The 08.05. marks the end of the Second World War in Europe. In Moscow, at 23:01 Berlin time, the 09.05. had already dawned, which is why the celebrations take place on different dates. Olaf Scholz laid out his government’s guidelines in a televised speech on Sunday: No solo effort, no NATO going to war, defense capability of one’s own country must be maintained – and no measures that harmed Germany or its partners more than Russia. He also defined the bar for what may come: Neither Ukraine nor its partners would accept a dictatorial peace by Russia.
In the meantime, the negotiators have not yet been able to agree on the exact procedure for the next sanctions package, which will then also include the oil embargo. Stephan Israel explains where the disagreements lie in the News.
Which measures should come when is also on Luc Frieden‘s mind. In an interview with Till Hoppe, the new Eurochambres president and former Luxembourg finance minister urges precisely balanced measures and fears severe economic and social upheavals otherwise.
The road to effective European emissions trading is long – the so-called ETS 2, in particular, continues to cause debate. On Tuesday, the European Parliament’s Environment Committee wants to agree on positions. But in view of the unresolved issues, it is by no means guaranteed that this will succeed, analyzes Lukas Scheid.
Today its decisive phase begins, and the conference on the future of Europe has also changed its character due to the events in Ukraine, as Eric Bonse analyses. The expectations are diverse – political, social, and economical.
Perhaps it would be more helpful to focus on other ways to create a European sense of community instead of selective conferences? Andre Wilkens (European Cultural Foundation) and Paweł Zerka (ECFR) present alternatives in their guest article.
Have a good start to the week!
Mr. Frieden, the European economy is barely growing, and prices are rising fast. Do you fear a new recession, even stagflation?
The situation is difficult. The war in Ukraine is lasting longer than originally expected. Meanwhile, several factors are coming together: The high prices for raw materials, especially gas and oil, the dislocations in the supply chains, and high inflation. It’s a mix that worries many companies.
In addition to war, China exacerbates supply chain chaos via its zero-covid policy.
I wouldn’t speak of chaos, even though many companies are feeling the consequences. It is often difficult for them to give their customers a binding delivery date. Despite all the problems, however, we must not forget that we have a stable domestic market in Europe. After the pandemic, demand is strong. Some sectors, such as the travel industry, have therefore been little affected so far and are able to recover. In the food sector, too, the consequences are not yet having such a strong impact. Commodity prices are rising, but demand is high.
Many producers are able to pass on higher costs to consumers, but high inflation is already slowing consumption.
At the moment, rising prices are primarily a social problem that politicians should cushion where possible. The longer the situation lasts, however, the more difficult it will be for companies. Much depends on how long the war lasts.
Should the European Central Bank do more to combat high inflation?
The ECB has the task of guaranteeing the inflation target of two percent in the medium term. I assume that it can achieve this if, on the one hand, it continues the support measures from the pandemic and, on the other, raises interest rates slightly. The high inflation is mainly a result of the subsiding pandemic, not so much of the war in Ukraine. I, therefore, expect it to be temporary.
You think the situation will quickly return to normal?
It will certainly take time for the Ukrainian economy to get rolling again. But internationally, trade and supply chains will recover relatively quickly once the war and pandemic are over because the structures behind them have not been destroyed. That’s different from the financial crisis. There, we felt the after-effects for years to come.
However, economic relations with Russia will hardly be the same even after the end of hostilities.
I believe that there will also be a Russia after this war and after Putin. It will indeed be difficult to work with this leadership. But Russia and the regime are not the same. We will have to maintain economic relations with our neighbor Russia again in the future – provided, of course, that it respects the rules of the international order.
The EU wants to impose an oil embargo, and a gas embargo could follow later. The right way?
Sanctions should not cause enormous social damage in our country. That is why we are very reluctant to sanctions that include oil and gas. We fear that there could be thousands, if not millions, of unemployed. If it does come to that, the consequences must be cushioned. Our companies and employees are not to blame for this war.
Do you fear that Moscow will respond to an oil embargo with a broader gas supply freeze?
That is difficult to predict. In any case, we should try to diversify our energy sources geographically and move more quickly to renewable energies. That’s easier said than done, but business should accelerate the energy transition, and the state should support it.
So you’re arguing for the pace of the Green Deal to be stepped up even further?
Yes, but there are limits to what is technically possible. Not all trucks will be able to run on battery power tomorrow, not all aircraft will be able to fly on climate-friendly kerosene. Such sectoral conditions should be taken into account.
Should the EU targets for expanding renewable energies and improving energy efficiency be increased once again, as is currently being discussed?
The targets are already very ambitious. We should focus on achieving them. And in doing so, take care to maintain the competitiveness of the companies in this difficult environment.
In concrete terms?
It’s about emissions trading and the planned CO2 limit compensation, for example. We should keep the system of free allocations for industry a little longer. The CBAM is an intellectually interesting system, but is now the right time? Our position is: The goals are right, but we should review the timing given the acute energy crisis.
