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Offshore renewable energy: EU takes next steps

With the EU’s new offshore renewable energy strategy (ORES) – “EU Strategy to harness the potential of offshore renewable energy for a climate neutral future” (published on 19 November 2020), the European Commission is widening the scope of its offshore activities. From focusing on offshore wind energy (bottom-fixed), the Commission aims to facilitate the further development of other offshore energy technologies such as floating wind energy, wave and tidal energy, but also floating solar energy and the use of algae. Our blog post sheds some light on upcoming opportunities and challenges from the offshore renewable energy strategy for the different offshore energy technologies.

Maritime spatial planning as a basis

Maritime spatial planning (coordination of use of marine space and resources) will be key to the further development of offshore renewable energy technologies. In the framework of the Maritime Spatial Planning Directive, the Commission aims to ensure sufficient space and resources are available for offshore technologies by coordinating the submission of national maritime spatial plans due by 31 March 2021. Such maritime spatial planning should be carefully coordinated with different national energy and climate plans but also the protection of vulnerable marine ecosystems.

Offshore renewable energy - Floating solar farm

Floating solar farm

 

From focusing on offshore wind energy (bottom-fixed), the Commission aims to facilitate the further development of other offshore energy technologies.

Different offshore renewable energy operators, as well as energy grid operators, are strongly encouraged to engage both on a European and national level to improve the quality of existing and future spatial planning. These exchanges will be facilitated by the European Commission throughout 2021 and beyond.

A clearer EU regulatory framework to facilitate investments

While offshore renewable energy projects are mainly nationally driven, the Commission wants to facilitate the further development of more complex, cross-border projects. Most importantly, the Commission clarifies the current regulatory framework for offshore bidding zones in its accompanying Staff Working Document. Furthermore, The Commission will ensure that the forthcoming revision of the state aid rules and the Renewable Energy Directive provide a fully updated and fit-for-purpose framework in order to cost-effectively deploy clean energy, including renewable offshore energy.

The lofty ambitions of the Commission will provide a very good opportunity for large-scale cross-border project operators to benefit from a changing regulatory framework. Such operators are advised to keep a close eye on the upcoming changes to the European electricity legislation, which will facilitate their activities. If you would like to stay up to date on the latest developments in the EU energy sector, visit our monitoring services webpage to find out how Dr2 Consultants can support you.

Targeted funding opportunities for offshore renewable energy deployment and R&I

Most importantly, the Commission aims to unlock new private investments as these are expected to carry the bulk of financing needs. The new InvestEU fund will play a key role, with the European Investment Bank acting as a European Climate Bank. In addition, existing and future EU funding instruments such as the NER 300, the Recovery and Resilience Facility and the Connecting Europe Facility are expected to substantially fund mature cross-border projects. Furthermore, investment programs such as Horizon Europe, the Innovation Fund and the Modernisation Fund will provide support for research, innovation and demonstration projects underpinning the future development and deployment of innovative offshore energy technologies in Europe.

Whether your organization is active in early stage R&I activities, demonstration of innovative technologies or the further deployment and rollout of offshore renewable energy infrastructure, the above mentioned EU funding instruments will serve a supporting role to the changing regulatory framework.

In conclusion, the Commission aims to tackle the challenge of creating the optimum environment to maintain and accelerate the current European momentum in offshore renewables. As such, the EU is ready to support frontrunners in this area to preserve its own leading role on a global level.

The Commission is actively inviting all stakeholders to discuss the policy actions proposed in this strategy and to join forces in taking this action forward without delay. Dr2 Consultants is ideally placed to support your organization to identify the opportunities in upcoming financial and policy developments. Fore more information, contact us at info@dr2consultants.eu or call us at +32 (0)2 512 37 22.


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European Year of Rail: 2021 – boost to a modal shift

The EU institutions declared 2021 as the European Year of Rail but what will next year exactly entail and how can stakeholders take advantage of this initiative? In this blog post, Dr2 Consultants highlights how the rail sector will be put in the limelight as of January.

Every calendar year since 1983 (with the exception of 2016 and 2017) marks a new ‘European Year’ with a different theme during each iteration. The European Years span across a wide range of subjects such as development aid (2015), mobility of employees (2006) languages (2001), etc. 2021, has been declared the European Year of Rail.

The main goal of designating ‘European Years’ is to increase the visibility of certain industries and to promote a political momentum to bring around significant changes. The practical aspects mostly entail media campaigns and stakeholder events targeting both European citizens as well as businesses and other stakeholders. In some cases, the European Commission also uses this opportunity to put forward new legislation.

What the European Year of Rail will look like?

In March 2020, the European Commission published a proposal for a decision to designate 2021 as the European Year of Rail. Rail plays an important role in the Commission’s plans in decarbonizing the transport sector, as it is referred to in the European Green Deal as the most sustainable and therefore preferred mode of transport. Moreover, the rail sector has also taken a prominent place in the COVID-19 recovery phase as enabler of the green recovery.

The Commission’s proposal was quickly followed by inter-institutional consultations between the European Commission, the European Parliament, and the Council of the EU, where an agreement was reached on the final text on 12 November. The agreement includes a final budget for the year of €8 million, which is higher than previous proposals. While a comprehensive list of the activities is still yet to be published, following an advice taken up in the European Parliament’s Transport and Tourism Committee (TRAN) report on the proposal for decision, the Commission has been tasked with conducting two studies into concrete proposals to stimulate both freight as well as passenger related rail transport. Even though the final text of the decision is basically set in stone, it has to be approved by the European Parliament plenary (date still to be determined) and the meeting of the European Transport ministers in the Transport Council of 8 December.

Impact on the rail sector

Designating 2021 as the European Year of Rail is in line with the European Commission’s priorities on making transport more sustainable. Stakeholders from the rail sector have unique opportunities in shaping the policy agenda for the years to come, meaning that it will be imperative for them to seize this momentum as much as possible.

