The European gas price cap continues to take shape. The EU Commission has now drawn up a price cap in a key issues paper. This is to apply to transactions based on the Dutch price index TTF, which are concluded for the following month. Manuel Berkel has analyzed the as yet unpublished paper.
Smoking is to become significantly more expensive in the future, according to the EU Commission’s plan. The proposal, which is exclusively available to Europe.Table, envisages that the member states should link the minimum taxes to their purchasing power. What exactly this means for Germany, and what criticism is already emerging, Markus Grabitz has written down.
My colleague Leonie Düngefeld is in Brussels this week for EU Raw Materials Week. There, Maroš Šefčovič, Commissioner for Interinstitutional Relations and Foresight, yesterday signed a memorandum of understanding with Ukraine to advance the raw materials partnership. There, people are already thinking about the reconstruction and investments that could be possible after the end of the war, Šefčovič says in an interview.
The Commission has drawn up key points for a price cap in gas trading. It is to apply to transactions concluded in the following month, based on the Dutch TTF price index. This price plays a key role as a reference on the European wholesale market for gas, writes the EU Commission in an as yet unpublished paper, which the ambassadors of the member states discussed on Wednesday and which has been made available to Europe.Table (link to the document).
However, the cap is only to take effect if there are no price jumps in the global LNG market. This is to ensure that the EU continues to import liquefied gas.
The paper does not yet specify a concrete price ceiling for the market correction mechanism. However, the “extraordinary price increase in Aug. 2022” could serve as a guide when setting it. Back then, the TTF price for gas supplies in December climbed up to €350 per megawatt hour, but on Wednesday the index was only about €125.
According to BDEW, the front month is normally the most liquid product traded in the short term under futures contracts. However, the Commission would thus be deviating from its draft regulation of Oct. 18. In it, it had announced that the price cap would apply to the spot market.
The price cap is an emergency measure and is to be limited to one year. As already announced, trading transactions away from exchanges are not to be affected. One disadvantage is therefore that gas trading could shift to so-called OTC transactions, the Commission writes in the key points. “This point alone implies that the approach will be ineffective in capping prices,” DIW economist Karsten Neuhoff tells Europe.Table.
The Commission also warns against this. It is true that the price cap could prevent some consumers who continue to demand gas even when prices are extremely high, as in August 2022, from temporarily setting the price for everyone. But, “It is not an instrument for structurally lowering the price level, which can only be achieved through additional supply and demand side measures.”
The EU executive only presented the key points after strong pressure from many member states. The Council had demanded a concrete legislative proposal so that the energy ministers could adopt the Oct. 18 regulation on Nov. 24. Surprisingly, the five-page paper now also contains some articles as possible building blocks of a legislative text. At the beginning of the week, Commission President Ursula von der Leyen had announced to the EU states in a letter that she would only be able to present a “detailed overview” of the price cap by the time of the Energy Council.
If the price correction mechanism is adopted, however, the member states are to have no further influence on it. It is to be triggered automatically and the Commission wants to be given the power to suspend the price cap at any time.
The criteria for the suspension are the reservations that were already listed in the draft regulation of Oct. 18 and were confirmed shortly afterwards by the heads of state and government. For example, the price cap must not impede the flow of gas between member states.
The Commission wants excise taxes on tobacco and tobacco-related products to rise dramatically. Under the plans, minimum excise taxes on cigarettes would double in Germany. Currently, the tobacco tax on cigarettes in Germany is €115 per 1000 pieces. In the future, it would be €230 per 1,000 pieces.
Minimum taxes on cigars and cigarillos would increase to nine times today’s levels. Pipe tobacco would see a 445 percent tax increase, and hookah tobacco would see a 310 percent increase. Fine-cut tobacco would see an increase of 167 percent. For so-called less harmful tobacco products, which no longer burn tobacco but merely heat it, the tax would be lower than for conventional smoking products. The Commission proposes at least €91 per 1000 pieces. This is according to the Commission’s draft directive for excise duties on tobacco products, which is available to Europe.Table. The Commission plans to adopt its proposal on Dec. 7.
The Commission proposes to separate cigars and cigarillos as product classes. This would allow member states to set different taxes for cigarillos and cigars. The Commission also wants to subject nicotine-containing liquids for e-cigarettes to excise taxes. Accordingly, a tax of ten cents per milliliter is to be levied on liquids with a nicotine content of up to 15 milligrams per milliliter, and a tax of 30 cents per milliliter is to be levied on liquids with a nicotine content of 15 milligrams per milliliter or more.
In Germany, it was recently decided to gradually increase the tax on liquids. Currently, 16 cents per milliliter is due. The tax rate will rise to 32 cents per milliliter by 2026.
Tobacco taxation falls within the exclusive competence of the member states. As with all other tax issues, a unanimous vote of the member states is required to adopt the proposed directive. The European Parliament is not involved in the legislative project. As heard in Brussels, France in particular is pushing for higher tobacco taxes. Currently, many smokers are switching to neighboring EU countries because of a high level of tobacco tax.
The Commission justifies its push for drastically higher excise taxes with health policy. The proposal is “an integral part of the Europe against Cancer action plan,” according to the explanatory memorandum for the legislative text. Higher tobacco taxes and prices on tobacco products have proven to be the most effective measure against nicotine consumption.
With the directive, the EU is staying on course with the long-term goals of the plan to combat cancer: The aim here is to create the first tobacco-free generation in 2040, in which less than five percent of the population uses tobacco.
According to the proposal, the minimum taxes are to be linked to purchasing power in the respective member states. Two-thirds of the minimum tax is to be a nominal amount, and one-third of the minimum tax is to be linked to purchasing power. This means that the minimum tax would be lower in Romania, for example, where purchasing power is lower than in Luxembourg or Germany. In addition, the minimum tax is to be adjusted every three years depending on the depreciation of money.
Markus Ferber (CSU) considers the proposal “a relatively transparent attempt to export the high French taxation level for tobacco products to the whole of Europe.” He said he does not expect approval from the Council. “The Commission must be careful not to overdo it,” Ferber added. “If the Commission sets the tax rates too high, there is a risk that smokers will move to the black market.”
