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The wind is changing in energy policy. The responsible ministers are once again discussing security of supply and Russian energy exports in Brussels today. But as far as prices are concerned, Germany and eleven other member states are calling for a change of direction. The “Friends of Renewables” wrote in a position paper on Monday that consumers and producers of renewable energy should gradually bear a higher market risk.
However, the crisis policy after 2022 was precisely aimed at shielding households and companies from the short-term ups and downs on the energy markets. With the new course, Germany and its fellow campaigners want to increase flexibility in the energy system and encourage everyone to align consumption and production more closely with the market. This is precisely what would dampen the ups and downs of prices – thus closing the circle.
However, the dispute between the renewables and nuclear energy factions is likely to be sparked primarily by hydrogen production. In another paper, France and seven fellow campaigners call on the Commission to also promote “low-carbon” hydrogen, for example from nuclear power, via the European Hydrogen Bank in the future. In view of scarce funding and the recent increase in financial requirements, this would put even more pressure on the development of green hydrogen.
I hope you enjoy reading the 800th edition of our Briefing.
Europe has one main objective in Baku. At the UN Climate Conference in November (COP29), the circle of donor countries for international climate financing is to be expanded. This was decided by the ministers responsible for climate policy on Monday at the Environment Council in Luxembourg.
Until now, the industrialized countries classified as such in the early 1990s have been paying for climate protection and adaptation measures in the Global South. According to the EU, this classification needs to be revised after three decades. Countries that have since achieved significant wealth and contribute to global warming with high greenhouse gas emissions should also be asked to pay – among them China and the oil- and gas-producing Gulf states.
At the Environment Council, the EU states set out their official negotiation position for COP29. Among other things, it states:
However, the EU countries do not want to name a specific figure for the European contribution to the NCQG (New Collective Quantified Goal) for tactical reasons. They fear that their goal of expanding the circle of donor countries could fail if they commit to a specific sum now. Sven Harmeling, Head of Climate at Climate Action Network Europe (CAN Europe), does not consider this strategy effective. “It is building an additional front”, he says.
In an interview with Table.Briefings, Harmeling criticizes that the EU lacks a clear strategy on how to win others as donor countries or get them to disclose their contributions to climate financing. At the same time, the EU must also clearly state that it bears the main responsibility for climate financing.
The NCQG is the successor to the currently valid $100 billion goal, under which industrialized countries pay developing countries. “As long as the industrialized countries do not make it clear that they will go higher than the $100 billion this time, they should not set any conditions themselves”, Harmeling argues. He believes that their unwillingness to continue the $100 billion – and potentially contributing even less – neither reflects the global economy nor does it honor the historical responsibility of industrialized nations. Even the US has designated the $100 billion per year as a minimum for the NCQG. “Europe should signal more openness there”, demands Harmeling.
The reasons for Europe’s lack of openness are the challenging budgetary situations in major EU member states and the political debates over finances in their capitals. France is plagued by a massive budget deficit; in Berlin, budget disputes threaten to repeatedly fracture the governing coalition, and climate financing is declining. In Italy, priorities other than combating climate change and its financing prevail. Consequently, the EU heads to Baku weakened, especially on financial matters.
The worst-case scenario is avoided, as Climate Commissioner Wopke Hoekstra remains in office and brings considerable experience to the climate negotiations and as a financial expert. However, the Hungarian Council Presidency is not considered particularly ambitious and is likely to limit itself to its moderating role within the EU in Baku. This places even more focus on the financially strained major member states during negotiations with other countries in Baku.
“In the best-case scenario, the EU will have a strategy by the time of the COP on how far it can go in climate financing, both through public funding and development banks”, says Harmeling. Should the EU abandon its hard line on expanding the circle of donor countries, other nations might agree to disclose their climate financing and initiate a longer-term process to broaden the donor base, he believes.
Although no such strategy is hinted at in the official conclusions of the EU member states, Climate Commissioner Hoekstra said on Monday evening that they want to ensure that more money from public and private sources is available for the neediest countries. Whether this will succeed remains to be seen. The current geopolitical situation creates a complicated negotiation scenario. Also, the positions of the COP participant countries are still, in some cases, very far apart, according to Hoekstra.
A failure of the COP in Baku, similar to Copenhagen in 2009, would harm the EU above all, says Harmeling. “The European public is still relatively highly sensitized to these issues.”
