Climate Goal 2040 + National Security Strategy + AI Act

Dear reader,

On Friday, the finance ministers will meet in Luxembourg to discuss the reform of the EU debt rules. Or rather: to present their familiar positions to each other. The negotiations are making only slow progress. The experts in the Council working group are working intensively through the Commission’s reform proposals since the end of April and are flooding the authority with questions.

However, no camp has moved significantly yet. German Finance Minister Christian Lindner insists on the German demand for reliable numerical benchmarks and safety nets so as not to undermine the Stability and Growth Pact. Still in line with the two coalition partners, by the way. At most, Berlin has so far signaled a willingness to talk about the crediting of certain investments, for example, in climate protection. The German government believes it has the support of ten other countries that also have considerable reservations about the reform proposals, including Austria, the Netherlands, Slovenia, the Czech Republic and Ireland.

A group led by France and Italy, on the other hand, continues to press for greater flexibility in the rules, with debt reduction paths tailored to individual states. According to diplomats, the work at the technical level is likely to drag on for weeks and months. The dossier will reach the political level in the fall at the earliest. However, time will be short: The old deficit rules will come into force again at the beginning of 2024, and the European elections will be held at the beginning of June.

Have an interesting read!

Your
Till Hoppe

Climate target 2040: Europe is fit for 95

By

Lukas Knigge

The EU is capable of reducing its greenhouse gas emissions by up to 95 percent by 2040 – compared to 1990 levels. This is according to a report by the Scientific Advisory Board on Climate Change, which was appointed in the wake of the European Climate Law. This Thursday, the panel’s 15 researchers publish their recommendations for the EU’s 2040 climate target and how it can be achieved.

In order to minimize climate risks and limit global warming to 1.5 degrees, Europe is allowed a cumulative greenhouse gas budget of 11 to 14 gigatons of carbon-equivalents (CO2e) for the period 2030 to 2050. “To achieve this, the EU should reduce its emissions by 90-95 percent by 2040 compared to 1990 levels,” explains climate researcher Ottmar Edenhofer, chair of the panel. However, the report states that the basis for this is achieving the 55 percent reduction target for 2030.

The researchers analyzed more than 1000 possible emission reduction pathways, identifying 36 scenarios compatible with the 1.5-degree target and the EU’s 2050 net zero goal. These scenarios were then assessed for their feasibility, environmental risks and challenges related to the short-term ramp-up of technologies such as photovoltaics, wind power and hydrogen. Any scenarios with a scientifically unrealistically high reliance on carbon capture, use and storage (CCUS) or nature-based removal methods such as carbon farming were not considered, Edenhofer confirms.

Three key scenarios for the 2040 climate target

Thus, three “iconic” pathways to achieving the recommended 2040 climate target have crystallized. They have different cumulative emission levels and include a range of possible policy options.

The “demand-focus” emission reduction pathway is based on less resource-intensive lifestyles and has the lowest energy demand and dependence on technical or biological carbon capture by 2040. Policy options: Increasing energy efficiency and decarbonization, reducing food waste and the need for livestock for food production.
The renewables-focused pathway has the highest share of renewable capacity in total energy demand (excluding biomass) in 2040, but the highest cumulative emissions by 2050. Policy options: Increasing electrification.
The mixed approach has the lowest cumulative emissions of the three pathways over the period 2030 to 2050 and includes greater use of CCUS (with a focus on nature-based methods) but also a higher share of nuclear energy. Policy options: Ramp-up of CCS and hydrogen.

However, most of the scenarios examined have common characteristics:

The energy sector will be largely emission-free by 2040 (almost complete phase-out of coal already by 2030)
Use of alternative, non-fossil energy sources for hard-to-electrify applications, e.g. in industry and transport – mainly hydrogen and biomass.
Reduction of non-carbon emissions (20-60 percent below 2019 levels), reduction of methane in waste (45-60 percent) and in energy consumption (70-90 percent).
Expansion of hydrogen production to 5-10 million tons by 2030.
Decreased overall domestic energy consumption by 20-40 percent by 2040 compared to today
Reduction of oil imports by 50-100 percent by 2040 compared to today, gas imports fall by 35-100 percent.

Research focus: energy sector

In the energy sector, the researchers – like the Greens in Germany and many emissions trading experts – expect a total coal phase-out well before 2038. The scenarios examined allow for “coal-fired power generation to be phased out by 2030,” the report states. The remaining share of coal in the electricity mix would be less than one to four percent, depending on the scenario.

Natural gas would only be used to generate electricity in power plants until 2040 (below one to six percent) – except in the scenarios that use carbon capture in power plants. The report shows different scenarios for CCS capacities. In the mixed-approach pathway, there will be more than 200 million tons of carbon annually in 2050.

Hydrogen not in buildings

Regarding European hydrogen production, it is striking that most scenarios expect relatively low production within the EU in the long term. While the Commission’s target of 10 million tons by 2030 is achievable under Repower-EU, the optimistic mixed approach assumes only an increase to about 25 million tons by 2050. But for 2050, the optimistic mixed approach only assumes an increase to about 25 million tonnes. Only individual scenarios assume that production can be increased to 70 million tons by mid-century.

The moderate outlook for hydrogen is probably one reason why this energy carrier does not play a role in the building sector from a scientific point of view. Here, the scientists expect an electrification rate of 53 to 71 percent by 2040. However, natural gas will continue to play a significant role with 5 to 20 percent. Wood, another controversial fuel, accounts for 6 to 9 percent.

The report leaves room for political decisions, Edenhofer commented on its publication. The scenarios examined all lead to achieving the goal of net zero by 2050. The report acknowledges a lack of economic data for all the scenarios considered. However, where data is available, the report states that annual investments in energy supply would amount to one to two percent of GDP in this decade. A peak of 1.1 to 2.1 percent of GDP would be reached in the early 2030s, and by 2050 spending would drop to about 1 percent. With Manuel Berkel

Vestager threatens Google with forced sale of advertising business parts

The EU Commission accuses Google of distorting competition in online advertising technologies (adtech). Google has a powerful position in adtech, said Margrethe Vestager, Executive Vice President in charge of competition. “We are concerned that Google may have illegally distorted competition,” she said. She added, “We found that Google may have abused its dominant position by favoring its own adtech services.” If the concerns were confirmed, Google would not only harm its competitors but also publishers and increase costs for advertisers.