Dustin Dahlmann of the Independent European Vaping Alliance, the e-cigarette association at EU level, warns, “Introducing an EU-wide tax on liquids would significantly over-tax the much less harmful alternative, e-cigarettes, in many more countries.”
Especially in member states that currently tax e-cigarettes little or not at all, major upheavals in the market are to be expected, he said. Dahlmann demands: “Vaporizing must be significantly cheaper than smoking.”
Strong criticism comes from the European Cigar Manufacturers Association. Should the Commission submit this proposal, it would be “a massive and disproportionate intervention in the cigar market,” says Bodo Mehrlein of the association. The market for cigars is characterized by medium-sized and mostly family-run companies, he said.
“A 900 percent increase in the minimum tax and a definitional separation of cigars and cigarillos are pure arbitrariness.” Cigars and cigarillos are purely niche products for which the problem of protecting minors does not arise. Mehrlein warns: “The revenue from the tobacco tax would not increase, but the profitability of many companies would be destroyed.”
Nov. 17, 2022; 10-11 a.m., online
Hydrogen Europe, Book Presentation Hydrogen Report 2022
Hydrogen Europe and Revolve publish the Special Report on Hydrogen, which presents the current state of the art in the hydrogen sector from a policy and market development perspective. INFO & REGISTRATION
Nov. 21, 2022; 5:30-7:30 p.m., Berlin/online
DGAP, Panel Discussion Climate Security After COP27
The subject of this discussion hosted by the German Council on Foreign Relations (DGAP) is how to navigate intersecting crises in a new era of risk. REGISTRATION
Nov. 21-Nov. 23, 2022; Berlin
EAB, Seminar European Perspectives on Disinformation
The aim of the seminar organized by the European Academy Berlin (EAB) is to strengthen transnational exchange and to provide useful tips on how to deal with fake news and disinformation. INFO & REGISTRATION
Nov. 22, 2022; 10:30 a.m.-12:00 p.m., online
ACEA, Panel Discussion Getting zero-emission trucks on the road
This event organized by the Association des Constructeurs Européens d’Automobiles (ACEA) will focus on the requirements in transport and logistics in order to bring more battery-electric or hydrogen-powered trucks onto the market. INFO & REGISTRATION
Mr. Šefčovič, during the EU Raw Materials Week you signed an agreement with Ukraine on the digitization of geological data. What do both partners hope to achieve?
Ukraine could become a commodity superpower. But until now, most of the data on critical raw materials are only available in paper form. In this process, we want to achieve the complete digitization of the archive of all known sources, so that all investors and all interested companies can check which raw materials are available in Ukraine and what needs to be done for their extraction. And, of course, this is also important for a healthy business environment. Digital access to the information and digital auctions would enormously increase the transparency of the whole process and investments.
With Ukraine, the EU agreed to its first partnership for critical raw materials and batteries back in the summer of 2021. Then Russia started the war. How can this cooperation now continue?
We have been watching Ukraine from day one. The Ukrainian government, parliament and administration are functioning remarkably well despite the war. That is why we are already preparing for reconstruction. Normally, mining investments have quite a long lead time. Therefore, we are currently working with the Ukrainian authorities and the European Bank for Reconstruction and Development (EBRD) to prepare a catalog of possible investments and to conduct proper due diligence. Once peace is restored, investments can be made much more quickly.
At COP27 last week, Commission President von der Leyen signed two more commodity partnerships with Kazakhstan and Namibia. What partnerships are still planned?
We have also signed a partnership with Canada and are working on collaborations with other countries. We also want to use our commodity trade diplomacy in the future: When we sign free trade agreements, we want to make sure there is a chapter on critical raw materials.
One measure of the EU Critical Raw Materials Act is to label strategic European projects in the raw materials sector. What does that mean exactly?
Together with our member states and partners, we apply a label to projects that are strategic for a certain critical raw material. This means that we would be willing to help with the feasibility study. At the same time, we would like assurances in return that the carbon footprint is low, that environmental regulations are met, and that social standards are met. This would pave the way for mobilizing investors from Europe.
So projects outside Europe can also receive such a label?
Yes. We want to use the raw materials we have in Europe and in our neighborhood – in Ukraine, Greenland, Norway and the Western Balkans. As Ursula von der Leyen mentioned in her State of the Union address, we also want to introduce a sovereignty fund, which we hope we can use to invest in strategic projects, even if they are outside Europe.
They want to establish competitive sustainability standards for critical raw materials, just as in the battery regulation currently being negotiated in the trilogue.
One of the lessons we learned from the European Battery Alliance was that you need not only a strong drive to build industry and competence – but also the critical raw materials necessary. That accelerated our thinking and we formed the European Raw Materials Alliance (ERMA). The common approach is that we put a lot of emphasis on competitive sustainability. We want to make it clear that once products are on the European market, they must meet and comply with our regulations: We require transparency about where the raw materials come from, what the product’s CO2 emissions were, and how the product is recycled.
So are the plans for the Raw Materials Act borrowing from the battery sector experience?
We founded the European Battery Alliance in 2017, when we were not yet on the map of the battery world at all. Today, there are more than 100 projects and we have invested more than €130 billion in this sector. When you bring together the experience of industry partners, academia, member states and civil society, you can achieve a very dramatic change in a very short time.
Because the Inflation Reduction Act subsidizes companies in the US, battery manufacturers like Northvolt or Tesla are questioning the construction of factories here in Europe. Are you afraid that more companies will turn their gaze toward the USA?
We have raised this issue with our American partners. Especially in these difficult times, as the closest of allies, we should also discuss such important legislation as the Inflation Reduction Act. It has the potential to have a very negative impact on European industry, especially new industries like batteries. We are discussing these issues and I hope we will find a solution.
Should the EU respond with its own new subsidies, for example via RePowerEU?
First and foremost, we should clarify this issue in the talks. At the same time, it is quite clear that it is important to pursue the goals of the new industrial policy in Europe. We need to develop various means to support European industry, especially in the technology areas that have a decisive impact on its competitiveness. We will talk to our American partners, and at the same time, we must prepare ourselves for the fact that competition among the major economic powers of this century will be much more fearsome than we might have thought a few years ago.
