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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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New Belgian federal government’s sustainability policy priorities

After 493 days of negotiations between the political parties in Belgium since the elections in May 2019, the new federal government of the Kingdom of Belgium was sworn in on 1 October 2020 with Alexander De Croo (Open Vld) appointed as new Prime Minister. With a clear difference in engagement compared to Charles Michel’s so-called ‘Swedish coalition”, sustainability – together with employment and solidarity – is one of the key themes in the new coalition agreement, which confirms full commitment to the climate ambitions of the Paris Agreement and the European Green Deal. The ambition is to reduce greenhouse gas emissions by 55% by 2030 and make Belgium climate neutral by 2050.

Another urgent focus of the new government will be addressing the corona crisis and the path to economic recovery by transitioning into a more sustainable economic model. The “Government De Croo” sets out investments and new policies in line with the goals of the European Green Deal, however, it often remains unclear how the goals will be achieved in practice.

Renewable energy sources 

The new Belgian federal government proposes to invest more in the development of renewable energy sources, in particular in wind and solar energy, i.e. by exploring potential additional capacity for offshore wind in the Belgian North Sea. However, environmental organizations already raised their concerns about the lack of measures that would protect nature reserves in the North Sea in case economic activities would be exploited in the area. Additionally, in their pursuit of climate neutrality, public companies are encouraged to develop their own sustainable energy supplies and to gradually replace polluting sources, including nuclear energy.

Sustainable transport 

Railway is within the competency of the federal government, where additional investments are expected with the ambition to create more efficient and faster international (night) train connections to major European cities and consequently make Brussels a truly international train hub. The government is also aiming to double the freight traffic by 2030. In consultation with the regions, the government will put forward proposals on the uptake of zero-emission vehicles (subject to the availability of such affordable vehicles on the Belgian market) including an obligation on zero-emission company vehicles by 2026. Also, together with the regions, this government will strive for an ambitious modal shift and the promotion of Mobility-as-a-Service with a view to a significantly increase the share of sustainable mobility modes.

Circular economy 

The new government – in consultation with the regions – will develop a federal circular economy action plan to significantly reduce the use of raw materials and the material footprint in production and consumption. The federal government will also set best practices and include the principle of a circular economy in its public tenders. In line with the ambitions of the European Green Deal, the Belgian government will also promote reduction of waste, reuse and recycling.

Biodiversity 

To improve the negative impact on the biodiversity, the new federal government will investigate the impact of the ban of certain plastics and push to harmonize these standards at the European level. Furthermore, the government will realize an ambitious reduction plan for pesticides with special attention for Belgian (agricultural) companies in order to avoid any competitive disadvantage. In general, the new government seems to align the national biodiversity strategy much more with the European biodiversity strategy.

Recovery 

The new government is investing €3.2 billion in new policies, out of which  €2.3 billion will be earmarked for social policy. €1 billion is reserved for relaunching the economy following the corona crisis, including investment in a new economy (e.g. more energy-efficient government buildings, the development of the use of sustainable accumulators and batteries, improvement and intensification of freight transport by rail and inland waterways). Furthermore, spin-offs that have a positive effect on sustainable development, more specifically on renewable energy, insulation of buildings, climate-friendly technologies, but also in the field of digitization and mobility will be set as priorities. Further details are set to be announced in the coming weeks and months.

Conclusion 

The new Belgian federal government has without doubt set out ambitious goals to achieve a more sustainable and circular economy for the coming years. Together with the recovery plan following the COVID-19 crisis, this provides new opportunities but also poses challenges for companies to adopt their operational and business environments. It is therefore crucial to stay up-to-date with the latest developments and understand when is the right momentum to proactive influence the political agenda.

Dr2 Consultants offers comprehensive Public Affairs support for companies and organizations that are impacted by Belgian policies – either at federal or at regional level. Furthermore, registration is still possible for our dedicated online Belgian Public Affairs training on 16 October 2020 that will provide participants with the opportunity to have a deeper look at the new priorities of the federal and regional governments.

 

Updated EU climate plans: opportunities for businesses at national level

Ambitious, achievable and beneficial for Europe” is how European Commission President, Ursula von der Leyen, characterized her updated EU climate plans. She unveiled her proposal to cut CO2 emissions by 55% by 2030 during her first State of the Union Speech on 16 September. New measures to reach the objective will affect all sectors of the economy from transport, construction to energy. It accelerates the transition to a climate-neutral Europe by 2050, as laid down in the overarching European Green Deal. Therefore, the European Commission is also calling on Member States to step up their efforts. The updated climate targets on a European level provide a unique framework and opportunity for businesses to shape and be part of the green transition at national level.

