Sweden has taken over the Presidency in the Council of the EU. What could be the impact on your business?

Until 30 June, Sweden holds the Presidency of the Council of the European Union. The six-month rotating Presidency will provide Sweden with the opportunity to set and steer the EU’s agenda, find a compromise with the other 26 Member States, advance the Council’s work on legislation, and liaise between the Council and other EU institutions.

Welcoming the Swedish Presidency

Sweden takes over the rotating Council Presidency with a year-and-a-half left until the next European election. Normally at this point in the five-year election cycle, the EU’s legislative timetable is busy but quite predictable. However, this is not the case following the severe energy crises the EU had and still must deal with.

The priorities of the Swedish Presidency were presented by Prime Minister Ulf Kristersson in a speech in the parliament. The four core priorities of the Swedish Presidency are as important on the global level as ever:

  1. Strengthen the security of the EU by reinforcing its unity.
  2. Integrate more resilience in the economic future of the EU by increasing European competitiveness.
  3. Accelerate the green and energy transition, stating that European companies that provide green solutions will be in high global demand and can help drive the transition towards a circular economy.
  4. Promote European democratic values and the rule of law as part of the foundation of the EU.

What is the role of the private sector?

Regarding the current energy crisis and the nascent energy transition, the Presidency wants to prioritize the transition to a resource-efficient, fossil-free future by providing the right regulatory framework and policies to attract investments.

In this regard, the Presidency stresses the important role of the private sector. The Swedes are also determined to drive rapid negotiations on energy files and a clean industry transition.

EU Member States will therefore also work on a joint industrial policy. This presents companies with an important window of opportunity to secure their business goals in the coming period. On top of that, the Presidency also vows to implement major reforms and investments under the Recovery and Resilience Facility, considering the REPowerEU plan.

Are the Swedes green?

The Swedes will continue with negotiations on the remaining parts of the “Fit for 55” high-ambition package in the Environment Council. In this context, the outcome of the UN Climate Change Conference (COP27) will play an important role.

The Presidency will continue organizing several international negotiations, most notably on a legally binding global agreement on plastic pollution. The Presidency will also work on the EU regulatory frameworks that promote non-toxic material cycles, increased use of high-quality recycled materials in products, and other business models that promote a circular economy. The Swedes will also intend to advance the work on the revision of the Packaging and Packaging Waste Directive.

Transport and CO² standards

On transport, there is still a multitude of proposals underway. This includes the Commission adoption of the new truck CO² standards and plans to increase the capacity on the EU’s rail tracks, a revision of the rules on vehicle weights and dimensions and an initiative on greening corporate fleets. In addition, the planned Alternative Fuels Infrastructure Regulation (AFIR), ReFuelEU Aviation and FuelEU Maritime, are still under negotiation. Sweden will probably work on these files at the end of their term, which will leave a short time for the dossiers to be agreed upon before the EU election in 2024.

What about digital policy?

When looking at the Swedish Presidency’s program, digital policies are not perceived as very ambitious. On the Data Act, they aim to develop a general approach in the Council and kick off Trilogue negotiations with the Parliament. However, the Swedes signal no commitment to finish the discussions before the Spanish take over in July. In May, the European Commission presented its “European Health Data Space”, which aims to regulate the transmission and sharing of health data across Member States. On health data, the Presidency has the task to decide how this data can be used for research and policymaking and ensure the legislation includes sufficient safeguards around privacy and data protection. On artificial intelligence, the European Parliament still has to adopt a position on the AI Act, which the Swedes can then use to coordinate the trilogue negotiations. However, the file is so complex that it is not expected that negotiations will be concluded in six months.

Transatlantic trade and a level-playing field

A trade war with the United States seems to be on the doorstep of the European Union, as Washington unveiled a monumental $369 billion program of state support for home-grown green tech industry.

Although President Biden made a vague promise to ensure that European companies could also benefit from the subsidies package, it is unclear to what extent this will be put into effect. The Swedish Presidency will have to mediate between the 27 EU Member States, who are bound to differ in opinion on how to protect the green tech sector of the EU.

