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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.

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, please visit our Dr2 Academy webpage.

Dr2 Academy


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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.

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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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.

Summer recess – what’s next?

As EU leaders agreed on a new proposal for the new Multiannual Financial Framework and the Recovery Plan on 21 July, the European Parliament was given good food for thought over its summer recess. However, the new long-term budget is not the only priority on the EU agenda. The Commission is already chewing on a series of proposals to be expected later this year and in 2021. In fact, now is the moment to deliver input on some key, planned legislative proposals, as the Commission launched a series of public consultations that are open until after summer. Let’s have a look what is next after the 2020 summer recess.

Transport: smarter and greener

The green and digital transition as the twin priorities of the Von der Leyen Commission are also reflected in the upcoming transport initiatives. To deliver the ambitious European Green Deal climate neutrality objective, the mobility sector needs a 90% emission reduction by 2050. The Strategy for Sustainable and Smart Mobility, expected towards the end of the year, will be the overarching strategy for the delivery of the twin transitions in this area. Stakeholders can contribute to the public consultation until 23 September.

Expectedly, the strategy will include the integration of alternative fuels, in line with the recently published hydrogen strategy that already outlines a pathway for the deployment until 2050 in all modes. The strategy is also complemented by the upcoming FuelEU initiatives for the maritime and aviation sector. The FuelEU Maritime initiative, aimed at boosing alternative fuels in shipping specifically, is open for feedback until 10 September. The public consultation on ReFuelEU Aviation, initially planned for the first quarter of 2020, is still to be expected ahead of the Commission proposal this year.

Sustainability: a bigger role for tax

Taxation will become a more important instrument for the Commission to align consumer choices and business investments with its climate targets. On 23 July, public consultations on both the revision of the Energy Taxation Directive and the creation of a Carbon Border Adjustment Mechanism were launched. Having been unchanged since its adoption in 2003, the Energy Taxation Directive will be subject to a thorough review. The exact changes are yet to be determined based on the consultation outcome, however, what is clear is that it will include a correction of the minimum taxation rates for electricity, gas, and coal, as well as a tax exemption reduction for fossil fuels. The proposal, which is part of the European Green Deal, is scheduled for June 2021. The consultation is open for feedback until 14 October.

In addition, the Commission proposes a Carbon Border Adjustment Mechanism to prevent ‘carbon leakage’. This ‘CO2-tax’ internalizes emissions in the price of a product, so production does not shift to countries with lower climate ambitions. The exact instrument is still to be determined, and could take the form of an EU-wide import tax or an extension of the Emmission Trading System (ETS). The latter has already seen critical responses, as this may not be in line with WTO rules. The Commission plans to scrutinize the issue and present a proposal later this year. The revenues would directly contribute to the ‘own resources’ of the EU budget for the next seven years that would help finance the new €750 billion recovery plan. Stakeholders can deliver their contribution to the plan until 28 October.

Digital: fit for the COVID-19 reality

Following its pledge to make Europe ‘fit for the digital age’, the Digital Education Action Plan and the Digital Services Act are also high on the Commission’s agenda. The Digital Education Action Plan, due to be published in September this year, will be part of the Next Generation EU program. The COVID-19 crisis has seen schools and universities close their doors and increasingly turn to remote, digital teaching. The Action Plan aims to promote high-quality and inclusive education and training in the post-COVID digital reality. Feedback on the proposal can be delivered until 4 September.

Part of the Next Generation EU financing is the digital tax element of the Digital Services Act, to be presented by the end of 2020. The Digital Services Act is an attempt to regulate online platforms when it comes to illegal goods, product safety, political advertising and offensive content. The initiative may face intense debates before its approval, as previous attempts to implement an EU-wide Digital Taxation mechanism have so far been unsuccessful. The consultation remains open until 8 September.

Next steps

The Commission’s proposals on the above initiatives are expected before the end of 2020, except for the Energy Taxation Directive which is due in June next year. From the above-mentioned public consultations, it is evident that the European Commission is gearing up for a busy end-of-year period. Early (proactive) action is desirable for stakeholders that aim to represent their interests on these files, which will also be closely examined by the European Parliament and Council of the EU in 2021 (and later).

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.

Europe’s hydrogen revolution: the outlook for transport

On 8 July, the European Commission unveiled its long-anticipated Hydrogen Strategy, laying out a roadmap to make the EU the global leader in the hydrogen economy. The Hydrogen Strategy aims to foster the energy transition and act on the ambition of achieving climate-neutrality by 2050. The Commission aims to grow the share of hydrogen in the EU’s energy mix from the current 2% to 13-14% by 2050.

The momentum for hydrogen has grown in recent months. Market demand has significantly increased and the costs of renewable energy have decreased. Moreover, several Member States already published national hydrogen initiatives (e.g. Germany, France, the Netherlands). According to the Commission, a coordinated approach at EU level is necessary to scale up fast and streamline investment needs.

With the Hydrogen Strategy, the Commission charts the path towards ‘green’ hydrogen, based on renewable electricity (e.g. solar and wind energy). However, as green hydrogen is not yet cost-competitive against fossil-based hydrogen, the Commission acknowledges the potential of low-carbon hydrogen (e.g. Carbon Capture Storage) as a facilitator to scale up production and stimulate the market demand for hydrogen.