Public procurement is actually an obvious instrument of industrial policy. When government budgets are tight and regulations are difficult to change, public procurement is the only way to shape the economy. The European market for public procurement amounts to around 14 percent of GDP. Nevertheless, the EU still makes little use of this instrument. As a general rule, the most favorable bidder is awarded the contract.
This is set to change in the new Commission. Ursula von der Leyen had already announced in her political guidelines that she would make greater use of public procurement. In her mission letter for the designated Commission Vice-President Stéphane Séjourné, she instructs him to revise the guidelines for public procurement “to ensure security of supply for a number of important technologies, products and services”.
In addition, the rules are to be simplified and the administrative burden reduced. The reform “should enable a preference for European products in public procurement in certain strategic sectors and technologies”, according to the mission letter.
In principle, it is already possible to take qualitative criteria into account in public procurement. However, the relevant Article 67 in the Public Procurement Directive is worded very loosely. According to Kerstin Jorna, Director General of DG GROW, this complexity creates uncertainty. Many local authorities and other administrative units do not have the resources to deal with the possibilities of the regulation in detail. This is why they usually simply choose the cheapest offer to be on the safe side, said Jorna at a conference of the economic policy think tank Bruegel in September. DG GROW has the main responsibility for preparing the reform.
In Germany, the BMWK is working on a procurement transformation package. The aim is similar: simplification for administration and SMEs and support for innovative, green business. The announcement of the package does not mention any European preference, but the reform is intended to make it possible to exclude “companies from certain third countries in critical areas”.
While the German public procurement transformation package applies to smaller public contracts, the EU directive defines the rules that public procurement above defined contract value thresholds must follow.
Behind the reform efforts lies the industrial policy concern to create demand for European suppliers of innovative and ecological technologies. One of the reasons for the lack of investment in Europe is the lack of certainty that there is a market for the new products, for example green steel. “Competitiveness depends very much on future market growth”, says André Wolf from the Center for European Policy (CEP). Demand from the public sector, for example for infrastructure projects, is intended to counteract this uncertainty and create “green lead markets”.
The USA and China have been using this strategy for some time by giving preference to domestic suppliers. The EU has so far shied away from this because an explicit preference would not be WTO-compatible. Instead, it is taking the detour via resilience criteria.
Resilience criteria do not stipulate that products must originate from the EU, but that dependencies on critical technologies should be reduced. The EU has introduced such criteria for net zero technologies in the Net Zero Industry Act (NZIA). In the case of technologies for which the EU is highly dependent (over 50 percent of imports) on a single third country, publicly tendered net zero projects must also take into account the contribution of the individual applications to eliminating this import dependency.
However, it is unclear exactly how resilience is to be calculated and taken into account. “There are still at least two implementing acts to come, which we hope will clarify this”, says Wolf, who wrote a study on the resilience criteria in the NZIA for the CEP. “Because it’s not entirely clear to us at first.”
This highlights a problem that public procurement reform also has to overcome. If the EU wants to promote European industry, but wants to make this WTO-compliant, there is a risk of complex regulations that make life difficult for companies and administrations. Industrial policy, WTO conformity and simplification form a trilemma that will not be easy to overcome.
In addition, it is not just industry that has demands. Trade unions, for example, are calling for social criteria such as collective bargaining coverage to be used much more explicitly as relevant qualitative criteria in public procurement. There are also calls for ecological criteria to be given greater consideration.
In diplomatic circles, the Commission is expected to launch a public consultation on the public procurement reform at the end of 2024 or the beginning of 2025. The Commission’s subsequent legislative proposal is expected to be part of the Commission’s work program for 2025.
Marta Kos comes from a country that stands for the early success of the EU enlargement process. The Slovenian wants to build on this success story if the EU Parliament confirms her as Commissioner for Enlargement at the hearings in November.
The Slovenian will also coordinate the reconstruction of Ukraine with international partners, as stated in the mission letter.
She will work intensively with Ukraine, Georgia, Moldova, Turkey and the Western Balkan states to realize their “European perspective” through to full accession, said Kos. Enlargement has been the EU’s most successful foreign policy, bringing peace, stability, prosperity and new opportunities for all Europeans. This is more important than ever in the current geopolitical environment, in which Russia has invaded Ukraine and brought the war to Europe.
Marta Kos will be the sixth Commissioner for Enlargement since the EU promised all former Yugoslav republics and Albania the prospect of accession in Thessaloniki in 2003. However, since Croatia’s accession a good ten years ago, none of the candidate countries have managed to become part of the EU. This calls into question the credibility of the process.
