LNG overcapacity + Putin and Biden + Megatunnel to Africa
LNG terminals: EU experts warned of overcapacity
Putin and Biden in long-distance duel
Megatunnel to link Spain and Morocco
EU emissions trading: carbon price exceeds €100 per metric ton for the first time
REPowerEU: Commission queries interest in loans
Energy: BMWK unit without management
EU Commission takes action against trawlers
Heads: The man who wants to save the climate through investments
Apéro
Dear reader,
LNG terminals are highly controversial. Nevertheless, the German government is planning six terminals at four locations. But new, exclusive information by Table.Media shows that the EU declared very early on that only a few terminals are needed in Germany, writes Manuel Berkel.
There is not much more that can happen on a Tuesday: US President Biden in Warsaw, in Brussels the EU foreign envoy, the Ukrainian foreign minister, and the NATO secretary-general literally holding hands. And Russia’s President Putin addresses his people in Moscow. What was it all about? In all cases, it was about the war in Ukraine. But also about something else, report Nana Brink, Gabriel Bub and Viktor Funk.
From Europe to Morocco by train? That could become a reality in the coming years. Spain and the North African country have agreed to build a tunnel under the Strait of Gibraltar. It is to be realized by a specialist company from Germany, which already built the Gotthard Base Tunnel, writes Christian von Hiller.
Previously unpublished EU Commission documents are fueling doubts about the German government’s plans to import liquefied natural gas. “Possible additional infrastructure needs” in Germany include a fixed LNG terminal in Brunsbüttel and a floating terminal in Wilhelmshaven, the Directorate General for Energy noted in its summary on a May 5, 2022 meeting.
According to the internal minutes, on the part of the German government, three officials from the Federal Ministry for Economic Affairs took part in the meeting, including the head of the department responsible for gas. Other participants included Commission officials and representatives from other EU countries and ENTSOG. On behalf of the Commission, the association of gas pipeline operators had assessed the need for additional infrastructure to secure supplies in the EU following Russia’s invasion of Ukraine.
Management recommended imports from Belgium and France
As another possible additional need for Germany, the Directorate General listed more powerful connections to neighboring countries to the west that already have terminals for importing LPG: “Expansion of gas infrastructure to increase export capacity from Belgium to Germany,” it says, plus a “deodorization plant to create export capacity from FR to DE.”
Deodorization plants remove artificial odors from natural gas, which France, unlike Germany, already adds to the fuel at the long-distance pipeline level. Because of this technical obstacle, there were almost no direct transport options from the French to the German gas network for a long time.
Berlin relies on much more than two terminals
However, the German government overrode the analysis of the DG and the European network operators. On May 10, just a few days after the meeting, the German cabinet approved a formulation aid for the law aimed at accelerating the construction of LNG terminals.
In it, the German government listed six locations for terminals to which faster approval procedures should apply. In addition to Brunsbüttel and Wilhelmshaven, these were Stade, Hamburg, Rostock, and Lubmin. The annex to the paper contains regulations for seven floating terminals (FSRUs) and four fixed ones at these locations.
At the same time, the EU Commission’s Directorate General had already noted in the minutes of the May 5 meeting that it was “generally important to avoid over-capacities that could become ‘stranded assets’ in the future.”
DUH criticizes ignorance of the ministry
For Environmental Action Germany (DUH), the research is evidence of sensible other options. “The minutes show that alternatives to building the LNG terminalswere on the table early on,” says Constantin Zerger of DUH. Apparently, however, BMWK had already committed to building its own terminals. “An improvement and more efficient use of the existing gas and LNG infrastructure, on the other hand, was ignored by Robert Habeck’s officials.” It is obvious that LNG over-capacities endanger climate goals and lead to unnecessary costs for taxpayers.
Zerger demands: “After these revelations, there is finally a line to be drawn under the planning of over-capacities. Before more and more terminals are hectically built, a resilient overall concept must be presented with a consideration of all options for action and the consequences for the climate.”
Bundestag added another floating terminal
On May 12, Table Media first reported on the Commission’s analysis that the authority considered only two German terminals necessary. On May 19 and 20, the Bundestag and Bundesrat finally approved the LNG Acceleration Act. The version passed even included another floating terminal in Wilhelmshaven.
The EU Commission made its analysis of infrastructure needs public in its REPowerEU communication on May 18. It corresponded to the status from the internal meeting just under two weeks earlier.
Eastern Europe could also be supplied
“The assessment has clearly shown that the additional FSRUs in Eemshaven (NL) and Wilhelmshaven (DE), as well as an additional LNG terminal in Germany (Brunsbüttel), will reduce infrastructure bottlenecks in northwestern Europe in the short term,” the Commission wrote in its plan to address the energy crisis. “More generally, it will be important to avoid overcapacity in LNG import infrastructure, which could become stranded assets in the future.”
According to the published document, the connection to Germany’s western neighbors would even enable the supply of Eastern European countries. “The assessment and discussions revealed that the development of a deodorization facility that would allow gas to flow from west to east between France and Germany could remove a major bottleneck in the medium term to reduce gas dependence on Russia in Central Europe,” the document said. Combined with the development of gas infrastructure to increase export capacity from Belgium to Germany, this would allow full use of LNG capacity in Western Europe to reduce dependence on Russian gas in Central and Eastern European regions as well.”
Currently six terminals at four locations announced
Shortly after the publication of REPowerEU, the German Ministry for Economic Affairs denied towards Table.Media that a better connection between Germany and its western neighbors would make “the terminals” redundant – without going into the numbers.
As recently as last Friday, a spokesman defended the ministry’s plans at the Federal Press Conference. The ministry is currently planning five state-owned and one private terminal at Wilhelmshaven, Brunsbüttel, Lubmin, and Stade. The BMWK lefta current inquiry, as to why the ministry was pushing ahead with the LNG Act in May 2022 with far more than two locations despite being informed by the EU Commission, unanswered until Tuesday evening.
EU planning can ‘completely avoid’ dependence
However, another internal document corroborates the EU Commission’s recommendation. An overall package of additional infrastructure, higher own generation, and savings could “completely avoid” dependence on Russian gas in 2030, according to an internal presentation for the Directorate-General for Energy from April 23 last year, also available to Table.Media.
The document also illuminates why the Commission, in connection with individual terminals in REPowerEU, only writes that these would “reduce” dependency. In addition to individual infrastructure projects, other measures are crucial.