Frans Timmermans has called on China to help finance a loss and damage mechanism. The EU climate czar (Heads) said at COP on Wednesday, “China is one of the largest economies in the world. Why shouldn’t they share responsibility for financing loss and damage?”
Regarding a proposal from the G77 group and China, he said, “According to the G77 proposal, all developing countries should be supported. We think we need to focus on the most vulnerable countries.”
The EU is also ready to reach an agreement on losses and damages more quickly. Instead of two years from now, Timmermans said, it would be possible to agree on a funding arrangement as early as next year. He said funding must be started quickly and therefore should not wait for a facility. Timmermans announced an alternative proposal to the G77 proposal. In addition, the EU has announced that it will provide €60 million for loss and damage under the EU-Africa Global Gateway Investment Package.
Mauritius, Jamaica and Ghana are also calling for more than just Western industrialized countries to pay into a fund to finance reconstruction after climate disasters. “Those that emit CO2 should contribute,” said Matthew Samuda, head of Jamaica’s COP27 delegation. Mauritian Environment Minister Kavydass Ramano wants “all major emitters” to provide funds, Bloomberg reports. Representatives of South Africa and Mali at the COP reportedly said China and India should participate voluntarily. A spokesman for the Indian delegation rejected a mandatory contribution.
Early on during COP, Gaston Browne, Prime Minister of Antigua and Barbuda, speaking on behalf of the Alliance of Small Island States (AOSIS), had said China and India, as the largest and third-largest emitters of CO2, had an obligation to pay into a fund for loss and damage. “I don’t think there is a free pass for any country, and I don’t say that with bitterness,” Browne had said.
China’s chief negotiator Xie Zhenhua had expressed support for such a fund and announced participation in a loss and damage mechanism. However, he had ruled out a financial contribution for the time being. nib/luk
The Energy Charter Treaty was actually on the agenda of the Permanent Representatives Committee yesterday. This was to agree on whether the EU will support the reform of the controversial treaty next Tuesday. But at the last moment, the Czech Council Presidency took the Energy Charter Treaty off the agenda of items that will be adopted without discussion.
The risk of a blocking minority is now too great. After Poland, Spain, the Netherlands, Slovenia and France, Germany also announced last week that it would withdraw from the Charter. This also affects their position in the Council. In all likelihood, no qualified majority will come together to adopt the reform text. In addition to Germany, France has now also announced that it will abstain from the vote. Spain and Poland will also not support the reform. Belgium, the Netherlands and Luxembourg are also considering abstaining.
The last compromise of the Council Decision had already been heavily watered down compared to the Commission proposal. According to it, the mandate should be “to cast a vote and not to raise an objection”. However, that would be tantamount to a vote in favor.
The EU does not have much time left to define its position. On Nov. 22, the ECT states will vote on the reform. But now the EU mandate cannot be formally adopted in the General Affairs Council on Friday as planned. It was not clear last night when the Energy Charter Treaty will now be discussed in the Permanent Representatives Committee.
Meanwhile, a letter has been circulating since yesterday in which members of the Parliament call on the EU Commission to withdraw from the Energy Charter. In it, members from the Greens, Renew, S&D and the Left criticize that the ECT reform text is neither compatible with the EU Green Deal nor with EU climate laws, nor with the EU strategy to limit dependence on fossil fuels. The letter was signed by Maria Arena, Aurore Lalucq (S&D), Manon Aubry, Helmut Scholz (GUE/NGL), Pascal Durand, Marie-Pierre Vedrenne (Renew), and Saskia Bricmont, Philippe Lamberts and Anna Cavazzini (Greens). cw
Croatia, Romania and Bulgaria are ready to join the Schengen area, according to the EU Commission. The three states have contributed significantly to the smooth functioning of the Schengen area, the Brussels authority announced on Wednesday.
All three are already partially bound by Schengen rules, but there are still controls at their borders. The Brussels-based authority said an expanded Schengen area would contribute to Europe’s security, for example through better border protection and more police cooperation.
In the Schengen area, which currently includes a total of 26 European countries, there are generally no stationary checks on persons at borders, and Schengen states issue common visas for travelers, for example.
Countries must meet certain criteria for admission, including police cooperation and personal data protection. The existing Schengen members must unanimously agree to their joining.
A vote on accession is now scheduled to take place on Dec. 8. The Council of EU states had already decided in December 2021 that Croatia basically met the requirements. It is considered likely that Croatia will now clear the final hurdle and be able to become a member in 2023. Whether the states will also agree to the accession of Bulgaria and Romania is unclear – the Netherlands in particular have reservations. dpa
Baden-Württemberg’s Minister President Winfried Kretschmann (Greens) is calling on the EU to amend the state aid law so that economically strong regions can also receive structural aid. At the annual meeting of the state’s Automotive Industry Strategy Dialogue in Brussels, which was also attended by Commissioner for the Internal Market Thierry Breton and Federal Minister for Digital Affairs and Transport Volker Wissing (FDP), Kretschmann said, “If Europe wants to be at the forefront of international competition, it must strengthen its innovation regions like Baden-Württemberg.” He added that the EU must create new instruments for this purpose.
Kretschmann had initiated the strategy dialog with the participation of manufacturers such as Porsche and Mercedes as well as suppliers such as Bosch in order to accompany the transformation in the industry. At the meeting, an impulse paper was presented with further demands. The instrument of “Important Projects of Common European Interest (IPCEI)” has proven its worth and should be expanded.
At EU level, a format must be set up to accompany the transformation, involving industry, trade unions, politics and science. The strategy dialog from Baden-Württemberg could be a blueprint for this. New sources of funding should be tapped. For example, the innovation fund of the emissions trading system could also be opened up for innovations in the automotive industry.
The infrastructure for alternative fuels must be developed with greater ambition, he claimed. A market forecast for the decarbonization of heavy-duty transport was lacking, he said. Otherwise, he warned, it would not be possible to push ahead with electricity grid development for battery-electric trucks and hydrogen refueling infrastructure for fuel cell trucks in a targeted manner. Baden-Württemberg also urgently calls for a regulatory framework for the market ramp-up of synthetic fuels in transport.
The third priority is an offensive on digitization and data sovereignty. The Data Act must provide an optimal basis for the use and sharing of mobility data. The legal framework for artificial intelligence must strike a balance between security and the potential benefits of the technologies.
