Euro 7 from mid-2025 + Faster permits fo • Table.Briefings

Dear reader,

It’s the next stage in the regulation of pollutants in cars, trucks and buses: Shortly before the Commission is due to present its proposal for Euro 7, further details have emerged about the plans of the Brussels-based authority. According to these, the regulations are to apply to all new passenger cars from July 1, 2025, with the start date for trucks set for July 1, 2026. The industry warns that the changeover is complex and will take manufacturers three years.

If the Commission has its way, simplified approval procedures should apply to renewable energies as soon as possible. This is a bridging measure for the period in which the member states have not yet implemented the revised Renewable Energies Directive (RED IV) from the REPowerEU package, according to a draft. Read more about the Commission’s plans in the News.

There is no way around the introduction of a digital currency backed by the European Central Bank – ECB President Christine Lagarde said at a conference on the “digital euro”. The plan is to provide only the infrastructure and leave the end-customer business to the commercial banks, said ECB Director Fabio Panetta. But then the digital currency would no longer be free, as consumer advocates criticize. And that is just one of numerous open questions that need to be clarified on the way to digitizing the European single currency. Torsten Kleinz gives an overview of the most important points in the debate.

Your
Sarah Schaefer

Digital euro: ECB does not want to compete with banks

By

Torsten Kleinz

Bitcoin and Facebook’s failed currency Libra have brought digital currencies into the public consciousness, and now the European Union wants to follow suit with its own project. At a conference on the “digital euro” in Brussels, however, it became clear that decision-makers are still a long way from clear solutions.

The head of the European Central Bank (ECB), Christine Lagarde, made it clear that the cryptocurrencies in widespread use are not suitable for the purpose that the digital euro is supposed to fulfill: “Bitcoin and Ether are too volatile to function as a means of payment,” she said on Monday. Still, there is no way around the introduction of a Central Bank Digital Currency (CBDC) backed by the European Central Bank, she said.

Lagarde and colleagues cited the sharp rise in the share of digital payments as one reason: Where money circulated less and less in the form of cash, the ECB had problems maintaining the authority of the currency and establishing trust. The triumph of payment services such as Paypal or credit card service providers based outside the EU also called into question the monetary autonomy of the European Union.

High costs for money transfer

In addition, the political institutions fear that the takeover of payment traffic by big tech corporations such as Apple and Google will take away the European institutions’ room for maneuver. Numerous other countries, from the People’s Republic of China to the Bahamas and the USA, have their own CBDC projects, some of which are already in the implementation phase.

Queen Máxima of the Netherlands also raised the issue of undersupply of banking services to sections of the population in Europe. It costs 6.5 percent in fees to transfer money to Ukraine, for example, far above the target of 3 percent. A digitalized payment system with state coverage is intended to reduce costs. In addition, the digital euro should help people who have not yet had access to the banking system.

Other participants, such as German Finance Minister Christian Lindner (FDP), preferred to talk about the potential for industry if a digital and thus programmable means of payment were available for automated machine-to-machine payments, for example.

The catch of such an initiative: If the central bank were to give its own money directly to EU citizens, the sophisticated system of money creation would be undermined, in which the central bank money represents only a fraction of the real money supply in circulation and is increased via the commercial banks by means of lending. If citizens were able to keep their accounts directly with the ECB, the banks would lack the money to continue lending, so the fear goes. Financial instability would be the result. In addition to commercial banks, other countries could also face problems if their populations had access to a risk-free and cheap EU payment settlement system.

Criticism of ECB cooperation with Amazon

ECB Director Fabio Panetta made it clear at the conference that the central bank does not want to tamper with this division of labor. “We have no commercial interest whatsoever in payments information,” Panetta said. Instead of being in direct contact with EU citizens, effectively building a retail business, Panetta wants to continue to provide only the infrastructure and leave the retail business to commercial banks. Whether and how citizens who are not bank customers will also have access to the digital euro, therefore, remained unclear.

This caused particular disagreement among Monique Goyens, chairwoman of the consumer umbrella organization BEUC: The consumer advocates had clearly formulated in their list of requirements that the digital euro should be free of charge for citizens. “But I don’t know of any commercial bank that offers anything for free,” Goyens criticized. She also criticized the ECB for hiring the Amazon retail group for a pilot project.

The ECB and the Commission have also made it clear on several occasions that the digital euro is not intended to replace cash, but only to supplement it. What’s more, the application of the digital currency is to be largely adapted to the paper currency.

However, this goal quickly reaches its limits. For example, it should be ruled out from the outset that the digital euro should serve as a means of money laundering or terror financing. Lindner advocated a risk-based approach here. In other words, data on payments will be recorded, but will not be checked as standard. Small amounts in particular should be waved through without checks. However, it is still completely unclear where the limit should be.

Conversion to digital dollars

In addition to a limit on transactions, there is also to be a maximum amount that citizens can deposit with the ECB. This is intended to prevent citizens from withdrawing their money from the banking system and parking it at the ECB. How this is supposed to fit in with the promised anonymity of payment flows is also an unanswered question.

Another set of questions that has yet to be discussed is interoperability. While the digital euro is to be coupled with the payment system of the 19 euro countries, it is still open whether the payment system should also be suitable for cross-border transactions outside the EU and whether it should be possible to exchange digital euros for digital US dollars without barriers, for example. Representatives of the payment service providers appealed to the legislators to clarify this issue at an early stage, as such interoperability would be very difficult and expensive to establish retrospectively.

This openness on fundamental issues does not faze representatives of the Commission and the ECB. “We don’t have all the answers yet,” said Finance Commissioner Mairead McGuinness at the end of the conference. Now the institutions want to discuss the outstanding questions extensively with the public in order to be able to present more specific plans next year.