Germany would have to save 28.5 bcm of gas
According to the study, the EU would have to reduceits gas consumption by 27 percentby 2030 – Germany by as much as 29 percent or 279 terawatt hours, equivalent to 28.5 billion cubic meters (bcm) per year. Of all the EU states, Germany would have to save the most.
Thanks to the drastic savings, some infrastructure projectswould evenbe of only temporary need. According to the April presentation, the need for LNG projects in Italy and the Netherlands, as well as, stronger pipeline capacities between France and Switzerland, would be eliminated by 2030. However, according to the documents, the two German LNG sitesare still needed in 2030 – even with the assumed lower gas demand.
Belgien
Climate & Environment
Energy
Gas prices
LNG
Natural gas
Netherlands
REPowerEU
Putin and Biden in a long-distance duel
Biden’s greeting already indicated the direction of the attack: “Hello Poland, one of our great allies!” the US President called out to the people who had gathered at Warsaw’s Royal Castle. Putin, he said, had tested Europe, the US, NATO, and all democracies with his attack on Ukraine – and missed his targets. “He thought he’d get the Finlandization of NATO. Instead, he got the NATOization of Finland.“
Biden had history books of the future on his mind during his two-day trip. “The decisions we make over the next five years will determine the future of the world for decades to come,” he exclaimed. He said even the grandchildren of those present will someday be grateful for the actions of the Western allies in the name of freedom.
Biden announces new sanctions
The “largest sanctions regime” ever directed against a country should be expanded, he said. New sanctions, together with partners, would come this week, he said.
That Biden gave this speech in Poland fits with Warsaw’s perception of itself as playing a stronger role in the alliance. Rzeszów Airport serves as a hub for arms shipments to Ukraine. Biden stressed the importance of welcoming Ukrainian refugees to Poland. “In that darkest moment of their lives, you, the people of Poland, offered them safety and light.” 1.5 million people from Ukraine have found refuge in Poland, and some 11,000 American troops are stationed there, according to the US Defense Department.
Putin to suspend participation in New Start Treaty
Biden is not the only one making an important appearance that day. Russian President Vladimir Putin addressed the Russians in a state of the nation address. In his speech: a lot of familiarities – NATO expansion was one of the causes of war. Russia, on the other hand, was interested in peace.
But there was news toward the end. Putin announced that Russia would suspend its participation in the last remaining nuclear arms control agreement with the United States. However, Putin stressed that this was only a stop, not a termination.
Mutual inspections under the April 2010 New Start Treaty have already ceased since 2020, officially because of the Covid pandemic. Talks scheduled for last November to extend the agreement, which runs through 2026, have also been postponed. What is the treaty worth if one party to the agreement says it will no longer participate?
Putin has nuclear weapons tests prepared
Putin went even further: He called on the Russian Defense Ministry and the state nuclear regulatory agency Rosatom to prepare for new nuclear weapons tests. He justified this with the US plans to test new nuclear weapons – at least Moscow states to have the relevant information. In 1990 the Soviet Union, and in 1992 the USA, carried out the last nuclear weapons tests, according to the United Nations.
And: The war, which Putin never called a war, was even an indirect opportunity for Russia, Putin found. It could help the Russian economy. The goal, he said, was not only to adapt to the current conditions but to put the economy on a higher level of development.
New procurement system for Ukraine
There was a third venue on Tuesday, Brussels, when Ukrainian Foreign Minister Dmytro Kuleba, EU Foreign Affairs Representative Josep Borrell, and NATO Secretary General Jens Stoltenberg met to demonstrate their unity.
“What we have seen today is that President Putin is not preparing for peace but for more war. He is preparing new offensives. He is mobilizing more troops. He is sending more weapons. And that is exactly why we need to increase support for Ukraine,” Stoltenberg said.
To support Ukraine, the NATO Secretary General announced the establishment of a new procurement system. It is intended to improve coordination for arms deliveries to Ukraine and increase production capacity. Ukraine’s ammunition stockpiles are dwindling, and the three representatives of NATO, the EU, and Ukraine stressed that coordination of production, procurement, and delivery is essential for Ukraine.
Dwindling support in the USA
But there is no universal agreement on Ukraine. In the past year, the number of Americans who think the US is doing too much for Ukrainehas nearly quadrupled, from seven to 26 percent. Bruce Stokes, an Associate Fellow at the prestigious London-based think tank Chatham House, concludes in his recent essay, “With no American lives at stake in Ukraine, only financial and military resources, there is a growing wariness of throwing good money after bad.”
For the waning support, Stokes pinpoints a typical American phenomenon: “People like winners. If Russia’s spring offensive looks successful or the Ukrainian counteroffensive uninspiring, expect louder voices calling for a settlement. The warning signs are already here.” Polling data bear this out: about half of the Americans think the US government should convince the leadership in Kyiv to begin negotiations.
Public opinion on this issue will play a major role in the 2024 US election campaign. After all, whether the grandchildren will someday be grateful, as Biden claimed Tuesday, probably won’t be known for many years. But what voters think will become clear in just a few months. By Nana Brink, Gabriel Bub, and Viktor Funk
It has been talked about for more than 40 years and is now to become reality. Now that Morocco and Spain have overcome their diplomatic crisis, the governments are planning a project that will bring the two kingdoms closer together.
At a top-level meeting this February, Madrid and Rabat agreed to build a tunnel under the Strait of Gibraltar. The construction costs are enormous. Estimates of €5 billion to €10 billion are circulating but still unreliable. The World Bank, the European Investment Bank, the African Fund for Development of the African Development Bank, and Arab donors have already pledged to finance the project of the century.
Economic development increases demand for tunnel
This time, they actually want to build the tunnel. After all, West Africa and Morocco, in particular, have developed to such an extent economically in recent years that the corresponding demand for such a tunnel is also coming from the business community. Especially the north of Morocco around the port city of Tangier is firmly integrated into the value creation of European industry.
The economic impact of the tunnel will be enormous. The two countries have set up state project companies to oversee construction; for Morocco, it is SNED, and for Spain, SECEGSA. The two companies expect12.8 million passengers annually and 13 million tons of goods after the planned completion in 2035.
The tunnel will connect Morocco’s rail network to the European rail network. The rail network already has a high-speed line from Tangier to Casablanca. Other lines are currently being planned. There will also be a tube for cars and trucks and another for a gas pipeline. Once the 5,660-kilometer gas pipeline from Nigeria and Morocco is built, Nigerian natural gas will be able to flow directly to Spain.
Expertise from Baden-Württemberg
The two governments are now stepping up the pace. The Spanish side has already commissioneda new feasibility study, for which the state has earmarked an amount of €750,000 this year alone. Making a serious estimate of how expensive the structure will be, is only possible with the study.
