Dispute over ETS and CBAM + Macron&#8217 • Table.Briefings

Dear reader,

As everyone knows, during the pandemic, a safe distance should be maintained from others. Vladimir Putin took this very seriously when he received Emmanuel Macron in the Kremlin last Monday: A table with a length of about four meters separated the two presidents. As Reuters now reported, citing French government officials, Putin had given his guest a choice: Macron should either accept a PCR test by Russian medics – or just maintain distance. “But we could not accept that they get their hands on the president’s DNA,” Paris said.

Thus, Putin’s concern about an infection simultaneously provided photos symbolizing the political distance between Moscow and the West. For Macron, however, the meeting in the Kremlin provided a welcome opportunity to present himself as an important leader. After all, the French president is in the middle of his election campaign, even though he has still not made his candidacy official. Yesterday, he stepped in front of the cameras in Belfort to present his climate and energy policy plans. These essentially include a relaunch of the French nuclear program, as Tanja Kuchenbecker reports from Belfort.

Nuclear power, that is France’s version of the energy transition and its answer to the gas price crisis. The enormous increase in electricity and heating bills is also throwing the EU’s climate protection plans into disarray. Poland and other member states are demanding that emissions trading not be extended to include buildings as planned. Yesterday in the Environment Committee, the European Parliament’s rapporteur, Peter Liese, sharply rejected these demands: “Putin and the oligarchs would be happy if we didn’t implement the Fit for 55 package,” he said. Lukas Scheid and Stephan Israel have more on the story.

Havea pleasant rest of the week, if possible, without excessive distance to your fellow human beings.

Your
Till Hoppe

Huge potential for conflict over ETS and CBAM

The phrase that the Fit for 55 package is not the reason for high energy prices, but the solution, is almost empty. Since the beginning of the energy price crisis, EU politicians of various party affiliations have repeated this statement many times.

Not without reason: Most recently, the government in Poland had campaigned to lower the ambitions of the reform of the emissions trading system. Criticism is directed in particular at the creation of a second ETS for road transport and buildings, which, according to Warsaw, burdens weaker households in particular. Allies for a less ambitious climate protection package can be found above all in Hungary, the Czech Republic, and Slovakia.

Concern is therefore growing in the EU Parliament’s Environment Committee (ENVI) that member states could water down the package’s ambitions. During yesterday’s debate on ETS reform, rapporteur Peter Liese (CDU/EPP) pointed verbally at several EU capitals, making it clear that climate protection cannot only be tackled where it is convenient.

Warsaw wants to prevent the building sector from being included in ETS 2 because many people heat their homes with coal-fired power, he reported from a conversation with Poland’s deputy environment minister. Poland should rather use the money from Brussels to provide people with modern heating systems instead of blocking European climate protection plans, Liese demanded. He said the same applied to Hungary.

Liese also rejected their criticism of the tightening of the regulations of the existing ETS. Due to rising energy prices, calls have become louder not to reduce the available emission allowances as planned. This would inevitably lead to a rise in the price of allowances and further drive energy costs, they worry.

‘Putin would be pleased’

Liese disagrees: The ETS accounts for only a small part of energy costs, the larger part being expensive fossil fuels, especially gas. The EPP politician argues that reducing fossil fuels is not only cheaper, but also makes geostrategic sense: “Putin and the oligarchs would be happy if we don’t implement the Fit for 55 package. That way you could get us into the current situation every year,” he said, referring to Europe’s dependence on Russian energy sources.

However, opposition to significant parts of the planned ETS reform is not only coming from member states, but from the Parliament as well. The EPP rapporteur for the Transport Committee (TRAN), Andrey Novakov, had spoken out earlier this week in favor of not including emissions from road transport in ETS 2 (Europe.Table reported). Liese and the EU Commission want to prevent this at all costs, as the expected CO2 reduction would be considerably lower as a result.

However, the Greens and Social Democrats are also voicing concerns, fearing drastic social consequences for the poorest households should fuel prices rise. Jutta Paulus of the Greens fears strong fluctuations in the financial burden on citizens in individual member states. A German SUV driver could easily afford the CO2 certificates, whereas the Bulgarian pensioner could not afford to pay for the heating of his apartment. According to Paulus, this creates social division instead of consensus on climate protection.

Shadow rapporteur Jytte Guteland (S&D) would prefer to increase the ambition of the existing ETS by reducing free allocations of emission rights to industry more quickly and replacing them with the CBAM. This is what her party colleague and CBAM rapporteur Mohammed Chahim had called for (Europe.Table reported). Until February 16th, MEPs can submit amendments to the ETS report.

CBAM consultations are on the brink of collapse

The consultations on the CBAM are already in the hot phase: Thursday was the deadline for amendments. However, tensions between CBAM rapporteur Chahim and ETS rapporteur Liese are weighing on the debate. As the two dossiers are closely linked, adequate cooperation would be important. However, the prospects are not optimistic.

Peter Liese, speaking at a Business Europe event on Wednesday, described Chahim’s proposal to allow free emission rights to expire more quickly as “naïve.” That will never work, he said. The Dutch politician wants to cut the transitional period for the start of the CBAM to two years. Chahim, on the other hand, is opposed to Liese’s proposal to hold back free emission rights in a reserve as a precaution should the CBAM fail to meet expectations. Chahim’s proposal to include the chemical industry and indirect emissions from heating and cooling in the CBAM is also controversial.

It’s fine to have political differences, Chahim responded on Twitter. But calling an absent colleague “naïve” at an event is not. The Dutchman and the German had already clashed last week in the ENVI committee. Liese had accused Chahim of overstepping his competencies and not respecting Liese’s competence as ETS rapporteur. The Dutchman rejected this accusation, saying that Liese was “exaggerating”.

Several hundred amendments are expected. Polish Shadow rapporteur Adam Jarubas (EPP) alone has submitted 81 amendments, for example against opportunities for importers and manufacturers from third countries to circumvent the rules.

