The failure of ETS reform – “a bad day for Parliament”? Not everyone sees it that way. Ismail Ertug, for example, one of the Social Democrats who voted against his own party’s recommendation to phase out free emissions allowances for industry, disagrees. Ertug hopes that the renegotiations can lead to an improvement of the climate package. Lukas Scheid analyzes the lines of conflict and possible compromise solutions in the run-up to the new vote.
The German government is looking to Chile, Argentina, and Uruguay to reduce its dependence on Russia and China for raw materials and energy imports and wants to work more closely with the three South American countries. It has high hopes for Chile’s ambitions to become a pioneer in green mining. But the global search for new partners could come at the expense of the environment and human rights, warns the Supply Chain Law initiative, with an eye on countries such as Nigeria, Kazakhstan, and Saudi Arabia. An effective EU supply chain law is, therefore, more urgent than ever. Leonie Düngefeld has the details.
Picking cotton, harvesting vegetables, assembling electrical parts – jobs like these are done under duress by millions of people around the world. Yesterday, EU parliamentarians presented their recommendation for legislation on products from forced labor. Their demand: imports should be stopped at the EU borders. The US is already a step ahead, with the Uyghur Forced Labor Prevention Act coming into force in a few days. The US approach goes much further than the EU Parliament’s proposal, as Amelie Richter reports.
There is widespread agreement that the EU urgently needs to catch up in the chip industry. The European Chips Act, which was presented by the Commission with great pomp in February, has therefore been approved in principle by the member states and the EU Parliament. However, opinions differ considerably on the details. Smaller countries, for example, are afraid of being left empty-handed. Till Hoppe analyzes the main points of contention.
With a slightly trembling voice, Peter Liese (EPP) had asked his EU Parliament colleagues on Wednesday to return his report on the reform of the European emissions trading system (ETS) to the committee. Liese knew at that moment that the previous failure of his text was largely his fault. As the responsible rapporteur, he had failed to form solid majorities without having to hope for votes from the ultra-conservative EKR or right-wing nationalist ID.
He should make up for that in the coming weeks, because the Environment Committee (ENVI) is now actually renegotiating. With a large majority, the MEPs finally voted to refer the text back to the committee (Europe.Table reported). It is obvious that the negotiations will not be easy due to the charged atmosphere and the mutual accusations of having made pacts with right-wingers. Liese himself called it a “bad day for the European Parliament” – as did Tiemo Wölken (S&D). Other MEPs, however, see it as a great opportunity.
In an interview with Europe.Table, Ismail Ertug (S&D) described it as perfectly legitimate for legislative texts to go through rounds of honor in Parliament. They often lie in the Council for years, why should it be a weakening of the democratic process if the necessary majorities are not achieved in Parliament at the first go, he asked. Ertug is part of a group of Social Democrats who voted against their own party recommendation to phase out free emissions allowances for the industry. That’s why he draws great hope from the renegotiations, which he believes could be more likely to improve the climate package.
Ertug so far favors the industry committee’s (ITRE) position of starting phase-out in 2028 and fully replacing free allocations with CBAM as carbon leakage protection in 2034. He argues that even unions and labor councils have warned him against a faster path. In his home constituency of Upper Palatinate, 500 people are threatened with unemployment by the Maxhütte pipe mill, which is in insolvency proceedings. Ending the free allocation too quickly could present the steel company with even greater problems.
Due to its still widespread blast furnaces, the German steel industry as a whole cannot reduce its emissions across the board at the same rate as a few sites with direct reduction plants can, agrees on fellow party member Jens Geier. Contrary to his party recommendation, he too supports the ITRE line but sees a way out of the dilemma.
The Social Democrats and Greens support a regulation under which benchmarks for emissions reduction apply to the assessment of free allocations for industrial plants, based on the cleanest plants that have the maximum possible CO2 reduction. In the case of the steel industry, however, this means that conventional blast furnace technology is compared with direct reduction plants. When operated with green hydrogen, these are emission-free. From Jens Geier’s point of view, this creates restrictions on allocations that may even end up preventing climate-friendly investments.
Peter Liese and the EPP have submitted an amendment that, according to Geier, is based on a text from the German Federal Ministry of Economics and Climate Protection. This would allow plants to continue to receive free emissions allowances if they received them based on other benchmarks. Geier is willing to vote for a faster phase-out path of free allocations if differentiated benchmarks also apply to them, he told Europe.Table.
If other industrial policy-driven members of parliament were to follow this middle course, Liese would have an even bigger problem. The majority of the ITRE line would be on the line. And so the compromise reached by S&D negotiator Mohammed Chahim with the liberal Renew Group would be back on top of the table. According to this, free allocations would be reduced as early as 2026 and fully replaced by CBAM in 2032. The Greens could also live well with this proposal, as it would mean ambition increases compared to the Commission proposal and the ITRE line.
Another possibility for broader compromises: Renew deputies voting against party recommendation. One of them is FDP politician Andreas Glück. He lacks what he considers a fairer regulation for exports for an approval of the S&D/Renew proposal. The so-called export rebates of the S&D/Renew proposal continue to provide free emission rights for those companies that belong to the 10 percent of the most climate-friendly producers in an industry. For Andreas Glück, the benchmark is too strict. For him, 30 percent would be conceivable. This would allow companies to better calculate whether they fell below the benchmark and receive free emission rights accordingly, Glück said.
So there is plenty of room for compromise. The question is how far the chief negotiators of the parties want to move away from their own positions. One sign that the renegotiations could become more complicated than initially assumed is the adjustment of the new voting date. While on Wednesday evening it was still said that another attempt would be made in just under two weeks’ time at the short parliamentary session in Brussels, on Thursday afternoon talk of a July plenary session (July 4-7) was doing the rounds.
With the aim of multiplying international partnerships in raw materials trade, Franziska Brantner, Parliamentary State Secretary at the German Federal Ministry of Economics, will begin a trip to Chile, Argentina, and Uruguay tomorrow. There, together with an EU delegation, she will meet the respective Ministers for Foreign Trade and Economic Affairs and for Energy and Mining. In these talks, she will “advocate more intensive economic cooperation, especially in renewable energies and raw materials,” the Federal Ministry of Economics announced. In Chile, Brantner will, among other things, open the EXPONOR mining trade fair, of which Germany is this year’s partner country.
The visit to South America is part of an effort to diversify the sources of German raw material imports as quickly as possible in order to reduce dependence on Russia and China. The German government is currently working on a new raw materials strategy. “For too long, we have acted on the principle of buying where it is cheapest. These are often raw materials that come from China,” Brantner said. Especially in the first processing stage there are hardly any production sites independent of China. “For many of the rare earths, this dependence is even close to 100 percent.”
In a recent analysis, the German Economic Institute (IW) writes that there are strong dependencies, particularly with regard to the extraction of raw materials that are critical for the energy transition, such as magnesium or rare earths. In addition, according to the International Energy Agency (IEA), 50 to 70 percent of the further processing of lithium and cobalt and almost 90 percent of rare minerals takes place in China.
“Chile is already an important partner for us in raw materials and energy policy cooperation,” Brantner said before the trip. “Chile, as well as Argentina and Uruguay, offer outstanding potential for the production of green hydrogen. However, many other sectors lend themselves to the expansion of our economic relations.” Together with a delegation of several companies, Brantner wants to promote greater involvement of German companies in the three South American countries.
In addition to other important raw materials, the talks are to focus on trade in green hydrogen, lithium, and increased cooperation in the field of renewable energies. The German government has high hopes for Chile’s ambitions to become a pioneer in green and sustainable mining. The Chilean government has been pursuing a green hydrogen strategy since 2020, which aims to make it the cheapest producer of hydrogen by 2030 and one of the top three exporters of green hydrogen by 2050.
Due to the large geographical distance, the transport of raw materials from South America is naturally an obstacle compared to other regions. “But Chile is just a country that is close to us in terms of our values and with a stable government,” Brantner said. “Therefore, it should remain an important partner for us.”
Meanwhile, the Supply Chain Act initiative, a coalition of civil society organizations including BUND, Germanwatch, and the German Trade Union Confederation (DGB), warns of human rights abuses and environmental destruction in new raw materials supply chains. In a briefing published yesterday, the alliance writes that the gaze of the German government and companies searching for alternative sources of fossil fuels and metals is now “falling on hotspots of human rights violations and environmental destruction, partly in fragile ecosystems.” The talk is about increased coal imports from Colombia and potential new oil suppliers such as Nigeria, Kazakhstan, Saudi Arabia, and the United Arab Emirates.
“We support the decided import stops of raw materials from Russia,” said Johannes Heeg, spokesman for the initiative. “But we are concerned that this is happening at the expense of people and the environment in the mining areas.” An effective EU supply chain law is more urgent than ever. In February, the European Commission presented a draft for such a law. However, according to the initiative, this offers too many loopholes for companies. In Germany, the Supply Chain Sourcing Obligations Act will come into force in 2023.