Single market and budget discussions

The Swedish Government has recognized that strengthening and deepening the Single Market will promote free trade, which in turn will help to accelerate the green transition and support the ongoing digitalization of the economy. As an open and liberal economy, Sweden understands the importance of this and will use its Presidency of the EU to champion the Single Market.

Lastly, the mid-term review of the Multiannual Financial Framework (MFF) 2021-2027, which will take place probably under this Presidency, provides an opportunity to reassess whether the current EU budget continues to provide the resources to respond to common challenges.


While the Czech Presidency was very much focused on deepening external relations with the EU, the Swedish Presidency wants to turn its attention inwardly. The Swedish Presidency and the 30th anniversary of the EU’s Single Market both fall in January 2023. We note Sweden’s focus on innovation, open trade, and strengthening the EU’s internal market.

The continuing development of a fully functioning Internal Market is a strong indicator of this. However, Sweden Democrats (SD) party’s domestic political sway may influence the next EU Presidency’s work on a broad range of topics, from pesticide use and climate to migration. Despite not being in government, SD is consulted on predefined topics, including energy and EU affairs.

Learn more about our EU services

Do you wish to know how the change in the Presidency of the Council might impact your business operations? Thanks to its expertise working with clients in the sustainability, energy, transport and digital sector, Dr2 Consultants is well placed to assist your company in identifying the impact of and leveraging the opportunities offered by developments in EU policy.

Dr2 Consultants offers tailor-made solutions to navigate the evolving policy environment at EU level and anticipate the impact of EU legislation on your organization. For more information on Dr2 Consultants’ full range of services, don’t hesitate to contact us.

What are the outcomes of the Czech Presidency and their effect on the European economy?

The Czech Republic held the Presidency of the Council at a particularly tense time for the European Union. With the motto ‘Rebuild, Rethink, Repower’, the Czech Presidency focused on five key priorities:

  1. Managing the refugee crisis and post-war reconstruction of Ukraine;
  2. Energy security;
  3. Strengthening European defense capabilities and cybersecurity;
  4. Strategic resilience of the European economy; and
  5. Resilience of democratic institutions.

Tackling the energy crisis and creating a level playing field

The energy agenda of the Czech Presidency was primarily determined by the REPowerEU plan, which aims to reduce our dependency on Russian fossil fuels, and tackle high energy prices, as well as to increase the roll-out of renewable energy sources.

Several political agreements were reached under the Czech presidency as part of the “Fit for 55” package:

  1. Carbon Border Adjustment Mechanism (CBAM) agreement – CBAM will set up the world’s first levy on carbon-intensive goods entering its market. CBAM aims to create a level playing field and to converge global climate ambitions.
  2. Reform of the EU’s Emissions Trading Scheme (ETS), the biggest carbon market in the world. The EU’s flagship climate policy instrument aims to stimulate innovation and curb greenhouse gas emissions.
  3. Launch of negotiations on a new global international treaty to reduce plastic pollution on land and in the seas.


The Czech Presidency succeeded in delivering on key transport priorities, such as:

  1. Regulation for the development of the trans-European transport network (TEN-T), a network of roads, railways, airports, and water infrastructure in the European Union. This should result in better-quality travel and more transport construction funding for applicants from Member States.
  2. The Presidency also made progress on the alternative fuels infrastructure Regulation (AFIR), which aims to increase the recharging and alternative fuel refueling points in the EU for cars, planes, and ships.
  3. Regulation on the use of renewable and low-carbon fuels in maritime transport (FuelEU Maritime) and sustainable air transport, (RefuelEU Aviation). Both regulations promote alternative fuels to be used in their respective transport sectors.

Digital Europe

Under the auspices of the Czechs, remarkable progress was booked regarding several key digital files:

  1. The Council adopted general approaches on the European Digital Identity – the digital wallet that can be used to identify, authenticate or verify certain aspects such as age in any other EU country – and the Artificial Intelligence (AI) Act, which aims to introduce a common regulatory and legal framework for artificial intelligence;
  2. Furthermore, significant strides were taken regarding the Data Act, a key measure for making more data available for use in line with EU rules and values; and
  3. The Cyber Resilience Act, published by the Commission in September, which aims at setting common cybersecurity standards for connected devices and services.