Euro 7 to apply to all new passenger cars from mid-2025

Further details have emerged from the Commission’s proposal for Euro 7, the next stage of emissions regulation for cars, trucks and buses. According to this, the regulations are to apply to all newly registered passenger cars from July 1, 2025, while the start date for trucks is to be July 1, 2026.

The industry considers these deadlines to be unfeasible. At the beginning of 2024 at the earliest, possibly not until the end of 2024, it is expected that the secondary legal texts for Euro 7 will be submitted by the Commission and that the industry will thus have planning security. However, manufacturers need three years for the complex changeover, according to industry sources.

As reported, the Commission wants to tighten the limits for passenger cars only slightly, if at all. For gasoline engines, for example, they are to remain at the level of the current Euro 6dtemp regulation. However, this cannot be seen as an all-clear, because at the same time the test conditions are to be massively tightened. The test conditions are listed in “Annex 3” of the legislative proposal. According to this, no specifications are made for the driving style during test drives under normal driving conditions.

Industry circles conclude from this that measurements can also be taken in extreme driving situations, such as on inclines. In extreme driving situations, however, the emission of pollutants is significantly higher. It will therefore be very difficult for manufacturers to comply with the limits under the more stringent test conditions.

According to the draft, it is also planned to keep the correction factor small for measurements in extreme driving situations. According to the “Annex 3” table, the correction factor is to be 1.6. In earlier versions, the Commission had envisaged higher correction factors, so that higher values would be permitted, for example, in extreme weather conditions or when driving uphill.

Another detail that has now become known: Until now, it had been assumed that the Commission would propose a combined limit value for the pollutants nitrous oxide (N2O) and methane (CH4) for commercial vehicles. According to Annex 3, there will now be two separate limit values. This would have consequences for the class of light commercial vehicles weighing 3.5 to 7.5 tons. For this class of vehicle, it should be virtually impossible to comply with the limits. As a result, they are threatened with extinction well before the targeted phase-out of internal combustion engines in 2035. mgr

Faster approvals for renewables

The EU Commission wants simplified approval procedures for renewable energies to apply as quickly as possible. This is a bridging measure for the period in which the member states have not yet implemented the revised Renewable Energies Directive (RED IV) from the REPowerEU package, according to the draft, which was made available to Europe.Table on Monday.

Tomorrow, the Commission will present a draft Council Regulation. It will initially apply for one year. The legal basis will once again be the emergency Article 122 TFEU, with which the Council has already adopted several measures this year to deal with the energy crisis. New measures include simplifications for the approval of large heat pumps and the connection of smaller heat pumps to the grid.

Otherwise, the regulation brings forward several elements already known from RED IV: The overwhelming public interest in renewable energies, facilitations under the Birds and Habitat Directives – which mainly affect wind farms – as well as exemptions from environmental impact assessments for ground-mounted solar plants and the repowering of wind farms.

“The emergency measures are a good basis for quickly bringing more renewables online,” said Rainer Hinrichs-Rahlwes of the German Renewable Energy Federation (BEE). However, he said it would be desirable for some facilitations, such as the approval fiction for small solar plants for self-supply, to be based on the possibilities of the Climate, Energy and Environmental Aid Guidelines (CEEAG), which includes a de minimis limit of one megawatt instead of 50 kilowatts.

However, the nature conservation organization Nabu criticizes the stipulations on species protection. “The ordinance wants to restrict species protection for all renewable projects. This clearly goes beyond the announcements from REPowerEU,” says Nabu lawyer Raphael Weyland. “According to RED IV, easements for renewables should only apply in certain target areas. Areas of nature conservation value, such as Natura 2000, would have remained free, meanwhile.” The regulation would also have to define more precisely which protection measures are appropriate to justify exemptions from the killing ban. Otherwise, this would be left to the member states. ber

EU and Kazakhstan sign raw materials partnership

EU Commission President Ursula von der Leyen and Kazakh Prime Minister Alichan Smailov yesterday signed a memorandum of understanding for a strategic partnership for raw materials, batteries and green hydrogen at COP27 in Sharm el-Sheikh. Together, they want to better integrate strategic value chains in these areas, von der Leyen said. In the coming months, both partners will work with member states, industry and other stakeholders to develop a roadmap.

“The memorandum of understanding underlines that our cooperation must contribute to aligning our high environmental, social and governance standards,” von der Leyen stressed. Kazakhstan and the EU plan to cooperate in research and innovation, skills building and capacity building, among other areas. This will also attract private capital for these investments, it is hoped. The value chains developed in Kazakhstan would then serve not only the EU, but the entire world, von der Leyen said.

The EU is Kazakhstan’s most important trading partner and largest foreign investor. Von der Leyen announced the partnership two weeks ago after talks with Kazakh President Kassym-Jomart Tokayev (Europe.Table reported). In six months, both partners plan to take stock. leo

Scholz: phasing out fossil fuels ‘without ifs and buts’

At the climate conference in Sharm el-Sheikh, German Chancellor Olaf Scholz made a clear commitment to phase out coal, oil and gas. “We will exit fossil fuels – without any ifs or buts,” Scholz promised in his speech to the plenary of COP27 on Monday evening and pointed to Germany. Although Russia’s war against Ukraine forced Germany to “reconnect coal-fired power plants to the grid for a short time,” the Chancellor said. “We stand firmly committed to the coal phase-out.”

Scholz thus countered questions and assumptions at COP that Germany and other industrialized countries intended to backtrack on their commitments made at COP26 in Glasgow in the face of the energy crisis caused by Russia’s war in Ukraine. In Glasgow, the nations decided to phase out fossil fuels and refrain from new investments. The agreed phase-out must also be adhered to internationally: “There must not be a worldwide renaissance of fossil fuels,” Scholz demanded.

‘Even more help’ for loss and damage

The concept of “loss and damage”, that is, support against the consequences of the climate crisis, which several countries and climate protection organizations called for, was explicitly mentioned. “Rightly, the countries that are hit the hardest by the consequences of climate change but have contributed least to its cause are calling for more international solidarity,” Scholz said. “We are ready to support them even more.”

