Commission Vice-Chair Henna Virkkunen has invited the industry to the Digital Working Group today as part of the auto dialog. While the Commissioners have tended to play the role of moderator at the meetings in the past, Virkkunen is likely to come in for criticism this time. She will be confronted with the incomprehension of manufacturers, suppliers and their associations at the Commission’s surprising decision to withdraw the proposal for more legal certainty and faster dispute resolution for standard-essential patents. The reason given in the work program was that no agreement was in sight. The Commission was examining whether to submit a new proposal or choose a different approach.
Whether suppliers or OEMs, they are fed up with being financially exploited by patent holders for the use of mobile phone patents that new cars cannot do without – today and even more so in the future of semi-autonomous and autonomous driving.
In a letter to the Commission, which Table.Briefings has been able to view, ACEA boss Sigrid de Vries mentions that Commission Vice-President Stéphane Séjourné promised during the hearings that he would work towards the swift adoption of the proposal. The letter reads: “We do not understand why the Commission has since reversed its position by 180 degrees.” It recalls that the co-legislators were already quite far along. The Parliament had adopted its position and the Polish Council Presidency had scheduled negotiations at working group level.
Volkswagen is also exerting pressure ahead of the meeting. It is “highly unusual for the Commission to withdraw a proposal at this stage”, said a spokesperson. Overnight, an “initiative to create urgently needed fair and transparent framework conditions has been stopped”, the statement continued. “And this while at the same time we are engaged in a strategic dialog about the future of the automotive industry.” It will be interesting to see how Virkkunen reacts to the broadsides.
Have a good start to the week.
The shock of Munich and the announcements made by the US administration over the last few days are still having an impact. Initially, the crisis meeting was supposed to take place on Sunday, but now Emmanuel Macron has invited people to Paris this afternoon after hectic consultations. The French President is bringing together the most important European states to discuss Europe’s security and the situation in Ukraine, Foreign Minister Jean-Noel Barrot told Radio France Inter. Following the Munich Security Conference, the Europeans must quickly position themselves on the threatened US withdrawal from Europe and Donald Trump’s Ukraine peace negotiations with Vladimir Putin, diplomats said.
In addition to Federal Chancellor Olaf Scholz, the heads of government of Poland, Spain, Italy, the Netherlands, Denmark and the UK have been invited. NATO Secretary General Jens Stoltenberg, Commission President Ursula von der Leyen and EU Council President António Costa will also be present. What is needed is a quick answer as to how Europe can quickly increase its defense spending and become more independent from the USA.
According to diplomats, the aim is also to reach a position on the question of what security guarantees the Europeans could offer in order to gain a seat at the negotiating table on Ukraine. Possible commitments for a peacekeeping force in Ukraine following a ceasefire will also be discussed. The aim of the meeting is to initiate consultations between the European heads of state and government on the situation in Ukraine and security issues in Europe, confirm EU diplomats in Brussels. The talks could then be continued in other formats with the aim of bringing together all partners interested in peace and security in Europe.
It is striking that António Costa is not inviting people to the informal meeting, as would actually be expected. The EU Council President has not responded to requests for a special summit in recent days. Unlike Emmanuel Macron, the Council President should have invited all EU member states, including Hungary and Slovakia. Head of government Viktor Orbán is close to both Vladimir Putin and Donald Trump and would have prevented a joint position.
Danish Prime Minister Mette Frederiksen is to represent the Baltic states as well as Sweden and Finland in Paris. From Emmanuel Macron’s point of view, the presence of Prime Minister Keir Starmer is essential, as the UK plays a key role in supporting Ukraine. However, the crisis summit in a small circle also caused disgruntlement. He did not know what exactly the topic of the meeting in Paris was, said Luxembourg’s head of government Luc Frieden at the security conference in Munich. Only a few states had been invited, whereas a common vision of all 27 member states was now required.
