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2022

No. 37 | 09 June 2022

Highlights of the week

EUROPEAN PARLIAMENT FAILS TO ADOPT POSITION ON KEY FIT FOR 55 FILES: On 8 June, the European Parliament held a vote on key legislations under the Fit for 55 package during its Plenary session in Strasbourg. In a surprising turn of events, a majority of MEPs rejected the Parliament’s position on the revision of the EU Emissions Trading System. The report was notably voted against by the Greens/EFA and the S&D, who refused the inclusion of last-minute amendments by the EPP and the ECR, that would have slowed the pace of emissions reduction targets and postponed the end of free allocations to 2034 instead of 2032. As the reports on the Carbon Border Adjustment Mechanism and the creation of a Social Climate Fund are closely related to the EU ETS, all three files have been sent back to the Environment Committee for further negotiations. Even if it had been voted on, the CBAM report was not expected to be adopted as MEPs had previously announced they had not managed to reach an agreement between political groups. On the EU ETS, the Chair of the ENVI Committee MEP Pascal Canfin announced MEPs will aim to find a new agreement in the next 15 days and vote on the revised proposal during the next Plenary session on 23 June.

EUROPEAN PARLIAMENT ADOPTS POSITION ON EU ETS FOR AVIATION, EFFORT SHARING REGULATION, CO2 PERFORMANCE STANDARDS AND LULUCF: The European Parliament did manage to adopt on 8 June its positions on other Fit for 55 files. Firstly, the Parliament adopted its report on the revised EU ETS rules for aviation. The adopted text proposes that the EU ETS should apply to all flights departing from an airport located in the European Economic Area (EEA) and that free allocations to the aviation sector should be phased out by 2025. A derogation from the EU ETS should be provided for emissions from flights between airports located in an EU outermost region and airports located in another EEA region, and flights between airports located within the same outermost region. MEPs want, as well, that 75% of the revenues generated from the auctioning of allowances for aviation are used to support innovation and new technologies. The Parliament also adopted its position on the Effort Sharing Regulation, increasing the EU-wide 2030 emissions reduction targets from 30 to 40%. All EU Member States would have to comply with national targets ranging between 10 and 50%. Additionally, MEPs adopted the report on CO2 standards for cars and vans, maintaining the end of sale of combustion engines vehicles in 2035. Finally, the Parliament adopted its position on the Land Use, Land Use Change and Forestry Regulation (LULUCF). The adoption of the Parliament’s position on these files opens the way to interinstitutional negotiations with the Council of the EU.

VICE-PRESIDENT TIMMERMANS CALLS ON MEPs TO MAKE THE GREEN TRANSITION HAPPEN: On 7 June, in its introductory speech opening the European Parliament’s Plenary session, European Commission Vice-President Frans Timmermans called on MEPs to make the green transition happen. Reminding on the climate urgency as well as the need to reduce dependence on Russia, EVP Timmermans urged MEPs to vote for a consistent and ambitious package that would allow the EU to reach its climate targets. He specifically underlined certain parliamentary positions that caused him worry, notably on the inclusion of road transport and buildings in the scope of the EU ETS.

TRANSPORT COUNCIL ADOPTS GENERAL APPROACHES ON FIT FOR 55 FILES: On 2 June, the Transport Council adopted general approaches on three Fit for 55 transport-related files: the Alternative Fuels Infrastructure Regulation (AFIR), FuelEU Maritime and ReFuelEU Aviation. As regards AFIR, the Council agrees on more flexibility on timelines. For instance, it proposes a gradual process of infrastructure deployment for electric heavy-duty vehicles starting in 2025 and covering all TEN-T roads by 2030. Moreover, the General Approach focuses also on the deployment of gaseous hydrogen refueling infrastructure. As regards FuelEU Maritime, Member States revised the scope of the requirements regarding on-shore power supply to extend obligations to ships anchored in ports. Additionally, the Council strengthens the governance system (e.g., monitoring, reporting and auditing procedures provisions). Finally, on ReFuelEU Aviation, the Transport Council amended the Commission’s proposal including the possibility for Member States to apply the legislation to airports below a certain traffic threshold, to increase national sub-mandate on synthetic fuels as well as to grant an exemption from the tankering provisions for certain flights. In addition, Member States propose an extension of the scope of eligible sustainable aviation fuels and synthetic aviation fuels complying with the Renewable Energy Directive (RED) sustainability and emissions saving criteria.

EU ENERGY CRISIS

EU SANCTIONS ON RUSSIA AND THE IMPACT ON THE FIT FOR 55 POLICIES

INTERNATIONAL ENERGY AGENCY PRESENTS POLICY FRAMEWORK BASED ON ENERGY EFFICIENCY: On 8 June, the International Energy Agency (IEA) presented a policy framework that could make Russian fossil fuels obsolete entirely. This framework proposes energy efficiency as solution to the current energy crisis, as it could simultaneously make energy supplies more affordable, more secure and more sustainable. The analysis carried out by IEA underlines how massive energy savings could be achieved by the end of the decade thought increased ambition while reducing CO2 global emissions by 5 billion tons a year by 2030. The amount of natural gas that the world would avoid using as a result of energy efficiency would be equal to four times what the European Union imported from Russia last year, while the reduced oil consumption would be almost 30 million barrels of oil per day, about triple Russia’s average production in 2021.

MEPs DIVIDED OVER SUSTAINABILITY OF GAS AND NUCLEAR ACTIVITIES: On 8 June, the main groups within the European Parliament (EPP, S&D, Greens, Renew Europe and The Left) held a public hearing on the EU Taxonomy complementary Delegated Act on nuclear and gas, which would classify certain nuclear and gas-related activities as sustainable. The Economic and Monetary Affairs Committee and the Environment Committee will jointly vote on a resolution for objection on the Delegated Act on 14 June. In general, MEPs oppose the text, which was presented by the Commission on 2 February. The Greens are fully against the inclusion of both nuclear and gas in the Taxonomy. S&D considers the delegated act “legal greenwashing” and denounces the fact that the Parliament has been sidelined during the process of drafting the act. Over 80% of the groups will vote against the Delegated Act. Renew Europe and The Left both warned that although their groups as a whole would not object the Delegated Act, several individual members are signatory of the resolution for objection and will vote against the Delegated Act. Only the EPP is more divided on the issue, especially in the context of the war in Ukraine which has affected the relationship towards gas and nuclear activities.

MEPs WELCOME FURTHER SANCTIONS AGAINST RUSSIA: On 8 June, the European Parliament discussed the conclusions of last week’s European Council summit, during which Member States approved a sixth sanctions package against Russia. Although MEPs welcomed the unity of Member States and the additional sanctions, numerous MEPs warned that not enough attention had been paid to addressing the negative effects of the war on the daily lives of EU citizens, notably due to sharp increases in energy prices. Many MEPs called for this to be properly addressed at the next European Council Summit which will take place on 23 and 24 June. A number of MEPs also warned against shifting energy dependency from one region of the world to another, saying that this would only be repeating the mistakes of the past.

THE NETHERLANDS AND GERMANY ANNOUNCE JOINT NORTH SEA DRILLING OPERATION: On 2 June, the Dutch Government announced a joint drilling operation together with Germany of the coast of The Netherlands, expected to start in 2024. A pipeline is also being constructed to transport the gas onto shore. Both governments are pressing to speed up operations following Gazprom’s announcement on 31 May that it would be cutting gas supplies to The Netherlands.

What’s next?

With three key Fit for 55 files sent back to the ENVI Committee for renegotiations, the expected timelines for adoption have been upset, and the agendas of upcoming might be subject to change. On EU ETS, MEPs will aim to find a new agreement in the next 15 days and vote on 23 June.

On 14 June, Commissioner for Energy Kadri Simson, will present the RePowerEU Plan to the Industry, Research and Energy Committee (ITRE). Still on 14 June, the Environment and Economic and Monetary Affairs Committees will vote on a resolution to exclude nuclear and gas from being considered sustainable under the EU Taxonomy.

On 23 and 24 June, the European Council summit will notably address the energy crisis in Europe. On 27 June, the Energy Council is set to adopt the Council’s General Approaches on the Energy Efficiency Directive and the Renewable Energy Directive. On 28 June, the Environment Council will gather in Luxembourg, and is due to adopt the Council’s General Approaches on the EU ETS, the Effort Sharing Regulation, the LULUCF and the CO2 standards for cars and vans.

No. 35 | 25 May 2022

EU ENERGY CRISIS

EU SANCTIONS ON RUSSIA AND THE IMPACT ON THE FIT FOR 55 POLICIES

COMMISSION PRESIDENT VON DER LEYEN ADDRESSES RUSSIAN SANCTION NEGOTIATIONS AT WORLD ECONOMIC FORUM: On 24 May, during the World Economic Forum in Davos, Commission President Ursula von Der Leyen was asked about the ongoing negotiations on the sixth sanction package against Russia, which includes a ban on Russian oil. After statements made by the Hungarian government stating it would not discuss Russian sanctions during the European Council meeting on 30 and 31 May, von Der Leyen stated that she does not expect an agreement to be found during the meeting. Hungary has been blocking the oil ban since the Commission proposed the sixth package of sanctions on 4 May, demanding considerable financial guarantees before it is willing to recommence to negotiations. Von Der Leyen indicated that such negotiations are too technical to take place at European Council level, but she still expressed the hope for a breakthrough to be made in the coming days.

EU MEMBER STATES ADVISED TO PREPARE FOR POTENTIAL GAS CUT FROM RUSSIA: According to leaked draft conclusions of the upcoming European Council meeting, Member States expect major Russian gas supply disruptions. The draft conclusions highlight the need to prepare for those disruptions through a coordinated contingency plan for gas cut-offs, bilateral solidarity agreements and a quick filling of gas storage before next winter. The draft conclusions also emphasize the short-term need to diversify supply sources and routes as well as secure Europe’s energy supply at affordable prices. However, this is expected to be difficult as alternative supplies, such as liquified natural gas (LNG) from the US, has historically been more expensive than cheap pipeline gas coming from Russia. The draft conclusions do not include any mention to the EU-wide ban on the import of Russian oil proposed by the European Commission.

EU COMMISSION AND UNITED STATES ISSUE JOINT STATEMENT ON EU ENERGY SECURITY: On 24 May, the European Commission and the United States issued a joint statement condemning Russia’s use of energy blackmail and reaffirming their commitment to strengthening Europe’s energy security. The European Commission and the US understand the urgency of taking decisive action to reduce energy imports from Russia, which is why they are partnering to address these challenges under the joint Task Force on Energy Security announced by Presidents Biden and Von der Leyen on March 25.  Through the Task Force, the US and the EU will continue working to diversify Europe’s supply of natural gas while accelerating the deployment of energy efficiency and smart technologies, electrify heating, and ramp-up clean energy output to reduce demand for fossil fuels altogether. As an important step towards realizing the goals of the Task Force, the European Commission and the United States welcome Finland’s contract to lease a floating LNG import terminal from a U.S. provider that will be operational before the end of this year.

EUROPEAN COMMISSION AND INTERNATIONAL ENERGY AGENCY JOIN FORCES TO REDUCE EU RELIANCE ON RUSSIAN FOSSIL FUELS: On 24 May, the Commission and the International Energy Agency (IEA) announced they are joining forces to help EU countries reduce their reliance on Russian fossil fuels. By strengthening investments in clean energy and energy efficiency, the project aims to mitigate the impact of Russia’s invasion of Ukraine on the EU energy sector. In the framework of this common endeavor, the Commission is offering support to Member States to reduce their dependence on Russian fossil fuels through the Technical Support Instrument. 17 EU countries have already joined the project. This support is in line with the REPowerEU Plan presented by the Commission on 18 May, outlining how to phase out EU dependence on Russian fossil fuels and accelerate the clean energy transition. The cooperation with the IEA will cover seven areas: supply and diversification of liquefied natural gas; production of biomethane; stepping up international trade in hydrogen; acceleration of rooftop solar and heat pumps roll-out; demand-side measures and energy efficiency; faster permitting of renewable projects; innovative hydrogen and renewables solutions for industry. It will include workshops, meetings, analysis, and data tracking by the International Energy Agency.

