Gas consumption in the industry could rise by 13 percent in 2023, according to forecasts by the International Energy Agency. In his analysis, Manuel Berkel explains what this means for Europe’s gas supply next winter and why China could tip the scales.
The fifth compromise for the Data Act is available, but the German government does not yet want to comment on it. Corinna Visser explains exactly what the new draft contains and where there is still criticism.
Shortly before the anniversary of the Russian war of aggression on Ukraine, the EU is heading for a tenth sanctions package. In total, it involves trade restrictions worth €11 billion. Eric Bonse shares the details with us.
Despite the drop in gas prices, Europe’s most important industry association does not yet see any clear signals of recovery. “The situation for industrial production in energy-intensive sectors remains uncertain. Despite the current easing in gas prices, the evolution of energy prices remains difficult to predict, making it difficult for companies to plan ahead and resume production,” Alexandre Affre, Deputy Director General of BusinessEurope, said Wednesday.
The association sees several reasons for this: “The volatility of gas prices remains. We also expect energy prices to remain significantly higher than before the war for quite some time. An additional challenge for the European industry is the expected increase in Chinese demand on the global gas market. This could drive up LNG prices in the coming months.”
However, there are also initial signs of relief. For months now, one of the hardest-hit sectors has been reporting the restart of several plants: fertilizer manufacturers were the first to be hit by the gas crisis last year. Their basic product, ammonia, is produced directly from natural gas and nitrogen from the air. At the beginning of September, European production capacities were only running at 30 percent capacity, according to Fertilizers Europe.
But as prices have fallen, one of the most important gas consumers has also recovered. At the beginning of January, capacity utilization at European plants had risen again to around 65 percent, a spokesman said. However, local manufacturers naturally see the import of fertilizers from regions with more relaxed gas supplies and lower raw material prices as a threat.
“The recent massive increase in imports is at odds with Europe’s policy of strategic autonomy,” a Fertilizers Europe spokesperson said yesterday. “If this negative trend is not reversed, Europe risks becoming completely dependent on fertilizer supplies from third countries and replacing its dependence on Russian natural gas with a dependence on imported fertilizers.”
The International Energy Agency (IEA) also sees a broad trend toward a slight easing. “The sharp decline in gas prices since the second half of December should support gas demand in industry,” the agency wrote in a report published last week. In view of the price development on the futures market, gas consumption in the industry is likely to rise again by 13 percent in 2023, making up for around half of the decline from the previous year.
However, this does not necessarily mean that production will increase again to the same extent. Instead, the IEA explains part of the likely increase in gas consumption by the fact that the industry will partially reverse the conversion of its own power plants from gas to oil, which happened during the crisis. Gas is simply cheaper than oil once more.
The agency has been trying to build a bridge for the industry for months. In December, the IEA forecast a looming gas shortfall of 27 to 57 billion cubic meters (bcm) for this year, which the EU Commission adopted. However, modelers took it as given that production declines in energy-intensive industries would end, increasing gas consumption by ten bcm. In addition to fertilizer producers, this would, according to the IEA, relieve the steel and aluminum sectors in particular.
Among other things, the energy agency also uses the gas needs of the industry to justify policy measures for savings in other areas in its latest report. European countries could close the remaining gas gap of 40 bcm, it says. “To prevent most of these energy savings from coming from production cuts in gas-intensive industries, as was the case in 2022, structural solutions that preserve economic activity and strategic autonomy in critical value chains must be implemented.”
The solutions are well known: faster deployment of renewables and higher efficiency. However, not all analysts are convinced that this will succeed at the necessary pace. According to a forecast published Wednesday, S&P still expects a “significant slump in demand,” especially in Europe. High inflation, for example, could make it difficult for households to contribute to investments in renewable energy. Few new liquefaction plants for LNG will also be completed worldwide, according to S&P.
China in particular is seen as tipping the scales for the supply of liquefied gas. Due to the relaxed corona policy, demand is generally expected to increase. However, Oxford University believes that the effect on the global LNG market will be limited.