The foundations must be laid to ensure that, in the future, public transport authorities have to collect and make available certain data in the mobility sector over and above the existing delegated regulations. The goal must be to be able to offer integrated mobility services throughout Europe. mgr
The energy crisis triggered by Russia’s war in Ukraine and geopolitical factors are complicating the fight against the climate crisis. In their opening statements at COP27, leaders did condemn Putin’s actions and urged greater commitment to climate action and clean energy.
But there is no doubt in my mind: Putin’s absence from the summit is a significant obstacle to the negotiations. At the same time, Russia’s war is exacerbating the climate crisis with each passing day. In the face of global sanctions, Putin refused to attend the COP27 talks.
He left it to Russia’s climate envoy Ruslan Edelgeriev to assure that the country would stay true to its climate commitments. But when Russian politicians say they will honor the country’s commitments, it is unclear what commitments they are talking about.
Despite all the years Russia has participated in climate negotiations, there is still no climate policy in the country. The official Russian climate strategy even says that Russian emissions will increase. Instead, they will most likely decrease – but this is a direct result of the economic crisis in Russia and thus a consequence of the war. It has nothing to do with the country’s climate commitments, but with the consequences of the crisis for the Russian fossil energy industry.
At the same time, Russia’s vast forests are getting worse. Since the beginning of Putin’s war, forest fires have been getting more severe, and it’s only going to get worse. It is a great threat to Russians and people everywhere when the forests of the largest country in the world burn.
However, the official Russian delegation will not talk about this or any other of the many issues affecting people at home at the talks. Instead, it will blatantly haggle with Russia’s “appropriate” behavior and hope that the world will continue to pay dictatorships for fossil fuels. But that would lead to another disaster in the near future. The climate crisis would kill thousands of people and leave millions homeless.
Greenpeace Russia is regularly threatened with being banned or classified as a foreign agent by the authorities. The activists are persecuted mainly for their campaigns against laws that threaten the ecosystem of Lake Baikal.
Formally, such locally defined issues are not up for debate at COP27, and certainly the lives of these activists will not be counted. But the importance of this ecosystem to the world is undeniable. About 20 percent of the world’s freshwater is threatened by corruption and abuse of nature in Lake Baikal.
Combined with the climate-related impacts on the drinking water supply of half the world’s population, the question arises as to why neither this nor the war is being addressed in these negotiations.
War is the elephant in the room at this conference. True, it was somewhat highlighted in the opening presentations. But even the unmistakable fact that, in my view, Putin’s war has set back all progress in negotiations by decades is not officially discussed.
There is a long history of ignoring the messages of activists like me, our work, and the threats we face, especially in crisis years like this one. But it is difficult to ignore the enormous danger of not addressing the unmistakable reality now.
The world failed to act when Russia attacked Chechnya and Georgia, occupied Crimea, and bombed Syria – this war in Ukraine must not be used as another opportunity to turn a blind eye.
The current situation makes it clear: Authoritarian regimes like Russia can blackmail the entire world by blocking talks and remaining silent in order to protect their power and legitimize violence and human rights violations. It is not only climate policy that is increasingly affected by this, but also everything else – whether in the authoritarian countries themselves or through the wars they wage against their neighbors.
In democracies, civil society can influence a country’s position and ensure that climate policy is adapted to the changing situation. It is true that this is happening in Russia at the moment. However, not because of greenhouse gas emissions, but because of the huge amount of petrodollars that have financed the regime in Russia so far, and because the previous buyer countries now feel the need to break away from Putin’s fossil blackmail.
In countries with authoritarian regimes, things are much more complicated than in democracies. My climate activism, for example, has resulted in my only citizenship being revoked. Activists of any kind are no longer allowed to protest in Russia.
The war has wiped out all the progress we have made over the years. Now environmental policy in Russia is reduced to work assignments, with people picking up trash where and when they are told to.
The fact that the international talks at COP27 are unable to directly confront Russia’s warmongering ultimately means that Ruslan Edelgiriev, advisor to the president on climate issues, can advocate for the lifting of sanctions in areas of climate policy.
He has advocated this line in numerous speeches. However, it is obvious that he does not mean, for example, the climate-relevant area of renewable energies. Solar and wind power currently generate less than one percent of Russia’s electricity, and there are no plans to expand them further. Instead, he means something else, suggesting, for example, that Russia could achieve carbon neutrality sooner than 2060 if sanctions were relaxed.
For more than 20 years, Russian policy and action on the climate crisis have been totally inadequate, despite all COPs. I myself would not have known about the climate crisis or the existence of climate negotiations without Greta Thunberg’s climate strike.
In Russia, no one is seriously concerned with this issue. Putin-controlled state television spreads world conspiracy theories and misleads the Russian people. And therefore it is only logical that Ruslan Edelgiriev does not take the climate crisis seriously, although it threatens millions of people in Russia. At COP25 in Madrid three years ago, he told me that activists did nothing but shout. Now we are not even allowed to do that.
Still, Edelgiriev is serious about some things, such as lifting sanctions, returning to Russia’s huge gains from fossil fuels, and promoting nuclear power to regain more influence over other countries’ energy systems. In Russia, the development of a plan to implement the long-term strategy for low-carbon development has been postponed until 2023, while global negotiations at COP27 continue. In other words, climate action in Russia will come tomorrow and only tomorrow – but tomorrow never comes.
Three years ago it seemed to me that Russia would not give up, that we would take to the streets until something really changed. After everything that has happened to me and my country since then, I can no longer have that confidence. That is why I ask the international community for hope.
For war, as for the climate crisis, there are no easy solutions, and we have difficult years ahead. But the longer we delay real and direct action, the higher the cost. Let’s not put more of the world’s progress at risk because of people like Putin.
Arshak Makichyan is a well-known climate activist from Russia. He has been striking in Moscow every Friday since 2019 alone for the climate and organized the Russian Fridays for Future movement. When Russia invaded Ukraine in 2022, he protested against the war from day one. To avoid imprisonment, he traveled to Berlin in March, where he currently lives. Because of his involvement, his Russian citizenship – his only one – was recently revoked.
