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Hydrogen in the EU: interview with Gijsbert Wierink, founder of Plutonic Raw Materials Advisory (RMA)

In light of the ongoing geopolitical tensions and the current European energy crisis, Commission President Ursula Von Der Leyen declared that “hydrogen can be a game-changer” during her State of the European Union address. In her mission statement, she explained how investments in hydrogen are necessary to scale up the hydrogen market so it can contribute to decarbonizing the EU economy and move away from fossil fuels. The  REPowerEU plan, presented by the Commission on 18 May 2022, reflects equally ambitious plans for hydrogen, doubling the production and import of renewable hydrogen by 2030.

In order to outline the impact and feasibility of the EU’s ambitions, Dr2 Consultants interviewed Gijsbert Wierink, founder of Plutonic Raw Materials Advisory (RMA), to share his views on the recent policy developments. As an expert in strategic sustainable raw materials and supply chains, Plutonic RMA finds itself right in the midst of the proposed policy measures.

How do you see the role of hydrogen in the EU’s sustainable economy?

Smart use of hydrogen can make EU economy more sustainable. The key here is to assess the energy economy as an integrated and interdependent system.

Hydrogen can be used for different purposes, for example, to produce fertilizers and certain petrochemical products. Much of the hydrogen currently used is produced from non-renewable sources, both in terms of the raw materials and the energy needed for production. The production and use of hydrogen in these areas is associated with significant emissions of greenhouse gasses. Alternatively, green hydrogen is hydrogen that is produced using renewable energy sources and raw materials. The emissions for production and use of green hydrogen should be net-zero, or at least very close to that. For the most polluting activities, such as transportation or heavy industries like the metallurgical and materials sector, hydrogen could replace the role of energy carrier and reduction agent that is now fulfilled by hydrocarbons or coal. There are some great projects and innovations in these areas.

Building vehicles with an Internal Combustion Engine (ICE) that run on hydrogen is a good step. Such hydrogen ICE does not produce carbon dioxide (CO2), although the combustion process still generates nitrogen oxide (NOx) emissions. Hydrogen fuel cells, however, do not emit CO2 or NOx and can be a greenhouse-gas-neutral solution. Another great example of decarbonization is the use of hydrogen as a reducing agent in the metallurgical industry. In simplified terms, iron metal is made from iron ore (an oxide) by bringing it into contact with a material that has an even stronger tendency to oxidize. In most cases this is carbon, resulting in liquid iron, carbon monoxide, and carbon dioxide. Nevertheless, a leading steelmaker recently made the first fossil-free steel by using hydrogen as a reducing agent. This provides perspective, but importantly, technology needs to be adapted and scaled to meet the current demand.

There are quite a few technologies under development that could abate heavy industries and transportation. I believe there is experience and a willingness from the industry and the markets to make hydrogen work. When the European institutions can set standards and support industries and education in this area, we have a good chance of decarbonizing the European economy and beyond.

Do you believe the proposed hydrogen volumes under the REPowerEU are feasible (i.e. 20 million tons of renewable hydrogen by 2030; 50% import/50% domestic production)?

“Bloody hard, but possible”, to paraphrase the European Commission’s Vice President Frans Timmermans. There are many great challenges to addressing this forced demand for hydrogen in the production, transport, storage, and use phases. Current global hydrogen demand is around 90 million tons per year. Importantly, however, the REPowerEU refers to so-called green hydrogen. Hydrogen comes in different flavors, so to say, depending on both the raw materials and the source of energy used for the process.

On the least environmental end of the spectrum, there is black, brown, and grey hydrogen, produced from fossil materials and using fossil fuel as energy source and emissions may not be captured. On the other end of the spectrum, there is green hydrogen – produced from the electrolysis of water, using renewable energy. Water molecules (H2O) consist of two hydrogen (H) atoms and one oxygen (O) atom. The hydrogen and oxygen atoms can be split into hydrogen and oxygen gas using electricity – this is called electrolysis. Hydrogen gas is called green hydrogen when it is produced from the electrolysis of water using renewable energy.

The EU-27 annual electricity production is around 2700-terawatt hour (TWh), of which about a third comes from renewable sources. At an electrolysis efficiency of 70%, the production of one ton of green hydrogen requires about 57-megawatt hour (MWh). Here, I ignore losses due to the transport and storage of both hydrogen and electricity. Producing 10 million tons domestically would require about 571 TWh of renewable energy capacity just for electrolysis. In practice, this would mean roughly doubling the current renewable energy production capacity.

Europe has about 17% of current electrolysis capacity globally, the US about 45%, and the rest is produced mostly in the Asia Pacific. The Middle East, China, as well as Australia, are increasing their renewable energy production as well as hydrogen production rapidly. Hence, there will probably be enough global capacity for Europe to be able to import 10 million tons of green hydrogen per year by 2030. The question is whether this hydrogen will be available for import into the EU. This depends greatly on how the geopolitical landscape develops over the coming decade, as we see currently with natural gas and battery metals.

How do you think we can move the hydrogen economy from niche to scale?

I agree that scaling is key to further developing the technology and experience necessary to bring down costs. In this respect, there are many lessons to be learned, both good and bad, from the recent scaling up of solar and wind energy. Europe, and in particular Germany, has had a respectable global position in photovoltaics development and production in the past despite many challenges. One of these challenges has been that production has moved to the Asia Pacific, particularly China, and costs have been driven down. This made production and development less feasible in Europe. Nonetheless, apart from environmental concerns, we must consider the supply chain security and the geopolitics that come with the territory.

Scaling up hydrogen technology is on the one hand a technical and educational issue, where we need to promote and support companies and educational institutes to expand capacity in the EU. On the other hand, this is very much a legislative and policy issue, where the European Institutions play a crucial role. To scale up, we need consistency and stability in the investment, industrial, as well as educational arenas. Nobody will invest money or dedicate their career to something that might change in two years. This is one of the things we can learn from other renewable technologies in the past. Consistent policies and a stable investment environment are crucial to long-term success.

Perhaps not a popular and flashy way of putting it, but here boring is good. The European Union and its Member States need to build trust among the industries, the markets, and the public. Trust and stability will bring down investment risk and increase the chances of this technology scaling up and contributing to our climate goals.

In terms of raw materials necessary to produce hydrogen, do you believe the EU’s ambitions are feasible?

To produce green hydrogen, we need electrolyzers and renewable energy capacity, both of which require a dramatic increase.

Many of the raw materials needed to produce green hydrogen are in limited supply in Europe or are so-called critical materials, materials that are subject to supply risk and are not easily substituted. The main types of electrolyzers are alkaline (AEL), proton membrane exchange (PEM), and solid oxide (SOEL) electrolyzers. Generally, these technologies require membranes and electrodes that are made from critical materials including platinum, palladium, iridium, nickel, and aluminum for the electrodes and graphite, titanium, and others for membranes. Furthermore, metals such as copper, aluminum, and tin are necessary for connections and the electric grid.

Besides, the technologies used to produce renewable energy including wind turbines, solar cells, hydropower, and other technologies, require a wide variety of special metals and minerals, which are often not available in sufficient amounts in Europe for the dramatic expansion in renewable energy capacity needed. Examples of these materials include silicon, tellurium, germanium, boron, indium, and gallium for photovoltaic cells. Production of wind turbines requires boron, niobium, and others. Most of the above renewable energy sources require so-called Rare Earth Elements (REEs). REEs are a group of 17 special metals and are needed to produce, for example, the permanent magnets in windmills and electric motors.