According to diplomats, time is running out because teams from the USA and Russia could begin preparations for peace negotiations on Ukraine as early as this week in Riyadh. The US President’s goal is a ceasefire by Easter. There are fears that Vladimir Putin could bring up the old demand for a neutral Ukraine with a reduced army of its own and agree on spheres of influence with Donald Trump.
Finland’s President Alexander Stubb warned against giving space to Russian fantasies of spheres of influence. According to diplomats, automatic NATO membership for Ukraine is under discussion should Russia violate a ceasefire agreement. The security of the European Union and Ukraine are interlinked, wrote EU Council President Costa on the X news service. Credible and successful negotiations or a lasting peace would not be possible without Ukraine and without the EU.
At the end of the 61st MSC, it was clear that Germany and the other major European economies would have to spend hundreds of billions of euros every year if their security and defense policymakers and the US administration’s expectations were to be met. NATO Secretary General Mark Rutte had already set a target of spending “north of three percent” of gross domestic product in order to expand the military capabilities that Europe needs to defend itself against further Russian attacks. In terms of the federal budget, this would be more than EUR 120 billion – almost two and a half times as much as the current defense budget, more than a quarter of the total budget.
In Munich, EU Commission President Ursula von der Leyen hinted at a way in which this could be achieved without plunging the eurozone states into fierce distribution conflicts: National defense spending should be exempted from the Maastricht stability criteria, the CDU politician said on the opening day of the MSC. A direction that the SPD Chancellor, who is probably in his last weeks in office, has also taken: “We must therefore reform the debt brake in our Basic Law immediately after the upcoming Bundestag elections by exempting investments in our security and defense.”
Members of his parliamentary group in Munich have openly hinted that the Union’s candidate for chancellor, Friedrich Merz, who has so far been noticeably cautious on this issue, will have to show his colors in the coalition negotiations. The pressure on the future German government is being intensified by US President Donald Trump’s disruptive foreign policy course. The Ukraine questionnaire from Washington alone, which reached the European NATO members last week, may render all previous financial and defense plans obsolete.
Immediately before a meeting between US Secretary of State Marco Rubio, National Security Advisor Mike Walz and Trump’s Middle East special envoy Steve Witkoff with their Russian counterparts in Saudi Arabia next week, the White House asked, according to dpa: How many soldiers could Germany and other allies send to Ukraine as part of peacekeeping forces after a peace deal? How many soldiers could Germany send to Ukraine for training programs after an end to the war in Ukraine? What weapons systems could Germany provide? The extent to which the answers from Europe will satisfy Trump was completely open at the end of the 61st MSC.
Trade Commissioner Maroš Šefčovič is traveling to Washington on Monday. He will meet with Secretary of Commerce Howard Lutnick, Trade Representative Jamieson Greer, and Trump’s economic advisor Kevin Hassett. The task of the EU Trade Commissioner could hardly be more demanding, as the tariffs announced by US President Trump last Thursday pose major challenges for the EU. The reciprocal tariffs attack the WTO’s “most favored nation” (MFN) principle. In addition, Trump’s focus on national trade deficits and value-added taxes threatens to introduce unequal treatment between EU states. The Commission has the Anti-Coercion Instrument (ACI) at its disposal to defend itself against attempts at coercive measures.
Trump has ordered the reports intended to determine the reciprocal tariffs to be published at the beginning of April. The Commission vows to respond quickly to tariffs. “The EU will react decisively and promptly against unjustified barriers to free and fair trade, including when tariffs are used to challenge legal and non-discriminatory measures,” the Commission said in a statement on Friday. It has left open which instruments it will use to react.
With the reciprocal tariffs, Trump is attacking the WTO’s MFN principle head-on. MFN states that a state or a federation of states must treat all trading partners equally when levying tariffs, unless otherwise agreed in a free trade agreement. Not only would the USA itself violate MFN with reciprocal tariffs, it would also make it more difficult for all other states to comply with MFN.