The Russian war of aggression against Ukraine has brought enlargement policy back into focus, but fresh impetus is urgently needed after five years with Olivér Várhelyi. The relief at the change from Viktor Orbán’s governor to the geopolitically less exposed post of Health Commissioner is not only great in Brussels. After all, the Enlargement Commissioner does not come from a country that itself has a problem with the fundamental values of the EU, according to one diplomat.
For Slovenia to succeed, the member states must also play their part. The negotiations with North Macedonia, for example, are not progressing due to Bulgaria’s blockade policy. Kos will also have to invest a lot of energy in convincing the candidate countries of the necessary reforms. Recently, there have been more setbacks than progress in certain Balkan states. If she is lucky, she will be able to welcome Montenegro as the 28th EU member state before the end of her mandate.
Kos has not held any executive office to date. The trained journalist was a government spokesperson and co-owner of a management consultancy firm, among other things, before becoming Slovenia’s ambassador to Germany in 2013, with responsibility for Latvia as well. In Berlin, she ensured, among other things, that her home country was no longer confused with Slovakia.
In 2017, she moved to the post of ambassador in Bern, where she met her husband, the then Swiss diplomat Henri Gétaz. In 2022, she became one of the vice presidents of Prime Minister Robert Golob’s Svoboda party and stood as a candidate for his new green-liberal movement in the presidential elections, but withdrew during the election campaign in a dispute with the party founder. The conflict with Robert Golob has now been resolved, according to reports in Ljubljana.
Allegations of bullying led to her premature departure from his ambassadorial post in Switzerland in 2020. The issue could come up at the hearing in the European Parliament. Observers speak of politically motivated proceedings launched by populist Janez Janša, who was temporarily back as head of government at the time. The same applies to allegations of links to the former Yugoslavian secret service Udba.
There are also likely to be critical questions at the hearing about Kos’ role as Senior Advisor at Kreab in Brussels, one of the largest consulting firms for which she worked since 2023. Marko Makovec from Slovenia, a senior civil servant at the European External Action Service and designated as Head of Cabinet, is helping to prepare for the hearings as part of the transition team. Stephan Israel
The wind is changing in energy policy. The responsible ministers are once again discussing security of supply and Russian energy exports in Brussels today. But as far as prices are concerned, Germany and eleven other member states are calling for a change of direction. The “Friends of Renewables” wrote in a position paper on Monday that consumers and producers of renewable energy should gradually bear a higher market risk.
However, the crisis policy after 2022 was precisely aimed at shielding households and companies from the short-term ups and downs on the energy markets. With the new course, Germany and its fellow campaigners want to increase flexibility in the energy system and encourage everyone to align consumption and production more closely with the market. This is precisely what would dampen the ups and downs of prices – thus closing the circle.
However, the dispute between the renewables and nuclear energy factions is likely to be sparked primarily by hydrogen production. In another paper, France and seven fellow campaigners call on the Commission to also promote “low-carbon” hydrogen, for example from nuclear power, via the European Hydrogen Bank in the future. In view of scarce funding and the recent increase in financial requirements, this would put even more pressure on the development of green hydrogen.
I hope you enjoy reading the 800th edition of our Briefing.
Europe has one main objective in Baku. At the UN Climate Conference in November (COP29), the circle of donor countries for international climate financing is to be expanded. This was decided by the ministers responsible for climate policy on Monday at the Environment Council in Luxembourg.
Until now, the industrialized countries classified as such in the early 1990s have been paying for climate protection and adaptation measures in the Global South. According to the EU, this classification needs to be revised after three decades. Countries that have since achieved significant wealth and contribute to global warming with high greenhouse gas emissions should also be asked to pay – among them China and the oil- and gas-producing Gulf states.
At the Environment Council, the EU states set out their official negotiation position for COP29. Among other things, it states:
However, the EU countries do not want to name a specific figure for the European contribution to the NCQG (New Collective Quantified Goal) for tactical reasons. They fear that their goal of expanding the circle of donor countries could fail if they commit to a specific sum now. Sven Harmeling, Head of Climate at Climate Action Network Europe (CAN Europe), does not consider this strategy effective. “It is building an additional front”, he says.
In an interview with Table.Briefings, Harmeling criticizes that the EU lacks a clear strategy on how to win others as donor countries or get them to disclose their contributions to climate financing. At the same time, the EU must also clearly state that it bears the main responsibility for climate financing.