Clearly, we will need to significantly improve European control over critical raw materials supply. This means a more engaged foreign policy and collaboration with producing countries, as well as improving processing and recycling capacity and knowledge in Europe. The European Union and its Member States are currently focused on crucial areas, such as improving and promoting raw materials education, supporting renewable energy and battery companies, and investing in research, aimed to make the processing capacity in Europe more feasible. I believe this is possible in Europe. The important and challenging part will be to do all this in a fast, coordinated and aligned way.

Do you have any advice for other organizations or companies which might also see threats and/or opportunities with the EU’s ambitions for hydrogen?

I believe it is important to look at such problems and possible solutions on a systemic level. The last thing you want is to do good in one area and damage our environment, society, or economy in another area. At the same time investment risk is another concern. You do not want to invest in one area and have a problem in a few years, such as many farmers recently experienced.

Realism, collaboration, and a systemic approach. The main driver for the hydrogen economy in the EU comes from the European Green Deal and its latest addition REPowerEU. There are amazing opportunities in the hydrogen economy, and these can be realized by an integrated and multipronged approach. I believe that industry, educational institutes, and policymakers want REPowerEU to be a success. An integrated approach can be realized with strong integration between policy, industry, and education. We need to speak with each other and listen. We must keep our eyes on the greater goals – reducing the effects of climate change and sustaining a democratic and autonomous Europe.

Anyone interested in contributing to and benefiting from the hydrogen economy can engage with the R&D community and industrialization of green hydrogen. Such strong collaboration can create momentum that would be hard to generate alone. The European Institute of Innovation and Technology (EIT) provides a great set of platforms for this through a range of so-called Innovation Communities in the areas of raw materials, manufacturing, energy, and more. Other specific organizations include Hydrogen Europe, the European Clean Hydrogen Alliance, H2 Forum, and many others at European and Member State levels.

The key message is to take action and to take action together.

Is your business fit for the energy transition?

The EU’s ambition to reduce emissions and reduce dependence on fossil energy sources, especially driven by the on-going energy crisis, will impact all businesses operating in the EU but also offer opportunities for more sustainable energy consumption.

Dr2 Consultants offers tailor-made solutions to navigate the evolving policy environment at EU level and anticipate the impact of the energy transition on your organization.

For more information on Dr2 Consultants’ full range of services, do not hesitate to contact us.

About Gijsbert Wierink

Gijsbert Wierink is the founder of Plutonic RMA and has over 15 years of experience in mineral processing and recycling, innovation management, and mathematical modeling. He combines a high level of technical knowledge in raw materials processing with an analytical approach and international business experience.

Over the past decades, raw materials have become critical raw materials, requiring an understanding of both the benefits and risks of working with such materials. Through his knowledge, Gijsbert advices organizations on the potential benefits and risks, helping them create a strategy that gives them control over their objectives. 

European Cyber Resilience Act: can new requirements for products strengthen your organization’s cybersecurity resilience?

On 15 September, the European Commission published a Cyber Resilience Act (CRA), which aims at setting common cybersecurity standards for connected devices and services. The European Union has long been taking action against cybercrime. Following up on its path to the digital decade to deliver on the EU’s digital transformation by 2030, this regulation seeks to protect consumers and the market from cyber incidents. Being a package of rules that should embed digital security in Europe, it also includes two guidelines: one on networks and information systems (NIS), which aims to improve Member States’ cybersecurity capabilities and encourages information sharing while the other one being the Cybersecurity Act, which entered into force in 2021 and defines the tasks of European cyber watchdog, ENISA. 

With this blog post, Dr2 Consultants is happy to provide an overview of the main implications and opportunities for European businesses, focusing on: 

  • The objectives of the legislation. 
  • The implications for providers of digital products and connected services. 

Read our summary below and if you want to have an in-depth view of the content of the proposal, you can check here our detailed analysis.

What’s the objective of the European Cyber Resilience Act?

As different economic sectors have become more dependent on digital technologies in executing their businesses, the opportunities that digital connectivity brings also expose economies to cyber threats. The amount, complexity, scale, and impact of cybersecurity events are also growing. When everything is connected, a cybersecurity incident can affect an entire system, disrupting many economic and social activities. The Cyber Resilience Act introduces rules to protect digital products that are not covered by any previous regulation. This way, it will be the first (‘the Internet of Things or IoT) legislation in the world. 

First communicated by European Commission President Ursula von der Leyen in her State of the Union Address in September 2021, the Cyber Resilience Act seeks to establish common cybersecurity rules for digital products and associated services that are placed on the EU market. Von der Leyen emphasized the growing importance of cybersecurity and called on Europe to properly address cyber threats and to become a leader in cyber defence. “With the economy and society relying more and more on digital solutions, it is crucial to ensure that we can defend ourselves in a world increasingly prone to the hacking of connected products and associated services”, she stated. Also, Commissioner for the Internal Market, Thierry Breton, specified his expectation for this initiative. He wished to increase Europe’s cyber defence capabilities by including defence requirements in the legislation. 

What implications will the European Cyber Resilience Act have for your business?

Dr2 Consultants has identified a number of essential requirements for hardware manufacturers, software developers, distributors and importers who place digital products or services on the EU market. The requirements proposed include: an ‘appropriate’ level of cybersecurity, the prohibition to sell products with any known vulnerability, security by default configuration, protection from unauthorised access, limitation of attack surfaces, and minimisation of incident impact. 

EU Data Policy Services

Furthermore, two categories for critical products are listed: 

  1. The first category includes browsers, password managers, antiviruses, firewalls, virtual private networks (VPNs), network management, systems, physical network interfaces, routers, and chips used for entities falling under the NIS2.  Moreover, it also includes all operating systems, microprocessors and industrial IoT not covered in class II.
  2. The second category includes higher-risk products such as desktop and mobile devices, virtualised operating systems, digital certificate issuers, general purpose microprocessors, card readers, robotic sensors, smart meters and all IoT, routers and firewalls for industrial use.  

The main difference between the two categories is the compliance process. Moreover, the commission asks manufacturers to perform regular tests to identify vulnerabilities in their products. Lastly, Member States would also have to put in place market surveillance bodies. The penalties for non-complying with the requirements can amount to €15 million or 2.5% of the annual turnover. 

Stakeholder reactions

In H1 2022, the Commission launched a public consultation and call for evidence on the Cyber Resilience Act open until 25 May 2022. The first overall reactions from the industry and other stakeholders to this initiative were positive. Consumers expect the products they purchase to be safe and secure. Hence, creating greater awareness of the importance of these security requirements in products will result in customers considering key security criteria when making purchasing decisions.  

However, to avoid confusion, the industry also warned that the legislation should encompass a clear definition, considering differences in the development, functionality, and use of digital products. Different sectors also ask the Commission that it should consider existing vertical legislation for specific sectors and/or product groups. Adding essential cybersecurity requirements risks excluding SMEs from the market. Businesses also need to know exactly what kind of technical specifications they must comply with to ensure adherence to CRA obligations. For instance, app developers warn of the extra costs in maintaining a cyber-resilient environment for the benefit of consumers. They prefer guidelines or recommendations. 

Next steps

A new call for feedback on the proposed legislation is open until 15 November. In the meantime, it is not yet known which European Parliament’s committee will lead this file. However, either the Internal Market and Consumer Protection Committee (IMCO) or the Industry, Research and Energy Committee (ITRE) are expected to be asked to take the lead. While, for the Council of the EU, EU ministers will meet to discuss the file for the first time on 6 December.  