Stepping up our climate efforts: “We can do it!”

The Commission based the increased 55% target on an assessment of the National Energy and Climate Plans for 2021-2030 (NECPs). The NECPs are ten-year plans, in which EU Member States outline how they will address climate-related issues such as energy efficiency, taking up renewables, reducing greenhouse gas emissions, interconnections and research & innovation. The evaluation of these national climate plans on EU-level showed that the EU is to surpass the current 40% reduction target, enabling the increase of the target to 55% by 2030. Or in Von der Leyen’s words: “we can do it!” As this demands a further increase of energy efficiency and the share of renewable energy, the Commission will present new proposals by June 2021:

  • The Renovation Wave: the renovation of public and private buildings to improve their energy efficiency;
  • Revision of the Energy Efficiency Directive: the alignment of the binding measures that limit energy consumption with the new climate targets;
  • Guidance for the Energy Efficiency First Principle: ensuring energy saving is a priority in policy-making and investment.

In addition to the EU-level evaluation of the National Energy and Climate Plans, the Commission will carry out an assessment of Member States’ individual plans in October, as part of the State of the Energy Union Report, expected by the end of the year. The assessment will evaluate if Member States are on track to achieve the current 40% and proposed 55% emission reduction targets, looking at areas such as energy efficiency and the share of renewables in the national energy mix as mentioned above.

Opportunities to shape the national green recovery

Expectedly, Member States will have to bring their National Energy and Climate Plans in line with the new emission reduction target, if it is approved by the European Parliament and the Council of the EU. Although the new objective may look challenging, combined with the Recovery and Resilience Facility, it offers a unique opportunity for businesses to become part of the green recovery in their countries. The Recovery and Resilience Facility is at the core of the Next Generation EU plan and offers an unprecedented €672.5 billion of loans and grants to Member States to emerge from the COVID-19 crisis. The budget is to be spent in line with the (increased) European climate ambitions. In order to benefit from the budget, Member States draft their national recovery plans outlining how these will contribute to criteria including environmental sustainability.

European Green Deal Impact Scan

As a result, a momentum arises for businesses to help national governments shape a sustainable recovery. Additionally, companies can benefit from European investment in the green ‘flagship areas’ that are to be included in the national plans. These focus areas include the development of renewables, energy efficiency of buildings and sustainable charging and refueling technologies for transport. With the deadline for preliminary drafts of Member States’ national recovery plans set on 15 October, now is the moment to deliver input.

Next steps

The Climate Law Regulation was proposed by the European Commission in March 2020 and is currently being discussed in the European Parliament and Council of the EU. The institutions will need to come to an agreement and approve the 55% emission reduction target. Next to that, Member states are invited to submit their preliminary draft plans under the Recovery and Resilience Facility as of 15 October 2020. The final deadline for submission is 30 April 2021.

With the first deadline for the National Recovery and Resilience Plans fast approaching, it is important to timely deliver input in order to have your ideas heard. If you would like more information on the EU climate plans, or other files that could impact your business, contact Dr2 Consultants. Also, visit our Sustainability webpage for more information.

 

 

EU Public Affairs in times of COVID-19: three lessons from the Dr2 Academy

The COVID-19 pandemic that reached the European continent in the beginning of March this year disrupted the daily life of businesses in countless ways. Apart from serious public health implications, the pandemic has also restricted mobility and forced many Europeans to work from home. As policymakers have to adhere to COVID-19 related restrictions as much as others do, the dynamics of policymaking and advocacy have changed significantly. This requires organizations to adapt the way in which they influence policymaking by engaging in EU Public Affairs. Dr2 Consultants’ Dr2 Academy presents three lessons how COVID-19 changed EU Public Affairs.

1. Digital Public Affairs in times of lockdown

Confinement measures, border closures and epidemiological color coding throughout Europe has severely hampered cross-border mobility, making physical meetings (in Brussels) almost impossible. The Croatian Presidency of the Council of the EU was required to facilitate Council meetings virtually and the European Parliament (EP) changed to remote voting during its plenary sessions. Following a controversial decision by EP President Sassoli earlier this month, Plenary sessions are taking place in Brussels (and not Strasbourg) at least until the end of 2020.