The project has even reached the small town of Lahr in the Rhine Valley. It has already had high-ranking visitors: The head of SECEGSA paid a visit to Herrenknecht AG. The company is the world market leader in tunnel construction and likes to be on hand when things get particularly tricky. For example, the company built the 57-kilometer Gotthard Base Tunnelin Switzerland but also the New Elbe Tunnel for the A7 highway in Hamburg.
Cross section of the tubes is a big challenge
The tunnel will be 38.7 kilometers long and will run under the Strait of Gibraltar from Punta Paloma across to Tangier. Almost 28 kilometers of the tunnel will be underwater to a depth of 475 meters. Most importantly, however, the project lies on two tectonic plates, the European and the African. Construction work is scheduled to begin in 2030.
Although the Gibraltar Tunnel will be shorter than the tunnel under the Gotthard, it will be incomparably more complex in technicalterms: “Due to its length, depth and its geological as well as hydrological situation, this tunnel will be an exciting, challenging but feasible project for us,” says company spokesman Achim Kühn. “Just imagine the water pressure that will weigh on the tunnel tubes.” The biggest difficulty lies in the large cross-section of the tunnel tubes.
Only a few companies in the world can realize such projects. That Herrenknecht is involved at such an early stage shows that European companies should not leave the field ofinfrastructure to their Chinese competitors without a fight.
With German help, an old dream could now become reality. The idea of a link between Gibraltar and Tangier has been circulating since 1869. Even then, the French engineer Laurent de Villedemil wanted to build a tunnel. At the end of the 1920s, the German architect Herman Sörgel promoted his project called “Atlantropa,” a huge dam across the strait. A bridge was also discussed for a long time. But that would be even more difficult to build.
Spain
News
ETS: Carbon price exceeds 100 euros per metric ton for the first time
The European carbon price exceeded the threshold of 100 euros per metric ton for the first time on Tuesday. The new record high – for the right to emit one ton of carbon within the European Emissions Trading System (ETS) – was 100.70 euros at midday on Tuesday. It is considered a historic and, for climate activists, psychological event. “This is an important signal for investments in climate mitigation: The tightening #CO2Budget is reflected in the rising prices,” climate scientist Brigitte Knopf wrote on Twitter. Experts and analysts see high carbon prices as one of the most important tools to drive industrial transformation, as the cost of CO2 abatement falls in relative terms. Since the beginning of the year, the CO2 price in the ETS alone has risen by 20 percent.
In 2005, the ETS started with a pilot phase in which industrial plants and energy producers initially received their CO2 allowances free of charge but, for the first time, had to collect emissions data in accordance with strict requirements. Nevertheless, the price dropped to zero euros. It was not until 2008, when a fixed emissions cap and specific emission reduction targets were set, that the CO2 price rose again. Above all, the low ambition level of the ETS and the oversupply of CO2 allowances on the market prevented an effective price signal for climate protection from developing in the system. The price bobbed along for almost a decade.
Price increase: result of climate policy
The first major ETS reform introduced a new target in 2018: Emissions are supposed to fall by 40 percent by 2030. In addition, the Market Stability Reserve has since ensured that surplus allowances are removed from the market. Even though an oversupply of emission allowances remained, the market anticipated that the period of ineffective emissions trading was coming to an end – the price rose again.
The announcement of the Green Deal and the revised EU climate target of minus 55 percent emissions by 2030 again caused prices to rise. The presentation of the Fit for 55 package with far-reaching ETS reforms and the change of government in Berlin were also followed by price jumps, some of them enormous, indicating that the system was overheating. However, with the start of the Russian war of aggression in Ukraine, the price crashed. Since then, the market has been subject to major fluctuations, and in the past four weeks, it has almost reached the 100 euro mark on several occasions, but on average, it has been rising steadily. The price of 100 euros per ton of CO2 is therefore not due to a specific event but the result of current European climate policy and system reforms. luk
Climate & Environment
Emissions trading
REPowerEU: Commission queries interest in loans
The European Commission is asking member states to signal early whether they want to take advantage of loans from the REPowerEU package. In addition to grants of €20 billion, the regulation also provides loans of €225 billion to help end dependence on fossil fuels more quickly and drive forward the energy transition. According to the regular schedule, states have until the end of August to submit their loan requests. The commission wants to bring this forward to the end of March for better planning, on voluntary terms.
In circles of the authority, it was said that credits unclaimed by member states could be distributed to countries that would benefit from them. However, for efficient redistribution, a sufficient lead time would be necessary. The loans from the Covid Recovery and Resilience Facility (ARF) are of particular interest to countries that refinance themselves more expensively on the international capital markets than the EU.
€96 billion in subsidies paid out
The EU Commission also presented an interim report on the two-year existence of the ARF on Tuesday. According to Commission President Ursula von der Leyen, “the original investment targets for the green and digital transition have been overachieved.” In light of the Russian invasion of Ukraine and the global energy crisis, she said, “the fund has become the key element of our Green Deal Industrial Plan.”
According to a Commission release, €96 billion in grants and €48 billion in loans have been paid out under ARF to date. Including also those national plans still under consideration, €203 billion are earmarked for the green and €131 billion for the digital transition. The billion-euro Recovery and Resilience Facility had been created against the backdrop of the Covid-19 crisis to counter economic crises in the member states.
According to the Commission linking ARF funds to reforms and investment has proved successful. For example, civil and criminal justice reforms have been carried out in Italy and labor market reforms in Spain. Even negotiations with Hungary on the 27 so-called super-milestones, including reforms to make the judiciary independent and to fight corruption more effectively, were going well, the agency said. It said a first disbursement request from the country is expected before the summer break. Currently, €5.8 billion in ARF subsidies to Hungary are blocked. cr
Climate & Environment
Energy
Investments
Energy: BMWK unit without management
Amid important negotiations at the EU level, the central unit for EU energy policy in the Federal Ministry for Economic Affairs is without a head. Current organizational charts of the ministry show no appointments for the posts of the two leaders of the unit since at least mid-January.
The former Head of “Overall Strategy,” André Poschmann, is now Head of the “Electricity Policy and Strategy” subdivision. The former Head of “Coordination” has moved to the European Policy Department, where she now heads the “Subsidy Control Policy” unit.
Spokesman: tasks are compensated on an interim basis
A ministry spokesman said yesterday on request that the management tasks would be temporarily compensated by officials of the house, as is common in such cases.