Several key initiatives for the transport and rail sector will be central in 2021. Firstly, actively providing input on the execution of the policy initiatives mentioned in the Strategy for Sustainable and Smart Mobility (planned to be published on 8 December 2020) will be crucial in shaping the rail sector for years to come. Secondly, in June 2021 the TEN-T Days will be organized by the Portuguese Presidency of the Council of the EU, which will be an important moment to influence the TEN-T revision and future targeted rail infrastructure investments. Lastly, highlighting important European routes in the Action Plan on rail corridors (Q3 2021), which will aim to facilitate better connections between European capitals and the modal shift, will increase efficiency and connectivity on the trajectories most important to stakeholders actively lobbying on the file. Activities surrounding these proposals, ranging from formal consultations to stakeholder dialogue events and communication campaigns will be initiated on all different levels (European, national, regional and local).

EU Affairs Training - 28 January 2021

In parallel to the policy initiatives, there will be other initiatives that highlight the momentum for rail. This year, a coalition of 25 Member States have set up the International Rail Passenger Platform, in which governments and the industry come together to make meaningful steps on the topics of infrastructure development and passenger services (i.e. ticketing). In addition, Germany has initiated the revival of the once popular TransEuropExpress, with launching a study on high-speed rail transport and night trains. The arts festival Europalia will dedicate its 2021 edition to the influence of railways on arts and their contribution to socio-economic change.

Opportunities for stakeholders in the European Year of Rail

As the focus of 2021 will be on setting the agenda for a modal shift to rail transport, European stakeholders can utilize the stage set by European institutions for rail-related issues to further elaborate and market their ideas and solutions. As the European Commission will be responsible for rolling out of communication and marketing campaigns, being aware of the latest events and actively engaging with the European institutions to be the first guest or participant of choice will be a crucial step to take to be more visible and effective. The industry will be able to fulfil a much needed role in the Commission’s campaigns, providing substance and content-driven input. Additionally, European businesses can initiate their own communication campaigns, which link to the existing media-related initiatives in the context of the European Year of Rail. This will greatly increase the effectiveness and reach of these campaigns, increasing their value and efficiency, and resulting in more value for money.

As mentioned earlier, the European Commission will be conducting two studies. Accompanying stakeholder consultations are expected in the first half of 2021, focused on the viability of a European label to promote goods transported by rail and the development of a rail connectivity index for rail passenger transport. The outcome of these studies will influence legislation for years to come, meaning that taking a proactive role is imperative. These consultation moments are also an opportunity to increase the network of Public Affairs professionals within the European Commission. It is therefore key to be aware of the latest consultations, even if they might not be public, to know who to engage with within the institutions and to effectively promote Public Affairs messages.

Moment to act

Dr2 Consultants has built solid expertise and network by providing support to transport stakeholders from rail and aviation to the maritime sector. We tailor our services, knowledge and expertise to support organizations in the most bespoke way and achieve tangible results. To successfully capitalize on the current political momentum and seize the opportunities provided by the European Year of Rail in 2021, please get in touch with us through our website.

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European cities and regions: three reasons to get active at EU level

Over the past decades, European cities and regions have been an important driver of the European economy. With major societal transformations such as the energy transition and digitalization looming, cities are expected to become even more important enablers, while regions are challenged to keep up. As such, EU policies and funding initiatives become increasingly important for cities and regions. In this blog post, Dr2 Academy, Dr2 Consultant’s educational institute, highlights the three main opportunities for European cities and regions across Europe to act upon.

1. European cities and regions at the heart of the EU budget

On the eve of the new EU’s seven-year budget cycle, and in the political context of a major economic recovery from COVID-19, the EU’s co-legislators have to make important decisions regarding the dispersion of EU funds. With EU initiatives increasingly materializing in cities and regions, more financing instruments come at the disposal of local authorities.

The grants from the EU’s Recovery and Resilience Facility will be linked to national and regional investments in sustainable and smart solutions, such as clean energy technologies, charging stations, building renovations,  scale-up of data cloud capacities, and the rapid roll-out of broadband services. In the execution of the national recovery plans, Member States are required to spend 30% of its investments via the Recovery Fund on climate action, while another 20% will have to be spent on digital projects. This presents opportunities to cities and regions to inform national administrations about the needs at a local level in order to unlock funding.

Moreover, during the next EU budget cycle, the Commission will aim to modernize Regional Development and Cohesion Policy. Sixty-five to eighty-five percent of European Regional Development Fund and Cohesion Fund resources will be allocated to the five different priorities (in the areas of digitization, climate, transport, social policy, and urban development) that the Commission has formulated, depending on Member States’ relative wealth. Developing regions and cities in the EU have the opportunity to obtain financing via the managing authorities in the Member States, especially when the region shows its added value to one of the priority areas.

In addition, in order to ensure that all cities and regions across the EU can overcome the preconditions for the transition towards a climate neutral Europe, the EU has established the Just Transition Fund, earmarking funds for cities and regions to ensure a fair transition. With new project calls coming up early 2021 for various funding programs, it is crucial that European cities and regions are aware of the funding opportunities and subsequent eligibility requirements.

2. The EU ecosystem: fertile environment for coalition-building and partnerships

For European cities and regions, the EU ecosystem provides par excellence opportunities to broaden their networks, exchange best practices and form coalitions to effectively influence EU policy. For example, in the context of the Urban Agenda for the EU, which brings together the Commission, national ministries, city governments and other stakeholders to promote better regulation, easier access to funding and more knowledge sharing on issues relevant for cities, an umbrella project of the EU smart cities policy called the  European innovation partnership on smart cities and communities (EIP-SCC) was set up. It provides a platform that aims at delivering practical knowledge and capacity-building opportunities, facilitating access to financing, and introducing potential partners to each other.

Besides these programs, stakeholder communities such as EUROCITIES and the institutionalized representation in the European Committee of the Regions (CoR) also provide ample opportunities to build a European wide network and share best practices. Moreover, these networks can enable cities to engage with policymakers, receive information, and access EU funding.