RUSSIA CUTS GAS SUPPLY TO FINLAND: On 21 May, Russian gas supplier Gazprom announced that it had shut off its gas export to Finland. The announcement comes shortly after Finland announced its intention to join the NATO defense alliance. Gasum, Finland’s gas supply, confirmed that Russia had halted supplies to Finland and announced that the company would supply natural gas from other sources, including through the Balticonnector pipeline, which runs between Finland and Estonia. Russia had already halted electricity deliveries to Finland on 14 May due to Finland’s intention to join NATO.

 

Would you like to know more about the impact of the energy crisis and sanctions on Russia on your organization? Dr2 Consultants’ European Green Deal & Fit for 55 Impact Scan offer targeted solutions to understand and anticipate the impact of the EU’s climate initiatives, as well as the EU’s countermeasures to mitigate the impact of the energy crisis and its sanctions on Russia. Don’t hesitate to contact us for more information.

Highlights of the week

EUROPEAN COMMISSION PUBLISHES DRAFT DELEGATED ACT ON METHODOLOGY FOR DETAILED RULES FOR THE PRODUCTION OF RENEWABLE TRANSPORT FUELS: This delegated act comes in the context of the revision of the Renewable Energy Directive, which introduces new provisions to promote the use of renewable liquid and gaseous transport fuels of nonbiological origin. The delegated act will set out the requirements for renewable electricity used to produce these renewable transport fuels so they can be counted as fully renewable. Its objective is to strike a balance between the needs in renewable electricity to produce renewable liquid and gaseous transport fuels of non-biological origin, most notably green hydrogen, and availability of renewable electricity for other uses (e.g. for industry or electric vehicles). Through its draft, the Commission wants to ensure that power installations providing electricity to produce green hydrogen are “additional” to other uses of electricity. It stipulates that, to ensure that the renewable hydrogen is produced from renewable electricity, the production of renewable electricity should happen at the same time as the use of said electricity for the production of renewable hydrogen. Environmental groups expressed skepticism in reaction to the draft, specifically due to a so-called ‘grandfathering clause’ which could allow hydrogen producers to contract for existing renewable capacity up to 2027. A public feedback period on the draft has been opened until 17 June.

ENERGY COMMUNITY DISCUSSES IMPLICATIONS OF CBAM: On 23 May, the Energy Community, which gathers the EU and neighboring countries to create an integrated pan-European energy market, held a high-level event to discuss the implications of the Carbon Border Adjustment Mechanism (CBAM) on its Contracting Parties. Participants recognized the beneficial role that CBAM could have on incentivizing increased decarbonization efforts and compliance with the Energy Community emission reduction rules. The event underlined that several pilot projects and initiatives related to carbon pricing were under way in the Contracting Parties. However, these efforts must be sped up in order to comply with the requirement of having an emission trading system in place by 2030 and thus qualify for an exemption from the CBAM levy on power exports to the EU.

TRANSPORT COMMITTEE PUBLISHES RENEWABLE ENERGY DIRECTIVE OPINION: On 19 May, the Transport (TRAN) Committee published Rapporteur Barbara Thaler’s opinion on the revision of the Renewable Energy Directive, which was adopted by the Committee on 17 May. The opinion states considerable investments into transmission grids within and between Member States need to be made and incentives need to be given for Member States to develop more joint projects. Additionally, the opinion reiterates the technology neutrality principle, in order not to limit research and development in certain sectors and for certain applications and to ensure a level playing field between all energy carries and technologies. On renewable fuels and gases of biological origin, the TRAN Committee rejects further tightening of available bio feedstock, since conventional biofuels are the only affordable option to replace conventional fuels in sufficient quantities for the time being. On Renewable Fuels of Non-Biological Origins, TRAN MEPs agreed that only sub-targets for hydrogen should be introduced in the revision, and should be postponed until 2030 and linked to a possible phasing out of low-carbon gases and fuels, plans for the caps for conventional biofuels and feedstocks proposed by the Commission to be abolished and for the only limitation to fuels and gases to be based on a sustainability criteria.

ENVIRONMENT COMMITTEE DISCUSSES ENERGY PERFORMANCE OF BUILDINGS REVISION: On 17 May, the Environment (ENVI) Committee gathered to discuss the revision of the Energy Performance of Buildings Directive, which sets measures to achieve energy efficient buildings throughout the EU. Rapporteur Radan Kanev (EPP, Bulgaria) indicated that he largely left intact the Commission’s high ambitions in his draft report. He is open to further amendments to realistically increase the existing ambitions where possible. He however warned that agreeing on high targets would not mean that they would be achieved, especially considering that previously agreed targets were met with significant difficulty. He stated that despite the existence of a large Social Climate Fund, large national budgets and a lot of other national and European support measures, public financing could not allow to achieve the objectives set for 2030 and 2050. He also emphasized the need to give enough consideration to low-income households. Shadow Rapporteur Marcos Ros Sempere (S&D, Spain) echoed the Rapporteur’s concern for low-income households and stated that they should not spend public money only on increasing energy efficiency, but also on improving quality of life in buildings. Shadow Rapporteur Claudia Ramon (RE, Austria) stated it was time to set the right incentives to give building renovations the strong push needed to reduce energy consumption, energy bills and greenhouse gas emissions and to increase the EU’s independence from fossil imports. Bas Eickhout (Greens/EFA, Netherlands) stressed the importance of the energy efficiency of buildings was consensual, and he warned that the legislation should also be assessed in conjunction with the Commission’s new REPowerEU plan.

What’s next?

On 30 and 31 May, the European Council will meet for an extraordinary meeting, in which EU leaders are expected to discuss the sixth sanction package and the energy crisis.

On 2 June, the Industry, Research and Energy (ITRE) Committee will adopt its opinions on the Renewable Energy Directive and FuelEU Maritime. On the same date, the Transport, Telecommunications and Energy (TTE) Council will meet to adopt the Council’s General Approaches on the Alternative Fuel Infrastructure Regulation (AFIR), RefuelEU Aviation and FuelEU Maritime.

On 7 June, the European Parliament Plenary will hold a joint debate on the Fit for 55, focusing on the CBAM, the EU ETS, the EU ETS for aviation, the Effort Sharing Regulation, the LULUCF and the CO2 emissions performance standards for cars and vans. Following the debate, MEPs will have to vote on the European Parliament’s position on the files.

All throughout June, the Council of the EU is due to continue adopting its positions on the Energy Efficiency Directive, Renewable Energy Directive, CO2 emission standards for cars and vans, Effort Sharing Regulation and EU ETS.

On 1 July, France will leave the Council Presidency, succeeded by Czech Republic.

No. 34 | 19 May 2022

EU ENERGY CRISIS

EU SANCTIONS ON RUSSIA AND THE IMPACT ON THE FIT FOR 55 POLICIES

POLITICAL STANDSTILL ON SIXTH SANCTION PACKAGE: After three weeks, Member States have not yet succeeded in finding an agreement on the sixth package of sanctions on Russia proposed by the Commission on 4 May. As previously reported in this update, the objective of this sanction package is to remove Russian oil products from the EU’s energy market. Hungary continues to block the proposal as it wants more substantial concessions to take into account its dependency of pipeline-imported Russian oil. Furthermore the Hungarian government has indicated a preference for the decision to be taken at the highest political level, which means that the sixth sanction package will likely be decided upon during the Special European Council Meeting of 30—31 May.

EUROPEAN COMMISSION PUBLISHES REPOWER EU PLAN:  On 18 May, the European Commission presented the REPowerEU plan, which includes an extensive set of priorities, recommendations and proposals to rapidly shift the European energy market away from Russian supply and towards renewable energy. The plan consists of three main pillars covering the plan’s core objectives and policy framework: first, to save more energy and promote energy efficiency; second, to substitute fossil fuels by accelerating the EU’s clean energy transition; and third, to diversify the European energy supply by seeking new import markets and rely less on import from Russia. In terms of energy savings the most significant developments are the presentation of the EU Save Energy Communication which builds further on the Fit for 55 package and an increase of targets within the Energy Efficiency Directive from 9% to 13%. In order to accelerate the energy transition, REPowerEU proposes to raise the 2030 goal to 45% renewable energy by drastically increasing investments in hydrogen and biomethane and boosting solar energy production through a new Solar Strategy. Within its effort to diversify away from the Russian market, the Commission focusses on the voluntary EU Energy Platform for Member States to jointly negotiate deals on the purchasing of energy. The Commission hopes to deepen this cooperation through a ‘Joint Purchasing Mechanism’ where it could negotiate on behalf of the members.

EUROPEAN PARLIAMENT POLITICAL GROUPS WELCOME THE REPOWEREU PLAN: In response to the presentation of the REPowerEU plan, political groups within the European Parliament voiced their support for the proposals announced by the European Commission. The EPP group underlined the need to develop long-term partnerships with non-EU countries to secure sustainable, secure and affordable energy. In particular, the EPP group strongly supports developments in solar energy and stressed the need to simplify rules on permits and make rooftop solar panels mandatory for all new buildings. The S&D group called for a new recovery plan to finance the energy transition and accelerate the phase out of fossil fuels. In this regard, MEP Dan Nica (S&D, Romania) underlined the need for a ‘a shock plan to boost renewables and energy efficiency measures’. However, he criticized the absence of a clear timeline for stopping energy dependency on Russia. Renew Europe strongly welcomed the proposals to speed up renewables permits and grid infrastructure improvements as well as to deploy a resilient renewable hydrogen market. The Greens/EFA group welcomed legal and binding measures for more renewable energy and energy efficiency, as well as the proposed legal obligation to install solar panels. Greens MEPs call on the European Commission to protect low-income households and to find new revenues to finance this transition moving away from Emissions Trading System certificates.

EUROPEAN COMMISSION PROPOSED SOLAR ENERGY STRATEGY: Within the context of REPowerEU published on 18 may, the commission also proposed a first Strategy for Solar Power. The objective is to more than double the current production of solar energy towards 320 Gigawatt by 2025, and further increase it towards 600 Gigawatt by 2027. The strategy consists of a European Solar Rooftops Initiative, which aims at making the installation of rooftop solar panels compulsory for new commercial and public buildings larger than 250 m² by 2026 and for all existing ones over that size by 2027. New residential buildings should be equipped with solar panels by 2029. The strategy additionally proposes a simplification of the current procedures for permits and calls for large-scale partnerships among stakeholders to share and develop skills with regards to onshore renewables including solar. Lastly, it aims at bolstering innovation in the field as well as strengthening the industrial sector by launching a European Solar PV Industry Alliance.

EUROPEAN COMMISSION PRESENTS EXTERNAL ENERGY STRATEGY: Together with the REPowerEU, the European Commission presented the EU External Energy Strategy, which aims to facilitate the diversification of energy supply and build long-term partnerships. To reduce the pressure on prices, the Strategy prioritizes the green energy transition, increasing energy savings and efficiency. Moreover, it plans to boost the global development of renewables and hydrogen as well as step up energy diplomacy. As regards hydrogen, the Strategy proposes actions to facilitate the import of hydrogen into the EU, for instance developing major hydrogen corridors in the Mediterranean and North seas as well as concluding hydrogen partnerships with hydrogen suppliers. A first step with regards to the hydrogen ambitions is a mapping of the current hydrogen infrastructure to be finished by March 2023. Regarding the relation with international partners, the EU aims at supporting Ukraine, Moldova, the Western Balkans and Eastern Partnership countries in ensuring energy supply. The Strategy also includes actions to promote and support the energy transition with EU partner countries.