In this context, the Chancellor not only mentioned the previously announced increase in German climate finance to €6 billion per year from 2025 but also announced: “In addition, we will provide targeted support to the countries most severely affected by climate change in dealing with losses and damage. As expected, Scholz did not mention any specific sums; the Chancellor only mentioned a contribution of €170 million to the “Global Shield,” a protective mechanism designed to provide insurance against climate damage.

At the end of the short speech, Scholz gave an urgent appeal. “Not less, but more speed, more ambition, more cooperation in the switch to renewable energies is the imperative of our time. Our resolute commitments to climate protection must be followed by equally resolute action,” he demanded. And declared, “We will be measured by this.” mkr

Germany and France seek intersections for energy sovereignty

Following yesterday’s meeting of the Franco-German Parliamentary Assembly in Berlin, it was decided to set up a new working group of parliamentarians from both countries to address the issue of energy sovereignty. It was also agreed to clear up the misunderstandings between Paris and Berlin.

Parliamentarians from both countries asked German Foreign Minister Annalena Baerbock and French Secretary of State for Europe Laurence Boone about common challenges in foreign and security policy. The meeting was chaired by Bärbel Bas, President of the German Bundestag, and Yaël Braun-Pivet, President of the National Assembly. It was a highly diplomatic exercise given the current strong divergences between Paris and Berlin.

Yaël Braun-Pivet pointed to “slight turbulence” in relations between the two capitals. She quoted Cicero as saying, “In adversity, true friends reveal themselves.” Annalena Baerbock added that Paris and Berlin “don’t always see eye to eye,” but precisely because of the deep ties, they can work to find common intersections. “There are no families in which everyone always agrees,” she said.

Common vision of Europe

One term kept coming up at the hearing: sovereignty, a concept close to Emmanuel Macron’s heart and one that French Commissioner Thierry Breton is happy to pass on in Brussels. In the spirit of “energy sovereignty,” a new working group is to be set up with parliamentarians from both assemblies. Their task: to find agreements between two countries with very different energy systems.

Baerbock and Boone stressed the need to continue working together in view of the next winter and the one after that. In addition, Paris and Berlin are expecting the EU Commission’s proposals for reforming the electricity market “early next year”.

It was also about geopolitical sovereignty, this time in relation to China, with Minister Baerbock referring in this context to the increasing rivalry between democratic and authoritarian systems. She and her French colleague underlined that the EU’s Global Gateway initiative is the European response to the Silk Road promoted by Beijing. In this context, both stressed that France and Germany share the same vision, namely that of a stronger and more sovereign Europe.

The meeting also discussed the international meeting to be held in Paris on December 13 under the auspices of President Macron, whose goal is to strengthen Ukraine’s “short-term resilience” – planned to determine and coordinate the modalities for the delivery of weapons and other assistance.

Yesterday’s Franco-German meeting was the last before the 60th anniversary of the Élysée Treaty, which will be celebrated on January 22. cst

Berlin supports Commission proposal for billions in financial aid to Ukraine

The German government is basically supporting the EU Commission’s proposal to continue supporting Ukraine with billions in financial aid next year but wants to attach conditions to this. In talks with Ukrainian head of state Volodimir Selenski over the weekend, EU Commission President Ursula von der Leyen confirmed that the EU wants to provide up to €18 billion for Ukraine’s budget in 2023, broken down into monthly payments of €1.5 billion. According to von der Leyen, the liquidity support is to be provided via very long-term, low-interest loans secured via the EU budget.

However, the Commission’s move requires an adjustment of the legislation governing the current EU Multiannual Financial Framework. According to information from Europe.Table, when amending the legal text, Berlin wants to ensure that funds made possible by it are intended exclusively for Ukraine’s budget and cannot be misappropriated for other states. In addition, the aid to Ukraine in the modified legal framework is to be capped in amount and limited in time. The Commission intends to present its proposal for Ukraine aid this Wednesday. The EU finance ministers are already holding a fundamental debate on Ukraine aid today.

Ambitious schedule

In order to disburse funds to Kyiv as early as the beginning of 2023, finance ministers must unanimously approve the legal text at their December meeting. However, this timetable is considered ambitious. For the first tranche in January, it may be necessary to draw on €3 billion that were already supposed to flow to Ukraine this year but have not yet been disbursed, a council insider said.

According to the Commission, the funds will also help Ukraine implement further reforms toward EU membership. Berlin agrees, particularly with regard to improvements in the fight against corruption, the strengthening of the rule of law and more efficient administrative processes. These are also basic prerequisites for the preparations for the reconstruction of the country.

In total, Kyiv will need €2 to €4 billion a month next year. The remaining funds are to come from donors outside the EU, primarily from the USA. For weeks, Washington has been putting pressure on Brussels for the EU to firm up its financial aid to Ukraine for the coming year. However, because of the midterm elections, it is no longer clear whether the US government will be able to deliver on its $1.5 billion pledge. cr/ebo

Booking platforms: more transparency for short-term rentals

As expected, the EU Commission presented a regulatory framework for short-term accommodation rentals on Monday (Europe.Table reported). The new EU-wide rules are intended to make short-term rentals more transparent, effective and sustainable. The Commission sees the regulation as a sector-specific plug-in for the Digital Services Act (DSA).

Until now, online booking platforms have had different rules for sharing data in each member state. The platforms Airbnb and Expedia welcomed the EU’s plans.

EPP parliamentarian Andreas Schwab rated the proposed regulation as challenging for Germany. “This is because platforms can benefit from uniform requirements, but there are no plans for true standardization,” Schwab said. In Germany, he said, this has not been envisaged so far, even between the states. “One novelty is that member states remain explicitly free not to act if there is no need.”