Vestager said Google may have to sell part of its adtech business because other measures may be insufficient to stop the anti-competitive practices. “For example, Google could divest its sell-side tools, DFP and AdX. By doing so, we would put an end to the conflicts of interest,” she said. She said she knows this is a strong statement. But it reflects the nature of the markets, and other measures may not be sufficient.

Dan Taylor, Google’s Vice President of Global Ads, disagreed with that view in a blog post. “The digital advertising market enjoys competitive pricing, lively innovation and robust competition – helping advertisers, publishers and consumers.” He said his company looks forward to demonstrating how its adtech tools help make the Internet open and accessible.

Marketing of advertising banners in focus

Google has a lot at stake in this conflict concerning the company’s biggest revenue generator. 79 percent of total revenues were generated by the adtech business last year. Advertising revenue across the search engine, Gmail, Google Play, Google Maps, YouTube ads, Google Ad Manager, AdMob and AdSense totaled $224.5 billion in 2022. However, the study only focuses on a smaller part, the advertising banner marketing beyond the company’s own search engine, for example.

The Commission had already initiated formal proceedings in June 2021 regarding possible anti-competitive practices by Google’s adtech division. The notification of the statement of objections is now the next step. The company can now inspect the Commission’s investigation file and comment. vis

AI Act: Parliament grants negotiating mandate

The European Parliament plenary adopted its position on the AI Act. The rapporteurs received a clear negotiating mandate for the trilogue with the Council and the Commission. On Wednesday, 499 MEPs voted in favor of the proposal of rapporteurs Brando Benifei (S&D) and Dragoş Tudorache (Renew). There were only 28 votes against and 93 abstentions. There have been no more changes compared to the version already voted in the IMCO and LIBE Committee.

EPP amendment fails

This also means the EPP failed with its group motion. It wanted to overturn the ban on AI for biometric real-time recognition in public spaces. This backing out of the compromise was quite resented by other groups involved in the EPP. “What happened today shows that agreements should be respected,” Benifei said in a press conference following the vote. However, he was sure he could bring the EPP back to the negotiating table if it showed more responsibility, he stated. Here, however, the EPP could succeed with its rejection of the ban. The majority of the member states are also against the ban.

Among other things, the parliamentarians decided:

the prohibition of real-time remote biometric identification systems in publicly accessible spaces and predictive policing.
the prohibition of after-the-fact remote biometric identification systems, with the sole exception of law enforcement agencies for the prosecution of serious crimes and only after judicial authorization
generative AI systems like ChatGPT must disclose that the content was generated by AI
AI systems used to influence voters in elections considered high-risk.

Trilogue already started

European Consumer Organisation BEUC welcomed the Parliament’s decision. “We however regret that the Parliament gives businesses the option to decide if their AI system is considered high-risk or not, and to thus escape from the main rules of the law,” said Ursula Pachl, BEUC Deputy Director General. And she urged the Parliament to insist on its position for it to be adopted by member states.

The kick-off meeting for the trilogue was scheduled to take place on Wednesday evening. Internal Market Commissioner Thierry Breton said he has already started working with AI companies and developers on his proposed AI Pact to get ahead of the implementation of the future law. He said he will travel to San Francisco at the end of next week to meet with Mark Zuckerberg of Meta and Sam Altman of OpenAI, among others. vis

National security strategy: the EU dimension

The German government is devoting a separate chapter to Europe in its national security strategy. However, the formulated positions hold few surprises – and are unlikely to please the EU partners in every respect.

For example, the coalition government announced it will work to harmonize military capability requirements with its allies and focus primarily on European solutions in procurement. But only if this is possible “without sacrificing capability.” “The decisive criterion remains the rapid closing of capability gaps,” the document says.

The German government had ordered F35 fighter jets in particular from the US after the Russian invasion of Ukraine. This had caused considerable irritation in France – Paris feared for the joint development project FCAS.

In addition, the German government is committed to the further development of Permanent Structured Cooperation (PESCO) and wants to strengthen the European Peace Facility. It also wants to contribute to making sanctions “even more effective.” tho

11th sanctions package: new attempt on Monday

On Wednesday, EU ambassadors moved closer to an agreement on the 11th sanctions package Brussels wants to use to close loopholes in the sanctions regime against Russia. The positions were in “98 percent” agreement, a diplomat said. In particular, Ukraine’s blacklist of “war profiteers” (including Western companies with developed business ties in Russia) remains a problem for an EU member, he said. Most recently, Greece and Hungary demanded Ukraine to remove companies from their countries from the list, which has primarily political significance.

However, Hungary is said to have eased its blockade most recently in exchange for concessions on the originally planned listing of Chinese companies. According to a media report, five companies based in China and Hong Kong have been removed from the list. Three companies were to remain listed, South China Morning Post reported, citing EU sources. Previously, there had been talks with Chinese diplomats.

The EU Commission has largely been able to dispel concerns with regard to the mechanism for sanctions against third countries serving as hubs for circumvention deals towards Russia. Diplomats said the Commission had specified which goods and technologies could be specifically targeted. EU ambassadors plan to make a new attempt to reach an agreement on Monday. After that, the 11th sanctions package would have to be formally signed off by governments in a written procedure. sti/ari

Renewable Energies Directive: still no agreement in the Council

The meeting of EU ambassadors yesterday (Wednesday) has not produced an agreement on the adoption of the Renewable Energy Directive (RED). The Permanent Representatives Committee (Coreper) will deal with the issue again next Friday.

The Swedish presidency presented the trilogue agreement reached with the European Parliament on Wednesday and the new recital circulated on Tuesday evening. This would allow ammonia plants to switch from gas to hydrogen, among other things, from nuclear energy, instead of using only renewable fuels as planned.

France had already secured some leeway in hydrogen production using nuclear energy for the industry but is calling for even more flexibility. In this way, Paris wants to facilitate the conversion of its gas-fired ammonia plants for the production of fertilizers.

For France, the agricultural sector is a mainstay of its economy: With agricultural production estimated at €81.6 billion in 2021, according to the French Ministry of Agriculture, France remains the largest producer in Europe, ahead of Germany and Italy. cst

Legal acts on hydrogen adopted

The delegated acts on e-fuels have finally been adopted and departmental coordination is already underway in the German government to transpose them into national law. In the night from Wednesday to Thursday, the objection period for Council and Parliament at EU level expired, according to a Commission database. Publication in the Official Journal is expected in the next few days, and the acts will enter into force on the 20th day after.