3. Cities as frontrunners and active shapers of EU policies

Given that most of the EU citizens live in cities, they play an important role in the implementation of EU policy. While EU’s urban areas are important contributors to the EU’s energy consumption and greenhouse gas emissions, they are at the same time considered important drivers of the EU’s climate ambitions. Through the greening and digitalization agendas of the EU there are plenty of opportunities for cities to fulfil a leading role. Initiatives that have been recently published, such as the Circular Economy Action Plan, the EU Strategy for Energy System Integration, the expected Strategy for Sustainable and Smart Mobility (9 December) and the Renovation Wave initiative are expected to have a profound impact on European cities.

Dr2 Academy

To make the most out of these opportunities at EU level in terms of financing, coalition-building and policy influence, Dr2 Academy offers a wide range of tailor-made services targeted to organizations and professionals whose work is impacted by EU policies. To accommodate the needs of European cities and regions, Dr2 Academy has developed a dedicated curriculum combining theory and practice, that teaches civil servants about the working of the EU institutions, the impact of EU policies at regional/local level, coalition-building, and the execution of effective Public Affairs strategies. In case of questions, do not hesitate to get into contact with us.

EU Affairs Training - 28 January 2021

Dr2 Academy also organizes an EU Public Affairs training on Thursday 28 January 2021, more information can be found here.

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US and EU flags

US-EU relationship after Joe Biden’s election – an analysis

On Saturday 7 November, five days after American voters went to the polls, Joseph Biden was finally projected by US media to have won enough Electoral College votes to become the next President of the United States, defeating outgoing President Donald Trump. Waves of congratulations immediately came from all over Europe. Many expressed relief that Trump failed to be reelected, given the tense US-EU relationship under his administration. Given the global reach of Dr2 Consultant’s clients, we’ve assessed the impact of the US Election on the US-EU relationship. We are therefore offering an analysis of the repercussions of Democratic candidate Joe Biden’s election on trade, environmental and digital issues.

Trade: a more stable partner but many disputes still to settle

The US-EU trading relationship under Trump’s leadership was highly confrontational. The US President complained countless times about the US trade deficit with the EU. He also intensified a sixteen-year-long tariffs war with the EU over state subsidies granted to Airbus and Boeing, imposing tariffs on European steel and aluminum, as well as on German cars or French wines and cheese, amongst others.

Despite having just raised tariffs in retaliation on about $4 billion worth of US goods, the EU is hoping that Joe Biden’s election will bring an opportunity to fix ongoing disputes, including the Boeing-Airbus feud, as announced by Trade Commissioner Valdis Drombrovskis. EU Trade Ministers also met virtually on Monday, 9 November, to prepare for the “rebooting” of transatlantic relations.

Dr2 Consultants expects the EU to take Joe Biden’s election as an opportunity to re-start the EU-US Free Trade Agreement negotiations, which had died during Obama’s mandate after strong backlash from both sides’ civil societies. Although under Biden’s leadership, negotiations will remain difficult.

Furthermore, Biden’s election might finally allow the World Trade Organization to fill its Secretary General’s seat. Trump’s administration has been blocking the nomination of Ngozi Okonjo-Iweala, former minister of Nigeria, despite her being backed by the majority of WTO members.   Although the Democratic Party shares some concern with Republicans over the WTO dispute settlement mechanism, Biden’s proclaimed support of multilateralism could help unlock the situation.

Thanks to Joe Biden’s election, cooperation could also increase on how to deal with China. EU officials hope that cooperation can be found on the protection of emerging technologies, especially 5G networks, to alleviate dependency on Chinese telecom companies. Officials from the Biden campaign have communicated that the future president would be open to cooperating on those topics.

Therefore, although trade relations will not change drastically with Biden’s election, and many disputes remain to be settled, the EU will at least benefit from a more stable and open interlocutor. This will at least result in clearer decisions, which European businesses trading with or involved in the US will benefit from, as they need predictable, transparent, and enforceable trading rules.

Joe Biden

Joe Biden – President-elect of the United States of America

Photo license: Gage Skidmore

Environment and climate change: converging goals on emissions

Climate change is one area in which Biden and the EU see eye-to-eye and cooperation will surely increase, benefiting US-EU relationship.

Although the US have left the Paris Agreement on 4 November 2020, as Trump wanted, Joe Biden has vowed to reenter it as soon as he takes office. Biden also made strong commitments during his campaign to reverse the Trump administration’s detrimental environmental actions, including adopting a $2 trillion green stimulus package, with the objective of cutting US emissions to net zero by 2050, similar to the EU’s target. Furthermore, in terms of sustainable finance, Biden has pledged $5 trillion to support the ecological transition, similarly to EU’s $4 trillion commitment to its own transition.

However, to implement his climate agenda domestically, Biden will have to gain approval from Congress, which might prove tricky if the Senate remains controlled by the Republicans.

Still, Biden’s will to implicate the US in climate talks will likely reignite multilateral cooperation on environmental issues. Additionally, aligned EU and US goals in terms of emissions could give European companies an opportunity to export environmental-friendly solutions and expertise.

Digital and Technology: opposition on Digital Taxation will likely remain

The EU has been attempting to adopt a European Digital Tax for several years, and the Commission has expressed determination to present an EU digital tax proposal if global talks fail to reach an agreement by mid-2021.

Currently, there are ongoing negotiations between 137 countries within the Organization for Economic Cooperation and Development (OECD) about an international tax system, which would redefine the way tech companies are taxed. This would notably impact companies providing digital services, allowing countries where they operate and make significant profit to tax them even if they do not have business operations there. The EU Commission supports this approach and will likely not introduce a separate European Digital Tax if a deal is found at the OECD level.

Trump’s administration however has been less than favorable to allowing foreign countries to tax US digital companies. The US policy under Trump was to use trade sanctions to retaliate against countries seeking to tax U.S. tech companies, as it did when France adopted a digital services tax.

