Table.Briefing: Europe

Renewables and energy efficiency + NATO ‘major overhaul’ + G7 and the oil price cap

  • Renewables & efficiency: ‘It can only get greener’
  • ‘Major NATO overhaul’ in response to new threat environment
  • G7: agreement on oil price cap in sight
  • Deadline passed: Is Russia in default?
  • States to cooperate on energy crisis
  • TRAN votes for SAF quotas for aircraft
  • EU business community warns against undermining of single market
  • Bulgarian president launches talks to try to avoid snap elections
  • Profile: Oliver Blank – representing the German electrical and digital industry in Brussels
Dear reader,

The German Federal Ministry for Economic Affairs spoke of a “great success” and “ambitious targets” after the energy ministers adopted their positions on the Renewable Energies Directive and the Energy Efficiency Directive yesterday. However, the Council’s targets fell short in several respects of what the Commission and Parliament want to achieve in view of the current energy crisis. For example, the ambition for the industrial use of hydrogen was weakened. The usually rather reserved Energy Commissioner Kadri Simson voiced clear criticism. And Sven Giegold (Greens), state secretary in the BMWK, also said, “Things can really only get greener now.” Manuel Berkel has the details.

Tonight, the NATO summit starts in Madrid as the third leg of the summit marathon after the G7 at Schloss Elmau. Against the backdrop of the Russian war of aggression against Ukraine, NATO Secretary General Jens Stoltenberg has announced the biggest “general overhaul of the military alliance” since the end of the Cold War. The number of NRF rapid reaction forces is to be massively increased – from the current 40,000 to 300,000 soldiers. One focus of the summit will be the adoption of a new strategic concept, in which China is to be mentioned for the first time. There is also a need for talks on Turkey’s demands and on increasing the joint budget, as Stephan Israel reports.

Your
Sarah Schaefer
Image of Sarah  Schaefer

Feature

Renewables & efficiency: ‘It can only get greener’

The general orientations of the energy ministers on Monday were followed by words of praise from Berlin. The Federal Ministry for Economic Affairs wrote of a “great success” and “ambitious goals”. But it was its State Secretary Sven Giegold (Greens) who struck a different tone in a video message outside the Council building. Speaking about the upcoming trilogue with the Parliament, the former MEP said, “Things can really only get greener now.”

Although the Council advocated higher targets than in the current versions of the Renewables and Energy Efficiency Directives – these fall short in several respects of what the Commission and Parliament want to push through in the current energy crisis.

The efficiency targets remain at the nine percent originally proposed by the Commission in July 2021, but in view of the gas crisis, Energy Commissioner Kadri Simson and the Parliament had recently called for 13 percent. However, the BMWK considers it a success that at least the target for final energy is to be mandatory for the first time. Savings in primary energy, on the other hand, will remain voluntary. This opens up greater scope for energy-intensive hydrogen production or the expansion of coal-fired power generation to counter the gas shortage.

Less hydrogen for industry

It remains to be seen how tangible the Commission’s options are for reacting to missed targets. Even though the EU-wide target for final energy is binding, there are only voluntary national targets for the member states. Germany has succeeded in ensuring that the Commission is given options for readjustment and that national governments must readjust if targets are missed if national plans do not add up to the EU-wide target. In practice, much is likely to depend on sanction options.

The Council is shying away from significantly higher ambitions for renewable energies. It does want to increase the target for 2030 from 32 to 40 percent, but not to 45 percent, as the Commission and Parliament had recently demanded. The ambition for the use of hydrogen in industry was also weakened. The target of 50 percent liquid or gaseous renewable fuels of non-biogenic origin (RFNBOs) has been postponed to 2035, with only a minimum of 35 percent by 2030.

Habeck supports go-to areas for renewables

The otherwise rather reserved energy commissioner had been unusually clear in criticizing this watering down before the energy ministers. The announcements from the industry make it possible to implement significantly higher hydrogen targets, Simson said.

The Renewable Energies Directive is also intended to simplify planning and approval. The simplifications are to take effect primarily in so-called go-to areas for solar and wind parks. German Economic Affairs Minister Robert Habeck (Greens) welcomed the approach and said he wanted to expand it. The idea of go-to-areas should be reflected in all legal acts relevant to renewable energy. He hopes for a Council decision in September, the minister said. All renewable targets otherwise existed only on paper.

The Council finally adopted the regulation on gas storage. It prescribes mandatory EU-wide minimum gas storage levels of 80 percent by the start of winter. In subsequent years, the level is to be 90 percent. The regulation also introduces a certification procedure for operators of gas storage facilities.

  • E-Fuels
  • Energy
  • Energy policy
  • Gasspeicher
  • Natural gas
  • Renewable energies

NATO responds to new threat situation

It is to be the most important summit of the military alliance in decades. In view of the threat posed by Russia and the war in Ukraine, NATO wants to position itself significantly better. Nato Secretary General Jens Stoltenberg announced that the number of NRF rapid reaction forces would be expanded from the current 40,000 to 300,000 soldiers. Forget the time when French President Emmanuel Macron certified that NATO was “brain dead”. At the latest, the Russian attack on Ukraine was the electric shock that brought the alliance back to life.

The summit begins this evening with a gala dinner hosted by Spain’s King Felipe VI. On the first day of the summit on Wednesday, the heads of state and government are expected to adopt the new strategic concept, which for the first time will also address the threat posed by China. Ukrainian President Volodimir Zelenskiy will join the meeting by video. In the afternoon, the leaders of Georgia, Japan, South Korea, Australia, and New Zealand will join the meeting. On Thursday, the focus is on the southern neighborhood, with Tunisia and Mauritania as guests. It remains to be seen whether the summit will succeed in officially inviting Finland and Sweden to join NATO.

At the summit, the heads of state and government of the 30 NATO members are expected to decide on an “enhanced forward presence” along the eastern flank. So far, the presence there has been more symbolic. Following Russia’s annexation of Crimea in 2014, the alliance had sent rotating combat battalions to the three Baltic states and Poland for the first time. In doing so, the alliance wanted to at least formally comply with the 1997 NATO-Russia Founding Act, which prohibits permanent troop deployments.