Federal government seeks position

Jarubas also calls for a solution for exporters and compensation for the manufacturing industry, which would be disadvantaged without free pollution rights. In line with Peter Liese’s position, the EPP shadow rapporteur does not want any rules on the ETS in the CBAM law, only cross-references. In principle, however, he proposes to start the phasing-out of free allocations after 2030 and to shorten it to five years. The vote in the ENVI Committee is expected in mid-May, and in the plenary session in June.

The member states are also in the process of positioning themselves. The dossier is a top priority for the French EU Council presidency. Paris wants to find a common position at the Council of Finance Ministers in mid-March, which observers consider ambitious. It is a very complex proposal and its many technical aspects are still being analyzed, according to the Swedish side. Sweden, however, is optimistic about the idea in principle: A well-designed CBAM could be a useful tool for an ambitious EU climate policy.

Talks within the new German government are currently running at full speed in Berlin. It is clear that German industry must remain competitive and trade conflicts must be avoided. Germany will also discuss the issue during its G7 presidency. Lukas Scheid and Stephan Israel

Macron: nuclear power as election campaign tool

By

Tanja Kuchenbecker

When will Emmanuel Macron officially declare himself as a candidate? This question has puzzled the French for weeks. The president is playing for time and is meanwhile putting himself in the limelight: As a mediator in the conflict with Russia, and now as a climate politician.

Yesterday in Belfort in eastern France, Macron presented his energy strategy for France. By 2050, he wants to reduce energy consumption by 40 percent and increase the output of installed solar systems tenfold. Above all, however, the president is aiming for a renaissance of nuclear energy.

He visited the factory of Arabelle turbines, with which French nuclear power plants are equipped. Two months before the presidential elections on April 10th and 24th, it was a symbolic appointment about French pride and national consciousness.

The turbines, which once belonged to Alstom, were sold to General Electric in 2015. At the time, Macron was Minister of Economy and greenlit the deal. But the sale abroad outraged many. Nuclear power is a symbol of national greatness in France.

Now comes the turnaround. The pandemic has shaped the perception in Paris that the relocation of important industries can be a problem. Macron’s mantra is industrial sovereignty. At the government’s insistence, the majority state-owned utility EDF negotiated with GE. In the meantime, an agreement has been reached, Macron announced.

The deal fits Macron’s agenda: The most important announcement on Thursday was the restart of France’s nuclear program. He had already announced this at the end of last year, and now Macron gave details: Six new pressurized water reactors (EPR) are to be built, for an estimated sum of €50 billion. The first could be completed in 2035. In addition, there could be eight more EPRs, for which feasibility studies are being prepared. The state wants to co-finance the new reactors with billions.

‘Secure and confident’

“There is no stable production without stable energy,” the president stressed. He said the aim was to preserve the purchasing power of the people and companies of France in the face of rising fossil energy prices. Macron called nuclear power “safe and sovereign” and “ecological and economic”. Safety would be guaranteed, even for the old nuclear power plants. Their lifespan of currently 40 years will be extended. EDF is also to examine whether an extension to more than 50 years is possible.

The timing of the announcement is not exactly favorable: On Wednesday, EDF had announced a further delay and cost increase of the EPR in Flamanville in northern France. The nuclear power plant, originally planned for 2012, is now not expected to go online until the second quarter of 2023.

The planned new reactors are to be improved types (EPR2). EDF has already made proposals for three sites where two reactors each could be built: Penly and Gravelines in northern France, and Bugey or Tricastin in the south. In addition, Macron is planning small nuclear reactors, SMRs. Originally, the president wanted to wait until the EPR at Flamanville was operational before announcing the nuclear program. But after all the delays, there is urgency because France’s old nuclear plants are increasingly prone to failure. Several have been shut down for months, and energy supply is becoming a problem.

No time for candidacy

In view of rising prices, energy policy is an important issue in the election campaign. According to surveys, purchasing power is the French people’s most burning concern. Macron is trying to counteract this, via energy vouchers for citizens in need and state intervention in EDF’s electricity prices. Currently, nuclear power accounts for 70 percent of electricity in France.

Macron had already attended another symbolic meeting this week, in foreign policy. The trip to visit Vladimir Putin in Moscow was a convenient way to put himself in the international spotlight. This allows Macron to profile himself far from the domestic presidential campaign and the mutual attacks of the election candidates.

Macron has long been keen to strengthen France’s influence and to prove himself as a key player in crises on Europe’s borders. He had justified his late candidacy with the Ukraine crisis: He could not reasonably explain to the French why he was entering the election campaign now of all times. “I told them that I would be president until the end.”

On Friday, Macron will travel on to Brest in Brittany, where the French EU presidency is hosting an oceans summit. With so many appointments, Macron seems in no hurry to announce his candidacy. A Macron adviser told French radio that it probably won’t be until February 19th.

CNIL: DSGVO violation through the use of Google Analytics

In the dispute over transatlantic standards for data protection, the French data protection supervisory authority CNIL has made another momentous decision. According to this, the use of Google Analytics violates the General Data Protection Regulation (GDPR), as data would be transferred to the USA. The CNIL now asked the website operator to “bring these processing operations in line with the GDPR, if necessary by no longer using the Google Analytics functionality (under the current conditions).” Alternatively, tools could be used that did not use transfers to countries that were not GDPR-secure. The measures taken by Google were not sufficient to ward off the possibility of access by US intelligence agencies in order to comply with the European Court of Justice, the French data protection authorities said.

The CNIL decision not only increases the pressure on providers who do not have a reliable legal basis for transatlantic processing of personal data after the failure of the Privacy Shield. The Austrian data protection organization None of your Business (Noyb) had brought up a total of 101 such cases. But as with a recently decided case in Austria, here again, it is not primarily the providers themselves who are the subject of the proceedings.