While industry representatives, lobbyists and other stakeholders used to meet Members of the European Parliament (MEPs) in one of the several parliamentary coffee corners, speak to Commission staff around the Berlaymont building or attend various events to broaden their network and get insight information, the nature of these meetings has changed significantly. Nowadays, setting up Zoom or Skype calls with policymakers to discuss the latest information on ongoing files has become an essential instrument for effective EU Public Affairs in times of COVID-19.

Furthermore, events, conferences and receptions moved online too in the form of webinars. Although not a fully-fledged alternative to the spontaneity of physical events, online conferences usually designate a timeslot for networking. Digital meetings pose their own challenges. In order to successfully convey a policy message, the use of PowerPoint presentations and other digital tools have become increasingly important. As the current situation is likely to be maintained, organizations will have to invest time and resources in the effective use of the appropriate digital tools.

2. Changing dynamics in the EU institutions

The reliance on digital meetings and COVID-19 emergency procedures shifted policy priorities, which resulted in delays of several legislative initiatives. In the Council of the EU, where multiple meetings normally take place simultaneously, the Croatian Presidency could (for technical and safety related reasons) only host one meeting at a time. This led to a capacity reduction of 25% at the height of both the pandemic as well as the political cycle. Moreover, Trilogue meetings between the Council of the EU and the European Parliament were preferably not held digitally, leading to additional delays. The European Parliament, which organized extraordinary plenary sessions to vote on COVID-19 related contingency measures, also witnessed postponement of several committee meetings. Flagship events, such as the Digital Transport Days and EU Green Week have all been moved to online environments.

Since policymakers, industry representatives and other stakeholders all deal with the same changing issues and circumstances, organizations are recommended to adapt to changing policy agendas and deadlines, as well as to align KPI’s accordingly. Creativity in maintaining regular contact with (institutional) stakeholders by exploiting the latest digital tools is imperative for effective Public Affairs in times of COVID-19.

3. Adapting to the changing policy agenda

During the initial months of the COVID-19 outbreak, the European Commission focused on managing the short-term effects of the crisis. Crisis management combined with the new way of digital working also caused the Commission to revise its Work Program for 2020. The publication of several initiatives has been pushed back and some have been grouped together. Legislative files with a lower priority have been moved up in their timelines, while more urgent ones got a priority position. Public consultations have in some cases also been extended, enabling more time for input from stakeholders. In general, the measures related to the pandemic have led to a considerable shake-up and accompanying unpredictability of the policy agenda for 2020 and beyond.

To remain on top of the developments in Brussels, it will be crucial for businesses to invest in monitoring the most recent developments and policy agenda changes (Dr2 Consultants offers such monitoring services). This will enable organizations to respond quickly to policy developments and capitalize on the opportunities to represent their interests at EU level.

Dr2 Academy 

Dr2 Consultants’ Dr2 Academy offers services such as EU and Belgium Affairs Trainings, individual coaching to Public Affairs professionals and organizational advice on how to embed Public Affairs within your organization. Dr2 Consultants can be contacted for any questions on how to be effective in times of COVID-19.

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Update on Belgian federal government negotiations

Towards a “Vivaldi-coalition”

In early September, and for the first time in months, there were positive signs that a majority could be found in Belgium willing to form a federal government. After several attempts over the summer that mainly focused on a “purple-yellow” coalition (consisting of the traditional parties, the socialists, liberals and Christian democrats and the Flemish nationalist party N-VA) and a “Vivaldi” coalition (consisting of the traditional parties and the green parties), it was clear that the latter was the more likely to succeed. However, in nearing the end of September, and after several “informateurs”, “koninklijke opdrachthouders/Chargés de mission royale” and “preformateurs”, every possible coalition remains fragile. This has been especially clear since the weekend of 19 and 20 September.

Already a fragile coalition

The first test for the current Vivaldi group, which started negotiations in August, was the collective expression of support by the chairs of the Vivaldi parties for the current Wilmès II government on 17 September, in absence of a new government. In normal circumstances, the Wilmès II government should have resigned by 21 September, or at least sought a vote of confidence in the House of Representatives, as the current minority government only received support for a limited time of 6 months to tackle the COVID-19 crisis. Due to the support of the Vivaldi coalition parties, Wilmès II will govern an additional two weeks, until 1 October.