China’s gas demand will probably increase by 30 bcm this year, writes the Institute for Energy Studies. However, the researchers expect Chinese LNG demand to increase by only six to eight bcm. The bulk of the higher consumption will probably be absorbed by higher domestic production and exports from Russia via the Power of Siberia pipeline.
The Swedish Presidency presented a fifth compromise on the Data Act on Tuesday evening. This paper, which is available to Contexte, will be discussed by delegations at the Telecommunications Working Group meeting on Feb. 28. It could already be the last compromise before the Council reaches a General Approach.
The German government is examining the proposal, but did not want to comment on it on Wednesday. In the German business community, however, the verdict is clear. Even if the associations see some improvements, they are still not satisfied. The unanimous opinion is that thoroughness should take precedence over speed.
The main changes to the previous compromise paper concern
The DIHK believes that the fifth compromise still fails to achieve the goal of creating a uniform legal framework for the European data market, promoting innovation and ensuring fair data exchange. Complicated definitions and procedures of dispute resolution bodies, as well as the possibility of being able to demand compensation directly in retrospect for minor errors, caused uncertainty. “This could deter smaller companies in particular from using data,” says Dirk Binding, head of the Digital Economy division at the DIHK.
This is also the view of eco, the Internet industry association. Overall, “the Data Act remains very complex and fraught with uncertainty for companies that own and process data.”
Yet the opposite is important. A recent DIHK survey shows that 53 percent of companies already feel thwarted by legal uncertainties in the use of data. It is therefore all the more important for the EU to make the Data Act “practical and legally secure,” says Dirk Binding of the DIHK.
Bitkom supports the fact that the interests of data owners and data recipients in intellectual property (IP) and trade secrets are somewhat more balanced in the new compromise. Dominic Doll, a digitization expert at the German Electrical and Electronic Manufacturers’ Association (ZVEI), agrees that the proposals to extend protection are a step in the right direction. This would give the data owner the right to refuse to pass on IP-relevant data if there is a suspicion of unlawful use of IP by the user or third parties.
In addition, the specification helps to ensure that users or third parties are not allowed to develop competing products on the basis of shared data. That was another point of concern for many companies. The adjustment contributes “significantly to the investment protection of the data holder,” says Doll, and demands: “The federal government must not fall behind this position.”
The DIHK, on the other hand, which probably has small and medium-sized enterprises in mind, wants the legislature to find a better-balanced approach “that serves the existing interest in data access and equally the protection of trade secrets.”
Against this background, the fifth compromise, which for the first time provides for a right of the data owner to reject the data access claim in exceptional circumstances, should be critically assessed. “The terms introduced, ‘exceptional circumstances’ and ‘serious damage’, which in the end only refer to a possible economic damage, are very abstract and leave a wide scope for refusing data disclosure,” warns Binding.
The German Engineering Federation VDMA welcomes the effort to bring the draft more in line with industry concerns. There are repeated accusations from the industry that business-to-business (B2B) relationships should be valued differently than those between businesses and consumers (B2C).
However, the compromise does not yet take sufficient account of concerns from a B2B perspective, criticizes the VDMA. The possibilities of “creating balanced contractual solutions among partners in the industrial value network” would be unnecessarily restricted. Thus, Doll from ZVEI also emphasizes: “The German government must urgently advocate a separation of the B2B and B2C regulatory areas in the Data Act.”
Overall, eco is more positive about the new proposal than about the Commission’s original draft. However, it remains unclear what appropriate compensation for access to data might look like. ZVEI, on the other hand, considers the proposal for fair compensation – consisting of the costs of providing the data plus an appropriate margin – to be suitable for stimulating data trading.
The bottom line is, however, according to Doll: “Even this draft does not address the structural flaws in the Data Act draft.” Furthermore, there is no legal certainty for companies as to which data they have to make available and how, because the draft does not take industrial practice into account.
Despite skyrocketing gas prices and strong economic incentives to reduce gas loss, methane emissions in the energy sector remain high. This is revealed by the International Energy Agency’s (IEA) Global Methane Tracker 2023, presented on Tuesday. “Some progress is being made but emissions are still far too high and not falling fast enough,” IEA Director Fatih Birol said at the presentation.