In Brussels, the EU Commission plans to present its proposal for a new electricity marketdesign on March 14. Negotiations are also underway in the Council or will be in the coming months, on legislation on renewable energy, energy efficiency, buildings, gas, and hydrogen, as well as on the possible extension of emergency measures in the energy crisis. ber
Electricity market
Energy policy
EU Commission takes action against trawlers
On Tuesday, the European Commission unveiled an action plan to phase out bottom trawling in marine protected areas by 2030. The flagship measure is one of several documents in which the agency sets out the EU’s ambitions for marine environmental protection, decarbonization of the fisheries sector, and sustainable fisheries management.
The ban on bottom trawling is part of an action plan to “protect and restore marine ecosystems” that had been expected for more than a year. The action plan was originally scheduled for 2021. However, it was postponed several times after a public consultation highlighted strong opposition by the fishing industry.
Fishermen versus environmentalists
The current plan warns that the European fisheries sector is under existential threat from climate change and biodiversity loss. It stresses that only a healthy marine environment can guarantee a future for fishing communities.
Bottom trawling is a fishing technique that involves dragging heavy nets across the seabed. The main representatives of the European fishing industry advocate the continued use of the technique. Environmental organizations, in turn, vehemently criticize it as harmful to biodiversity and the climate because it destroys the seabed. The two sides are bitterly opposed.
Regulation could come
The Commission also wants to limit the bycatch of species with poor conservation status, improve knowledge, particularly about the seabed’s carbon storage capacity, and ensure a fair transition for the fisheries sector by encouraging the provision of funding for this purpose.
The 27 member states must submit a roadmap for implementing these measures to the Commission by July this year. In addition, an evaluation of the plan’s implementation is scheduled for the first half of 2024. On this occasion, it will be determined whether further measures – particularly of a legislative nature – are needed.
Increase energy efficiency, including a short- to medium-term decrease in fuel intensity and total fuel consumption in the sector;
Shift from fossil fuels to renewable, zero- or low-carbon energy sources and fuels. Examples of these energy sources include green electricity, hydrogen, certain biofuels, ammonia, batteries, and wind power. cst
Climate & Environment
Climate Policy
Energy
Environmental protection
Heads
The man who wants to save the climate through investments
Christian Müller is the German Head of EIT InnoEnergy.
Anyone who wants to start a sustainable company in Europe faces bureaucratic hurdles and sometimes an underdeveloped market. Christian Müller’s work begins where start-ups feel thwarted. The chemical engineer with a doctorate has represented EIT InnoEnergy as Managing Director in Germany, Austria, and Switzerland since 2013. EIT InnoEnergy is one of Europe’s largest investors in the cleantech sector, co-financed by the EU Commission. With his work, Müller wants to “find ways to accelerate changes in the energy system,” he says.
His focus on ecological innovation is new. After studying at the University of Karlsruhe and the University of California, Berkeley, Müller first worked at Siemens, ABB, and Höchst. “At some point, I asked myself if I was investing my talents in the right way. What will my children say about me in 20 years? Will they be proud that their dad contributed something to a better world? I felt the need for that, which ultimately led to a change in my career,” Müller says today.
Investments and educational opportunities
The company’s efforts are driven by the desire for a climate-neutral future, he says. EIT InnoEnergy’s toolbox includes innovations: “That doesn’t have to mean technologies, but can also mean entering the market with new business models,” he says. The second part of the toolbox, he says, has to do with people: “With our educational offerings, we can also motivate people in the directions driving these changes.”
The innovations here are often delivered by start-ups, which are supported by EIT InnoEnergy. The funding opportunities go beyond financial resources: “When someone presents a new start-up to us, our first approach is to ask: What does it take to make this idea work? That could be marketing, sales, or capital. At the same time, we try to drive the development of strategically important value chains in Europe,” says Müller.
High demands on start-ups
But what must a start-up look like to be eligible for this support? For Christian Müller, they should be one thing above all: young. “We get involved, in particular, with start-ups in an early development phase. Sure, the technology has to have a certain degree of maturity, but as soon as it’s time to build the business, we’re happy to be involved right from the start,” says the CEO.
The demands on young companies are high. The innovations they support must promote climate neutrality, and at the same time they should reduce costs in the energy system or strengthen the security of the system, says Müller. And: If he can only apply a business idea in southern Hesse and not scale it globally, it is not interesting for him, says the CEO.
Sometimes he has to create the market first
Often the framework conditions need to be created first to implement these innovations. The best example: the photovoltaics industry. Here, most manufacturers of the necessary components have migrated to Asia in recent years. “If we really want to bring this back to Europe successfully, we need to provide the breeding ground that it takes to build an industry across the entire value chain,” says Müller. “In doing so, we are trying to bring players into contact at all ends.”
In doing so, the investor goes beyond just business. “We also sit down with politicians,” says Christian Müller. To get closer to a more sustainable industry, InnoEnergy has a special approach, he says: “Even if there is no existing framework yet, we ask: what does it take for an industry to be located here?” Svenja Schlicht
Battery
Climate & Environment
Energy
Apéro
What if? This question comes up again and again. But politically, one question is not coming up at the moment: What if the EU were to dissolve? But research is free, fortunately. And it is thus allowed to answer questions no one has asked in this form. This is why the renowned economists Gabriel Felbermayr, Jasmin Gröschl, and Inga Heiland have calculated seven scenarios for the Ifo Institute, although they have to emphasize three times that the scenarios are counterfactual.
The results in brief: It would not be pretty. In the event of a complete disintegration of the EU, Malta would take the top spot among the losers and, according to the calculations, would lose almost a fifth of its economic output (19.4 percent), closely followed by Luxembourg (18.1). Estonia (11.8 percent) follows at a distance, but still with huge figures. Germany would lose about one-twentieth of its GDP, 5.2 percent. Individual steps (dissolution of the eurozone, the customs union, or abolition of all EU trade agreements) would each hurt less on their own, with greatly varying intensity for the individual states.
It’s good that these calculations were presented to us.
Researchers: more prosperity through more integration
But what the economists are really concerned with are two things: First, they wanted to calculate the extent to which the losses in prosperity would outweigh the transfer payments from the net contributor states: That would be more expensive, the researchers say.
And second, what the findings mean for conceivable further integration. Felbermayr, Gröschl, and Heiland conclude that even more integration would also mean even more economic prosperity. Even if not everyone went along with all the steps, “European policy should therefore allow those countries to participate in much freer trade in the EU for which the transfer of competences to the supranational level goes too far or too fast.”