EUROPEAN COMMISSION AIMS TO BOOST ENERGY PARTNERSHIP WITH GULF COUNTRIES: In line with the EU’s ambition to engage in international partnership in the field of energy, the European Commission also presented on 18 May a Joint Communication on a Strategic Partnership with the Gulf. The Communication underlines that the Gulf countries play a key role in the field of energy security as world’s largest producers of fossil fuels, reliable liquefied natural gas (LNG) providers as well as producers of renewable energy, such as hydrogen, solar and wind power. Against this background, the EU aims to set up a dedicated EU-Gulf energy and climate expert group to intensify policy dialogue on green transition at regional and bilateral level, develop and improve infrastructure interconnections and promote the creation of competitive markets enabling trade in renewable energy.

EUROPEAN COMMISSION SETS NEW MEASURES TO TACKLE HIGH ENERGY PRICES: Still on 18 May, the European Commission presented a Communication on “short-term energy market interventions and long term improvements to the electricity market design”. The Communication puts forward a series of measures to tackle high energy prices and address the possible gas supply disruptions from Russia. Specifically, as short-term intervention measures, Member States could temporarily extend end-consumer price regulation and use emergency liquidity measures in the gas market. Moreover, the Communication sets intervention options in the electricity markets to support consumers next winter. The European Commission announced also that it would investigate the electricity market in order to make it future-proof and resilient to possible future shocks. As regards possible gas disruption from Russian, the Communication invites Member States to update their contingency plans. Furthermore, the European Commission is ready to facilitate a coordinated the EU response, for instance with a EU demand reduction plan and a price cap on gas.

VON DER LEYEN EMPHASIZES IMPORTANCE OF HYDROGEN IN EU’S ENERGY SECURITY: Speaking at the Central European Hydrogen Technology Forum on 17 May, European Commission President Ursula von der Leyen stated that green hydrogen is essential to end the EU’s dependence on unreliable and dangerous suppliers such as Russia. That is why the Commission’s new energy plan, REPowerEU, has doubled the 2030 target to produce annually ten million tons of renewable hydrogen in the EU, and plans for the EU to import another 10 million tons from abroad. This could replace up to 50 billion cubic metres per year of imported Russian gas.  

 

Would you like to know more about the impact of the energy crisis and sanctions on Russia on your organization? Dr2 Consultants’ European Green Deal & Fit for 55 Impact Scan offer targeted solutions to understand and anticipate the impact of the EU’s climate initiatives, as well as the EU’s countermeasures to mitigate the impact of the energy crisis and its sanctions on Russia. Don’t hesitate to contact us for more information.

Highlights of the week

ENVIRONMENT COMMITTEE MEPS VOTE TO RAISE THE EU ETS CLIMATE AMBITION: On 17 May, the Environment (ENVI) Committee adopted Rapporteur Peter Liese’s (EPP, Germany) report on the revision of the EU Emissions Trading System (ETS). Voting on the amendments, MEPs agreed upon strengthening the Innovation Fund and rewarding best-performing companies in decarbonization through a bonus-malus system. MEPs also voted to include waste in the ETS scope starting from 2026 (following an impact assessment) and to support companies covered by the ETS dealing with international competition. In addition, the report aims to include maritime from 2024 with full auctioning, to allocate 75% of the ETS revenues to finance innovation in ships and harbors and 25% to pay back NextGenerationEU. The scope of the ETS concerns 100% of intra-EU trips and 50% of international shipping (departing/arriving in the EU). A 100% of international shipping should be included as of 2027. On ETS for road transport and buildings, MEPs agreed to include them in the scope already in 2025 for commercial operations, while the private sector could only be included as of 2029, after an impact assessment on energy and mobility poverty in the EU and through a co-decision procedure involving the European Parliament and Council of the EU. Rapporteur Liese expressed criticism on adopted amendments that were supported by Greens, Renew, S&D and the Left (and not the EPP), which would raise the ETS climate ambition (e.g., the phase-out of free allowances for sectors covered by CBAM in 2030). The Rapporteur expects these amendments to be challenged by the EPP and ECR during the European Parliament plenary session in June, during which the report is to be adopted. Indeed, both groups proposed the phase out of free allowances in 2034 (in line with the Industry, Research and Energy (ITRE) Committee’s opinion).  

ENVI COMMITTEE VOTES TO SPEED UP AND INCREASE THE SCOPE OF CBAM: On 17 May, the ENVI Committee adopted the report by Rapporteur Mohammed Chahim (S&D, Netherlands) on the Carbon Border Adjustment Mechanism (CBAM) with 49 votes in favor, 33 against and 5 abstentions. MEPs voted to expand the scope of CBAM including aluminum, hydrogen, polymers and organic chemicals in addition to the products proposed by the Commission (iron and steel, refineries, cement, organic basic chemicals and fertilizers). Furthermore, the report aims to include indirect emissions in the scope, to create a centralized CBAM authority and to phase out free allowances under the EU ETS in 2030. MEPs also voted in favor of anti-circumvention measures and extra financial support for least developed countries using CBAM revenues. According to the report, the CBAM would apply from 1 January 2023 with a transitional period until the end of 2024 and it must be fully implemented for all sectors of the EU ETS by 2030 (five years earlier than proposed by the European Commission). The report is scheduled for a vote at the plenary session on 6-9 June after which the European Parliament will be ready to start negotiations with the Council of the EU.

MEPS IN ENVIRONMENT COMMITTEE AIM FOR A FASTER DECARBONIZATION OF THE AVIATION SECTOR: On 17 May, the ENVI Committee adopted its position on the revision of the EU Emissions Trading System (ETS) for aviation. The report by Rapporteur Sunčana Glavak (EPP, Croatia) aims to raise the ambition of decarbonizing the aviation sector by proposing the phase out of free allocation already in 2025 (two years ahead than the original proposal), with an accelerated phase out of 50% in 2024. In addition, MEPs voted to expand the scope by including in the EU ETS all flights departing from airports located in the European Economic Area (EEA). To support innovation and new technologies to decarbonize the sector, the report proposed to allocate 75% of ETS aviation revenues to fund innovative projects and solutions. The European Commission should also improve transparency, for instance by publishing all emissions data related to aircraft operators and a list of aircraft operators from countries that do not apply CORSIA. The report is scheduled for a vote during the European Parliament plenary session on 6-9 June.

TRANSPORT COMMITTEE DEBATES AMENDMENTS TO FUELEU MARITIME REPORT: On 17 May, the Transport (TRAN) Committee held a debate on the amendments to Rapporteur Jorgen Warborn’s (EPP, Sweden) draft report on FuelEU Maritime. The Rapporteur welcomed the agreement between most MEPs on the need for technological neutrality, saying that this was the best way to ensure that the energy transition was designed in a cost-effective way. He also called for binding limits on greenhouse gas (GHG) intensity and using them as tools to push the maritime sector in the right direction. Shadow Rapporteur Vera Tax (S&D, Netherlands) said her party sought 100% reduction in the maritime sector’s GHG emissions by 2050, which was essential to keeping the climate goals within reach and accused the rapporteur of not taking into consideration a majority of MEPs’ concerns. MEP Else Katainen (Finland), Shadow Rapporteur for Renew Europe, called for moderated ambition, citing the need to ensure competitiveness in the shipping sector as well as a level playing field in the Single Market all the while reducing emissions. Shadow Rapporteur Jutta Paulus (Greens/EFA, Germany) stressed the importance of attaining climate neutrality by 2050 and explicitly incorporating this target into the legislation. In response to the MEPs, a representative of the Directorate-General for Mobility and Transport (GD MOVE) in the European Commission commented that all elements and targets of the Fit for 55 package, were modelled on the EU’s broader climate target plans and reflected the most cost-effective scenario combining the effects of various elements in the package, notably EU ETS, the Renewable Energy Directive and the Alternative Fuels Infrastructure Regulation.

What’s next?

On 30 and 31 May, the European Council will meet for an extraordinary meeting, in which EU leaders are expected to discuss the sixth sanction package and the proposed oil embargo.

On 7 June, the European Parliament Plenary will hold a joint debate on the Fit for 55, focusing on the CBAM, the EU ETS, the EU ETS for aviation, the Effort Sharing Regulation, the LULUCF and the CO2 emissions performance standards for cars and vans. Following the debate MEPs will have to vote on the European Parliament’s position on the files.

All throughout June, the Council of the EU is due to adopt its positions on FuelEU Maritime, ReFuelEU Aviation, Energy Efficiency Directive, Renewable Energy Directive, CO2 emission standards for cars and vans, Effort Sharing Regulation and EU ETS.

No. 33 | 12 May 2022

EU ENERGY CRISIS

EU SANCTIONS ON RUSSIA AND THE IMPACT ON THE FIT FOR 55 POLICIES

EU GAS DEPENDENCY COULD COST €250 BILLION BY 2030: A report published on 11 May by environmental think-tanks found that, despite the measures planned in the Fit for 55 package, forecasted gas consumption in 2030 could cost the EU €250 billion more than anticipated by the European Commission in its impact assessments when drafting the package. This is because the high and volatile gas prices, caused by shortages coupled with the war in Ukraine, are expected to last for at least three years. The EU’s REPowerEU Communication, which proposes a path towards independency from Russian supplies, is expected to decrease this cost by only €47 billion. The report finds that the only way to considerably reduce this cost is to roll-out renewable energies more rapidly and on a larger scale than planned in the package, as well considerably increase energy efficiency.

RENEWABLE ENERGY GENERATION CAPACITY REACHED RECORD HIGH IN 2021: According to a press release published on 11 May by the International Energy Agency (IEA), global renewable energy generation capacity has known an unprecedented growth in 2021, with the addition of a record 295 gigawatts of new renewable power capacity, mainly from solar energy. The growth is notably driven by strong policy support in the EU, but also in China and Latin America. The IEA expects that this growth will continue in 2022 as governments increasingly seek to take advance of renewables’ energy security and climate benefits. Global capacity additions are expected to rise this year to 320 gigawatts – equivalent to an amount that would come close to matching the European Union’s total electricity generation from natural gas.  However, the IEA warns that, based on the current policy setting, renewable energy’s global growth is set to lose momentum in 2023. In the absence of stronger policies, the amount of renewable power capacity added worldwide is expected to plateau next year.

EU COMMISSION CONSIDERING FUNDING FOR EASTERN MEMBER STATES’ ENERGY INFRASTRUCTURE: Following Commission President Ursula von der Leyen’s trip to Hungary on 9 May, EU officials revealed that the Commission is considering offering certain eastern Member States (Hungary, Slovakia and Czech Republic) additional funding to improve their oil infrastructure and connections with other Member States, as a way to convince them to endorse a ban on Russian oil. The ban on Russian oil imports was proposed by the Commission as part of the sixth sanctions package proposed by the Commission last week. The three countries are landlocked and have therefore less options than other Member States for alternative supplies. The sanctions package, which must be approved unanimously by Member States, is currently being tweaked by the Commission to address their various concerns and gain approval. The Commission has already agreed to grant Hungary, Slovakia, Czech Republic longer transition periods for phasing out crude oil and refined oil imports, and a new revision of the text is expected to remove the ban on EU tankers from carrying Russian oil after pressure from Greece, Cyprus, Malta.

 

Would you like to know more about the impact of the energy crisis and sanctions on Russia on your organization? Dr2 Consultants’ European Green Deal & Fit for 55 Impact Scan offer targeted solutions to understand and anticipate the impact of the EU’s climate initiatives, as well as the EU’s countermeasures to mitigate the impact of the energy crisis and its sanctions on Russia. Don’t hesitate to contact us for more information.