So far so good, and therefore the weekend of 19 and 20 was crucial to finally launch the Vivaldi coalition, most notably with the introduction of a new Prime Minister. The very first conversation on this topic already proved to be divisive as several parties claimed the position of Prime Minister based on different arguments, such as who is the biggest political family or who is the biggest party in Flanders, as there were already two consecutive Walloon Prime Ministers the past legislatures. That this would be a hard nut to crack was already known, but the president of the Walloon liberals (MR), George-Louis Bouchez, really made the bomb burst as he stated in an interview on 20 September that he was certain that the current Prime Minister, Sophie Wilmès (MR) would stay on. Once again Bouchez provoked his colleagues with personal interviews and tweets. Especially the Flemish socialists (sp.a) were upset and reacted on 21 September that they do not want to continue the coalition talks with the MR.

Despite these difficulties, “preformateurs” Egbert Lachaert (Open Vld) and Conner Rousseau (sp.a) spent a whole afternoon on 21 September trying to save the Vivaldi coalition. Because that did not work, the “preformateurs” decided to go to King Philippe to offer their resignation. However, the King refused that resignation, which is rather an exception. It seems that by refusing this resignation, King Philippe wants to force a new government, but this is only a short-lived tactic. Lachaert and Rousseau will report again by Wednesday 23 September at the latest.

Time is running out

The question is if the remaining days are enough to boost the viability of a possible Vivaldi coalition. Timewise it is getting very difficult to have a new government in place by 1 October, when the Wilmès II Government must resign. This would mean that by the end of this week or latest the beginning of next week the basis of the new government agreement must be approved. The different party congresses could follow after that and the new Prime Minister can make the government statement by 1 October. A vote of confidence in the new government could follow by 3 October.

Alternative?

It is not clear if the Vivaldi group will survive this week. The parties have definitely made it very difficult for themselves by setting a deadline on 1 October. N-VA chairman Bart De Wever expects the Vivaldi parties will continue their attempt to form a government. De Wever made clear that he and his party are ready for opposition as he stated on 21 September: “We will destroy them from the opposition.”

An alternative coalition is of course still possible, but the relationships between a lot of parties have become bitter, especially between the N-VA and the liberal parties. However, a workable alternative could be a Vivaldi coalition without the MR and the Walloon Christian democrats from cdH instead. However, Lachaert has not been prepared to drop his Walloon counterpart so far.

If this is not possible, then there is still the possibility of new elections. As there is still a health crisis ongoing and new elections will not magically bring the solution (especially because populist parties like Vlaams Belang (extreme-right Flemish party) and PVDA/PTB (extreme-left party in Wallonia) will gain new seats according to the latest polls and the other parties do not want to cooperate with them), this remains very unlikely. However, after 486 days of having no federal government with a majority in the House of Representatives, pressure is growing.

The Digital Services Act – How does it affect businesses in the EU?

The upcoming Digital Services Act (DSA) package, announced by the President of the European Commission, Ursula von der Leyen, in her political guidelines and in the Commission’s Communication “Shaping Europe’s Digital Future” of 19 February, is expected be published in the end of 2020. This will represent the Commission’s most ambitious plan to regulate digital services. The DSA package is expected to include a revision of the 2000 e-Commerce Directive (ECD), introduction of ex ante rules for ‘gatekeeper’ platforms and potential provisions for platform workers. So, how will this impact businesses in the EU?

When thinking about the impact of the DSA, one might initially think about big international platforms, and while those certainly can be impacted by the upcoming legislation, the implications for businesses in general can likely be much more far-reaching. The DSA is planned to have a more interventionist approach compared to its predecessor, the e-Commerce Directive, and will have broad implications for European and non-European businesses operating within the EU.

A wide range of information society services will be impacted by the new rules, one can think of transport and tourism platforms, e-commerce marketplaces, social media platforms, online sellers, data services, online search engine providers and more. The revision of the e-Commerce Directive is expected to be the most important overhaul of digital legislation of this decade, and given ongoing digitalization efforts, it is a crucial file to follow for many sectors. If you are interested in getting up to date insights into this topic, learn more about our monitoring services and get in touch with us.

Digital Services Act – what is it?

There are three main principles in the current e-Commerce Directive, which was adopted in 2000, for which the European Commission has to decide whether they will maintain them or make changes:

  • The internal market clause (i.e. country of origin principle) establishes that a provider of information society services is only subject to the rules of the Member State where it is established. It may then provide the services across the 27 other Member States without being subject to the rules of those other States.
  • The e-Commerce Directive (Art. 15) prohibits Member States from imposing general monitoring obligations on online intermediaries. In essence, this means that it is prohibited to require from intermediaries that they actively seek facts or circumstances indicating illegal activity.
  • The limited liability clause for online intermediary services (further explained below).