During his campaign, Biden has criticized digital tech giants, and proposed a minimum tax on digital companies. This position could raise the hopes that he would support the taxation system negotiated at the OECD level, or that he at least will not threaten countries adopting digital taxes as strongly as Trump did. However, many observers underline that Democrats have always been just as opposed to a global digital services tax as Republicans, and the OECD does not believe that the change of leadership will increase significantly the chances of success of the negotiations. The deadline for an agreement to be found, originally set for the end of 2020, has already been postponed to mid-2021.

If the OECD negotiations do not result in an agreement on a taxation system, Dr2 Consultants expects companies providing digital services to likely face an EU-level tax. Dr2 Consultants helps its client keep track of the different tax initiatives and understand the potential impact of their business.

There will certainly also be a lot of discussions between the EU and the US on other key digital topics, from content regulation to EU-US data flows and the privacy shields talks.

European Commission President Ursula von der Leyen’s twitter thread following Biden’s election summarizes well the EU’s general position regarding Biden’s election: “It is time for a new transatlantic agenda fit for today’s world”, mentioning notably the work to be done on “health, climate, digital [and] reform of the multilateral rules-based system”.

Although Trump’s departure from the White House will likely facilitate communication with the US, the relationship will not go back to the pre-Trump status quo overnight.

Dr2 Consultants continuously monitors the evolution of the US-EU relationship. Should you be interested in further information on how Joe Biden’s election and his agenda could impact your business, you can reach out to Dr2 Consultants at info@dr2consultants.eu or find more information on our website.

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Recovery of the EU tourism industry and its way to a smart and sustainable sector

The COVID-19 pandemic has a devastating impact on the tourism sector, directly affecting 22 million jobs and 2.3 million businesses. In Europe, the tourism sector accounts for around 5% of the EU’s total workforce and almost 4% of the EU’s GDP. As we are witnessing a second wave of infections and subsequent travel restrictions in the EU, the outlook for the sector is not promising. What measures have been taken so far, and how will the recovery of the EU tourism industry be ensured?

Support measures at EU and Member States level

As an initial response to support the sector, the European Commission adopted a package of initiatives in May to allow for a coordinated framework to resume transport and tourism, including guidelines on safe and healthy travel, guidance for lifting internal borders and recommendations on vouchers issued by package travel organizations. However, as the EU has limited competence in the field of tourism, its guidelines are non-binding, thereby hampering the effectiveness of its actions.

At a national level, most Member States introduced economic assistance packages that also covers the tourism sector, including extended deadlines for payments of social charges and wage subsidies, loans and guarantees for workers. The EU competition framework was amended to facilitate this kind of direct support that would normally not be in line with the state aid rules.

Additionally, in order to further facilitate coordination of travelling across the EU, Member States recently adopted a recommendation establishing common criteria and a common framework on travel measures in response to the COVID-19 pandemic. However, individual Member States remain responsible for implementing the content of the recommendation, leading to a patchwork of measures and consequently insecurity and unclarity about travel.

European Parliament’s push for coordination of the recovery of the EU tourism industry

The European Parliament (EP) has been very vocal in the role it thinks the EU should play in the recovery of the EU tourism industry. On 29 June, the EP adopted a resolution calling for additional measures to save the EU’s tourism and travel sector. Around that time, different political groups (such as Renew Europe, S&D) in the EP published individual position papers on tourism, all advocating for more European coordination.

The European Parliament’s Tourism Task Force (TTF), a dedicated group in the Committee on Transport and Tourism (TRAN) has been a vocal supporter of developing a strategy for sustainable tourism for some years, advocating the EU to take concrete steps towards establishing a broad, EU-wide vision. Currently, the TRAN Committee is in the process of drafting a report on the development of this strategy.

In the short term, before the finalization of such a strategy for the future of the tourism sector, the TFF argues that a separate budget line of €300 million is needed to support the sector and stresses the importance of considering the tourism industry in drawing up national recovery plans. The TRAN Committee also calls on the Member States to financially support the industry and apply common criteria for travel.

Agenda for a sustainable and smart tourism industry

On 12 October, the European Commission organized the European Tourism Convention in order to facilitate discussions among stakeholders on the recovery as well as the future of a sustainable tourism industry. According to Commissioner Thierry Breton, the Convention marks a first step towards a EU policy framework for the tourism sector.

Based on the conclusions of the Tourism Convention and the recent developments in the European Parliament, Dr2 Consultants identifies four important trends that will dominate the agenda for the recovery of the tourism sector.

  • The strategy for the future of the tourism sector should stimulate a dual transition towards a more sustainable and smarter sector, by accelerating investments. This could lead to the development of safe and seamless tourism experiences powered by the digitalization (data sharing, multimodal travel) and greener holidays (eco-tourism);
  • Sufficient investments in the sector are needed to ensure the recovery of the EU tourism industry. The European Parliament’s TTF proposal to create a separate budget line for tourism worth €300 million is not yet taken up within the draft MFF proposal. However, the European Commission has announced that the new Recovery and Resilience Facility, worth €560 billion, could also be used for the recovery of the sector;
  • Liquidity problems in the sector should be addressed, in particular to small and medium sized enterprises (SMEs). SMEs should be empowered and be able to operate more innovatively with digital tools and financial instruments, either through the proposed budget line or state aid;
  • Collaboration is key between the tourism industry, European politicians, and EU Member States. Policymakers on an EU level should cooperate and coordinate measures in the travel industry and engage with stakeholders to understand what is needed to build a new agenda or strategy for tourism of the future.

 Next steps

As travel restrictions and containment measures are still in place within the EU, a coordinated approach among the Member States is a prerequisite for the recovery. The main challenge for the tourism sector and policy-makers in the short to medium term remains to swiftly enhance cooperation to ensure the recovery of the EU tourism industry in the long term, ready for the current and any future crises.

At the same time, it is to be seen what the Commission will do in building an agenda for the future smart and sustainable tourism industry, as its workplan for 2021 does not reflect any concrete actions for the future industry so far. However, by organizing a convention on tourism, it has put the issue more plainly on the agenda and set the table for constructive dialogue between the sector and policymakers. It is expected that the final report of the European Parliament on establishing an EU strategy for sustainable tourism will further shape the debate on the sector’s future, inviting the European Commission to respond by developing a concrete vision for the future.