The two acts regulate renewable energy additionality for liquid and gaseous renewable fuels of non-biological origin (RFNBO) and carbon accounting for recycled carbon fuels (RCF). These form the basis for building the hydrogen economy and had been severely delayed.

Departmental coordination on national implementation already underway

The implementation of the two legal acts into national law is proceeding via the new version of the Ordinance offsetting electricity-based fuels and co-processed biogenic oils against the greenhouse gas quota (37th BImSchV). “The draft bill for the new version of the 37th BImSchV is currently in departmental coordination,” a spokesperson for the Federal Environment Ministry said upon request. “The BMUV is working at full speed to create legal and investment security for the hydrogen economy as quickly as possible.”

Earlier, the industry association eFuel Alliance had urged rapid implementation into national law. All member states and the German government, in particular, should not under any circumstances wait until the end of 2024 for national implementation of RED III, which has just been provisionally adopted, it said in a statement on Tuesday. ber

Parliament adopts battery regulation

The European Parliament adopted the agreement on the Battery Regulation yesterday with 587 votes in favor, 9 against and 20 abstentions. Parliament, Council and Commission had agreed on the legislative text in December. The main measures:

The carbon footprint for EV batteries, light transportation batteries (e.g., for electric scooters and bicycles), and rechargeable industrial batteries with a capacity greater than two kWh must be declared and labeled.
Device batteries must be designed so that users can easily remove and replace them. This will mean disposable e-cigarettes, for example, will no longer be permitted.
Batteries for light transportation, industrial batteries with a capacity of more than two kWh and EV batteries must receive a digital product passport.
All economic operators, with the exception of small and medium-sized enterprises, must fulfill due diligence obligations.
Stricter targets for waste collection of portable and light transportation batteries.
Minimum quantities of recovered materials from spent batteries for lithium, cobalt, copper, lead and nickel.
Minimum content of recovered ingredients from consumer and production waste for use in new batteries for cobalt, lead, lithium and nickel.

“For the first time, we have circular economy legislation that covers the entire life cycle of a product,” said Achille Variati (S&D), rapporteur in the lead Environment Committee. “Our overall aim is to build a stronger EU recycling industry, particularly for lithium, and a competitive industrial sector as a whole, which is crucial in the coming decades for our continent’s energy transition and strategic autonomy.”

Following the vote in plenary, the Council must now formally adopt the text. It will then be published in the Official Journal of the EU and enter into force shortly thereafter. leo

EU and Chile: lithium and hydrogen partnership planned

Chile and the European Union will soon sign a memorandum of understanding to develop high-value-added lithium projects in Chile, EU Commission President Ursula von der Leyen said Wednesday during her visit to the South American country. In a joint press conference with Chilean President Gabriel Boric, von der Leyen said the two parties had agreed to establish a strategic partnership to develop lithium and strengthen supply chains. “We are working to sign a memorandum of understanding soon,” von der Leyen said. She said this strategic association is also intended to create local added value in Chile.

In April, Chile announced a plan to expand lithium mining in the country through state-controlled public-private partnerships to regain its position as the world’s leading lithium producer. The metal is in high demand worldwide, particularly for batteries used in EVs.

Both heads of state also announced new projects as part of a green hydrogen initiative between the EU and Chile. The “Team Europe Fund for Renewable Hydrogen in Chile” initiative is intended to finance new renewable hydrogen projects in Chile. They said the fund is to be endowed with more than €200 million, mostly financed by the European Investment Bank and KfW and managed by Chile’s state development agency. rtr

Janka Oertel to enter the EP for the Greens

Janka Oertel, Asia expert at the think tank ECFR, wants to run for the European Parliament for the Greens, the scientist announced yesterday on Twitter. She has support from the party leadership: Green Party leader Omid Nouripour also welcomed the announcement for the European election on Twitter: “It’s good news that Janka wants to run for Europe for us. She would be an enrichment for the Green Group in the European Parliament. Especially in these times, we need a proven China expert as a strong European voice.” Which list position she is aiming for is unknown. mgr

ECB monetary policy: proposal for climate-friendly interest rate system

When the ECB turns the interest rate screw this Thursday as expected, the result could stall climate action. A new study by the Bertelsmann Foundation suggests a monetary policy that would not stall decarbonization. The fiscal dilemma: Higher interest rates lead to less investment and less climate-neutral transformation of the economy. At the same time, an “interest rate hammer” would strangle the room for maneuver even more in the long term, warns the foundation’s economic policy spokesman Daniel Posch, because the consequences of unchecked climate change threaten the price and financial stability of European economies.

The ECB also has room for maneuvering in times of increased inflation. For example, it could offer banks low-cost loans for green investments and technologies via targeted longer-term refinancing operations, so-called TLTROs. Giving banks an incentive to grant these loans to companies and households. Borrowing costs remain comparatively low – despite the negative interest rate environment – and green investments are promoted on top.

Such measures are by no means new, the study says. Leading central banks around the world, most recently the Bank of Japan, but also the ECB, have already applied differentiated interest rates or launched green refinancing lines. Posch thus sees it as the ECB’s duty, as part of the green deal, to gear its instruments toward climate protection and to subject its balance sheet to appropriate stress tests. ab

AI Regulation in the EU: between algorithm hype and doomsday

The lawyer, Professor and former Hamburg Data Protection Commissioner, Johannes Caspar.

Artificial intelligence is dividing society. What is addressed here is not the actual danger posed by deep-fake technologies or the manipulation of opinions. That is a technology-inherent risk that urgently needs answers. What is addressed is the struggle to regulate technology, which calls into question basic social principles such as freedom and equality and the image of man as an autonomous subject. Not only Europe, but large parts of the democratic world are confronting each other as innovation advocates and admonishers.

The struggle is actually not new. It has already accompanied us for decades with nuclear technology or genetic engineering. But this time, the situation is different: The time for AI regulation is running out. The technological innovation cycles of the digital efficiency revolution are turning ever faster. It is becoming increasingly difficult to formulate viable answers in democratic discourses. Answers, that are still supposed to be valid when the laws come into force after longer transition periods.