Highlights of the week

ECONOMIC COMMITTEE DEBATES AMENDMENTS TO ENERGY TAXATION DIRECTIVE: On 11 May, the Economic and Monetary Affairs Committee debated the 409 amendments submitted to Rapporteur Johan Van Overtveldt’s (ECR, Belgium) draft report on the Energy Taxation Directive. MEP Overtveldt underlined that there is still a disagreement within the Committee on the taxation approach to adopt in the legislation: he is in favour of a technology-neutral approach, whereas other political groups favour the Commission’s approach based on environmental impact. However, MEPs agree on the need for a global impact assessment of the Fit for 55 package to assess its impact on citizens and industry. MEPs also disagree on the inclusion or not of automatic indexation of taxation rates on inflation, as well as on the date of entry into force of the new legislation. However, they agree that double taxation must be avoided, especially with regards to energy used in installations covered by the EU ETS. The minimum and maximum taxation rates for various energy sources, notably electricity, transitional fuels and sustainable fuels, also still cause disagreement between MEPs.

ENVIRONMENT COMMITTEE ADOPTS CO2 STANDARDS FOR CARS AND VANS REPORT: On 11 May, the Environment Committee (ENVI) adopted the report by Rapporteur Jan Huitema (RE, Netherlands) on the CO2 emission performance standards for cars and vans.  The report was adopted with 46 votes in favor, 40 against and 2 abstentions. Proposed measures include the removal of the incentive mechanism for zero- and low-emission vehicles (‘ZLEV’) and a gradual reduction of the cap for eco-innovation, in line with the proposed stricter targets (the existing 7g CO2/km limit should remain until 2024, followed by 5g from 2025, 4g from 2027 and 2g until the end of 2034). MEPs agreed upon the establishment of a common EU methodology by the Commission, by 2023, for assessing the full life cycle of CO2 emissions of cars and vans placed on the EU market, as well as for the fuels and energy consumed by these vehicles. Furthermore, the report calls on the Commission to work on reports covering the impact on consumers and employment, the level of renewable energy use, information on the market for second-hand vehicles, and targeted funding to boost the green mobility transition. The ENVI report will be voted on during the June Plenary sitting.

ENVIRONMENT COMMITTEE REACHES MAJORITY AGREEMENT ON EU ETS: On 11 May, the Rapporteur on the EU Emissions Trading System (ETS), MEP Peter Liese (EPP, Germany) announced the Environment Committee reached an agreement on the proposal. This comes a day after MEP Michael Bloss (Greens/EFA, Germany), Shadow Rapporteur for the EU ETS, announced that the Committee had reached a majority agreement supported by the S&D, Greens/EFA, Renew Europe and The Left,  but not EPP. MEP Liese explained that the Shadow Rapporteurs accepted the inclusion of the ‘bonus-malus-system’, according to which companies that are emitting much less than others in their sector will get additional allowances, while those that are emitting much more and do not do efforts to decarbonize, will have to pay a much higher bill in the next years. In addition, companies that meet the emissions reduction benchmark will be rewarded with longer free allowances and be exempted from the correction factor. MEPs also agreed on increasing the Innovation Fund with additional 50 million more allowances and to direct 75% of the ETS’s revenues for shipping to an ‘Ocean Fund’ (support for the decarbonization of shipping industry). As regard the expansion of the scope of the EU ETS, MEP Liese explained that maritime transport will be included from 2024 while the ETS II for road transport and heating has some differentiation. Specifically, MEPs agreed that ETS II for commercial operators will be introduced as soon as possible, while for private sector it will start only from 2029 (subjected to an impact assessment by the Commission of energy and mobility poverty in the EU).

COMMISSION TO SHORTEN RENEWABLE ENERGY PERMIT PROCEDURE: According to a leak of the Commission’s REPowerEU plan, to be published on 18 May, the European Commission will propose to allow certain renewable energy projects to receive permits within a year. Member States would have to designate “go-to- areas” where renewable energy projects would have a low environmental impact. For new projects in such areas, permit granting process should not exceed one year. Normal permitting procedures for renewable energy usually take years, dependent on the Member States’ bureaucracy. The Commission’s proposal would accelerate the process as the overall “go-to area” would be subject to an environmental assessment, but individual projects would no longer need one. Also according to the REPowerEU leak, the EU renewable energy target should be increased compared to the Renewable Energy Directive proposal, but the number is not yet specified. Finally, the REPowerEU plan will include a strategy for solar power, to make it a significant part of the EU’s power and heating systems.

TRANSPORT COMMITTEE AGREES ON THE INCLUSION OF MARITIME IN THE EU ETS BUT NOT OF ROAD TRANSPORT AND BUILDINGS: On 10 May, the Committee on Transport and Tourism (TRAN) published its opinion on EU ETS, which was adopted on 28 April. The Rapporteur for opinion Andrey Novakov (EPP, Bulgaria) underlines his concerns over the lack of a synergistic economic impact assessment covering the entire Fit for 55 package. The opinion supports the inclusion of the maritime sector in the scope of the EU ETS, but calls for a coordinated approach with the International Maritime Organization (IMO) towards a global market-based instrument. The opinion also extends the phase-in period from 20% of verified emissions for 2026 to 100% for 2029, to mitigate the negative effects of COVID-19 pandemic and leave time for the sector to adapt. The TRAN opinion proposes the establishment of a Maritime Transition Fund funded by ETS revenues, which would finance decarbonization projects and boost the development of transitional fuels and new technologies. On the inclusion of building and road transport in the scope, the TRAN Committee rejected this option, highlighting that it is premature as it would have negative effect on end-consumer costs, citizens and business. A comprehensive impact assessment indicating the real burden to citizens and thoroughly analyzing the risk and scale of energy and transport poverty, is needed before a final decision on the new ETS can be made.

EUROPEAN PARLIAMENT PUBLISHES STUDY ON PRICING INSTRUMENTS ON TRANSPORT EMISSIONS: The study was published on 10 May on the request of the TRAN committee to support its work on key legislative proposals such as the Energy Taxation Directive (ETD) and the EU Emissions Trading System (EU ETS). The study explains that pricing instruments on CO2 emissions from road transport are used widely across the EU, but not in a coherent way. As a result, different tax levels and structures are in place across the EU. The Commission has attempted to harmonize these policies through the EU ETS and ETD. The report does however show that pricing instruments seem successful in reducing CO2 emissions, as well as in generating taxation income. It must be taken into account that distributional impacts also occur: households of low-income experience a larger impact than other groups. The report therefore recommends a balanced mix of pricing instruments and to integrate these into broader emission reduction policies. Carefully exploring social acceptance and openness to adjusting the instruments are also important.

What’s next?

On 16 and 17 May the TRAN Committee will vote on its opinions on the Renewable Energy Directive and the Energy Taxation Directive, and debate amendments to the FuelEU Maritime report.

On 16 and 17 May, the ENVI Committee will vote on its reports on the Carbon Border Adjustment Mechanism (CBAM), EU ETS, Land Use, Land Use Change and Forestry Regulation (LULUCF) and Effort Sharing Regulation, as well as its opinions on the Renewable Energy Directive.

On 7 June, the European Parliament Plenary will hold a joint debate on the Fit for 55, focusing on the CBAM, the EU ETS, the Effort Sharing Regulation, the LULUCF and the CO2 emissions performance standards for cars and vans.

All throughout June, the Council of the EU is due to adopt its positions on FuelEU Maritime, ReFuelEU Aviation, Energy Efficiency Directive, Renewable Energy Directive, CO2 emission standards for cars and vans, Effort Sharing Regulation and EU ETS.

No. 32 | 05 May 2022

EU ENERGY CRISIS

EU SANCTIONS ON RUSSIA AND THE IMPACT ON THE FIT FOR 55 POLICIES

EUROPEAN COMMISSION ANNOUNCES SIXTH SANCTION PACKAGE ON RUSSIA: On 4 May, during the European Parliament’s Plenary session, European Commission President, Ursula von der Leyen, announced the sixth sanction package on Russia. Most significantly, the package targets imports of Russian oil. The Commission aims at a complete ban on Russian oil products within a time period of 8 months, both on import by sea or through pipelines. In six months, a full ban on the import of Russian crude oil is to be in place, to be extended to two months later to refined oil products. The proposal was welcomed by the Greens/EFA, the EPP and Renew Europe, although they ask for a total embargo on coal and gas as well. The S&D group, while supporting the measure, asked for an urgent plan to cope with the economic and social impact of the oil ban. The package first needs to be unanimously approved by Member States. It is expected that Member States highly dependent on Russian oil will express resistance to the package. Hungary has already warned it would not support the package “in its current form”, while Slovakia wants an even longer transition period, although the Commission has already granted an exemption to both Member States, allowing them until 2023 to phase out their import of Russian oil. The European Foreign Affairs Council is set to meet on 16 May and has the war on its agenda, while a special European Council meeting is scheduled on 30 May.

MEPs STRESS THE STRATEGIC IMPORTANCE OF RENEWABLES AND ENERGY INTERCONNECTIONS AND EFFICIENCY: On 3 May, Commissioner for Energy, Kadri Simson, joined the European Parliament’s Plenary session to discuss the EU’s energy autonomy. During the discussion, MEPs called for more investments in renewables and support to projects improving energy interconnections in the EU, including for LNG, to ensure the EU’s energy autonomy. Greens MEPs called for a European Solar Act, similar to the European Chips Act, that would support the autonomy of the EU’s solar energy sector. They also stressed the importance of energy saving and energy efficiency in reducing prices for consumers and reducing reliance on energy imports. EPP MEPs stressed that accelerating the energy transition was core to protecting energy security both in the short and long run, also stressing the important role hydrogen can play. S&D MEPs highlighted the need to take accompanying measures to shield consumers from high energy prices.

MEMBER STATES VOW TO ENSURE SECURITY OF ENERGY SUPPLY: On 2 May, the Energy Council gathered in Brussels to address the situation of energy supplies and other energy developments in the EU, in the context of Russian company Gazprom halting gas deliveries to some Member States. Ministers, together with Energy Commissioner, Kadri Simson, reviewed the preparedness of the EU, underlining that there is no immediate risk of gas disruptions to consumers and industry. Nonetheless, they reiterated their readiness to offer all necessary assistance to affected Member States. Commissioner Simson also highlighted that energy projects within the EU, such as gas interconnectors between Lithuania and Poland and between Greece and Bulgaria, were starting to operate or nearing completion and would play a crucial role in ensuring the EU’s security of supply. EU Energy Ministers stressed that they would continue to work with the Commission to ensure the security of energy supply of all Member States at all times, including by reaching the best possible storage levels across the EU, by securing alternative deliveries from reliable suppliers and by continuous monitoring of the preparedness of the EU’s energy systems, including exchanging information on gas savings.

 

Would you like to know more about the impact of the energy crisis and sanctions on Russia on your organization? Dr2 Consultants’ European Green Deal & Fit for 55 Impact Scan offer targeted solutions to understand and anticipate the impact of the EU’s climate initiatives, as well as the EU’s countermeasures to mitigate the impact of the energy crisis and its sanctions on Russia. Don’t hesitate to contact us for more information.

Highlights of the week

WIND ENERGY PRODUCTION IN THE EU STILL SHORT OF REACHING 2030 TARGET: On 4 May, WindEurope, the association representing the EU’s wind energy sector, reported that €41.4 billion had been invested in wind farms in Europe in 2021, financing a record increase in new production capacity of 25 Gigawatt. Despite this increase, the sector still falls short of reaching the yearly EU target of 35 Gigawatt necessary to reach 2030 climate and energy security targets. In fact, Europe invested 11% less in wind energy compared to 2020. WindEurope warns that this underinvestment is harming the competitiveness of the sector. WindEurope therefore calls upon the EU and national governments to remove barriers towards the expansion of renewables.