Rather, the complaints are directed more indirectly against companies like Google, Facebook, and Microsoft: the proceedings brought before data protection supervisory authorities and courts concern those companies and organizations that use – in part free of charge – services from US companies, such as Google Analytics, Google Fonts, Facebook pages, or YouTube players. In many cases, however, this also transfers user data to the major US providers and thus falls within the scope of US law.

The CNIL’s decision is only the second in a series of open investigations. Most recently, Facebook had caused a stir by stating that it would probably have to stop operating its services if the corresponding decisions were made in the EU. The widespread European perception that this was a threat to exert pressure on the European side of the Privacy Shield follow-up negotiations has since been dismissed by the company, but without alternative interpretations.

At the heart of the dispute, meanwhile, remains the low level of protection for foreign citizens’ data under US law. In the long run, either data protection in the US that meets European standards is needed, says Noyb founder Max Schrems, “or we will end up with separate products for the US and the EU.” He personally would “prefer better protection in the US,” but that’s up to US lawmakers, he said. Schrems has already twice prevailed on the European Court of Justice to annul inadequate agreements between the EU Commission and the US administration. fst

AI regulation: study calls for coherence

Regulation in the digital sector in Europe lacks coherence. This is shown by a study commissioned by the AI Special Committee (AIDA). In the search for a balance between protecting fundamental rights on the one hand and promoting innovation on the other, coherence and simplicity have been partially disregarded, the authors said when presenting the study. The aim of the study was to give the AIDA committee an overview of existing and planned EU legislation in the digital field and to assess the interactions between these legal acts and the planned AI regulation.

The analysis shows that in the course of regulation, intended or unintended regulatory gaps have emerged that should be addressed, said Cristiano Codagnone of the University of Milan. The study co-author identified several problem areas. Unintended regulatory gaps, for example, would require discussion on how they should be closed. But deliberate policy choices, such as focusing AI regulation on high-risk AI systems, would also not be free of problems. Such a scoping strategy raises the question of general-purpose and multi-purpose AI systems, explained Teresa Rodrigues de las Heras Ballell of Carlos III University in Madrid.

Interplay between legal acts

According to the study, there are interactions between the many legal acts in the area of digitization. A good example of this is the relationship between the AI Regulation and the General Data Protection Regulation (GDPR), Rodrigues de las Heras Ballell explained. It is true, he said, that the AI Bill states that its provisions are to apply without prejudice to any other EU legal act and, on the other hand, that the bill does not provide a legal basis for the processing of personal data. However, in the lawyer’s view, such a general statement of compatibility between the AI Act and the personal data protection regime may not be sufficient to cover all possible use scenarios for data by AI systems. Therefore greater clarity is needed in the AI law regarding the processing of personal data.

The AI law’s tendency to copy the DSGVO model could lead to problems because data protection and the AI regulation are fundamentally different, the study says. The DSGVO is about a fundamental human right related to data processing. AI regulation, on the other hand, is broader in scope, it says: it aims both to protect individuals and to promote AI development, and does not refer to specific activities.

According to the study, further interactions arise in the areas of cybersecurity and liability, among others. For example, it is not clear what claims arise should there be violations of the provisions of the AI act. The authors recommend revising product liability and liability regulations for damage caused by AI systems.

High costs due to lack of consistency

Rodrigues de las Heras Ballell and Codagnone emphasized the central importance of consistency and coherence in the overall regulatory system. This, they said, is the only way to create an environment that fosters innovation and entrepreneurship while ensuring consumer protection. A lack of coherence or excessively complex legal acts, whose application and interpretation by market participants would be associated with high costs, would be counterproductive. Micro-enterprises and SMEs would be particularly affected. In view of the large number of legal acts in the area of digitization, the authors warned against fragmentation of the regulatory system.

Axel Voss (EPP), the rapporteur for the report of the Special Committee, called the results of the study in the AIDA Committee devastating and frustrating. The abundance of inconsistencies leads to legal uncertainty for companies. Therefore, legislative projects should be better coordinated in the future.

Previously, the members of the AIDA Committee discussed the Council’s positions on the AI Regulation with French Digital Minister Cédric O, representing the Council Presidency. It was essential that the AI Regulation be implemented uniformly in the member states, otherwise distortions of competition would arise, stressed O. In addition, it was necessary to ensure that algorithms from the USA and China did not gain access to the European market if they did not meet the European requirements. However, this would be extremely complicated.

The European Parliament has just begun its deliberations on the AI Regulation after a long dispute over competencies. A quick agreement in the Parliament is currently considered unlikely. ank

McGuinness: tailoring CSR rules to SMEs

EU Finance Commissioner Mairead McGuinness has defended the Commission’s proposal to extend the scope of the CSR Sustainability Reporting Directive to small and medium-sized enterprises. Otherwise, it would be difficult for listed SMEs to access funding, she told the European Parliament’s legal affairs committee on Thursday. The new rules are intended to provide investors with better information about companies’ social and environmental footprint.

To achieve this, the rules must be proportionate and tailored to SMEs, McGuinness said. This would include an additional three-year period for adaptation and the possibility for unlisted SMEs to apply the standards on a voluntary basis. Some JURI MEPs had criticized the extension. They fear that this could place an additional burden on those sectors in particular that have been particularly affected by the COVID-19 pandemic.

The Finance Commissioner also stressed that the EU rules are in line with the global standards set by the International Sustainability Standards Board (ISSB). However, she said, the EU wants to set a good example on the road to sustainability and therefore act faster and more ambitiously than other regions. There is not much time left to achieve the climate targets.