Airbnb and similar providers are booming

However, short-term rentals are becoming increasingly popular and thus a problem for many metropolitan areas in Europe. Internal Market Commissioner Thierry Breton pointed out in a post on Linkedin that in 2021, visitors already spent more than 360 million nights in short-term rentals, representing nearly a quarter of all tourist accommodation in the EU. According to the commission, the number of bookings in the first half of 2022 increased by another 138 percent compared to the same period in 2021.

The main contents of the regulatory proposal:

Harmonization of the requirements for the registration of hosts and accommodations
Clarification of the rules for display and control of individual registration numbers.
Automation of data exchange between online platforms and authorities. Creation of nationally uniform digital access points
Further use of data in aggregated form for Eurostat tourism statistics. The data will also feed into the future European Tourism Data Space.
Member States implement and monitor the transparency framework and establish sanctions for violations.

After the adoption of the regulation by parliament and council and its entry into force, member states will have a period of two years to set up the necessary data exchange mechanisms. The regulation will complement existing instruments, in particular, the DSA and the provisions of the Directive on Administrative Cooperation in the field of Taxation (DAC7). vis

Henning Vöpel – the intellectual pragmatist

*Henning Vöpel is director of the think tank Centre for European Poli*cy.

If you ask Henning Vöpel what has shaped him as a European, he gives an answer that is rather unusual for an economist. He said he read the books of Holocaust survivor Elie Wiesel very early on. “I was touched at a relatively young age that something like this had taken place in Europe by Germans,” Vöpel says. Later, a political and economic interest came along. “That showed me: It’s important to be concerned with Europe and to keep standing up for peace and freedom in Europe.”

The 50-year-old from Hamburg has been working on this for a year at the Centre for European Policy (cep), the think tank of the Foundation Political Procedures from Freiburg. He is also a professor of economics at the BSP Business & Law School. Previously, he headed the Hamburg Institute of International Economics (HWWI) for seven years. He continues to live in his native Hamburg.

Europe must learn to think strategically again

At cep, Vöpel leads a team of nearly 40 people who evaluate EU policies from a regulatory economics perspective. In addition to locations in Freiburg and Berlin, cep has partner institutes in Paris and Rome. Talks are currently underway about an additional location in Warsaw. If all goes well, the partner institute should be up and running by the beginning of next year.

Since taking up his post, he has been in the process of establishing two new specialist areas: Digitization and New Technologies, and Security and Resilience. “We need to incorporate future developments, which we can’t fully anticipate, more into what we do today.” Europe, he said, has forgotten how to think strategically. He now wants to help change that.

Vöpel advocates a new approach to regulation. “The way Europe currently regulates leads to deformation rather than transformation.” He calls for research, innovation and entrepreneurship to always be strengthened at the same time as the necessary regulation. This balance of freedom and regulation is out of joint in Brussels, he said. “Regulations should always aim to activate creative and entrepreneurial forces instead of suppressing them,” he says. “That’s the only way we can develop the potential of diversity in Europe much more.” For example, there are presentable AI regions in Paris, Lisbon or Tallinn, Vöpel says. But these could be much more networked to work even more innovatively.

There must be time for research

Through his work, Vöpel holds many talks, networks and organizes conferences. Still, he takes the time to do research. “I think it’s absolutely essential that the people who have institutional responsibility also do basic work,” he says. That’s why he takes an hour every day to read. In conversation, he quotes historians like Harold James or philosophers like Karl Popper.

At the same time, he advocates a pragmatic approach to dilemmas. “A values-based and feminist foreign policy is desirable,” Vöpel says. “But at the same time, we have to ask ourselves how we can maintain dialogue in a world of geopolitical confrontation.” That’s why he prefers to talk about an emancipatory foreign policy that strengthens civil society forces while maintaining trade and diplomatic relations. Asked what that might mean in concrete terms when dealing with Iran, the economist replies, “That’s exactly the dilemma where politics loses its innocence.” Tom Schmidtgen

Claude Turmes: ‘Mr. Energy’ on the loose

“It is important that we have someone with experience who will do everything to implement the European mandate,” Luxembourg’s Energy Minister Claude Turmes (Greens) said last year. At issue was the reform of the Energy Charter Treaty and the move of Turmes’ energy advisor Guy Lentz to head the ECT. The latter took over as secretary general on Jan. 1. Lentz was tasked with bringing the outdated Investor Protection Treaty in line with European climate goals.

Claude Turmes, who was dubbed “Climate Knight” and “Mr. Energy” in his Brussels MEP days, should actually be very interested in this. It was he who pushed for his advisor to take over the leadership of the ECT. It was also he who was one of the first politicians in Europe to criticize the Energy Charter. In 2019, he was still in favor of the ECT leaving.

But “Mr. Energy” played a bad hand. Tower’s ally Lentz failed to implement the EU mandate satisfactorily: Already several EU states have announced their withdrawal from the charter. The ECT secretary recently drew attention mainly for his antics on Twitter. Lentz personally insulted scientists who criticized his reform text. “Who pays these clowns to write such crap?” he tweeted. A short time later, he deleted his account. He has not apologized for his behavior, Reporter.lu reports.

With his misplacement, Luxembourg’s Energy Minister is skating on thin ice politically. The former major ECT critic suddenly finds the treaty acceptable. He says that the Energy Charter is particularly suitable for the expansion of renewable energies. Yet this has not been proven to date. On the contrary, the charter would even make them “more expensive than they need to be,” criticizes attorney Philippe Sands, who regularly intervenes in ECT arbitration proceedings.

At the same time, a reformed Energy Charter continues to protect investments in nuclear. (And outside the EU, Switzerland and Great Britain, also those in fossil energies.) Claude Turmes is a convinced opponent of nuclear power. As a young activist, he had already set up solar panels with his own hands and advocated a future without fossil energies and nuclear power, he writes in his book on the energy transition (please do not read in English translation).