Germany already leads the multilateral battlegroup in Lithuania as a framework nation. Since the Russian attack on Ukraine, the allies have begun to reinforce these battlegroups and to send additional troops also to Slovakia, Hungary, Bulgaria, and especially Romania. The point was to signal to Moscow that an attack on Estonia or Lithuania would always be an attack on the alliance. In NATO jargon, there is talk of the “trip wire”.

New strategic concept

Now, from NATO’s point of view, the symbolic presence of the units with a strength of 1200 soldiers per country is no longer enough. The allies want to designate a multinational brigade of 3,000 to 5,000 men and women for each country from the Baltic to Romania. Germany has proposed a model that other framework nations could adopt. According to this model, the brigades would remain stationed in their home countries for the most part but would set up a permanent staff on site, practice regularly in the field, store heavy military equipment and ammunition, and be ready to be called up at short notice in the event of an emergency. This is expected to result in greater flexibility and, of course, lower costs.

The second focus is the adoption of the new strategic concept. The current situation picture is hopelessly outdated. When it was adopted in 2010, then-Russian President Dmitry Medvedev was still at the table as a welcome guest, and Moscow was praised as a “strategic partner”. NATO has indeed long sought to build cooperation with Moscow. Shortly before the attack on Ukraine, Russia withdrew entirely from the Nato-Russia Council. “Russia is today the greatest and most direct threat to our security,” Jens Stoltenberg said Monday. The wording is likely to be similar in the strategic concept.

For the first time, China will also be mentioned there. Is China an enemy, a systemic rival, a possible partner, or a mixture of all of these? Experts from the allies are likely to be fine-tuning wording right up to the start of the summit on Wednesday. The US sees China and Russia as threats on a similar scale. But some of the Europeans, led by Germany, want to draw a clear distinction between the two countries. Russia, they say, is the main challenge for NATO. Relations with China are more complex than with Russia, and there are not only risks, diplomats say.

Turkey’s demands

Actually, the admission of the two countries should only be a formality: Finland and Sweden announced their intention to join NATO shortly after the Russian invasion of Ukraine began. But at the last moment, President Recep Tayyip Erdoğan vetoed the move. The two countries are to meet Turkish conditions first. Erdoğan accuses Finland and Sweden in particular of not acting decisively enough against sympathizers of the banned Kurdish organization PKK on their territory.

Not all Turkish demands are transparent. Erdoğan may also be concerned with restrictions on arms exports imposed by some NATO members in response to Turkish forces’ crackdown on Kurds in Syria. Or he may want US President Joe Biden to allow the delivery of F-16 fighter jets, which have been blocked since Turkey bought a Russian air defense system.

Stoltenberg said Monday that he was glad that President Erdogan had accepted his invitation to meet Finnish President Sauli Niinistö and Sweden’s Prime Minister Magdalena Andersson today in Madrid before the start of the summit. He said he could not promise anything, but everything would be done to make progress because Finland’s and Sweden’s applications for membership were “historic”.

Expectations at NATO headquarters have recently been rather subdued. Sweden’s position on the PKK is crystal clear, said Prime Minister Andersson after a meeting with Stoltenberg in Brussels on Monday. In addition, legislative changes are being prepared to better prosecute membership in terrorist organizations.

Two percent target as minimum

No NATO summit is complete without a discussion about burden-sharing and money. However, things are unlikely to get as heated as they did at the summit with Donald Trump. The then US president had once accused the European allies of spending too little on common security and even threatened to leave. Joe Biden comes as a friend and convinced transatlanticist. In any case, the burden-sharing situation now looks better, at least on paper. 2022 will be the eighth year in a row in which European allies and Canada will have spent more on defense, Stoltenberg said.

The NATO secretary general put the additional investment since 2014 at $350 billion. Nine member states had now reached the two percent target for defense spending. Nineteen NATO states planned to do so by 2024, including Germany. However, according to Stoltenberg, the two-percent target is increasingly seen as a minimum, not an upper limit.

The rather modest joint budget of the military alliance of around €2.6 billion per year, which Stoltenberg wants to increase, has been controversial until recently. The funds are used to finance the headquarters, the command structures, and the AWACS aircraft for air surveillance. France has so far been opposed to increasing the budget, which Stoltenberg wants to use to relieve troop contributors along the eastern flank and to finance joint capabilities in the fight against hybrid warfare, for example.

  • Geopolitics
  • Nato
  • Security policy
  • Ukraine

News

G7: agreement on oil price cap in sight

Yesterday’s deliberations of the G7 leaders at Schloss Elmau also included aid to Ukraine and responses to Russia’s war of aggression. The intention is to further isolate the Russian economy worldwide, according to the statement published on Monday. The G7 countries want to reduce sanctions against Russia and the country’s income from commodity sales, for example. They were close to an agreement to get behind a price cap on Russian oil, a US official said on Monday.

The USA has already said goodbye to Russian oil, and the EU wants to do the same by the end of the year at the latest. And yet the sanctions have only a limited effect because other countries continue to purchase Russian oil, first and foremost China and India. The USA wants to close these gaps with the price cap.

Washington hopes for two effects in particular: Most recently, Russia’s earnings have even increased due to massively rising oil and gas prices, despite the Western sanctions. The price cap would prevent this. Secondly, in view of rising inflation, a price cap would limit the impact on third markets and consumers worldwide.

The only problem is that such a price cap for Russian oil would only work if India and China joined in. India was one of five guest countries present at the G7 summit on Monday. The G7 addressed the Indian prime minister. As for China, they still have to talk first.

Gold embargo needs approval of EU countries

Another initiative initiated by the US is a ban on imports of Russian gold. US President Biden believes that this would deprive Russia of billions in revenue from this important export commodity. The Europeans are quite open to the plans. “However, the actual impact on the gold market is likely to be too small to have a lasting effect on price developments,” says commodities expert Carsten Fritsch of Commerzbank.

According to the industry association World Gold Council, Russia is one of the most important gold producers with a mining output of 330 tons last year. “However, only a small part of Russian production is likely to have gone to the West,” said Fritsch. Expert Alexander Zumpfe of trading house Heraeus pointed to the major buyer countries China and India. This makes “an immediate shortage on the gold market unlikely,” Zumpfe said. So, this plan would also require China. German Chancellor Olaf Scholz also said that the gold embargo could not yet be decided as a joint G7 position because it would first require coordination within the EU.