Doomsday mood among experts

One point that is different this time: The Frankenstein effect is missing. Instead of allying with their creation, the loudest critics today come from the camp of the pioneers and developers of the technology. That should give us pause for thought: Whether it’s Sam Altman, CEO of OpenAI, or scientists like Geoffrey Hinton and Yoshua Bengio, the Godfathers of Deep Learning – they are urgently warning of the extinction of humanity and calling for fundamental regulation.

At the same time, the concentrated tech elite is calling for a research stop for AI developments. All fake? End-of-the-world advertising, a marketing ploy, as Sascha Lobo recently proclaimed in a Spiegel column, a shifting of responsibility onto politics?

If politics has any responsibility toward the people, it comes to bear in constellations of this kind. Because it is the duty to protect fundamental rights that makes it incumbent on elected representatives and governments to act. To do more than hope for the self-responsibility of listed companies. What the final version of the AI regulation will look like cannot be discerned at this time. However, it is possible to formulate a few key requirements that will be included in the regulation.

Quantum leap in the quality of manipulation

Concerning influencing people, a new universe opens up, especially in the context of text-based dialog systems or text-to-picture generators. The sudden appearance of ChatGPT is always referred to as an “iPhone moment.” That’s like comparing the crossing of the Alps to the first manned moon landing. An erroneous classification of processes in the history of mankind: language, writing and printing were followed by the Internet. All of this concerned the dissemination and transport of information.

Intelligent speech systems are now catapulting us into an age where machines create content on their own. They not only display certain information to us, but tell us what to do. A quantum leap in the quality of manipulation.

Do we want to trust that the business model of companies that have invested billions in their technology will always bring “good” and serve the common good? That, this time, everything will be different from past actions of Google, Facebook and others? Then we can sit back and relax. We can do without more than marginal transparency obligations in the operation of these models. A risk-based approach, in which these technologies are not recorded at all, will then be completely sufficient.

Setting the purpose of the hammer

AI is an instrument. Suppose it was a hammer. Should we limit ourselves to describing general rules about the construction of hammers, how they should be marketed, how they should best fit inside the hand, and how the risk of injury during use should be minimized? Or should we also remember that they should not be used for all purposes? That they should not be used to kill, injure or threaten people? Shouldn’t we then make it clear that AI is not to be used for mass surveillance, facial recognition, or emotion detection? And should we resist the temptation to not just impose apparent bans, behind which broad exceptions are allowed?

Innovation is needed. We agree on that. Standing on the sidelines in global competition is not a good idea. But is it innovative to use AI-based processes to assess people in the workplace or in educational institutions to hire, fire, warn or grade them? What is the innovation of procedures that allow us to calculate probabilities of crimes that have not yet been committed and to identify perpetrators that do not yet exist? Do we need AI-assisted decisions for people’s social needs? If so, we should adopt the annex to the AI regulation that contains all these high-risk technologies. There is then no need for differentiations of the fields of application. AI is set: whether it is used for early detection of cancer or for monitoring and evaluating people.

The EU makes history

If human individuality is the fuel for the new technology, then we need not worry about the sources running dry. If anything is inexhaustible in this world, it is the directories of our individuality, our data. We even produce them in our sleep. From a purely economic point of view, shouldn’t we look at AI regulations as harmonization regulations and keep the data protectors out of this? In essence, it is then only a matter of common standards in the EU internal market.

Clear answers to these questions are at stake. To be clear, much of what the EU Parliament has already presented on the AI Regulation in the amendment of the Commission’s draft is definitely going in the right direction. First of all, it is great that Europeans recognize they have to set the course for a humane future. Pioneers who are looking for sustainable social structures are also pioneers. There is no reason to wrinkle one’s nose contemptuously at “world champions of regulation” from the old continent. But even pioneers can make mistakes. Let us hope that the most difficult piece of legislation of recent years will remain linked to the traditions of European social history: human dignity, democracy and the rule of law.

Personal details: Prof. Dr. Johannes Caspar, born in 1962, holds a Ph.D. in law and was Hamburg’s Commissioner for Data Protection and Freedom of Information from 2009 to 2021. From 2015 to 2021, he also represented the independent German data protection authorities of the federal states in the European Data Committee in Brussels. Currently, Caspar teaches and researches at the University of Hamburg and works as a freelance author. His latest book, “We Data Slaves – Ways out of Digital Exploitation,” has just been published by Econ (hardcover, 352 pages; €24.99).

Great cinema in the Environment Committee

There will be great cinema for breakfast today in the European Parliament in Strasbourg. The flick will run from 8:30 a.m. in the Environment Committee and can be followed on livestream. For the first time in the history of EU parliamentarianism, old sailors affirm, the EPP refuses to even deal with a Commission bill.

It is about the Nature Restoration Law from Commission Vice-President Frans Timmermans. We will not discuss the pros and cons here. But if the bill fails, it would be a massive blow for Timmermans, who sees himself as the Green Deal CEO in the von der Leyen team. It would be the first law from the Fit for 55 series ever to sink the Commission.

88 votes in the Environment Committee

With the vote in the Environment Committee, the EPP wants to reject the proposal. And the chances are not bad that the Christian Democrats, who occupy 22 of 88 seats in the Committee, will succeed. They need 45 votes, with abstentions on the other side correspondingly less.

EKR could contribute eight votes. Most of the eight right-wingers will also raise their hands, if they are well rested and already present. And among the four factionless there are some Fidesz people who are likely to vote with the EPP. On the other side, there are 18 Socialists, eight Greens and six Leftists, making 32 who are quite certain to vote for the law. The weal and woe of Timmermann’s bill will be decided by the voting behavior of the Liberals, who make up 14 members of the ENVI.

It all comes down to the liberals

And that is why Committee Chairman Pascal Canfin (Renew) is so nervous these days. Canfin – a very firm advocate of Emmanuel Macron’s will – is extremely worried. Four deputies, including German FDP man and Harley rider Andreas Glück and Dutch Tesla driver Jan Huitema have already publicly committed to voting against Timmermans’ proposal. Two others are considered certain, but have not yet come out.

When this newsletter appears, there are still two and a half hours until the session begins. Even in these remaining minutes, attempts to win over the last fickle MEPs to the Timmermans bill are likely to be made. The liaison officers from the Commission have long since swarmed out for one-on-one meetings and are far from tired.