These developments were also part of the Czech drive to develop a strong and unified (transatlantic) approach to digital policy. Whether it will lead to a convergence of standards to improve the ease of transatlantic trade remains to be seen.

Overall, we can say that the Czech has made several steps to make the European economy more resilient by promoting the use of alternative fuels, and thereby less dependent on Russian fossil fuel imports. Through the introduction of CBAM and the revisions of the ETS, it also aims to promote a level playing field and stimulate innovation to reduce global greenhouse gas emissions.

If you are interested to understand how these new policies will impact your business operations, do not hesitate to contact us.

Sustainability in the end of life of a product

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

Sustainable end-of-life of a product

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 analyzing 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 and second article on the products’ (pre-)development and introduction to the market, this article, which includes a contribution from our partner PHI Factory, focuses on sustainability in the end of life (reuse, recycling, disposal, incineration etc.) of the product.

Extending the product’s life cycle

Closing the product’s loop

The linear economy model and consumption trends in the past decades have contributed to a massive generation of waste in the European Union. Despite the existence of EU laws on waste management and on the environmental performance of products for more than 20 years, these initiatives never constituted a cohesive framework. Hence the effectiveness of reducing waste and limiting resource use through legislation remained limited.

The European Commission found that the best way to sustainably manage the end-of-life of a product is to extend that product’s life, limiting the manufacturing and sale of brand-new products altogether. Therefore, the Commission introduced the objective in the first 2015 Circular Economy Action Plan of “closing the product’s loop”, followed in 2020 by a new Circular Economy Action Plan, addressing the sustainability of a product throughout its entire lifespan. The ambition of the Commission is to encourage companies to shift their business models to overcome the traditional ’take-make-waste’ or ‘take-make-use-dispose’ economy, by guaranteeing that every product put on the market has a way to be shared, reused, repaired or recycled.

Companies can make the choice to ensure that their products and components can be reused at their highest value. Circular business models are one way to ensure this. They contain financial incentives for manufacturers to ensure high quality and durability. For example, Product-as-a-Service models, in which ownership stays with the company instead of transferring it to the consumer. This way, companies have more ongoing engagement with closer customer contact as they do not only sell a product but also the associated services to repair or replace. Companies are incentivized to create the best possible products that are easy to repair and can be given a new life, instead of gaining most by selling as much as they can. They also benefit from informing their consumers on how to take good care of their products during their lifetime. Other examples of circular business models are Pay-per-Use or Buy-Back models, which also rely on consumer contact and encourage the sharing and return of products, to be given a second life.

Fight against planned obsolescence

Despite its ambitions, the European Commission is well aware that some companies can purposely seek to reduce the lifespan of products, in order to incentivize consumers to purchase new ones. Hence, the Commission proposed a revision of the Consumer Rights Directive and the Unfair Commercial Practices Directive (UCPD) aimed at limiting planned and early obsolescence by classifying associated practices as unfair under the UCPD and by obliging companies to inform consumers about features that could limit durability. For instance, electronics manufacturers would be obliged to disclose information on new software which could downgrade the functionality of the product after a certain period of time. Furthermore, companies are prohibited from inducing consumers into replacing the consumables of a good (such as the cartridges of a printer) earlier than necessary for technical reasons. A concrete example of the European Union’s progress on the matter is the legislation on a common EU charger, aimed at preventing e-waste by reducing the necessity to buy different chargers for devices of different brands, as well as decreasing costs for consumers.

This legislation will strongly impact manufacturers of electronics but will actually benefit all companies who also on rely electronic devices to carry out their operations, and who may also suffer from this planned obsolescence. Indeed, the increased transparency will likely refrain manufacturers from downgrading the functionality of their products over time, ensuring a longer lifespan for these various devices, and thus reducing the budget spent by companies on material such as laptops and phones.

The benefits of durable business models

The measures related to promote repair and fight against planned obsolescence will have a fundamental impact on companies whose business models still strongly rely on consumers requiring replacement products. Many companies still need to break from the ‘take-make-waste’ model. Transitioning towards a more circular model and working to extend the life of your products, as promoted by the European Commission, can however bring a competitive advantage by attracting customers more and more conscious of the environmental impact of their purchases, as more durable and repairable products have a much lower carbon footprint.