The European gas price cap continues to take shape. The EU Commission has now drawn up a price cap in a key issues paper. This is to apply to transactions based on the Dutch price index TTF, which are concluded for the following month. Manuel Berkel has analyzed the as yet unpublished paper.
Smoking is to become significantly more expensive in the future, according to the EU Commission’s plan. The proposal, which is exclusively available to Europe.Table, envisages that the member states should link the minimum taxes to their purchasing power. What exactly this means for Germany, and what criticism is already emerging, Markus Grabitz has written down.
My colleague Leonie Düngefeld is in Brussels this week for EU Raw Materials Week. There, Maroš Šefčovič, Commissioner for Interinstitutional Relations and Foresight, yesterday signed a memorandum of understanding with Ukraine to advance the raw materials partnership. There, people are already thinking about the reconstruction and investments that could be possible after the end of the war, Šefčovič says in an interview.
The Commission has drawn up key points for a price cap in gas trading. It is to apply to transactions concluded in the following month, based on the Dutch TTF price index. This price plays a key role as a reference on the European wholesale market for gas, writes the EU Commission in an as yet unpublished paper, which the ambassadors of the member states discussed on Wednesday and which has been made available to Europe.Table (link to the document).
However, the cap is only to take effect if there are no price jumps in the global LNG market. This is to ensure that the EU continues to import liquefied gas.
The paper does not yet specify a concrete price ceiling for the market correction mechanism. However, the “extraordinary price increase in Aug. 2022” could serve as a guide when setting it. Back then, the TTF price for gas supplies in December climbed up to €350 per megawatt hour, but on Wednesday the index was only about €125.
According to BDEW, the front month is normally the most liquid product traded in the short term under futures contracts. However, the Commission would thus be deviating from its draft regulation of Oct. 18. In it, it had announced that the price cap would apply to the spot market.
The price cap is an emergency measure and is to be limited to one year. As already announced, trading transactions away from exchanges are not to be affected. One disadvantage is therefore that gas trading could shift to so-called OTC transactions, the Commission writes in the key points. “This point alone implies that the approach will be ineffective in capping prices,” DIW economist Karsten Neuhoff tells Europe.Table.
The Commission also warns against this. It is true that the price cap could prevent some consumers who continue to demand gas even when prices are extremely high, as in August 2022, from temporarily setting the price for everyone. But, “It is not an instrument for structurally lowering the price level, which can only be achieved through additional supply and demand side measures.”
The EU executive only presented the key points after strong pressure from many member states. The Council had demanded a concrete legislative proposal so that the energy ministers could adopt the Oct. 18 regulation on Nov. 24. Surprisingly, the five-page paper now also contains some articles as possible building blocks of a legislative text. At the beginning of the week, Commission President Ursula von der Leyen had announced to the EU states in a letter that she would only be able to present a “detailed overview” of the price cap by the time of the Energy Council.
If the price correction mechanism is adopted, however, the member states are to have no further influence on it. It is to be triggered automatically and the Commission wants to be given the power to suspend the price cap at any time.
The criteria for the suspension are the reservations that were already listed in the draft regulation of Oct. 18 and were confirmed shortly afterwards by the heads of state and government. For example, the price cap must not impede the flow of gas between member states.
The Commission wants excise taxes on tobacco and tobacco-related products to rise dramatically. Under the plans, minimum excise taxes on cigarettes would double in Germany. Currently, the tobacco tax on cigarettes in Germany is €115 per 1000 pieces. In the future, it would be €230 per 1,000 pieces.
Minimum taxes on cigars and cigarillos would increase to nine times today’s levels. Pipe tobacco would see a 445 percent tax increase, and hookah tobacco would see a 310 percent increase. Fine-cut tobacco would see an increase of 167 percent. For so-called less harmful tobacco products, which no longer burn tobacco but merely heat it, the tax would be lower than for conventional smoking products. The Commission proposes at least €91 per 1000 pieces. This is according to the Commission’s draft directive for excise duties on tobacco products, which is available to Europe.Table. The Commission plans to adopt its proposal on Dec. 7.
The Commission proposes to separate cigars and cigarillos as product classes. This would allow member states to set different taxes for cigarillos and cigars. The Commission also wants to subject nicotine-containing liquids for e-cigarettes to excise taxes. Accordingly, a tax of ten cents per milliliter is to be levied on liquids with a nicotine content of up to 15 milligrams per milliliter, and a tax of 30 cents per milliliter is to be levied on liquids with a nicotine content of 15 milligrams per milliliter or more.
In Germany, it was recently decided to gradually increase the tax on liquids. Currently, 16 cents per milliliter is due. The tax rate will rise to 32 cents per milliliter by 2026.
Tobacco taxation falls within the exclusive competence of the member states. As with all other tax issues, a unanimous vote of the member states is required to adopt the proposed directive. The European Parliament is not involved in the legislative project. As heard in Brussels, France in particular is pushing for higher tobacco taxes. Currently, many smokers are switching to neighboring EU countries because of a high level of tobacco tax.
The Commission justifies its push for drastically higher excise taxes with health policy. The proposal is “an integral part of the Europe against Cancer action plan,” according to the explanatory memorandum for the legislative text. Higher tobacco taxes and prices on tobacco products have proven to be the most effective measure against nicotine consumption.
With the directive, the EU is staying on course with the long-term goals of the plan to combat cancer: The aim here is to create the first tobacco-free generation in 2040, in which less than five percent of the population uses tobacco.
According to the proposal, the minimum taxes are to be linked to purchasing power in the respective member states. Two-thirds of the minimum tax is to be a nominal amount, and one-third of the minimum tax is to be linked to purchasing power. This means that the minimum tax would be lower in Romania, for example, where purchasing power is lower than in Luxembourg or Germany. In addition, the minimum tax is to be adjusted every three years depending on the depreciation of money.
Markus Ferber (CSU) considers the proposal “a relatively transparent attempt to export the high French taxation level for tobacco products to the whole of Europe.” He said he does not expect approval from the Council. “The Commission must be careful not to overdo it,” Ferber added. “If the Commission sets the tax rates too high, there is a risk that smokers will move to the black market.”