The report shows that:
Fatih Birol lamented that the sector had raked in a record profit of around $4 trillion in 2022. According to Birol’s calculations, just three percent of that sum “would be enough to achieve a 75 percent reduction in methane emissions.” Most of the gas loss could be prevented without significant cost and with proven methods – such as identifying leaks or repairing and replacing old infrastructure. The use of satellites could reduce particularly large methane leaks by ten percent. Gas flaring has also been reduced globally, according to initial IEA estimates.
In a report, the NGO Environmental Investigation Agency (EIA) criticizes the EU’s lack of action on reducing methane emissions from imported feedstocks, saying this puts EU climate targets at risk. The EU imports much of its fossil fuel feedstock. According to the NGO’s estimates, methane leaks regularly occur during the production of this natural gas, coal and oil, as well as during transportation. According to the report, imported fossil fuels were responsible for over eight million tons of methane emissions in 2020. That was comparable to 200 million metric tons of CO2, or the annual CO2 emissions of 54 coal-fired power plants, it said. Methane is an extremely climate-damaging greenhouse gas in the short term.
According to EIA data, most methane is emitted during production and import from Russia. However, US gas does not have a much better methane balance either. Only gas from Norway performs better. Overall, however, the replacement of Russian gas with gas from the USA and Norway is likely to have contributed only to a small reduction in methane emissions. According to the EIA, liquefied natural gas from Qatar and Australia is responsible for 60 to 175 percent more methane emissions than Russian gas.
The NGO criticizes the EU Commission’s proposal for methane regulation. The Commission’s proposal does not include any obligations to measure, report on, or reduce methane emissions from imported energy feedstocks, the EIA said. The NGO calls for fossil fuel importers to:
Market participants who do not comply should not be allowed to sell raw materials on the EU market, the EIA demands. “The technical requirements to implement strict regulations throughout the supply chain are available at low cost,” the NGO concludes. The EU Parliament needs to tighten up the Commission’s methane regulation, it demands. Nico Beckert
“Anyone who follows the European Council can feel the pulse of the European Union,” says Peter Ludlow. Almost no one knows the metaphorical pulse of the EU as well as he does. For decades, the 83-year-old Briton has been observing and writing about the Brussels institutions, especially the European Council. His analyses can be bought on the online platform EuroComment – for former Council President Herman Van Rompuy, they are a “priceless source of information and insight.”
The reason probably lies in Ludlow’s good relationships with many high-profile politicians and officials in the Brussels cosmos. He analyzes Council meetings not only on the basis of public documents but often has internal papers on hand as well. Because of his large network, the Financial Times once called him “Brussels’ ultimate insider.” Ludlow himself doesn’t like this designation, finding it exaggerated: “I consider myself a historian,” he says. “And it is as a historian that I would like to be remembered.”
When Ludlow recounts his career, he almost always punctuates events with the appropriate year. In 1957, for example, the Treaty of Rome awakened Ludlow’s interest in European politics. In the years that followed, he studied in Oxford, Cambridge and Göttingen, and from 1966 on, he taught international history in London. Ten years later, he moved to the European Institute in Florence. Before that, he worked in archives in various parts of Europe, including Switzerland, France, Germany, and the Nordic countries.
Then, just over 40 years ago, Ludlow came to Brussels to found the think tank CEPS (Center for European Policy Studies). At one of CEPS’s first events, he met Niels Ersbøll, then Secretary General of the Council of the European Union. The two became friends, and Ersbøll introduced Ludlow to other crucial people in the Brussels institutions. This network, combined with his background as a historian, makes Ludlow an EU insider. For him, the deep insight behind the scenes in Brussels comes not from this one special moment but from many conversations over time.
Ludlow has been involved with strategic issues in the Brussels institutions for decades: first at CEPS and then at the European Strategy Forum (ESF), which he co-founded. The ESF’s meetings bring together senior figures from around the European Council, most of whom are themselves current or former insiders like Ludlow.