The EU could be affected in the automotive sector because it imposes a higher tariff on cars (10 percent) than the USA (2.5 percent). If, for example, the EU wanted to prevent reciprocal tariffs on cars by lowering the tariff for US cars, it would theoretically have to do the same for all other trading partners. According to reports in the Financial Times, the Commission is prepared to lower car tariffs.
However, it is not necessarily this direct effect of reciprocal tariffs that is most dangerous for the EU – it has relatively low tariff rates in most sectors and only little difference to the tariff rates of the USA. Countries with higher tariffs, such as India and China, will be under greater pressure. They are likely to try to redirect their exports, which could lead to crowding out in the European market and other export markets.
On Thursday, Trump cited other factors for determining the tariffs, including VAT in Europe, the US trade deficit, and unwelcome regulations. “The argument that VAT would lead to a trade imbalance is complete nonsense,” says Niclas Poitiers, trade expert at the Brussels-based think tank Bruegel.
The VAT rate varies between the member states, ranging from 17% in Luxembourg to 27% in Hungary. The trade balances with the USA also vary greatly depending on the member state (see chart below). There is a risk that the US will not impose tariffs against the EU as a trading bloc, but will treat member states differently. “I think the fact that Trump could impose different tariffs on individual member states should be taken more seriously,” says Sam Lowe, trade expert and partner at consulting firm Flint Global.
In the trade dispute between Airbus and Boeing, the US had already imposed tariffs on products from Germany and France in 2020. If the USA now wants to apply this much more broadly, this would probably have a distorting effect on the domestic market.
Bernd Lange (SPD), Chairman of Parliament’s Trade Committee, doubts that the USA can even identify which EU country a product comes from in view of the integrated European supply chains. Nevertheless, he warns against American attempts at division. “I would not see this as an economic policy consideration, but as an attempt to divide the European Union,” he told Table.Briefings.
So far, the EU has shown unity in the face of US threats. Unlike Canada and Mexico, the EU has held back with specific tariff threats. Its options for action are limited, partly because it wants to continue to abide by WTO law.
However, Trump’s focus on unpopular regulations and taxes in the EU could see the ACI applied for the first time. According to Bruegel’s trade expert Niclas Poitiers, Trump’s complaints against VAT should be seen as a pretext to further raise US tariffs in order to “force states to abolish regulations that go against the interests of a few large US companies.” According to Poitiers, the US is thus attacking a core component of the sovereignty of the EU and its member states.
With the ACI, the EU could introduce import and export restrictions, put American companies and products at a disadvantage in public procurement, or restrict the protection of intellectual property, among other things. Even if the ACI process is faster than a WTO process, the ACI Regulation requires several consultation steps between the Commission, the Council, and the third country concerned, which in practice will take several months.
Commission Vice-President Teresa Ribera wants to approve aid for climate-friendly investments until the end of 2030 under a simplified procedure, thereby also meeting a demand from the outgoing German government. Corresponding regulations from the TCTF crisis framework, which is limited until the end of the year, are to be extended for this purpose. This is the result of a draft published by Contexte. The new abbreviation for the aid framework is now CISAF, short for Clean Industry State Aid Framework.
Ribera wants to present it on Feb. 26 with the Clean Industrial Deal. According to Contexte, however, the proposal has not yet been agreed with the other commissioners. The structure corresponds to chapters 2.5, 2.6 and 2.8 of the TCTF:
Rules for non-fossil flexibilities and capacity mechanisms are new. De-risking covers aid in forms such as equity investments and guarantees, most of which were already included in the previous framework.
Non-fossil flexibilities primarily refer to batteries and a shift in consumption. Two conditions in the draft could cause displeasure in Germany. If the federal government wants to control where batteries are built, then the additional costs should be borne by the electricity consumers in the respective region. And the costs for flexibility technologies should also explicitly be co-financed by those consumers who cause the need for flexibility. The German government, on the other hand, wants to spare companies that cannot flexibilize their consumption.
