SOTEU2022: Securing Europe’s green ideals

On 14 September, European Commission President Ursula von der Leyen delivered her third ‘State of the Union’ address during the plenary session of the European Parliament in Strasbourg.

With this blogpost, Dr2 Consultants aims to shed light on some of the main challenges and upcoming legislative files presented during the State of the European Union namely in the field of energy, sustainability and digital.

State of the Union 2022

Dressed in the colors of the Ukrainian flag, President von der Leyen began by looking back at the EU’s reaction to Russia’s invasion of Ukraine, stating that the EU should be proud of its united, determined and immediate response. Reference to the war was a reoccurring pattern in von der Leyen’s speech as she pledged continued European solidarity with Ukraine.

The President outlined the Commission’s priorities in response to the increasing energy prices and difficult economic situation for citizens and businesses. The Commission’s plans underline the EU’s commitment to move forward with the green and digital transition by means of new investments and legislative proposals.

The Commission President announced measures to reform the European electricity market and tackle soaring energy prices. The Commission aims to propose a cap on revenues of companies that produce electricity at a low cost, such as nuclear and renewable energy aimed to support vulnerable households. Moreover, President von der Leyen revealed actions to decouple gas and electricity prices and establish a more representative natural gas price benchmark that would reflect the switch to liquified natural gas (LNG).

We have to decouple the dominance of gas on the electricity market” to ensure consumers “reap the benefits of low-cost renewables” – President von der Leyen

Notably, the Commission has decided to continue the discussion on the price cap on gas due to diverging views amongst Member States. Moreover, a task force has been set up to negotiate deals with gas suppliers, such as Norway. At the same time, von der Leyen emphasized the need for an energy transition towards renewable energy. She announced new investments in hydrogen, which could be a “game changer for Europe”, through both the establishment of a European Hydrogen Bank supporting the purchase of hydrogen and investments up to €3 billion in the hydrogen market.

Furthermore, apart from Russia’s manipulation of the energy market, President von der Leyen highlighted the impact climate change has had on EU energy prices. Therefore, she emphasized the need to reach ambitious global deals for nature and the climate at the UN Biodiversity Conference in Montreal and COP27 in Sharm el-Sheikh.

While the 2021 State of the Union mainly focused on the COVID-19 pandemic, this year’s address put more emphasis on the recovery plan and announced more flexible economic policies and simpler tax rules for small and medium-sized enterprises (SMEs). In addition, to address companies’ liquidity issues, the Commission aims to amend rules on collateral and limit intra-day price volatility. In this regard, in October, the Commission will also amend the temporary state aid framework to allow for the provision of state guarantees. Moreover, von der Leyen acknowledged the reality of higher public debt. Therefore, new fiscal rules must allow for strategic investment. In October, the European Commission will present new ideas for sustainable economic governance. These proposals must ensure more freedom to invest, together with more scrutiny, and more ownership for Member States.

Von der Leyen emphasized the importance of European independence in raw materials, stating “Raw material will fuel our green and digital future.” To replicate the success of last year’s announcement of the Chips Act, von der Leyen announced that the Commission will invest in Important Projects of Common European Interest (IPCEI) by setting up a new European Sovereignty Fund (ESF).

Finally, she called for a new European Convention, following the Conference on the Future of Europe. She also expressed that 2023 should be the European Year of Skills since “the lack of staff is a major challenge for European companies”. Additionally, the Commission President showed support for Macron’s idea of a European Political Community to strengthen European democracy, which together with a new Defense for Democracy Pact should safeguard democracy from malign foreign threats.

Reactions by Members of the European Parliament

After the State of the European Union, Members of the European Parliament (MEPs) reacted to the Commission President’s speech.

Manfred Weber, Leader of the European People’s Party, welcomed the Commission’s response to tackle energy prices, but also stressed the need to include the European Parliament in the decision-making process. Furthermore, he criticized Germany’s decision to stop producing nuclear energy and called for better connection between Spain and the rest of the European gas grid. He also added that the EU must speed up trade deals with reliable partners, specifically calling on the ratification of the Canada-European Union Comprehensive Economic and Trade Agreement (CETA).

On behalf of the Socialists & Democrats, MEP Iratxe García Pérez called for reinforcement of social policies, reform of the energy market, reform of taxation and economic governance, and acceleration of the green transition. She also expressed support for a price cap on gas and a tax on windfall profits of energy companies to help families and businesses pay their bill.

Renew Europe President, MEP Stéphane Séjourné expressed his support for a cap on gas import prices and the energy shield. In addition, he called for joint purchase of energy, investment in renewables and renovation of buildings. Furthermore, MEP Séjourné stressed the need to reduce the EU’s dependence on other countries for food, raw materials, health, digital technology and infrastructure.

Speaking on behalf of the Greens/EFA, MEP Ska Keller called for measures to tackle skyrocketing food and energy prices, especially to protect the most vulnerable households. She welcomed the Commission’s proposal to redistribute windfall profits, while also stating that the only way to end the EU’s energy dependency is to accelerate the transition towards renewable energy.

What’s next?

On 18 October, the Commission will present its work program for 2023, outlining upcoming priorities and both legislative as well as non-legislative proposals.

These upcoming policies present an opportunity for your organization to get involved in EU decision making and to make sure your voice is heard. Want to know more? Don’t hesitate to contact Dr2 Consultants’ team of policy experts who will continue to monitor these legislative proposals!