The NCQG is the successor to the currently valid $100 billion goal, under which industrialized countries pay developing countries. “As long as the industrialized countries do not make it clear that they will go higher than the $100 billion this time, they should not set any conditions themselves”, Harmeling argues. He believes that their unwillingness to continue the $100 billion – and potentially contributing even less – neither reflects the global economy nor does it honor the historical responsibility of industrialized nations. Even the US has designated the $100 billion per year as a minimum for the NCQG. “Europe should signal more openness there”, demands Harmeling.
The reasons for Europe’s lack of openness are the challenging budgetary situations in major EU member states and the political debates over finances in their capitals. France is plagued by a massive budget deficit; in Berlin, budget disputes threaten to repeatedly fracture the governing coalition, and climate financing is declining. In Italy, priorities other than combating climate change and its financing prevail. Consequently, the EU heads to Baku weakened, especially on financial matters.
The worst-case scenario is avoided, as Climate Commissioner Wopke Hoekstra remains in office and brings considerable experience to the climate negotiations and as a financial expert. However, the Hungarian Council Presidency is not considered particularly ambitious and is likely to limit itself to its moderating role within the EU in Baku. This places even more focus on the financially strained major member states during negotiations with other countries in Baku.
“In the best-case scenario, the EU will have a strategy by the time of the COP on how far it can go in climate financing, both through public funding and development banks”, says Harmeling. Should the EU abandon its hard line on expanding the circle of donor countries, other nations might agree to disclose their climate financing and initiate a longer-term process to broaden the donor base, he believes.
Although no such strategy is hinted at in the official conclusions of the EU member states, Climate Commissioner Hoekstra said on Monday evening that they want to ensure that more money from public and private sources is available for the neediest countries. Whether this will succeed remains to be seen. The current geopolitical situation creates a complicated negotiation scenario. Also, the positions of the COP participant countries are still, in some cases, very far apart, according to Hoekstra.
A failure of the COP in Baku, similar to Copenhagen in 2009, would harm the EU above all, says Harmeling. “The European public is still relatively highly sensitized to these issues.”
Public procurement is actually an obvious instrument of industrial policy. When government budgets are tight and regulations are difficult to change, public procurement is the only way to shape the economy. The European market for public procurement amounts to around 14 percent of GDP. Nevertheless, the EU still makes little use of this instrument. As a general rule, the most favorable bidder is awarded the contract.
This is set to change in the new Commission. Ursula von der Leyen had already announced in her political guidelines that she would make greater use of public procurement. In her mission letter for the designated Commission Vice-President Stéphane Séjourné, she instructs him to revise the guidelines for public procurement “to ensure security of supply for a number of important technologies, products and services”.
In addition, the rules are to be simplified and the administrative burden reduced. The reform “should enable a preference for European products in public procurement in certain strategic sectors and technologies”, according to the mission letter.
In principle, it is already possible to take qualitative criteria into account in public procurement. However, the relevant Article 67 in the Public Procurement Directive is worded very loosely. According to Kerstin Jorna, Director General of DG GROW, this complexity creates uncertainty. Many local authorities and other administrative units do not have the resources to deal with the possibilities of the regulation in detail. This is why they usually simply choose the cheapest offer to be on the safe side, said Jorna at a conference of the economic policy think tank Bruegel in September. DG GROW has the main responsibility for preparing the reform.
In Germany, the BMWK is working on a procurement transformation package. The aim is similar: simplification for administration and SMEs and support for innovative, green business. The announcement of the package does not mention any European preference, but the reform is intended to make it possible to exclude “companies from certain third countries in critical areas”.
While the German public procurement transformation package applies to smaller public contracts, the EU directive defines the rules that public procurement above defined contract value thresholds must follow.
Behind the reform efforts lies the industrial policy concern to create demand for European suppliers of innovative and ecological technologies. One of the reasons for the lack of investment in Europe is the lack of certainty that there is a market for the new products, for example green steel. “Competitiveness depends very much on future market growth”, says André Wolf from the Center for European Policy (CEP). Demand from the public sector, for example for infrastructure projects, is intended to counteract this uncertainty and create “green lead markets”.
The USA and China have been using this strategy for some time by giving preference to domestic suppliers. The EU has so far shied away from this because an explicit preference would not be WTO-compatible. Instead, it is taking the detour via resilience criteria.