TRANSPORT COMMITTEE ADOPTS OPINION ON EU ETS FOR AVIATION: On 28 April, the Committee on Transport and Tourism (TRAN) voted and adopted the opinion by Rapporteur for opinion Jan-Christoph Oetjen (Renew, DE) on the proposal for an EU Emissions Trading System (ETS) for aviation. The MEPs adopted it with 37 votes in favor, 6 against and 5 abstentions. MEP Oetjen proposes to introduce free allocation of allowances to aircraft operators to incentivize the uplifting of sustainable aviation fuels (SAFs), including synthetic aviation fuels, in line with the objectives of the proposal of ReFuelEU Aviation. He suggests that these ETS credits should come from the pool of total allowances available and proposes to reserve a total of 20 million for this purpose up to 2030. Moreover, Rapporteur Oetjen proposes the earmarking of revenues from EU ETS allowances purchased by aircraft operators for R&D investment exclusively in the aviation sector. In order to ensure a level playing field, the opinion suggest that the European Commission should be able to impose an EU ETS on third-country carriers in case of distortion of competition or a threat of injury to the European aircraft operator as a result of this non-compliance. Finally, to avoid high fluctuations in carbon price, current rules safeguarding the market against any future speculation should be revised.

TRANSPORT COMMITTEE ADOPTS OPINION ON CO2 EMISSION STANDARDS: On 28 April, the TRAN Committee adopted the opinion by Rapporteur Karima Delli (Greens/EFA, France) on the proposed revision of CO2 emission standards for cars and vans. The final vote on the opinion was adopted with 27 positive votes, 14 against and 7 abstentions. MEPs voted in favor of recognizing the contribution of sustainable renewable fuels for compliance with the targets. Furthermore, they call for reducing the CO2 emission reduction target for 2035 from 100% to a 90% target (compared to 2021 levels), while retaining the proposed targets for 2025 and 2030. Moreover, the opinion proposes the amounts of the excess emissions premium to be considered as revenue assigned to the Social Climate Fund to mitigate any negative employment impact of the transition in the sector. MEPs also agreed to consider different technologies to achieve the zero-emissions goal.

ENVIRONMENT COMMITTEE ADOPTS OPINIONS ON REFUEL AVIATION AND ENERGY EFFICIENCY DIRECTIVE: On 28 April, the Committee on the Environment, Public Health and Food Safety (ENVI) voted and adopted the opinion by Rapporteur Nicolás González Casares (S&D, ES) on the proposal for ReFuelEU Aviation. The draft opinion was adopted with 46 votes in favor, 14 against and 26 abstentions. Notably, the opinion raises the target to 100% sustainable aviation fuels (SAFs) by 2050, includes hydrogen and electricity in the scope, and ensures that all EU airports would provide SAFs by 2035 (by 2025, only airports with more than 750.000 passengers would have to provide SAFs). As regards biofuels covered under the Renewable Energy Directive, the opinion establishes a cap of 1.7% for the total SAFs supplied to aircrafts. Moreover, MEP Casares proposes that the European Commission puts forward legislation to reduce the non-CO2 effects of aviation (e.g., aromatics and sulfur) and works on a report evaluating the environmental impacts and technical viability of a SAF mandate for short-haul flights. During the same ENVI meeting, MEPs adopted the draft opinion on the Energy Efficiency Directive (EED) by Rapporteur Eleonora Evi (Greens/EFA, Italy) with 47 votes in favor, 30 against and 9 abstentions.

What’s next?

On 10 May, the Committee on Women’s Rights and Gender Equality will adopt its opinion on the Energy Efficiency Directive. On 11 May, ENVI MEPs will vote on MEP Jan Huitema (Renew, The Netherlands)’s draft report on the CO2 Emission Standards for Cars and Vans.

Furthermore, on 11 May the Committee on Economic and Monetary Affairs (ECON) will discuss the revision of the Energy Taxation Directive, which will also be voted upon by TRAN MEPs on 16 May.

Lastly, the ENVI committee will be handling several proposals with regards to the EU ETS: on 11 May it considers its draft report on ETS as regards notification on the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), and on 16 may it votes on ETS maritime and operation of a market stability reserve as well as ETS aviation.

No. 31 | 28 April 2022

EU ENERGY CRISIS

EU SANCTIONS ON RUSSIA AND THE IMPACT ON THE FIT FOR 55 POLICIES

GERMANY PLANS EXTRAORDINARY MEASURES TO DECREASE DEPENDANCE ON RUSSIAN GAS: On 28 April, Germany’s Vice-Chancellor and Climate and Economy Minister, Robert Habeck, outlined the plans for speeding up the country’s independence from Russian gas, which is planned to be achieved mid-2024. One of the measures taken is the construction of a Liquified Natural Gas (LNG) terminal in ten months’ time. The project is highly ambitious and will require unprecedent efforts to speed up the process (e.g. start construction before receiving permits). Finance Minister, Christian Lindner, already made €3 billion available to support the leasing of floating LNG terminals, which would receive shipments for instance from the United States and Qatar. In the meantime, Germany has also successfully worked to drastically decrease its reliance on Russian oil by diversifying supplies, notably through a tight partnership with Poland for deliveries. Robert Habeck stated on 26 April that Germany was “very, very close” to stop needing to rely on Russian oil imports, which constituted 35% of the country’s oil consumption in 2021.

PORTUGAL AND SPAIN WANT THE GAS STORAGE REGULATION TO INCLUDE LNG FACILITIES: On 27 April, Portugal and Spain issued a joint statement outlining their position regarding the proposal for a Gas Storage Regulation. The two Member States highlight the prominent role of Liquified Natural Gas (LNG) in the Iberian Peninsula and the several LNG facilities currently operating in Portugal and Spain. In this regard, they underline the resilience of their storage levels during winter 2021/2022 thanks to LNG stocks. Against this background, Portugal and Spain stress the gas storage regulation should include LNG facilities, and not only underground storage. Both countries ask for the Iberian Peninsula to be explicitly recognized as a region with distinctive circumstances, and as such, Spain and Portugal should have specific targets of 80% storage capacity for 2022 onwards, allowing LNG stocks to count towards the fulfilment of the 90% target.

RUSSIA STOPS DELIVERIES OF GAS TO POLAND AND BULGARIA: In response to the countries refusal to pay supplies of gas in rubles, Russia’s state-owned Gazprom halted gas deliveries to Poland and Bulgaria from 27 April. The Member States reported that they would not suffer disturbance and customers would not face shortfalls in deliveries, thanks also to the high level of gas storage. European Commission President, Ursula von der Leyen, voiced her criticism against Gazprom’s announcement and Russian attempt to use fossil fuels as a political weapon. She announced that Poland and Bulgaria would continue receiving deliveries from other Member States. Moreover, as regards the diversification of energy supplies, President von der Leyen mentioned that the EU reached an agreement with the US to provide additional Liquified Natural Gas (LNG) imports and that the European Commission would present its detailed plan to speed up the green energy transition on 18 May.

EUROPEAN UNION TO INCLUDE OIL IN THE SIXTH SANCTIONS PACKAGE: Commissioner Vice-President Valdis Dombrovskis revealed on 25 April that the EU is working on a sixth sanctions package against Russia that would include “some form of oil embargo”. The measure, which has not been agreed yet, could include a granular phasing-out of Russian oil or the imposition of tariffs on exports beyond a certain price cap. Indeed, a full embargo on gas and oil would unlikely find support among Member States. Notably, the most vocal opponents to the embargo, Germany and Hungary, are softening their position. Germany has been working to end its dependency from Russian oil in the past weeks, and the visit of the German Climate and Economy Minister, Robert Habeck, in Poland could hint at a softer position on sanctions. Meanwhile, the Hungarian Prime Minister’s chief of staff, Gergely Gulyás, opened up to discussing alternatives on an oil embargo. According to Commissioner for Energy, Kadri Simson, the package would be presented soon to EU diplomats. Nevertheless, High-Representative Josep Borrell clarified that the package still requires further negotiations, and it is unlikely that a final decision would be taken before the next European Council at the end of May. Beside the embargo, the sanctions package is expected to target the largest Russian bank, Sberbank, through which Member States make payments for Russian gas and oil.

 

Would you like to know more about the impact of the energy crisis and sanctions on Russia on your organization? Dr2 Consultants’ European Green Deal & Fit for 55 Impact Scan offer targeted solutions to understand and anticipate the impact of the EU’s climate initiatives, as well as the EU’s countermeasures to mitigate the impact of the energy crisis and its sanctions on Russia. Don’t hesitate to contact us for more information.

Highlights of the week

NEW REPORT FROM EUROPEAN COMMISSION SHOWS INCREASE IN GHG EMISSIONS FROM OPERATORS COVERED BY EU EMISSION TRADING SYSTEM: According to a new report published on 25 April by the European Commission, greenhouse gas emissions from operators covered by the EU Emissions Trading System (EU ETS) increased by 7.3% in 2021 compared with 2020 levels. The increase results from an 8.3% increase in emissions from the power sector, an increase of 5.2% from main industrial sectors and an increase of 8.7% from aviation. Compared with 2019 emissions, emissions from the power sector have, however, decreased by 7.3%, while for main industrial sectors they have decreased by 1.9% and by 61% for aviation. Under the EU ETS, all operators (stationary installations and airlines) were required to report their verified emissions for the year of 2021 by 31 March 2022. Reporting has been above 95% for most sectors and countries.

REGIONAL AND INDUSTRY COMMITTEES ADOPT DRAFT OPINIONS ON DEPLOYMENT OF ALTERNATIVE FUELS INFRASTRUCTURE REGULATION: On 21 April, the Regional (REGI) Committee adopted the draft opinion on the Alternative Fuels Infrastructure Regulation, with 18 votes in favor casted by MEPs from the Renew, S&D, Greens and the Left, 15 votes  against casted by ECR, ID and EPP MEPs and 7 abstentions. In the Industry, Research and Energy (ITRE) Committee, the opinion was adopted on 20 April with 59 votes in favor with the support of MEPs from Renew, S&D, Geens, EPP and ID groups; 9 votes against from ECR, ID and The Left as well as 8 abstentions from ECR and ID.

INDUSTRY COMMITTEE PUBLISHES OPINION ON THE REVISION OF THE EU EMISSIONS TRADING SYSTEM: The ITRE Committee published its opinion on the EU Emissions Trading System (EU ETS) on 21 April. The report references the Glasgow Climate Change Conference which demonstrated that it will be impossible to limit global warming to around 1.5 degrees with the current measures in place. The opinion states that the scope of the Innovation Fund should be extended to cover innovative breakthrough technologies to reduce carbon dioxide emissions from maritime transport and to support the production of low- and zero-carbon fuels and zero-emission fuels for aviation, road and rail transport. Yet, the specific details of the new forms of support will have to be examined carefully before they are adopted. There is some concern regarding the Commission’s proposal that there should be an obligation to conduct energy audits. The issue is the equal treatment of operators from the perspective of the content and quality of reports. A more viable alternative that the opinion proposes would be to require operators to establish an energy management system and follow the recommendations specified in it. The calculation of the amount of free allocation must also in future be based on product-specific benchmarks, set according to what is seen as best in the sector. These calculation rules would permit technological development and ensure technological neutrality.

INDUSTRY COMMITTEE PRESENTS FINAL OPINION ON CARBON BORDER ADJUSTMENT MECHANISM: Following its adoption on 20 April, the ITRE Committee published Rapporteur Izabela-Helena Kloc’s (ECR, Poland) opinion of the Carbon Border Adjustment Mechanism (CBAM). In her opinion, MEP Kloc highlights the interlinkage between the EU Emissions Trading System and the CBAM and underlines that the newly established mechanism can complement the existing carbon leakage prevention mechanisms under the EU ETS. However, the withdrawal of free allowance under the EU ETS risks reducing EU export competitiveness, resulting in a drop of EU exports for CBAM sectors. Therefore, the phase out of free allowances under ETS should start only once the Commission establishes a mechanism to prevent such carbon leakage on export markets. Additionally, the opinion also calls for an implementation timeframe between 2023 and 2025, but emphases the need for an assessment of the impact of the CBAM on the downstream sector, as well as for an impact assessment on the extension of the scope to indirect emissions. Finally, the opinion underlines the importance of avoiding circumventions and proposes to strengthen the system for registration of third country installations. The plenary vote on the CBAM is scheduled on 6 June.