The EU Commission’s sustainability agenda brings with it a number of new reporting requirements for the industry. Is this also the wrong time for this?
The goals of the projects are legitimate, but we should review the way to get there. Take the Supply Chain Act: It is a question of economic ethics that human rights are respected in production relationships. However, we must avoid making this overly bureaucratic and difficult to implement for SMEs. We will work to improve this in the Council and the European Parliament.
Commission President von der Leyen has vowed to relieve companies elsewhere for new laws according to the one-in-one-out principle. Do you see this being put into practice?
In any case, I find it hard to give an example.
The Commission has still not appointed an SME envoy. Do you feel you are appreciated enough?
I do think that the Commission and the other institutions appreciate the power of small and medium-sized enterprises. We have found an open ear.
The most important news: On Friday, Green shadow rapporteur Michael Bloss also expressed confidence that “some form of ETS 2” could be managed. The fears of many that the second emissions trading scheme for road transport and heating buildings would be buried in the EU Parliament have thus been somewhat defused. However, this does not bring us any closer to an agreement on how and when ETS 2 will be introduced.
The disappointment of not finding a consensus compromise runs deep in both the conservative and green camps. Bloss complains about the “stubbornness” of the EPP negotiators around the main rapporteur Peter Liese. In his view, Liese is putting the brakes on climate protection by reducing the ambitions of the ETS instrument, for example, in deleting surplus allowances and reducing free allowances for the industry.
As a reminder, Liese wants to reduce surplus allowances more quickly via the Linear Reduction Factor (LRF) instead of deleting them on a larger scale once. Liese wants to gradually reduce free certificates starting in 2028 and replace them with the CBAM. However, the certificates are not to be deleted but go into a carbon leakage reserve in case the CBAM does not have its effect. Finally, in 2033 at the earliest, there should only be the CBAM as carbon leakage protection. The Greens, Social Democrats, Liberals, and Left want to start reducing free allocations as early as 2026 and see the CBAM fully introduced in 2030. This would probably give you a narrow majority in the Environment Committee.
With regard to ETS 2, Bloss would rather see stronger regulatory measures, such as stricter CO2 fleet limits for passenger cars, instead of the CO2 price for road transport. Liese, on the other hand, is stunned that the German Greens and SPD members of the EU Parliament are so vehemently opposed to ETS 2 when the position of the traffic light coalition in Berlin is in line with his. It refers to a position paper of the current Federal Government to the ETS 2, available to Europe.table. In fact, a model is described there, as Liese also supports it. The German government argues that without ETS 2, there would also be no revenue available for social compensation. From Liese’s point of view, the members of the Green Party and the SPD are stabbing him in the back at the European level.
Liese also sees his compromise proposals supported by environmental associations. NGOs such as Germanwatch, WWF, and T&E expressed concern in a March letter to members of the Environment Committee that ETS 2 could fail and explicitly called for it not to fail. They, too, are calling for a maximum price for ETS 2, as Liese has proposed, to protect households from prices that are too high. Unlike the parliamentarian, however, the NGOs also want a minimum price as well as an annually increasing maximum price.
Michael Bloss would also like to see the minimum price – for both ETS 1 and ETS 2. However, the Green demands that this must be socially just and must not place an additional burden on weak households. His party’s problem in the EU Parliament is that a CO2 price for fossil fuels in road transport and for heating would primarily burden private households instead of industry.
There are various ideas for cushioning the social impact and making the CO2 price an effective instrument in the commercial use of fuels instead. The climate social fund has been under discussion for some time. In a compromise, Liese had proposed bringing forward its introduction by two years. This means that the compensation for rising CO2 prices would come before the actual price increase. The Greens had called for five years of “frontloading” the fund. On Friday, Bloss said he could also live with three years. So a compromise here would be on the cards.
Another possibility: A ban on oil companies being able to pass on the entire cost of rising prices to end consumers through the introduction of ETS 2. Liese had proposed that a maximum of 50 percent be passed on. The Greens as well as the Social Democrats, want mineral oil producers to have to bear the full costs themselves. An agreement is still doubtful.
Alternatively, there is now also discussion about whether to introduce ETS 2 for consumers at a later date than for commercial fuel use. The only question here is how to distinguish between the two types of use. Liberal Renew rapporteur Emma Wiesner has put forward a proposal that fuel suppliers for building heating could distinguish between B2B and B2C supply contracts and record the cost of a carbon price accordingly. For example, office buildings used for business would be included, but homes would not.
For road transport, the distinction could be made in terms of vehicle size. Fuels for heavy-duty vehicles, which are largely used in the commercial sector, would thus be included in ETS 2 as early as 2025 (one year earlier than planned by the Commission), while passenger cars and light commercial vehicles would initially be left out. The different types of use of the fuels could be recorded via the nozzle of the gas pump. The nozzles for cars and heavy-duty vehicles are different and do not fit the other type of vehicle, so an “administrative and physical” distinction could be made between fuel use at this point, the Renew proposal says.