The new directive on CSR regulations is considered a core component of the EU’s sustainable finance agenda and is intended to contribute to the success of the Green Deal. The Commission presented its first draft in April last year. The European Financial Reporting Advisory Group (EFRAG) is currently preparing drafts of the sustainability standards, which should be ready by October 2022. The Commission will then adopt the standards via delegated acts. til

HERA: €1.3 billion for crisis response in 2022

The new EU Health Emergency Preparedness and Response Agency (HERA) plans to spend a total of €1.3 billion on a range of measures this year. “Two years of pandemics have taught us that the ability to respond decisively to cross-border health crises is what makes a strong European Health Union,” said EU Health Commissioner Stella Kyriakides at the launch of HERA’s first annual work program.

Following the adoption of the work program, the authority now intends to take concrete action to strengthen EU crisis preparedness and response capabilities and reduce vulnerabilities and strategic dependencies. The measures envisaged:

Procurement and stockpiling of medical countermeasures for a range of health threats with a budget of over €580 million;
€300 million for research and development of medical countermeasures and innovative technologies against new threats;
Establishment of a network of production facilities that can be activated in case of emergency (EU FAB);
Establishing an EU clinical trials and data platform;
Prioritization of three high-priority health threats by the end of spring.

Recognize future health hazards

HERA has announced that it will carry out threat analyses and collect information, develop forecasting models and draw up a response plan at EU level. In 2022, for example, a state-of-the-art real-time early warning system for health threats will be established. The agency also plans to create a dedicated IT platform for threat assessment and prioritization.

As part of the COVID-19 crisis response, HERA’s emergency response capabilities are reportedly already activated. According to the statement, this includes the timely provision of COVID-19 vaccines to EU countries, procurement of COVID-19 therapeutics for EU member states, strengthening national capacities for detection and scientific evaluation of variants, and securing vaccine shipments around the world. ank

EU Commission: inflation remains high

Despite continued high inflation, the eurozone economy should pick up soon, according to the EU Commission. “We expect growth to pick up as early as spring, ” said Economic Affairs Commissioner Paolo Gentiloni on Thursday. The Omicron wave and supply chain problems had hurt the economy, but the headwinds will gradually ease, he said.

However, the EU Commission lowered its growth forecast for the current year from 4.3 to 4.0 percent. At the same time, it expects inflation to be much higher than assumed in the fall: the inflation rate is likely to shoot up to 3.5 percent in 2022, far above the ECB’s target of two percent. In the fall, its staff of experts had still assumed a rate of just 2.2 percent in the current year.

“Price pressure is likely to remain high until the summer,” Gentiloni warned. According to the EU Commissioner, however, the situation is likely to ease as supply bottlenecks ease and energy prices rise only moderately from the fall.

However, uncertainty and risks remain high, the commissioner acknowledged, referring to pandemic events and the Ukraine crisis. It is obvious that “peace, stability, and economic growth” are closely intertwined, he said. The Ukraine crisis has the potential to drive prices further, according to experts.

If global inflation were to develop more strongly than expected, this could lead to monetary authorities tightening the reins more quickly. “This would have implications for global financing conditions and demand,” the Italian warned. Consumer prices in the US had risen at their fastest pace in 40 years at the start of the year. Goods and services cost 7.5 percent more in January than in the same month last year.

The US Federal Reserve is on the verge of an interest rate turnaround, which is likely to be followed by a series of further hikes. Meanwhile, Bundesbank President Joachim Nagel and other monetary watchdogs from the ECB Governing Council are also talking about an interest rate hike for the eurozone before the end of this year. According to the head of the Dutch central bank, Klaas Knot, the first step of 0.25 percent in the fourth quarter would be possible.

This would mean that the ECB would tighten the reins just at the time when inflationary pressure in the eurozone is easing according to the EU Commission’s forecast. It predicts that the inflation wave will peak at 4.8 percent in the current first quarter. In 2023, the European Central Bank’s (ECB) inflation target of 2.0 percent is expected to be undershot again with an inflation rate of 1.7 percent. rtr

Peter Fleischer: Google’s first privacy expert

Peter Fleischer is Global Privacy Counsel at Google.

The beginning of Peter Fleischer’s career at Google more than 15 years ago sounds like a scene from a Silicon Valley movie. During the job interview, company founders Larry Page and Sergey Brin asked the Harvard graduate where he wanted to work from. Fleischer’s answer: Europe. “Because that’s the continent with the longest tradition of data protection laws,” Fleischer explains. “And besides, if we develop our products, they have to meet European standards. If we achieve those data protection standards, our products will almost certainly work around the world.”

Fleischer has served as Global Privacy Counsel for the American tech giant Google since 2006. “I was the first full-time employee at Google to deal with privacy issues on the Internet,” he says. But Fleischer’s interest in privacy dates back to a very different time: “My father grew up as a young Jewish child in Berlin in the 1930s and 1940s. The question of who survived and who didn’t during that time depended on whether anyone put you on a list.”

When Peter Fleischer tries to describe his idea of privacy, the English language sometimes lacks depth. “Self-determination is a much better word than user control,” Fleischer says. “To self-determine who processes my data, to self-determine whether a government uses my data – that’s what it’s really about.”

EU as a role model for data protection

Over the past decades, Europe had repeatedly set milestones for digital privacy. This has been true since the mid-1990s with Directive 95/46/EC, which regulated the processing of personal data and was renewed in 2018 with the General Data Protection Regulation. “Many countries, for example, Latin America, have enacted privacy laws, and if you study them closely, you notice that the laws often follow the European model,” Fleischer says.

At Google, Fleischer is no longer the only one dealing with the issue. There are now more than 500 employees working on privacy and data protection in all levels of the company, be it in technology or customer service, he says.

Fleischer is decidedly relaxed about the current developments in the EU with the Digital Markets Act and Digital Service Act. “I’m no politician and I can’t say much about DMA or DSA,” he explains, “but one area is advertising on websites.”