Even if everything goes well again in the ENVI: Nothing would be set in stone. In July, the matter would be submitted to the plenum for a final decision. If it is already close in the environment committee, the law will fail in the plenum, predict experienced observers. Markus Grabitz

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,

On Friday, the finance ministers will meet in Luxembourg to discuss the reform of the EU debt rules. Or rather: to present their familiar positions to each other. The negotiations are making only slow progress. The experts in the Council working group are working intensively through the Commission’s reform proposals since the end of April and are flooding the authority with questions.

However, no camp has moved significantly yet. German Finance Minister Christian Lindner insists on the German demand for reliable numerical benchmarks and safety nets so as not to undermine the Stability and Growth Pact. Still in line with the two coalition partners, by the way. At most, Berlin has so far signaled a willingness to talk about the crediting of certain investments, for example, in climate protection. The German government believes it has the support of ten other countries that also have considerable reservations about the reform proposals, including Austria, the Netherlands, Slovenia, the Czech Republic and Ireland.

A group led by France and Italy, on the other hand, continues to press for greater flexibility in the rules, with debt reduction paths tailored to individual states. According to diplomats, the work at the technical level is likely to drag on for weeks and months. The dossier will reach the political level in the fall at the earliest. However, time will be short: The old deficit rules will come into force again at the beginning of 2024, and the European elections will be held at the beginning of June.

Have an interesting read!

Your
Till Hoppe

Climate target 2040: Europe is fit for 95

By

Lukas Knigge

The EU is capable of reducing its greenhouse gas emissions by up to 95 percent by 2040 – compared to 1990 levels. This is according to a report by the Scientific Advisory Board on Climate Change, which was appointed in the wake of the European Climate Law. This Thursday, the panel’s 15 researchers publish their recommendations for the EU’s 2040 climate target and how it can be achieved.

In order to minimize climate risks and limit global warming to 1.5 degrees, Europe is allowed a cumulative greenhouse gas budget of 11 to 14 gigatons of carbon-equivalents (CO2e) for the period 2030 to 2050. “To achieve this, the EU should reduce its emissions by 90-95 percent by 2040 compared to 1990 levels,” explains climate researcher Ottmar Edenhofer, chair of the panel. However, the report states that the basis for this is achieving the 55 percent reduction target for 2030.

The researchers analyzed more than 1000 possible emission reduction pathways, identifying 36 scenarios compatible with the 1.5-degree target and the EU’s 2050 net zero goal. These scenarios were then assessed for their feasibility, environmental risks and challenges related to the short-term ramp-up of technologies such as photovoltaics, wind power and hydrogen. Any scenarios with a scientifically unrealistically high reliance on carbon capture, use and storage (CCUS) or nature-based removal methods such as carbon farming were not considered, Edenhofer confirms.

Three key scenarios for the 2040 climate target

Thus, three “iconic” pathways to achieving the recommended 2040 climate target have crystallized. They have different cumulative emission levels and include a range of possible policy options.

The “demand-focus” emission reduction pathway is based on less resource-intensive lifestyles and has the lowest energy demand and dependence on technical or biological carbon capture by 2040. Policy options: Increasing energy efficiency and decarbonization, reducing food waste and the need for livestock for food production.
The renewables-focused pathway has the highest share of renewable capacity in total energy demand (excluding biomass) in 2040, but the highest cumulative emissions by 2050. Policy options: Increasing electrification.
The mixed approach has the lowest cumulative emissions of the three pathways over the period 2030 to 2050 and includes greater use of CCUS (with a focus on nature-based methods) but also a higher share of nuclear energy. Policy options: Ramp-up of CCS and hydrogen.

However, most of the scenarios examined have common characteristics:

The energy sector will be largely emission-free by 2040 (almost complete phase-out of coal already by 2030)
Use of alternative, non-fossil energy sources for hard-to-electrify applications, e.g. in industry and transport – mainly hydrogen and biomass.
Reduction of non-carbon emissions (20-60 percent below 2019 levels), reduction of methane in waste (45-60 percent) and in energy consumption (70-90 percent).
Expansion of hydrogen production to 5-10 million tons by 2030.
Decreased overall domestic energy consumption by 20-40 percent by 2040 compared to today
Reduction of oil imports by 50-100 percent by 2040 compared to today, gas imports fall by 35-100 percent.

Research focus: energy sector

In the energy sector, the researchers – like the Greens in Germany and many emissions trading experts – expect a total coal phase-out well before 2038. The scenarios examined allow for “coal-fired power generation to be phased out by 2030,” the report states. The remaining share of coal in the electricity mix would be less than one to four percent, depending on the scenario.

Natural gas would only be used to generate electricity in power plants until 2040 (below one to six percent) – except in the scenarios that use carbon capture in power plants. The report shows different scenarios for CCS capacities. In the mixed-approach pathway, there will be more than 200 million tons of carbon annually in 2050.

Hydrogen not in buildings

Regarding European hydrogen production, it is striking that most scenarios expect relatively low production within the EU in the long term. While the Commission’s target of 10 million tons by 2030 is achievable under Repower-EU, the optimistic mixed approach assumes only an increase to about 25 million tons by 2050. But for 2050, the optimistic mixed approach only assumes an increase to about 25 million tonnes. Only individual scenarios assume that production can be increased to 70 million tons by mid-century.

The moderate outlook for hydrogen is probably one reason why this energy carrier does not play a role in the building sector from a scientific point of view. Here, the scientists expect an electrification rate of 53 to 71 percent by 2040. However, natural gas will continue to play a significant role with 5 to 20 percent. Wood, another controversial fuel, accounts for 6 to 9 percent.

The report leaves room for political decisions, Edenhofer commented on its publication. The scenarios examined all lead to achieving the goal of net zero by 2050. The report acknowledges a lack of economic data for all the scenarios considered. However, where data is available, the report states that annual investments in energy supply would amount to one to two percent of GDP in this decade. A peak of 1.1 to 2.1 percent of GDP would be reached in the early 2030s, and by 2050 spending would drop to about 1 percent. With Manuel Berkel

Vestager threatens Google with forced sale of advertising business parts

The EU Commission accuses Google of distorting competition in online advertising technologies (adtech). Google has a powerful position in adtech, said Margrethe Vestager, Executive Vice President in charge of competition. “We are concerned that Google may have illegally distorted competition,” she said. She added, “We found that Google may have abused its dominant position by favoring its own adtech services.” If the concerns were confirmed, Google would not only harm its competitors but also publishers and increase costs for advertisers.