G7 warms to international climate club

In the fight against climate change, the G7 countries are committed to the possibility of an international climate club to develop internationally comparable standards in climate protection efforts. But a climate policy statement released Monday avoids explicit support for the climate club long called for by Chancellor Olaf Scholz. Instead, it says only that plans and partnerships for global infrastructure and investment “can contribute to the goals of an open and inclusive climate club by enabling policy reform and transforming industry and the energy sector in harmony”.

The US, in particular, had expressed reservations because there is no CO2 taxation in the United States as there is in the EU, for example. Scholz, on the other hand, had justified his idea precisely on the grounds that comparability of different national efforts was needed to avoid a trade war over climate protection measures. However, the climate club could still be mentioned in the final declaration of the G7, which is to be published on Tuesday.

Christoph Bals, political director at the NGO Germanwatch, however, does not expect the form of the climate clubs to be clarified in all details before the end of the German G7 presidency. A process for their development will probably be launched by the end of the year, he said on Monday. The subsequent presidencies would have to drive the process forward accordingly. This summit is only the starting point, Bals said.

Environmental organizations on Monday also took a positive view of the fact that there was no mention of investments in fossil fuel infrastructure in emerging or developing countries in Monday’s summary of the G7 presidency. Environmentalists fear that the final declaration will classify investments in the development of new gas fields, for example, as a necessity to reduce coal-fired power generation in the countries. flee, rtr, luk

  • Climate & Environment
  • Climate Policy
  • Energy policy

Deadline passed: Is Russia in default?

Russia is apparently facing its first default on foreign debt in more than 100 years. On Monday night, a 30-day deadline expired for paying interest due on two government bonds denominated in foreign currency. At stake is a total of about $100 million (€94.7 million). If the investors did not receive the money, which can be assumed in view of tough financial sanctions imposed by the West, it would be the first default on foreign debt since 1918.

The Russian government does not deny that interest payments have not reached creditors. But it insists it has made the payments and therefore denies a default. The payment was still made in May, Kremlin spokesman Dmitry Peskov said Monday, according to the Interfax agency. The fact that the funds had been blocked by the clearing house Euroclear because of Western sanctions against Russia was “not our problem,” he said.

The background of the current case is complicated and seeks its historical comparison. Russia emphasizes that it is economically able and willing to service its debts. However, this is countered by severe sanctions, mainly imposed by Western countries, in response to Russia’s war against Ukraine. As a result, Moscow cannot access the bulk of its financial reserves in Western countries, nor can it transfer domestic reserves to Western creditors.

Experts express caution

Major rating agencies, which would normally determine a default, are currently not allowed to do so due to sanctions. Creditors’ associations that could try to legally enforce their claims against Russia have not yet made a public appearance. Russia’s Finance Minister Anton Siluanov had described the impending default as a “farce” last week. Anyone who understands what is going on knows that it is not a case of default, he said.

Experts were initially rather cautious about the matter. The looming default is likely to be of a rather symbolic nature, analysts at Dekabank said. The background is that the immediate consequences of a Russian default can initially be considered rather limited. For one thing, Russia is not heavily indebted. For another, only a small part of the national debt is in the hands of foreign creditors.

Meanwhile, the medium-term consequences of the default are difficult to predict. First, at least 25 percent of the affected creditors would have to declare a formal default. Whether this would result in a so-called cross-default is currently questionable. In this case, not only the bonds affected by the current default but all of Russia’s foreign debt would be considered non-performing.

Russia recently wanted to exclude this case. However, it is doubtful whether such unilateral steps would hold up in international courts. As a result, a prolonged legal dispute between Russia and its creditors could be in the offing. dpa

  • Finance
  • Financial policy

States to cooperate on energy crisis

German Economic Affairs Minister Robert Habeck is counting on solidarity between EU countries in dealing with the current gas crisis. “No country can depend on itself,” the Green politician said ahead of the meeting of ministers responsible for energy in Luxembourg. “A supply crisis in one country leads to an economic crisis in the other.”

On the sidelines of the meeting, the minister signed a memorandum of understanding with his colleagues from the Czech Republic, Poland, Slovakia, Austria, and Hungary, agreeing to strengthen regional cooperation in the event of power supply crises. The memorandum of understanding should provide an important starting point for further cooperation between the countries in the event of a crisis, the Ministry for Economic Affairs said.

Habeck said Germany is ready to support its neighboring countries – and vice versa. “We wouldn’t make any progress at all if we couldn’t fall back on France, on Belgium, on the Netherlands, also on Norway, which are supporting us in this situation,” he said. Algeria, too, is increasing the amount of gas it supplies through Italy.

In fact, the US has recently nearly tripled its exports of liquefied natural gas to Europe, according to a joint statement from US President Joe Biden and Commission President Ursula von der Leyen. Global LNG exports to Europe have increased 75 percent since March compared to 2021. They said they are working together to end Europe’s dependence on Russian energy. tho/dpa/rtr

  • Climate & Environment
  • Energy
  • European policy
  • Natural gas

TRAN votes for SAF quotas for aircraft

85 percent of aircraft fuel are supposed to be sustainable by 2050. Members of the Transport Committee in the EU Parliament (TRAN) voted on the ReFuelEU Aviation legislative proposal on Monday afternoon. From 2025, the share of so-called sustainable aviation fuels (SAF) in the total consumption of European aviation is to be 2 percent, rising to 37 percent by 2040. In 2050, the quota should eventually be 85 percent, taking into account the potential of electricity and hydrogen in the overall fuel mix. The Commission had proposed 32 percent for 2040 and 63 percent for 2050.

To this end, EU transport policymakers want to establish a Sustainable Aviation Fund from 2023 to accelerate the decarbonization of the sector and support investment in sustainable aviation fuels, innovative aircraft propulsion technologies, and research into new engines.

SAF term expanded

MEPs also adjusted the definition of SAF. Previously, it included synthetic fuels as well as certain biofuels produced from agricultural or forestry residues, algae, biowaste, or used cooking oil. Under the TRAN proposal, recyclable carbonaceous fuels produced from waste and waste gases from the production process of industrial facilities are included.