Targeted advertising has been a goldmine for Google in the past – and it often remains unclear what personal data is used to ensure that a user is presented with a particular ad. “Instead of adopting blanket bans, we want to try to create an ad-supported Web ecosystem while still providing privacy,” Fleischer says. One approach is said to be the Privacy Sandbox, which is intended to replace personalized advertising via cookies. David Renke

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,

As everyone knows, during the pandemic, a safe distance should be maintained from others. Vladimir Putin took this very seriously when he received Emmanuel Macron in the Kremlin last Monday: A table with a length of about four meters separated the two presidents. As Reuters now reported, citing French government officials, Putin had given his guest a choice: Macron should either accept a PCR test by Russian medics – or just maintain distance. “But we could not accept that they get their hands on the president’s DNA,” Paris said.

Thus, Putin’s concern about an infection simultaneously provided photos symbolizing the political distance between Moscow and the West. For Macron, however, the meeting in the Kremlin provided a welcome opportunity to present himself as an important leader. After all, the French president is in the middle of his election campaign, even though he has still not made his candidacy official. Yesterday, he stepped in front of the cameras in Belfort to present his climate and energy policy plans. These essentially include a relaunch of the French nuclear program, as Tanja Kuchenbecker reports from Belfort.

Nuclear power, that is France’s version of the energy transition and its answer to the gas price crisis. The enormous increase in electricity and heating bills is also throwing the EU’s climate protection plans into disarray. Poland and other member states are demanding that emissions trading not be extended to include buildings as planned. Yesterday in the Environment Committee, the European Parliament’s rapporteur, Peter Liese, sharply rejected these demands: “Putin and the oligarchs would be happy if we didn’t implement the Fit for 55 package,” he said. Lukas Scheid and Stephan Israel have more on the story.

Havea pleasant rest of the week, if possible, without excessive distance to your fellow human beings.

Your
Till Hoppe

Huge potential for conflict over ETS and CBAM

The phrase that the Fit for 55 package is not the reason for high energy prices, but the solution, is almost empty. Since the beginning of the energy price crisis, EU politicians of various party affiliations have repeated this statement many times.

Not without reason: Most recently, the government in Poland had campaigned to lower the ambitions of the reform of the emissions trading system. Criticism is directed in particular at the creation of a second ETS for road transport and buildings, which, according to Warsaw, burdens weaker households in particular. Allies for a less ambitious climate protection package can be found above all in Hungary, the Czech Republic, and Slovakia.

Concern is therefore growing in the EU Parliament’s Environment Committee (ENVI) that member states could water down the package’s ambitions. During yesterday’s debate on ETS reform, rapporteur Peter Liese (CDU/EPP) pointed verbally at several EU capitals, making it clear that climate protection cannot only be tackled where it is convenient.

Warsaw wants to prevent the building sector from being included in ETS 2 because many people heat their homes with coal-fired power, he reported from a conversation with Poland’s deputy environment minister. Poland should rather use the money from Brussels to provide people with modern heating systems instead of blocking European climate protection plans, Liese demanded. He said the same applied to Hungary.

Liese also rejected their criticism of the tightening of the regulations of the existing ETS. Due to rising energy prices, calls have become louder not to reduce the available emission allowances as planned. This would inevitably lead to a rise in the price of allowances and further drive energy costs, they worry.

‘Putin would be pleased’

Liese disagrees: The ETS accounts for only a small part of energy costs, the larger part being expensive fossil fuels, especially gas. The EPP politician argues that reducing fossil fuels is not only cheaper, but also makes geostrategic sense: “Putin and the oligarchs would be happy if we don’t implement the Fit for 55 package. That way you could get us into the current situation every year,” he said, referring to Europe’s dependence on Russian energy sources.

However, opposition to significant parts of the planned ETS reform is not only coming from member states, but from the Parliament as well. The EPP rapporteur for the Transport Committee (TRAN), Andrey Novakov, had spoken out earlier this week in favor of not including emissions from road transport in ETS 2 (Europe.Table reported). Liese and the EU Commission want to prevent this at all costs, as the expected CO2 reduction would be considerably lower as a result.

However, the Greens and Social Democrats are also voicing concerns, fearing drastic social consequences for the poorest households should fuel prices rise. Jutta Paulus of the Greens fears strong fluctuations in the financial burden on citizens in individual member states. A German SUV driver could easily afford the CO2 certificates, whereas the Bulgarian pensioner could not afford to pay for the heating of his apartment. According to Paulus, this creates social division instead of consensus on climate protection.

Shadow rapporteur Jytte Guteland (S&D) would prefer to increase the ambition of the existing ETS by reducing free allocations of emission rights to industry more quickly and replacing them with the CBAM. This is what her party colleague and CBAM rapporteur Mohammed Chahim had called for (Europe.Table reported). Until February 16th, MEPs can submit amendments to the ETS report.

CBAM consultations are on the brink of collapse

The consultations on the CBAM are already in the hot phase: Thursday was the deadline for amendments. However, tensions between CBAM rapporteur Chahim and ETS rapporteur Liese are weighing on the debate. As the two dossiers are closely linked, adequate cooperation would be important. However, the prospects are not optimistic.

Peter Liese, speaking at a Business Europe event on Wednesday, described Chahim’s proposal to allow free emission rights to expire more quickly as “naïve.” That will never work, he said. The Dutch politician wants to cut the transitional period for the start of the CBAM to two years. Chahim, on the other hand, is opposed to Liese’s proposal to hold back free emission rights in a reserve as a precaution should the CBAM fail to meet expectations. Chahim’s proposal to include the chemical industry and indirect emissions from heating and cooling in the CBAM is also controversial.

It’s fine to have political differences, Chahim responded on Twitter. But calling an absent colleague “naïve” at an event is not. The Dutchman and the German had already clashed last week in the ENVI committee. Liese had accused Chahim of overstepping his competencies and not respecting Liese’s competence as ETS rapporteur. The Dutchman rejected this accusation, saying that Liese was “exaggerating”.

Several hundred amendments are expected. Polish Shadow rapporteur Adam Jarubas (EPP) alone has submitted 81 amendments, for example against opportunities for importers and manufacturers from third countries to circumvent the rules.