Peter Liese is skeptical, however. These distinctions between commercial and private use might be feasible in France but possibly not in Greece or Bulgaria, he fears. That is why he is actually against this proposal. In any case, this compromise would not be discussed at all among the member states, according to Liese. So it could be that such a compromise will quickly be scrapped again in the trilogue.
Nevertheless, its latest compromise proposal from the middle of last week envisages such a model for ETS 2: from 2025 for commercial use, then from 2027 for private households as well. However, member states are to have the option of including private households in ETS 2 even earlier – a so-called “opt-in”.
Tomorrow, Tuesday, the last shadow meeting for the time being will take place. It is likely to be the last opportunity to find a compromise. The vote will take place in the Environment Committee next week. Despite the differences, all sides are outwardly making an effort and are willing to reach an agreement by then.
Covid, war and low audience interest: For a long time, the Conference on the Future of Europe led a quiet existence. The four citizen panels with 800 randomly selected participants from the 27 EU countries had to meet mainly online because of the pandemic. The first results of the work were lost in the rage of the Ukraine war. And an online platform set up specifically for this purpose attracted little attention, even from EU professionals in Brussels.
But things are now supposed to get better: Today, Monday, the second and decisive phase of the Future Conference begins with the presentation of the final report. At a symbolic ceremony in the European Parliament in Strasbourg, Parliament President Roberta Metsola, EU Commission President Ursula von der Leyen and current EU Council President Emmanuel Macron will reveal what happens next – and whether the proposals will be translated into reforms.
Expectations are high, maybe too high. All of a sudden, it’s no longer just about more democracy and being closer to the people – as it was at the beginning of the conference, when the EU promised to learn from the mistakes of the 2019 European elections and to reform the system of top candidates. While that remains on the agenda, the war in Ukraine has shifted priorities. Now it’s no longer just about reforming the EU, but about asserting itself.
Proposals such as the abolition of the unanimity principle in foreign policy, the creation of an EU army or the reduction of dependency in energy supply are coming to the fore – and call for swift implementation. In total, the plenum of the Future Conference adopted 49 proposals with more than 200 measures. In addition to foreign policy, the focus is also on climate, digital, health and economic and social policy.
Many proposals could be implemented quickly, according to the EU Commission. Some, however, would require treaty amendments. The Brussels authority now wants to examine how smooth implementation could be achieved. Miracles should not be expected, even if the proposals are of high quality, said a representative of the authority. The EU Commission intends to provide initial feedback at a feedback meeting in the fall.
The European Parliament, on the other hand, exerts more pressure. There are already calls for a reform convention. German MEPs such as Sven Simon (CDU), Gaby Bischoff (SPD) and Daniel Freund (Greens) are particularly committed to a convention. “It will now be important for Macron to remember his Sorbonne speech and summon a convention,” says Simon. The German government must also push for treaty changes, he demands.
There are encouraging signals coming from Berlin. The German government is open to amendments to the treaty, it is said. However, 90 percent of the proposals could also be implemented without changing primary law. It should be noted, however, that there is currently no majority in the Council for a convention. The aim is therefore to concentrate on “pragmatic solutions”. The goal is to make Europe more capable of action, more democratic and more efficient.
The German Engineering Federation (VDMA) is more cautious. “We do not agree with the content of all 300 measures,” said Managing Director Thilo Brodtmann. Some proposals are too detailed, and others go in the wrong direction, such as those on the role of trade agreements in sustainability. “But the recommendations address the right issues, and we explicitly support many ideas. This applies above all to the demands for deepening the internal market and strengthening the competitiveness of EU companies.”
Business Europe also reminds political leaders that the future of Europe and the cherished European lifestyle also depend on its own economic strength and competitiveness. Markus J. Beyrer, Director General of the association, therefore puts the focus on some areas he defines as fundamental requirements: “The proposals on competitiveness, more efficient decision-making in foreign policy, the defense of rules-based multilateral trade and a stronger EU internal market crucial for a prosperous, common future.”
The Conference on the Future of Europe is coming to an end. On today’s Europe Day its final report will be published and delivered to the presidents of the EU institutions – a result of a more than a year of deliberations among over 50,000 European citizens. Its far-reaching 49 proposals include the end of unanimity voting, introduction of transnational lists, or the launch of Joint Armed Forces of the Union.
This may prove to be a useful initiative – or just a PR exercise that gets quickly forgotten. Much will depend on the actual adoption and implementation of the proposals. But in either case, if its goal has been to boost public engagement in shaping the union, it won’t suffice, and mainly for two reasons.