A meeting of the European Competitiveness Council yesterday also focused on the supply of raw materials. “We must never again be as dependent on one country as we were. This applies not only to Russia, but also to China,” said Michael Kellner, Parliamentary State Secretary at the BMWK, during the Council meeting. Therefore, the extraction and processing of raw materials within the EU should be ramped up. International trade is nonetheless essential. “Nevertheless, the EU must not close itself off, but remain an open force integrated into the global economy.”
“Strong international partnerships are at the heart of our solution,” said EU Competition Commissioner Margrethe Vestager. “We must not replace one dependency with another, but create more balanced trade relationships with partners we can rely on.” A strategic partnership with Canada is already in place. Other partnerships with Namibia, Norway, and Serbia are under discussion, said Internal Market Commissioner Thierry Breton. The EU also wants to cooperate more with the US and countries in Central Asia and South America.
Breton announced that the Commission would prepare a legislative proposal on critical raw materials. This will be based on three pillars: a clear statement of priorities, the structuring of investments in European production capacities, and the strengthening of the circular economy in the field of raw materials.
According to EU figures, around 25 million people worldwide work in conditions that can be classified as forced labor. In countries such as China, these modern-day slaves pick cotton for clothing, harvest fruit and vegetables, or assemble electrical components. These goods then end up with consumers in Europe. This should change. The European Parliament is putting pressure on the executive EU Commission: in the fall, a long-requested draft law for an import and export ban on products from forced labor should finally see the light of day in Brussels’ bureaucracy.
EU parliamentarians presented their recommendations for legislation on Thursday. They demand that the import of products from forced labor and child labor should already be stopped at the EU borders. The definition of forced labor should be set according to the guidelines of the International Labor Organization (ILO). Products will then be sorted out on the basis of several criteria:
According to the recommendation of the EU Parliament
The responsibility, therefore, lies with the importer. According to the EU Parliament’s draft, the importer bears the burden of proof and must prove that no forced labor or child labor was used in the production and transport of the goods. Otherwise, the charge remains fixed. To help importers, the European Parliament calls for a publicly accessible list of already sanctioned companies, regions, and producers. Small and medium-sized companies are to receive separate help in implementing the new regulations.
The proposal received a large majority in Thursday’s vote in the EU Parliament. “Today we are signaling that the EU will no longer allow itself to become an accomplice of the totalitarian Chinese regime, which has been committing crimes against humanity in Xinjiang province for five years,” said Green Party European politician Reinhard Bütikofer after the vote.
Dubravka Šuica, Vice-President of the EU Commission and responsible for democracy and demography, stressed in plenary that a legislative proposal from the Brussels authority would follow after the summer break. However, due to the tight schedule, an impact assessment is no longer possible, Šuica said. EU parliamentarians had called for a bill in September in a debate on the issue – exactly one year after EU Commission chief Ursula von der Leyen announced the import ban in her State of the European Union speech. It was actually supposed to become part of the EU supply chain legislation. However, due to wrangling over responsibility, the project was shelved.
However, the EU is now also facing a time crunch because an important legal change is due to take place on the other side of the Atlantic at the end of the month: from June 21, the Uyghur Forced Labor Prevention Act (UFLPA) will come into force in the United States. Import bans on cotton and tomatoes from Xinjiang already exist there. However, UFLPA will further restrict the import of goods from the region.
In the case of US legislation, the following applies:
The US legislation thus goes a step further than the EU Parliament’s proposal, as all goods from Xinjiang are stopped at the US border per se and are only released once it has been proven that no forced labor was involved in their production. The stricter US approach as a model has been rejected by the EU Directorate-General for Trade in the past. To what extent the Brussels authority will follow the recommendations from the EU Parliament is open.
However, UFLPA will also have an impact on Europe: “We expect companies to now use the EU and other markets as a dumping ground for forced labor products,” says Chloe Cranston of the non-governmental organization Anti-Slavery International in an interview with China.Table. So what can no longer be sold in the US is transported to the EU market. According to Cranston, this strategy is not completely new. For example, this can already be observed in cotton or in the solar industry. “That’s why we’re calling for equally strong legislation in all countries.“
Otherwise, Cranston warns, there is a risk of value chains splitting up if the laws differ: a “clean” supply chain for goods to the US and one for other regions, where products from production with forced labor are not yet so sharply tracked down and sorted out. The situation in the EU would be further complicated by the fact that customs data is not publicly available.
Meanwhile, the US is also trying to put pressure on China through the ILO. At the annual conference of the Labor Organization, which will end on Saturday in Geneva after almost two weeks, the US delegation, alongside other Western countries, called for an investigation of the forced labor allegations by a commission of experts. Because China is a member of the ILO executive, however, it will be difficult to issue a mandate to that effect.
In principle, everyone agrees that the European Union must regain lost ground in the chip industry and reduce the dependence of the domestic industry on suppliers from countries, especially in Asia. For years, the importance of such strategically important products had been neglected, said Portuguese Economy Minister Antonio Costa Silva at the Competitiveness Council in Luxembourg. “We have to learn from our mistakes.”
The EU Commission presented the European Chips Act in February for precisely this purpose. Research and development in Europe are to be strengthened, and investments in new factories are to be facilitated via a separate aid framework. The goal is to increase the EU’s share of global chip production from the current level of around eight percent to 20 percent by 2030.
The initiative enjoys broad support among the member states and in the European Parliament. At least in principle. In detail, however, opinions diverge – sometimes to such an extent that high-ranking EU diplomats fear it will be difficult to bring them together to reach a compromise. Yet a time is pressing, and it was not only Industry Commissioner Thierry Breton who warned yesterday that “the situation is absolutely critical.” The main points of contention:
Breton advocates focusing public funding on the development and production of leading-edge chips. The French politician is thinking above all of the semiconductors with ultra-small structure sizes of less than 2 nanometers (the limit of what is technologically feasible today is 5 nm), and of so-called FD-SOI chips (Fully Depleted Silicon On Insulator), which enable a lot of performance with reduced power consumption. He is receiving support from countries such as the Netherlands, home of ASML, the world’s leading manufacturer of manufacturing machines.
For many other countries, however, the focus is too narrow. On the one hand, the Chips Act should strengthen innovation, said Michael Kellner, Germany’s Secretary of State for Economic Affairs, “but it should also focus on the needs of the user industries“. And they need, as in the case of car manufacturers or machine builders, above all semiconductors with more mature technologies. Only if the short-and medium-term needs of industry are also met will the Chips Act be an effective tool for eliminating the current supply bottlenecks, said Austrian Minister Martin Kocher.
Some want to address the current problems, while others want to make Europe the technological leader in the semiconductor industry in the long term. “This will be a very difficult discussion,” concluded Commission Vice President Margrethe Vestager. In other countries, investments are already being made to expand production capacity. Therefore, partnerships with countries such as the US “on which we can rely even in bad days” make sense.
The technology dispute also involves a lot of money. The Chips Act is intended to prepare the ground for the establishment of new chip factories, which will require billions of euros in investment. Other countries such as South Korea, the USA, and China are offering high subsidies. In the EU, state aid law places tight limits on this practice. The path chosen so far via IPCEI projects is lengthy and only permits the funding of R&D projects. The Chips Act is intended to enable rapid approval of factories as well, as long as the technology is innovative enough to be classified as “first of a kind”.
However, the term remains fuzzy so far. The Italian government is pushing for the production of semiconductors to also be considered “first of a kind” if they use mature structural sizes but employ innovative processes or materials. This is the only way to reduce dependence on third countries, it says. When it comes to attracting manufacturers with technologies that are being used for the first time worldwide, extra rules should also apply: in such cases, member states should be allowed to offer companies the same level of support as other countries vying for the investment.
Other member states warn against such a subsidy race, even within the EU. State aid must always be appropriate, effective, and targeted, warned the Dutch representative Michael Stibbe. A subsidy race would be “the worst possible outcome” for everyone. The German government has so far kept a low profile in the discussion, a fact that is being carefully noted in the Nordic member states. In view of the massive support for the new plants of the US chip giant Intel in Magdeburg, Berlin is positioned here in the camp of France and Italy.
The Commission has put €43 billion for the Chips Act in the shop window. However, only around €4 billion of this will come from EU pots; the rest is to be contributed by national budgets and private investors. The funds are earmarked for promoting innovations under the first pillar of the Chips Act.
Opinions on this issue are mixed: Some member states, such as Austria, are calling for more money from the EU budget. At the same time, however, Vienna does not want to tamper with the medium-term fiscal framework, which leaves little room for maneuver. Kellner also insisted on behalf of the German government that the MFF should not be touched. Other governments are primarily concerned about their companies getting anything at all.
In order to prevent widespread supply bottlenecks in the future, as was the case during the COVID-19 pandemic, the Commission wants to introduce detailed monitoring of the value chains with the help of the member states. In the event of acute problems, a crisis mechanism is to take effect: following the example of the COVID-19 vaccines, the instruments include export restrictions and the joint procurement of semiconductors.