Dr2 Consultants will follow the legislative developments very closely, and thanks to its expertise and wide range of clients in the digital sector, Dr2 Consultants is expertly placed to assist your company in identifying the impact of and leveraging the opportunities offered by the Cyber Resilience Act. 

Would you like to know more about how your organization can make the most out of this regulation? Subscribe to Dr2 Consultants’ newly launched service for EU data-related policies or get in touch with our Managing Partner Jasper Nagtegaal. 

European Data Act: a harmonized framework for accessing and sharing data

On 23 February 2022, the European Commission published the long-awaited “Data Act”, which is a proposal for regulation to establish a harmonized framework for industrial, non-personal data sharing in the European Union.

The European Data Act will make more data available for use and will set up rules on who can use and access what data, for which purposes across all economic sectors in the EU. According to the Commission, the new rules are expected to create €270 billion of additional GDP by 2028.

In concrete terms, the Commission proposes:

  1. Improved access to private sector data for the public sector (B2G);
  2. Fairness of data access and use in business relationships (B2B);
  3. New rules allowing customers to effectively switch between different cloud data-processing services providers.

The EU inter-institutional negotiation: plenty of changes on the plate

The inter-institutional negotiations within the Council of the EU and the European Parliament already started in the past weeks.

As far as the European Parliament is concerned, it endorsed the allocation of competences between its committees on 30 June, after more than four months of internal discussions and bounces. In the final shape, the competences have been attributed as follows:

  • MEP Pilar del Castillo Vera (EPP, ES) in the Industry, Research and Energy (ITRE) Committee is in charge of drafting a report,
  • Adam Bielan (ECR, PL) in the Internal Market and Consumer Protection (IMCO) Committee has shared competences on the entire file, plus exclusive competences on Articles 23, 24, 25 and 26, as well as Recitals 70 until 76,
  • Sergey Lagodinsky (Greens, DE) in the Civil Liberties, Justice and Home Affairs (LIBE) Committee has shared competences on the entire file, plus exclusive competence on Articles 4(3), 4(6), 5(5), 5(8), 8(6), 17(2)(c), 27(3) sub-paragraph 2, 35 and 37, as well as the last sentence of Recital 63 and Recital 84,
  • and Ibán García del Blanco (S&D, ES) in the Legal Affairs (JURI) Committee has exclusive competences on Articles 1(3), 1(4), 4(5), 5(6), 5(7), 5(9), 6(1) (only on the caveat for the protection of personal data), 6(2b), 16(2), 18(5), 19(1b), 31(2a), 32(3) (only on specific cooperation mechanism of the GDPR), 33(3) and 33(4). The committee also shared competences on Articles 1-6, 8-12, 14-19 and 31-32.

Member States on the other side move much faster. Already in mid-July, the Czech Presidency of the Council of the EU tabled a partial draft compromise for discussion within the Council’s Telecommunications and Information Society Working Party of 19 July. During the debates, the scope of the European Data Act was under examination, with for example proposals to delete the mention of “moveable” products, apply the regulation only to a specific list of products, or focus on the types of data generated rather than the type of devices. Restrictions for gatekeepers were also discussed, as well as a reduction of the SME exemptions, and the obligations to make data generated by products more accessible. A second partial compromise text is expected to be discussed on 5 September.

Stakeholder reactions

Because the proposal is a horizontal legislation impacting different sectors, many stakeholders have been attempting to influence the legislative process and contribute with their views. While some organizations welcomed the text and proposed to expand the data access rights to more users, others warned that the regulation lacks horizontal specifications and common methodologies for data sharing. As evidenced during the Breakfast webinars (I, II and III) organized by Dr2 Consultants together with policymakers and testimonials from the transport and sustainability sectors, the obligation to share data might actually end up in a loss of competitiveness for the European industry, leading to unintended consequences.

EU Data Policy Services

Next steps

The European Parliament’s committees kickstarted discussions in the second week of September, and on 19 September the ITRE committee had already published its draft report. In a nutshell, the report focuses on broadening the exemptions from small to medium-sized enterprises and ensuring interoperability of cloud switching. However, the other committees still haven’t published their draft opinion.

Amendments to the draft report of the lead ITRE Committee can be tabled until 28 October. However, given the diverging stakeholder reactions and the options tabled within the Council working parties, the draft text is still a malleable piece of legislation, potentially prone to plenty of changes. The Data Act is not expected to be finalized before the end of 2022.

What’s the objective of the European Data Act?

Complementing the Data Governance Act, which aimed to increase trust and facilitate data sharing across the EU and between sectors, the Data Act’s core objective is to put users and providers – large and small – on more equal footing in terms of access to data. Concretely, Dr2 Consultants expects every actor that contributes to the generation of data should be able to access said data. This means that users will get standard access to the generated data on any of their integrated tools. These could be virtual assistants, connected home appliances and so forth. The data should be easily and freely accessible and shareable with third parties.

The proposal is based on the results of an open public consultation carried out by the European Commission in 2021, which showed that an EU action is needed on business-to-government (B2G) data sharing for the public interest, especially for emergencies and crisis management, prevention and resilience. For the past three months, the Commission has been working to address certain concerns regarding the necessary legal clarity to B2G data sharing. In the proposal, the Commission appears to have tried to limit mandatory B2G data sharing to cases in which an ‘exceptional need’ exists.

What implications will the European Data Act have for your business?

A piece of horizontal legislation, the Data Act will apply to device manufacturers, providers of digital services and connected products (such as ‘the Internet of Things or IoT) as well as public authorities in the EU. Dr2 Consultants advises businesses to pay close attention to the developments in the coming months.

The proposed legislation mandates data sharing requirements to allow data sharing among businesses, public authorities and users. SMEs are exempted from these obligations, but overall the requirements imply that the European Commission has opted for a one-size-fits-all solution that compels all businesses to adapt.

Certain limits will be put in place to guarantee that third party access to shared data remains safe and harmless to the parties involved. This entails agreed upon measures to protect confidentiality, privacy and trade secrets as well as restrictions of the use of the data by market competitors of the data holder.

Neither data holders nor third parties will be allowed to influence or prevent the user’s data sharing behaviour in any coercive, manipulative or technical way. Only micro and small companies will be excluded from these strict guidelines if they’re independent from other companies.

In particular, providers with a significant position in the market will be labelled as gatekeepers within the market. Such actors will be subject to more specific restrictions, as third parties are not allowed to share data with these gatekeepers, nor are gatekeepers allowed to request access to these data.

Specific attention goes out to the risk of non-EU countries gaining access to data. The European Data Act goes beyond current restrictions regarding the transfer of personal data outside the EU by extending such restrictions to non-personal data. Only when an international agreement is in place will court orders from third countries be adhered to. This is relevant keeping in mind the ongoing efforts of the US and the EU to reach such an agreement.

Furthermore, the draft sets out provisions to ensure interoperability and cloud switching and safeguards for international data transfers. The previous SWIPO initiative for cloud-switching was deemed insufficient for this purpose as the Commission now opts for binding measures. The goal will be functional equivalence when moving software to another cloud platform. This means required compatibility of interfaces and platforms with all other services. Proper interoperability is essential for fair competition to function in the digital data market. To realistically strive for interoperability, a degree of harmonized standards among cloud services will be necessary. European standardisation organisations will be approached for this purpose, possibly accompanied with a mandatory implementing act if necessary.

What does the European Data Act mean for you?

Because of the targets of the proposed regulation, which range from service providers and gatekeepers to device manufacturers, companies and public authorities, the Data Act will have implications of data sharing, interoperability standards and cloud switching for many industries and sectors of the society.