An annex to the draft also contains regulations to facilitate the approval of capacity mechanisms under state aid law. Germany is reliant on this in order to build gas and hydrogen power plants as a backup for the dark doldrums. However, the current traffic light model appears to be difficult to reconcile with the ideas from Brussels. Following a lengthy consultation process, the BMWK under the leadership of Robert Habeck came out in favour of a combination of centralized and decentralized elements.
However, Ribera’s first proposal only contains two models: a strategic reserve and a market-wide capacity mechanism. Strategic reserves are designed for emergencies and are not allowed to participate in the electricity market during normal times. They are therefore unpopular with power plant operators.
However, the proposal for a market-wide capacity mechanism corresponds to a central model, according to the draft. This would have to meet 21 of a total of 27 criteria: “If some of these requirements are not met, approval would be required in accordance with the guidelines for state aid for climate, environmental protection, and energy (KUEBLL).”
This increases the likelihood that Berlin will have to have its model approved in a lengthy procedure and that the construction of the reserve power plants will drag on. In other respects too, the criteria are more of a concretization of the internal electricity market regulation than a deregulation and genuine acceleration.
Ribera wants to give natural gas a somewhat greater role in the decarbonization of industry. Plants for the generation of process heat based on natural gas are to be covered by the new aid framework as an exception if emissions are reduced by at least 60 percent.
Minor relief is also to be granted for low-carbon hydrogen – i.e. blue and red hydrogen from natural gas or nuclear energy. Its use is eligible for funding if it is mixed with green hydrogen. However, renewable hydrogen must still make up the lion’s share – either 90 percent or, if lower, the share of renewable energies in the national electricity mix plus 25 percentage points. In Germany, therefore, around 80 percent green hydrogen would currently still be sufficient. This provision is likely to meet with fierce resistance from French Commissioner Stéphane Séjourné.
Commission Vice-Chair Henna Virkkunen has invited the industry to the Digital Working Group today as part of the auto dialog. While the Commissioners have tended to play the role of moderator at the meetings in the past, Virkkunen is likely to come in for criticism this time. She will be confronted with the incomprehension of manufacturers, suppliers and their associations at the Commission’s surprising decision to withdraw the proposal for more legal certainty and faster dispute resolution for standard-essential patents. The reason given in the work program was that no agreement was in sight. The Commission was examining whether to submit a new proposal or choose a different approach.
Whether suppliers or OEMs, they are fed up with being financially exploited by patent holders for the use of mobile phone patents that new cars cannot do without – today and even more so in the future of semi-autonomous and autonomous driving.
In a letter to the Commission, which Table.Briefings has been able to view, ACEA boss Sigrid de Vries mentions that Commission Vice-President Stéphane Séjourné promised during the hearings that he would work towards the swift adoption of the proposal. The letter reads: “We do not understand why the Commission has since reversed its position by 180 degrees.” It recalls that the co-legislators were already quite far along. The Parliament had adopted its position and the Polish Council Presidency had scheduled negotiations at working group level.
Volkswagen is also exerting pressure ahead of the meeting. It is “highly unusual for the Commission to withdraw a proposal at this stage”, said a spokesperson. Overnight, an “initiative to create urgently needed fair and transparent framework conditions has been stopped”, the statement continued. “And this while at the same time we are engaged in a strategic dialog about the future of the automotive industry.” It will be interesting to see how Virkkunen reacts to the broadsides.
Have a good start to the week.
The shock of Munich and the announcements made by the US administration over the last few days are still having an impact. Initially, the crisis meeting was supposed to take place on Sunday, but now Emmanuel Macron has invited people to Paris this afternoon after hectic consultations. The French President is bringing together the most important European states to discuss Europe’s security and the situation in Ukraine, Foreign Minister Jean-Noel Barrot told Radio France Inter. Following the Munich Security Conference, the Europeans must quickly position themselves on the threatened US withdrawal from Europe and Donald Trump’s Ukraine peace negotiations with Vladimir Putin, diplomats said.