First, it only represents one of the strategies that can be deployed to awaken the European sentiment. It corresponds to what Dutch historian Luuk van Middelaar calls a ‘Greek’ strategy, consisting in giving the public a voice, which is already the case with direct elections to the European Parliament. In the past decades this has coexisted with other political strategies, such as promoting a shared cultural and historical identity, or appealing to the benefits of European integration. But the European sentiment does not necessarily come into being because of such intentional strategies – it can also be triggered by sudden external events. This seems to be particularly the case today, with a return of war to the European continent.
Meanwhile, and secondly, most of the conference happened before the war in Ukraine started. And this single event has become the source of several of the main dilemmas that the EU currently needs to address – from energy sovereignty to viability of its climate ambitions, to readiness for another round of financial solidarity, to determination in defending democracy and rule of law in member states, and so on. They added to the already long list of issues brought by the COVID-19 pandemic. The war is confronting Europeans with some new and difficult questions about themselves. For example, they have been much more solidary with Ukrainian migrants today than with Syrians seven years ago. How should that be interpreted?
In the European Sentiment Compass – a new data tool and an essay published today by the European Council on Foreign Relations and the European Cultural Foundation – we have uncovered the different angles through which such issues are currently discussed across the EU27. For example, the EU’s climate policy elicits hope in some member states but fear in others, and the same goes for the bloc’s rule of law activism. We have also analysed whether these topics would improve or harm people’s attitudes towards Europe in respective member states. We have learned that on all issues the prevailing feeling is that they could bring Europeans closer together rather than drift them apart, although this all strongly depends on the decisions that Europeans choose to take.
At the same time, we have explored the role which two very specific sectors – the media and the culture sector – play in allowing the European sentiment to emerge in each country. We believe that, even when external circumstances are favorable, that process won’t succeed if media are not independent or cultural expression isn’t free. The channels for translating events into shared meanings need to be unobstructed, and in several EU members they are not.
An obvious example is Hungary where cultural institutions are subordinated to nationalist discourses, and the media heavily controlled by an illiberal government, making it very hard to expect that the pandemic and the war could help the Hungarians feel they are in all of it together with the rest of Europeans.
But the issue with the media concerns not just weak media freedom in countries like Bulgaria, Hungary, Malta, Greece; or low media literacy in a similar list of countries. It is also about an infiltration by Russian interests elsewhere, and complacency to foreign interference. Recent examples include an Italian TV letting Sergey Lavrov use prime time for his antisemitic accusations; major French private TV channel conducting an interview with Kremlin’s spokesman; or The Guardian accepting an opinion piece from a former Kremlin’s advisor arguing against sending arms to Ukraine.
Meanwhile, with the cultural sector, the problem is not just the public promotion of nationalist discourses in countries like Hungary or Poland – but even more so the sector’s worrying economic shape after the pandemic. Some studies show that it has been among the most heavily affected sectors in the EU: on par with air transport and ahead of tourism. Despite a civil society campaign – the Cultural Deal for Europe – encouraging member states to earmark 2% of their national recovery and resilience plans to culture, only two countries – France and Italy – have effectively done so.
Today, art and culture – from the Venice Biennale to the Eurovision contest – are at the front of Europe’s reaction to war in Ukraine. Culture has also played a crucial role during and after the pandemic: bringing people together, putting solidarity in action, helping individuals and communities to make sense of what is happening. But it’s pertinent to ask whether in all EU countries the sector can count on sufficient resources and the necessary freedom to continue performing these vital roles.
There are some positive signs of a growing appreciation of culture and the media in their role of shaping the European sentiment. Ursula von der Leyen has recently acknowledged that “Europe cannot be Europe without a thriving cultural sector”. With the recovery fund, the EU institutions have for the first time mobilized an extraordinary support for cultural and creative sectors. In the same spirit, and the recognition that Kremlin’s war is, first and foremost, a war against fundamental European values, dreams, ideals and culture, our responses need to include a strong cultural dimension.
The soon-to-be-established Trust Fund for Ukraine should therefore include culture among its priorities. Media pluralism is already part of the European Commission’s annual rule of law reports, which monitor significant developments relating to the rule of law in all member states. At the same time, the European Commission is expected to propose a new regulation later this year to tackle media independence. A corresponding monitoring mechanism is missing when it comes to cultural policies though.
The point here is that for the EU to tackle its current challenges – from security to climate change, to migration – it needs an ecosystem that would allow these issues to be permanently debated across the union, in the European public sphere, and for joint conclusions and meanings to emerge undisturbed. Free media and culture need to be considered part and parcel of that ecosystem and the necessary actors in helping Europeans shape their future. They are thus also vital for the continent’s security and its capacity to act in a coordinated way.
Exercises such as the conference on the future of Europe are praiseworthy experiments – but they seem to be too much one-off and top-down, and their legitimacy is still far from perfect. It would be dangerous to assume that they alone could suffice in bringing Europeans together. A European sentiment, a feeling of belonging, needs to grow, needs to be nurtured. Not by sporadic citizens conferences but in a conscious, strategic, and sustainable way. Otherwise, we really make ourselves vulnerable to events.