Dr2 Consultants closely follows legislative developments regarding the Data Act and other data-related policy issues. Thanks to its expertise and wide range of clients in the digital sector, Dr2 Consultants is expertly placed to assist your company in identifying the impact of and leveraging the opportunities offered by the Data Act.

Would you like to know more about how your organization can make the most out of the data regulation? Subscribe to Dr2 Consultants’ newly launched service for EU data-related policies, or get in touch with our Managing Partner Jasper Nagtegaal.

 

Digital Services Act

Digital Services Act proposal: the start of a new era in digital regulation

On 5 July, the plenary session of the European Parliament approved the inter-institutional agreement with the Council of the EU on the Digital Services Act (DSA). The DSA has the goal to create a comprehensive set of new rules for all digital services, including social media, online marketplaces, and other online platforms that operate in the European Union, and it introduces new binding, harmonized, EU-wide obligations which will have a significant impact on a wide range of digital services that connect consumers to goods, services and content.

The inter-institutional agreement establishes the principles of what should be illegal offline, should also be illegal online, which results in certain new obligations for providers of digital services and online platforms. The obligations include new measures to prevent illegal content and to increase traceability and accountability of traders on online marketplaces. To further enable correct practices measures for more transparency of platforms with regards to their content moderation and algorithms will be introduced, as well as bans on misleading practicing and dark patterns.

With this blog post, Dr2 Consultants aims to shed light on some of the main provisions of the Digital Services Act and their subsequent impact on businesses.

What implications could the Digital Services Act proposal have for your organization?

The rules proposed by the DSA are designed asymmetrically: On the one hand, SMEs will have obligations proportionate to their ability and their role, size and impact in the online ecosystem while ensuring they remain accountable. On the other hand, very large online platforms that reach more than 10% of the EU’s population (45 million users) monthly in average will be considered systemic in nature and with a significant societal impact, hence, they will be subject to specific and stricter obligations.

The DSA will target the intermediary services offering network infrastructure (such as internet access providers and domain name registrars), hosting services (like cloud and webhosting services), and online platforms (such as online marketplaces, app stores, collaborative economy platforms and social media platforms).

Numerous businesses affected by the new rules

Dr2 Consultants identifies some of the main issues that could impact businesses. All online intermediaries offering their services in the EU Single Market, regardless whether they are established in the EU or outside, will have to comply with the new rules and they will have obligations in terms of transparency, fundamental rights protection, and cooperation with national authorities.

The inclusion of the requirement for non-EU companies to have a legal representative in the EU, while being burdensome for such companies, has so far been accepted positively by European players as it would ensure a level playing field within the Single Market. Relating to the fines for the violation of rules, the issue has been raised that the threat of significant fines for non-compliance might lead to preventive removal of content, which might otherwise be considered legal, putting companies in the uncomfortable position of risking fines under the Digital Services Act or being criticized for violating freedom of expression by censorship. Furthermore, there have been concerns among media stakeholders that the DSA could harm media freedom and pluralism, and therefore called for obligation of non-interference preventing platforms from jeopardizing the freedom of the press.

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Information society services, which offer a wide range of services such as search engines, cloud services and other platforms would be likewise impacted by the new rules. Specifically, search engines have been included in the scope by the Member States’ position as well as opinions issued by the European Parliament’s committees (namely ITRE and JURI).

Stricter rules for very large online platforms

More stringent obligations will apply on the largest platforms with more than 45 million monthly users: these include risk preventing measures, independent audits and more control for their users over moderation settings. Furthermore, the biggest platforms will be forced to provide greater transparency on online advertisements. Dr2 Consultants expects these extra obligations will require additional resources and raise a question about the legislative coherence between the Digital Services Act on the one hand, and provisions in for instance the recently published European Democracy Action Plan on the other hand.

Finally, gig economy companies, such as well-known travel accommodation websites, would experience significant changes as the extra requirements against illegal content and the provision of information on users would allow local authorities to require the removal of unregistered properties and receive information on hosts with outstanding tax obligations. Big European cities such as Amsterdam, Berlin and Paris adopted rules against said platforms and the Digital Services Act would allow them to enforce them.

Mixed response from stakeholders

Dr2 Consultants acknowledges that industry stakeholders’ responses to the proposal are rather mixed. On the one hand, several representatives from the industry stressed the risk that the DSA could lead to overregulation as some of the issues introduced by the proposed amendments could be already addressed taking into account the existing EU legislation (e.g., ePrivacy Directive and General Data Protection Regulation). Moreover, they highlighted the need for workable provisions and ensure a balanced legal framework. On the other hand, consumer protection groups called for further and stricter obligations for platforms, namely on the liability regime and the use of personal data for direct marketing (targeted advertising).

Next steps for the Digital Services Act

The Council is expected to formally approve the agreement in September, following this the DSA will enter into force six months after publication in the Official Journal of the EU. As the DSA is a regulation, it will apply directly in the EU Member States.

Dr2 Consultants continuously monitors the developments of the discussion on the new rules for digital services and supports its clients on these matters accordingly. If you would like to know more about this regulation or the overall legislation that the Commission will publish on the digital policy, please contact Dr2 Consultants, or visit our Digital & Tech webpage to learn more about our services.

You might also be interested in:

Data Governance Act: main elements and business implications

Tax initiatives on the digitalisation of the economy and their implications for businesses

European Commission presents “Save Gas for a Safe Winter” plan

On 20 July, the European Commission presented its emergency plan to ensure energy security for citizens and industry by saving gas in view of the upcoming winter. The proposal follows months of disruptions in energy supplies, affecting already 12 Member States across the EU.

The EU has already taken actions to reduce its dependency from Russian fossil fuels and ensure energy security, notably with the publication of the REPowerEU Plan in May, the revision of the Gas Storage Regulation and the supply agreements with international partners. With the publication of the “Save Gas for a Safe Winter” emergency plan, another step has been taken to reduce gas demand and prepare the EU for possible further disruptions in winter.

Communication on Save Gas for a Safe Winter

The Communication builds on months of gas supply interruptions and cuts of gas flow via the Nord Stream 1 pipeline (e.g., 10-day outage in July and flow reduced to 40% capacity). In this light, the Commission underlines that acting now on reducing gas demand would ensure sufficient gas storage levels (80%) and reduce economic negative impact and market pressure.

Takeaway

The proposed measures by the Commission are in line with the recent recommendations of the International Energy Agency, such as bringing down the household electricity demand by setting cooling standards and controls, and minimizing gas use in the power sector by temporarily increasing coal and oil-fired generation or by accelerating the deployment of low-carbon sources such as nuclear power.

Council Regulation on Coordinated Demand Reduction Measures for Gas

The Regulation sets a voluntary target for all Member States to reduce gas demand by 15% between 1 August 2022 and 31 March 2023. However, in case of an exceptional supply disruption, the Commission could declare a ‘Union Alert’ imposing a compulsory gas demand reduction. This will make the 15% target mandatory.

Takeaway

The package is based on the solidarity principle since some Member States (e.g. Germany) are more depended on Russian gas than others (e.g. Spain, Portugal). However, the possibility of imposing a mandatory target to cut gas use by 15% in case of supply emergency has already raised criticism from some Member States. For instance, Spain already indicated it ‘cannot support the gas usage proposal without consultations’. EU Energy Ministers will discuss the proposal during the informal Energy Council on 26 July. The approval of the Council Regulation will require a qualified majority (at least 15 Member States).