The anticipated recovery measures for the post-COVID-19 era will have a major impact on the EU budget and the EU policy agenda. In this challenging context, it is crucial to remain up-to-date with the latest developments and to be flexible in order to adjust and act quickly. Dr2 Consultants supports your organization in getting a better grip on the contingency and recovery measures that are announced at EU level. Visit our COVID-19 services webpage to learn more.

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Potential Consequences of a “No-Deal” Brexit

As negotiators are still running against the clock with the end of the transition period around the corner – and the deadline to reach an agreement coming even faster – now is the time for businesses to accelerate preparations for the future relationship between the UK and the EU, whatever it might look like. The negotiations have not seen much progress, despite recent intensification, and both parties have repeated that they are ready for a “no-deal” scenario. What would be the consequences of a no-deal Brexit? What would happen if no agreement is signed by 31st December 2020?

The United Kingdom officially left the European Union on 1 February 2020 but entered a transition period during which the UK is still part of the Single Market and Customs Union.

In November 2019, the EU and the UK have signed a first Withdrawal Agreement. This agreement settles the UK’s financial obligations (or so-called “divorce bill”), the status of citizens in the UK and the EU and arranges how goods trade between Northern Ireland and the EU would continue after Brexit. This agreement is not a trade deal and has little bearing on what a possible future agreement would look like.

Trade between the EU and the UK is significant, with the EU27 being the UK’s most important trading partner. In 2019, the rest of the EU had exported to the UK £372 billion of goods and services, and the UK had exported goods and services to the EU worth £300 billion.

The consequences of a no-deal Brexit

The UK will, no matter what, leave the Single Market and the Customs Union on 1st January 2021. Without a specific Free Trade Agreement, EU and UK trading relations would fall under “WTO terms”. The World Trade Organisation sets rules on international trade which all members must follow. WTO terms are the basic trading terms that can apply. Without an FTA with the UK, this will lead to the re-establishment of tariffs and non-tariff barriers and, for example, the loss of preferential access to the EU market.

Therefore, if an agreement is not found before the end of the transition period, from 1st January 2021, UK goods and services being imported in the EU would face the Union’s existing external tariffs for “third countries”. Reciprocally, the UK would also have to apply tariffs to EU goods entering the UK. In anticipation, the UK has adopted new “Global Tariffs” which will be imposed from 1st January 2021 to all countries with which it does not have trade deals.

Additionally, quotas restricting the number of goods allowed to be imported and regulatory barriers would also be applied. A whole new set of costly and time-consuming administrative procedures would also need to be complied with.

All these new barriers would have repercussions on the price of UK products sold in the EU, and vice versa. For example, the automobile industry estimates the application of the EU standard 10% tariff on imported vehicles would make UK imported cars about £1,900 more expensive.

One of the consequences of a no-deal Brexit is that the free movement would also come to an end, meaning that customs border checks would be imposed. This would put significant pressure on both British and EU businesses that are currently benefiting from unbarred trade and clear sets of rules. The UK Government is already anticipating significant lines and delays at border-crossing points. Truck drivers looking to cross over to France would also need a whole new set of documents to be allowed entry. This would impact industries relying on expeditive supply chains, such as the automobile or agri-food industries.

These new formalities would increase costs for businesses, which would impact the price of their products, and in turn, their competitiveness. This would be especially true for SMEs, which might not have the cash flow to sustain said costs.

How to mitigate the impact of a no-deal Brexit?

The Commission urges stakeholders to start preparing for the end of the transition period, under any scenario, as, even if a deal was to be found, significant disruption to trade would still appear on 1st of January. Although the consequences of a no-deal Brexit would be more impactful and far-reaching than in case of a deal, preparing for the UK’s exit in general will still help businesses and Member States bear the repercussions that the lack of agreement would have.

The EU Commission recommends companies to talk to their business partners, to contact local authorities and advice centres for further information and to consult EU Commission readiness notices.

First published while the EU and the UK were negotiating the Withdrawal Agreement, the readiness notices have now been updated by the Commission and cover over 100 sectors providing information on measures that should be taken by Member States, business and citizens in order to prepare for the UK’s exit, with or without a deal.

The Commission also prepared a checklist so business can make sure they have taken all the steps necessary to fully prepare.

Businesses that currently import or export goods from or to the UK should make themselves aware of rules applying to trade with third countries and obligations of importers or exporters, especially if they do not have experience trading with third countries.

With regards to customs formalities, checks and controls, the Commission also advises businesses to get acquainted with existing formalities and procedures for doing business with third countries. They should also assess the actions needed to mitigate the impact of increased administrative formalities and procedures, especially on supply chains.

Brexit Office

Understanding the consequences that a no-deal Brexit would have and navigating the legislation and regulations that will take effect after the end of the transition period can be overwhelming and time-consuming. Dr2 Consultants’ Brexit Office can help you understand the European regulatory maze.

Brexit Office

Transparency in the EU: a state of play

With approximately 30,000 lobbyists, Brussels is known as the world’s second lobbying capital, following Washington D.C. Even though the EU’s relatively small civil service is heavily dependent on the input of stakeholders, voices calling for more transparency have become stronger and stronger. Dr2 Academy explains the state of play of transparency in the EU.

Should transparency be an obligation?

Already since the European Commission’s 2016 proposal for an interinstitutional agreement on a mandatory Transparency Register, the different EU institutions have been debating the form of a ‘one-size-fits-all’ Transparency Register (hereafter: “the Register”). The Register, introduced in 2011, is a database that provides insights into all activities carried out by organizations with the intention of directly or indirectly influencing the decision-making processes of the EU and/or shaping the implementation of existing legislation. The Register has been set up to answer core questions such as what interests are being pursued, by whom and with what budget. The system is operated jointly by the European Parliament and the Commission.