Take a laptop, for example. When a laptop is made to last about three years, the yearly carbon footprint is 40% higher than when a laptop is made to last 5 years. When the lifetime can be extended by replacing the battery, the yearly carbon footprint is still about 30% smaller taking the carbon footprint of the battery into account (see figure 1).

When organizations globally design their products to last longer or be repaired more easily, it will not only contribute to attracting the more conscious consumer which look to purchase a product with reduced environmental impact. Repair costs will also go down (30-40%) as labor costs make up for the major part (see figure 2). This will result in reparations becoming more economically attractive than replacing the product. Switching to more service-oriented business models will also benefit manufacturers, as, in the longer run, resource scarcity will increase prices, making the consumption of new products even more expensive and the transition towards a circular economy even more urgent.

In a context of increased risks of shortages of critical raw materials, shifting part of the activity towards repairs and longevity of products can also ensure companies’ supply chain continuity by reducing production cadences and limiting need for new resources. Factoring in the on-going energy crisis, extending the lifespan of products could lead to energy savings. Indeed, as a whole, the European Commission estimates that the new Ecodesign for Sustainable Products Regulation, by introducing durability and energy performance requirements for a large range of products, could lead to 132 mtoe of primary energy savings, which corresponds roughly to 150 billion cubic meters of natural gas, almost equivalent to EU’s import of Russian gas.

Improving waste management to promote reuse and recycling

Despite all efforts to extend the life of a product, there will inevitably come a time when it will not be usable anymore, at least not with its first intended purpose. To avoid products ending up in landfills or being incinerated, the EU adopted the five-stage “waste hierarchy”, introduced by the 2008 revision of the Waste Framework Directive (WFD). The waste hierarchy establishes the order of preference for managing and disposing of waste, from most to least sustainable. Companies are encouraged to, preferably, prevent waste altogether, whereas the next best options are to reuse, and recycle the product.

To further promote the sustainable end-of-life of products in line with the Circular Economy Action Plan, the Commission is currently working on the revision of the Waste Framework Directive, to be presented in Q2 2023. This revision aims to improve the implementation of the waste hierarchy by further promoting companies to reuse and recycle, for which rates remain low. The revision will target inefficient waste collection systems by creating new separate collection systems for different waste streams, notably for textile and oils, and will address illegal disposition of waste.

The Waste Framework Directive’s most direct impact is for Member States and local authorities who need to ensure that the right waste collection systems and infrastructures for reuse and recycling are in place. However, improved national or local waste management systems can help companies in ensuring the most sustainable end-of-life for their products, avoiding that end-up in landfills or are incinerated without purpose. This can contribute to easing the transition to a more circular business model and reducing the environmental impact of companies’ products, ultimately benefiting companies’ sustainability ambitions.


New European rules increasingly frame the end-of-life of products to ensure their most sustainable potential, either by extending their lifespan as much as possible, or by ensuring they are recycled or reused. Companies who already shift away from “take-make-use-dispose” business models towards more circular models will be frontrunners, prepared for future EU requirements and resilient to potential resource scarcity. Moreover, in the long-term, those companies will be saving costs and securing a competitive advantage. Alternatively, non-compliance of EU legislation can easily lead to sanctions, or to prohibitions to manufacture, import or sell. To secure the future of your company you need a clear and personalized overview of the EU’s ambitions and their impact on your business.

Curious about how EU environmental legislation applies to your company’s activities? Dr2 Consultants’ European Green Deal Impact Scan and Sustainability Consulting services 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!

Read also:

PART I: Sustainability in product (pre-)development

PART II: Sustainability in the product’s introduction to market

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

On 15 September 2022, 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

The default category consists of low-risk products, covering 90% of the market, including smart toys, TVs or fridges, and would require companies to perform a self-assessment to ensure that a product meets cybersecurity standards.