Dustin Dahlmann of the Independent European Vaping Alliance, the e-cigarette association at EU level, warns, “Introducing an EU-wide tax on liquids would significantly over-tax the much less harmful alternative, e-cigarettes, in many more countries.”
Especially in member states that currently tax e-cigarettes little or not at all, major upheavals in the market are to be expected, he said. Dahlmann demands: “Vaporizing must be significantly cheaper than smoking.”
Strong criticism comes from the European Cigar Manufacturers Association. Should the Commission submit this proposal, it would be “a massive and disproportionate intervention in the cigar market,” says Bodo Mehrlein of the association. The market for cigars is characterized by medium-sized and mostly family-run companies, he said.
“A 900 percent increase in the minimum tax and a definitional separation of cigars and cigarillos are pure arbitrariness.” Cigars and cigarillos are purely niche products for which the problem of protecting minors does not arise. Mehrlein warns: “The revenue from the tobacco tax would not increase, but the profitability of many companies would be destroyed.”
Nov. 17, 2022; 10-11 a.m., online
Hydrogen Europe, Book Presentation Hydrogen Report 2022
Hydrogen Europe and Revolve publish the Special Report on Hydrogen, which presents the current state of the art in the hydrogen sector from a policy and market development perspective. INFO & REGISTRATION
Nov. 21, 2022; 5:30-7:30 p.m., Berlin/online
DGAP, Panel Discussion Climate Security After COP27
The subject of this discussion hosted by the German Council on Foreign Relations (DGAP) is how to navigate intersecting crises in a new era of risk. REGISTRATION
Nov. 21-Nov. 23, 2022; Berlin
EAB, Seminar European Perspectives on Disinformation
The aim of the seminar organized by the European Academy Berlin (EAB) is to strengthen transnational exchange and to provide useful tips on how to deal with fake news and disinformation. INFO & REGISTRATION
Nov. 22, 2022; 10:30 a.m.-12:00 p.m., online
ACEA, Panel Discussion Getting zero-emission trucks on the road
This event organized by the Association des Constructeurs Européens d’Automobiles (ACEA) will focus on the requirements in transport and logistics in order to bring more battery-electric or hydrogen-powered trucks onto the market. INFO & REGISTRATION
Mr. Šefčovič, during the EU Raw Materials Week you signed an agreement with Ukraine on the digitization of geological data. What do both partners hope to achieve?
Ukraine could become a commodity superpower. But until now, most of the data on critical raw materials are only available in paper form. In this process, we want to achieve the complete digitization of the archive of all known sources, so that all investors and all interested companies can check which raw materials are available in Ukraine and what needs to be done for their extraction. And, of course, this is also important for a healthy business environment. Digital access to the information and digital auctions would enormously increase the transparency of the whole process and investments.
With Ukraine, the EU agreed to its first partnership for critical raw materials and batteries back in the summer of 2021. Then Russia started the war. How can this cooperation now continue?
We have been watching Ukraine from day one. The Ukrainian government, parliament and administration are functioning remarkably well despite the war. That is why we are already preparing for reconstruction. Normally, mining investments have quite a long lead time. Therefore, we are currently working with the Ukrainian authorities and the European Bank for Reconstruction and Development (EBRD) to prepare a catalog of possible investments and to conduct proper due diligence. Once peace is restored, investments can be made much more quickly.
At COP27 last week, Commission President von der Leyen signed two more commodity partnerships with Kazakhstan and Namibia. What partnerships are still planned?
We have also signed a partnership with Canada and are working on collaborations with other countries. We also want to use our commodity trade diplomacy in the future: When we sign free trade agreements, we want to make sure there is a chapter on critical raw materials.
One measure of the EU Critical Raw Materials Act is to label strategic European projects in the raw materials sector. What does that mean exactly?
Together with our member states and partners, we apply a label to projects that are strategic for a certain critical raw material. This means that we would be willing to help with the feasibility study. At the same time, we would like assurances in return that the carbon footprint is low, that environmental regulations are met, and that social standards are met. This would pave the way for mobilizing investors from Europe.
So projects outside Europe can also receive such a label?
Yes. We want to use the raw materials we have in Europe and in our neighborhood – in Ukraine, Greenland, Norway and the Western Balkans. As Ursula von der Leyen mentioned in her State of the Union address, we also want to introduce a sovereignty fund, which we hope we can use to invest in strategic projects, even if they are outside Europe.
They want to establish competitive sustainability standards for critical raw materials, just as in the battery regulation currently being negotiated in the trilogue.
One of the lessons we learned from the European Battery Alliance was that you need not only a strong drive to build industry and competence – but also the critical raw materials necessary. That accelerated our thinking and we formed the European Raw Materials Alliance (ERMA). The common approach is that we put a lot of emphasis on competitive sustainability. We want to make it clear that once products are on the European market, they must meet and comply with our regulations: We require transparency about where the raw materials come from, what the product’s CO2 emissions were, and how the product is recycled.
So are the plans for the Raw Materials Act borrowing from the battery sector experience?
We founded the European Battery Alliance in 2017, when we were not yet on the map of the battery world at all. Today, there are more than 100 projects and we have invested more than €130 billion in this sector. When you bring together the experience of industry partners, academia, member states and civil society, you can achieve a very dramatic change in a very short time.
Because the Inflation Reduction Act subsidizes companies in the US, battery manufacturers like Northvolt or Tesla are questioning the construction of factories here in Europe. Are you afraid that more companies will turn their gaze toward the USA?
We have raised this issue with our American partners. Especially in these difficult times, as the closest of allies, we should also discuss such important legislation as the Inflation Reduction Act. It has the potential to have a very negative impact on European industry, especially new industries like batteries. We are discussing these issues and I hope we will find a solution.
Should the EU respond with its own new subsidies, for example via RePowerEU?
First and foremost, we should clarify this issue in the talks. At the same time, it is quite clear that it is important to pursue the goals of the new industrial policy in Europe. We need to develop various means to support European industry, especially in the technology areas that have a decisive impact on its competitiveness. We will talk to our American partners, and at the same time, we must prepare ourselves for the fact that competition among the major economic powers of this century will be much more fearsome than we might have thought a few years ago.