Industry opposes the state intervention that would result from this part of the Commission’s proposal. The German Electrical and Electronic Manufacturers’ Association (ZVEI), for example, criticizes the fact that far-reaching obligations to provide information would jeopardize trade secrets. Chips often involve a large number of very specialized products that, unlike vaccines, cannot simply be procured by the Commission on behalf of the member states. The experts at the German think tank Stiftung Neue Verantwortung (SNV) also argue that governments are overburdened with monitoring the multi-layered supply chains and should better transfer responsibility to the companies.
Several governments also have concerns: “We need to minimize the burden of collecting and sharing the information,” said Danish Economy Minister Simon Kollerup. Belgian State Secretary Barbara Trachte warned that the crisis mechanism must be “realistic, not protectionist”.
The European Commission has proposed a deal to EU member states with Egypt and Israel to boost imports of natural gas from the eastern Mediterranean, according to a draft document seen by Reuters dated June 7. The draft memorandum of understanding, which is still subject to changes and needs approval from the governments involved, is part of European Union efforts to reduce fossil fuel imports from Russia following the war in Ukraine.
“The natural gas to be shipped to the European Union will originate either from the Arab Republic of Egypt, the State of Israel, or any other source in the East Mediterranean region, including EU Member States in the region,” the nine page document said. The EU has said publicly it intends to conclude a trilateral agreement with Egypt and Israel before the summer, but the details in the June 7 draft are not public.
EU Commission President Ursula von der Leyen is due to visit Cairo next week. The European Commission declined to comment on the draft agreement, or whether von der Leyen’s trip could be when the memorandum of understanding is signed. The draft deal establishes the principles for enhanced cooperation between the three partners but does not say how much gas the EU would import nor set any timelines for deliveries.
The document said shipments would include the use of liquefied natural gas (LNG) infrastructure in Egypt, noting the North African country’s plan to become a regional hub for natural gas. The memorandum of understanding would run for nine years from its signature, the document says, although that part is still in brackets, a sign that there is a higher chance it could be changed than other paragraphs.
Egypt already exports relatively small amounts of gas to the EU, and both countries are expecting to ramp up production and exports in the coming years. The Egyptian government was not immediately available for comment on the draft agreement. Egypt exported 8.9 billion cubic metres (bcm) of LNG last year and 4.7 bcm in the first five months of 2022, according to Refinitiv Eikon data, though the majority goes to Asia.
Israel is on track in the next few years to double gas output to about 40 bcm a year as it expands projects and brings new fields online, industry officials say. Israel has said it hopes to reach a deal to supply gas to Europe and is also considering building a pipeline to export more gas to Egypt.
The EU imported 155 bcm of gas from Russia last year, accounting for about 40% of the bloc’s overall consumption. Under the draft agreement, Egypt would be able to purchase some of the gas being transported to the EU or other countries via Egyptian infrastructure, the document said, adding that Egypt could use it for its own consumption or for export.
The parties “will work collaboratively to set forth the appropriate ways and means for implementing the purpose of this memorandum of understanding in order to expedite the export of natural gas to the EU,” the document said. The deal does not introduce any binding legal or financial obligation on the signatories.
Under the plan, the EU could fund new infrastructure if it is in line with its commitment to discourage all further investments into fossil fuel infrastructure projects in third countries, “unless they are fully consistent with an ambitious, clearly defined pathway towards climate neutrality”.
Funds could also be provided to develop technologies for emissions reduction and natural gas decarbonization. The partners will engage to reduce methane leaks from gas infrastructure, examine new technologies for reducing venting and flaring, and explore possibilities for using captured methane throughout the entire supply chain. rtr
Gas storage facilities in the EU are more than half full again. For Tuesday, the AGSI portal of Gas Infrastructure Europe (GIE) showed a level of 50.24 percent. German gas storage facilities were slightly above average at 52.6 percent full, but some other EU countries are already much further along. Poland and Portugal are above 90 percent. In Spain, Denmark, and the Czech Republic, the figure is over 65 percent.
Other states are far behind. Levels of less than 40 percent are currently found in Austria, Bulgaria, Croatia, Hungary, Romania, and Sweden.
EU bodies are currently working on a storage obligation for the entire Union. In mid-May, the Council and Parliament reached a preliminary agreement that storage facilities must be at least 80 percent full by November 1. Member states are also called upon to achieve a total of at least 85 percent. With the storage obligation, the community of states wants to prepare for a possible loss of Russian gas supplies. ber
Spain and Portugal may temporarily take action against high energy costs in their countries with a price cap. The measure, approved by the EU Commission, will allow the countries to reduce electricity prices for consumers, which have risen more sharply as a result of Russia’s invasion of Ukraine, said Margrethe Vestager, the EU Commissioner for Competition. Until the end of May 2023, the two countries together will be allowed to pay out subsidies worth nearly €8.5 billion to power producers.
The payments were calculated on the basis of the price difference between the market price for natural gas and a cap of €48.8 per megawatt-hour on average. The Commission concluded that the measure was in line with EU rules on state aid.
In March, there was a long and hard struggle over the issue at an EU summit. In the end, Spain, and Portugal were given a political commitment to introduce special measures to combat high energy prices. Countries such as Germany and the Netherlands rejected such market intervention at the time. dpa
The European Commission has proposed a deal to EU member states with Egypt and Israel to boost imports of natural gas from the eastern Mediterranean, according to a draft document seen by Reuters dated June 7. The draft memorandum of understanding, which is still subject to changes and needs approval from the governments involved, is part of European Union efforts to reduce fossil fuel imports from Russia following the war in Ukraine.
“The natural gas to be shipped to the European Union will originate either from the Arab Republic of Egypt, the State of Israel, or any other source in the East Mediterranean region, including EU Member States in the region,” the nine page document said. The EU has said publicly it intends to conclude a trilateral agreement with Egypt and Israel before the summer, but the details in the June 7 draft are not public.
EU Commission President Ursula von der Leyen is due to visit Cairo next week. The European Commission declined to comment on the draft agreement, or whether von der Leyen’s trip could be when the memorandum of understanding is signed. The draft deal establishes the principles for enhanced cooperation between the three partners but does not say how much gas the EU would import nor set any timelines for deliveries.
The document said shipments would include the use of liquefied natural gas (LNG) infrastructure in Egypt, noting the North African country’s plan to become a regional hub for natural gas. The memorandum of understanding would run for nine years from its signature, the document says, although that part is still in brackets, a sign that there is a higher chance it could be changed than other paragraphs.
Egypt already exports relatively small amounts of gas to the EU, and both countries are expecting to ramp up production and exports in the coming years. The Egyptian government was not immediately available for comment on the draft agreement. Egypt exported 8.9 billion cubic metres (bcm) of LNG last year and 4.7 bcm in the first five months of 2022, according to Refinitiv Eikon data, though the majority goes to Asia.
Israel is on track in the next few years to double gas output to about 40 bcm a year as it expands projects and brings new fields online, industry officials say. Israel has said it hopes to reach a deal to supply gas to Europe and is also considering building a pipeline to export more gas to Egypt.
The EU imported 155 bcm of gas from Russia last year, accounting for about 40% of the bloc’s overall consumption. Under the draft agreement, Egypt would be able to purchase some of the gas being transported to the EU or other countries via Egyptian infrastructure, the document said, adding that Egypt could use it for its own consumption or for export.
The parties “will work collaboratively to set forth the appropriate ways and means for implementing the purpose of this memorandum of understanding in order to expedite the export of natural gas to the EU,” the document said. The deal does not introduce any binding legal or financial obligation on the signatories.
Under the plan, the EU could fund new infrastructure if it is in line with its commitment to discourage all further investments into fossil fuel infrastructure projects in third countries, “unless they are fully consistent with an ambitious, clearly defined pathway towards climate neutrality”.
Funds could also be provided to develop technologies for emissions reduction and natural gas decarbonization. The partners will engage to reduce methane leaks from gas infrastructure, examine new technologies for reducing venting and flaring, and explore possibilities for using captured methane throughout the entire supply chain. rtr
The European Parliament has called for a convention to revise the EU treaties following a major citizen survey and recent foreign policy events. In a resolution passed by a clear majority, MEPs called on European Union leaders to convene a convention and put forward several reform proposals.
The legislature cannot rewrite the EU treaties itself, but insists that the issue be put on the agenda of the next summit on June 23 and 24. There, the Council could convene the convention. A constitutional amendment is necessary “to ensure that the Union can respond more effectively to future crises,” the resolution says.
The main problem for the Parliament is the so-called unanimity rule in the Council. Time and again, it happens that a single EU state blocks the adoption of sanctions or even joint declarations that all the others wanted to sign. Since Russia’s invasion of Ukraine in February, for example, Hungary has delayed important measures against Moscow.
“Just in the past few weeks we have seen once again what the de facto vetoes of individual states can do,” Rasmus Andresen, spokesman for the German Greens in parliament, said in a statement. “Hungary blocks on urgently needed sanctions, Poland slows down on the global minimum tax.”