Federal government seeks position

Jarubas also calls for a solution for exporters and compensation for the manufacturing industry, which would be disadvantaged without free pollution rights. In line with Peter Liese’s position, the EPP shadow rapporteur does not want any rules on the ETS in the CBAM law, only cross-references. In principle, however, he proposes to start the phasing-out of free allocations after 2030 and to shorten it to five years. The vote in the ENVI Committee is expected in mid-May, and in the plenary session in June.

The member states are also in the process of positioning themselves. The dossier is a top priority for the French EU Council presidency. Paris wants to find a common position at the Council of Finance Ministers in mid-March, which observers consider ambitious. It is a very complex proposal and its many technical aspects are still being analyzed, according to the Swedish side. Sweden, however, is optimistic about the idea in principle: A well-designed CBAM could be a useful tool for an ambitious EU climate policy.

Talks within the new German government are currently running at full speed in Berlin. It is clear that German industry must remain competitive and trade conflicts must be avoided. Germany will also discuss the issue during its G7 presidency. Lukas Scheid and Stephan Israel

Macron: nuclear power as election campaign tool

By

Tanja Kuchenbecker

When will Emmanuel Macron officially declare himself as a candidate? This question has puzzled the French for weeks. The president is playing for time and is meanwhile putting himself in the limelight: As a mediator in the conflict with Russia, and now as a climate politician.

Yesterday in Belfort in eastern France, Macron presented his energy strategy for France. By 2050, he wants to reduce energy consumption by 40 percent and increase the output of installed solar systems tenfold. Above all, however, the president is aiming for a renaissance of nuclear energy.

He visited the factory of Arabelle turbines, with which French nuclear power plants are equipped. Two months before the presidential elections on April 10th and 24th, it was a symbolic appointment about French pride and national consciousness.

The turbines, which once belonged to Alstom, were sold to General Electric in 2015. At the time, Macron was Minister of Economy and greenlit the deal. But the sale abroad outraged many. Nuclear power is a symbol of national greatness in France.

Now comes the turnaround. The pandemic has shaped the perception in Paris that the relocation of important industries can be a problem. Macron’s mantra is industrial sovereignty. At the government’s insistence, the majority state-owned utility EDF negotiated with GE. In the meantime, an agreement has been reached, Macron announced.

The deal fits Macron’s agenda: The most important announcement on Thursday was the restart of France’s nuclear program. He had already announced this at the end of last year, and now Macron gave details: Six new pressurized water reactors (EPR) are to be built, for an estimated sum of €50 billion. The first could be completed in 2035. In addition, there could be eight more EPRs, for which feasibility studies are being prepared. The state wants to co-finance the new reactors with billions.

‘Secure and confident’

“There is no stable production without stable energy,” the president stressed. He said the aim was to preserve the purchasing power of the people and companies of France in the face of rising fossil energy prices. Macron called nuclear power “safe and sovereign” and “ecological and economic”. Safety would be guaranteed, even for the old nuclear power plants. Their lifespan of currently 40 years will be extended. EDF is also to examine whether an extension to more than 50 years is possible.

The timing of the announcement is not exactly favorable: On Wednesday, EDF had announced a further delay and cost increase of the EPR in Flamanville in northern France. The nuclear power plant, originally planned for 2012, is now not expected to go online until the second quarter of 2023.

The planned new reactors are to be improved types (EPR2). EDF has already made proposals for three sites where two reactors each could be built: Penly and Gravelines in northern France, and Bugey or Tricastin in the south. In addition, Macron is planning small nuclear reactors, SMRs. Originally, the president wanted to wait until the EPR at Flamanville was operational before announcing the nuclear program. But after all the delays, there is urgency because France’s old nuclear plants are increasingly prone to failure. Several have been shut down for months, and energy supply is becoming a problem.

No time for candidacy

In view of rising prices, energy policy is an important issue in the election campaign. According to surveys, purchasing power is the French people’s most burning concern. Macron is trying to counteract this, via energy vouchers for citizens in need and state intervention in EDF’s electricity prices. Currently, nuclear power accounts for 70 percent of electricity in France.

Macron had already attended another symbolic meeting this week, in foreign policy. The trip to visit Vladimir Putin in Moscow was a convenient way to put himself in the international spotlight. This allows Macron to profile himself far from the domestic presidential campaign and the mutual attacks of the election candidates.

Macron has long been keen to strengthen France’s influence and to prove himself as a key player in crises on Europe’s borders. He had justified his late candidacy with the Ukraine crisis: He could not reasonably explain to the French why he was entering the election campaign now of all times. “I told them that I would be president until the end.”

On Friday, Macron will travel on to Brest in Brittany, where the French EU presidency is hosting an oceans summit. With so many appointments, Macron seems in no hurry to announce his candidacy. A Macron adviser told French radio that it probably won’t be until February 19th.

CNIL: DSGVO violation through the use of Google Analytics

In the dispute over transatlantic standards for data protection, the French data protection supervisory authority CNIL has made another momentous decision. According to this, the use of Google Analytics violates the General Data Protection Regulation (GDPR), as data would be transferred to the USA. The CNIL now asked the website operator to “bring these processing operations in line with the GDPR, if necessary by no longer using the Google Analytics functionality (under the current conditions).” Alternatively, tools could be used that did not use transfers to countries that were not GDPR-secure. The measures taken by Google were not sufficient to ward off the possibility of access by US intelligence agencies in order to comply with the European Court of Justice, the French data protection authorities said.

The CNIL decision not only increases the pressure on providers who do not have a reliable legal basis for transatlantic processing of personal data after the failure of the Privacy Shield. The Austrian data protection organization None of your Business (Noyb) had brought up a total of 101 such cases. But as with a recently decided case in Austria, here again, it is not primarily the providers themselves who are the subject of the proceedings.