A European Gas Demand Reduction Plan

To achieve the 15% gas reduction target, the Commission’s Action Plan provides Member States with guidelines to protect households, essential users and industries from a gas shortage and help them to reduce gas demand. The main recommendations focus on the switch toward other kind of fuels (renewables but also coal, oil and nuclear), reduce heating and cooling in buildings (e.g., public awareness raising campaigns) and incentivize reduction by industry (e.g., interruptible contracts).

Takeaway

The use of coal, oil or liquified natural gas could risk putting under threat the overall long-term EU climate goals and the phase out of fossil fuels. The Commission underlines that the fuel switching measures should be designated in a way that these are temporary and do not result in a long-term fossil lock-in or endanger the decarbonization objectives of the ‘Fit for 55’ package. However, no guarantees have been put in place to ensure this.

Amendments to State aid Temporary Crisis Framework

The targeted amendments will allow Member States to set up schemes for investments in renewable energy, diversify energy supplies and expand the types of support that they can give to companies in need. For instance, state aid could support companies affected by mandatory or voluntary gas curtailment and support them for fuel switching to more polluting fossil fuels subject to energy efficiency efforts. In addition, Member States could provide aid to fill gas storages and to support companies transporting goods to and from Ukraine.

Takeaway

The relaxation of state aid measures will strive to simplify tender and permitting procedures and will increase state aid limits substantially. This will notably benefit renewable energy projects linked to the implementation of the REPowerEU objectives, such as projects that will generate clean energy, increase energy efficiency or decarbonize industrial processes.

Sustainability in the product’s introduction to market

PART II
This article is part of a series of articles on sustainability in the lifecycle of a product

Getting your product into your customers’ hands

The EU has the ambition of transitioning to a truly sustainable economy and becoming carbon neutral by 2050. Starting with the publication of the European Green Deal in 2019, the EU is adopting environmental, climate and energy legislation with a wide-ranging scope, which will impact European and international companies’ entire chain of activities, both in terms of challenges and opportunities.

In a series of articles, Dr2 Consultants is analysing the impact of EU policies on four key areas of companies’ operations: the product (pre-)development, the introduction to the market, the end-of-life, and strategy and reporting. Building on the first article on the products’ (pre)development, this article focuses on sustainability in product distribution (packaging, waste, labels, and logistical activities).

Thanks to our partner Hezelburcht, this article also offers an insight into relevant EU funding opportunities for (groups of) companies in the described areas of activities.

Designing sustainable packaging to reduce waste

The EU has been trying to reduce its packaging waste since the introduction of the Packaging and Packaging Waste Directive (PPWD) in 1994. Despite the rules for packaging waste prevention and management set by the PPWD, packaging waste per inhabitants in Europe continues to increase (in 2019, EU inhabitants generated approximately 178.1 kg of packaging waste, less than half of which was recycled. This has led the Commission to launch a revision of the PPWD. Mainly, it intends to upgrade the Directive into a Regulation directly applicable in Member States, ensuring unified packaging requirements across Member States. The proposal is expected in November 2022.

Through the revision, the Commission aims at further strengthening the sustainability of packaging and reducing packaging waste through the increase of recycling targets, the creation of binding reuse targets and the establishment of recycled plastic content targets for plastic packaging. Most importantly, the Commission aims at making mandatory that all packaging on the EU market be recyclable or reusable by 2030, getting rid of all single-use packaging.

Packaging is a key aspect of the introduction of the product on the market. The legislative framework for packaging is about to drastically change, setting stricter conditions for companies on how they package their products, promoting sustainability. Companies will have to adapt their supply chains to fit these requirements.

Moreover, EU citizens are increasingly concerned with the environmental footprint of their consumption habits, and packaging is one of the main aspects taken into consideration when purchasing consumer goods. The past years have seen an increase in consumption of more sustainable packaging, such as glass or steel packaging, against plastic packaging, but also a higher interest for packaging-less options, such as bulk buying. Companies can leverage this consumer interest and distinguish themselves from competitors by addressing packaging in their sustainability strategy.

Relevant EU funding instruments

The EU grant program LIFE – focusing on environment and climate actions – offers opportunities for projects in the field of circular economy or waste (management). LIFE projects are pilots, demonstrations or best practices of at least €1 million. LIFE calls open on a yearly basis, usually in the period April-May. The LIFE call 2022 is already open with a deadline set for deadline 4 October 2022.

The polluter pays

To encourage more sustainable packaging and reduce overall environmental impact, the European Commission is leveraging the “polluter pays” principle, which requires polluters to bear the environmental and social cost of their activities or products, rather than the wider society. This should incentivize polluters to avoid environmental damage by holding them accountable.

The 2018 PPWD introduced the polluter-pays principle with regards to packaging waste, creating a mandatory Extended Producer Responsibility for all packaging by 2024. As such, the responsibility for the financing of collection, recycling and end-of-life disposal is put on producers. To encourage the design and use of packaging that is increasingly sustainable, the financial participation is to be modulated by Member States in accordance with the  “waste hierarchy” defined in the Waste Framework Directive, which informs all packaging legislation. The waste hierarchy classifies the ways to manage waste, from the most to least sustainable: waste prevention, reuse, recycling, recovery. Disposal of the packaging should only be a last resort.

The Waste Framework Directive is currently also being revised by the Commission, and will focus on reducing waste generation through reuse of products and components and improving separate collection to avoid mixed waste, facilitating recycling or reuse.

The principle of the polluter pays is an important incentive for companies to improve the sustainability of the packaging before putting their products on the market to avoid extra costs. However, opportunities can be found in revision of key waste legislation, which will make it easier to implement reuse or recycling on packaging.

Promoting sustainability on the shelf

Another key aspect of introducing a product on the market is to create consumer interest. With consumers being concerned more and more by the environmental impact of their purchases, companies are increasingly using sustainability labels or claims on the packaging of their products or in adverts as marketing tools to attract consumers.

However, due to the plethora of existing, and more or less regulated, environmental labels in the EU and worldwide, both consumers and companies can experience difficulties in determining the reliability of a label. Additionally, environmental claims are not regulated at EU level, leading to different frameworks between Member States.

In response to greenwashing, whereby companies give an exaggerated impression of the sustainability of their products or activities, the European Commission decided to introduce an obligation for companies to substantiate these claims or justify the use of certain logos through a standardized methodology. Certain misleading claims could also be forbidden. The proposal for a Regulation on substantiating environmental claims is due to be presented in November 2022.

By making the most sustainable option more easily identifiable through this proposal, the Commission notably aims at incentivizing companies to truly enhance their environmental performance if they are to safeguard a competitive edge in a market increasingly driven by sustainability considerations. Companies will also have to take this parameter in consideration in their overall strategies, including in their marketing strategy.

Reducing CO2 emissions in distribution processes

Once a product is packaged and ready to enter the market, it must be distributed. Logistics, especially the transport of products, will be impacted by the new rules to limit emissions and boost the energy transition presented in July 2021 as part of the Fit for 55 package, another key building block of the European Green Deal. Notably, emissions from the transport sector are to be included in the EU Emissions Trading System, potentially as of 2026 for commercial vehicles. This means that companies will have to purchase carbon allowances to account for the emissions of their transport activities, increasing costs.

However, the new energy and climate legislation presented in the package will provide opportunities for companies to more easily reduce the environmental impact of their logistics operations. The revisions of the CO2 emission standards for cars and vans and of the CO2 standards for heavy-duty vehicles will decrease the amount of CO2 that newly commercialized vehicles can emit, making gradually available more and more zero-emissions vehicles. The revisions of the Renewable Energy Directive, Alternative Fuels Infrastructure Regulation and Energy Taxation Directive, by increasing the availability of renewable energies and lowering their costs, and by boosting the coverage in charging and sustainable fuel refilling stations across the EU, will also make it easier and cheaper to rely on sustainably powered transport modes.