The 08.05. marks the end of the Second World War in Europe. In Moscow, at 23:01 Berlin time, the 09.05. had already dawned, which is why the celebrations take place on different dates. Olaf Scholz laid out his government’s guidelines in a televised speech on Sunday: No solo effort, no NATO going to war, defense capability of one’s own country must be maintained – and no measures that harmed Germany or its partners more than Russia. He also defined the bar for what may come: Neither Ukraine nor its partners would accept a dictatorial peace by Russia.
In the meantime, the negotiators have not yet been able to agree on the exact procedure for the next sanctions package, which will then also include the oil embargo. Stephan Israel explains where the disagreements lie in the News.
Which measures should come when is also on Luc Frieden‘s mind. In an interview with Till Hoppe, the new Eurochambres president and former Luxembourg finance minister urges precisely balanced measures and fears severe economic and social upheavals otherwise.
The road to effective European emissions trading is long – the so-called ETS 2, in particular, continues to cause debate. On Tuesday, the European Parliament’s Environment Committee wants to agree on positions. But in view of the unresolved issues, it is by no means guaranteed that this will succeed, analyzes Lukas Scheid.
Today its decisive phase begins, and the conference on the future of Europe has also changed its character due to the events in Ukraine, as Eric Bonse analyses. The expectations are diverse – political, social, and economical.
Perhaps it would be more helpful to focus on other ways to create a European sense of community instead of selective conferences? Andre Wilkens (European Cultural Foundation) and Paweł Zerka (ECFR) present alternatives in their guest article.
Have a good start to the week!
Mr. Frieden, the European economy is barely growing, and prices are rising fast. Do you fear a new recession, even stagflation?
The situation is difficult. The war in Ukraine is lasting longer than originally expected. Meanwhile, several factors are coming together: The high prices for raw materials, especially gas and oil, the dislocations in the supply chains, and high inflation. It’s a mix that worries many companies.
In addition to war, China exacerbates supply chain chaos via its zero-covid policy.
I wouldn’t speak of chaos, even though many companies are feeling the consequences. It is often difficult for them to give their customers a binding delivery date. Despite all the problems, however, we must not forget that we have a stable domestic market in Europe. After the pandemic, demand is strong. Some sectors, such as the travel industry, have therefore been little affected so far and are able to recover. In the food sector, too, the consequences are not yet having such a strong impact. Commodity prices are rising, but demand is high.
Many producers are able to pass on higher costs to consumers, but high inflation is already slowing consumption.
At the moment, rising prices are primarily a social problem that politicians should cushion where possible. The longer the situation lasts, however, the more difficult it will be for companies. Much depends on how long the war lasts.
Should the European Central Bank do more to combat high inflation?
The ECB has the task of guaranteeing the inflation target of two percent in the medium term. I assume that it can achieve this if, on the one hand, it continues the support measures from the pandemic and, on the other, raises interest rates slightly. The high inflation is mainly a result of the subsiding pandemic, not so much of the war in Ukraine. I, therefore, expect it to be temporary.
You think the situation will quickly return to normal?
It will certainly take time for the Ukrainian economy to get rolling again. But internationally, trade and supply chains will recover relatively quickly once the war and pandemic are over because the structures behind them have not been destroyed. That’s different from the financial crisis. There, we felt the after-effects for years to come.
However, economic relations with Russia will hardly be the same even after the end of hostilities.
I believe that there will also be a Russia after this war and after Putin. It will indeed be difficult to work with this leadership. But Russia and the regime are not the same. We will have to maintain economic relations with our neighbor Russia again in the future – provided, of course, that it respects the rules of the international order.
The EU wants to impose an oil embargo, and a gas embargo could follow later. The right way?
Sanctions should not cause enormous social damage in our country. That is why we are very reluctant to sanctions that include oil and gas. We fear that there could be thousands, if not millions, of unemployed. If it does come to that, the consequences must be cushioned. Our companies and employees are not to blame for this war.
Do you fear that Moscow will respond to an oil embargo with a broader gas supply freeze?
That is difficult to predict. In any case, we should try to diversify our energy sources geographically and move more quickly to renewable energies. That’s easier said than done, but business should accelerate the energy transition, and the state should support it.
So you’re arguing for the pace of the Green Deal to be stepped up even further?
Yes, but there are limits to what is technically possible. Not all trucks will be able to run on battery power tomorrow, not all aircraft will be able to fly on climate-friendly kerosene. Such sectoral conditions should be taken into account.
Should the EU targets for expanding renewable energies and improving energy efficiency be increased once again, as is currently being discussed?
The targets are already very ambitious. We should focus on achieving them. And in doing so, take care to maintain the competitiveness of the companies in this difficult environment.
In concrete terms?
It’s about emissions trading and the planned CO2 limit compensation, for example. We should keep the system of free allocations for industry a little longer. The CBAM is an intellectually interesting system, but is now the right time? Our position is: The goals are right, but we should review the timing given the acute energy crisis.