Hydrogen as enabler of emissions-free transport

The Hydrogen Strategy presents opportunities for the transport industry to act on the ambition of decarbonization and reducing CO2 emissions. Although electrification seems to be the most viable option on the short term, hydrogen is dubbed as the energy source for the future of transport. According to the Commission, the application of hydrogen in the transport industry is likely to develop through a gradual trajectory.

  • In the first phase (2020-2024), the objective is to produce up to 1 million tonnes of renewable hydrogen and to facilitate the take up of hydrogen consumption in commercial fleets (e.g. taxi’s) and specific parts of the railway network. Moreover, it could also be applied to heavy-duty transport, such as buses, lorries, coaches – currently responsible for about 6% of total EU CO2 emissions.
  • In the second phase (2025-2030), the objective is to make hydrogen an intrinsic part of an integrated energy system and to produce up to 10 million tonnes of renewable hydrogen. In this phase, green hydrogen should be cost-competitive with other forms of hydrogen production, but demand-boosting policies will be needed for the application of hydrogen in the railway sector and maritime transport (e.g. short-sea shipping and inland waterborne transport).
  • In the last phase towards maturity (2030-2050), renewable hydrogen and hydrogen-derived synthetic fuels could be applied to several hard-to-decarbonize modes of transport, such as aviation and deep-sea shipping, although the Commission acknowledges more research and innovation efforts are required to realize these ambitions.

In order to realize the hydrogen ecosystem and trajectory for transport, the Commission opts for an integrated value chain approach. In doing so, the Commission incorporates several aspects which are necessary to facilitate the hydrogen transition, ranging from infrastructure (e.g. the deployment of hydrogen refueling networks for the different modes of transport) to production techniques and market regulation (e.g. EU incentives to stimulate demand-side support policies).

The Commission is still exploring further renewable hydrogen appliances in the transport industry. This broader uptake of green hydrogen in the transport sector will be reflected in the Strategy for Sustainable and Smart Mobility, which is due for publication in the fourth quarter of 2020, and for which the public consultation has recently opened

Stimuli for the Hydrogen revolution

The Clean Hydrogen Alliance, a Commission-led coalition that brings together industry, governments and civil society, will identify a robust pipeline of projects to accelerate the upscaling of hydrogen production. The Alliance will be strongly anchored in the hydrogen value chain, covering green and low-carbon hydrogen from production via transmission to mobility, industry, energy and heating applications.

Financial instruments such as InvestEU, the Horizon partnership for clean hydrogen and the Cohesion Fund, which will expectedly be topped up by financial resources from the €750 billion Next Generation EU Recovery Fund, will help drive clean hydrogen past its tipping point.

Climate ambitions of Flanders and the European Green Deal

On 21 June, in an interview on Flemish news television VRT, First Executive Vice-President of the European Commission, Frans Timmermans, called on Flanders to be more ambitious in the fight against climate neutrality. However, he also said, he was optimistic that Flanders would do its part being a wealthy region, which already has industrial pioneers on board for the European objectives. But what exactly are the Flemish climate objectives, and how are they aligned with the EU plans?

Greenhouse gas emissions reduction by 35%

The Flemish climate policy plan sets out the guidelines for the climate policy for the period 2021-2030. In line with the objective imposed by the EU for Belgium, the plan puts forward the objective to reduce greenhouse gas emissions in Flanders by 35% by 2030 compared to 2005. However, the EU is setting this goal at a reduction level of 50-55% by 2030. The required effort is identified per sector and, where necessary, the greenhouse gas reduction target is converted into sub-targets. In addition, the plan also contains the main measures required to achieve this objective and puts Flanders on the path towards a low-carbon future.

Energy efficiency

Another priority for Flanders is to increase energy efficiency for all sectors. The three largest energy consumption sectors in Flanders are industry, residential and transport sectors. In addition to improving energy efficiency, simultaneous efforts must be made to achieve the strong development of renewable energy. Energy services and technologies will be digitally controlled and intelligently linked. However, this is a huge challenge for Flanders. In the period 2005-2018, emissions decreased by only 5%. The Flemish Government, therefore, intends to focus more on increasing innovation, the persistence of circular economy, parallel federal policies and additional EU instruments (legislative and financial).

Transforming buildings will also play an important role in increasing the energy efficiency in densely populated Flanders. The climate policy plan encourages the renovation of residential buildings, rebuilding after demolition and making the heating installation more sustainable. This is in line with the EU’s ‘Renovation Wave’ initiative, part of the European Green Deal, with the goal to double the annual renovation rate of the existing building stock. The European Commission will publish communication on this in September 2020.

How can Dr2 Consultants advise you

The EU’s ambition is to lead the way towards a more sustainable future. Contrary to the fear that the COVID-19 pandemic would jeopardize the green agenda for the coming years, the Commission has shown its commitment to accelerate the green transition during the recovery phase. This green transition will pose challenges but will also provide opportunities to businesses, like front runners who can introduce their new and innovative approaches in Flanders. With the Dr2 Consultants’ European Green Deal Impact Scan, we will provide you with a comprehensive analysis of how the European Green Deal will affect your business, identifying the opportunities and challenges and highlighting moments to positively influence the policies and legislation. In addition, we are able to provide you with high-end intelligence on the developments in Flanders that allows for a comprehensive overview of relevant files for your business.