In addition to Federal Chancellor Olaf Scholz, the heads of government of Poland, Spain, Italy, the Netherlands, Denmark and the UK have been invited. NATO Secretary General Jens Stoltenberg, Commission President Ursula von der Leyen and EU Council President António Costa will also be present. What is needed is a quick answer as to how Europe can quickly increase its defense spending and become more independent from the USA.
According to diplomats, the aim is also to reach a position on the question of what security guarantees the Europeans could offer in order to gain a seat at the negotiating table on Ukraine. Possible commitments for a peacekeeping force in Ukraine following a ceasefire will also be discussed. The aim of the meeting is to initiate consultations between the European heads of state and government on the situation in Ukraine and security issues in Europe, confirm EU diplomats in Brussels. The talks could then be continued in other formats with the aim of bringing together all partners interested in peace and security in Europe.
It is striking that António Costa is not inviting people to the informal meeting, as would actually be expected. The EU Council President has not responded to requests for a special summit in recent days. Unlike Emmanuel Macron, the Council President should have invited all EU member states, including Hungary and Slovakia. Head of government Viktor Orbán is close to both Vladimir Putin and Donald Trump and would have prevented a joint position.
Danish Prime Minister Mette Frederiksen is to represent the Baltic states as well as Sweden and Finland in Paris. From Emmanuel Macron’s point of view, the presence of Prime Minister Keir Starmer is essential, as the UK plays a key role in supporting Ukraine. However, the crisis summit in a small circle also caused disgruntlement. He did not know what exactly the topic of the meeting in Paris was, said Luxembourg’s head of government Luc Frieden at the security conference in Munich. Only a few states had been invited, whereas a common vision of all 27 member states was now required.
According to diplomats, time is running out because teams from the USA and Russia could begin preparations for peace negotiations on Ukraine as early as this week in Riyadh. The US President’s goal is a ceasefire by Easter. There are fears that Vladimir Putin could bring up the old demand for a neutral Ukraine with a reduced army of its own and agree on spheres of influence with Donald Trump.
Finland’s President Alexander Stubb warned against giving space to Russian fantasies of spheres of influence. According to diplomats, automatic NATO membership for Ukraine is under discussion should Russia violate a ceasefire agreement. The security of the European Union and Ukraine are interlinked, wrote EU Council President Costa on the X news service. Credible and successful negotiations or a lasting peace would not be possible without Ukraine and without the EU.
At the end of the 61st MSC, it was clear that Germany and the other major European economies would have to spend hundreds of billions of euros every year if their security and defense policymakers and the US administration’s expectations were to be met. NATO Secretary General Mark Rutte had already set a target of spending “north of three percent” of gross domestic product in order to expand the military capabilities that Europe needs to defend itself against further Russian attacks. In terms of the federal budget, this would be more than EUR 120 billion – almost two and a half times as much as the current defense budget, more than a quarter of the total budget.
In Munich, EU Commission President Ursula von der Leyen hinted at a way in which this could be achieved without plunging the eurozone states into fierce distribution conflicts: National defense spending should be exempted from the Maastricht stability criteria, the CDU politician said on the opening day of the MSC. A direction that the SPD Chancellor, who is probably in his last weeks in office, has also taken: “We must therefore reform the debt brake in our Basic Law immediately after the upcoming Bundestag elections by exempting investments in our security and defense.”
Members of his parliamentary group in Munich have openly hinted that the Union’s candidate for chancellor, Friedrich Merz, who has so far been noticeably cautious on this issue, will have to show his colors in the coalition negotiations. The pressure on the future German government is being intensified by US President Donald Trump’s disruptive foreign policy course. The Ukraine questionnaire from Washington alone, which reached the European NATO members last week, may render all previous financial and defense plans obsolete.
