been exceeded in the first two rounds.

In the first round of joint purchases in the spring, by mid-May, 25 gas suppliers had submitted offers totaling 13.4 billion cubic meters of gas. This exceeded the collective demand of EU member states, which was 11.6 billion cubic meters. The program was launched after the outbreak of the Ukraine conflict to achieve lower prices and replenish gas storage through joint gas purchases. The third round of joint gas purchases is scheduled to take place after the summer break. dpa

EU removes curbs on Japan food imports

The European Union agreed on Thursday to remove restrictions on Japanese food imports imposed after the 2011 Fukushima nuclear accident, with the hope that Japan will ease its controls on EU farm produce.

The EU has required pre-export testing of food products for radioactivity since an earthquake and tsunami wrecked the Fukushima Dai-ichi nuclear plant on Japan’s east coast. Since 2021, it has required certificates showing levels of radioactive isotopes in wild mushrooms, some fish species and edible wild plants, such as bamboo shoots, from Fukushima and nine other prefectures.

Japan continues to monitor for radioactivity

The European Commission said these restrictions had been fully lifted, while noting Japan continued to monitor for radioactivity and stressing Japan should publish its findings.

In return, the EU hopes to ease trade with Japan. European Commission President Ursula von der Leyen said both sides had also agreed to work on removing Japanese trade barriers to EU beef, fruit and vegetables, whose access to Japan is limited by food safety rules.

At the summit, the EU and Japan also committed to deeper cooperation in green and digital transitions, research and other fields. rtr

What’s cooking in Brussels? The Nature Restoration Law as a political turning point

By Claire Stam

The vote on the nature restoration text from last Wednesday still lingers in the minds of many parliamentarians. Not only because of the 136 amendments that were also voted on by MEPs, not only because of the trilogue that will now begin, but also, above all, because of the political repercussions of this vote, which has already sparked much discussion.

For Terry Reintke, co-chair of the Greens/EFA group in the European Parliament, it is clear that the MEPs have also voted on how they want to “do politics together within the European Parliament” and “find positive European majorities” in the future. The meteoric rise of the farmer-friendly Farmers-Citizen Movement (BBB) in the Netherlands may explain the political strategy of the EPP to align with the far and extreme right. But Reintke asserts in an interview with Table.Media: “That’s not how to do it, and that has become evident.”

Reintke: EPP used tool of the extreme right

Indeed, for many in the bubble, the political debate surrounding the Nature Restoration Law in recent weeks represents a turning point in how politics is conducted in the EU. Not least because of the rather curious Santa Claus tweet from the EPP. And all this less than a year before the next European elections. The political battle was often overshadowed by a debate that was conducted “not based on factual arguments” but “as a kind of culture war,” Reintke continues. “Disinformation” and “populist arguments” were used very deliberately to fuel fears and uncertainty. And that, according to Reintke, usually belongs in the toolkit of the extreme right. The fact that the EPP now wants to use these tools as well is “a very, very dangerous development”.

In the future, other important files from the Green Deal will be on the negotiating table, especially those related to the agricultural sector. For example, the reduction of pesticide use (sustainable use of pesticides in EU jargon), the rules for new genomic techniques (NGTs), or the Soil Health Directive. And time is running out to finalize these files before the next EU elections.

‘Appetite’ for this kind of politics likely dampened for now

So, will we have to witness such intense political confrontations as the one surrounding the Nature Restoration Law again? “My feeling is that test balloons are repeatedly being launched to try out how it goes to discuss with the right and take positions based on disinformation campaigns,” says Reintke. Nevertheless, the head of the EU Greens believes that with the vote that took place on Wednesday, the appetite for such political convergence and the style of politics it entails has diminished. And she hopes that EPP members who were skeptical of this strategy will now speak up and say, “Let’s do it differently next time, let’s try to find compromises with others.”

Reintke also observes positive developments, for example in the world of industry. Reintke, a native of the Ruhr region, visited Thyssenkrupp and medium-sized companies last week. “It was the complete opposite; it was really very hopeful,” she enthuses. These are energy-intensive companies undergoing transformation. “It’s not that they don’t have any problems. But they say, ‘I’m going to tackle this now.’ And if it doesn’t work, then we’ll find another way,” she reports.