The EU Commission’s sustainability agenda brings with it a number of new reporting requirements for the industry. Is this also the wrong time for this?
The goals of the projects are legitimate, but we should review the way to get there. Take the Supply Chain Act: It is a question of economic ethics that human rights are respected in production relationships. However, we must avoid making this overly bureaucratic and difficult to implement for SMEs. We will work to improve this in the Council and the European Parliament.
Commission President von der Leyen has vowed to relieve companies elsewhere for new laws according to the one-in-one-out principle. Do you see this being put into practice?
In any case, I find it hard to give an example.
The Commission has still not appointed an SME envoy. Do you feel you are appreciated enough?
I do think that the Commission and the other institutions appreciate the power of small and medium-sized enterprises. We have found an open ear.
The most important news: On Friday, Green shadow rapporteur Michael Bloss also expressed confidence that “some form of ETS 2” could be managed. The fears of many that the second emissions trading scheme for road transport and heating buildings would be buried in the EU Parliament have thus been somewhat defused. However, this does not bring us any closer to an agreement on how and when ETS 2 will be introduced.
The disappointment of not finding a consensus compromise runs deep in both the conservative and green camps. Bloss complains about the “stubbornness” of the EPP negotiators around the main rapporteur Peter Liese. In his view, Liese is putting the brakes on climate protection by reducing the ambitions of the ETS instrument, for example, in deleting surplus allowances and reducing free allowances for the industry.
As a reminder, Liese wants to reduce surplus allowances more quickly via the Linear Reduction Factor (LRF) instead of deleting them on a larger scale once. Liese wants to gradually reduce free certificates starting in 2028 and replace them with the CBAM. However, the certificates are not to be deleted but go into a carbon leakage reserve in case the CBAM does not have its effect. Finally, in 2033 at the earliest, there should only be the CBAM as carbon leakage protection. The Greens, Social Democrats, Liberals, and Left want to start reducing free allocations as early as 2026 and see the CBAM fully introduced in 2030. This would probably give you a narrow majority in the Environment Committee.
With regard to ETS 2, Bloss would rather see stronger regulatory measures, such as stricter CO2 fleet limits for passenger cars, instead of the CO2 price for road transport. Liese, on the other hand, is stunned that the German Greens and SPD members of the EU Parliament are so vehemently opposed to ETS 2 when the position of the traffic light coalition in Berlin is in line with his. It refers to a position paper of the current Federal Government to the ETS 2, available to Europe.table. In fact, a model is described there, as Liese also supports it. The German government argues that without ETS 2, there would also be no revenue available for social compensation. From Liese’s point of view, the members of the Green Party and the SPD are stabbing him in the back at the European level.
Liese also sees his compromise proposals supported by environmental associations. NGOs such as Germanwatch, WWF, and T&E expressed concern in a March letter to members of the Environment Committee that ETS 2 could fail and explicitly called for it not to fail. They, too, are calling for a maximum price for ETS 2, as Liese has proposed, to protect households from prices that are too high. Unlike the parliamentarian, however, the NGOs also want a minimum price as well as an annually increasing maximum price.
Michael Bloss would also like to see the minimum price – for both ETS 1 and ETS 2. However, the Green demands that this must be socially just and must not place an additional burden on weak households. His party’s problem in the EU Parliament is that a CO2 price for fossil fuels in road transport and for heating would primarily burden private households instead of industry.
There are various ideas for cushioning the social impact and making the CO2 price an effective instrument in the commercial use of fuels instead. The climate social fund has been under discussion for some time. In a compromise, Liese had proposed bringing forward its introduction by two years. This means that the compensation for rising CO2 prices would come before the actual price increase. The Greens had called for five years of “frontloading” the fund. On Friday, Bloss said he could also live with three years. So a compromise here would be on the cards.
Another possibility: A ban on oil companies being able to pass on the entire cost of rising prices to end consumers through the introduction of ETS 2. Liese had proposed that a maximum of 50 percent be passed on. The Greens as well as the Social Democrats, want mineral oil producers to have to bear the full costs themselves. An agreement is still doubtful.
Alternatively, there is now also discussion about whether to introduce ETS 2 for consumers at a later date than for commercial fuel use. The only question here is how to distinguish between the two types of use. Liberal Renew rapporteur Emma Wiesner has put forward a proposal that fuel suppliers for building heating could distinguish between B2B and B2C supply contracts and record the cost of a carbon price accordingly. For example, office buildings used for business would be included, but homes would not.
For road transport, the distinction could be made in terms of vehicle size. Fuels for heavy-duty vehicles, which are largely used in the commercial sector, would thus be included in ETS 2 as early as 2025 (one year earlier than planned by the Commission), while passenger cars and light commercial vehicles would initially be left out. The different types of use of the fuels could be recorded via the nozzle of the gas pump. The nozzles for cars and heavy-duty vehicles are different and do not fit the other type of vehicle, so an “administrative and physical” distinction could be made between fuel use at this point, the Renew proposal says.