Ludlow hopes to find a successor for EuroComment this year. He himself will use the freed-up time to write books and edit his publications. He also plans to allow himself a little more free time at the age of 83. Jens Toebben
Gas consumption in the industry could rise by 13 percent in 2023, according to forecasts by the International Energy Agency. In his analysis, Manuel Berkel explains what this means for Europe’s gas supply next winter and why China could tip the scales.
The fifth compromise for the Data Act is available, but the German government does not yet want to comment on it. Corinna Visser explains exactly what the new draft contains and where there is still criticism.
Shortly before the anniversary of the Russian war of aggression on Ukraine, the EU is heading for a tenth sanctions package. In total, it involves trade restrictions worth €11 billion. Eric Bonse shares the details with us.
Despite the drop in gas prices, Europe’s most important industry association does not yet see any clear signals of recovery. “The situation for industrial production in energy-intensive sectors remains uncertain. Despite the current easing in gas prices, the evolution of energy prices remains difficult to predict, making it difficult for companies to plan ahead and resume production,” Alexandre Affre, Deputy Director General of BusinessEurope, said Wednesday.
The association sees several reasons for this: “The volatility of gas prices remains. We also expect energy prices to remain significantly higher than before the war for quite some time. An additional challenge for the European industry is the expected increase in Chinese demand on the global gas market. This could drive up LNG prices in the coming months.”
However, there are also initial signs of relief. For months now, one of the hardest-hit sectors has been reporting the restart of several plants: fertilizer manufacturers were the first to be hit by the gas crisis last year. Their basic product, ammonia, is produced directly from natural gas and nitrogen from the air. At the beginning of September, European production capacities were only running at 30 percent capacity, according to Fertilizers Europe.
But as prices have fallen, one of the most important gas consumers has also recovered. At the beginning of January, capacity utilization at European plants had risen again to around 65 percent, a spokesman said. However, local manufacturers naturally see the import of fertilizers from regions with more relaxed gas supplies and lower raw material prices as a threat.
“The recent massive increase in imports is at odds with Europe’s policy of strategic autonomy,” a Fertilizers Europe spokesperson said yesterday. “If this negative trend is not reversed, Europe risks becoming completely dependent on fertilizer supplies from third countries and replacing its dependence on Russian natural gas with a dependence on imported fertilizers.”
The International Energy Agency (IEA) also sees a broad trend toward a slight easing. “The sharp decline in gas prices since the second half of December should support gas demand in industry,” the agency wrote in a report published last week. In view of the price development on the futures market, gas consumption in the industry is likely to rise again by 13 percent in 2023, making up for around half of the decline from the previous year.
However, this does not necessarily mean that production will increase again to the same extent. Instead, the IEA explains part of the likely increase in gas consumption by the fact that the industry will partially reverse the conversion of its own power plants from gas to oil, which happened during the crisis. Gas is simply cheaper than oil once more.
The agency has been trying to build a bridge for the industry for months. In December, the IEA forecast a looming gas shortfall of 27 to 57 billion cubic meters (bcm) for this year, which the EU Commission adopted. However, modelers took it as given that production declines in energy-intensive industries would end, increasing gas consumption by ten bcm. In addition to fertilizer producers, this would, according to the IEA, relieve the steel and aluminum sectors in particular.
Among other things, the energy agency also uses the gas needs of the industry to justify policy measures for savings in other areas in its latest report. European countries could close the remaining gas gap of 40 bcm, it says. “To prevent most of these energy savings from coming from production cuts in gas-intensive industries, as was the case in 2022, structural solutions that preserve economic activity and strategic autonomy in critical value chains must be implemented.”
The solutions are well known: faster deployment of renewables and higher efficiency. However, not all analysts are convinced that this will succeed at the necessary pace. According to a forecast published Wednesday, S&P still expects a “significant slump in demand,” especially in Europe. High inflation, for example, could make it difficult for households to contribute to investments in renewable energy. Few new liquefaction plants for LNG will also be completed worldwide, according to S&P.
China in particular is seen as tipping the scales for the supply of liquefied gas. Due to the relaxed corona policy, demand is generally expected to increase. However, Oxford University believes that the effect on the global LNG market will be limited.