Biofuels produced from animal fats or distillates, on the other hand, are only to be used in the aviation fuel mix until 2034. Fuels based on feed and food crops and from palm oil, however, were excluded. The plenum will vote on the report in July. luk

  • Climate & Environment
  • Climate Policy
  • Transport policy

EU business community warns against undermining of single market

In view of the looming recession, several business associations are calling for a new political impetus to reduce barriers in the common market. “Businesses no longer experience the Single Market as a true free trade area,” BusinessEurope, Eurochambres, Digitaleurope, EuroCommerce, and the European Round Table criticized in a joint statement. In the past ten years, they say, there have been hardly any efforts to reduce barriers.

EU legislation often gives the member states too much leeway when it comes to transposing it into national regulations, the associations criticize. Small and medium-sized enterprises, in particular, find it difficult to cope with divergent legal requirements in the individual countries. Instead of airy commitments to the single market in the conclusions of the European Council, concrete improvements are needed.

New regulation should therefore focus either on full harmonization of legislation or on the country-of-origin principle, which requires a certain degree of trust between national administrations. To prevent fragmentation, the better regulation agenda should be complemented by an internal market test, the business representatives demand. Moreover, to avoid excessive regulation of companies, the 1-in-1-out principle promised by Commission President Ursula von der Leyen when she took office should be applied consistently. tho

  • Digital policy
  • European policy
  • Trade

Bulgarian president launches talks to try to avoid snap elections

Bulgarian President Rumen Radev started talks on Monday with political parties in a bid to avert snap elections after the coalition government of reformist Prime Minister Kiril Petkov was toppled in a no-confidence vote.

Petkov hopes for the support of at least six more lawmakers to be able to forge an absolute majority but analysts remain sceptical and expect fresh elections in the autumn, which would be Bulgaria’s fourth since 2021.

On Monday, Radev opened consultations with the second-largest party in parliament, the center-right GERB, after Petkov’s PP party asked for a delay in talks until parliament votes on budget changes it has proposed later this week. “Bulgarians are rightly concerned with rising prices, with the ongoing war, and the uncertainty that comes from these crises,” Radev said before the talks, listing the challenges awaiting any new coalition.

GERB’s officials told Radev their party would not try to form a government if Petkov, who would have the first go, fails in his attempt. If Petkov’s PP, GERB and another political party in parliament fail to form a government, Radev will have to appoint a caretaker cabinet and call early elections within two months.

On Sunday, Petkov, who has blamed corrupt interests and pro-Russian influence for the collapse of his government, expressed concerns that an interim cabinet appointed by Radev may reverse Bulgaria’s decision not to pay in roubles for Russian gas. Last week, Bulgaria’s parliament voted to override a veto on the start of EU accession negotiations with North Macedonia. rtr/sas

  • bulgaria
  • Energy Prices

Profile

Oliver Blank – representing the German electrical and digital industry in Brussels

Oliver Blank, Head of European Affairs at ZVEI.

The face of the German electrical and digital industry in Brussels holds the title of Dr. phil. in political science, comparative literature, and art history. Does that fit together? When Oliver Blank, Head of European Affairs at the German Electrical and Electronic Manufacturers’ Association (ZVEI), tells us how he got there, a common thread does emerge.

“I originally wanted to become a journalist and write for the feature section or the business section of the FAZ. I chose my fields of study accordingly.” However, interest then shifted more and more in the direction of politics. After studying for a master’s degree in the US, gaining initial professional experience in an advertising agency, and earning his doctorate, he found his destiny: The interface between politics and business is what interests him. “That’s where you end up pretty quickly with an association.”

Enthusiastic about the electrical industry

His first association employer was the VDMA. At that time, shortly before the turn of the millennium, everything was geared toward information technology and Europe. Blank went to Brussels and co-founded the EICTA association there in 1999, which was renamed Digitaleurope in 2009. He spends four years setting up the structures on the ground. “That was my first European job. That’s how I got into this world.” Things changed for Blank in his private life, too. In 2001, his daughter was born, and in 2002, his son. The young family commutes between Brussels and Frankfurt am Main.

That’s when the offer to join the ZVEI’s executive board in Frankfurt came at just the right time in 2003. At the time, Blank was one of the few people without an engineering background. But it is his skills that are needed, such as strong communication skills and political understanding. After all, he is to build up the European branch of the association.

Oliver Blank soon felt at home in the industry. “What fascinates me about the electrical industry to this day is that it is very much a medium-sized business, and you realize how important small and medium-sized companies are to Europe,” he says. Working with them is “huge fun” for him because their commitment to society is not a fad but has always been part of their motivation. “They are involved in their regions, do a lot in education and training. They’ve been doing what’s now called corporate social responsibility for decades.”

Concern about increasing polarization

When the children grow up, he goes back to Brussels. He sets up the Brussels office of ZVEI. The office grows, expanding its scope under his leadership from Europe to China and, since May of this year, to everything international. “I’ve always been good at pushing new things,” Blank says. He never went anywhere, he says, where there were already ready-made structures. Another professional focus: bringing people together, even those with different views and positions – and thus enabling compromises.

He is therefore very concerned about international developments and increasing polarization. Both the war in Europe and China’s isolation and, not least, the uncertainty about where the US is heading in the next few years, despite all the euphoria about the new transatlantic partnership, are making it more difficult to get people talking to each other. “The global challenges are very great at the moment, and the need for orientation among our member companies is extremely high,” says Blank.

Analyses and forecasts are becoming increasingly important. At the same time, he feels that politicians are increasingly in crisis mode and are less and less able to shape things. Complexity, speed, and a constant prioritization have also arrived in his everyday work. “That wasn’t the case at the beginning of the 2000s. Back then, many EU commissioners didn’t even have a computer on their desk.”