Vestager said Google may have to sell part of its adtech business because other measures may be insufficient to stop the anti-competitive practices. “For example, Google could divest its sell-side tools, DFP and AdX. By doing so, we would put an end to the conflicts of interest,” she said. She said she knows this is a strong statement. But it reflects the nature of the markets, and other measures may not be sufficient.

Dan Taylor, Google’s Vice President of Global Ads, disagreed with that view in a blog post. “The digital advertising market enjoys competitive pricing, lively innovation and robust competition – helping advertisers, publishers and consumers.” He said his company looks forward to demonstrating how its adtech tools help make the Internet open and accessible.

Marketing of advertising banners in focus

Google has a lot at stake in this conflict concerning the company’s biggest revenue generator. 79 percent of total revenues were generated by the adtech business last year. Advertising revenue across the search engine, Gmail, Google Play, Google Maps, YouTube ads, Google Ad Manager, AdMob and AdSense totaled $224.5 billion in 2022. However, the study only focuses on a smaller part, the advertising banner marketing beyond the company’s own search engine, for example.

The Commission had already initiated formal proceedings in June 2021 regarding possible anti-competitive practices by Google’s adtech division. The notification of the statement of objections is now the next step. The company can now inspect the Commission’s investigation file and comment. vis

AI Act: Parliament grants negotiating mandate

The European Parliament plenary adopted its position on the AI Act. The rapporteurs received a clear negotiating mandate for the trilogue with the Council and the Commission. On Wednesday, 499 MEPs voted in favor of the proposal of rapporteurs Brando Benifei (S&D) and Dragoş Tudorache (Renew). There were only 28 votes against and 93 abstentions. There have been no more changes compared to the version already voted in the IMCO and LIBE Committee.

EPP amendment fails

This also means the EPP failed with its group motion. It wanted to overturn the ban on AI for biometric real-time recognition in public spaces. This backing out of the compromise was quite resented by other groups involved in the EPP. “What happened today shows that agreements should be respected,” Benifei said in a press conference following the vote. However, he was sure he could bring the EPP back to the negotiating table if it showed more responsibility, he stated. Here, however, the EPP could succeed with its rejection of the ban. The majority of the member states are also against the ban.

Among other things, the parliamentarians decided:

the prohibition of real-time remote biometric identification systems in publicly accessible spaces and predictive policing.
the prohibition of after-the-fact remote biometric identification systems, with the sole exception of law enforcement agencies for the prosecution of serious crimes and only after judicial authorization
generative AI systems like ChatGPT must disclose that the content was generated by AI
AI systems used to influence voters in elections considered high-risk.

Trilogue already started

European Consumer Organisation BEUC welcomed the Parliament’s decision. “We however regret that the Parliament gives businesses the option to decide if their AI system is considered high-risk or not, and to thus escape from the main rules of the law,” said Ursula Pachl, BEUC Deputy Director General. And she urged the Parliament to insist on its position for it to be adopted by member states.

The kick-off meeting for the trilogue was scheduled to take place on Wednesday evening. Internal Market Commissioner Thierry Breton said he has already started working with AI companies and developers on his proposed AI Pact to get ahead of the implementation of the future law. He said he will travel to San Francisco at the end of next week to meet with Mark Zuckerberg of Meta and Sam Altman of OpenAI, among others. vis

National security strategy: the EU dimension

The German government is devoting a separate chapter to Europe in its national security strategy. However, the formulated positions hold few surprises – and are unlikely to please the EU partners in every respect.

For example, the coalition government announced it will work to harmonize military capability requirements with its allies and focus primarily on European solutions in procurement. But only if this is possible “without sacrificing capability.” “The decisive criterion remains the rapid closing of capability gaps,” the document says.

The German government had ordered F35 fighter jets in particular from the US after the Russian invasion of Ukraine. This had caused considerable irritation in France – Paris feared for the joint development project FCAS.

In addition, the German government is committed to the further development of Permanent Structured Cooperation (PESCO) and wants to strengthen the European Peace Facility. It also wants to contribute to making sanctions “even more effective.” tho

11th sanctions package: new attempt on Monday

On Wednesday, EU ambassadors moved closer to an agreement on the 11th sanctions package Brussels wants to use to close loopholes in the sanctions regime against Russia. The positions were in “98 percent” agreement, a diplomat said. In particular, Ukraine’s blacklist of “war profiteers” (including Western companies with developed business ties in Russia) remains a problem for an EU member, he said. Most recently, Greece and Hungary demanded Ukraine to remove companies from their countries from the list, which has primarily political significance.

However, Hungary is said to have eased its blockade most recently in exchange for concessions on the originally planned listing of Chinese companies. According to a media report, five companies based in China and Hong Kong have been removed from the list. Three companies were to remain listed, South China Morning Post reported, citing EU sources. Previously, there had been talks with Chinese diplomats.

The EU Commission has largely been able to dispel concerns with regard to the mechanism for sanctions against third countries serving as hubs for circumvention deals towards Russia. Diplomats said the Commission had specified which goods and technologies could be specifically targeted. EU ambassadors plan to make a new attempt to reach an agreement on Monday. After that, the 11th sanctions package would have to be formally signed off by governments in a written procedure. sti/ari

Renewable Energies Directive: still no agreement in the Council

The meeting of EU ambassadors yesterday (Wednesday) has not produced an agreement on the adoption of the Renewable Energy Directive (RED). The Permanent Representatives Committee (Coreper) will deal with the issue again next Friday.

The Swedish presidency presented the trilogue agreement reached with the European Parliament on Wednesday and the new recital circulated on Tuesday evening. This would allow ammonia plants to switch from gas to hydrogen, among other things, from nuclear energy, instead of using only renewable fuels as planned.

France had already secured some leeway in hydrogen production using nuclear energy for the industry but is calling for even more flexibility. In this way, Paris wants to facilitate the conversion of its gas-fired ammonia plants for the production of fertilizers.

For France, the agricultural sector is a mainstay of its economy: With agricultural production estimated at €81.6 billion in 2021, according to the French Ministry of Agriculture, France remains the largest producer in Europe, ahead of Germany and Italy. cst

Legal acts on hydrogen adopted

The delegated acts on e-fuels have finally been adopted and departmental coordination is already underway in the German government to transpose them into national law. In the night from Wednesday to Thursday, the objection period for Council and Parliament at EU level expired, according to a Commission database. Publication in the Official Journal is expected in the next few days, and the acts will enter into force on the 20th day after.