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 23 January 2023. In the meantime, the European Parliament’s Industry, Research and Energy Committee (ITRE) has been appointed as the responsible committee, under the lead of MEP Nicola Danti (IT) as Rapporteur for Renew Europe. Shadow Rapporteurs will be Henna Virkkunen (FI) for EPP, Beatrice Covassi (IT) for S&D, Ignazio Corrao (IT) for the Greens/EFA and Evžen Tošenovský (CZ) for ECR. The Internal Market and Consumer Protection (IMCO) and Civil Liberties, Justice and Home Affairs (LIBE) Committees will produce an opinion. .    

On 18 November, the Czech presidency of the Council of the EU circulated the first compromise text on the Cyber Resilience Act, making major changes to the proposal’s scope and free movement clause. On 6 December, the Telecommunications Council discussed the progress report. It revealed that an essential part of the discussions in the Council focused on the extent to which Software-as-a-Service is covered in the regulation.

Even before the draft was out, Denmark, Germany and the Netherlands issued a non-paper calling for an extension of the scope to Software-as-a-Service. A new text from the Czech presidency, dated 2 December, updated the previous compromise text by placing SaaS firmly outside the regulation’s scope. In particular, the draft law has been rephrased to only apply to remote data processing solutions based on software or hardware that support the functioning of a connected device. The push for keeping SaaS outside the new cybersecurity rules is consistent with what Internal Market Commissioner Thierry Breton said at the Telecommunications Council meeting on 6 December. During the meeting, Breton stressed that SaaS is already covered by the NIS2 Directive, adding that incorporating these services under the Cyber Resilience Act would be a legal challenge because of the legal basis on which the proposal was based.

On 2 June 2023, EU Ministers will meet to discuss the progress on the file. The Presidency’s objective for the next six months is to advance as far as possible the negotiations in the Council on the Cyber Resilience Act.

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. 

How can supervisory boards facilitate the transition to a new sustainable economic business model?

Blog post by Margreet Lommerts

Climate change is one of the biggest challenges we are facing today. This is true for countries and companies that must adapt to a changing world. However, many companies struggle to transform their business models.

In this blog, I uncover the pivotal role corporate governance plays to ensure the long-term value creation of a company based on my research. I found that today, more than ever, supervisory boards play a key role in the transition to the new sustainable economic business models. So how do you do this?

Below, I have summarized my key findings into practical guidance on the abstract and complex transition to a sustainable economy for the leadership of companies and anyone interested in this question. I was able to test and validate my findings through interviews with Boudewijn Siemons (COO of the Port of Rotterdam), and Ineke Dezentjé Hamming-Bluemink, who has extensive supervisory experience as a member of the supervisory board of Vopak Netherlands, Eindhoven University of Technology and ANWB (Royal Dutch Touring Club).

What Governance questions should you ask?

My research takes into account current corporate governance trends and initiatives around sustainability including Environmental Social Governance (ESG) and the United Nations Sustainable Development Goals (SDGs), as well as European legislative trends regarding corporate sustainable governance, due diligence and reporting.

Based on these findings, I uncovered which questions the supervisory board should ask to facilitate the company’s transition to a new sustainable economic business model. These questions relate to four key themes;

  1. Long-term value creation
  2. Sustainability strategy
  3. Forward-thinking
  4. ESG and renumeration

Below I briefly describe each of these themes and propose the most crucial questions for a supervisory board to ensure the company develops sustainable policies and ultimately transforms into a future-proof business model.

1. Long-term value creation

The supervisory board handles the long-term value creation of a company and acting sustainably is part of that. This also implies that the interests of shareholders must be considered.

The questions that the supervisory board should ask in its oversight of long-term value creation are:

  • What are the most important issues affecting our long-term value creation?
  • What is our business model, including in terms of ‘non-financial’ value?
  • In what ways are we creating social value?
  • Do we know which sustainability issues matter to our stakeholders?

2. Sustainability strategy

Besides handling long-term value creation, the supervisory board bears responsibility for the company’s interests and the interests of everyone associated with it. Hence, the Board should look beyond the interests of the shareholders.