At the end of a busy day, Oliver Blank likes to switch off while cooking. “That’s when I’m monothematic,” he says. In other words, he thinks of nothing but the dish he is preparing. Ulrike Christl

  • Digital policy
  • Digitization
  • European policy

Europe.Table Editorial Office

EUROPE.TABLE EDITORS

Licenses:
    • Renewables & efficiency: ‘It can only get greener’
    • ‘Major NATO overhaul’ in response to new threat environment
    • G7: agreement on oil price cap in sight
    • Deadline passed: Is Russia in default?
    • States to cooperate on energy crisis
    • TRAN votes for SAF quotas for aircraft
    • EU business community warns against undermining of single market
    • Bulgarian president launches talks to try to avoid snap elections
    • Profile: Oliver Blank – representing the German electrical and digital industry in Brussels
    Dear reader,

    The German Federal Ministry for Economic Affairs spoke of a “great success” and “ambitious targets” after the energy ministers adopted their positions on the Renewable Energies Directive and the Energy Efficiency Directive yesterday. However, the Council’s targets fell short in several respects of what the Commission and Parliament want to achieve in view of the current energy crisis. For example, the ambition for the industrial use of hydrogen was weakened. The usually rather reserved Energy Commissioner Kadri Simson voiced clear criticism. And Sven Giegold (Greens), state secretary in the BMWK, also said, “Things can really only get greener now.” Manuel Berkel has the details.

    Tonight, the NATO summit starts in Madrid as the third leg of the summit marathon after the G7 at Schloss Elmau. Against the backdrop of the Russian war of aggression against Ukraine, NATO Secretary General Jens Stoltenberg has announced the biggest “general overhaul of the military alliance” since the end of the Cold War. The number of NRF rapid reaction forces is to be massively increased – from the current 40,000 to 300,000 soldiers. One focus of the summit will be the adoption of a new strategic concept, in which China is to be mentioned for the first time. There is also a need for talks on Turkey’s demands and on increasing the joint budget, as Stephan Israel reports.

    Your
    Sarah Schaefer
    Image of Sarah  Schaefer

    Feature

    Renewables & efficiency: ‘It can only get greener’

    The general orientations of the energy ministers on Monday were followed by words of praise from Berlin. The Federal Ministry for Economic Affairs wrote of a “great success” and “ambitious goals”. But it was its State Secretary Sven Giegold (Greens) who struck a different tone in a video message outside the Council building. Speaking about the upcoming trilogue with the Parliament, the former MEP said, “Things can really only get greener now.”

    Although the Council advocated higher targets than in the current versions of the Renewables and Energy Efficiency Directives – these fall short in several respects of what the Commission and Parliament want to push through in the current energy crisis.

    The efficiency targets remain at the nine percent originally proposed by the Commission in July 2021, but in view of the gas crisis, Energy Commissioner Kadri Simson and the Parliament had recently called for 13 percent. However, the BMWK considers it a success that at least the target for final energy is to be mandatory for the first time. Savings in primary energy, on the other hand, will remain voluntary. This opens up greater scope for energy-intensive hydrogen production or the expansion of coal-fired power generation to counter the gas shortage.

    Less hydrogen for industry

    It remains to be seen how tangible the Commission’s options are for reacting to missed targets. Even though the EU-wide target for final energy is binding, there are only voluntary national targets for the member states. Germany has succeeded in ensuring that the Commission is given options for readjustment and that national governments must readjust if targets are missed if national plans do not add up to the EU-wide target. In practice, much is likely to depend on sanction options.

    The Council is shying away from significantly higher ambitions for renewable energies. It does want to increase the target for 2030 from 32 to 40 percent, but not to 45 percent, as the Commission and Parliament had recently demanded. The ambition for the use of hydrogen in industry was also weakened. The target of 50 percent liquid or gaseous renewable fuels of non-biogenic origin (RFNBOs) has been postponed to 2035, with only a minimum of 35 percent by 2030.

    Habeck supports go-to areas for renewables

    The otherwise rather reserved energy commissioner had been unusually clear in criticizing this watering down before the energy ministers. The announcements from the industry make it possible to implement significantly higher hydrogen targets, Simson said.

    The Renewable Energies Directive is also intended to simplify planning and approval. The simplifications are to take effect primarily in so-called go-to areas for solar and wind parks. German Economic Affairs Minister Robert Habeck (Greens) welcomed the approach and said he wanted to expand it. The idea of go-to-areas should be reflected in all legal acts relevant to renewable energy. He hopes for a Council decision in September, the minister said. All renewable targets otherwise existed only on paper.

    The Council finally adopted the regulation on gas storage. It prescribes mandatory EU-wide minimum gas storage levels of 80 percent by the start of winter. In subsequent years, the level is to be 90 percent. The regulation also introduces a certification procedure for operators of gas storage facilities.

    • E-Fuels
    • Energy
    • Energy policy
    • Gasspeicher
    • Natural gas
    • Renewable energies

    NATO responds to new threat situation

    It is to be the most important summit of the military alliance in decades. In view of the threat posed by Russia and the war in Ukraine, NATO wants to position itself significantly better. Nato Secretary General Jens Stoltenberg announced that the number of NRF rapid reaction forces would be expanded from the current 40,000 to 300,000 soldiers. Forget the time when French President Emmanuel Macron certified that NATO was “brain dead”. At the latest, the Russian attack on Ukraine was the electric shock that brought the alliance back to life.

    The summit begins this evening with a gala dinner hosted by Spain’s King Felipe VI. On the first day of the summit on Wednesday, the heads of state and government are expected to adopt the new strategic concept, which for the first time will also address the threat posed by China. Ukrainian President Volodimir Zelenskiy will join the meeting by video. In the afternoon, the leaders of Georgia, Japan, South Korea, Australia, and New Zealand will join the meeting. On Thursday, the focus is on the southern neighborhood, with Tunisia and Mauritania as guests. It remains to be seen whether the summit will succeed in officially inviting Finland and Sweden to join NATO.

    At the summit, the heads of state and government of the 30 NATO members are expected to decide on an “enhanced forward presence” along the eastern flank. So far, the presence there has been more symbolic. Following Russia’s annexation of Crimea in 2014, the alliance had sent rotating combat battalions to the three Baltic states and Poland for the first time. In doing so, the alliance wanted to at least formally comply with the 1997 NATO-Russia Founding Act, which prohibits permanent troop deployments.