Further integration steps, possibly even in clubs of different speeds? So far, the realistic political as well as legal basis for this is lacking – quite factually. Economic policy and political economy remain separate worlds for the time being. Falk Steiner
EU emissions trading: carbon price exceeds €100 per metric ton for the first time
REPowerEU: Commission queries interest in loans
Energy: BMWK unit without management
EU Commission takes action against trawlers
Heads: The man who wants to save the climate through investments
Apéro
Dear reader,
LNG terminals are highly controversial. Nevertheless, the German government is planning six terminals at four locations. But new, exclusive information by Table.Media shows that the EU declared very early on that only a few terminals are needed in Germany, writes Manuel Berkel.
There is not much more that can happen on a Tuesday: US President Biden in Warsaw, in Brussels the EU foreign envoy, the Ukrainian foreign minister, and the NATO secretary-general literally holding hands. And Russia’s President Putin addresses his people in Moscow. What was it all about? In all cases, it was about the war in Ukraine. But also about something else, report Nana Brink, Gabriel Bub and Viktor Funk.
From Europe to Morocco by train? That could become a reality in the coming years. Spain and the North African country have agreed to build a tunnel under the Strait of Gibraltar. It is to be realized by a specialist company from Germany, which already built the Gotthard Base Tunnel, writes Christian von Hiller.
Previously unpublished EU Commission documents are fueling doubts about the German government’s plans to import liquefied natural gas. “Possible additional infrastructure needs” in Germany include a fixed LNG terminal in Brunsbüttel and a floating terminal in Wilhelmshaven, the Directorate General for Energy noted in its summary on a May 5, 2022 meeting.
According to the internal minutes, on the part of the German government, three officials from the Federal Ministry for Economic Affairs took part in the meeting, including the head of the department responsible for gas. Other participants included Commission officials and representatives from other EU countries and ENTSOG. On behalf of the Commission, the association of gas pipeline operators had assessed the need for additional infrastructure to secure supplies in the EU following Russia’s invasion of Ukraine.
Management recommended imports from Belgium and France
As another possible additional need for Germany, the Directorate General listed more powerful connections to neighboring countries to the west that already have terminals for importing LPG: “Expansion of gas infrastructure to increase export capacity from Belgium to Germany,” it says, plus a “deodorization plant to create export capacity from FR to DE.”
Deodorization plants remove artificial odors from natural gas, which France, unlike Germany, already adds to the fuel at the long-distance pipeline level. Because of this technical obstacle, there were almost no direct transport options from the French to the German gas network for a long time.
Berlin relies on much more than two terminals
However, the German government overrode the analysis of the DG and the European network operators. On May 10, just a few days after the meeting, the German cabinet approved a formulation aid for the law aimed at accelerating the construction of LNG terminals.
In it, the German government listed six locations for terminals to which faster approval procedures should apply. In addition to Brunsbüttel and Wilhelmshaven, these were Stade, Hamburg, Rostock, and Lubmin. The annex to the paper contains regulations for seven floating terminals (FSRUs) and four fixed ones at these locations.
At the same time, the EU Commission’s Directorate General had already noted in the minutes of the May 5 meeting that it was “generally important to avoid over-capacities that could become ‘stranded assets’ in the future.”
DUH criticizes ignorance of the ministry
For Environmental Action Germany (DUH), the research is evidence of sensible other options. “The minutes show that alternatives to building the LNG terminalswere on the table early on,” says Constantin Zerger of DUH. Apparently, however, BMWK had already committed to building its own terminals. “An improvement and more efficient use of the existing gas and LNG infrastructure, on the other hand, was ignored by Robert Habeck’s officials.” It is obvious that LNG over-capacities endanger climate goals and lead to unnecessary costs for taxpayers.
Zerger demands: “After these revelations, there is finally a line to be drawn under the planning of over-capacities. Before more and more terminals are hectically built, a resilient overall concept must be presented with a consideration of all options for action and the consequences for the climate.”
Bundestag added another floating terminal
On May 12, Table Media first reported on the Commission’s analysis that the authority considered only two German terminals necessary. On May 19 and 20, the Bundestag and Bundesrat finally approved the LNG Acceleration Act. The version passed even included another floating terminal in Wilhelmshaven.
The EU Commission made its analysis of infrastructure needs public in its REPowerEU communication on May 18. It corresponded to the status from the internal meeting just under two weeks earlier.
Eastern Europe could also be supplied
“The assessment has clearly shown that the additional FSRUs in Eemshaven (NL) and Wilhelmshaven (DE), as well as an additional LNG terminal in Germany (Brunsbüttel), will reduce infrastructure bottlenecks in northwestern Europe in the short term,” the Commission wrote in its plan to address the energy crisis. “More generally, it will be important to avoid overcapacity in LNG import infrastructure, which could become stranded assets in the future.”
According to the published document, the connection to Germany’s western neighbors would even enable the supply of Eastern European countries. “The assessment and discussions revealed that the development of a deodorization facility that would allow gas to flow from west to east between France and Germany could remove a major bottleneck in the medium term to reduce gas dependence on Russia in Central Europe,” the document said. Combined with the development of gas infrastructure to increase export capacity from Belgium to Germany, this would allow full use of LNG capacity in Western Europe to reduce dependence on Russian gas in Central and Eastern European regions as well.”
Currently six terminals at four locations announced
Shortly after the publication of REPowerEU, the German Ministry for Economic Affairs denied towards Table.Media that a better connection between Germany and its western neighbors would make “the terminals” redundant – without going into the numbers.
As recently as last Friday, a spokesman defended the ministry’s plans at the Federal Press Conference. The ministry is currently planning five state-owned and one private terminal at Wilhelmshaven, Brunsbüttel, Lubmin, and Stade. The BMWK lefta current inquiry, as to why the ministry was pushing ahead with the LNG Act in May 2022 with far more than two locations despite being informed by the EU Commission, unanswered until Tuesday evening.
EU planning can ‘completely avoid’ dependence
However, another internal document corroborates the EU Commission’s recommendation. An overall package of additional infrastructure, higher own generation, and savings could “completely avoid” dependence on Russian gas in 2030, according to an internal presentation for the Directorate-General for Energy from April 23 last year, also available to Table.Media.
The document also illuminates why the Commission, in connection with individual terminals in REPowerEU, only writes that these would “reduce” dependency. In addition to individual infrastructure projects, other measures are crucial.
Germany would have to save 28.5 bcm of gas
According to the study, the EU would have to reduceits gas consumption by 27 percentby 2030 – Germany by as much as 29 percent or 279 terawatt hours, equivalent to 28.5 billion cubic meters (bcm) per year. Of all the EU states, Germany would have to save the most.