One year before the parliamentary elections, “Mr. Energy” faces a dilemma. If he now questions this reform, the “Climate Knight” would have to admit his failure. Charlotte Wirth

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,

It’s the next stage in the regulation of pollutants in cars, trucks and buses: Shortly before the Commission is due to present its proposal for Euro 7, further details have emerged about the plans of the Brussels-based authority. According to these, the regulations are to apply to all new passenger cars from July 1, 2025, with the start date for trucks set for July 1, 2026. The industry warns that the changeover is complex and will take manufacturers three years.

If the Commission has its way, simplified approval procedures should apply to renewable energies as soon as possible. This is a bridging measure for the period in which the member states have not yet implemented the revised Renewable Energies Directive (RED IV) from the REPowerEU package, according to a draft. Read more about the Commission’s plans in the News.

There is no way around the introduction of a digital currency backed by the European Central Bank – ECB President Christine Lagarde said at a conference on the “digital euro”. The plan is to provide only the infrastructure and leave the end-customer business to the commercial banks, said ECB Director Fabio Panetta. But then the digital currency would no longer be free, as consumer advocates criticize. And that is just one of numerous open questions that need to be clarified on the way to digitizing the European single currency. Torsten Kleinz gives an overview of the most important points in the debate.

Your
Sarah Schaefer

Digital euro: ECB does not want to compete with banks

By

Torsten Kleinz

Bitcoin and Facebook’s failed currency Libra have brought digital currencies into the public consciousness, and now the European Union wants to follow suit with its own project. At a conference on the “digital euro” in Brussels, however, it became clear that decision-makers are still a long way from clear solutions.

The head of the European Central Bank (ECB), Christine Lagarde, made it clear that the cryptocurrencies in widespread use are not suitable for the purpose that the digital euro is supposed to fulfill: “Bitcoin and Ether are too volatile to function as a means of payment,” she said on Monday. Still, there is no way around the introduction of a Central Bank Digital Currency (CBDC) backed by the European Central Bank, she said.

Lagarde and colleagues cited the sharp rise in the share of digital payments as one reason: Where money circulated less and less in the form of cash, the ECB had problems maintaining the authority of the currency and establishing trust. The triumph of payment services such as Paypal or credit card service providers based outside the EU also called into question the monetary autonomy of the European Union.

High costs for money transfer

In addition, the political institutions fear that the takeover of payment traffic by big tech corporations such as Apple and Google will take away the European institutions’ room for maneuver. Numerous other countries, from the People’s Republic of China to the Bahamas and the USA, have their own CBDC projects, some of which are already in the implementation phase.

Queen Máxima of the Netherlands also raised the issue of undersupply of banking services to sections of the population in Europe. It costs 6.5 percent in fees to transfer money to Ukraine, for example, far above the target of 3 percent. A digitalized payment system with state coverage is intended to reduce costs. In addition, the digital euro should help people who have not yet had access to the banking system.

Other participants, such as German Finance Minister Christian Lindner (FDP), preferred to talk about the potential for industry if a digital and thus programmable means of payment were available for automated machine-to-machine payments, for example.

The catch of such an initiative: If the central bank were to give its own money directly to EU citizens, the sophisticated system of money creation would be undermined, in which the central bank money represents only a fraction of the real money supply in circulation and is increased via the commercial banks by means of lending. If citizens were able to keep their accounts directly with the ECB, the banks would lack the money to continue lending, so the fear goes. Financial instability would be the result. In addition to commercial banks, other countries could also face problems if their populations had access to a risk-free and cheap EU payment settlement system.

Criticism of ECB cooperation with Amazon

ECB Director Fabio Panetta made it clear at the conference that the central bank does not want to tamper with this division of labor. “We have no commercial interest whatsoever in payments information,” Panetta said. Instead of being in direct contact with EU citizens, effectively building a retail business, Panetta wants to continue to provide only the infrastructure and leave the retail business to commercial banks. Whether and how citizens who are not bank customers will also have access to the digital euro, therefore, remained unclear.

This caused particular disagreement among Monique Goyens, chairwoman of the consumer umbrella organization BEUC: The consumer advocates had clearly formulated in their list of requirements that the digital euro should be free of charge for citizens. “But I don’t know of any commercial bank that offers anything for free,” Goyens criticized. She also criticized the ECB for hiring the Amazon retail group for a pilot project.

The ECB and the Commission have also made it clear on several occasions that the digital euro is not intended to replace cash, but only to supplement it. What’s more, the application of the digital currency is to be largely adapted to the paper currency.

However, this goal quickly reaches its limits. For example, it should be ruled out from the outset that the digital euro should serve as a means of money laundering or terror financing. Lindner advocated a risk-based approach here. In other words, data on payments will be recorded, but will not be checked as standard. Small amounts in particular should be waved through without checks. However, it is still completely unclear where the limit should be.

Conversion to digital dollars

In addition to a limit on transactions, there is also to be a maximum amount that citizens can deposit with the ECB. This is intended to prevent citizens from withdrawing their money from the banking system and parking it at the ECB. How this is supposed to fit in with the promised anonymity of payment flows is also an unanswered question.

Another set of questions that has yet to be discussed is interoperability. While the digital euro is to be coupled with the payment system of the 19 euro countries, it is still open whether the payment system should also be suitable for cross-border transactions outside the EU and whether it should be possible to exchange digital euros for digital US dollars without barriers, for example. Representatives of the payment service providers appealed to the legislators to clarify this issue at an early stage, as such interoperability would be very difficult and expensive to establish retrospectively.

This openness on fundamental issues does not faze representatives of the Commission and the ECB. “We don’t have all the answers yet,” said Finance Commissioner Mairead McGuinness at the end of the conference. Now the institutions want to discuss the outstanding questions extensively with the public in order to be able to present more specific plans next year.

Euro 7 to apply to all new passenger cars from mid-2025

Further details have emerged from the Commission’s proposal for Euro 7, the next stage of emissions regulation for cars, trucks and buses. According to this, the regulations are to apply to all newly registered passenger cars from July 1, 2025, while the start date for trucks is to be July 1, 2026.