Questions the supervisory board should ask to oversee the sustainability strategy are:

  • What are our sustainability ambitions? What are the priority areas for action, given our values and ambitions?
  • What is our position relative to the rapidly evolving European legislative agenda?
  • What is our position relative to the 17 SDGs? What are we doing?
  • How has the (sustainability) strategy been integrated in the organisation?
  • What is the quality of our sustainability reporting?

3. Forward-thinking

The supervisory board has the task of advising and supporting the Executive Board. Since members of the supervisory board usually have years of experience in the business world, they bring different types of experiences to the table. They may have experience in managing companies with different types of shareholders of working in different sectors, with different ambitions. Such experiences are unbelievably valuable and keep the Executive Board on its toes.

To properly fulfil the advisory role, the supervisory board should ask the following questions:

  • Are we knowledgeable about the rapidly developing European legislative sustainability agenda in relation to our strategy, and are we capable of fulfilling our advisory role?
  • Do we share enough information in our organisation to give us an adequate understanding of the implementation of our sustainability strategy and its accompanying culture and business conduct?
  • Do we have the necessary sustainability expertise in-house, or do we need to hire (temporary)external expertise?

4. ESG and renumeration

ESG developments are increasingly linked to remuneration policies, an important part of the shareholder agenda.

Subsequently, the supervisory board should ask questions, such as:

  • Do we have a remuneration policy that does not only focus on financial performance?
  • Which of the ESG themes are important to our organisation and would we like to see reflected in the remuneration policy as a directors’ incentive? Consider environment and climate, culture, remuneration, the position of employees, diversity, etc.
  • How do we define the performance criteria and how do we measure the result?
  • Do we know what the top executives earn in comparison to the organisation’s average employee?

In conclusion, for the transition to a new economic model, the supervisory board can play a crucial role. From approving the (sustainability) strategy, to appointing directors capable of shaping and implementing the company’s sustainability ambition, the supervisory board holds the key to overseeing the company’s sustainable value creation based on its supervisory, advisory and employer functions.

Do you want to know more about the expertise and services of Dr2 Consultants on sustainability, or how we can assist you to make this transition? You can reach out to Margreet Lommers here.

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 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.
  • Ibán García del Blanco (S&D, ES) in the Legal Affairs (JURI) 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.

The ITRE Committee’s rapporteur submitted her draft report in mid-September. Over 1000 amendments were submitted which will change the text significantly. MEPs have most concerns about trade secrets, IP rights, personal data protection, administrative burdens as well as biometrics. Originally, the Data Act aimed to manage the sharing conditions for the data generated by any connected device, except for products that are designed to display or play content, including smart TVs and smartphones. However, some members of the European Parliament, featuring MEP Mituța (RE, RO), found that these products should be included if they function as an Internet of Things (IoT) product, for instance, when it calculates distance or speed. This is a significant change in the scope of the legislation.

Additionally, in her report, del Castillo also made a distinction between raw data, i.e. data as it is collected, and prepared data, i.e. data that was processed to make it more “comprehensible”, specifying that the Data Act only covers the former. For some other MEPs, like MEP Boeselager (Greens, DE), the definition of data holder should be extended to all parties with a contractual right to use the data. He is also vocal about the idea to monetize the non-personal data of users. At the same time, MEP Melchior (RE, DK) stresses that the boundary between personal and non-personal data should be clarified, and also the definition of the different data types should be better defined.

Furthermore, the Commission merged the data holder and the product manufacturer but there is an ask from the European Parliament to differentiate. MEP Niebler (EPP, DE) wants stronger protection of trade secrets by requesting safeguards to be agreed upon in the contract and taken before any data-sharing takes place. Moreover, in the European Commission’s proposal, tech companies that are designated as gatekeepers under the Digital Markets Act are excluded from benefiting from the data-sharing provisions of the data law. MEP Mituța prefers to extend the ban to all companies with a dominant position in the data market. With regards to public access to private data, some MEPs would like to see an extension on when privately-held data can be shared. Others propose to reduce the scope of this part merely to industrial data. Notably, the LIBE Committee’s rapporteur would like to entirely delete Chapter V on mandating data sharing, referring to warnings about the protection of personal data and fundamental rights.