There are diverging views across the various digital sectors on the preferred course of action, depending on the interests at stake. Regardless of the direction the Commission will decide to take with its legislative proposal, it can be expected that these principles will have a prominent role in upcoming negotiations and debates.

The ex-ante rules for ‘gatekeeper’ platforms would address the issue of the level playing field in European digital markets, where, according to the European Commission, currently a few large online platforms act as gatekeepers. The rules will be aimed at ensuring that consumers have the widest choice and that the EU single market for digital services remains competitive and open to innovation. This could be done through additional general rules for all platforms of a certain scale, such as rules on self-preferencing, and/or through tailored regulatory obligations for specific gatekeepers, such as non-personal data access obligations, specific requirements regarding personal data portability, or interoperability requirements.

The Commission is also taking the opportunity to consult on other emerging issues related to online platforms, such as the opportunities and challenges that self-employed people face in providing services through online platforms. For instance, those working for food delivery applications or online transport platforms.

Digital Services Act: Implications for businesses

There will be various implications for various businesses depending on the sector concerned:

e-Commerce

If we take as an example “e-commerce”, the upcoming DSA will have two main implications. First, there will most likely be a re-evaluation of the role of e-commerce marketplaces. The focus of the current debate lies on the complex issue of the future of the limited liability principle, introduced by the e-Commerce Directive. The Directive includes an exemption from liability for digital services hosting illegal content if they are not aware of the illegality or, when they become aware, they act expeditiously to remove or block access to the illegal material. This is also known as “safe harbour”.

There are actors that say this clause is not enough, stating that liability for platforms should be extended, but there are others arguing that the current regime could disincentivize proactive content moderation measures. In this context, there has been discussion about the introduction of a potential “Good Samaritan” principle, which would aim to ensure that online intermediaries are not penalized for proactive measures against illegal content.

Second, the role of online sellers is an important element, as this is directly linked to EU’s inability to enforce its laws to non-EU based sellers and marketplaces, in particular when they have no legal representative in the EU.

Information society services

Another example of businesses that would be impacted by the new rules are information society services offering a wide range of services such as search engines, cloud services and other platforms. Those businesses generally consider it important that the core foundations of the e-Commerce Directive are respected, i.e. limited liability, no general monitoring obligations and the maintenance of the country of origin principle. Platforms can likely also be impacted by rules on transparency in online advertising, which are targeted by the DSA.

The introduction of ex ante rules for ‘gatekeeper’ platforms is planned to build on the transparency requirements for online platforms and the rules on provision of intermediation services between businesses and consumers, as stated in the Platform to Business Regulation (P2B), applicable since 12 July 2020. The Commission foresees the inclusion of perspective rules for platforms on self-preferencing, data access policies and unfair contractual provisions, as well as a data gathering framework allowing regulators to collect further information from gatekeepers on the workings of their platforms.

Furthermore, specific rules for gatekeepers of a certain size have been proposed, including rules against ‘blacklisted’ behaviour for all platforms or more tailored interventions on a case by case basis. Potential obligations for large platforms to share the data they obtain is expected to become an issue of debate. However, it is still unclear which platforms will be identified as gatekeepers, and which markets will the new rules focus on. Furthermore, the introduction of such rules, while aimed at protecting smaller EU businesses, might go against EU’s core antitrust principles if there is no evidence of systemic market failure.

Next steps

On 8 September, the Commission closed its public consultations on the DSA, which gathered contributions from platforms, companies, as well as business and consumer associations.

Meanwhile, three committees in the European Parliament: Committee on the Internal Market and Consumer Protection (IMCO), Committee on Civil Liberties, Justice and Home Affairs (LIBE), and Committee on Legal Affairs (JURI) are currently debating over their own-initiative reports, with final committee votes planned by the end of September, followed by a final vote during the October Plenary session.

Dr2 Consultants closely monitors the developments on this file for its clients. If you would also like to know more about the upcoming initiative, and how it might impact your business, please contact Dr2 Consultants.

Interested to know more about other upcoming EU legislative proposals? Read our blog post – Back to work: EU legislative proposals – 2020 outlook.

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Back to work: EU legislative proposals – 2020 outlook

As the summer recess is coming to an end, the European Commission will start preparing the EU legislative proposals that are still in the pipeline for 2020, according to the work program. As the second semester of the year will be a packed one, it is key to timely prepare input in order to have your priorities heard.

Following our blog on the EU initiatives that were open for feedback over summer, Dr2 Consultants now guides you through the main remaining proposals for 2020 in the transport, sustainability and digital sector. You can find these below in that particular order.