INDUSTRY COMMITTEE DEBATES COMMISSION’S PLAN FOR SECURITY OF GAS SUPPLY: On 20 April, the Industry, Research and Energy (ITRE) Committee in the European Parliament debated the Commission’s proposal on the revision of the Gas Storage Regulation. ITRE Chair Cristian-Silviu Busoi (EPP, Romania) informed that ITRE coordinators have requested the European Parliament to apply an urgent procedure to the examination of the file, which was approved in Plenary this month. Rapporteur Jerzy Buzek (EPP, Poland) emphasized the urgency of the proposal and informed that the negotiating team was ready to start the trialogue already in May. He also underlined that the upcoming winter will be the most critical one, calling for 2022 gas storage filling targets to be set at 90%. He also proposed the set-up of a voluntary mechanism for the joint procurement of gas. Shadow Rapporteur Patrizia Toia (S&D, Italy) added that the aim of the proposal was not to be exhaustive and other provisions, such as general policies and support measures, were needed in addition to address the energy crisis. The security of supply was particularly important, and the EU should use its infrastructure’s full potential and improve interconnection given that the proposal discussed the sharing of storage facilities. Klemen Groselji (Slovenia) on behalf of the Renew Group pointed that market impacts require very thorough considerations in this case, as filling up storages will inevitably increase prices. The Greens expressed their strong support for ensuring the EU’s gas independence from Russia and called for an obligation to decrease gas consumption.

What’s next?

Today, 28 April, the Transport (TRAN) Committee is voting on its opinions on several Fit for 55 files, notably the Social Climate Fund, the EU Emissions Trading System, the Effort Sharing Regulation, and the CO2 Emission Performance Standards for cars and vans. The TRAN Committee will also discuss with the Commission the impact of the Russian invasion in Ukraine on the EU transport sector.

The Environment (ENVI) will vote on the adoption of its draft opinion ReFuelEU Aviation, FuelEU Maritime, and the Energy Efficiency Directive.

During next week’s European Parliament Plenary Session (2-5 May), MEPs will hold a debate on the situation in Ukraine, which will no doubt raise the topic of energy.

No. 30 | 21 April 2022

EU ENERGY CRISIS

EU SANCTIONS ON RUSSIA AND THE IMPACT ON THE FIT FOR 55 POLICIES

EU NATURAL GAS IMPORT DEPENDENCY DOWN BY 1% IN 2021: According to figures published by Eurostat on 19 April, the EU’s natural gas import dependency rate was 83% in 2021, once percentage point less than 2020 (84%). The small decrease in imports can be explained by the fact that most EU Member States used stocks of natural gas that were already imported in previous years. The EU Member State with the highest dependency on natural gas imports in 2021 was Malta (104%), followed by Sweden (102%) and Lithuania (101%), which have imported important amounts to increase their stocks. However, the share of natural gas in these countries’ energy mixes is relatively low. The lowest dependency on natural gas imports was recorded in Romania (24%), followed by Denmark (26%) and the Netherlands (33%). 

NEW SANCTIONS ON RUSSIA TO TARGET OIL: In an interview to a German newspaper on 17 April, Commission President Ursula von der Leyen confirmed that the Commission is working on mechanisms to include oil in the sixth round of sanctions against Russia. The new sanctions will also further target the banking sector, including the large bank Sberbank, through which Member Sates continue to make their payments for Russian oil and gas despite the war in Ukraine. The Commission wants to avoid that Russia benefits from high prices on energy markets. On 19 April, French Economy Minister Bruno Le Maire expressed his support for an embargo on oil, preferring it to a gas import ban, as he considers oil the primary source of currency for Russian President Vladimir Putin. Le Maire however acknowledges there is still not consensus between all Member States on the ban. Germany and Hungary have been vocal about their opposition to such a sanction, and Austria, Czech Republic, Slovakia and Bulgaria have also raised concerns. They worry that an oil ban would hurt the EU’s economy more than Russia’s.

GERMANY RELEASES FUNDS TO ACQUIRE FLOATING LNG TERMINALS: On 15 April, German Finance Minister, Christian Lindner, announced that his country was releasing €2.94 billion for the lease of floating liquified natural gas (LNG) terminals, in a move to reduce its dependence on Russian energy imports. Germany is one of the EU Member States that is most dependent on Russian gas, importing of 55% of its supply from Russia. Since beginning 2022, Germany has started diversifying its supplies, notably by increasing imports of LNG, notably from Australia, Qatar, and the US, but it relies at the moment on LNG terminals in the ports of other EU countries, limiting its import capacity. With the acquisition of floating LNG terminals, to be positioned in North Sea or Baltic ports and expected to be operational by next winter, the government expects to increase this capacity, although it warned it would be unrealistic to consider being completely independent of Russian gas before mid-2024.

 

Would you like to know more about the impact of the energy crisis and sanctions on Russia on your organization? Dr2 Consultants’ European Green Deal & Fit for 55 Impact Scan offer targeted solutions to understand and anticipate the impact of the EU’s climate initiatives, as well as the EU’s countermeasures to mitigate the impact of the energy crisis and its sanctions on Russia. Don’t hesitate to contact us for more information.

Highlights of the week

EUROPEAN COMMISSION CONSIDERING 45% RENEWABLE ENERGY TARGET: According to its Directorate-General for Energy, the European Commission is currently assessing whether the EU could achieve a target of 45% of renewable energy by 2030, instead of the 40% target proposed in the revision of the Renewable Energy Directive (RED). This ambition is supported by seven Member States, which, in a letter shared on 21 April, called for strengthened efforts on the deployment of renewable energy in the context of the RED revision. To support attaining the EU’s renewable energy objectives, the Commission will also propose a delegated act, expected mid-May, to set out the conditions for hydrogen to count as renewable under the RED framework.

MEP Markus Pieper (EPP, Germany), Rapporteur on RED in the Industry, Research and Energy (ITRE) Committee, supports the increased renewable energy target. He called for the Commission’s evaluation to be finalized urgently so it can inform the on-going negotiations in the European Parliament as well as future discussions between the Parliament and the Council of the EU, which will need to agree on the final target. On hydrogen, he also wants to include hydrogen from low-carbon gases in the scope of the RED, so they may receive public subsidies as renewables. However, the Commission intends to include only hydrogen produced from renewable energies in the scope of its delegated act.

INDUSTRY COMMITTEE ADOPTS ITS OPINIONS ON SEVERAL FIT FOR 55 FILES: On 20 April, the Committee on Industry, Research and Energy (ITRE) voted and adopted its opinion on several files of the Fit for 55 package. MEPs adopted the draft opinion on the Regulation on CO2 Emission Performance Standards (40 votes in favor, 17 against and 19 abstentions), on the Alternative Fuels Infrastructure Regulation (59 votes in favor, 9 against and 8 abstentions) and on the EU Emissions Trading System (50 votes in favor, 24 against and 2 abstentions). Moreover, the ITRE Committee adopted the draft opinion on Carbon Border Adjustment Mechanism (57 votes in favor, 16 against and 3 abstentions) and on ReFuelEU Aviation (42 votes in favor, 6 against and 28 abstentions).

MEPS IN INDUSTRY COMMITTEE AIM FOR AN AMBITIOUS RENEWABLE ENERGY DIRECTIVE: On 20 April, the ITRE Committee discussed the over 1000 amendments on the proposal for a revision of the Renewable Energy Directive (RED). The Rapporteur Markus Pieper (EPP, Germany) highlighted how the Russian invasion of Ukraine influenced the discussion on RED, as renewables could be a mean for the EU to become independent from Russian fossil fuels. He noted that during the shadow meetings, they discussed cross-border projects and strengthening the synergies in the energy market. MEP Pieper underlined his confidence in reaching agreements on target levels, consent procedure and guarantees of origin. As regards the Communication on REPowerEU, MEP Pieper called on the European Commission to put forward concrete proposals. MEPs agreed on the role of renewables to reduce EU dependence on external sources of energies and called for an ambitious revision of RED (45% target). Some MEPs raised the issue of definitions of renewable energies and gas. In this regard, the European Commission commented that any other forms than renewables should not be included in RED. The adoption of the report is expected on 13 June.

REFUELEU AVIATION REPORT TO BE MORE AMBITIOUS THAN COMMISSION’S PROPOSAL: On 19 April, the Committee on Transport and Tourism (TRAN) discussed the amendments tabled on ReFuelEU Aviation. The Rapporteur, MEP Søren Gade, (RE, Denmark) noted that more than 400 amendments have been tabled by MEPs and that MEPs have different positions under several points, namely the definition of sustainable aviation fuels (SAFs), feedstocks, scope and the book and claim mechanism. A limited number of MEPs supported amendments that would allow Member States to set higher targets, a proposal that MEP Gade does not support as it would risk rising the price of SAFs without increasing the production. Similarly to amendments tabled in the ENVI and ITRE Committees, MEPs tabled amendments calling for a higher blending mandate. Finally, MEP Gade recognized that the TRAN report on ReFuelEU Aviation would be more ambitious than the Commission’s proposal.

During the discussion, several MEPs argued for a broader definition of SAFs, measures to incentivize the industry to develop SAFs and new engines, as well as to ensure harmonization and connectivity. Some MEPs called for 100% use of SAFs by 2050 (in line with the discussion in the ENVI Committee), proposed the expansion of the scope to private aviation and non-CO2 emissions, and warned about the risk of fraud as regards cooking oil. The TRAN Committee will vote on the report on 15 June.

TRANSPORT COMMITTEE DISCUSSES AMENDMENTS ON EU ETS: On 19 April, the TRAN Committee held a discussion on the amendments proposed as regard EU Emissions Trading System (ETS). Marian-Jean Marinescu (EPP, Romania) on behalf of Rapporteur Andrey Novakov (EPP, Bulgaria) explained that, after two shadow meetings, there were still issues requiring further negotiations. However, an agreement is expected to be found shortly. For instance, regarding the inclusion of the maritime sector, MEPs do not agree on the shared responsibilities between shipowners and ship operators and the scope. The Rapporteur proposed the establishment of a maritime fund and a bonus system (free allowances exchanged against the uptake of alternative fuels). He also believes that the inclusion of road transport and buildings is premature, and the rising costs would severely impact consumers. Some MEPs noted the importance to ensure connectivity and criticized the inclusion of the maritime sector in the scope, as it would harm EU maritime competitiveness, as well as the extension of ETS to road transport and buildings. The TRAN MEPs will vote on the draft opinion on 28 April.

TRANSPORT COMMITTEE CONSIDERS ALTERNATIVE FUELS INFRASTRUCTURE AMENDMENTS: On 19 April, the Transport Committee debated the amendments submitted to Rapporteur Ismail Ertug’s (S&D, Germany) draft report on the Alternative Fuels Infrastructure Regulation (AFIR). MEP Ertug noted that there was common ground in the 1175 submitted amendments. There was notably broad agreement on increasing the power output for light-duty vehicles and heavy-duty vehicles charging infrastructure, as well as on card payment provisions and price transparency. However, he noted that the inclusion of liquified natural gas (LNG) in the definition of alternative fuels needed to be further discussed, and there were some divisions of opinions on provisions for hydrogen refueling stations and shore-side electricity charging points. Electrification in airports also revealed some divergences of opinion, but Rapporteur Ertug deemed them workable. The adoption of the report in the TRAN Committee is scheduled for 11 July.

What’s next?

On 28 April, the Transport Committee will adopt its opinions on several Fit for 55 files, notably the Social Climate Fund, the EU Emissions Trading System, the Effort Sharing Regulation, and the CO2 Emission Performance Standards for cars and vans.