Rather, the complaints are directed more indirectly against companies like Google, Facebook, and Microsoft: the proceedings brought before data protection supervisory authorities and courts concern those companies and organizations that use – in part free of charge – services from US companies, such as Google Analytics, Google Fonts, Facebook pages, or YouTube players. In many cases, however, this also transfers user data to the major US providers and thus falls within the scope of US law.

The CNIL’s decision is only the second in a series of open investigations. Most recently, Facebook had caused a stir by stating that it would probably have to stop operating its services if the corresponding decisions were made in the EU. The widespread European perception that this was a threat to exert pressure on the European side of the Privacy Shield follow-up negotiations has since been dismissed by the company, but without alternative interpretations.

At the heart of the dispute, meanwhile, remains the low level of protection for foreign citizens’ data under US law. In the long run, either data protection in the US that meets European standards is needed, says Noyb founder Max Schrems, “or we will end up with separate products for the US and the EU.” He personally would “prefer better protection in the US,” but that’s up to US lawmakers, he said. Schrems has already twice prevailed on the European Court of Justice to annul inadequate agreements between the EU Commission and the US administration. fst

AI regulation: study calls for coherence

Regulation in the digital sector in Europe lacks coherence. This is shown by a study commissioned by the AI Special Committee (AIDA). In the search for a balance between protecting fundamental rights on the one hand and promoting innovation on the other, coherence and simplicity have been partially disregarded, the authors said when presenting the study. The aim of the study was to give the AIDA committee an overview of existing and planned EU legislation in the digital field and to assess the interactions between these legal acts and the planned AI regulation.

The analysis shows that in the course of regulation, intended or unintended regulatory gaps have emerged that should be addressed, said Cristiano Codagnone of the University of Milan. The study co-author identified several problem areas. Unintended regulatory gaps, for example, would require discussion on how they should be closed. But deliberate policy choices, such as focusing AI regulation on high-risk AI systems, would also not be free of problems. Such a scoping strategy raises the question of general-purpose and multi-purpose AI systems, explained Teresa Rodrigues de las Heras Ballell of Carlos III University in Madrid.

Interplay between legal acts

According to the study, there are interactions between the many legal acts in the area of digitization. A good example of this is the relationship between the AI Regulation and the General Data Protection Regulation (GDPR), Rodrigues de las Heras Ballell explained. It is true, he said, that the AI Bill states that its provisions are to apply without prejudice to any other EU legal act and, on the other hand, that the bill does not provide a legal basis for the processing of personal data. However, in the lawyer’s view, such a general statement of compatibility between the AI Act and the personal data protection regime may not be sufficient to cover all possible use scenarios for data by AI systems. Therefore greater clarity is needed in the AI law regarding the processing of personal data.

The AI law’s tendency to copy the DSGVO model could lead to problems because data protection and the AI regulation are fundamentally different, the study says. The DSGVO is about a fundamental human right related to data processing. AI regulation, on the other hand, is broader in scope, it says: it aims both to protect individuals and to promote AI development, and does not refer to specific activities.

According to the study, further interactions arise in the areas of cybersecurity and liability, among others. For example, it is not clear what claims arise should there be violations of the provisions of the AI act. The authors recommend revising product liability and liability regulations for damage caused by AI systems.

High costs due to lack of consistency

Rodrigues de las Heras Ballell and Codagnone emphasized the central importance of consistency and coherence in the overall regulatory system. This, they said, is the only way to create an environment that fosters innovation and entrepreneurship while ensuring consumer protection. A lack of coherence or excessively complex legal acts, whose application and interpretation by market participants would be associated with high costs, would be counterproductive. Micro-enterprises and SMEs would be particularly affected. In view of the large number of legal acts in the area of digitization, the authors warned against fragmentation of the regulatory system.

Axel Voss (EPP), the rapporteur for the report of the Special Committee, called the results of the study in the AIDA Committee devastating and frustrating. The abundance of inconsistencies leads to legal uncertainty for companies. Therefore, legislative projects should be better coordinated in the future.

Previously, the members of the AIDA Committee discussed the Council’s positions on the AI Regulation with French Digital Minister Cédric O, representing the Council Presidency. It was essential that the AI Regulation be implemented uniformly in the member states, otherwise distortions of competition would arise, stressed O. In addition, it was necessary to ensure that algorithms from the USA and China did not gain access to the European market if they did not meet the European requirements. However, this would be extremely complicated.

The European Parliament has just begun its deliberations on the AI Regulation after a long dispute over competencies. A quick agreement in the Parliament is currently considered unlikely. ank

McGuinness: tailoring CSR rules to SMEs

EU Finance Commissioner Mairead McGuinness has defended the Commission’s proposal to extend the scope of the CSR Sustainability Reporting Directive to small and medium-sized enterprises. Otherwise, it would be difficult for listed SMEs to access funding, she told the European Parliament’s legal affairs committee on Thursday. The new rules are intended to provide investors with better information about companies’ social and environmental footprint.

To achieve this, the rules must be proportionate and tailored to SMEs, McGuinness said. This would include an additional three-year period for adaptation and the possibility for unlisted SMEs to apply the standards on a voluntary basis. Some JURI MEPs had criticized the extension. They fear that this could place an additional burden on those sectors in particular that have been particularly affected by the COVID-19 pandemic.

The Finance Commissioner also stressed that the EU rules are in line with the global standards set by the International Sustainability Standards Board (ISSB). However, she said, the EU wants to set a good example on the road to sustainability and therefore act faster and more ambitiously than other regions. There is not much time left to achieve the climate targets.