Instead of unanimity, parliamentarians want the introduction of qualified majority voting in the EU Council for certain matters, including sanctions or in emergency situations. Parliament should also have the right to initiate legislation, the resolution says. Currently, only the EU Commission has this right.
The resolution comes a month after the publication of the final report of the Conference on the Future of Europe. This contains almost 50 proposals that were drawn up in a large-scale democratic consultation in the EU countries and on the Internet. However, it is far from clear whether EU countries will agree to treaty change – even if a convention takes place.
In a non-paper released last month, more than 10 member states said they “do not support ill-considered and premature attempts to initiate a treaty change process.” Thursday’s resolution was adopted by a vote of 355 to 154, according to the parliament. There were 48 abstentions. joy
Europe’s monetary guardians are responding to record inflation with the first interest rate hike in eleven years. The Governing Council of the European Central Bank (ECB) announced on Thursday that it intends to raise key interest rates in the euro zone by 25 basis points in July. For the time being, however, the key interest rate will remain at the record low of zero percent, and banks will still have to pay 0.5 percent interest on money parked at the ECB. ECB President Christine Lagarde had held out the prospect of ending negative interest rates by the end of September.
At the same time, the ECB’s Governing Council decided at its external meeting in Amsterdam to end the multi-billion net bond purchases on July 1. The end of these purchases had been declared by the central bank in its longer-term monetary policy outlook (“forward guidance”) as a prerequisite for an interest rate hike.
In recent weeks, pressure on Europe’s monetary guardians to change course after years of ultra-loose policy and curb record-high inflation by raising interest rates has increased significantly. In the euro zone, consumer prices in May 2022 were 8.1 percent higher than in the same month a year earlier, while in Europe’s largest economy, Germany, the annual inflation rate jumped to 7.9 percent in May, the highest level in almost 50 years, according to preliminary figures.
The ECB is aiming for stable prices in the medium term for the currency area of 19 countries, with an annual inflation rate of 2 percent. For months now, inflation has been driven primarily by rising energy prices, which again increased sharply following the Russian attack on Ukraine. Problems in the supply chains are also causing prices to rise.
Economists were expecting a series of upward ECB interest rate steps this year ahead of Thursday’s ECB meeting. Accordingly, the deposit rate could rise to plus 0.5 percent by the end of the year and the main refinancing rate could reach a level of 0.75 percent. Other central banks, such as the Federal Reserve in the US or the Bank of England, have already raised their key interest rates several times. However, experience has shown that it takes a while for higher interest rates to reach savers. dpa
The European Commission has proposed an agreement with Egypt and Israel to EU member states to increase natural gas imports from the eastern Mediterranean. This is according to a draft dated June 7 obtained by Reuters.
The draft memorandum of understanding is still subject to change and must be approved by the governments involved. It is part of the EU’s efforts to reduce fossil fuel imports from Russia following the war in Ukraine.
“The natural gas to be supplied to the European Union will come either from the Arab Republic of Egypt, the State of Israel or another source in the Eastern Mediterranean, including EU member states in that region,” the nine-page document says. The EU has already publicly stated that it intends to conclude a trilateral agreement with Egypt and Israel before the summer. The details of the draft are not yet public.
The draft agreement sets out the principles for increased cooperation between the three partners, but says nothing about how much gas the EU would import, nor does it set any deadlines for deliveries. The document says the supplies would include the use of Egypt’s liquefied natural gas (LNG) infrastructure. The North African country plans to become a regional hub for natural gas. The memorandum of understanding has a term of nine years from the date of signing, the document conditionally states.
Egypt already exports relatively small amounts of gas to the EU, and both countries expect to increase their production and exports in the coming years. Israel has said it hopes to reach an agreement on gas supplies to Europe and is also considering building a pipeline to export more gas to Egypt.
According to the draft agreement, Egypt could buy some of the gas transported to the EU or other countries through Egyptian infrastructure and use it for its own consumption or export, the document says.
Under the plan, the EU could fund new infrastructure – provided it is “fully consistent with an ambitious, clearly defined pathway to climate neutrality.” Partners will work to reduce methane leaks from gas infrastructure, test new technologies to reduce venting and flaring, and explore ways to use captured methane throughout the supply chain, according to the draft.
EU Commission President Ursula von der Leyen will visit Cairo next week. The European Commission declined to comment on the draft agreement or whether von der Leyen’s trip might coincide with the signing of the memorandum of understanding. rtr
The European Parliament has given the green light to a regulation with which the EU wants to open China’s public procurement market to European firms. The “International Procurement Instrument” (IPI) received the necessary votes on Thursday.
“This will significantly strengthen the EU in the harsh international trade environment,” said Daniel Caspary (CDU), the MEP in charge of IPI. “In the future, access to EU public tenders will be restricted for companies from third countries if they do not offer European companies comparable access.”
In concrete terms, the plan is as follows: If a third country such as the People’s Republic refuses to open its public procurement market to EU suppliers to a comparable extent as vice versa, sanctions are threatened. Thus, bids from China could either be completely excluded from a procurement procedure or receive a price surcharge (China.Table reported). Now the regulation still needs to be adopted in the EU Council of Member States, and then the legislation can come into force. When exactly this will be the case is not yet known. ari
Hot pots are an indispensable part of Brussels cuisine. The hot pot offered by the European Commission is particularly spicy at the moment.
Parliamentary wrangling over the Fit for 55 packages is taking a (temporarily tiny) break, and EU diplomats are already in marching order to prepare for the next EU summit on June 23-24 and the next G7 summit at Schloss Elmau on June 27-28. What is the Brussels executive doing in the meantime? It is introducing so-called “milestones.”
These “milestones” are stages for Poland set by the European Commission. They are intended to enable the country to gradually receive the funds provided for in the Post-Covid Recovery Plan. In other words, there will be no automatic release of the funds, but each payment tranche must be preceded by a specific assessment under these “Milestones”.
The big problem is that this initiative is seen by many in Brussels as a significant relaxation of the Commission’s rule-of-law requirements for Warsaw – at a time when Brussels is compromising with Hungary to win Viktor Orbán’s support for a sixth sanctions package. Even though Ursula von der Leyen stressed at a press conference in Warsaw, “We are not yet at the end of the road as far as the rule of law in Poland is concerned.”
Wojciech Sadurski, Challis Professor of Law at the University of Sydney and Professor at the Europe Centre at the University of Warsaw, points out in his blog on the subject that the Commission’s decision still needs to be approved by the Council. Most importantly, the legal expert says, the Commission has shot itself in the foot.
“The Commission has voluntarily and without apparent reason renounced the great leverage it has over a Member State guilty of systematic violations of the rule of law,” he writes. “The rashness of the decision (…) is inexcusable. The facts on the ground are known to all: independent judges and prosecutors are harassed and suspended, the Constitutional Court issues one anti-European verdict after another, and the illegal KRS continues to recommend new judges to the president, who then blithely appoints them. This is no way for a member state to assure its EU partners that it will use stimulus funds responsibly.”
Indeed, the Commission’s proposal received a more than frosty reception from a large majority of EU parliamentarians – but also within the Commission itself. In a rare gesture, two members of the College of Commissioners – Margrethe Vestager and Frans Timmermans – voted against the proposal, while three others sent letters expressing their concerns.
On the Council side, rule of law advocates such as the Netherlands and the Nordic countries could reject Poland’s recovery and reconstruction plan, while others could abstain. This would be a first, as national recovery and resilience plans have so far been adopted unanimously.
In the Brussels Bubble, people are looking for explanations to make sense of the Commission’s attitude. In the Berlaymont and Wiertz Street corridors, reference is made to Poland’s positive role in dealing with Putin’s war and the urgent need for funding for Warsaw, made necessary by the arrival of over three million Ukrainian refugees. But also – and not least – out of a desire to further disrupt relations between Poland (anti-Putin) and Hungary (pro-Putin) and thus isolate Budapest. It is an understatement to say that tempers in Brussels were heated by Viktor Orbán’s repeated blocking of the new sanctions package.
There are other factors at play as well. From the Bubble, Poland’s stance in the negotiations on the EU tax on multinationals is mostly perceived as blackmail. At this point, it is useful to recall that France, whose presidency ends at the end of the month, has made this European tax on multinationals one of its priorities during its presidency. And with France insoumise seriously sweating in the Macronist camp, Paris needs a strong social message to seduce voters with left-leaning hearts as the first round of parliamentary elections takes place next Sunday.
A national appointment, you will say. But the steady rise of La France Insoumise – whose European agenda is causing more than a frown in Brussels – is making the strategists of La République en Marche sweat. While the parliamentary elections should be a cakewalk for Emmanuel Macron’s party, some of the new government’s most important figures are under political scrutiny. First and foremost, Emmanuel Macron’s Mr. Europe, Clément Beaune.
For at this point, it is necessary to recall a principle of French political life – a curious one, to be sure, but one that is consistently applied: A minister can remain in government only if he or she succeeds in winning or retaining his or her deputy mandate at the same time.