Thanks to the drastic savings, some infrastructure projectswould evenbe of only temporary need. According to the April presentation, the need for LNG projects in Italy and the Netherlands, as well as, stronger pipeline capacities between France and Switzerland, would be eliminated by 2030. However, according to the documents, the two German LNG sitesare still needed in 2030 – even with the assumed lower gas demand.
Belgien
Climate & Environment
Energy
Gas prices
LNG
Natural gas
Netherlands
REPowerEU
Putin and Biden in a long-distance duel
Biden’s greeting already indicated the direction of the attack: “Hello Poland, one of our great allies!” the US President called out to the people who had gathered at Warsaw’s Royal Castle. Putin, he said, had tested Europe, the US, NATO, and all democracies with his attack on Ukraine – and missed his targets. “He thought he’d get the Finlandization of NATO. Instead, he got the NATOization of Finland.“
Biden had history books of the future on his mind during his two-day trip. “The decisions we make over the next five years will determine the future of the world for decades to come,” he exclaimed. He said even the grandchildren of those present will someday be grateful for the actions of the Western allies in the name of freedom.
Biden announces new sanctions
The “largest sanctions regime” ever directed against a country should be expanded, he said. New sanctions, together with partners, would come this week, he said.
That Biden gave this speech in Poland fits with Warsaw’s perception of itself as playing a stronger role in the alliance. Rzeszów Airport serves as a hub for arms shipments to Ukraine. Biden stressed the importance of welcoming Ukrainian refugees to Poland. “In that darkest moment of their lives, you, the people of Poland, offered them safety and light.” 1.5 million people from Ukraine have found refuge in Poland, and some 11,000 American troops are stationed there, according to the US Defense Department.
Putin to suspend participation in New Start Treaty
Biden is not the only one making an important appearance that day. Russian President Vladimir Putin addressed the Russians in a state of the nation address. In his speech: a lot of familiarities – NATO expansion was one of the causes of war. Russia, on the other hand, was interested in peace.
But there was news toward the end. Putin announced that Russia would suspend its participation in the last remaining nuclear arms control agreement with the United States. However, Putin stressed that this was only a stop, not a termination.
Mutual inspections under the April 2010 New Start Treaty have already ceased since 2020, officially because of the Covid pandemic. Talks scheduled for last November to extend the agreement, which runs through 2026, have also been postponed. What is the treaty worth if one party to the agreement says it will no longer participate?
Putin has nuclear weapons tests prepared
Putin went even further: He called on the Russian Defense Ministry and the state nuclear regulatory agency Rosatom to prepare for new nuclear weapons tests. He justified this with the US plans to test new nuclear weapons – at least Moscow states to have the relevant information. In 1990 the Soviet Union, and in 1992 the USA, carried out the last nuclear weapons tests, according to the United Nations.
And: The war, which Putin never called a war, was even an indirect opportunity for Russia, Putin found. It could help the Russian economy. The goal, he said, was not only to adapt to the current conditions but to put the economy on a higher level of development.
New procurement system for Ukraine
There was a third venue on Tuesday, Brussels, when Ukrainian Foreign Minister Dmytro Kuleba, EU Foreign Affairs Representative Josep Borrell, and NATO Secretary General Jens Stoltenberg met to demonstrate their unity.
“What we have seen today is that President Putin is not preparing for peace but for more war. He is preparing new offensives. He is mobilizing more troops. He is sending more weapons. And that is exactly why we need to increase support for Ukraine,” Stoltenberg said.
To support Ukraine, the NATO Secretary General announced the establishment of a new procurement system. It is intended to improve coordination for arms deliveries to Ukraine and increase production capacity. Ukraine’s ammunition stockpiles are dwindling, and the three representatives of NATO, the EU, and Ukraine stressed that coordination of production, procurement, and delivery is essential for Ukraine.
Dwindling support in the USA
But there is no universal agreement on Ukraine. In the past year, the number of Americans who think the US is doing too much for Ukrainehas nearly quadrupled, from seven to 26 percent. Bruce Stokes, an Associate Fellow at the prestigious London-based think tank Chatham House, concludes in his recent essay, “With no American lives at stake in Ukraine, only financial and military resources, there is a growing wariness of throwing good money after bad.”
For the waning support, Stokes pinpoints a typical American phenomenon: “People like winners. If Russia’s spring offensive looks successful or the Ukrainian counteroffensive uninspiring, expect louder voices calling for a settlement. The warning signs are already here.” Polling data bear this out: about half of the Americans think the US government should convince the leadership in Kyiv to begin negotiations.
Public opinion on this issue will play a major role in the 2024 US election campaign. After all, whether the grandchildren will someday be grateful, as Biden claimed Tuesday, probably won’t be known for many years. But what voters think will become clear in just a few months. By Nana Brink, Gabriel Bub, and Viktor Funk
It has been talked about for more than 40 years and is now to become reality. Now that Morocco and Spain have overcome their diplomatic crisis, the governments are planning a project that will bring the two kingdoms closer together.
At a top-level meeting this February, Madrid and Rabat agreed to build a tunnel under the Strait of Gibraltar. The construction costs are enormous. Estimates of €5 billion to €10 billion are circulating but still unreliable. The World Bank, the European Investment Bank, the African Fund for Development of the African Development Bank, and Arab donors have already pledged to finance the project of the century.
Economic development increases demand for tunnel
This time, they actually want to build the tunnel. After all, West Africa and Morocco, in particular, have developed to such an extent economically in recent years that the corresponding demand for such a tunnel is also coming from the business community. Especially the north of Morocco around the port city of Tangier is firmly integrated into the value creation of European industry.
The economic impact of the tunnel will be enormous. The two countries have set up state project companies to oversee construction; for Morocco, it is SNED, and for Spain, SECEGSA. The two companies expect12.8 million passengers annually and 13 million tons of goods after the planned completion in 2035.
The tunnel will connect Morocco’s rail network to the European rail network. The rail network already has a high-speed line from Tangier to Casablanca. Other lines are currently being planned. There will also be a tube for cars and trucks and another for a gas pipeline. Once the 5,660-kilometer gas pipeline from Nigeria and Morocco is built, Nigerian natural gas will be able to flow directly to Spain.
Expertise from Baden-Württemberg
The two governments are now stepping up the pace. The Spanish side has already commissioneda new feasibility study, for which the state has earmarked an amount of €750,000 this year alone. Making a serious estimate of how expensive the structure will be, is only possible with the study.