The new directive on CSR regulations is considered a core component of the EU’s sustainable finance agenda and is intended to contribute to the success of the Green Deal. The Commission presented its first draft in April last year. The European Financial Reporting Advisory Group (EFRAG) is currently preparing drafts of the sustainability standards, which should be ready by October 2022. The Commission will then adopt the standards via delegated acts. til

HERA: €1.3 billion for crisis response in 2022

The new EU Health Emergency Preparedness and Response Agency (HERA) plans to spend a total of €1.3 billion on a range of measures this year. “Two years of pandemics have taught us that the ability to respond decisively to cross-border health crises is what makes a strong European Health Union,” said EU Health Commissioner Stella Kyriakides at the launch of HERA’s first annual work program.

Following the adoption of the work program, the authority now intends to take concrete action to strengthen EU crisis preparedness and response capabilities and reduce vulnerabilities and strategic dependencies. The measures envisaged:

Procurement and stockpiling of medical countermeasures for a range of health threats with a budget of over €580 million;
€300 million for research and development of medical countermeasures and innovative technologies against new threats;
Establishment of a network of production facilities that can be activated in case of emergency (EU FAB);
Establishing an EU clinical trials and data platform;
Prioritization of three high-priority health threats by the end of spring.

Recognize future health hazards

HERA has announced that it will carry out threat analyses and collect information, develop forecasting models and draw up a response plan at EU level. In 2022, for example, a state-of-the-art real-time early warning system for health threats will be established. The agency also plans to create a dedicated IT platform for threat assessment and prioritization.

As part of the COVID-19 crisis response, HERA’s emergency response capabilities are reportedly already activated. According to the statement, this includes the timely provision of COVID-19 vaccines to EU countries, procurement of COVID-19 therapeutics for EU member states, strengthening national capacities for detection and scientific evaluation of variants, and securing vaccine shipments around the world. ank

EU Commission: inflation remains high

Despite continued high inflation, the eurozone economy should pick up soon, according to the EU Commission. “We expect growth to pick up as early as spring, ” said Economic Affairs Commissioner Paolo Gentiloni on Thursday. The Omicron wave and supply chain problems had hurt the economy, but the headwinds will gradually ease, he said.

However, the EU Commission lowered its growth forecast for the current year from 4.3 to 4.0 percent. At the same time, it expects inflation to be much higher than assumed in the fall: the inflation rate is likely to shoot up to 3.5 percent in 2022, far above the ECB’s target of two percent. In the fall, its staff of experts had still assumed a rate of just 2.2 percent in the current year.

“Price pressure is likely to remain high until the summer,” Gentiloni warned. According to the EU Commissioner, however, the situation is likely to ease as supply bottlenecks ease and energy prices rise only moderately from the fall.

However, uncertainty and risks remain high, the commissioner acknowledged, referring to pandemic events and the Ukraine crisis. It is obvious that “peace, stability, and economic growth” are closely intertwined, he said. The Ukraine crisis has the potential to drive prices further, according to experts.

If global inflation were to develop more strongly than expected, this could lead to monetary authorities tightening the reins more quickly. “This would have implications for global financing conditions and demand,” the Italian warned. Consumer prices in the US had risen at their fastest pace in 40 years at the start of the year. Goods and services cost 7.5 percent more in January than in the same month last year.

The US Federal Reserve is on the verge of an interest rate turnaround, which is likely to be followed by a series of further hikes. Meanwhile, Bundesbank President Joachim Nagel and other monetary watchdogs from the ECB Governing Council are also talking about an interest rate hike for the eurozone before the end of this year. According to the head of the Dutch central bank, Klaas Knot, the first step of 0.25 percent in the fourth quarter would be possible.

This would mean that the ECB would tighten the reins just at the time when inflationary pressure in the eurozone is easing according to the EU Commission’s forecast. It predicts that the inflation wave will peak at 4.8 percent in the current first quarter. In 2023, the European Central Bank’s (ECB) inflation target of 2.0 percent is expected to be undershot again with an inflation rate of 1.7 percent. rtr

Peter Fleischer: Google’s first privacy expert

The beginning of Peter Fleischer’s career at Google more than 15 years ago sounds like a scene from a Silicon Valley movie. During the job interview, company founders Larry Page and Sergey Brin asked the Harvard graduate where he wanted to work from. Fleischer’s answer: Europe. “Because that’s the continent with the longest tradition of data protection laws,” Fleischer explains. “And besides, if we develop our products, they have to meet European standards. If we achieve those data protection standards, our products will almost certainly work around the world.”

Fleischer has served as Global Privacy Counsel for the American tech giant Google since 2006. “I was the first full-time employee at Google to deal with privacy issues on the Internet,” he says. But Fleischer’s interest in privacy dates back to a very different time: “My father grew up as a young Jewish child in Berlin in the 1930s and 1940s. The question of who survived and who didn’t during that time depended on whether anyone put you on a list.”

When Peter Fleischer tries to describe his idea of privacy, the English language sometimes lacks depth. “Self-determination is a much better word than user control,” Fleischer says. “To self-determine who processes my data, to self-determine whether a government uses my data – that’s what it’s really about.”

EU as a role model for data protection

Over the past decades, Europe had repeatedly set milestones for digital privacy. This has been true since the mid-1990s with Directive 95/46/EC, which regulated the processing of personal data and was renewed in 2018 with the General Data Protection Regulation. “Many countries, for example, Latin America, have enacted privacy laws, and if you study them closely, you notice that the laws often follow the European model,” Fleischer says.

At Google, Fleischer is no longer the only one dealing with the issue. There are now more than 500 employees working on privacy and data protection in all levels of the company, be it in technology or customer service, he says.

Fleischer is decidedly relaxed about the current developments in the EU with the Digital Markets Act and Digital Service Act. “I’m no politician and I can’t say much about DMA or DSA,” he explains, “but one area is advertising on websites.”

Targeted advertising has been a goldmine for Google in the past – and it often remains unclear what personal data is used to ensure that a user is presented with a particular ad. “Instead of adopting blanket bans, we want to try to create an ad-supported Web ecosystem while still providing privacy,” Fleischer says. One approach is said to be the Privacy Sandbox, which is intended to replace personalized advertising via cookies. David Renke