The industry considers these deadlines to be unfeasible. At the beginning of 2024 at the earliest, possibly not until the end of 2024, it is expected that the secondary legal texts for Euro 7 will be submitted by the Commission and that the industry will thus have planning security. However, manufacturers need three years for the complex changeover, according to industry sources.

As reported, the Commission wants to tighten the limits for passenger cars only slightly, if at all. For gasoline engines, for example, they are to remain at the level of the current Euro 6dtemp regulation. However, this cannot be seen as an all-clear, because at the same time the test conditions are to be massively tightened. The test conditions are listed in “Annex 3” of the legislative proposal. According to this, no specifications are made for the driving style during test drives under normal driving conditions.

Industry circles conclude from this that measurements can also be taken in extreme driving situations, such as on inclines. In extreme driving situations, however, the emission of pollutants is significantly higher. It will therefore be very difficult for manufacturers to comply with the limits under the more stringent test conditions.

According to the draft, it is also planned to keep the correction factor small for measurements in extreme driving situations. According to the “Annex 3” table, the correction factor is to be 1.6. In earlier versions, the Commission had envisaged higher correction factors, so that higher values would be permitted, for example, in extreme weather conditions or when driving uphill.

Another detail that has now become known: Until now, it had been assumed that the Commission would propose a combined limit value for the pollutants nitrous oxide (N2O) and methane (CH4) for commercial vehicles. According to Annex 3, there will now be two separate limit values. This would have consequences for the class of light commercial vehicles weighing 3.5 to 7.5 tons. For this class of vehicle, it should be virtually impossible to comply with the limits. As a result, they are threatened with extinction well before the targeted phase-out of internal combustion engines in 2035. mgr

Faster approvals for renewables

The EU Commission wants simplified approval procedures for renewable energies to apply as quickly as possible. This is a bridging measure for the period in which the member states have not yet implemented the revised Renewable Energies Directive (RED IV) from the REPowerEU package, according to the draft, which was made available to Europe.Table on Monday.

Tomorrow, the Commission will present a draft Council Regulation. It will initially apply for one year. The legal basis will once again be the emergency Article 122 TFEU, with which the Council has already adopted several measures this year to deal with the energy crisis. New measures include simplifications for the approval of large heat pumps and the connection of smaller heat pumps to the grid.

Otherwise, the regulation brings forward several elements already known from RED IV: The overwhelming public interest in renewable energies, facilitations under the Birds and Habitat Directives – which mainly affect wind farms – as well as exemptions from environmental impact assessments for ground-mounted solar plants and the repowering of wind farms.

“The emergency measures are a good basis for quickly bringing more renewables online,” said Rainer Hinrichs-Rahlwes of the German Renewable Energy Federation (BEE). However, he said it would be desirable for some facilitations, such as the approval fiction for small solar plants for self-supply, to be based on the possibilities of the Climate, Energy and Environmental Aid Guidelines (CEEAG), which includes a de minimis limit of one megawatt instead of 50 kilowatts.

However, the nature conservation organization Nabu criticizes the stipulations on species protection. “The ordinance wants to restrict species protection for all renewable projects. This clearly goes beyond the announcements from REPowerEU,” says Nabu lawyer Raphael Weyland. “According to RED IV, easements for renewables should only apply in certain target areas. Areas of nature conservation value, such as Natura 2000, would have remained free, meanwhile.” The regulation would also have to define more precisely which protection measures are appropriate to justify exemptions from the killing ban. Otherwise, this would be left to the member states. ber

EU and Kazakhstan sign raw materials partnership

EU Commission President Ursula von der Leyen and Kazakh Prime Minister Alichan Smailov yesterday signed a memorandum of understanding for a strategic partnership for raw materials, batteries and green hydrogen at COP27 in Sharm el-Sheikh. Together, they want to better integrate strategic value chains in these areas, von der Leyen said. In the coming months, both partners will work with member states, industry and other stakeholders to develop a roadmap.

“The memorandum of understanding underlines that our cooperation must contribute to aligning our high environmental, social and governance standards,” von der Leyen stressed. Kazakhstan and the EU plan to cooperate in research and innovation, skills building and capacity building, among other areas. This will also attract private capital for these investments, it is hoped. The value chains developed in Kazakhstan would then serve not only the EU, but the entire world, von der Leyen said.

The EU is Kazakhstan’s most important trading partner and largest foreign investor. Von der Leyen announced the partnership two weeks ago after talks with Kazakh President Kassym-Jomart Tokayev (Europe.Table reported). In six months, both partners plan to take stock. leo

Scholz: phasing out fossil fuels ‘without ifs and buts’

At the climate conference in Sharm el-Sheikh, German Chancellor Olaf Scholz made a clear commitment to phase out coal, oil and gas. “We will exit fossil fuels – without any ifs or buts,” Scholz promised in his speech to the plenary of COP27 on Monday evening and pointed to Germany. Although Russia’s war against Ukraine forced Germany to “reconnect coal-fired power plants to the grid for a short time,” the Chancellor said. “We stand firmly committed to the coal phase-out.”

Scholz thus countered questions and assumptions at COP that Germany and other industrialized countries intended to backtrack on their commitments made at COP26 in Glasgow in the face of the energy crisis caused by Russia’s war in Ukraine. In Glasgow, the nations decided to phase out fossil fuels and refrain from new investments. The agreed phase-out must also be adhered to internationally: “There must not be a worldwide renaissance of fossil fuels,” Scholz demanded.

‘Even more help’ for loss and damage

The concept of “loss and damage”, that is, support against the consequences of the climate crisis, which several countries and climate protection organizations called for, was explicitly mentioned. “Rightly, the countries that are hit the hardest by the consequences of climate change but have contributed least to its cause are calling for more international solidarity,” Scholz said. “We are ready to support them even more.”