Frans Timmermans has called on China to help finance a loss and damage mechanism. The EU climate czar (Heads) said at COP on Wednesday, “China is one of the largest economies in the world. Why shouldn’t they share responsibility for financing loss and damage?”
Regarding a proposal from the G77 group and China, he said, “According to the G77 proposal, all developing countries should be supported. We think we need to focus on the most vulnerable countries.”
The EU is also ready to reach an agreement on losses and damages more quickly. Instead of two years from now, Timmermans said, it would be possible to agree on a funding arrangement as early as next year. He said funding must be started quickly and therefore should not wait for a facility. Timmermans announced an alternative proposal to the G77 proposal. In addition, the EU has announced that it will provide €60 million for loss and damage under the EU-Africa Global Gateway Investment Package.
Mauritius, Jamaica and Ghana are also calling for more than just Western industrialized countries to pay into a fund to finance reconstruction after climate disasters. “Those that emit CO2 should contribute,” said Matthew Samuda, head of Jamaica’s COP27 delegation. Mauritian Environment Minister Kavydass Ramano wants “all major emitters” to provide funds, Bloomberg reports. Representatives of South Africa and Mali at the COP reportedly said China and India should participate voluntarily. A spokesman for the Indian delegation rejected a mandatory contribution.
Early on during COP, Gaston Browne, Prime Minister of Antigua and Barbuda, speaking on behalf of the Alliance of Small Island States (AOSIS), had said China and India, as the largest and third-largest emitters of CO2, had an obligation to pay into a fund for loss and damage. “I don’t think there is a free pass for any country, and I don’t say that with bitterness,” Browne had said.
China’s chief negotiator Xie Zhenhua had expressed support for such a fund and announced participation in a loss and damage mechanism. However, he had ruled out a financial contribution for the time being. nib/luk
The Energy Charter Treaty was actually on the agenda of the Permanent Representatives Committee yesterday. This was to agree on whether the EU will support the reform of the controversial treaty next Tuesday. But at the last moment, the Czech Council Presidency took the Energy Charter Treaty off the agenda of items that will be adopted without discussion.
The risk of a blocking minority is now too great. After Poland, Spain, the Netherlands, Slovenia and France, Germany also announced last week that it would withdraw from the Charter. This also affects their position in the Council. In all likelihood, no qualified majority will come together to adopt the reform text. In addition to Germany, France has now also announced that it will abstain from the vote. Spain and Poland will also not support the reform. Belgium, the Netherlands and Luxembourg are also considering abstaining.
The last compromise of the Council Decision had already been heavily watered down compared to the Commission proposal. According to it, the mandate should be “to cast a vote and not to raise an objection”. However, that would be tantamount to a vote in favor.
The EU does not have much time left to define its position. On Nov. 22, the ECT states will vote on the reform. But now the EU mandate cannot be formally adopted in the General Affairs Council on Friday as planned. It was not clear last night when the Energy Charter Treaty will now be discussed in the Permanent Representatives Committee.
Meanwhile, a letter has been circulating since yesterday in which members of the Parliament call on the EU Commission to withdraw from the Energy Charter. In it, members from the Greens, Renew, S&D and the Left criticize that the ECT reform text is neither compatible with the EU Green Deal nor with EU climate laws, nor with the EU strategy to limit dependence on fossil fuels. The letter was signed by Maria Arena, Aurore Lalucq (S&D), Manon Aubry, Helmut Scholz (GUE/NGL), Pascal Durand, Marie-Pierre Vedrenne (Renew), and Saskia Bricmont, Philippe Lamberts and Anna Cavazzini (Greens). cw
Croatia, Romania and Bulgaria are ready to join the Schengen area, according to the EU Commission. The three states have contributed significantly to the smooth functioning of the Schengen area, the Brussels authority announced on Wednesday.
All three are already partially bound by Schengen rules, but there are still controls at their borders. The Brussels-based authority said an expanded Schengen area would contribute to Europe’s security, for example through better border protection and more police cooperation.
In the Schengen area, which currently includes a total of 26 European countries, there are generally no stationary checks on persons at borders, and Schengen states issue common visas for travelers, for example.
Countries must meet certain criteria for admission, including police cooperation and personal data protection. The existing Schengen members must unanimously agree to their joining.
A vote on accession is now scheduled to take place on Dec. 8. The Council of EU states had already decided in December 2021 that Croatia basically met the requirements. It is considered likely that Croatia will now clear the final hurdle and be able to become a member in 2023. Whether the states will also agree to the accession of Bulgaria and Romania is unclear – the Netherlands in particular have reservations. dpa
Baden-Württemberg’s Minister President Winfried Kretschmann (Greens) is calling on the EU to amend the state aid law so that economically strong regions can also receive structural aid. At the annual meeting of the state’s Automotive Industry Strategy Dialogue in Brussels, which was also attended by Commissioner for the Internal Market Thierry Breton and Federal Minister for Digital Affairs and Transport Volker Wissing (FDP), Kretschmann said, “If Europe wants to be at the forefront of international competition, it must strengthen its innovation regions like Baden-Württemberg.” He added that the EU must create new instruments for this purpose.
Kretschmann had initiated the strategy dialog with the participation of manufacturers such as Porsche and Mercedes as well as suppliers such as Bosch in order to accompany the transformation in the industry. At the meeting, an impulse paper was presented with further demands. The instrument of “Important Projects of Common European Interest (IPCEI)” has proven its worth and should be expanded.
At EU level, a format must be set up to accompany the transformation, involving industry, trade unions, politics and science. The strategy dialog from Baden-Württemberg could be a blueprint for this. New sources of funding should be tapped. For example, the innovation fund of the emissions trading system could also be opened up for innovations in the automotive industry.
The infrastructure for alternative fuels must be developed with greater ambition, he claimed. A market forecast for the decarbonization of heavy-duty transport was lacking, he said. Otherwise, he warned, it would not be possible to push ahead with electricity grid development for battery-electric trucks and hydrogen refueling infrastructure for fuel cell trucks in a targeted manner. Baden-Württemberg also urgently calls for a regulatory framework for the market ramp-up of synthetic fuels in transport.
The third priority is an offensive on digitization and data sovereignty. The Data Act must provide an optimal basis for the use and sharing of mobility data. The legal framework for artificial intelligence must strike a balance between security and the potential benefits of the technologies.