The EP Committees still have to vote on their opinions and report, so further changes are still expected to come.

On the side of the Council of the EU, the Member States are moving much faster, with a new compromise text being tabled for discussions within the Council’s Telecommunications and Information Society Working Party in end-October and early November, explicitly referring to common European data spaces, providing a framework for sharing or jointly processing data related to a specific sector like health or transport. Competent national authorities are also mandated to promote voluntary data-sharing agreements between public and private actors. They also clarified the protection of trade secrets and the definition of the data holder.

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

Under the new Swedish Presidency, Stockholm indicated that there are difficulties to find agreement on SMEs exemption, B2G data sharing and trade secrets. The paper was presented at the first Working Party meeting on 10 January 2023. Other member states are asked to provide feeback on these issues. A next compromise text is foreseen for 31 January 2023.

While, the ITRE Committee will vote on its report on 9 February 2023, with a plenary vote scheduled for the following 13 March 2023. 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 and its trilogue negotiations are not expected to be finalized before Spring 2023.

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.

REPowerEU: A boost for the European energy transition

Accelerated by the situation in Ukraine, this year 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 the 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 build off 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 and its potential to mitigate the negative effects deriving from the energy crisis across the bloc.

The main elements of REPowerEU plan 

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

Energy savings

Together with the REPowerEU plan, the Commission presented 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 proposed 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%. The European Parliament on 14 September proposed to raise the target even further to 14.5% by 2030. The Commission also wants to double the current deployment rate of heat pumps, resulting in a cumulative 10 million units over the next five years. Moreover, Member States are encouraged to introduce 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.

Building on the REPowerEU plan, on 26 July 2022, the Council of the EU agreed on the ‘Save Gas for a Safe Winter’ package, originally proposed by the Commission, to voluntarily reduce Member States’ gas demand by 15% compared to their average consumption in the past five years between 1 August 2022 and 31 March 2023. In addition, Member States agreed to the possibility of triggering a ‘Union alert’ on the security of supply, in the instance of a substantial risk of a severe gas shortage, in which case the gas demand reduction would become mandatory. On 30 September, the energy ministers of the EU 27 agreed on further measures for Member States for a voluntary overall reduction target of 10% of gross electricity consumption and a mandatory reduction target of 5% of the electricity consumption in peak hours during winter.

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.

Moreover, 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.

Fit for 55 services

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, it proposes 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. In order to do so, the Commission published both a proposal to amend the Renewable Energy Directive as well as a non-binding recommendation to the Member States. Central to the proposal is the introduction of “Renewable go-to Areas”. Member States are to develop such areas in which a simplified permit procedure will apply for renewable energy projects other than biomass combustion.

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). During the summer, the EU struck new deals to enhance energy cooperation with Norway and Azerbaijan.

During her State of the Union address on 14 September, European Commission President Ursula von der Leyen announced the Commission’s priorities in response to the increasing energy prices and the difficult economic situation for citizens and businesses. Notably, she announced an upcoming reform of the energy market as well as further investments for renewable energy, such as hydrogen. On 30 September, the energy ministers of the EU 27 agreed on a set of Commission measures complementary to the REPowerEU plan. These measures introduce a mandatory reduction in electricity consumption, a profit cap for electricity producers with low operating costs, and a solidarity contribution from the fossil fuel industry. They are temporary measures that will apply from 1 December 2022 to 31 December 2023. The reduction targets of energy consumption shall apply until 31 March 2023. The mandatory cap on market revenues shall apply until 30 June 2023.

With regards to economic sanctions, earlier in June, the Council of the EU agreed on a total ban on insurance and financial services for seaborne Russian crude oil, entering into force from 5 December onwards. The proposed eighth sanction package aims to add a ban on shipping Russian oil but include an exemption for oil priced below a cap set by the G7. A gas price cap is still further away, with notable opposition from a limited number of Member States (e.g., Germany).

What to expect next from the REPowerEU plan?