Transport up-to-speed with the new decade

Emerging developments such as the decarbonization of transport, digitalization and the global COVID-19 pandemic have stressed the need to review the Trans-European Transport Network (TEN-T) Regulation. The TEN-T policy aims to develop and implement a Europe-wide infrastructure network linking ports, highways, airports and railways. With the upcoming revision of this EU legislation, the European Commission aims to bring TEN-T up-to-speed with the ongoing green and digital transitions. The Commission is expected to put renewed emphasis on the strengthening of urban nodes, the update of infrastructure requirements, and the alignment of the TEN-T policy with the EU’s environmental policies.

The Commission is currently finalizing the evaluation of the TEN-T Regulation. The different modes of transport are still invited to contribute to dedicated case studies in the course of September. The European Parliament is currently preparing an own-initiative report on the TEN-T policy. The Transport & Tourism committee will discuss the draft report on 3 September. The Commission is expected to publish a roadmap and a public consultation later this year. A legislative proposal is foreseen for summer 2021.

In addition to the TEN-T, the Commission is expected to publish the EU’s Strategy on Sustainable and Smart Mobility. With this strategy, the Commission intends to adopt a comprehensive strategy to reduce transport-related greenhouse gas emissions by 90% by 2050, and to ensure the transport sector is fit for a clean, digital and modern economy. A public consultation has been opened in the summer and is open for feedback until 23 September.

Visit our Transport page.

Green energy and sustainable production

The energy-focused sibling of TEN-T will also be subject to a revision this year. The Trans-European Energy Network (TEN-E) Regulation aims to link European electricity, gas and oil infrastructure into a single network, consisting of nine corridors. TEN-E focus areas are smart grids, electric highways and the cross-border carbon dioxide network. This EU legislation is considered to be instrumental to realize the renewable energy objectives across the Union, for example in stimulating the hydrogen economy. The Commission will come up with a legislative proposal for a revised TEN-E regulation.

European Green Deal Impact Scan

In addition, several EU legislative proposals will be initiated that will have an impact on producers. Proposals that tackle packaging waste, deforestation and industrial emissions are currently in the pipeline. Striving towards a circular economy, the Commission will promote waste reduction by reviewing the Packaging Directive. This may include improved design standards and increased recycled content in packaging materials. Possibly, packaging design standards will also change as a result of the Deforestation Regulation, which could include labelling requirements and verification schemes to increase the transparency of supply chains. Finally, the Industrial Emissions Directive may require additional sectors, such as farms and extractive industries, to implement available sustainable production techniques. Public consultations on the three initiatives are upcoming this year, and the respective legislative proposals are scheduled for 2021.

Visit our Sustainability page.

Trustworthy AI and shared data spaces

Artificial Intelligence (AI) is increasingly affecting our society. Applications can bring about revolutionary changes in healthcare, governance, research, production and many other areas of our society. On the one hand, opportunities such as the precision of diagnosis, the prevention of car accidents and more efficient farming are promising. On the other hand, AI carries several potential risks, including racial, gender or other discriminatory biases, infringements of our privacy and reduced governance accountability.

Amidst global competition, the European Commission aims to distinguish the EU approach with its emphasis on European values. The EU strategy must embrace opportunities, while protecting citizens from potential harmful impacts. The European approach for trustworthy artificial intelligence will propose ethical requirements for AI, following the general strategy presented in the White Paper, stakeholder consultations and the draft guidelines presented by the High-Level Expert Group on AI in 2018. The initiative will be a review of the draft guidelines, on which stakeholders will be invited to deliver input through the upcoming roadmap.

Another aspect of the EU digital strategy is the regulation of the growing volume of data. Data can give valuable insights that drive innovation in areas such as medicine, mobility and policy-making. The creation of common European data spaces will allow citizens, businesses and organizations to access non-personalized data from different Member States, pooled across different key sectors. European privacy rules (GDPR) and competition law continue to be applied. Although the roadmap has already closed, input can be delivered through the upcoming public consultation. Adoption by the College of Commissioners is expected by the end of 2020.

Visit our Digital & Tech page.

Next steps 

Commission proposals on the EU legislative initiatives mentioned above are expected by the end 2020, or in the course of 2021. As the Commission is preparing for a proposal-packed final quarter, it is key to reach out early to have your interests set on the agenda.

Want to know more about the upcoming initiatives, COVID-19, or other files that might affect your business? Please contact Dr2 Consultants to see what we can do for you.