The foundations must be laid to ensure that, in the future, public transport authorities have to collect and make available certain data in the mobility sector over and above the existing delegated regulations. The goal must be to be able to offer integrated mobility services throughout Europe. mgr
The energy crisis triggered by Russia’s war in Ukraine and geopolitical factors are complicating the fight against the climate crisis. In their opening statements at COP27, leaders did condemn Putin’s actions and urged greater commitment to climate action and clean energy.
But there is no doubt in my mind: Putin’s absence from the summit is a significant obstacle to the negotiations. At the same time, Russia’s war is exacerbating the climate crisis with each passing day. In the face of global sanctions, Putin refused to attend the COP27 talks.
He left it to Russia’s climate envoy Ruslan Edelgeriev to assure that the country would stay true to its climate commitments. But when Russian politicians say they will honor the country’s commitments, it is unclear what commitments they are talking about.
Despite all the years Russia has participated in climate negotiations, there is still no climate policy in the country. The official Russian climate strategy even says that Russian emissions will increase. Instead, they will most likely decrease – but this is a direct result of the economic crisis in Russia and thus a consequence of the war. It has nothing to do with the country’s climate commitments, but with the consequences of the crisis for the Russian fossil energy industry.
At the same time, Russia’s vast forests are getting worse. Since the beginning of Putin’s war, forest fires have been getting more severe, and it’s only going to get worse. It is a great threat to Russians and people everywhere when the forests of the largest country in the world burn.
However, the official Russian delegation will not talk about this or any other of the many issues affecting people at home at the talks. Instead, it will blatantly haggle with Russia’s “appropriate” behavior and hope that the world will continue to pay dictatorships for fossil fuels. But that would lead to another disaster in the near future. The climate crisis would kill thousands of people and leave millions homeless.
Greenpeace Russia is regularly threatened with being banned or classified as a foreign agent by the authorities. The activists are persecuted mainly for their campaigns against laws that threaten the ecosystem of Lake Baikal.
Formally, such locally defined issues are not up for debate at COP27, and certainly the lives of these activists will not be counted. But the importance of this ecosystem to the world is undeniable. About 20 percent of the world’s freshwater is threatened by corruption and abuse of nature in Lake Baikal.
Combined with the climate-related impacts on the drinking water supply of half the world’s population, the question arises as to why neither this nor the war is being addressed in these negotiations.
War is the elephant in the room at this conference. True, it was somewhat highlighted in the opening presentations. But even the unmistakable fact that, in my view, Putin’s war has set back all progress in negotiations by decades is not officially discussed.
There is a long history of ignoring the messages of activists like me, our work, and the threats we face, especially in crisis years like this one. But it is difficult to ignore the enormous danger of not addressing the unmistakable reality now.
The world failed to act when Russia attacked Chechnya and Georgia, occupied Crimea, and bombed Syria – this war in Ukraine must not be used as another opportunity to turn a blind eye.
The current situation makes it clear: Authoritarian regimes like Russia can blackmail the entire world by blocking talks and remaining silent in order to protect their power and legitimize violence and human rights violations. It is not only climate policy that is increasingly affected by this, but also everything else – whether in the authoritarian countries themselves or through the wars they wage against their neighbors.
In democracies, civil society can influence a country’s position and ensure that climate policy is adapted to the changing situation. It is true that this is happening in Russia at the moment. However, not because of greenhouse gas emissions, but because of the huge amount of petrodollars that have financed the regime in Russia so far, and because the previous buyer countries now feel the need to break away from Putin’s fossil blackmail.
In countries with authoritarian regimes, things are much more complicated than in democracies. My climate activism, for example, has resulted in my only citizenship being revoked. Activists of any kind are no longer allowed to protest in Russia.
The war has wiped out all the progress we have made over the years. Now environmental policy in Russia is reduced to work assignments, with people picking up trash where and when they are told to.
The fact that the international talks at COP27 are unable to directly confront Russia’s warmongering ultimately means that Ruslan Edelgiriev, advisor to the president on climate issues, can advocate for the lifting of sanctions in areas of climate policy.
He has advocated this line in numerous speeches. However, it is obvious that he does not mean, for example, the climate-relevant area of renewable energies. Solar and wind power currently generate less than one percent of Russia’s electricity, and there are no plans to expand them further. Instead, he means something else, suggesting, for example, that Russia could achieve carbon neutrality sooner than 2060 if sanctions were relaxed.
For more than 20 years, Russian policy and action on the climate crisis have been totally inadequate, despite all COPs. I myself would not have known about the climate crisis or the existence of climate negotiations without Greta Thunberg’s climate strike.
In Russia, no one is seriously concerned with this issue. Putin-controlled state television spreads world conspiracy theories and misleads the Russian people. And therefore it is only logical that Ruslan Edelgiriev does not take the climate crisis seriously, although it threatens millions of people in Russia. At COP25 in Madrid three years ago, he told me that activists did nothing but shout. Now we are not even allowed to do that.
Still, Edelgiriev is serious about some things, such as lifting sanctions, returning to Russia’s huge gains from fossil fuels, and promoting nuclear power to regain more influence over other countries’ energy systems. In Russia, the development of a plan to implement the long-term strategy for low-carbon development has been postponed until 2023, while global negotiations at COP27 continue. In other words, climate action in Russia will come tomorrow and only tomorrow – but tomorrow never comes.
Three years ago it seemed to me that Russia would not give up, that we would take to the streets until something really changed. After everything that has happened to me and my country since then, I can no longer have that confidence. That is why I ask the international community for hope.
For war, as for the climate crisis, there are no easy solutions, and we have difficult years ahead. But the longer we delay real and direct action, the higher the cost. Let’s not put more of the world’s progress at risk because of people like Putin.
Arshak Makichyan is a well-known climate activist from Russia. He has been striking in Moscow every Friday since 2019 alone for the climate and organized the Russian Fridays for Future movement. When Russia invaded Ukraine in 2022, he protested against the war from day one. To avoid imprisonment, he traveled to Berlin in March, where he currently lives. Because of his involvement, his Russian citizenship – his only one – was recently revoked.