Immediately before a meeting between US Secretary of State Marco Rubio, National Security Advisor Mike Walz and Trump’s Middle East special envoy Steve Witkoff with their Russian counterparts in Saudi Arabia next week, the White House asked, according to dpa: How many soldiers could Germany and other allies send to Ukraine as part of peacekeeping forces after a peace deal? How many soldiers could Germany send to Ukraine for training programs after an end to the war in Ukraine? What weapons systems could Germany provide? The extent to which the answers from Europe will satisfy Trump was completely open at the end of the 61st MSC.
Trade Commissioner Maroš Šefčovič is traveling to Washington on Monday. He will meet with Secretary of Commerce Howard Lutnick, Trade Representative Jamieson Greer, and Trump’s economic advisor Kevin Hassett. The task of the EU Trade Commissioner could hardly be more demanding, as the tariffs announced by US President Trump last Thursday pose major challenges for the EU. The reciprocal tariffs attack the WTO’s “most favored nation” (MFN) principle. In addition, Trump’s focus on national trade deficits and value-added taxes threatens to introduce unequal treatment between EU states. The Commission has the Anti-Coercion Instrument (ACI) at its disposal to defend itself against attempts at coercive measures.
Trump has ordered the reports intended to determine the reciprocal tariffs to be published at the beginning of April. The Commission vows to respond quickly to tariffs. “The EU will react decisively and promptly against unjustified barriers to free and fair trade, including when tariffs are used to challenge legal and non-discriminatory measures,” the Commission said in a statement on Friday. It has left open which instruments it will use to react.
With the reciprocal tariffs, Trump is attacking the WTO’s MFN principle head-on. MFN states that a state or a federation of states must treat all trading partners equally when levying tariffs, unless otherwise agreed in a free trade agreement. Not only would the USA itself violate MFN with reciprocal tariffs, it would also make it more difficult for all other states to comply with MFN.
The EU could be affected in the automotive sector because it imposes a higher tariff on cars (10 percent) than the USA (2.5 percent). If, for example, the EU wanted to prevent reciprocal tariffs on cars by lowering the tariff for US cars, it would theoretically have to do the same for all other trading partners. According to reports in the Financial Times, the Commission is prepared to lower car tariffs.
However, it is not necessarily this direct effect of reciprocal tariffs that is most dangerous for the EU – it has relatively low tariff rates in most sectors and only little difference to the tariff rates of the USA. Countries with higher tariffs, such as India and China, will be under greater pressure. They are likely to try to redirect their exports, which could lead to crowding out in the European market and other export markets.
On Thursday, Trump cited other factors for determining the tariffs, including VAT in Europe, the US trade deficit, and unwelcome regulations. “The argument that VAT would lead to a trade imbalance is complete nonsense,” says Niclas Poitiers, trade expert at the Brussels-based think tank Bruegel.
The VAT rate varies between the member states, ranging from 17% in Luxembourg to 27% in Hungary. The trade balances with the USA also vary greatly depending on the member state (see chart below). There is a risk that the US will not impose tariffs against the EU as a trading bloc, but will treat member states differently. “I think the fact that Trump could impose different tariffs on individual member states should be taken more seriously,” says Sam Lowe, trade expert and partner at consulting firm Flint Global.
In the trade dispute between Airbus and Boeing, the US had already imposed tariffs on products from Germany and France in 2020. If the USA now wants to apply this much more broadly, this would probably have a distorting effect on the domestic market.
Bernd Lange (SPD), Chairman of Parliament’s Trade Committee, doubts that the USA can even identify which EU country a product comes from in view of the integrated European supply chains. Nevertheless, he warns against American attempts at division. “I would not see this as an economic policy consideration, but as an attempt to divide the European Union,” he told Table.Briefings.