The failure of ETS reform – “a bad day for Parliament”? Not everyone sees it that way. Ismail Ertug, for example, one of the Social Democrats who voted against his own party’s recommendation to phase out free emissions allowances for industry, disagrees. Ertug hopes that the renegotiations can lead to an improvement of the climate package. Lukas Scheid analyzes the lines of conflict and possible compromise solutions in the run-up to the new vote.
The German government is looking to Chile, Argentina, and Uruguay to reduce its dependence on Russia and China for raw materials and energy imports and wants to work more closely with the three South American countries. It has high hopes for Chile’s ambitions to become a pioneer in green mining. But the global search for new partners could come at the expense of the environment and human rights, warns the Supply Chain Law initiative, with an eye on countries such as Nigeria, Kazakhstan, and Saudi Arabia. An effective EU supply chain law is, therefore, more urgent than ever. Leonie Düngefeld has the details.
Picking cotton, harvesting vegetables, assembling electrical parts – jobs like these are done under duress by millions of people around the world. Yesterday, EU parliamentarians presented their recommendation for legislation on products from forced labor. Their demand: imports should be stopped at the EU borders. The US is already a step ahead, with the Uyghur Forced Labor Prevention Act coming into force in a few days. The US approach goes much further than the EU Parliament’s proposal, as Amelie Richter reports.
There is widespread agreement that the EU urgently needs to catch up in the chip industry. The European Chips Act, which was presented by the Commission with great pomp in February, has therefore been approved in principle by the member states and the EU Parliament. However, opinions differ considerably on the details. Smaller countries, for example, are afraid of being left empty-handed. Till Hoppe analyzes the main points of contention.
With a slightly trembling voice, Peter Liese (EPP) had asked his EU Parliament colleagues on Wednesday to return his report on the reform of the European emissions trading system (ETS) to the committee. Liese knew at that moment that the previous failure of his text was largely his fault. As the responsible rapporteur, he had failed to form solid majorities without having to hope for votes from the ultra-conservative EKR or right-wing nationalist ID.
He should make up for that in the coming weeks, because the Environment Committee (ENVI) is now actually renegotiating. With a large majority, the MEPs finally voted to refer the text back to the committee (Europe.Table reported). It is obvious that the negotiations will not be easy due to the charged atmosphere and the mutual accusations of having made pacts with right-wingers. Liese himself called it a “bad day for the European Parliament” – as did Tiemo Wölken (S&D). Other MEPs, however, see it as a great opportunity.
In an interview with Europe.Table, Ismail Ertug (S&D) described it as perfectly legitimate for legislative texts to go through rounds of honor in Parliament. They often lie in the Council for years, why should it be a weakening of the democratic process if the necessary majorities are not achieved in Parliament at the first go, he asked. Ertug is part of a group of Social Democrats who voted against their own party recommendation to phase out free emissions allowances for the industry. That’s why he draws great hope from the renegotiations, which he believes could be more likely to improve the climate package.
Ertug so far favors the industry committee’s (ITRE) position of starting phase-out in 2028 and fully replacing free allocations with CBAM as carbon leakage protection in 2034. He argues that even unions and labor councils have warned him against a faster path. In his home constituency of Upper Palatinate, 500 people are threatened with unemployment by the Maxhütte pipe mill, which is in insolvency proceedings. Ending the free allocation too quickly could present the steel company with even greater problems.
Due to its still widespread blast furnaces, the German steel industry as a whole cannot reduce its emissions across the board at the same rate as a few sites with direct reduction plants can, agrees on fellow party member Jens Geier. Contrary to his party recommendation, he too supports the ITRE line but sees a way out of the dilemma.
The Social Democrats and Greens support a regulation under which benchmarks for emissions reduction apply to the assessment of free allocations for industrial plants, based on the cleanest plants that have the maximum possible CO2 reduction. In the case of the steel industry, however, this means that conventional blast furnace technology is compared with direct reduction plants. When operated with green hydrogen, these are emission-free. From Jens Geier’s point of view, this creates restrictions on allocations that may even end up preventing climate-friendly investments.
Peter Liese and the EPP have submitted an amendment that, according to Geier, is based on a text from the German Federal Ministry of Economics and Climate Protection. This would allow plants to continue to receive free emissions allowances if they received them based on other benchmarks. Geier is willing to vote for a faster phase-out path of free allocations if differentiated benchmarks also apply to them, he told Europe.Table.
If other industrial policy-driven members of parliament were to follow this middle course, Liese would have an even bigger problem. The majority of the ITRE line would be on the line. And so the compromise reached by S&D negotiator Mohammed Chahim with the liberal Renew Group would be back on top of the table. According to this, free allocations would be reduced as early as 2026 and fully replaced by CBAM in 2032. The Greens could also live well with this proposal, as it would mean ambition increases compared to the Commission proposal and the ITRE line.
Another possibility for broader compromises: Renew deputies voting against party recommendation. One of them is FDP politician Andreas Glück. He lacks what he considers a fairer regulation for exports for an approval of the S&D/Renew proposal. The so-called export rebates of the S&D/Renew proposal continue to provide free emission rights for those companies that belong to the 10 percent of the most climate-friendly producers in an industry. For Andreas Glück, the benchmark is too strict. For him, 30 percent would be conceivable. This would allow companies to better calculate whether they fell below the benchmark and receive free emission rights accordingly, Glück said.
So there is plenty of room for compromise. The question is how far the chief negotiators of the parties want to move away from their own positions. One sign that the renegotiations could become more complicated than initially assumed is the adjustment of the new voting date. While on Wednesday evening it was still said that another attempt would be made in just under two weeks’ time at the short parliamentary session in Brussels, on Thursday afternoon talk of a July plenary session (July 4-7) was doing the rounds.
With the aim of multiplying international partnerships in raw materials trade, Franziska Brantner, Parliamentary State Secretary at the German Federal Ministry of Economics, will begin a trip to Chile, Argentina, and Uruguay tomorrow. There, together with an EU delegation, she will meet the respective Ministers for Foreign Trade and Economic Affairs and for Energy and Mining. In these talks, she will “advocate more intensive economic cooperation, especially in renewable energies and raw materials,” the Federal Ministry of Economics announced. In Chile, Brantner will, among other things, open the EXPONOR mining trade fair, of which Germany is this year’s partner country.
The visit to South America is part of an effort to diversify the sources of German raw material imports as quickly as possible in order to reduce dependence on Russia and China. The German government is currently working on a new raw materials strategy. “For too long, we have acted on the principle of buying where it is cheapest. These are often raw materials that come from China,” Brantner said. Especially in the first processing stage there are hardly any production sites independent of China. “For many of the rare earths, this dependence is even close to 100 percent.”
In a recent analysis, the German Economic Institute (IW) writes that there are strong dependencies, particularly with regard to the extraction of raw materials that are critical for the energy transition, such as magnesium or rare earths. In addition, according to the International Energy Agency (IEA), 50 to 70 percent of the further processing of lithium and cobalt and almost 90 percent of rare minerals takes place in China.
“Chile is already an important partner for us in raw materials and energy policy cooperation,” Brantner said before the trip. “Chile, as well as Argentina and Uruguay, offer outstanding potential for the production of green hydrogen. However, many other sectors lend themselves to the expansion of our economic relations.” Together with a delegation of several companies, Brantner wants to promote greater involvement of German companies in the three South American countries.
In addition to other important raw materials, the talks are to focus on trade in green hydrogen, lithium, and increased cooperation in the field of renewable energies. The German government has high hopes for Chile’s ambitions to become a pioneer in green and sustainable mining. The Chilean government has been pursuing a green hydrogen strategy since 2020, which aims to make it the cheapest producer of hydrogen by 2030 and one of the top three exporters of green hydrogen by 2050.
Due to the large geographical distance, the transport of raw materials from South America is naturally an obstacle compared to other regions. “But Chile is just a country that is close to us in terms of our values and with a stable government,” Brantner said. “Therefore, it should remain an important partner for us.”
Meanwhile, the Supply Chain Act initiative, a coalition of civil society organizations including BUND, Germanwatch, and the German Trade Union Confederation (DGB), warns of human rights abuses and environmental destruction in new raw materials supply chains. In a briefing published yesterday, the alliance writes that the gaze of the German government and companies searching for alternative sources of fossil fuels and metals is now “falling on hotspots of human rights violations and environmental destruction, partly in fragile ecosystems.” The talk is about increased coal imports from Colombia and potential new oil suppliers such as Nigeria, Kazakhstan, Saudi Arabia, and the United Arab Emirates.
“We support the decided import stops of raw materials from Russia,” said Johannes Heeg, spokesman for the initiative. “But we are concerned that this is happening at the expense of people and the environment in the mining areas.” An effective EU supply chain law is more urgent than ever. In February, the European Commission presented a draft for such a law. However, according to the initiative, this offers too many loopholes for companies. In Germany, the Supply Chain Sourcing Obligations Act will come into force in 2023.