The two acts regulate renewable energy additionality for liquid and gaseous renewable fuels of non-biological origin (RFNBO) and carbon accounting for recycled carbon fuels (RCF). These form the basis for building the hydrogen economy and had been severely delayed.

Departmental coordination on national implementation already underway

The implementation of the two legal acts into national law is proceeding via the new version of the Ordinance offsetting electricity-based fuels and co-processed biogenic oils against the greenhouse gas quota (37th BImSchV). “The draft bill for the new version of the 37th BImSchV is currently in departmental coordination,” a spokesperson for the Federal Environment Ministry said upon request. “The BMUV is working at full speed to create legal and investment security for the hydrogen economy as quickly as possible.”

Earlier, the industry association eFuel Alliance had urged rapid implementation into national law. All member states and the German government, in particular, should not under any circumstances wait until the end of 2024 for national implementation of RED III, which has just been provisionally adopted, it said in a statement on Tuesday. ber

Parliament adopts battery regulation

The European Parliament adopted the agreement on the Battery Regulation yesterday with 587 votes in favor, 9 against and 20 abstentions. Parliament, Council and Commission had agreed on the legislative text in December. The main measures:

The carbon footprint for EV batteries, light transportation batteries (e.g., for electric scooters and bicycles), and rechargeable industrial batteries with a capacity greater than two kWh must be declared and labeled.
Device batteries must be designed so that users can easily remove and replace them. This will mean disposable e-cigarettes, for example, will no longer be permitted.
Batteries for light transportation, industrial batteries with a capacity of more than two kWh and EV batteries must receive a digital product passport.
All economic operators, with the exception of small and medium-sized enterprises, must fulfill due diligence obligations.
Stricter targets for waste collection of portable and light transportation batteries.
Minimum quantities of recovered materials from spent batteries for lithium, cobalt, copper, lead and nickel.
Minimum content of recovered ingredients from consumer and production waste for use in new batteries for cobalt, lead, lithium and nickel.

“For the first time, we have circular economy legislation that covers the entire life cycle of a product,” said Achille Variati (S&D), rapporteur in the lead Environment Committee. “Our overall aim is to build a stronger EU recycling industry, particularly for lithium, and a competitive industrial sector as a whole, which is crucial in the coming decades for our continent’s energy transition and strategic autonomy.”

Following the vote in plenary, the Council must now formally adopt the text. It will then be published in the Official Journal of the EU and enter into force shortly thereafter. leo

EU and Chile: lithium and hydrogen partnership planned

Chile and the European Union will soon sign a memorandum of understanding to develop high-value-added lithium projects in Chile, EU Commission President Ursula von der Leyen said Wednesday during her visit to the South American country. In a joint press conference with Chilean President Gabriel Boric, von der Leyen said the two parties had agreed to establish a strategic partnership to develop lithium and strengthen supply chains. “We are working to sign a memorandum of understanding soon,” von der Leyen said. She said this strategic association is also intended to create local added value in Chile.

In April, Chile announced a plan to expand lithium mining in the country through state-controlled public-private partnerships to regain its position as the world’s leading lithium producer. The metal is in high demand worldwide, particularly for batteries used in EVs.

Both heads of state also announced new projects as part of a green hydrogen initiative between the EU and Chile. The “Team Europe Fund for Renewable Hydrogen in Chile” initiative is intended to finance new renewable hydrogen projects in Chile. They said the fund is to be endowed with more than €200 million, mostly financed by the European Investment Bank and KfW and managed by Chile’s state development agency. rtr

Janka Oertel to enter the EP for the Greens

Janka Oertel, Asia expert at the think tank ECFR, wants to run for the European Parliament for the Greens, the scientist announced yesterday on Twitter. She has support from the party leadership: Green Party leader Omid Nouripour also welcomed the announcement for the European election on Twitter: “It’s good news that Janka wants to run for Europe for us. She would be an enrichment for the Green Group in the European Parliament. Especially in these times, we need a proven China expert as a strong European voice.” Which list position she is aiming for is unknown. mgr

ECB monetary policy: proposal for climate-friendly interest rate system

When the ECB turns the interest rate screw this Thursday as expected, the result could stall climate action. A new study by the Bertelsmann Foundation suggests a monetary policy that would not stall decarbonization. The fiscal dilemma: Higher interest rates lead to less investment and less climate-neutral transformation of the economy. At the same time, an “interest rate hammer” would strangle the room for maneuver even more in the long term, warns the foundation’s economic policy spokesman Daniel Posch, because the consequences of unchecked climate change threaten the price and financial stability of European economies.

The ECB also has room for maneuvering in times of increased inflation. For example, it could offer banks low-cost loans for green investments and technologies via targeted longer-term refinancing operations, so-called TLTROs. Giving banks an incentive to grant these loans to companies and households. Borrowing costs remain comparatively low – despite the negative interest rate environment – and green investments are promoted on top.

Such measures are by no means new, the study says. Leading central banks around the world, most recently the Bank of Japan, but also the ECB, have already applied differentiated interest rates or launched green refinancing lines. Posch thus sees it as the ECB’s duty, as part of the green deal, to gear its instruments toward climate protection and to subject its balance sheet to appropriate stress tests. ab

AI Regulation in the EU: between algorithm hype and doomsday

Artificial intelligence is dividing society. What is addressed here is not the actual danger posed by deep-fake technologies or the manipulation of opinions. That is a technology-inherent risk that urgently needs answers. What is addressed is the struggle to regulate technology, which calls into question basic social principles such as freedom and equality and the image of man as an autonomous subject. Not only Europe, but large parts of the democratic world are confronting each other as innovation advocates and admonishers.

The struggle is actually not new. It has already accompanied us for decades with nuclear technology or genetic engineering. But this time, the situation is different: The time for AI regulation is running out. The technological innovation cycles of the digital efficiency revolution are turning ever faster. It is becoming increasingly difficult to formulate viable answers in democratic discourses. Answers, that are still supposed to be valid when the laws come into force after longer transition periods.