In this context, the Chancellor not only mentioned the previously announced increase in German climate finance to €6 billion per year from 2025 but also announced: “In addition, we will provide targeted support to the countries most severely affected by climate change in dealing with losses and damage. As expected, Scholz did not mention any specific sums; the Chancellor only mentioned a contribution of €170 million to the “Global Shield,” a protective mechanism designed to provide insurance against climate damage.

At the end of the short speech, Scholz gave an urgent appeal. “Not less, but more speed, more ambition, more cooperation in the switch to renewable energies is the imperative of our time. Our resolute commitments to climate protection must be followed by equally resolute action,” he demanded. And declared, “We will be measured by this.” mkr

Germany and France seek intersections for energy sovereignty

Following yesterday’s meeting of the Franco-German Parliamentary Assembly in Berlin, it was decided to set up a new working group of parliamentarians from both countries to address the issue of energy sovereignty. It was also agreed to clear up the misunderstandings between Paris and Berlin.

Parliamentarians from both countries asked German Foreign Minister Annalena Baerbock and French Secretary of State for Europe Laurence Boone about common challenges in foreign and security policy. The meeting was chaired by Bärbel Bas, President of the German Bundestag, and Yaël Braun-Pivet, President of the National Assembly. It was a highly diplomatic exercise given the current strong divergences between Paris and Berlin.

Yaël Braun-Pivet pointed to “slight turbulence” in relations between the two capitals. She quoted Cicero as saying, “In adversity, true friends reveal themselves.” Annalena Baerbock added that Paris and Berlin “don’t always see eye to eye,” but precisely because of the deep ties, they can work to find common intersections. “There are no families in which everyone always agrees,” she said.

Common vision of Europe

One term kept coming up at the hearing: sovereignty, a concept close to Emmanuel Macron’s heart and one that French Commissioner Thierry Breton is happy to pass on in Brussels. In the spirit of “energy sovereignty,” a new working group is to be set up with parliamentarians from both assemblies. Their task: to find agreements between two countries with very different energy systems.

Baerbock and Boone stressed the need to continue working together in view of the next winter and the one after that. In addition, Paris and Berlin are expecting the EU Commission’s proposals for reforming the electricity market “early next year”.

It was also about geopolitical sovereignty, this time in relation to China, with Minister Baerbock referring in this context to the increasing rivalry between democratic and authoritarian systems. She and her French colleague underlined that the EU’s Global Gateway initiative is the European response to the Silk Road promoted by Beijing. In this context, both stressed that France and Germany share the same vision, namely that of a stronger and more sovereign Europe.

The meeting also discussed the international meeting to be held in Paris on December 13 under the auspices of President Macron, whose goal is to strengthen Ukraine’s “short-term resilience” – planned to determine and coordinate the modalities for the delivery of weapons and other assistance.

Yesterday’s Franco-German meeting was the last before the 60th anniversary of the Élysée Treaty, which will be celebrated on January 22. cst

Berlin supports Commission proposal for billions in financial aid to Ukraine

The German government is basically supporting the EU Commission’s proposal to continue supporting Ukraine with billions in financial aid next year but wants to attach conditions to this. In talks with Ukrainian head of state Volodimir Selenski over the weekend, EU Commission President Ursula von der Leyen confirmed that the EU wants to provide up to €18 billion for Ukraine’s budget in 2023, broken down into monthly payments of €1.5 billion. According to von der Leyen, the liquidity support is to be provided via very long-term, low-interest loans secured via the EU budget.

However, the Commission’s move requires an adjustment of the legislation governing the current EU Multiannual Financial Framework. According to information from Europe.Table, when amending the legal text, Berlin wants to ensure that funds made possible by it are intended exclusively for Ukraine’s budget and cannot be misappropriated for other states. In addition, the aid to Ukraine in the modified legal framework is to be capped in amount and limited in time. The Commission intends to present its proposal for Ukraine aid this Wednesday. The EU finance ministers are already holding a fundamental debate on Ukraine aid today.

Ambitious schedule

In order to disburse funds to Kyiv as early as the beginning of 2023, finance ministers must unanimously approve the legal text at their December meeting. However, this timetable is considered ambitious. For the first tranche in January, it may be necessary to draw on €3 billion that were already supposed to flow to Ukraine this year but have not yet been disbursed, a council insider said.

According to the Commission, the funds will also help Ukraine implement further reforms toward EU membership. Berlin agrees, particularly with regard to improvements in the fight against corruption, the strengthening of the rule of law and more efficient administrative processes. These are also basic prerequisites for the preparations for the reconstruction of the country.

In total, Kyiv will need €2 to €4 billion a month next year. The remaining funds are to come from donors outside the EU, primarily from the USA. For weeks, Washington has been putting pressure on Brussels for the EU to firm up its financial aid to Ukraine for the coming year. However, because of the midterm elections, it is no longer clear whether the US government will be able to deliver on its $1.5 billion pledge. cr/ebo

Booking platforms: more transparency for short-term rentals

As expected, the EU Commission presented a regulatory framework for short-term accommodation rentals on Monday (Europe.Table reported). The new EU-wide rules are intended to make short-term rentals more transparent, effective and sustainable. The Commission sees the regulation as a sector-specific plug-in for the Digital Services Act (DSA).

Until now, online booking platforms have had different rules for sharing data in each member state. The platforms Airbnb and Expedia welcomed the EU’s plans.

EPP parliamentarian Andreas Schwab rated the proposed regulation as challenging for Germany. “This is because platforms can benefit from uniform requirements, but there are no plans for true standardization,” Schwab said. In Germany, he said, this has not been envisaged so far, even between the states. “One novelty is that member states remain explicitly free not to act if there is no need.”