    Germany already leads the multilateral battlegroup in Lithuania as a framework nation. Since the Russian attack on Ukraine, the allies have begun to reinforce these battlegroups and to send additional troops also to Slovakia, Hungary, Bulgaria, and especially Romania. The point was to signal to Moscow that an attack on Estonia or Lithuania would always be an attack on the alliance. In NATO jargon, there is talk of the “trip wire”.

    New strategic concept

    Now, from NATO’s point of view, the symbolic presence of the units with a strength of 1200 soldiers per country is no longer enough. The allies want to designate a multinational brigade of 3,000 to 5,000 men and women for each country from the Baltic to Romania. Germany has proposed a model that other framework nations could adopt. According to this model, the brigades would remain stationed in their home countries for the most part but would set up a permanent staff on site, practice regularly in the field, store heavy military equipment and ammunition, and be ready to be called up at short notice in the event of an emergency. This is expected to result in greater flexibility and, of course, lower costs.

    The second focus is the adoption of the new strategic concept. The current situation picture is hopelessly outdated. When it was adopted in 2010, then-Russian President Dmitry Medvedev was still at the table as a welcome guest, and Moscow was praised as a “strategic partner”. NATO has indeed long sought to build cooperation with Moscow. Shortly before the attack on Ukraine, Russia withdrew entirely from the Nato-Russia Council. “Russia is today the greatest and most direct threat to our security,” Jens Stoltenberg said Monday. The wording is likely to be similar in the strategic concept.

    For the first time, China will also be mentioned there. Is China an enemy, a systemic rival, a possible partner, or a mixture of all of these? Experts from the allies are likely to be fine-tuning wording right up to the start of the summit on Wednesday. The US sees China and Russia as threats on a similar scale. But some of the Europeans, led by Germany, want to draw a clear distinction between the two countries. Russia, they say, is the main challenge for NATO. Relations with China are more complex than with Russia, and there are not only risks, diplomats say.

    Turkey’s demands

    Actually, the admission of the two countries should only be a formality: Finland and Sweden announced their intention to join NATO shortly after the Russian invasion of Ukraine began. But at the last moment, President Recep Tayyip Erdoğan vetoed the move. The two countries are to meet Turkish conditions first. Erdoğan accuses Finland and Sweden in particular of not acting decisively enough against sympathizers of the banned Kurdish organization PKK on their territory.

    Not all Turkish demands are transparent. Erdoğan may also be concerned with restrictions on arms exports imposed by some NATO members in response to Turkish forces’ crackdown on Kurds in Syria. Or he may want US President Joe Biden to allow the delivery of F-16 fighter jets, which have been blocked since Turkey bought a Russian air defense system.

    Stoltenberg said Monday that he was glad that President Erdogan had accepted his invitation to meet Finnish President Sauli Niinistö and Sweden’s Prime Minister Magdalena Andersson today in Madrid before the start of the summit. He said he could not promise anything, but everything would be done to make progress because Finland’s and Sweden’s applications for membership were “historic”.

    Expectations at NATO headquarters have recently been rather subdued. Sweden’s position on the PKK is crystal clear, said Prime Minister Andersson after a meeting with Stoltenberg in Brussels on Monday. In addition, legislative changes are being prepared to better prosecute membership in terrorist organizations.

    Two percent target as minimum

    No NATO summit is complete without a discussion about burden-sharing and money. However, things are unlikely to get as heated as they did at the summit with Donald Trump. The then US president had once accused the European allies of spending too little on common security and even threatened to leave. Joe Biden comes as a friend and convinced transatlanticist. In any case, the burden-sharing situation now looks better, at least on paper. 2022 will be the eighth year in a row in which European allies and Canada will have spent more on defense, Stoltenberg said.

    The NATO secretary general put the additional investment since 2014 at $350 billion. Nine member states had now reached the two percent target for defense spending. Nineteen NATO states planned to do so by 2024, including Germany. However, according to Stoltenberg, the two-percent target is increasingly seen as a minimum, not an upper limit.

    The rather modest joint budget of the military alliance of around €2.6 billion per year, which Stoltenberg wants to increase, has been controversial until recently. The funds are used to finance the headquarters, the command structures, and the AWACS aircraft for air surveillance. France has so far been opposed to increasing the budget, which Stoltenberg wants to use to relieve troop contributors along the eastern flank and to finance joint capabilities in the fight against hybrid warfare, for example.

    • Geopolitics
    • Nato
    • Security policy
    • Ukraine

    News

    G7: agreement on oil price cap in sight

    Yesterday’s deliberations of the G7 leaders at Schloss Elmau also included aid to Ukraine and responses to Russia’s war of aggression. The intention is to further isolate the Russian economy worldwide, according to the statement published on Monday. The G7 countries want to reduce sanctions against Russia and the country’s income from commodity sales, for example. They were close to an agreement to get behind a price cap on Russian oil, a US official said on Monday.

    The USA has already said goodbye to Russian oil, and the EU wants to do the same by the end of the year at the latest. And yet the sanctions have only a limited effect because other countries continue to purchase Russian oil, first and foremost China and India. The USA wants to close these gaps with the price cap.

    Washington hopes for two effects in particular: Most recently, Russia’s earnings have even increased due to massively rising oil and gas prices, despite the Western sanctions. The price cap would prevent this. Secondly, in view of rising inflation, a price cap would limit the impact on third markets and consumers worldwide.

    The only problem is that such a price cap for Russian oil would only work if India and China joined in. India was one of five guest countries present at the G7 summit on Monday. The G7 addressed the Indian prime minister. As for China, they still have to talk first.

    Gold embargo needs approval of EU countries

    Another initiative initiated by the US is a ban on imports of Russian gold. US President Biden believes that this would deprive Russia of billions in revenue from this important export commodity. The Europeans are quite open to the plans. “However, the actual impact on the gold market is likely to be too small to have a lasting effect on price developments,” says commodities expert Carsten Fritsch of Commerzbank.

    According to the industry association World Gold Council, Russia is one of the most important gold producers with a mining output of 330 tons last year. “However, only a small part of Russian production is likely to have gone to the West,” said Fritsch. Expert Alexander Zumpfe of trading house Heraeus pointed to the major buyer countries China and India. This makes “an immediate shortage on the gold market unlikely,” Zumpfe said. So, this plan would also require China. German Chancellor Olaf Scholz also said that the gold embargo could not yet be decided as a joint G7 position because it would first require coordination within the EU.