China’s gas demand will probably increase by 30 bcm this year, writes the Institute for Energy Studies. However, the researchers expect Chinese LNG demand to increase by only six to eight bcm. The bulk of the higher consumption will probably be absorbed by higher domestic production and exports from Russia via the Power of Siberia pipeline.
The Swedish Presidency presented a fifth compromise on the Data Act on Tuesday evening. This paper, which is available to Contexte, will be discussed by delegations at the Telecommunications Working Group meeting on Feb. 28. It could already be the last compromise before the Council reaches a General Approach.
The German government is examining the proposal, but did not want to comment on it on Wednesday. In the German business community, however, the verdict is clear. Even if the associations see some improvements, they are still not satisfied. The unanimous opinion is that thoroughness should take precedence over speed.
The main changes to the previous compromise paper concern
The DIHK believes that the fifth compromise still fails to achieve the goal of creating a uniform legal framework for the European data market, promoting innovation and ensuring fair data exchange. Complicated definitions and procedures of dispute resolution bodies, as well as the possibility of being able to demand compensation directly in retrospect for minor errors, caused uncertainty. “This could deter smaller companies in particular from using data,” says Dirk Binding, head of the Digital Economy division at the DIHK.
This is also the view of eco, the Internet industry association. Overall, “the Data Act remains very complex and fraught with uncertainty for companies that own and process data.”
Yet the opposite is important. A recent DIHK survey shows that 53 percent of companies already feel thwarted by legal uncertainties in the use of data. It is therefore all the more important for the EU to make the Data Act “practical and legally secure,” says Dirk Binding of the DIHK.
Bitkom supports the fact that the interests of data owners and data recipients in intellectual property (IP) and trade secrets are somewhat more balanced in the new compromise. Dominic Doll, a digitization expert at the German Electrical and Electronic Manufacturers’ Association (ZVEI), agrees that the proposals to extend protection are a step in the right direction. This would give the data owner the right to refuse to pass on IP-relevant data if there is a suspicion of unlawful use of IP by the user or third parties.
In addition, the specification helps to ensure that users or third parties are not allowed to develop competing products on the basis of shared data. That was another point of concern for many companies. The adjustment contributes “significantly to the investment protection of the data holder,” says Doll, and demands: “The federal government must not fall behind this position.”
The DIHK, on the other hand, which probably has small and medium-sized enterprises in mind, wants the legislature to find a better-balanced approach “that serves the existing interest in data access and equally the protection of trade secrets.”
Against this background, the fifth compromise, which for the first time provides for a right of the data owner to reject the data access claim in exceptional circumstances, should be critically assessed. “The terms introduced, ‘exceptional circumstances’ and ‘serious damage’, which in the end only refer to a possible economic damage, are very abstract and leave a wide scope for refusing data disclosure,” warns Binding.
The German Engineering Federation VDMA welcomes the effort to bring the draft more in line with industry concerns. There are repeated accusations from the industry that business-to-business (B2B) relationships should be valued differently than those between businesses and consumers (B2C).
However, the compromise does not yet take sufficient account of concerns from a B2B perspective, criticizes the VDMA. The possibilities of “creating balanced contractual solutions among partners in the industrial value network” would be unnecessarily restricted. Thus, Doll from ZVEI also emphasizes: “The German government must urgently advocate a separation of the B2B and B2C regulatory areas in the Data Act.”
Overall, eco is more positive about the new proposal than about the Commission’s original draft. However, it remains unclear what appropriate compensation for access to data might look like. ZVEI, on the other hand, considers the proposal for fair compensation – consisting of the costs of providing the data plus an appropriate margin – to be suitable for stimulating data trading.
The bottom line is, however, according to Doll: “Even this draft does not address the structural flaws in the Data Act draft.” Furthermore, there is no legal certainty for companies as to which data they have to make available and how, because the draft does not take industrial practice into account.
Despite skyrocketing gas prices and strong economic incentives to reduce gas loss, methane emissions in the energy sector remain high. This is revealed by the International Energy Agency’s (IEA) Global Methane Tracker 2023, presented on Tuesday. “Some progress is being made but emissions are still far too high and not falling fast enough,” IEA Director Fatih Birol said at the presentation.