Peter Liese is skeptical, however. These distinctions between commercial and private use might be feasible in France but possibly not in Greece or Bulgaria, he fears. That is why he is actually against this proposal. In any case, this compromise would not be discussed at all among the member states, according to Liese. So it could be that such a compromise will quickly be scrapped again in the trilogue.
Nevertheless, its latest compromise proposal from the middle of last week envisages such a model for ETS 2: from 2025 for commercial use, then from 2027 for private households as well. However, member states are to have the option of including private households in ETS 2 even earlier – a so-called “opt-in”.
Tomorrow, Tuesday, the last shadow meeting for the time being will take place. It is likely to be the last opportunity to find a compromise. The vote will take place in the Environment Committee next week. Despite the differences, all sides are outwardly making an effort and are willing to reach an agreement by then.
Covid, war and low audience interest: For a long time, the Conference on the Future of Europe led a quiet existence. The four citizen panels with 800 randomly selected participants from the 27 EU countries had to meet mainly online because of the pandemic. The first results of the work were lost in the rage of the Ukraine war. And an online platform set up specifically for this purpose attracted little attention, even from EU professionals in Brussels.
But things are now supposed to get better: Today, Monday, the second and decisive phase of the Future Conference begins with the presentation of the final report. At a symbolic ceremony in the European Parliament in Strasbourg, Parliament President Roberta Metsola, EU Commission President Ursula von der Leyen and current EU Council President Emmanuel Macron will reveal what happens next – and whether the proposals will be translated into reforms.
Expectations are high, maybe too high. All of a sudden, it’s no longer just about more democracy and being closer to the people – as it was at the beginning of the conference, when the EU promised to learn from the mistakes of the 2019 European elections and to reform the system of top candidates. While that remains on the agenda, the war in Ukraine has shifted priorities. Now it’s no longer just about reforming the EU, but about asserting itself.
Proposals such as the abolition of the unanimity principle in foreign policy, the creation of an EU army or the reduction of dependency in energy supply are coming to the fore – and call for swift implementation. In total, the plenum of the Future Conference adopted 49 proposals with more than 200 measures. In addition to foreign policy, the focus is also on climate, digital, health and economic and social policy.
Many proposals could be implemented quickly, according to the EU Commission. Some, however, would require treaty amendments. The Brussels authority now wants to examine how smooth implementation could be achieved. Miracles should not be expected, even if the proposals are of high quality, said a representative of the authority. The EU Commission intends to provide initial feedback at a feedback meeting in the fall.
The European Parliament, on the other hand, exerts more pressure. There are already calls for a reform convention. German MEPs such as Sven Simon (CDU), Gaby Bischoff (SPD) and Daniel Freund (Greens) are particularly committed to a convention. “It will now be important for Macron to remember his Sorbonne speech and summon a convention,” says Simon. The German government must also push for treaty changes, he demands.
There are encouraging signals coming from Berlin. The German government is open to amendments to the treaty, it is said. However, 90 percent of the proposals could also be implemented without changing primary law. It should be noted, however, that there is currently no majority in the Council for a convention. The aim is therefore to concentrate on “pragmatic solutions”. The goal is to make Europe more capable of action, more democratic and more efficient.
The German Engineering Federation (VDMA) is more cautious. “We do not agree with the content of all 300 measures,” said Managing Director Thilo Brodtmann. Some proposals are too detailed, and others go in the wrong direction, such as those on the role of trade agreements in sustainability. “But the recommendations address the right issues, and we explicitly support many ideas. This applies above all to the demands for deepening the internal market and strengthening the competitiveness of EU companies.”
Business Europe also reminds political leaders that the future of Europe and the cherished European lifestyle also depend on its own economic strength and competitiveness. Markus J. Beyrer, Director General of the association, therefore puts the focus on some areas he defines as fundamental requirements: “The proposals on competitiveness, more efficient decision-making in foreign policy, the defense of rules-based multilateral trade and a stronger EU internal market crucial for a prosperous, common future.”
The Conference on the Future of Europe is coming to an end. On today’s Europe Day its final report will be published and delivered to the presidents of the EU institutions – a result of a more than a year of deliberations among over 50,000 European citizens. Its far-reaching 49 proposals include the end of unanimity voting, introduction of transnational lists, or the launch of Joint Armed Forces of the Union.
This may prove to be a useful initiative – or just a PR exercise that gets quickly forgotten. Much will depend on the actual adoption and implementation of the proposals. But in either case, if its goal has been to boost public engagement in shaping the union, it won’t suffice, and mainly for two reasons.