Doomsday mood among experts

One point that is different this time: The Frankenstein effect is missing. Instead of allying with their creation, the loudest critics today come from the camp of the pioneers and developers of the technology. That should give us pause for thought: Whether it’s Sam Altman, CEO of OpenAI, or scientists like Geoffrey Hinton and Yoshua Bengio, the Godfathers of Deep Learning – they are urgently warning of the extinction of humanity and calling for fundamental regulation.

At the same time, the concentrated tech elite is calling for a research stop for AI developments. All fake? End-of-the-world advertising, a marketing ploy, as Sascha Lobo recently proclaimed in a Spiegel column, a shifting of responsibility onto politics?

If politics has any responsibility toward the people, it comes to bear in constellations of this kind. Because it is the duty to protect fundamental rights that makes it incumbent on elected representatives and governments to act. To do more than hope for the self-responsibility of listed companies. What the final version of the AI regulation will look like cannot be discerned at this time. However, it is possible to formulate a few key requirements that will be included in the regulation.

Quantum leap in the quality of manipulation

Concerning influencing people, a new universe opens up, especially in the context of text-based dialog systems or text-to-picture generators. The sudden appearance of ChatGPT is always referred to as an “iPhone moment.” That’s like comparing the crossing of the Alps to the first manned moon landing. An erroneous classification of processes in the history of mankind: language, writing and printing were followed by the Internet. All of this concerned the dissemination and transport of information.

Intelligent speech systems are now catapulting us into an age where machines create content on their own. They not only display certain information to us, but tell us what to do. A quantum leap in the quality of manipulation.

Do we want to trust that the business model of companies that have invested billions in their technology will always bring “good” and serve the common good? That, this time, everything will be different from past actions of Google, Facebook and others? Then we can sit back and relax. We can do without more than marginal transparency obligations in the operation of these models. A risk-based approach, in which these technologies are not recorded at all, will then be completely sufficient.

Setting the purpose of the hammer

AI is an instrument. Suppose it was a hammer. Should we limit ourselves to describing general rules about the construction of hammers, how they should be marketed, how they should best fit inside the hand, and how the risk of injury during use should be minimized? Or should we also remember that they should not be used for all purposes? That they should not be used to kill, injure or threaten people? Shouldn’t we then make it clear that AI is not to be used for mass surveillance, facial recognition, or emotion detection? And should we resist the temptation to not just impose apparent bans, behind which broad exceptions are allowed?

Innovation is needed. We agree on that. Standing on the sidelines in global competition is not a good idea. But is it innovative to use AI-based processes to assess people in the workplace or in educational institutions to hire, fire, warn or grade them? What is the innovation of procedures that allow us to calculate probabilities of crimes that have not yet been committed and to identify perpetrators that do not yet exist? Do we need AI-assisted decisions for people’s social needs? If so, we should adopt the annex to the AI regulation that contains all these high-risk technologies. There is then no need for differentiations of the fields of application. AI is set: whether it is used for early detection of cancer or for monitoring and evaluating people.

The EU makes history

If human individuality is the fuel for the new technology, then we need not worry about the sources running dry. If anything is inexhaustible in this world, it is the directories of our individuality, our data. We even produce them in our sleep. From a purely economic point of view, shouldn’t we look at AI regulations as harmonization regulations and keep the data protectors out of this? In essence, it is then only a matter of common standards in the EU internal market.

Clear answers to these questions are at stake. To be clear, much of what the EU Parliament has already presented on the AI Regulation in the amendment of the Commission’s draft is definitely going in the right direction. First of all, it is great that Europeans recognize they have to set the course for a humane future. Pioneers who are looking for sustainable social structures are also pioneers. There is no reason to wrinkle one’s nose contemptuously at “world champions of regulation” from the old continent. But even pioneers can make mistakes. Let us hope that the most difficult piece of legislation of recent years will remain linked to the traditions of European social history: human dignity, democracy and the rule of law.

Personal details: Prof. Dr. Johannes Caspar, born in 1962, holds a Ph.D. in law and was Hamburg’s Commissioner for Data Protection and Freedom of Information from 2009 to 2021. From 2015 to 2021, he also represented the independent German data protection authorities of the federal states in the European Data Committee in Brussels. Currently, Caspar teaches and researches at the University of Hamburg and works as a freelance author. His latest book, “We Data Slaves – Ways out of Digital Exploitation,” has just been published by Econ (hardcover, 352 pages; €24.99).

Great cinema in the Environment Committee

There will be great cinema for breakfast today in the European Parliament in Strasbourg. The flick will run from 8:30 a.m. in the Environment Committee and can be followed on livestream. For the first time in the history of EU parliamentarianism, old sailors affirm, the EPP refuses to even deal with a Commission bill.

It is about the Nature Restoration Law from Commission Vice-President Frans Timmermans. We will not discuss the pros and cons here. But if the bill fails, it would be a massive blow for Timmermans, who sees himself as the Green Deal CEO in the von der Leyen team. It would be the first law from the Fit for 55 series ever to sink the Commission.

88 votes in the Environment Committee

With the vote in the Environment Committee, the EPP wants to reject the proposal. And the chances are not bad that the Christian Democrats, who occupy 22 of 88 seats in the Committee, will succeed. They need 45 votes, with abstentions on the other side correspondingly less.

EKR could contribute eight votes. Most of the eight right-wingers will also raise their hands, if they are well rested and already present. And among the four factionless there are some Fidesz people who are likely to vote with the EPP. On the other side, there are 18 Socialists, eight Greens and six Leftists, making 32 who are quite certain to vote for the law. The weal and woe of Timmermann’s bill will be decided by the voting behavior of the Liberals, who make up 14 members of the ENVI.

It all comes down to the liberals

And that is why Committee Chairman Pascal Canfin (Renew) is so nervous these days. Canfin – a very firm advocate of Emmanuel Macron’s will – is extremely worried. Four deputies, including German FDP man and Harley rider Andreas Glück and Dutch Tesla driver Jan Huitema have already publicly committed to voting against Timmermans’ proposal. Two others are considered certain, but have not yet come out.

When this newsletter appears, there are still two and a half hours until the session begins. Even in these remaining minutes, attempts to win over the last fickle MEPs to the Timmermans bill are likely to be made. The liaison officers from the Commission have long since swarmed out for one-on-one meetings and are far from tired.

Even if everything goes well again in the ENVI: Nothing would be set in stone. In July, the matter would be submitted to the plenum for a final decision. If it is already close in the environment committee, the law will fail in the plenum, predict experienced observers. Markus Grabitz