Resilience criteria do not stipulate that products must originate from the EU, but that dependencies on critical technologies should be reduced. The EU has introduced such criteria for net zero technologies in the Net Zero Industry Act (NZIA). In the case of technologies for which the EU is highly dependent (over 50 percent of imports) on a single third country, publicly tendered net zero projects must also take into account the contribution of the individual applications to eliminating this import dependency.
However, it is unclear exactly how resilience is to be calculated and taken into account. “There are still at least two implementing acts to come, which we hope will clarify this”, says Wolf, who wrote a study on the resilience criteria in the NZIA for the CEP. “Because it’s not entirely clear to us at first.”
This highlights a problem that public procurement reform also has to overcome. If the EU wants to promote European industry, but wants to make this WTO-compliant, there is a risk of complex regulations that make life difficult for companies and administrations. Industrial policy, WTO conformity and simplification form a trilemma that will not be easy to overcome.
In addition, it is not just industry that has demands. Trade unions, for example, are calling for social criteria such as collective bargaining coverage to be used much more explicitly as relevant qualitative criteria in public procurement. There are also calls for ecological criteria to be given greater consideration.
In diplomatic circles, the Commission is expected to launch a public consultation on the public procurement reform at the end of 2024 or the beginning of 2025. The Commission’s subsequent legislative proposal is expected to be part of the Commission’s work program for 2025.
Marta Kos comes from a country that stands for the early success of the EU enlargement process. The Slovenian wants to build on this success story if the EU Parliament confirms her as Commissioner for Enlargement at the hearings in November.
The Slovenian will also coordinate the reconstruction of Ukraine with international partners, as stated in the mission letter.
She will work intensively with Ukraine, Georgia, Moldova, Turkey and the Western Balkan states to realize their “European perspective” through to full accession, said Kos. Enlargement has been the EU’s most successful foreign policy, bringing peace, stability, prosperity and new opportunities for all Europeans. This is more important than ever in the current geopolitical environment, in which Russia has invaded Ukraine and brought the war to Europe.
Marta Kos will be the sixth Commissioner for Enlargement since the EU promised all former Yugoslav republics and Albania the prospect of accession in Thessaloniki in 2003. However, since Croatia’s accession a good ten years ago, none of the candidate countries have managed to become part of the EU. This calls into question the credibility of the process.
The Russian war of aggression against Ukraine has brought enlargement policy back into focus, but fresh impetus is urgently needed after five years with Olivér Várhelyi. The relief at the change from Viktor Orbán’s governor to the geopolitically less exposed post of Health Commissioner is not only great in Brussels. After all, the Enlargement Commissioner does not come from a country that itself has a problem with the fundamental values of the EU, according to one diplomat.
For Slovenia to succeed, the member states must also play their part. The negotiations with North Macedonia, for example, are not progressing due to Bulgaria’s blockade policy. Kos will also have to invest a lot of energy in convincing the candidate countries of the necessary reforms. Recently, there have been more setbacks than progress in certain Balkan states. If she is lucky, she will be able to welcome Montenegro as the 28th EU member state before the end of her mandate.
Kos has not held any executive office to date. The trained journalist was a government spokesperson and co-owner of a management consultancy firm, among other things, before becoming Slovenia’s ambassador to Germany in 2013, with responsibility for Latvia as well. In Berlin, she ensured, among other things, that her home country was no longer confused with Slovakia.
In 2017, she moved to the post of ambassador in Bern, where she met her husband, the then Swiss diplomat Henri Gétaz. In 2022, she became one of the vice presidents of Prime Minister Robert Golob’s Svoboda party and stood as a candidate for his new green-liberal movement in the presidential elections, but withdrew during the election campaign in a dispute with the party founder. The conflict with Robert Golob has now been resolved, according to reports in Ljubljana.
Allegations of bullying led to her premature departure from his ambassadorial post in Switzerland in 2020. The issue could come up at the hearing in the European Parliament. Observers speak of politically motivated proceedings launched by populist Janez Janša, who was temporarily back as head of government at the time. The same applies to allegations of links to the former Yugoslavian secret service Udba.
There are also likely to be critical questions at the hearing about Kos’ role as Senior Advisor at Kreab in Brussels, one of the largest consulting firms for which she worked since 2023. Marko Makovec from Slovenia, a senior civil servant at the European External Action Service and designated as Head of Cabinet, is helping to prepare for the hearings as part of the transition team. Stephan Israel