A meeting of the European Competitiveness Council yesterday also focused on the supply of raw materials. “We must never again be as dependent on one country as we were. This applies not only to Russia, but also to China,” said Michael Kellner, Parliamentary State Secretary at the BMWK, during the Council meeting. Therefore, the extraction and processing of raw materials within the EU should be ramped up. International trade is nonetheless essential. “Nevertheless, the EU must not close itself off, but remain an open force integrated into the global economy.”
“Strong international partnerships are at the heart of our solution,” said EU Competition Commissioner Margrethe Vestager. “We must not replace one dependency with another, but create more balanced trade relationships with partners we can rely on.” A strategic partnership with Canada is already in place. Other partnerships with Namibia, Norway, and Serbia are under discussion, said Internal Market Commissioner Thierry Breton. The EU also wants to cooperate more with the US and countries in Central Asia and South America.
Breton announced that the Commission would prepare a legislative proposal on critical raw materials. This will be based on three pillars: a clear statement of priorities, the structuring of investments in European production capacities, and the strengthening of the circular economy in the field of raw materials.
According to EU figures, around 25 million people worldwide work in conditions that can be classified as forced labor. In countries such as China, these modern-day slaves pick cotton for clothing, harvest fruit and vegetables, or assemble electrical components. These goods then end up with consumers in Europe. This should change. The European Parliament is putting pressure on the executive EU Commission: in the fall, a long-requested draft law for an import and export ban on products from forced labor should finally see the light of day in Brussels’ bureaucracy.
EU parliamentarians presented their recommendations for legislation on Thursday. They demand that the import of products from forced labor and child labor should already be stopped at the EU borders. The definition of forced labor should be set according to the guidelines of the International Labor Organization (ILO). Products will then be sorted out on the basis of several criteria:
According to the recommendation of the EU Parliament
The responsibility, therefore, lies with the importer. According to the EU Parliament’s draft, the importer bears the burden of proof and must prove that no forced labor or child labor was used in the production and transport of the goods. Otherwise, the charge remains fixed. To help importers, the European Parliament calls for a publicly accessible list of already sanctioned companies, regions, and producers. Small and medium-sized companies are to receive separate help in implementing the new regulations.
The proposal received a large majority in Thursday’s vote in the EU Parliament. “Today we are signaling that the EU will no longer allow itself to become an accomplice of the totalitarian Chinese regime, which has been committing crimes against humanity in Xinjiang province for five years,” said Green Party European politician Reinhard Bütikofer after the vote.
Dubravka Šuica, Vice-President of the EU Commission and responsible for democracy and demography, stressed in plenary that a legislative proposal from the Brussels authority would follow after the summer break. However, due to the tight schedule, an impact assessment is no longer possible, Šuica said. EU parliamentarians had called for a bill in September in a debate on the issue – exactly one year after EU Commission chief Ursula von der Leyen announced the import ban in her State of the European Union speech. It was actually supposed to become part of the EU supply chain legislation. However, due to wrangling over responsibility, the project was shelved.
However, the EU is now also facing a time crunch because an important legal change is due to take place on the other side of the Atlantic at the end of the month: from June 21, the Uyghur Forced Labor Prevention Act (UFLPA) will come into force in the United States. Import bans on cotton and tomatoes from Xinjiang already exist there. However, UFLPA will further restrict the import of goods from the region.
In the case of US legislation, the following applies:
The US legislation thus goes a step further than the EU Parliament’s proposal, as all goods from Xinjiang are stopped at the US border per se and are only released once it has been proven that no forced labor was involved in their production. The stricter US approach as a model has been rejected by the EU Directorate-General for Trade in the past. To what extent the Brussels authority will follow the recommendations from the EU Parliament is open.
However, UFLPA will also have an impact on Europe: “We expect companies to now use the EU and other markets as a dumping ground for forced labor products,” says Chloe Cranston of the non-governmental organization Anti-Slavery International in an interview with China.Table. So what can no longer be sold in the US is transported to the EU market. According to Cranston, this strategy is not completely new. For example, this can already be observed in cotton or in the solar industry. “That’s why we’re calling for equally strong legislation in all countries.“
Otherwise, Cranston warns, there is a risk of value chains splitting up if the laws differ: a “clean” supply chain for goods to the US and one for other regions, where products from production with forced labor are not yet so sharply tracked down and sorted out. The situation in the EU would be further complicated by the fact that customs data is not publicly available.
Meanwhile, the US is also trying to put pressure on China through the ILO. At the annual conference of the Labor Organization, which will end on Saturday in Geneva after almost two weeks, the US delegation, alongside other Western countries, called for an investigation of the forced labor allegations by a commission of experts. Because China is a member of the ILO executive, however, it will be difficult to issue a mandate to that effect.
In principle, everyone agrees that the European Union must regain lost ground in the chip industry and reduce the dependence of the domestic industry on suppliers from countries, especially in Asia. For years, the importance of such strategically important products had been neglected, said Portuguese Economy Minister Antonio Costa Silva at the Competitiveness Council in Luxembourg. “We have to learn from our mistakes.”
The EU Commission presented the European Chips Act in February for precisely this purpose. Research and development in Europe are to be strengthened, and investments in new factories are to be facilitated via a separate aid framework. The goal is to increase the EU’s share of global chip production from the current level of around eight percent to 20 percent by 2030.
The initiative enjoys broad support among the member states and in the European Parliament. At least in principle. In detail, however, opinions diverge – sometimes to such an extent that high-ranking EU diplomats fear it will be difficult to bring them together to reach a compromise. Yet a time is pressing, and it was not only Industry Commissioner Thierry Breton who warned yesterday that “the situation is absolutely critical.” The main points of contention:
Breton advocates focusing public funding on the development and production of leading-edge chips. The French politician is thinking above all of the semiconductors with ultra-small structure sizes of less than 2 nanometers (the limit of what is technologically feasible today is 5 nm), and of so-called FD-SOI chips (Fully Depleted Silicon On Insulator), which enable a lot of performance with reduced power consumption. He is receiving support from countries such as the Netherlands, home of ASML, the world’s leading manufacturer of manufacturing machines.
For many other countries, however, the focus is too narrow. On the one hand, the Chips Act should strengthen innovation, said Michael Kellner, Germany’s Secretary of State for Economic Affairs, “but it should also focus on the needs of the user industries“. And they need, as in the case of car manufacturers or machine builders, above all semiconductors with more mature technologies. Only if the short-and medium-term needs of industry are also met will the Chips Act be an effective tool for eliminating the current supply bottlenecks, said Austrian Minister Martin Kocher.
Some want to address the current problems, while others want to make Europe the technological leader in the semiconductor industry in the long term. “This will be a very difficult discussion,” concluded Commission Vice President Margrethe Vestager. In other countries, investments are already being made to expand production capacity. Therefore, partnerships with countries such as the US “on which we can rely even in bad days” make sense.
The technology dispute also involves a lot of money. The Chips Act is intended to prepare the ground for the establishment of new chip factories, which will require billions of euros in investment. Other countries such as South Korea, the USA, and China are offering high subsidies. In the EU, state aid law places tight limits on this practice. The path chosen so far via IPCEI projects is lengthy and only permits the funding of R&D projects. The Chips Act is intended to enable rapid approval of factories as well, as long as the technology is innovative enough to be classified as “first of a kind”.
However, the term remains fuzzy so far. The Italian government is pushing for the production of semiconductors to also be considered “first of a kind” if they use mature structural sizes but employ innovative processes or materials. This is the only way to reduce dependence on third countries, it says. When it comes to attracting manufacturers with technologies that are being used for the first time worldwide, extra rules should also apply: in such cases, member states should be allowed to offer companies the same level of support as other countries vying for the investment.
Other member states warn against such a subsidy race, even within the EU. State aid must always be appropriate, effective, and targeted, warned the Dutch representative Michael Stibbe. A subsidy race would be “the worst possible outcome” for everyone. The German government has so far kept a low profile in the discussion, a fact that is being carefully noted in the Nordic member states. In view of the massive support for the new plants of the US chip giant Intel in Magdeburg, Berlin is positioned here in the camp of France and Italy.
The Commission has put €43 billion for the Chips Act in the shop window. However, only around €4 billion of this will come from EU pots; the rest is to be contributed by national budgets and private investors. The funds are earmarked for promoting innovations under the first pillar of the Chips Act.
Opinions on this issue are mixed: Some member states, such as Austria, are calling for more money from the EU budget. At the same time, however, Vienna does not want to tamper with the medium-term fiscal framework, which leaves little room for maneuver. Kellner also insisted on behalf of the German government that the MFF should not be touched. Other governments are primarily concerned about their companies getting anything at all.
In order to prevent widespread supply bottlenecks in the future, as was the case during the COVID-19 pandemic, the Commission wants to introduce detailed monitoring of the value chains with the help of the member states. In the event of acute problems, a crisis mechanism is to take effect: following the example of the COVID-19 vaccines, the instruments include export restrictions and the joint procurement of semiconductors.