No. 29 | 14 April 2022

EU ENERGY CRISIS

EU SANCTIONS ON RUSSIA AND THE IMPACT ON THE FIT FOR 55 POLICIES

GERMANY TO REINVIGORATE ITS RENEWABLE ELECTRICITY SECTOR: In order to reach 80% renewable electricity by 2030 and carbon neutrality by 2035, the German government presented a new framework to reinvigorate the renewables power sector. The government announced it would revise several laws, namely the renewable energy law (EEG), the offshore wind law, the Energy Act, the federal law on electricity grids, and the Grid Expansion Acceleration Act. For instance, the revision of the EEG aims at fastening permits for renewable energy projects as well as increasing the tender volumes for solar and wind power. Furthermore, the government would put in place consumer protection measures and increase the market supervisory powers of the federal network agency to tackle rising energy prices.

EU AND MEMBER STATES LOOK TO DIVERSIFY OIL AND GAS SUPPLIES: The war in Ukraine and the ensuing sanctions on Russia have triggered the need to reduce the EU’s reliance on imports of fossil fuels from the country. The EU and its Members States are therefore increasingly looking at alternative suppliers. Commission Vice-President Frans Timmermans identified Egypt as a potential new supplier of Liquified Natural Gas (LNG) and is willing to explore a long-term strategic relationship, starting with LNG but with the potential to move into renewables and hydrogen. Italy signed on 11 April a deal with Algeria to increase gas imports, which would lead the Maghreb country to replace Russia as Italy’s main gas importer. Under the agreement, Algeria will send an additional 9 billion cubic meters of gas to Italy by next year and until 2024. Italy is also exploring boosting imports from Mozambique, Angola and the Republic of the Congo.

OIL EMBARGO COULD BE PART OF NEXT EU SANCTIONS ON RUSSIA: Ahead the meeting of the Foreign Affairs Council on 11 April, the foreign ministers of Ireland, Lithuania and The Netherlands mentioned that the European Commission was working on a new sanction package on Russia that could include a ban on oil imports from Russia, which make up about a quarter of the EU’s overall oil imports. EU High Representative for Foreign Affairs, Josep Borrell, also expressed his support for such an embargo, as had the European Parliament during its plenary session on 7 April. However, foreign affairs ministers could not align on a position during the 11 April meeting, with Bulgaria and Hungary, the EU’s most dependent countries on Russian imports, refusing to support such a ban.  Germany, another big importer of Russian oil, remains unclear on whether it would back the sanction or not.

OPEC WARNS EU IT CANNOT REPLACE RUSSIAN OIL VOLUMES: During a meeting with the EU on 11 April, the Organization of the Petroleum Exporting Countries (OPEC) warned that current and future sanctions on Russia could create one of the worst ever oil supply shocks, and that its members were not in capacity of replacing volumes produced by Russia. The EU together with the US have been pushing oil-producing countries to increase pumping rates and deliveries to help mitigate increasing oil prices, which reached their highest level in 14 years following the imposition of sanctions on Russia. The prices could further surge as the EU is considering imposing a ban on imports of Russian oil.

TIMMERMANS HINTS AT REVIEWED RENEWABLE ENERGY TARGETS TO END DEPENDENCE ON RUSSIAN GAS: Speaking to reporters during a visit to Egypt on 10 April, Commission Vice-President Frans Timmermans hinted that the EU could set more ambitious targets for its transition to renewable energy to end its dependance on Russian imports of oil and gas more rapidly. The current targets plan for the share of renewable energy to reach 40% of final consumption by 2030. The revisited targets could be presented as part of the action plan to end imports of Russian fossil fuels that the Commission is due to present in May.

GREEK PRIME MINISTER CALLS FOR COVID RECOVERY FUNDS TO FIGHT HIGH ENERGY PRICES: On 9 April, speaking with the Organization for Economic Cooperation and Development (OECD), Kyriakos Mitsotakis, Greece’s Prime Minister, called for the EU to use funds from the Recovery & Resilience Facility, of which €230 billion remains to be used, to mitigate the energy prices crisis. The RRF had originally been created to support Member States cope with the economic repercussions of the COVID-19 pandemic. Mitsotakis called for the option to be considered during the next Council Summit end of May, together with other propositions such as putting a cap on wholesale prices of gas and delinking gas and electricity prices.

COMMISSION HOSTS FIRST MEETING OF EU ENERGY PURCHASE PLATFORM: The first meeting was held on 8 April with the objective of securing an affordable supply of gas, LNG and hydrogen as a reaction to the surging energy pricing and need to phase out energy dependence on Russia. The initiative, announced during last month’s European Council together with the Communication on Security of Supply and Affordable Energy Prices, will function on a voluntary basis. The digital meeting brought together the Commission and representatives of the 27 Member States with the objective of using the full economic and political weight of the EU to secure more beneficial prices. The work of the Platform will also contribute to the objective to build a gas storage reserve by next winter and making more efficient use of the existing gas infrastructure.

 

Would you like to know more about the impact of the energy crisis and sanctions on Russia on your organization? Dr2 Consultants’ European Green Deal & Fit for 55 Impact Scan offer targeted solutions to understand and anticipate the impact of the EU’s climate initiatives, as well as the EU’s countermeasures to mitigate the impact of the energy crisis and its sanctions on Russia. Don’t hesitate to contact us for more information.

Highlights of the week

AGRICULTURE COMMITTEE PUBLISHES AMENDMENTS ON ENERGY TAXATION DIRECTIVE: On 11 April, the Committee on Agriculture and Rural Development (AGRI) published its amendments (12 – 89 and 90 – 104) on the proposal for an Energy Taxation Directive (ETD). MEPs underline the need to ensure coherence with the Renewable Energy Directive (RED III), especially in defining biogas as well as the feedstocks used to produce them. The EPP group suggests maintaining derogation in energy products and electricity used in the primary sector, such as agricultural, horticultural/aquaculture works, and forestry. Some MEPs propose sectoral differentiation of tax levels to maintain competitiveness of the internal market. As regards transport, MEP Ivan David (ID, CZ) adds that the European Commission should take into account the uptake of renewable fuels in the transport sector as one of the criteria when assessing the implementation of ETD. The vote on the AGRI opinion and the tabled amendments is scheduled on 17 May.

FRENCH PRESIDENCY PRESENTS STATE OF PLAY OF NEGOTIATIONS ON KEY ENERGY FILES: Ahead of the Coreper I meeting on 13 April, the French Presidency shared two guidance notes on the Renewable Energy Directive (RED III) and on the Energy Efficiency Directive (EED) with Member States delegations. The paper provides insights on the ongoing discussion in the Working Group on Energy on both files. On RED, the Working Party agreed to reduce the binding sub-target for renewable hydrogen in various sectors. The text also addresses the proposals made on the flexibility on high biodiversity forests, the clarifications on support for electricity-only installations and the application of sustainability criteria for existing power plants. Delegations will have to further discuss the binding sub-targets, particularly with regard to renewable fuels of non-biological origins (RFNBOs) in the transport and industry sectors. Indeed, some Member States aim to raise the targets, while others consider them already too ambitious.

On EED, the Presidency explains that many divergences remain on how to reach certain objectives of the proposal. On national contribution targets, delegations disagree on the inclusion of flexibilities in the calculation method. Regarding the obligation of energy consumption reduction in the public sector, certain Member States are calling for reducing the 1.7% target. Finally, on the global 1.5% energy consumption reduction target, some Member States worry it is too high, and the delegations disagree on the exclusion of direct fossil fuels combustion from the calculation.

TRAN COMMITTEE PUBLISHES AMENDMENTS ON ENERGY TAXATION DIRECTIVE: On 8 April, the Committee on Transport and Tourism (TRAN) published the amendments tabled by MEPs on the proposed Energy Taxation Directive (ETD) (40 – 197 and 198 – 204). In her amendments, the Rapporteur for opinion, Maria Grapini (S&D, RO), underlines that the levels of taxation on energy products should not undermine the level playing field between Member States. She also amends the proposal to include a differentiated taxation rate for motor fuels used by road goods and passenger transport operators for commercial purpose, which should be lower than the lowest national taxation rate applicable to general motor fuel use. S&D MEP Josianne Cutajar (Malta) stresses that role of aviation and maritime in connecting EU citizens in periphery regions, and therefore, she argues the new taxes should not negatively impact intra-EU connectivity. The S&D Group also suggest a tax exemption applying to electricity provided to vessels at berth (OPS). Green MEPs want the ETD to apply to CO2-related taxation and to general energy consumption taxation. The Renew Group proposes revenues from the new taxes should be reinvested in promoting energy transition of the aviation and maritime sector (e.g., establish an EU Inland Waterway Fund increasing funding opportunities); therefore, reducing the risk of carbon leakage. Moreover, Renew MEPs propose sustainable fuels should have a zero minimum taxation rate on a permanent base.

ECON COMMITTEE AIMS AT EXPANDING THE SCOPE OF CBAM: The Committee on Economic and Monetary Affairs (ECON) published the opinion on the Carbon Border Adjustment Mechanism (CBAM) by Rapporteur for opinion MEP Damien Carême (Greens/EFA, FR). The opinion calls on CBAM to come into force fully from 1 January 2025, in parallel with the phasing out of free EU Emissions Trading System allowances. Indeed, the opinion criticizes the maintenance of free allowances until 2035 as it would weaken incentives to take climate action. MEP Carême argues CBAM should focus not only on the ETS sectors presenting the greatest risk of carbon leakage, but the scope should be extended to those sectors that contribute the most to global warming, such as oil, paper, glass, plastics, chemicals and downstream products. Furthermore, the opinion proposes to use revenues generated by CBAM to support climate action in the least developed countries as well as to exempt least developed countries from some CBAM obligations. The opinion was adopted with 41 votes in favor, 12 against and 0 abstentions.

What’s next?

On Tuesday, 19 April, and Wednesday, 20 April, the European Parliament’s committee on Transport and Tourism (TRAN) will discuss a number of Fit for 55 related proposals. These include a discussion of the Regulation on the Deployment of Alternative Fuels Infrastructure, on the EU Emissions Trading System (ETS), on FuelEU Maritime and on the Effort Sharing Regulation.

No. 28 | 07 April 2022

EU ENERGY CRISIS

EU SANCTIONS ON RUSSIA AND THE IMPACT ON THE FIT FOR 55 POLICIES

ELEVEN MEMBER STATES CALL FOR A SWIFT TRANSITION TO RENEWABLE ENERGY: On 7 April, a group of eleven Member States issued a joint statement arguing that the best way to make the EU fit for energy independence of Russian fossil fuels is a swift transition to renewable energy. While welcoming the European Commission’s REPowerEU Communication, the Member States underline the need for an ambitious Fit for 55 package and the necessity to speed and scale up renewable energy, renewable gas and energy efficiency. The statement was signed by Austria, Germany, Denmark, Spain, Finland, Ireland, Luxembourg, Latvia, the Netherlands, Sweden and Slovenia.

EUROPEAN PARLIAMENT BACKS UPDATED GUIDELINES FOR TRANS-EUROPEAN ENERGY INFRASTRUCTURE: On 6 April, the European Parliament approved the revision of the TEN-E Regulation, which sets rules for selecting which energy projects can receive EU funding. The revision aligns the Regulation with the objectives of the European Green Deal, notably by including funding for projects related to the development of hydrogen infrastructure and carbon capture and storage. Eligible projects should also drive market integration and increase the security of energy supply. The selected projects will have to help EU countries move away from solid fossil fuels such as coal, lignite, peat and oil shale. Funding will also go to projects that repurpose existing natural gas infrastructure for hydrogen transport or storage during a transitional period. Projects of this nature will be eligible to receive EU financial assistance until 31 December 2027. The text now have to be formally adopted by the Council of the EU before publication in the Official Journal and subsequent entry into force.