Maritime transport is also due to improve its environmental impact, with the FuelEU Maritime legislation aiming to make the uptake of sustainable maritime fuels gradually mandatory.

In general, the EU heavily supports the uptake of new mobility solutions, especially building on the digital transition, as outlined the Smart and Sustainable Mobility Strategy. The Commission encourages the use of innovative technologies such as artificial intelligence, but also data collection and data sharing, to enhance logistical efficiency. Funding opportunities are available for companies developing projects, for example on multimodal mobility or on solutions to green the last mile, under EU funding instruments such as the Connecting Europe Facility or Horizon Europe.

Companies will therefore have to consider the environmental impact of their distribution activities, which often represent a large share of a business’ emissions. However, for companies looking to improve the sustainability of their logistics operations, many opportunities will arise from the new legislation.

Relevant EU funding instruments

There are several EU grant programs aimed at making transport more sustainable. One of these is the LIFE program mentioned earlier. Another example is Interreg (such as North Sea Region (NSR)), which offers opportunities for pilot projects in the field of zero emission mobility. Within Interreg, parties from several countries – within the respective program area – are expected to test a certain solution. The 2nd Interreg NSR call of 2022 will be opened on 1 August.

In addition, CEF Transport focuses on further improving the TEN-T (Trans-European Transport Network) and making it more sustainable. CEF Transport is a is a large EU grant program with various priorities (such as improving cross-border rail connections and increasing the modal shift within ports: shifting transport of goods from road to water and/or rail). Within this EU program, a call is opened every year; the CEF Transport call 2022 will be opened in September.

Within CEF Transport there is a separate part: AFIF (Alternative Fuels & Infrastructure Facility). AFIF focuses on the rollout of the infrastructure needed for alternative fuels – including hydrogen – within Europe (note: vehicles and vessels are eligible to a limited extent). In contrast to the regular annual CEF Transport call, AFIF concerns a combination of a CEF Transport grant and a loan (which may involve a loan from the EIB). In addition, AFIF is a rolling call with several ‘cut-off dates’ / deadlines, namely: 10 November 2022, 13 April 2023 and 19 September 2023.

Furthermore, Horizon Europe provides grant opportunities for R&D projects (including in certain cases demonstrating the outcome of research). A number of Horizon Europe calls are currently open in the area of mobility (deadline: 6 September 2022). In the period 2023-2024, several calls will again be opened concerning clean solutions for all modes of transport.

Conclusion

The new European environmental rules will have strong implications on introduction to market of products, setting a trend for more sustainable choice of packaging, restricting labelling and environmental claims, and promoting logistical activities that are environmentally friendly and respectful of human rights. Companies can leverage the EU’s twin (green and digital) transition to a zero-carbon, zero-waste economy to become a front runner in terms of sustainability.

While touched upon briefly, the next article of the “Sustainability in the lifecycle of a product” series will explore the relevant legislation impacting the product end-of life.

Curious about how EU environmental legislation applies to your company’s activities? Dr2 Consultants’ European Green Deal Impact Scan and Sustainability Consulting provide you with a comprehensive overview of how EU legislation will affect your business, identifying the opportunities and challenges and highlighting how your company’s strategic goals could be updated. Want to know more? Don’t hesitate to contact us!

Similarly, are you eager to exploit funding opportunities at EU level linked to the activities described in this article? Then do not hesitate to reach out to our partner, grant consultancy Hezelburcht!

Read also:

PART I: Sustainability in product (pre-)development

Council of the EU adopts its position on key ‘Fit for 55’ legislation

The end of June has seen major breakthroughs in the negotiations among EU Member States on the legislation part of the ‘Fit for 55’ package. In the last days of its presidency over the Council of the EU, the French managed to reach agreement on various energy and environmental legislation that are part of the climate package, namely: Renewable Energy Directive (REDIII), Energy Efficiency Directive (EED), the EU Emissions Trading System (ETS), Effort Sharing Regulation (ESR) and the CO2 emissions performance standards for cars and vans. Following the adoption of the respective General Approaches, the Council of the EU is now ready to start the negotiations with the European Parliament and the European Commission.

With the ‘Fit for 55’ initiative, the Commission aims to make the EU the world’s first climate-neutral continent by 2050 and achieve 55% emissions reduction by 2030. Ever since its publication less than a year ago, on 14 July 2021, the legislative package has caused heated debates among the co-legislators and dominated the policy agenda. Given how much is at stake for the green transition, especially in the context of the ongoing energy crisis, Dr2 Consultants aims to shed some light on the Member States’ position and the impact it will have on the businesses across the EU.

Accelerate the clean energy transition

On 27 June, the energy ministers of the 27 EU Member States reached an agreement to decarbonize the EU energy system by supporting the deployment of renewables and improving the efforts in energy efficiency and energy savings. The proposed revisions of the REDIII and EED are closely linked with the EU’s purpose to become independent from Russian energy supply, reducing energy consumption and fast-tracking the uptake of renewable energy.

The General Approach on the revision of the REDIII sets a binding EU-level target of 40% of energy from renewable sources in the overall energy mix by 2030. This objective falls short of the 45% target that the European Commission proposed on 18 May as part of the REPowerEU plan, which is also supported by the European Parliament. In addition to the EU-wide target, the Council of the EU agreed on sector-specific sub-targets for transport, industry, buildings as well as heating and cooling. Despite the increased flexibility compared to the European Commission’s proposal, several Member States underlined the need to take national differences into account in order to achieve the sub-targets and to leave room for maneuver for Member States in order to choose the most cost-effective energy mix in their countries.

Fit for 55 services

With regards to the General Approach on the EED, Member States agreed to contribute to achieving the reduction targets of 36% for final energy consumption and 39% for primary energy consumption by 2030. They will therefore have to take into account these targets in their national energy and climate plans (NECPs) setting indicative national contributions and trajectories. Specifically, Member States will need to ensure savings of 1.1% of annual final energy consumption from 2024, 1.3% from 2026, and 1.5% from 2028 to 2030.

Although the Member States stay aligned with the Commission’s proposals, they are still far away from the renewable energy targets as outlined by the Commission in its recently published REPowerEU plan. Moreover, Member States have introduced additional flexibility in the text. The European Parliament, which is scheduled to vote on the REDIII and EED during its Plenary session in September, is expected to adopt a more ambitious position. As the positions of the co-legislators are expected to diverge significantly, this might delay the informal Trilogue negotiations and as such, cause uncertainty for businesses.

Reduce carbon emissions to become a climate-neutral continent

On 29 June, following almost 16 hours of negotiations, the Member States adopted their General Approach on emissions reduction related legislation.

Following intense, behind closed doors negotiations on the EU ETS proposal, Member States agreed to retain the 61% emissions reduction target by 2030, to include a one-off reduction of the overall emissions ceiling by 117 million allowances and to increase the annual reduction rate of the cap by 4.2% per year. Moreover, the Council supported the inclusion of maritime shipping emissions in the EU ETS as well as the creation of a separate ETS for buildings and road transport sectors from 2027. As regards aviation, free allowances will be phased out gradually by 2027, while the General Approach proposes that operators using sustainable aviation fuels could receive free emissions allowances as compensation for higher prices.