Airbnb and similar providers are booming

However, short-term rentals are becoming increasingly popular and thus a problem for many metropolitan areas in Europe. Internal Market Commissioner Thierry Breton pointed out in a post on Linkedin that in 2021, visitors already spent more than 360 million nights in short-term rentals, representing nearly a quarter of all tourist accommodation in the EU. According to the commission, the number of bookings in the first half of 2022 increased by another 138 percent compared to the same period in 2021.

The main contents of the regulatory proposal:

Harmonization of the requirements for the registration of hosts and accommodations
Clarification of the rules for display and control of individual registration numbers.
Automation of data exchange between online platforms and authorities. Creation of nationally uniform digital access points
Further use of data in aggregated form for Eurostat tourism statistics. The data will also feed into the future European Tourism Data Space.
Member States implement and monitor the transparency framework and establish sanctions for violations.

After the adoption of the regulation by parliament and council and its entry into force, member states will have a period of two years to set up the necessary data exchange mechanisms. The regulation will complement existing instruments, in particular, the DSA and the provisions of the Directive on Administrative Cooperation in the field of Taxation (DAC7). vis

Henning Vöpel – the intellectual pragmatist

If you ask Henning Vöpel what has shaped him as a European, he gives an answer that is rather unusual for an economist. He said he read the books of Holocaust survivor Elie Wiesel very early on. “I was touched at a relatively young age that something like this had taken place in Europe by Germans,” Vöpel says. Later, a political and economic interest came along. “That showed me: It’s important to be concerned with Europe and to keep standing up for peace and freedom in Europe.”

The 50-year-old from Hamburg has been working on this for a year at the Centre for European Policy (cep), the think tank of the Foundation Political Procedures from Freiburg. He is also a professor of economics at the BSP Business & Law School. Previously, he headed the Hamburg Institute of International Economics (HWWI) for seven years. He continues to live in his native Hamburg.

Europe must learn to think strategically again

At cep, Vöpel leads a team of nearly 40 people who evaluate EU policies from a regulatory economics perspective. In addition to locations in Freiburg and Berlin, cep has partner institutes in Paris and Rome. Talks are currently underway about an additional location in Warsaw. If all goes well, the partner institute should be up and running by the beginning of next year.

Since taking up his post, he has been in the process of establishing two new specialist areas: Digitization and New Technologies, and Security and Resilience. “We need to incorporate future developments, which we can’t fully anticipate, more into what we do today.” Europe, he said, has forgotten how to think strategically. He now wants to help change that.

Vöpel advocates a new approach to regulation. “The way Europe currently regulates leads to deformation rather than transformation.” He calls for research, innovation and entrepreneurship to always be strengthened at the same time as the necessary regulation. This balance of freedom and regulation is out of joint in Brussels, he said. “Regulations should always aim to activate creative and entrepreneurial forces instead of suppressing them,” he says. “That’s the only way we can develop the potential of diversity in Europe much more.” For example, there are presentable AI regions in Paris, Lisbon or Tallinn, Vöpel says. But these could be much more networked to work even more innovatively.

There must be time for research

Through his work, Vöpel holds many talks, networks and organizes conferences. Still, he takes the time to do research. “I think it’s absolutely essential that the people who have institutional responsibility also do basic work,” he says. That’s why he takes an hour every day to read. In conversation, he quotes historians like Harold James or philosophers like Karl Popper.

At the same time, he advocates a pragmatic approach to dilemmas. “A values-based and feminist foreign policy is desirable,” Vöpel says. “But at the same time, we have to ask ourselves how we can maintain dialogue in a world of geopolitical confrontation.” That’s why he prefers to talk about an emancipatory foreign policy that strengthens civil society forces while maintaining trade and diplomatic relations. Asked what that might mean in concrete terms when dealing with Iran, the economist replies, “That’s exactly the dilemma where politics loses its innocence.” Tom Schmidtgen

Claude Turmes: ‘Mr. Energy’ on the loose

“It is important that we have someone with experience who will do everything to implement the European mandate,” Luxembourg’s Energy Minister Claude Turmes (Greens) said last year. At issue was the reform of the Energy Charter Treaty and the move of Turmes’ energy advisor Guy Lentz to head the ECT. The latter took over as secretary general on Jan. 1. Lentz was tasked with bringing the outdated Investor Protection Treaty in line with European climate goals.

Claude Turmes, who was dubbed “Climate Knight” and “Mr. Energy” in his Brussels MEP days, should actually be very interested in this. It was he who pushed for his advisor to take over the leadership of the ECT. It was also he who was one of the first politicians in Europe to criticize the Energy Charter. In 2019, he was still in favor of the ECT leaving.

But “Mr. Energy” played a bad hand. Tower’s ally Lentz failed to implement the EU mandate satisfactorily: Already several EU states have announced their withdrawal from the charter. The ECT secretary recently drew attention mainly for his antics on Twitter. Lentz personally insulted scientists who criticized his reform text. “Who pays these clowns to write such crap?” he tweeted. A short time later, he deleted his account. He has not apologized for his behavior, Reporter.lu reports.

With his misplacement, Luxembourg’s Energy Minister is skating on thin ice politically. The former major ECT critic suddenly finds the treaty acceptable. He says that the Energy Charter is particularly suitable for the expansion of renewable energies. Yet this has not been proven to date. On the contrary, the charter would even make them “more expensive than they need to be,” criticizes attorney Philippe Sands, who regularly intervenes in ECT arbitration proceedings.

At the same time, a reformed Energy Charter continues to protect investments in nuclear. (And outside the EU, Switzerland and Great Britain, also those in fossil energies.) Claude Turmes is a convinced opponent of nuclear power. As a young activist, he had already set up solar panels with his own hands and advocated a future without fossil energies and nuclear power, he writes in his book on the energy transition (please do not read in English translation).

One year before the parliamentary elections, “Mr. Energy” faces a dilemma. If he now questions this reform, the “Climate Knight” would have to admit his failure. Charlotte Wirth