In recent years, the European Parliament and Commission have tried to convince the Council of the EU to become more transparent by applying the Register. Currently, meetings with Commissioners, cabinet members or Commission officials at the helm of the Directorate-Generals need to be registered. In the European Parliament, the use of the Register has also become more of a common practice, in an effort by Members of the European Parliament (MEPs) to increase transparency towards their constituencies. Some MEPs make the presence in the Register a condition to accept meetings. The Council of the EU, however, has been lagging behind: most meetings still take place behind closed doors.

No registration, no meeting?

The most controversial issue in the negotiations is the principle of ‘no registration, no meeting’. This would mean organizations can no longer meet policymakers from the EU institutions if they are not in the Register. Following recent progress in the negotiations (which focused on additional clarity on the future purpose and scope for an enhanced Register), this conditionality will be further discussed in the coming months with all three institutions expressing their intention to reach an agreement as soon as possible. Furthermore, a revised Register is likely to include additional guidelines on virtual communication channels, as the nature of meeting policymakers changed significantly due to the COVID-19 pandemic and subsequent teleworking policies and travel restrictions.

EU Affairs Training - 28 January 2021

In the meantime, the different political groups in the European Parliament are increasing their transparency efforts. In June 2020, transparency watchdog Transparency International launched a new feature on the EU Integrity Watch, in which it tracks lobby meetings with MEPs. This led to a total of 10,000 logged meetings by the end of September 2020, with the percentage of MEPs reporting their meetings increasing from 37% to 44%.  However, there are internal discrepancies in the consistent usage of the Register. Mainly Scandinavian and Western European countries, as well as the liberal and green political groups are most consistent in their logging of meetings. Pressure from civil society, therefore, seems to work, but an obligation would make these efforts redundant.

A mandatory Register and its implications for Public Affairs

A mandatory Register could relieve lobbying in the EU of its somewhat dubious reputation, as well as enhance citizens’ trust in EU decision-making. Even though it is still unclear what the exact scope of the future Register would be, it is apparent that organizations will have to become more transparent about their activities in Brussels – regardless whether this is due to intrinsic motivation, or due to (mandatory) external obligations.

Organizations engaging in EU Public Affairs should, therefore, consider transparency and ethical interactions with policymakers to be an integral part of their daily work.

Dr2 Academy

The Dr2 Academy offers a wide range of tailor-made services targeted to organizations and professionals active in public or private sectors and whose work is impacted by EU policies. To learn more about EU Public Affairs and on how to engage in transparent Public Affairs, make sure to register for the Dr2 Academy EU Affairs Training on Thursday, 28 January 2020.

Dr2 Academy Register


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Renovation Wave: opportunities for the construction sector

“The green recovery starts at home” said Commissioner for Energy Kadri Simson during the presentation of the European Commission’s Renovation Wave initiative on 14 October. Buildings are responsible for 40% of the energy consumption in the EU, while 75% of European buildings are not energy efficient. With its eyes fixed on the 2050 climate-neutrality target, the European Commission aims to double renovation rates in the next ten years to increase the energy efficiency of buildings and to cut emissions. The goal is to renovate 35 million buildings by 2030, supported with funding of €672.5 billion from the Recovery and Resilience Facility. The Renovation Wave, therefore, offers new opportunities for the construction sector.

Priority actions

The strategy’s main priority is the renovation of the least energy-efficient buildings, which often house people who are most affected by energy poverty. The Commission expects that focussing on these constructions will lead to the greatest cut in emissions. Additional attention is paid to public sector buildings and the decarbonization of heating and cooling systems. The publication of the initiatives to speed up renovations of public buildings, as well as a revision of the Renewable Energy Directive to increase heating and cooling energy targets is planned for June 2021. Legal certainty to take up renovations, well-targeted funding, project capacity increases, smart buildings and the use of circular materials are lead actions to realize the transformation of European homes, schools, offices and townhalls.

Consequences and opportunities for businesses

Renovation of buildings

The Renovation Wave initiative, aimed at renovating the current stock of buildings, would bring opportunities to companies, notably, in the construction sector. The proposal that public buildings should be renovated at a higher pace than those in the private sector might lead to an increased demand in the short term. The Commission also put forward the use of efficient and sustainable products generating a higher energy consumption reduction, which will benefit the sectors providing these materials.

European Bauhaus

The proposals of the Commission do not only focus on CO2 reduction, but also envisage the launch of new European building designs. The launch of the New European Bauhaus will include the vision on how Europe will look like in the future, opening up opportunities for both the designing dimension of the new sustainable style as well as the construction side. The Commission will bring together architects, artists, students, engineers and designers to shape new construction designs.

European Green Deal Impact Scan

Financing opportunities

The Renovation Wave initiative opens up funding opportunities for the construction sector on both national and EU level. To realize action in the above-mentioned areas, an annual investment of €57 billion is foreseen from the Recovery and Resilience Facility. Other funding will be granted by the revenues from the carbon market. In addition, the European Commission will revise state aid rules, so national governments can support renovation in their respective countries.

 Electric vehicles

With electric mobility on the rise, charging vehicles at home or in public places (e.g. office buildings) will be a common practice in the near future. The Commission stresses that in order to reach the 2030 CO2 reduction targets, electric bikes, cars and vans will be the preferred mode of transport. Therefore, innovation, connectivity and accessibility of charging infrastructure will be the main aspects of the Renovation Wave which will thus present opportunities for the construction sector. Buildings will need to be equipped with the necessary infrastructure to support e-mobility.

State of play

In order to realize the European Renovation Wave, the Commission calls on the European institutions and all stakeholders to engage in a discussion on the strategy. Input from different sectors will now determine in what way the current plans and proposals will still be fine-tuned. Dr2 Consultants is eager to help your business understand the impact of the Renovation Wave and assist you in shaping its outcome by building a sound Public Affairs strategy.

For a full overview of the European Commission’s proposed measures, please see the annex to the Renovation Wave initiative.