The report shows that:
Fatih Birol lamented that the sector had raked in a record profit of around $4 trillion in 2022. According to Birol’s calculations, just three percent of that sum “would be enough to achieve a 75 percent reduction in methane emissions.” Most of the gas loss could be prevented without significant cost and with proven methods – such as identifying leaks or repairing and replacing old infrastructure. The use of satellites could reduce particularly large methane leaks by ten percent. Gas flaring has also been reduced globally, according to initial IEA estimates.
In a report, the NGO Environmental Investigation Agency (EIA) criticizes the EU’s lack of action on reducing methane emissions from imported feedstocks, saying this puts EU climate targets at risk. The EU imports much of its fossil fuel feedstock. According to the NGO’s estimates, methane leaks regularly occur during the production of this natural gas, coal and oil, as well as during transportation. According to the report, imported fossil fuels were responsible for over eight million tons of methane emissions in 2020. That was comparable to 200 million metric tons of CO2, or the annual CO2 emissions of 54 coal-fired power plants, it said. Methane is an extremely climate-damaging greenhouse gas in the short term.
According to EIA data, most methane is emitted during production and import from Russia. However, US gas does not have a much better methane balance either. Only gas from Norway performs better. Overall, however, the replacement of Russian gas with gas from the USA and Norway is likely to have contributed only to a small reduction in methane emissions. According to the EIA, liquefied natural gas from Qatar and Australia is responsible for 60 to 175 percent more methane emissions than Russian gas.
The NGO criticizes the EU Commission’s proposal for methane regulation. The Commission’s proposal does not include any obligations to measure, report on, or reduce methane emissions from imported energy feedstocks, the EIA said. The NGO calls for fossil fuel importers to:
Market participants who do not comply should not be allowed to sell raw materials on the EU market, the EIA demands. “The technical requirements to implement strict regulations throughout the supply chain are available at low cost,” the NGO concludes. The EU Parliament needs to tighten up the Commission’s methane regulation, it demands. Nico Beckert
“Anyone who follows the European Council can feel the pulse of the European Union,” says Peter Ludlow. Almost no one knows the metaphorical pulse of the EU as well as he does. For decades, the 83-year-old Briton has been observing and writing about the Brussels institutions, especially the European Council. His analyses can be bought on the online platform EuroComment – for former Council President Herman Van Rompuy, they are a “priceless source of information and insight.”
The reason probably lies in Ludlow’s good relationships with many high-profile politicians and officials in the Brussels cosmos. He analyzes Council meetings not only on the basis of public documents but often has internal papers on hand as well. Because of his large network, the Financial Times once called him “Brussels’ ultimate insider.” Ludlow himself doesn’t like this designation, finding it exaggerated: “I consider myself a historian,” he says. “And it is as a historian that I would like to be remembered.”
When Ludlow recounts his career, he almost always punctuates events with the appropriate year. In 1957, for example, the Treaty of Rome awakened Ludlow’s interest in European politics. In the years that followed, he studied in Oxford, Cambridge and Göttingen, and from 1966 on, he taught international history in London. Ten years later, he moved to the European Institute in Florence. Before that, he worked in archives in various parts of Europe, including Switzerland, France, Germany, and the Nordic countries.
Then, just over 40 years ago, Ludlow came to Brussels to found the think tank CEPS (Center for European Policy Studies). At one of CEPS’s first events, he met Niels Ersbøll, then Secretary General of the Council of the European Union. The two became friends, and Ersbøll introduced Ludlow to other crucial people in the Brussels institutions. This network, combined with his background as a historian, makes Ludlow an EU insider. For him, the deep insight behind the scenes in Brussels comes not from this one special moment but from many conversations over time.
Ludlow has been involved with strategic issues in the Brussels institutions for decades: first at CEPS and then at the European Strategy Forum (ESF), which he co-founded. The ESF’s meetings bring together senior figures from around the European Council, most of whom are themselves current or former insiders like Ludlow.
Ludlow hopes to find a successor for EuroComment this year. He himself will use the freed-up time to write books and edit his publications. He also plans to allow himself a little more free time at the age of 83. Jens Toebben