The project has even reached the small town of Lahr in the Rhine Valley. It has already had high-ranking visitors: The head of SECEGSA paid a visit to Herrenknecht AG. The company is the world market leader in tunnel construction and likes to be on hand when things get particularly tricky. For example, the company built the 57-kilometer Gotthard Base Tunnelin Switzerland but also the New Elbe Tunnel for the A7 highway in Hamburg.
Cross section of the tubes is a big challenge
The tunnel will be 38.7 kilometers long and will run under the Strait of Gibraltar from Punta Paloma across to Tangier. Almost 28 kilometers of the tunnel will be underwater to a depth of 475 meters. Most importantly, however, the project lies on two tectonic plates, the European and the African. Construction work is scheduled to begin in 2030.
Although the Gibraltar Tunnel will be shorter than the tunnel under the Gotthard, it will be incomparably more complex in technicalterms: “Due to its length, depth and its geological as well as hydrological situation, this tunnel will be an exciting, challenging but feasible project for us,” says company spokesman Achim Kühn. “Just imagine the water pressure that will weigh on the tunnel tubes.” The biggest difficulty lies in the large cross-section of the tunnel tubes.
Only a few companies in the world can realize such projects. That Herrenknecht is involved at such an early stage shows that European companies should not leave the field ofinfrastructure to their Chinese competitors without a fight.
With German help, an old dream could now become reality. The idea of a link between Gibraltar and Tangier has been circulating since 1869. Even then, the French engineer Laurent de Villedemil wanted to build a tunnel. At the end of the 1920s, the German architect Herman Sörgel promoted his project called “Atlantropa,” a huge dam across the strait. A bridge was also discussed for a long time. But that would be even more difficult to build.
Spain
News
ETS: Carbon price exceeds 100 euros per metric ton for the first time
The European carbon price exceeded the threshold of 100 euros per metric ton for the first time on Tuesday. The new record high – for the right to emit one ton of carbon within the European Emissions Trading System (ETS) – was 100.70 euros at midday on Tuesday. It is considered a historic and, for climate activists, psychological event. “This is an important signal for investments in climate mitigation: The tightening #CO2Budget is reflected in the rising prices,” climate scientist Brigitte Knopf wrote on Twitter. Experts and analysts see high carbon prices as one of the most important tools to drive industrial transformation, as the cost of CO2 abatement falls in relative terms. Since the beginning of the year, the CO2 price in the ETS alone has risen by 20 percent.
In 2005, the ETS started with a pilot phase in which industrial plants and energy producers initially received their CO2 allowances free of charge but, for the first time, had to collect emissions data in accordance with strict requirements. Nevertheless, the price dropped to zero euros. It was not until 2008, when a fixed emissions cap and specific emission reduction targets were set, that the CO2 price rose again. Above all, the low ambition level of the ETS and the oversupply of CO2 allowances on the market prevented an effective price signal for climate protection from developing in the system. The price bobbed along for almost a decade.
Price increase: result of climate policy
The first major ETS reform introduced a new target in 2018: Emissions are supposed to fall by 40 percent by 2030. In addition, the Market Stability Reserve has since ensured that surplus allowances are removed from the market. Even though an oversupply of emission allowances remained, the market anticipated that the period of ineffective emissions trading was coming to an end – the price rose again.
The announcement of the Green Deal and the revised EU climate target of minus 55 percent emissions by 2030 again caused prices to rise. The presentation of the Fit for 55 package with far-reaching ETS reforms and the change of government in Berlin were also followed by price jumps, some of them enormous, indicating that the system was overheating. However, with the start of the Russian war of aggression in Ukraine, the price crashed. Since then, the market has been subject to major fluctuations, and in the past four weeks, it has almost reached the 100 euro mark on several occasions, but on average, it has been rising steadily. The price of 100 euros per ton of CO2 is therefore not due to a specific event but the result of current European climate policy and system reforms. luk
Climate & Environment
Emissions trading
REPowerEU: Commission queries interest in loans
The European Commission is asking member states to signal early whether they want to take advantage of loans from the REPowerEU package. In addition to grants of €20 billion, the regulation also provides loans of €225 billion to help end dependence on fossil fuels more quickly and drive forward the energy transition. According to the regular schedule, states have until the end of August to submit their loan requests. The commission wants to bring this forward to the end of March for better planning, on voluntary terms.
In circles of the authority, it was said that credits unclaimed by member states could be distributed to countries that would benefit from them. However, for efficient redistribution, a sufficient lead time would be necessary. The loans from the Covid Recovery and Resilience Facility (ARF) are of particular interest to countries that refinance themselves more expensively on the international capital markets than the EU.
€96 billion in subsidies paid out
The EU Commission also presented an interim report on the two-year existence of the ARF on Tuesday. According to Commission President Ursula von der Leyen, “the original investment targets for the green and digital transition have been overachieved.” In light of the Russian invasion of Ukraine and the global energy crisis, she said, “the fund has become the key element of our Green Deal Industrial Plan.”
According to a Commission release, €96 billion in grants and €48 billion in loans have been paid out under ARF to date. Including also those national plans still under consideration, €203 billion are earmarked for the green and €131 billion for the digital transition. The billion-euro Recovery and Resilience Facility had been created against the backdrop of the Covid-19 crisis to counter economic crises in the member states.
According to the Commission linking ARF funds to reforms and investment has proved successful. For example, civil and criminal justice reforms have been carried out in Italy and labor market reforms in Spain. Even negotiations with Hungary on the 27 so-called super-milestones, including reforms to make the judiciary independent and to fight corruption more effectively, were going well, the agency said. It said a first disbursement request from the country is expected before the summer break. Currently, €5.8 billion in ARF subsidies to Hungary are blocked. cr
Climate & Environment
Energy
Investments
Energy: BMWK unit without management
Amid important negotiations at the EU level, the central unit for EU energy policy in the Federal Ministry for Economic Affairs is without a head. Current organizational charts of the ministry show no appointments for the posts of the two leaders of the unit since at least mid-January.
The former Head of “Overall Strategy,” André Poschmann, is now Head of the “Electricity Policy and Strategy” subdivision. The former Head of “Coordination” has moved to the European Policy Department, where she now heads the “Subsidy Control Policy” unit.
Spokesman: tasks are compensated on an interim basis
A ministry spokesman said yesterday on request that the management tasks would be temporarily compensated by officials of the house, as is common in such cases.