To address emissions from sectors not covered by the ETS (e.g. agriculture and waste), the Council of the EU’s position on Effort Sharing Regulation supports an EU-level greenhouse gas emissions reduction target of 40% compared to 2005. The General Approach includes also reference to the need to converge all together towards the objectives and the possibility to adjust linear emissions trajectories in 2025.

Finally, as regards the proposed revision of the CO2 emissions for new cars and vans, the Member States agreed to introduce a 100% CO2 emissions reduction target by 2035 for new cars and vans – effectively phasing out the production of new combustion engines – and to raise the targets to 55% for cars and to 50% for vans by 2030.

The climate ambition to reduce net emissions would require not only investments in decarbonization but also financial support for most vulnerable households and SMEs to cope with the impact of higher carbon pricing. In this regard, the Council agreed to establish a Social Climate Fund with a maximum budget of €59 billion over the period 2027-2032, and it will coincide with the entry into force of the EU ETS for road transport and buildings.

The above key legislations are expected to shake up business operations in various sectors, as new obligations will be introduced to tackle carbon emissions and new sectors such as road transport and buildings will be included in the EU’s carbon trading market. Moreover, the internal-combustion-engine (ICE) ban for cars and vans by 2035 is a historic decision that will present a big challenge for the automotive industry. The upcoming trialogue negotiations with the European Parliament on these files will most likely focus on how to mitigate the potential negative effects of these measures on low-income households, such as higher energy prices.

 What to expect next?

On 1 July, the Czech Republic took over the rotating Council of the EU Presidency from France. Hence, the Czech Presidency will be the leading negotiator during Trilogue negotiations with the European Parliament. Dr2 Consultants had the possibility to discuss the energy priorities of the Czech Presidency beforehand with Mr. Petr Binhack, Chairman of the Energy Working Group for the Czech Presidency of the Council of the EU during an insightful webinar. The Czech Presidency would aim to close several of these Fit for 55 files, prioritizing the ones focusing on the transition towards energy efficiency and renewable energy, and achieve the short-term goals set by the REPowerEU plan.

Dr2 Consultants advises businesses to pay particular attention to the interinstitutional negotiations as the European Parliament’s starting position on these files aims at raising the ambition of the Fit for 55 package compared to the European Commission’s proposal, and especially, to the Council of the EU’s mandate.

Are you interested in what impact the Fit for 55 files will have on your company? Over the last years, Dr2 Consultants has built up a track record in advising a broad range of transport clients in navigating the EU ecosystem. Would you like to know more about what the ‘Fit for 55 Package’ means for your organization? Feel free to reach out to us or visit our Fit for 55 webpage.

We also invite you to stay up to date via Dr2 Consultants’ weekly Fit for 55 policy updates (read the latest update here and subscribe here).

Dr2 Consultants hosts third webinar on the EU Data Act with representatives of the EU Parliament and the Council

Following the publication of the EU Data Act in February 2022, Dr2 Consultants hosted a series of three Breakfast Webinars to discuss the impact of the proposal on European businesses. The last edition took place on June 16 and hosted institutional representatives to discuss the views of the European Parliament and the Council. The event was moderated by Cathy Kremer, Senior Consultant at Dr2 Consultants.

Ms. Angelica Petrov, Policy Advisor on cybersecurity and digital policy to MEP Alin Mituța, shadow rapporteur on the EU Data Act for Renew in the leading ITRE committee, and Ms. Anna-Liisa Pärnalaas, Counsellor for Digital and Cyber Affairs at the Permanent Representation of Estonia to the EU, were invited to shed light on the Data Act from an institutional perspective. Input gathered from the previous two webinars (first and second) on the EU Data Act and its impact on EU competition and sustainability and smart mobility goals fed into the discussion with institutional stakeholders.

Both speakers emphasized the importance of the proposal as one of the main cornerstones of the EU data economy. However, they also recognized that the proposal still requires a comprehensive assessment of the proposal’s real-life impact given the technical nature of some of its provisions. In addition, some clarifications are necessary to avoid putting an additional burden on EU SMEs and companies, thus guaranteeing a competitive edge for the digital economy and society. Against that background, they encouraged all stakeholders to come up with their input to implement a practical framework that works for everyone.

Ms. Anna-Liisa Pärnalaas stated that the proposal has several provisions that support businesses entering the market and empower consumers, e.g. data portability, interoperability safeguards, and unfair contractual contracts. On privacy rights, Ms. Pärnalaas underlined that this regulation should avoid a situation where requirements lead to loss of control of personal data. To tackle this issue, she mentioned that additional safeguards and clarifications about how GDPR applies to the Data Act would be beneficial.

Ms. Angelica Petrov said the European Parliament supports this piece of legislation as it comes at a timely moment with the surge of connected devices and IoT products which generate a significant amount of data. In her view, data holders should have access to the data they produce, and this framework comes at the right moment to regulate how to process and collect data, unleashing the true power of industrial data for EU consumers and businesses. Against that background, Ms. Petrov stressed how this legislation would help B2B, B2G and cloud switching. In that regard, Ms. Petrov would like to see more clarity on definitions as well as data anonymization; data sharing with Member States governments in emergency situations; and cloud switching rights including reverse switching.

When asked about the imbalance on third parties’ requirements, who would be the big economic beneficiaries, in the direction of both consumers and manufacturers, Ms. Petrov and Ms. Pärnalaas answered that this issue would require additional safeguards and provisions.

From an institutional standpoint, Ms. Petrov noted that there has been a broad consensus on major issues in the European Parliament so far. She added that the timeline is on hold for now due to a conflict of competence between committees. Ms. Pärnalaas stipulated that the Council had finished the first reading of the French presidency’s report. She mentioned that the first written comments are with the Presidency before discussions kick off in July, adding that the most active part will begin in fall 2022.

To watch the full replay of the last breakfast webinar click here.

If you would like to stay up to date with the developments regarding EU digital policies and related events, please sign up to our monthly EU Data Policy Update here. Learn more about our EU Data Policy Services here.

Dr2 Consultants hosts second webinar on the EU Data Act and its impact on EU competition and smart mobility goals

Following the publication of the EU Data Act in February 2022, Dr2 Consultants hosted a second Breakfast Webinar on May 25 to discuss the impact of the EU Data Act on the European competition and smart mobility goals. The webinar is the second in a series of three, where the first was held on May 5 and discussed the impact on EU competition and sustainability goals.

The event was moderated by Cathy Kremer, Senior Consultant at Dr2 Consultants. Two speakers were invited to share their thoughts about the impact of the Data Act on the mobility sector. Mr. Mikael Isaksson, Public Affairs Officer at Volvo Cars and Dr. Nima Barraci, Senior Manager, Group Data Strategy and Transformation at Lufthansa Group gave insight into the road transport and aviation sectors’ perspectives.

Mr. Isaksson stated that the consumer focused approach in the Commission proposal is the right approach. He underlined that Volvo Cars values people’s freedom to move in a personal, sustainable and safe way. He argued that data and connectivity have a role to play in decarbonizing transport, in managing traffic flows and in optimizing energy efficiency. Data must be shared in a way that is safe, technically feasible and relevant for the consumer. The Data Act should not stifle innovation, growth and investment. It should lay down the basic principles to ensure data can be accessed on a level playing field.

Dr. Barraci said that Lufthansa Group had in principle a positive stance towards the Data Act. He noted that, currently, machine generated data is to a large extent unregulated and there are no rules to whom the data belongs and who has access to it. The Data Act would level the playing field by creating ground rules, foster competition and innovation. It would help reach the EU’s sustainability goals by improving the ecological performance of aircrafts and aircraft operations. The Data Act will foster innovation and energy efficiency, he underlined.