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The future of the EU transport sector (2021-2024) – four trends

For the EU’s transport sector, the last several months were exceptionally challenging with passenger and freight transport being severely disrupted. Although the recovery of the sector is of vital importance for Europe’s economy, it also provides a momentum for the industry to act on the ambition of decarbonization and reaching climate neutrality by 2050. The upcoming EU Strategy for Sustainable and Smart Mobility (“EUSSSM”), scheduled to be published by the European Commission on 9 December, should pave the way towards sustainable recovery and provide clarity on the instruments to get there. The EUSSSM is the sequel to the 2011 White Paper on transport and will set out the broader policy priorities for the transport sector for the period of 2021-2024, including timelines for legislative and non-legislative proposals. A stakeholder consultation was closed on 23 September, attracting more than 600 stakeholder contributions. Based on our latest intelligence and the contributions of our clients to the consultation, Dr2 Consultants presents four emerging trends that will shape the future of the EU transport sector.

1. Prioritizing alternative fuels across all modes of transport

Alternative fuels are a key priority for the Commission to cut emissions and create jobs. The EU’s executive arm aims to accelerate the production of low-emission fuels and the deployment of sustainable vehicles and vessels. Following the publication of the Hydrogen Strategy this summer, the EUSSSM is expected to outline the broader uptake of green hydrogen in the transport sector. Although electrification seems to be the most viable option on the short term, hydrogen is dubbed as the energy source for the future of the EU transport sector.

In addition, the EUSSSM is expected to propose a range of policy instruments to decarbonize the EU transport sector and cut back CO2 emissions. A silver bullet to decarbonizing the transport sector is lacking, hence a mix of alternative fuels is required. The details of the fuel mix for the future will be worked out in both FuelEU proposals (FuelEU Maritime and ReFuelEU Aviation), that will aim to set out a pathway for low-emission fuels to be used in the maritime and aviation sectors. In parallel, the Commission is working on the revision of the Alternative Fuels Infrastructure Directive (AFID), which will accelerate the development of the necessary infrastructure across Member States to stimulate the uptake of low emission fuels for all transport modes. The AFID is expected to be upgraded to a Regulation to ensure that Member States act upon the ambitions.

How can the EUSSSM and related initiatives stimulate the uptake of alternative fuels in the maritime sector? According to the Port of Rotterdam, the FuelEU initiative and the AFID revision should be handled in an integrated manner to ensure that demand and supply requirements remain aligned. At the same time, a goal-based approach is a prerequisite for success. According to the Port, there is no one-size-fits all approach: the legislative framework should be accompanied by a clear roadmap (to be developed by the Member States together with all stakeholders in the value chain) encompassing the range of fuels available for each segment, while meeting general criteria of sustainability, carbon intensity and affordability.

2. Safeguarding competition in the aviation sector

European airlines have been intensively exploring potential pathways towards reducing their carbon footprints (offsets or market-based measures). To limit the climate impact of air travel, it is essential that a basket of measures is applied simultaneously to allow European aviation to fully contribute to the climate effort while long-term solutions are implemented to reduce emissions. These measures include, i.e. greener aircraft technologies, more efficient operations and infrastructure, the development of and appropriate support for sustainable aviation fuels (SAFs) and smart economic instruments.

The sustainable growth of aviation, which produces socio-economic benefits and contributes to achieving European environmental targets, remains one of the industry’s most important objectives. There is an urgency to make bold political decisions that will help European aviation meet these objectives for the benefit of passengers and businesses that rely on sustainable air connectivity. The EU should however refrain from imposing unilateral measures at EU level that would hamper European airlines’ ability to compete at global level.

3. A modal-neutral approach, facilitating sustainable transport

In recent months, Member States such as Austria and France have both announced that they would significantly cut short-haul flights if an alternative transport mode is available. Simultaneously, railway undertakings experience an increasing market demand for international rail passenger transport. According to the Dutch Railways (Nederlandse Spoorwegen – NS), the principal Dutch rail passenger operator, the EUSSSM should embrace the modal shift and stimulate the uptake of climate-friendly alternatives such as rail. In order to promote the development of an international passenger service market, the NS is of the view that the EU should strive towards the creation of a European high-speed network that is interoperable, linking European capitals and major cities and connecting urban nodes and airports.

The EUSSSM is expected to have a modal-neutral approach, but it will focus on facilitating the market demands and stimulating sustainable modes of transport. The Commission is expected to address issues related to establishing a level playing field between the modes of transport (i.e. fuel taxation, infrastructure charges), improving intermodal ticketing services and increasing the customer experience through digital solutions such as the Mobility as a Service (MaaS) concept.

4. Green funding to enhance the resilience of the EU transport industry

In order to stimulate the resilience of the European transport industry and to realize the ambitions that will be set out in the EUSSSM, investments are necessary. Following the landmark approval of the new EU budget and the Next Generation Recovery Fund by the European Council in July, the co-legislators are expected to conclude the budget negotiations by the end of this year. With a combined firepower of more than €1,800 trillion, EU Member States will have various funding instruments at their disposal to finance the recovery of the transport sector.

Member States are currently drawing up the national recovery plans in order to receive funds from the Recovery Fund. The draft plans should be shared with the Commission by late October. Project that have a cross-border impact, clear link to sustainability objectives and which can be executed in the next five years will get priority. According to the Commission, 30% of all funding through the Recovery Fund and in the new EU budget will be spent on sustainable projects.

Next steps

The EUSSSM is expected to be published on 9 December. In case you would like more information on the anticipated impact of the strategy on your organization or would like to know more about the future of the EU transport sector, do not hesitate to get in touch with us.

Visit our Transport Sector webpage.

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

Today, on 12 October, Pascal Saint-Amans, head of tax policy at the Organisation for Economic Co-operation and Development (OECD), announced that an agreement on the establishment of a global digital tax would be postponed until mid-2021. The original deadline for the end of negotiations between 137 countries was the end of 2020. However, due to major political differences, particularly on which companies should be included in the new regime and whether the rules would be mandatory, as well as the effect of the COVID-19 pandemic, negotiators will need more time. As part of its announcement today, the OECD also published updated proposals for the two areas of its digital tax plan: Pillar 1 and Pillar 2.