    G7 warms to international climate club

    In the fight against climate change, the G7 countries are committed to the possibility of an international climate club to develop internationally comparable standards in climate protection efforts. But a climate policy statement released Monday avoids explicit support for the climate club long called for by Chancellor Olaf Scholz. Instead, it says only that plans and partnerships for global infrastructure and investment “can contribute to the goals of an open and inclusive climate club by enabling policy reform and transforming industry and the energy sector in harmony”.

    The US, in particular, had expressed reservations because there is no CO2 taxation in the United States as there is in the EU, for example. Scholz, on the other hand, had justified his idea precisely on the grounds that comparability of different national efforts was needed to avoid a trade war over climate protection measures. However, the climate club could still be mentioned in the final declaration of the G7, which is to be published on Tuesday.

    Christoph Bals, political director at the NGO Germanwatch, however, does not expect the form of the climate clubs to be clarified in all details before the end of the German G7 presidency. A process for their development will probably be launched by the end of the year, he said on Monday. The subsequent presidencies would have to drive the process forward accordingly. This summit is only the starting point, Bals said.

    Environmental organizations on Monday also took a positive view of the fact that there was no mention of investments in fossil fuel infrastructure in emerging or developing countries in Monday’s summary of the G7 presidency. Environmentalists fear that the final declaration will classify investments in the development of new gas fields, for example, as a necessity to reduce coal-fired power generation in the countries. flee, rtr, luk

    • Climate & Environment
    • Climate Policy
    • Energy policy

    Deadline passed: Is Russia in default?

    Russia is apparently facing its first default on foreign debt in more than 100 years. On Monday night, a 30-day deadline expired for paying interest due on two government bonds denominated in foreign currency. At stake is a total of about $100 million (€94.7 million). If the investors did not receive the money, which can be assumed in view of tough financial sanctions imposed by the West, it would be the first default on foreign debt since 1918.

    The Russian government does not deny that interest payments have not reached creditors. But it insists it has made the payments and therefore denies a default. The payment was still made in May, Kremlin spokesman Dmitry Peskov said Monday, according to the Interfax agency. The fact that the funds had been blocked by the clearing house Euroclear because of Western sanctions against Russia was “not our problem,” he said.

    The background of the current case is complicated and seeks its historical comparison. Russia emphasizes that it is economically able and willing to service its debts. However, this is countered by severe sanctions, mainly imposed by Western countries, in response to Russia’s war against Ukraine. As a result, Moscow cannot access the bulk of its financial reserves in Western countries, nor can it transfer domestic reserves to Western creditors.

    Experts express caution

    Major rating agencies, which would normally determine a default, are currently not allowed to do so due to sanctions. Creditors’ associations that could try to legally enforce their claims against Russia have not yet made a public appearance. Russia’s Finance Minister Anton Siluanov had described the impending default as a “farce” last week. Anyone who understands what is going on knows that it is not a case of default, he said.

    Experts were initially rather cautious about the matter. The looming default is likely to be of a rather symbolic nature, analysts at Dekabank said. The background is that the immediate consequences of a Russian default can initially be considered rather limited. For one thing, Russia is not heavily indebted. For another, only a small part of the national debt is in the hands of foreign creditors.

    Meanwhile, the medium-term consequences of the default are difficult to predict. First, at least 25 percent of the affected creditors would have to declare a formal default. Whether this would result in a so-called cross-default is currently questionable. In this case, not only the bonds affected by the current default but all of Russia’s foreign debt would be considered non-performing.

    Russia recently wanted to exclude this case. However, it is doubtful whether such unilateral steps would hold up in international courts. As a result, a prolonged legal dispute between Russia and its creditors could be in the offing. dpa

    • Finance
    • Financial policy

    States to cooperate on energy crisis

    German Economic Affairs Minister Robert Habeck is counting on solidarity between EU countries in dealing with the current gas crisis. “No country can depend on itself,” the Green politician said ahead of the meeting of ministers responsible for energy in Luxembourg. “A supply crisis in one country leads to an economic crisis in the other.”

    On the sidelines of the meeting, the minister signed a memorandum of understanding with his colleagues from the Czech Republic, Poland, Slovakia, Austria, and Hungary, agreeing to strengthen regional cooperation in the event of power supply crises. The memorandum of understanding should provide an important starting point for further cooperation between the countries in the event of a crisis, the Ministry for Economic Affairs said.

    Habeck said Germany is ready to support its neighboring countries – and vice versa. “We wouldn’t make any progress at all if we couldn’t fall back on France, on Belgium, on the Netherlands, also on Norway, which are supporting us in this situation,” he said. Algeria, too, is increasing the amount of gas it supplies through Italy.

    In fact, the US has recently nearly tripled its exports of liquefied natural gas to Europe, according to a joint statement from US President Joe Biden and Commission President Ursula von der Leyen. Global LNG exports to Europe have increased 75 percent since March compared to 2021. They said they are working together to end Europe’s dependence on Russian energy. tho/dpa/rtr

    • Climate & Environment
    • Energy
    • European policy
    • Natural gas

    TRAN votes for SAF quotas for aircraft

    85 percent of aircraft fuel are supposed to be sustainable by 2050. Members of the Transport Committee in the EU Parliament (TRAN) voted on the ReFuelEU Aviation legislative proposal on Monday afternoon. From 2025, the share of so-called sustainable aviation fuels (SAF) in the total consumption of European aviation is to be 2 percent, rising to 37 percent by 2040. In 2050, the quota should eventually be 85 percent, taking into account the potential of electricity and hydrogen in the overall fuel mix. The Commission had proposed 32 percent for 2040 and 63 percent for 2050.

    To this end, EU transport policymakers want to establish a Sustainable Aviation Fund from 2023 to accelerate the decarbonization of the sector and support investment in sustainable aviation fuels, innovative aircraft propulsion technologies, and research into new engines.

    SAF term expanded

    MEPs also adjusted the definition of SAF. Previously, it included synthetic fuels as well as certain biofuels produced from agricultural or forestry residues, algae, biowaste, or used cooking oil. Under the TRAN proposal, recyclable carbonaceous fuels produced from waste and waste gases from the production process of industrial facilities are included.