Asked about their one key message to policymakers, Dr. Barraci wished to see the Data Act become an enabler for innovation and competition in Europe. Mr. Isaksson concluded that the Data Act should be designed in a way that it encourages innovation and that it will benefit everyone in the connected mobility ecosystem.

To watch the full replay of the second breakfast webinar, click here.

Input gathered from the first and second webinar will feed into a discussion with institutional stakeholders in the final webinar on 16 June.

If you would like to stay up to date with the developments regarding EU digital policies and related events, please sign up to our monthly EU Data Policy Update here. Learn more about our EU Data Policy Services here.

REPowerEU: A boost for the European energy transition

This week marks a major development in the path towards an independent EU energy market. Through the REPowerEU plan, published on 18 May (an outline of which was published on 8 March), the European Commission highlights an urgent need to reduce the EU’s reliance on Russian fossil fuels, especially on natural gas imports. But how does this plan concretely foresee to reduce dependence, ensure strategic autonomy of the EU in the field of energy and how will it accelerate the clean energy transition? In this article, Dr2 Consultants presents the main takeaways of the REPowerEU plan.

The EU’s recipe for a green transition

In 2021, the European Commission proposed a package of measures to tackle the transition to more sustainable energy systems by means of the “Fit for 55” package. If all proposals as part of the package would be implemented, annual fossil gas consumption could be reduced by 30%, equivalent to 100 billion cubic meters (bcm), by 2030. However, in view of the invasion of Russia into Ukraine and the subsequent energy crisis, the REPowerEU Plan aims to accelerate this process.

The REPowerEU plan is based on three main elements:

  1. Saving more energy (and thus reducing energy dependency) through the promotion of energy efficiency;
  2. Diversifying energy supply (seeking new markets for imports), in order to reduce dependency on Russian energy;
  3. Substituting fossil fuels through the acceleration of Europe’s clean energy transition (combining investments and reforms).

Energy savings

Together with the REPowerEU plan, the Commission presents an EU Save Energy Communication. The new plan builds on the Fit for 55 proposals from July 2021 and calls for their speedy adoption. Among others, the European Commission proposes a legal amendment to raise the targets as put forward in the Energy Efficiency Directive – a revision that is part of the Fit for 55 package and currently under revision –  from 9% in the current proposal to 13%. On heat pumps, the EU wants to double the current deployment rate, resulting in a cumulative 10 million units over the next five years. Moreover, Member States are encouraged to come with measures such as reduced VAT rates for high efficiency heating systems and for insulation in buildings, as well as other energy pricing measures, which encourage switching to heat pumps and the purchase of more efficient appliances.

Accelerating clean energy transition

The REPowerEU plan recommends replacing fossil fuels, such as natural gas with renewable fuels from both biological as well as non-biological origin in the near future. By accelerating the transition towards and increasing the uptake of fuels such as hydrogen and biomethane, Europe can replace fossil imports by renewables at a faster pace than foreseen. The Commission will finalize the proposed regulatory framework for hydrogen and will soon publish two new draft legal acts to define and boost the production and market development of renewable hydrogen within Europe. On biomethane, the Commission is proposing an action plan to achieve 35 billion cubic meters (bcm) of annual biomethane production by 2030. The Commission wants to address the main barriers to increasing the production and use of biomethane. Taking away these barriers will make it easier to facilitate its integration into the EU gas market.

Fit for 55 services

Furthermore, REPowerEU urges for much more action on deploying renewable energy and related smart energy technologies, such as heat pumps and hydrogen electrolyzers. It puts forward an increase to the Renewable Energy Directive target – a revision that is part of the Fit for 55 package – from 40% to 45% by 2030, equivalent to 1236GW of installed renewables capacity, a significant step up from the 1067GW targeted in the original proposal for a revision.

Lastly, REPowerEU also includes a strategy for solar energy to make it an important part of the EU’s energy and heating systems. This proposes a target of over 320 GW of newly installed solar photovoltaic capacity by 2025, and almost 600 GW by 2030. The European Commission introduces a solar rooftop obligation for commercial and public buildings by 2026 and for new residential buildings by 2029. Moreover, an EU large-scale skills partnership to develop the necessary skilled workforce to produce, install and maintain these panels and an EU Solar Industry Alliance to support the EU industry in expanding the domestic production of photovoltaic panels.

In the new detailed plan, the Commission encourages Member States to identify the most suitable projects for renewables where permitting would be shortened and simplified. Normal renewable energy licensing procedures usually take years, meaning a significant acceleration of the rollout of renewable energy projects in the years to come.

Diversifying energy supply

Similar to the vaccine purchase schemes during the COVID-19 pandemic, the Commission would like to negotiate (gas) purchasing agreements on behalf of the whole EU through a ‘joint purchasing mechanism’, as part of the EU External Energy Strategy. The vehicle currently used for purchasing agreements is the EU Energy Platform, a voluntary mechanism used to pool demand, and to coordinate the use of the import, storage and transmission infrastructure. By negotiating in this way, the Commission wants to secure more reliable suppliers of gas and hydrogen, build long term partnerships, and thanks to the collective purchasing power of all Member States strike better deals (including cooperation on hydrogen and other green technologies).

As part of the REPowerEU communication on 23 March 2022, the Commission adopted a legislative proposal for obligatory gas storage rules. The proposed rules include the obligation for Member States to fill all gas storage sites to at least 80% by November 2022 (and 90% in subsequent years), new mandatory certification for storage system operators and a 100% transmission tariff discount for gas storage facilities. The file is currently being negotiated by the co-legislators under an urgent procedure, so that it can take effect from Summer 2022.

With regards to the European embargo on Russian oil products, as announced by the Commission as part of its sixth sanction package, an agreement among the Member States has not yet been reached. The introduction of REPowerEU should help the Member states to transition away from Russian oil products, but the negotiations are reported to be at a standstill. The decision on a potential embargo is likely to be taken at the highest political level during a Special meeting of the European Council on 30 and 31 May.

What to expect next?

The REPowerEU plan is a landmark publication with far-stretching impact on various industries, and is expected to guide reforms and investments in the years up to 2030. In order to replace Russian fossil fuels and diversify the EU’s energy mix, the Commission is increasing the targets for the production and import of energy carriers such as renewable hydrogen, biomethane and LNG significantly. Additionally, the plan proposes to significantly shake up the investment landscape, e.g. by repurposing the Recovery and Resilience Facility and easing permitting procedures. It is expected that this mix of measures will strengthen the business case of projects in the energy transition and will provide guarantees to investors.

Moreover, with its dedicated External Energy Strategy, the Commission rightfully acknowledges the need for strong partnerships with other continents across the globe to diversify its energy supplies. It is expected that new platforms such as EU Energy Platform and the Mediterranean Green Hydrogen Partnership will play a key role in setting a clear regulatory framework to accommodate global trade flows and harmonize standards between continents.

Furthermore, the revised targets within some of the (already controversial) Fit for 55 files, such as the Renewable Energy Directive, are expected to be subject to intense negotiations among the co-legislators. Whilst there is general consensus on the objectives of the REPowerEU plan – diversify energy sources and stimulate the transition towards renewable energy sources – policymakers disagree on the measures necessary to realize these objectives.

Want to know more about these latest developments and how they impact your organization? Please get in touch with us via our website. We also invite you to stay up to date via Dr2 Consultants’ weekly Fit for 55 policy updates (read the latest update here and subscribe here).