Industry opposes the state intervention that would result from this part of the Commission’s proposal. The German Electrical and Electronic Manufacturers’ Association (ZVEI), for example, criticizes the fact that far-reaching obligations to provide information would jeopardize trade secrets. Chips often involve a large number of very specialized products that, unlike vaccines, cannot simply be procured by the Commission on behalf of the member states. The experts at the German think tank Stiftung Neue Verantwortung (SNV) also argue that governments are overburdened with monitoring the multi-layered supply chains and should better transfer responsibility to the companies.
Several governments also have concerns: “We need to minimize the burden of collecting and sharing the information,” said Danish Economy Minister Simon Kollerup. Belgian State Secretary Barbara Trachte warned that the crisis mechanism must be “realistic, not protectionist”.
The European Commission has proposed a deal to EU member states with Egypt and Israel to boost imports of natural gas from the eastern Mediterranean, according to a draft document seen by Reuters dated June 7. The draft memorandum of understanding, which is still subject to changes and needs approval from the governments involved, is part of European Union efforts to reduce fossil fuel imports from Russia following the war in Ukraine.
“The natural gas to be shipped to the European Union will originate either from the Arab Republic of Egypt, the State of Israel, or any other source in the East Mediterranean region, including EU Member States in the region,” the nine page document said. The EU has said publicly it intends to conclude a trilateral agreement with Egypt and Israel before the summer, but the details in the June 7 draft are not public.
EU Commission President Ursula von der Leyen is due to visit Cairo next week. The European Commission declined to comment on the draft agreement, or whether von der Leyen’s trip could be when the memorandum of understanding is signed. The draft deal establishes the principles for enhanced cooperation between the three partners but does not say how much gas the EU would import nor set any timelines for deliveries.
The document said shipments would include the use of liquefied natural gas (LNG) infrastructure in Egypt, noting the North African country’s plan to become a regional hub for natural gas. The memorandum of understanding would run for nine years from its signature, the document says, although that part is still in brackets, a sign that there is a higher chance it could be changed than other paragraphs.
Egypt already exports relatively small amounts of gas to the EU, and both countries are expecting to ramp up production and exports in the coming years. The Egyptian government was not immediately available for comment on the draft agreement. Egypt exported 8.9 billion cubic metres (bcm) of LNG last year and 4.7 bcm in the first five months of 2022, according to Refinitiv Eikon data, though the majority goes to Asia.
Israel is on track in the next few years to double gas output to about 40 bcm a year as it expands projects and brings new fields online, industry officials say. Israel has said it hopes to reach a deal to supply gas to Europe and is also considering building a pipeline to export more gas to Egypt.
The EU imported 155 bcm of gas from Russia last year, accounting for about 40% of the bloc’s overall consumption. Under the draft agreement, Egypt would be able to purchase some of the gas being transported to the EU or other countries via Egyptian infrastructure, the document said, adding that Egypt could use it for its own consumption or for export.
The parties “will work collaboratively to set forth the appropriate ways and means for implementing the purpose of this memorandum of understanding in order to expedite the export of natural gas to the EU,” the document said. The deal does not introduce any binding legal or financial obligation on the signatories.
Under the plan, the EU could fund new infrastructure if it is in line with its commitment to discourage all further investments into fossil fuel infrastructure projects in third countries, “unless they are fully consistent with an ambitious, clearly defined pathway towards climate neutrality”.
Funds could also be provided to develop technologies for emissions reduction and natural gas decarbonization. The partners will engage to reduce methane leaks from gas infrastructure, examine new technologies for reducing venting and flaring, and explore possibilities for using captured methane throughout the entire supply chain. rtr
Gas storage facilities in the EU are more than half full again. For Tuesday, the AGSI portal of Gas Infrastructure Europe (GIE) showed a level of 50.24 percent. German gas storage facilities were slightly above average at 52.6 percent full, but some other EU countries are already much further along. Poland and Portugal are above 90 percent. In Spain, Denmark, and the Czech Republic, the figure is over 65 percent.
Other states are far behind. Levels of less than 40 percent are currently found in Austria, Bulgaria, Croatia, Hungary, Romania, and Sweden.
EU bodies are currently working on a storage obligation for the entire Union. In mid-May, the Council and Parliament reached a preliminary agreement that storage facilities must be at least 80 percent full by November 1. Member states are also called upon to achieve a total of at least 85 percent. With the storage obligation, the community of states wants to prepare for a possible loss of Russian gas supplies. ber
Spain and Portugal may temporarily take action against high energy costs in their countries with a price cap. The measure, approved by the EU Commission, will allow the countries to reduce electricity prices for consumers, which have risen more sharply as a result of Russia’s invasion of Ukraine, said Margrethe Vestager, the EU Commissioner for Competition. Until the end of May 2023, the two countries together will be allowed to pay out subsidies worth nearly €8.5 billion to power producers.
The payments were calculated on the basis of the price difference between the market price for natural gas and a cap of €48.8 per megawatt-hour on average. The Commission concluded that the measure was in line with EU rules on state aid.
In March, there was a long and hard struggle over the issue at an EU summit. In the end, Spain, and Portugal were given a political commitment to introduce special measures to combat high energy prices. Countries such as Germany and the Netherlands rejected such market intervention at the time. dpa
The European Commission has proposed a deal to EU member states with Egypt and Israel to boost imports of natural gas from the eastern Mediterranean, according to a draft document seen by Reuters dated June 7. The draft memorandum of understanding, which is still subject to changes and needs approval from the governments involved, is part of European Union efforts to reduce fossil fuel imports from Russia following the war in Ukraine.
“The natural gas to be shipped to the European Union will originate either from the Arab Republic of Egypt, the State of Israel, or any other source in the East Mediterranean region, including EU Member States in the region,” the nine page document said. The EU has said publicly it intends to conclude a trilateral agreement with Egypt and Israel before the summer, but the details in the June 7 draft are not public.
EU Commission President Ursula von der Leyen is due to visit Cairo next week. The European Commission declined to comment on the draft agreement, or whether von der Leyen’s trip could be when the memorandum of understanding is signed. The draft deal establishes the principles for enhanced cooperation between the three partners but does not say how much gas the EU would import nor set any timelines for deliveries.
The document said shipments would include the use of liquefied natural gas (LNG) infrastructure in Egypt, noting the North African country’s plan to become a regional hub for natural gas. The memorandum of understanding would run for nine years from its signature, the document says, although that part is still in brackets, a sign that there is a higher chance it could be changed than other paragraphs.
Egypt already exports relatively small amounts of gas to the EU, and both countries are expecting to ramp up production and exports in the coming years. The Egyptian government was not immediately available for comment on the draft agreement. Egypt exported 8.9 billion cubic metres (bcm) of LNG last year and 4.7 bcm in the first five months of 2022, according to Refinitiv Eikon data, though the majority goes to Asia.
Israel is on track in the next few years to double gas output to about 40 bcm a year as it expands projects and brings new fields online, industry officials say. Israel has said it hopes to reach a deal to supply gas to Europe and is also considering building a pipeline to export more gas to Egypt.
The EU imported 155 bcm of gas from Russia last year, accounting for about 40% of the bloc’s overall consumption. Under the draft agreement, Egypt would be able to purchase some of the gas being transported to the EU or other countries via Egyptian infrastructure, the document said, adding that Egypt could use it for its own consumption or for export.
The parties “will work collaboratively to set forth the appropriate ways and means for implementing the purpose of this memorandum of understanding in order to expedite the export of natural gas to the EU,” the document said. The deal does not introduce any binding legal or financial obligation on the signatories.
Under the plan, the EU could fund new infrastructure if it is in line with its commitment to discourage all further investments into fossil fuel infrastructure projects in third countries, “unless they are fully consistent with an ambitious, clearly defined pathway towards climate neutrality”.
Funds could also be provided to develop technologies for emissions reduction and natural gas decarbonization. The partners will engage to reduce methane leaks from gas infrastructure, examine new technologies for reducing venting and flaring, and explore possibilities for using captured methane throughout the entire supply chain. rtr
The European Parliament has called for a convention to revise the EU treaties following a major citizen survey and recent foreign policy events. In a resolution passed by a clear majority, MEPs called on European Union leaders to convene a convention and put forward several reform proposals.
The legislature cannot rewrite the EU treaties itself, but insists that the issue be put on the agenda of the next summit on June 23 and 24. There, the Council could convene the convention. A constitutional amendment is necessary “to ensure that the Union can respond more effectively to future crises,” the resolution says.
The main problem for the Parliament is the so-called unanimity rule in the Council. Time and again, it happens that a single EU state blocks the adoption of sanctions or even joint declarations that all the others wanted to sign. Since Russia’s invasion of Ukraine in February, for example, Hungary has delayed important measures against Moscow.
“Just in the past few weeks we have seen once again what the de facto vetoes of individual states can do,” Rasmus Andresen, spokesman for the German Greens in parliament, said in a statement. “Hungary blocks on urgently needed sanctions, Poland slows down on the global minimum tax.”