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 the 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 targets within many of the Fit for 55 legislation, such as the Renewable Energy Directive, are still subject to negotiations among the co-legislators. While 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. Notably, in September, MEPs voted to raise the target of renewable energy from 40% to 45%. The European Parliament will start its discussions on the proposed amendments to RED on permitting procedures in the end of October in the ITRE Committee. MEPs and the Czech Presidency of the Council of the EU aim to integrating the proposed RED on permitting procedure into the Trilogue negotiations on RED III and close the files by the end of the year.

As regards other REPowerEU deliverables, on 4 October, EU economy and finance ministers agreed to add REPowerEU chapters in their national recovery and resilience plans (RRPs) to channel investments toward achieving REPowerEU objectives. The additional €20 billion will be sourced from the Innovation Fund and the ETS allowances. The vote on the REPowerEU chapters is scheduled on 9 November in the Plenary.

On 7 October, the informal European Council will discuss how to guarantee security of supply and affordable energy for households and businesses as well as to ensure a well-coordinated European response. To address high energy prices, Member States have been adopting national measures (e.g., the newly announced German plan of €200 billion investment), which undermined the EU-level actions taken in the past months and resulted in an uncoordinated approach. In this context, the European Commission proposed a common EU roadmap to limit the prices in the natural gas market, introduce a temporary price cap on gas and boost negotiations with reliable energy suppliers (e.g., Norway and the United States).

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 EU Energy and Climate Policy Updates (read the latest update here and subscribe here).

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. 

Public Affairs in an economic downturn: how to recession-proof your Public Affairs activities

Crisis preparedness and management are essential parts of a successful Public Affairs strategy. Whether it is a pandemic, global conflict or economic downturn, being adaptable and flexible is a must. As companies and organizations eye a potential recession, what can you do to prepare your Public Affairs activities for an economic downturn?

Cutting costs is among the first things managements decide about when the economic outlook becomes worrying and Public Affairs tend to be among the most vulnerable functionalities of organizations that become victims of downsizing. However, a well-functioning Public Affairs department is critical when bracing for an economic downturn to ensure your company can withstand a recession. Staying in the frontline of EU policymaking allow organizations to better position themselves and be ahead of the crowd, be prepared for new legislation and benefit from new opportunities.

New challenges for Public Affairs

The recent example of the COVID-19 pandemic showed that those companies who remained visible and active in Brussels despite the insecurities and the strict working from home policies benefited the most from the changing legislative landscape as they managed to stay connected and maintain their access to key policymakers (e.g. successfully conveying messaging on keeping borders open for goods, review of state aid rules for companies that were hit by the pandemic). 

Recession-proofing is all about being as efficient and streamlined as possible: one way to achieve this is to consolidate and visualize the upcoming policy and market trends that impact your organization, map stakeholders and track engagements. Creating and maintaining an online repository for your co-workers where you can keep track of your activities can create a culture of seamless collaboration and transparency. Doing this will drive alignment and improve institutional knowledge as well as make your Public Affairs activities relevant and visible towards your management. 

More than ever, during an economic downturn it is vital to be aware of potential risks and threats that can be detrimental to your organization. Tracking key legislation can be a challenge for any company, so it is important to arm yourself with solutions that meet your needs, power your decisions and evolve with your priorities. 

What to expect from the EU? 

As the EU is bracing for the biggest economic recession of the past decades, the EU institutions are working hard to coordinate measures in view of mitigating its impact. It is yet unclear what extent and how long the downturn will last but learning from previous crises, the EU will use the momentum to build upon a more sustainable and energy-efficient and -independent policy for the EU27. Therefore, we can expect that in the wake of the crisis, the European Parliamentary elections of 2024 as well as the policy agenda of the new European Commission will further embrace the twin priorities (sustainability and digitalization) of the Von der Leyen Commission and taxonomy will be also in the heart of the new institutional work programme. 

Therefore, in order to stay up-to-date, remain relevant and able to influence policy making in the months ahead, continuous investment in Public Affairs and presence in Brussels is a key for success. Dr2 Consultants has already helped companies to effectively streamline their activities during the COVID-19 pandemic. Reach out to us if you want to learn more about our track record and approach of providing efficient Public Affairs support. 

This is an opinion article by Viktoria Vajnai, Managing Partner Dr2 Consultants 

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.

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