In Brussels, the EU Commission plans to present its proposal for a new electricity marketdesign on March 14. Negotiations are also underway in the Council or will be in the coming months, on legislation on renewable energy, energy efficiency, buildings, gas, and hydrogen, as well as on the possible extension of emergency measures in the energy crisis. ber
Electricity market
Energy policy
EU Commission takes action against trawlers
On Tuesday, the European Commission unveiled an action plan to phase out bottom trawling in marine protected areas by 2030. The flagship measure is one of several documents in which the agency sets out the EU’s ambitions for marine environmental protection, decarbonization of the fisheries sector, and sustainable fisheries management.
The ban on bottom trawling is part of an action plan to “protect and restore marine ecosystems” that had been expected for more than a year. The action plan was originally scheduled for 2021. However, it was postponed several times after a public consultation highlighted strong opposition by the fishing industry.
Fishermen versus environmentalists
The current plan warns that the European fisheries sector is under existential threat from climate change and biodiversity loss. It stresses that only a healthy marine environment can guarantee a future for fishing communities.
Bottom trawling is a fishing technique that involves dragging heavy nets across the seabed. The main representatives of the European fishing industry advocate the continued use of the technique. Environmental organizations, in turn, vehemently criticize it as harmful to biodiversity and the climate because it destroys the seabed. The two sides are bitterly opposed.
Regulation could come
The Commission also wants to limit the bycatch of species with poor conservation status, improve knowledge, particularly about the seabed’s carbon storage capacity, and ensure a fair transition for the fisheries sector by encouraging the provision of funding for this purpose.
The 27 member states must submit a roadmap for implementing these measures to the Commission by July this year. In addition, an evaluation of the plan’s implementation is scheduled for the first half of 2024. On this occasion, it will be determined whether further measures – particularly of a legislative nature – are needed.
Increase energy efficiency, including a short- to medium-term decrease in fuel intensity and total fuel consumption in the sector;
Shift from fossil fuels to renewable, zero- or low-carbon energy sources and fuels. Examples of these energy sources include green electricity, hydrogen, certain biofuels, ammonia, batteries, and wind power. cst
Climate & Environment
Climate Policy
Energy
Environmental protection
Heads
The man who wants to save the climate through investments
Christian Müller is the German Head of EIT InnoEnergy.
Anyone who wants to start a sustainable company in Europe faces bureaucratic hurdles and sometimes an underdeveloped market. Christian Müller’s work begins where start-ups feel thwarted. The chemical engineer with a doctorate has represented EIT InnoEnergy as Managing Director in Germany, Austria, and Switzerland since 2013. EIT InnoEnergy is one of Europe’s largest investors in the cleantech sector, co-financed by the EU Commission. With his work, Müller wants to “find ways to accelerate changes in the energy system,” he says.
His focus on ecological innovation is new. After studying at the University of Karlsruhe and the University of California, Berkeley, Müller first worked at Siemens, ABB, and Höchst. “At some point, I asked myself if I was investing my talents in the right way. What will my children say about me in 20 years? Will they be proud that their dad contributed something to a better world? I felt the need for that, which ultimately led to a change in my career,” Müller says today.
Investments and educational opportunities
The company’s efforts are driven by the desire for a climate-neutral future, he says. EIT InnoEnergy’s toolbox includes innovations: “That doesn’t have to mean technologies, but can also mean entering the market with new business models,” he says. The second part of the toolbox, he says, has to do with people: “With our educational offerings, we can also motivate people in the directions driving these changes.”
The innovations here are often delivered by start-ups, which are supported by EIT InnoEnergy. The funding opportunities go beyond financial resources: “When someone presents a new start-up to us, our first approach is to ask: What does it take to make this idea work? That could be marketing, sales, or capital. At the same time, we try to drive the development of strategically important value chains in Europe,” says Müller.
High demands on start-ups
But what must a start-up look like to be eligible for this support? For Christian Müller, they should be one thing above all: young. “We get involved, in particular, with start-ups in an early development phase. Sure, the technology has to have a certain degree of maturity, but as soon as it’s time to build the business, we’re happy to be involved right from the start,” says the CEO.
The demands on young companies are high. The innovations they support must promote climate neutrality, and at the same time they should reduce costs in the energy system or strengthen the security of the system, says Müller. And: If he can only apply a business idea in southern Hesse and not scale it globally, it is not interesting for him, says the CEO.
Sometimes he has to create the market first
Often the framework conditions need to be created first to implement these innovations. The best example: the photovoltaics industry. Here, most manufacturers of the necessary components have migrated to Asia in recent years. “If we really want to bring this back to Europe successfully, we need to provide the breeding ground that it takes to build an industry across the entire value chain,” says Müller. “In doing so, we are trying to bring players into contact at all ends.”
In doing so, the investor goes beyond just business. “We also sit down with politicians,” says Christian Müller. To get closer to a more sustainable industry, InnoEnergy has a special approach, he says: “Even if there is no existing framework yet, we ask: what does it take for an industry to be located here?” Svenja Schlicht
Battery
Climate & Environment
Energy
Apéro
What if? This question comes up again and again. But politically, one question is not coming up at the moment: What if the EU were to dissolve? But research is free, fortunately. And it is thus allowed to answer questions no one has asked in this form. This is why the renowned economists Gabriel Felbermayr, Jasmin Gröschl, and Inga Heiland have calculated seven scenarios for the Ifo Institute, although they have to emphasize three times that the scenarios are counterfactual.
The results in brief: It would not be pretty. In the event of a complete disintegration of the EU, Malta would take the top spot among the losers and, according to the calculations, would lose almost a fifth of its economic output (19.4 percent), closely followed by Luxembourg (18.1). Estonia (11.8 percent) follows at a distance, but still with huge figures. Germany would lose about one-twentieth of its GDP, 5.2 percent. Individual steps (dissolution of the eurozone, the customs union, or abolition of all EU trade agreements) would each hurt less on their own, with greatly varying intensity for the individual states.
It’s good that these calculations were presented to us.
Researchers: more prosperity through more integration
But what the economists are really concerned with are two things: First, they wanted to calculate the extent to which the losses in prosperity would outweigh the transfer payments from the net contributor states: That would be more expensive, the researchers say.
And second, what the findings mean for conceivable further integration. Felbermayr, Gröschl, and Heiland conclude that even more integration would also mean even more economic prosperity. Even if not everyone went along with all the steps, “European policy should therefore allow those countries to participate in much freer trade in the EU for which the transfer of competences to the supranational level goes too far or too fast.”
Further integration steps, possibly even in clubs of different speeds? So far, the realistic political as well as legal basis for this is lacking – quite factually. Economic policy and political economy remain separate worlds for the time being. Falk Steiner