Instead of unanimity, parliamentarians want the introduction of qualified majority voting in the EU Council for certain matters, including sanctions or in emergency situations. Parliament should also have the right to initiate legislation, the resolution says. Currently, only the EU Commission has this right.
The resolution comes a month after the publication of the final report of the Conference on the Future of Europe. This contains almost 50 proposals that were drawn up in a large-scale democratic consultation in the EU countries and on the Internet. However, it is far from clear whether EU countries will agree to treaty change – even if a convention takes place.
In a non-paper released last month, more than 10 member states said they “do not support ill-considered and premature attempts to initiate a treaty change process.” Thursday’s resolution was adopted by a vote of 355 to 154, according to the parliament. There were 48 abstentions. joy
Europe’s monetary guardians are responding to record inflation with the first interest rate hike in eleven years. The Governing Council of the European Central Bank (ECB) announced on Thursday that it intends to raise key interest rates in the euro zone by 25 basis points in July. For the time being, however, the key interest rate will remain at the record low of zero percent, and banks will still have to pay 0.5 percent interest on money parked at the ECB. ECB President Christine Lagarde had held out the prospect of ending negative interest rates by the end of September.
At the same time, the ECB’s Governing Council decided at its external meeting in Amsterdam to end the multi-billion net bond purchases on July 1. The end of these purchases had been declared by the central bank in its longer-term monetary policy outlook (“forward guidance”) as a prerequisite for an interest rate hike.
In recent weeks, pressure on Europe’s monetary guardians to change course after years of ultra-loose policy and curb record-high inflation by raising interest rates has increased significantly. In the euro zone, consumer prices in May 2022 were 8.1 percent higher than in the same month a year earlier, while in Europe’s largest economy, Germany, the annual inflation rate jumped to 7.9 percent in May, the highest level in almost 50 years, according to preliminary figures.
The ECB is aiming for stable prices in the medium term for the currency area of 19 countries, with an annual inflation rate of 2 percent. For months now, inflation has been driven primarily by rising energy prices, which again increased sharply following the Russian attack on Ukraine. Problems in the supply chains are also causing prices to rise.
Economists were expecting a series of upward ECB interest rate steps this year ahead of Thursday’s ECB meeting. Accordingly, the deposit rate could rise to plus 0.5 percent by the end of the year and the main refinancing rate could reach a level of 0.75 percent. Other central banks, such as the Federal Reserve in the US or the Bank of England, have already raised their key interest rates several times. However, experience has shown that it takes a while for higher interest rates to reach savers. dpa
The European Commission has proposed an agreement with Egypt and Israel to EU member states to increase natural gas imports from the eastern Mediterranean. This is according to a draft dated June 7 obtained by Reuters.
The draft memorandum of understanding is still subject to change and must be approved by the governments involved. It is part of the EU’s efforts to reduce fossil fuel imports from Russia following the war in Ukraine.
“The natural gas to be supplied to the European Union will come either from the Arab Republic of Egypt, the State of Israel or another source in the Eastern Mediterranean, including EU member states in that region,” the nine-page document says. The EU has already publicly stated that it intends to conclude a trilateral agreement with Egypt and Israel before the summer. The details of the draft are not yet public.
The draft agreement sets out the principles for increased cooperation between the three partners, but says nothing about how much gas the EU would import, nor does it set any deadlines for deliveries. The document says the supplies would include the use of Egypt’s liquefied natural gas (LNG) infrastructure. The North African country plans to become a regional hub for natural gas. The memorandum of understanding has a term of nine years from the date of signing, the document conditionally states.
Egypt already exports relatively small amounts of gas to the EU, and both countries expect to increase their production and exports in the coming years. Israel has said it hopes to reach an agreement on gas supplies to Europe and is also considering building a pipeline to export more gas to Egypt.
According to the draft agreement, Egypt could buy some of the gas transported to the EU or other countries through Egyptian infrastructure and use it for its own consumption or export, the document says.
Under the plan, the EU could fund new infrastructure – provided it is “fully consistent with an ambitious, clearly defined pathway to climate neutrality.” Partners will work to reduce methane leaks from gas infrastructure, test new technologies to reduce venting and flaring, and explore ways to use captured methane throughout the supply chain, according to the draft.
EU Commission President Ursula von der Leyen will visit Cairo next week. The European Commission declined to comment on the draft agreement or whether von der Leyen’s trip might coincide with the signing of the memorandum of understanding. rtr
The European Parliament has given the green light to a regulation with which the EU wants to open China’s public procurement market to European firms. The “International Procurement Instrument” (IPI) received the necessary votes on Thursday.
“This will significantly strengthen the EU in the harsh international trade environment,” said Daniel Caspary (CDU), the MEP in charge of IPI. “In the future, access to EU public tenders will be restricted for companies from third countries if they do not offer European companies comparable access.”
In concrete terms, the plan is as follows: If a third country such as the People’s Republic refuses to open its public procurement market to EU suppliers to a comparable extent as vice versa, sanctions are threatened. Thus, bids from China could either be completely excluded from a procurement procedure or receive a price surcharge (China.Table reported). Now the regulation still needs to be adopted in the EU Council of Member States, and then the legislation can come into force. When exactly this will be the case is not yet known. ari
Hot pots are an indispensable part of Brussels cuisine. The hot pot offered by the European Commission is particularly spicy at the moment.
Parliamentary wrangling over the Fit for 55 packages is taking a (temporarily tiny) break, and EU diplomats are already in marching order to prepare for the next EU summit on June 23-24 and the next G7 summit at Schloss Elmau on June 27-28. What is the Brussels executive doing in the meantime? It is introducing so-called “milestones.”
These “milestones” are stages for Poland set by the European Commission. They are intended to enable the country to gradually receive the funds provided for in the Post-Covid Recovery Plan. In other words, there will be no automatic release of the funds, but each payment tranche must be preceded by a specific assessment under these “Milestones”.
The big problem is that this initiative is seen by many in Brussels as a significant relaxation of the Commission’s rule-of-law requirements for Warsaw – at a time when Brussels is compromising with Hungary to win Viktor Orbán’s support for a sixth sanctions package. Even though Ursula von der Leyen stressed at a press conference in Warsaw, “We are not yet at the end of the road as far as the rule of law in Poland is concerned.”
Wojciech Sadurski, Challis Professor of Law at the University of Sydney and Professor at the Europe Centre at the University of Warsaw, points out in his blog on the subject that the Commission’s decision still needs to be approved by the Council. Most importantly, the legal expert says, the Commission has shot itself in the foot.
“The Commission has voluntarily and without apparent reason renounced the great leverage it has over a Member State guilty of systematic violations of the rule of law,” he writes. “The rashness of the decision (…) is inexcusable. The facts on the ground are known to all: independent judges and prosecutors are harassed and suspended, the Constitutional Court issues one anti-European verdict after another, and the illegal KRS continues to recommend new judges to the president, who then blithely appoints them. This is no way for a member state to assure its EU partners that it will use stimulus funds responsibly.”
Indeed, the Commission’s proposal received a more than frosty reception from a large majority of EU parliamentarians – but also within the Commission itself. In a rare gesture, two members of the College of Commissioners – Margrethe Vestager and Frans Timmermans – voted against the proposal, while three others sent letters expressing their concerns.
On the Council side, rule of law advocates such as the Netherlands and the Nordic countries could reject Poland’s recovery and reconstruction plan, while others could abstain. This would be a first, as national recovery and resilience plans have so far been adopted unanimously.
In the Brussels Bubble, people are looking for explanations to make sense of the Commission’s attitude. In the Berlaymont and Wiertz Street corridors, reference is made to Poland’s positive role in dealing with Putin’s war and the urgent need for funding for Warsaw, made necessary by the arrival of over three million Ukrainian refugees. But also – and not least – out of a desire to further disrupt relations between Poland (anti-Putin) and Hungary (pro-Putin) and thus isolate Budapest. It is an understatement to say that tempers in Brussels were heated by Viktor Orbán’s repeated blocking of the new sanctions package.
There are other factors at play as well. From the Bubble, Poland’s stance in the negotiations on the EU tax on multinationals is mostly perceived as blackmail. At this point, it is useful to recall that France, whose presidency ends at the end of the month, has made this European tax on multinationals one of its priorities during its presidency. And with France insoumise seriously sweating in the Macronist camp, Paris needs a strong social message to seduce voters with left-leaning hearts as the first round of parliamentary elections takes place next Sunday.
A national appointment, you will say. But the steady rise of La France Insoumise – whose European agenda is causing more than a frown in Brussels – is making the strategists of La République en Marche sweat. While the parliamentary elections should be a cakewalk for Emmanuel Macron’s party, some of the new government’s most important figures are under political scrutiny. First and foremost, Emmanuel Macron’s Mr. Europe, Clément Beaune.
For at this point, it is necessary to recall a principle of French political life – a curious one, to be sure, but one that is consistently applied: A minister can remain in government only if he or she succeeds in winning or retaining his or her deputy mandate at the same time.