In the past few years, the international community has been trying to reform the international tax system in order to address the digitalisation of the global economy. The new global digital tax regime, if adopted, will have an impact on various digital companies. Specifically, the main issue at stake has been the question of where multinational companies should pay taxes: in the country where they are headquartered or in countries where their customers reside. Over the past two years, the OECD has been tasked with designing a global compromise solution, with 137 countries participating in the negotiations. Since May 2019, the OECD has been hosting public consultations and negotiations to address the tax challenges of the digitalisation of the economy (Pillar 1) and to address tax avoidance through a global minimum tax (Pillar 2).

OECD’s proposals to address global tax

The first pillar aims to ensure big digital and multinational companies are taxed in the places where they generate profit, not where they book them. The OECD suggests targeting consumer-facing firms with a significant footprint around the globe, notably revenues of at least €750 million, and whose sales in each country reach a specific revenue threshold. It has been the more contentious OECD approach, with strong disagreements between the United States and several EU countries. The OECD’s second pillar aims to set a global minimum corporate tax rate to stop countries lowering corporate tax rates in an attempt to shift company headquarters to their jurisdictions. The second pillar has proven less controversial and discussions focus mainly on what that rate should be and whether there would be any exceptions. Despite ideas to decouple the two pillars in order to appease the United States and expedite the negotiation process, an agreement cannot be achieved without committing to both pillars.

On 12 October, Mr. Saint-Amans stated that while many of the details of these proposals have been already agreed upon, there are still difficult political choices to be made, including the idea of ‘safe harbor’ making the entire digital tax agreement optional, for which the United States has been negotiating. By accepting a safer harbor regime, governments would have the possibility to choose whether to adopt the rules or not, thus allowing companies to adopt or disregard Pillar 1 of the proposal.

The OECD will present the two blueprints at the meeting of G20 finance ministers on 14 October, for which a report is already available. Furthermore, today a public consultation was launched on the reports of the two blueprints, inviting stakeholders to send their written comments to the OECD by 14 December. Public consultation meetings on the blueprints will be held in January 2021, for which the OECD will publish registration details in December 2020.

OECD’s negotiations: state of play

In June 2020, the United States temporarily withdrew from the OECD negotiations due to the COVID-19 crisis, internal political disagreement and the upcoming Presidential elections. This withdrawal marked a peak in the tensions between the United States and France. In 2019, after France adopted a national digital services tax, the US government launched an investigation, determining that France’s digital tax was unfair because it was discriminating against US companies. The two countries reached an agreement and sanctions were not imposed pending the OECD negotiations. Following the United States’ withdrawal, France, the United Kingdom, Spain and Italy suggested a “phased approach” to the digital tax talks, allowing more concessions so that a compromise remains within reach. The details of such an approach, however, are still not clear. On 9 and 10 October, a final round of negotiations took place, aiming to reach a compromise between the opposing positions of the United States and its EU negotiation partners. Deputy U.S. Trade Representative C.J. Mahoney urged Europe to support an OECD deal and signalled that the United States would be able to engage more deeply with the negotiations after the Presidential election on 3 November. Following these negotiations, it was announced that an agreement on the global digital tax would be postponed until mid-2021.

EU’s position on digital taxation

According to the European Council conclusions on the 2021-2027 Multiannual Financial Framework and Recovery Fund, published on 21 July, the European Commission will present a proposal for the introduction of an EU-wide digital tax in the beginning of 2021 with a view to its introduction at the latest by 1 January 2023. The Commission expects the tax to bring €1.3 billion to the EU in terms of revenue, in case the ongoing OECD negotiations fail to deliver an international agreement by the end of 2020. The Commission’s intention to come up with a proposal for a European digital services tax in the beginning of 2021 has been reaffirmed by Commission President Ursula von der Leyen in her State of the Union address. Furthermore, on 4 September, during a meeting with national tax officials in the High Level Working Party on Tax Questions, the European Commission presented their plans to launch a new digital tax in the summer of 2021. The tax is meant to feed into the EU budget necessary for the recovery plans. It is not clear how the negotiations at OECD level will impact the EU digital tax, as some say that the tax will come regardless of the progress at OECD level, while the Commission officially states it will only come forward with a new tax proposal if OECD negotiations fail. Following the outcome of the OECD negotiations, it is possible that the Commission might postpone its proposal to allow OECD negotiations to conclude in 2021.

National Digital Services Taxes

A group of EU Member States and the UK have adopted national digital services taxes to remain in force until an international agreement is reached. In 2019, France started applying a 3 percent digital services tax on big tech companies with revenue of more than €750 million of which at least €25 million generated in France. After considering its suspension in January 2020 until the end of the year in the hope of an OECD agreement, Paris recently stated that, in wake of the COVID-19 crisis, such a tax is necessary and will not be suspended. Italy and Austria have been applying their own digital levies of 3 and 5 percent respectively, since January 2020, and the UK has approved a 2 percent tax applied from April 2020. Spain and the Czech Republic are currently in the process of discussing such taxes and the new Belgian government has announced it will start work on a national digital levy in 2023 in case there has been no progress on OECD or EU level beforehand.

Business implications

The OECD proposal for a global digital tax regime will target automated digital services businesses and consumer-facing businesses such as search engines, social media platforms, cloud computing, content streaming and gaming, as well as online marketplaces and businesses selling goods and services to consumers online. It has been clarified that intermediate products and components for consumer products would be out of scope, with some remaining subject to possible exceptions.

Although, generally speaking, one can say that the target of digital taxes are normally large digital companies, the various ways in which these companies integrate the tax into their business models, may also have a direct impact on their business customers/users. With the unilateral development of digital taxes across Europe, some technology companies have decided to take on the additional costs themselves. However, other companies are going to announce price increases for their business customers/users as a result of the adoption of national digital taxes in some EU countries.

Dr2 Consultants continuously monitors the developments of the discussion on the new global, EU and national tax regimes. Should you be interested in further information on digital taxation and how it could impact your business, you can reach out to Dr2 Consultants at info@dr2consultants.eu or find more information on our website.

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