First, it only represents one of the strategies that can be deployed to awaken the European sentiment. It corresponds to what Dutch historian Luuk van Middelaar calls a ‘Greek’ strategy, consisting in giving the public a voice, which is already the case with direct elections to the European Parliament. In the past decades this has coexisted with other political strategies, such as promoting a shared cultural and historical identity, or appealing to the benefits of European integration. But the European sentiment does not necessarily come into being because of such intentional strategies – it can also be triggered by sudden external events. This seems to be particularly the case today, with a return of war to the European continent.
Meanwhile, and secondly, most of the conference happened before the war in Ukraine started. And this single event has become the source of several of the main dilemmas that the EU currently needs to address – from energy sovereignty to viability of its climate ambitions, to readiness for another round of financial solidarity, to determination in defending democracy and rule of law in member states, and so on. They added to the already long list of issues brought by the COVID-19 pandemic. The war is confronting Europeans with some new and difficult questions about themselves. For example, they have been much more solidary with Ukrainian migrants today than with Syrians seven years ago. How should that be interpreted?
In the European Sentiment Compass – a new data tool and an essay published today by the European Council on Foreign Relations and the European Cultural Foundation – we have uncovered the different angles through which such issues are currently discussed across the EU27. For example, the EU’s climate policy elicits hope in some member states but fear in others, and the same goes for the bloc’s rule of law activism. We have also analysed whether these topics would improve or harm people’s attitudes towards Europe in respective member states. We have learned that on all issues the prevailing feeling is that they could bring Europeans closer together rather than drift them apart, although this all strongly depends on the decisions that Europeans choose to take.
At the same time, we have explored the role which two very specific sectors – the media and the culture sector – play in allowing the European sentiment to emerge in each country. We believe that, even when external circumstances are favorable, that process won’t succeed if media are not independent or cultural expression isn’t free. The channels for translating events into shared meanings need to be unobstructed, and in several EU members they are not.
An obvious example is Hungary where cultural institutions are subordinated to nationalist discourses, and the media heavily controlled by an illiberal government, making it very hard to expect that the pandemic and the war could help the Hungarians feel they are in all of it together with the rest of Europeans.
But the issue with the media concerns not just weak media freedom in countries like Bulgaria, Hungary, Malta, Greece; or low media literacy in a similar list of countries. It is also about an infiltration by Russian interests elsewhere, and complacency to foreign interference. Recent examples include an Italian TV letting Sergey Lavrov use prime time for his antisemitic accusations; major French private TV channel conducting an interview with Kremlin’s spokesman; or The Guardian accepting an opinion piece from a former Kremlin’s advisor arguing against sending arms to Ukraine.
Meanwhile, with the cultural sector, the problem is not just the public promotion of nationalist discourses in countries like Hungary or Poland – but even more so the sector’s worrying economic shape after the pandemic. Some studies show that it has been among the most heavily affected sectors in the EU: on par with air transport and ahead of tourism. Despite a civil society campaign – the Cultural Deal for Europe – encouraging member states to earmark 2% of their national recovery and resilience plans to culture, only two countries – France and Italy – have effectively done so.
Today, art and culture – from the Venice Biennale to the Eurovision contest – are at the front of Europe’s reaction to war in Ukraine. Culture has also played a crucial role during and after the pandemic: bringing people together, putting solidarity in action, helping individuals and communities to make sense of what is happening. But it’s pertinent to ask whether in all EU countries the sector can count on sufficient resources and the necessary freedom to continue performing these vital roles.
There are some positive signs of a growing appreciation of culture and the media in their role of shaping the European sentiment. Ursula von der Leyen has recently acknowledged that “Europe cannot be Europe without a thriving cultural sector”. With the recovery fund, the EU institutions have for the first time mobilized an extraordinary support for cultural and creative sectors. In the same spirit, and the recognition that Kremlin’s war is, first and foremost, a war against fundamental European values, dreams, ideals and culture, our responses need to include a strong cultural dimension.
The soon-to-be-established Trust Fund for Ukraine should therefore include culture among its priorities. Media pluralism is already part of the European Commission’s annual rule of law reports, which monitor significant developments relating to the rule of law in all member states. At the same time, the European Commission is expected to propose a new regulation later this year to tackle media independence. A corresponding monitoring mechanism is missing when it comes to cultural policies though.
The point here is that for the EU to tackle its current challenges – from security to climate change, to migration – it needs an ecosystem that would allow these issues to be permanently debated across the union, in the European public sphere, and for joint conclusions and meanings to emerge undisturbed. Free media and culture need to be considered part and parcel of that ecosystem and the necessary actors in helping Europeans shape their future. They are thus also vital for the continent’s security and its capacity to act in a coordinated way.
Exercises such as the conference on the future of Europe are praiseworthy experiments – but they seem to be too much one-off and top-down, and their legitimacy is still far from perfect. It would be dangerous to assume that they alone could suffice in bringing Europeans together. A European sentiment, a feeling of belonging, needs to grow, needs to be nurtured. Not by sporadic citizens conferences but in a conscious, strategic, and sustainable way. Otherwise, we really make ourselves vulnerable to events.