    Biofuels produced from animal fats or distillates, on the other hand, are only to be used in the aviation fuel mix until 2034. Fuels based on feed and food crops and from palm oil, however, were excluded. The plenum will vote on the report in July. luk

    • Climate & Environment
    • Climate Policy
    • Transport policy

    EU business community warns against undermining of single market

    In view of the looming recession, several business associations are calling for a new political impetus to reduce barriers in the common market. “Businesses no longer experience the Single Market as a true free trade area,” BusinessEurope, Eurochambres, Digitaleurope, EuroCommerce, and the European Round Table criticized in a joint statement. In the past ten years, they say, there have been hardly any efforts to reduce barriers.

    EU legislation often gives the member states too much leeway when it comes to transposing it into national regulations, the associations criticize. Small and medium-sized enterprises, in particular, find it difficult to cope with divergent legal requirements in the individual countries. Instead of airy commitments to the single market in the conclusions of the European Council, concrete improvements are needed.

    New regulation should therefore focus either on full harmonization of legislation or on the country-of-origin principle, which requires a certain degree of trust between national administrations. To prevent fragmentation, the better regulation agenda should be complemented by an internal market test, the business representatives demand. Moreover, to avoid excessive regulation of companies, the 1-in-1-out principle promised by Commission President Ursula von der Leyen when she took office should be applied consistently. tho

    • Digital policy
    • European policy
    • Trade

    Bulgarian president launches talks to try to avoid snap elections

    Bulgarian President Rumen Radev started talks on Monday with political parties in a bid to avert snap elections after the coalition government of reformist Prime Minister Kiril Petkov was toppled in a no-confidence vote.

    Petkov hopes for the support of at least six more lawmakers to be able to forge an absolute majority but analysts remain sceptical and expect fresh elections in the autumn, which would be Bulgaria’s fourth since 2021.

    On Monday, Radev opened consultations with the second-largest party in parliament, the center-right GERB, after Petkov’s PP party asked for a delay in talks until parliament votes on budget changes it has proposed later this week. “Bulgarians are rightly concerned with rising prices, with the ongoing war, and the uncertainty that comes from these crises,” Radev said before the talks, listing the challenges awaiting any new coalition.

    GERB’s officials told Radev their party would not try to form a government if Petkov, who would have the first go, fails in his attempt. If Petkov’s PP, GERB and another political party in parliament fail to form a government, Radev will have to appoint a caretaker cabinet and call early elections within two months.

    On Sunday, Petkov, who has blamed corrupt interests and pro-Russian influence for the collapse of his government, expressed concerns that an interim cabinet appointed by Radev may reverse Bulgaria’s decision not to pay in roubles for Russian gas. Last week, Bulgaria’s parliament voted to override a veto on the start of EU accession negotiations with North Macedonia. rtr/sas

    • bulgaria
    • Energy Prices

    Profile

    Oliver Blank – representing the German electrical and digital industry in Brussels

    Oliver Blank, Head of European Affairs at ZVEI.

    The face of the German electrical and digital industry in Brussels holds the title of Dr. phil. in political science, comparative literature, and art history. Does that fit together? When Oliver Blank, Head of European Affairs at the German Electrical and Electronic Manufacturers’ Association (ZVEI), tells us how he got there, a common thread does emerge.

    “I originally wanted to become a journalist and write for the feature section or the business section of the FAZ. I chose my fields of study accordingly.” However, interest then shifted more and more in the direction of politics. After studying for a master’s degree in the US, gaining initial professional experience in an advertising agency, and earning his doctorate, he found his destiny: The interface between politics and business is what interests him. “That’s where you end up pretty quickly with an association.”

    Enthusiastic about the electrical industry

    His first association employer was the VDMA. At that time, shortly before the turn of the millennium, everything was geared toward information technology and Europe. Blank went to Brussels and co-founded the EICTA association there in 1999, which was renamed Digitaleurope in 2009. He spends four years setting up the structures on the ground. “That was my first European job. That’s how I got into this world.” Things changed for Blank in his private life, too. In 2001, his daughter was born, and in 2002, his son. The young family commutes between Brussels and Frankfurt am Main.

    That’s when the offer to join the ZVEI’s executive board in Frankfurt came at just the right time in 2003. At the time, Blank was one of the few people without an engineering background. But it is his skills that are needed, such as strong communication skills and political understanding. After all, he is to build up the European branch of the association.

    Oliver Blank soon felt at home in the industry. “What fascinates me about the electrical industry to this day is that it is very much a medium-sized business, and you realize how important small and medium-sized companies are to Europe,” he says. Working with them is “huge fun” for him because their commitment to society is not a fad but has always been part of their motivation. “They are involved in their regions, do a lot in education and training. They’ve been doing what’s now called corporate social responsibility for decades.”

    Concern about increasing polarization

    When the children grow up, he goes back to Brussels. He sets up the Brussels office of ZVEI. The office grows, expanding its scope under his leadership from Europe to China and, since May of this year, to everything international. “I’ve always been good at pushing new things,” Blank says. He never went anywhere, he says, where there were already ready-made structures. Another professional focus: bringing people together, even those with different views and positions – and thus enabling compromises.

    He is therefore very concerned about international developments and increasing polarization. Both the war in Europe and China’s isolation and, not least, the uncertainty about where the US is heading in the next few years, despite all the euphoria about the new transatlantic partnership, are making it more difficult to get people talking to each other. “The global challenges are very great at the moment, and the need for orientation among our member companies is extremely high,” says Blank.

    Analyses and forecasts are becoming increasingly important. At the same time, he feels that politicians are increasingly in crisis mode and are less and less able to shape things. Complexity, speed, and a constant prioritization have also arrived in his everyday work. “That wasn’t the case at the beginning of the 2000s. Back then, many EU commissioners didn’t even have a computer on their desk.”

    At the end of a busy day, Oliver Blank likes to switch off while cooking. “That’s when I’m monothematic,” he says. In other words, he thinks of nothing but the dish he is preparing. Ulrike Christl

    • Digital policy
    • Digitization
    • European policy

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