So far, the EU has shown unity in the face of US threats. Unlike Canada and Mexico, the EU has held back with specific tariff threats. Its options for action are limited, partly because it wants to continue to abide by WTO law.
However, Trump’s focus on unpopular regulations and taxes in the EU could see the ACI applied for the first time. According to Bruegel’s trade expert Niclas Poitiers, Trump’s complaints against VAT should be seen as a pretext to further raise US tariffs in order to “force states to abolish regulations that go against the interests of a few large US companies.” According to Poitiers, the US is thus attacking a core component of the sovereignty of the EU and its member states.
With the ACI, the EU could introduce import and export restrictions, put American companies and products at a disadvantage in public procurement, or restrict the protection of intellectual property, among other things. Even if the ACI process is faster than a WTO process, the ACI Regulation requires several consultation steps between the Commission, the Council, and the third country concerned, which in practice will take several months.
Commission Vice-President Teresa Ribera wants to approve aid for climate-friendly investments until the end of 2030 under a simplified procedure, thereby also meeting a demand from the outgoing German government. Corresponding regulations from the TCTF crisis framework, which is limited until the end of the year, are to be extended for this purpose. This is the result of a draft published by Contexte. The new abbreviation for the aid framework is now CISAF, short for Clean Industry State Aid Framework.
Ribera wants to present it on Feb. 26 with the Clean Industrial Deal. According to Contexte, however, the proposal has not yet been agreed with the other commissioners. The structure corresponds to chapters 2.5, 2.6 and 2.8 of the TCTF:
Rules for non-fossil flexibilities and capacity mechanisms are new. De-risking covers aid in forms such as equity investments and guarantees, most of which were already included in the previous framework.
Non-fossil flexibilities primarily refer to batteries and a shift in consumption. Two conditions in the draft could cause displeasure in Germany. If the federal government wants to control where batteries are built, then the additional costs should be borne by the electricity consumers in the respective region. And the costs for flexibility technologies should also explicitly be co-financed by those consumers who cause the need for flexibility. The German government, on the other hand, wants to spare companies that cannot flexibilize their consumption.
An annex to the draft also contains regulations to facilitate the approval of capacity mechanisms under state aid law. Germany is reliant on this in order to build gas and hydrogen power plants as a backup for the dark doldrums. However, the current traffic light model appears to be difficult to reconcile with the ideas from Brussels. Following a lengthy consultation process, the BMWK under the leadership of Robert Habeck came out in favour of a combination of centralized and decentralized elements.
However, Ribera’s first proposal only contains two models: a strategic reserve and a market-wide capacity mechanism. Strategic reserves are designed for emergencies and are not allowed to participate in the electricity market during normal times. They are therefore unpopular with power plant operators.
However, the proposal for a market-wide capacity mechanism corresponds to a central model, according to the draft. This would have to meet 21 of a total of 27 criteria: “If some of these requirements are not met, approval would be required in accordance with the guidelines for state aid for climate, environmental protection, and energy (KUEBLL).”
This increases the likelihood that Berlin will have to have its model approved in a lengthy procedure and that the construction of the reserve power plants will drag on. In other respects too, the criteria are more of a concretization of the internal electricity market regulation than a deregulation and genuine acceleration.
Ribera wants to give natural gas a somewhat greater role in the decarbonization of industry. Plants for the generation of process heat based on natural gas are to be covered by the new aid framework as an exception if emissions are reduced by at least 60 percent.
Minor relief is also to be granted for low-carbon hydrogen – i.e. blue and red hydrogen from natural gas or nuclear energy. Its use is eligible for funding if it is mixed with green hydrogen. However, renewable hydrogen must still make up the lion’s share – either 90 percent or, if lower, the share of renewable energies in the national electricity mix plus 25 percentage points. In Germany, therefore, around 80 percent green hydrogen would currently still be sufficient. This provision is likely to meet with fierce resistance from French Commissioner Stéphane Séjourné.