EU ANNOUNCES NEW PACKAGE OF SANCTIONS AGAINST RUSSIA: The European Commission announced a fifth round of sanctions against Russia during a press conference on 5 April. The package extends import bans from Russia to coal (worth €4 billion a year) and to specific sectors, such as wood, cement, seafood and liquor. It also adds an export ban in areas in which Russia is vulnerable, including computers, advances semiconductors, sensitive machinery, and transportation equipment (worth €10 billion). Moreover, the new sanctions ban Russian (-operated) vessels from accessing EU ports, and Russian and Belarusian road transport operators from operating in the EU. While the new package did not target oil imports, Commission President Ursula von der Leyen mentioned that the Commission is working on additional sanctions which could include oil imports. This has been called for by several Member States, notably Poland and Baltic countries, with Germany now softening its opposition. Within the European Parliament, there is also consensus, led by the Greens/EFA group, on an embargo on oil imports.

BALTIC STATES NO LONGER IMPORT RUSSIAN GAS: On 2 April, the CEO of Conexus Baltic Grid (Latvia’s natural gas storage operator), Mr Uldis Barris, officially announced that Lithuania, Latvia and Estonia were no longer importing Russian gas of 1 April, in reaction to Russia’s invasion of Ukraine. The Baltic market is instead currently being served by gas reserves stored underground in Latvia. Lithuania had already revealed on 1 April that it was stopping Russian gas imports, explaining that, in alternative to Russian gas, it will be importing gas from multiple countries through Klaipėda’s liquefied natural gas (LNG) terminal. The Baltic counties become the first European Member States to stop all gas imports from Russia. Lithuania’s president is calling on other Member States to follow their example.

EP INDUSTRY COMMITTEE WANT GAS STORAGE REGULATION EXAMINED VIA URGENT PROCEDURE: On 1 April, ITRE MEPs called for the European Commission’s proposal to set up a minimal gas storage obligation by next winter to be handled via urgent procedure. ITRE chair, Cristian Busoi (Romania, EPP), called the proposal a race against time to guarantee European citizens will stay warm next winter. Therefore, a negotiation team on behalf of ITRE was appointed and will be coordinated by MEP Jerzy Buzek (EPP, Poland). The urgent procedure, as stipulated by rule 163 of the Parliament’s rules of procedure, can be requested by a committee and results in the proposal to be given priority on the agenda over other items, debates and vote may be held without a report and less speakers are allowed during the voting procedure. The request was adopted by the European Parliament Plenary on 5 April.

IEA MEMBERS AGREE UPON NEW EMERGENCY OIL STOCK RELEASE: On 1 April, the International Energy Agency (IEA) agreed to a new release of oil from emergency reserves in response to the market turmoil caused by Russia’s invasion of Ukraine. The agreement follows the previous action taken by IEA members, by which they pledged a total of 62.7 million barrels. Currently, IEA Members hold emergency stockpiles of 1.5 billion barrels. Ministers also discussed Europe’s dependency on Russian natural gas, as well as the importance of accelerating global dialogue with gas producing countries, including IEA member countries to ensure secure, affordable and reliable gas supplies, including LNG, and of continuing to pursue a well-managed acceleration of clean energy transitions. On 3 March, the IEA Secretariat had released a 10-Point Plan to Reduce the European Union’s Reliance on Russian Natural Gas by next winter – and is now working closely with the European Commission on next steps.

MEMBER STATES PLAN TO INVEST IN LNG FLOATING TERMINALS TO BOOST THEIR IMPORT CAPACITY: In the effort of reducing the EU’s dependency on Russian gas, several Member States are looking at boosting their import capacity of liquified natural gas (LNG). Member States started the construction of terminals for the liquefaction and regasification process; however, this would take years to build. Against this background, Member States such as Germany, Italy and France are moving towards floating LNG terminals as pressure grows to move away from Russian gas by next winter.

 

Would you like to know more about the impact of the energy crisis and sanctions on Russia on your organization? Dr2 Consultants’ European Green Deal & Fit for 55 Impact Scan offer targeted solutions to understand and anticipate the impact of the EU’s climate initiatives, as well as the EU’s countermeasures to mitigate the impact of the energy crisis and its sanctions on Russia. Don’t hesitate to contact us for more information.

Highlights of the week

EUROPEAN COMMISSION PRESENTS NEW EU INDUSTRIAL EMISSIONS RULES: On 5 April, the European Commission presented the proposal to revise the Industrial Emission Directive (IED). The revision aims to enhance the effectiveness of the ‘Best Available Techniques’ (BAT) IED permitting process. For instance, the new rules would enhance permitting regimes for installations, tighten pollutant emission limit values, support innovation, extend the IED’s scope and increase synergies between depollution and decarbonization. Moreover, it would increase the focus on energy, water and material resource efficiency and reuse, as well as promoting the use of safer and less toxic, or non-toxic chemicals in industrial processes. The new IED targets sectors that carry a high risk of causing environmental pollution, such as extractive industry installations, ‘giga-factories’ for electro-mobility batteries and larger-scale cattle, pig and poultry farms. The new IED is expected to cover activities responsible for 15% of the overall EU greenhouse gas emissions not covered by the EU Emission Trading System.

EUROPEAN PARLIAMENT ADOPTS THE REVISION OF THE MARKET STABILITY RESERVE: During the European Parliament Plenary on 5 April, MEPs voted on the revision of the Market Stability Reserve (MSR) for the EU Emissions Trading System (ETS). The Reserve aims at limiting surplus of ETS allowances and improving the system’s resilience to major shocks by adjusting the supply of allowances to be auctioned if needed. The proposal was adopted with 490 votes in favor, 127 against and 7 abstentions. This is the first legislative proposal of the Fit for 55 package to be adopted in the European Parliament. In the final text, MEPs underline the centrality of the MSR for the functioning of the ETS. Therefore, MEPs want the European Commission to monitor the functioning of the Reserve and keep it fit for purpose in case of future unforeseeable external shocks. The European Parliament voted to extend the temporary adjustments in the MSR until the end 2030, so that after 2023 at least 24 % of the market surplus should be put in the reserve. The final text set at 200 million the minimum number of allowances which can be withdrawn in a given period. Hence, withdrawals to the Reserve could be performed only when the surplus of allowances is above 833 million. The European Parliament will enter into negotiations with the Council of the EU once the latter adopts its general approach.

FRENCH PRESIDENCY PAPER ON REFUELEU AVIATION: On 4 April, ahead of the Coreper I meeting, a compromise paper by the French Presidency on ReFuelEU Aviation circulated in Brussels. The French Presidency notes the Working Party on Aviation reached compromises on several issues. In particular, Member States agreed upon the possibility to include small airports as well as aircraft operators in the scope of the Regulation. The paper underlines delegations reached an agreement on tankering (e.g. possibility to load extra fuel necessary to comply with the safety measures in force) and introduced the possibility of exemptions from tankering provisions due to specific circumstances. The Member States also agreed upon the role of the airport managing body in facilitating access to sustainable aviation fuels (SAFs) as well as the role of the national competent authority. Other pending issues will require further discussions. For instance, Member States still need to agree on the definition of SAFs and which types of biofuels should be included in the scope. Furthermore, delegations do not yet agree on the targets. While some would like to raise them, other delegations expressed concerns on high targets. Finally, during the discussions, mentions have been made of the overall impact of Fit for 55 proposals, the cost of SAFs and the competitiveness of EU airlines operators. These points have been discussed during the Coreper I meeting on 6 and 8 April.

EUROPEAN PARLIAMENT COMMITTEES START TO VOTE ON FIT FOR 55 FILES: On 31 March, a number of relevant votes took place in Parliamentary committees with regards to Fit for 55 files. The Committee on Environment, Food Safety and Public Health (ENVI) voted on its opinion on the Alternative Fuels Infrastructure Regulation. The report was adopted with a clear majority (71-11-3). Votes in other committees will take place between April and July, with plenary vote scheduled on 12 September. The Committee on Transport and Tourism (TRAN) passed its opinion on the Energy Efficiency Directive with 47 members voting in favor and 2 against. Other committee votes are planned between April and June, with an indicative plenary sitting date in July. Finally, the Committee on Economic and Monetary Affairs (ECON) adopted its opinion on the Carbon Border Adjustment Mechanism with 41 votes in favor, 12 against. Other votes in committee will take place between April and May, with the plenary vote expected in June.

What’s next?

Next week is a green week in the European Parliament, so no votes or debates will take place. On 11 April, the Foreign Affairs Council will discuss the latest developments concerning the Russian aggression against Ukraine as well as the Global Gateway, the new European strategy to boost smart, clean and secure links in digital, energy and transport sectors.

No. 27 | 31 March 2022

EU ENERGY CRISIS

EU SANCTIONS ON RUSSIA AND THE IMPACT ON THE FIT FOR 55 POLICIES

CEPS PRESENTS EVALUATION OF NATURAL GAS IMPORTS TARIFF TO REDUCE DEPENDENCY ON RUSSAIN GAS: On 29 March, the Center for European Policy Studies (CEPS) presented an economic analysis of a tariff on imports on natural gas into the EU, and its potential for reducing the EU’s depending on Russian gas imports. The starting point of the analysis is Russian gas company Gazprom’s monopoly on exports of gas from Russia and pricing power on the European market. CEPS finds that a tariff on Russian gas imports into the EU would result into higher prices for European consumer on the short-term, but the tariff revenue would be more than sufficient to compensate. The tariff would also cut Gazprom’s net revenues by approximately half. CEPS’ overall conclusion is thus that an EU import tariff on Russian gas would have a major impact on Russia’s earning from gas exports and would improve the European terms of trade.

EUROSTAT DATA HIGHLIGHTS EU DEPENDENCY ON RUSSIAN ENERGY IMPORTS: Data published by Eurostat on 28 March showed that, in 2020, the EU imported 58% of the energy it consumed, as its own production satisfied only 42% of its needs. The EU’s energy mix in 2020 consisted of 35% oil and petroleum products, 24% natural gas, 17% renewables, 13% nuclear energy and 11% solid fossil fuels. Russia was the EU’s leading supplier for natural gas, oil and coal, which are the main energy commodities of the EU’s energy mix. Natural gas was the fuel most imported from Russia. In 2020, the EU received 46% of its natural gas imports from Russia. In second position were crude oil imports (26% imported from Russia), followed solid fossil fuels, such as coal (19%).

NIGERIA READY TO INCREASE GAS SUPPLIES TO EUROPE: On 25 March, Nigeria’s Minister of State for Petroleum Resources, Timipre Sylva, announced that the country was ready to dramatically increase its gas supplies to Europe as an alternative to Russian imports. Mr. Sylva urged the EU to encourage its oil and gas companies to step up their investments in the Nigerian gas sector. Until the energy crisis and the need to reduce dependency on Russian energy imports, the EU had been encouraging African countries to shift away from fossil fuels production, notably by pulling investments in the sector. The tone has however changed following the invasion of Ukraine by Russia, with several Commissioners, including High Representative Josep Borrell and Commission Vice-President Margrethe Vestager, having announced that the EU and certain African countries, including Nigeria but also Algeria, were exploring cooperation on expanding supplies of liquified natural gas (LNG).

EU AND US COMMIT TO STEP UP COOPERATION ON ENERGY SECURITY: During the European Council Summit on 24 April, EU leaders reaffirmed their commitment to phase out the EU’s dependence on Russian fossil fuels. In a joint statement, Presidents Biden and von der Leyen committed to stepping up cooperation on security of supply. The US will notably supply an additional 15 billion m3 at least of liquefied natural gas (LNG) in 2022, aiming to reach at least 50 billion m3 per year. EU leaders also agreed to refill gas storage to prepare for next winter, and tasked the Commission with establishing ‘solidarity and compensation mechanisms’. They also agreed to work on a voluntary joint procurement mechanism allowing the common purchase of gas, LNG and hydrogen, to be open also to Ukraine, Georgia, Moldova and the Western Balkans.

G7 LEADERS AGREE TO FURTHER REDUCE RELIANCE ON RUSSIAN ENERGY: Meeting in Brussels on 24 March, G7 countries (Canada, France, Germany, Italy, Japan, the UK and the US) agreed to take further steps to reduce their reliance on Russian energy, and secure alternative and sustainable supplies. G7 leaders called on oil and gas producing countries, notably OPEC members, to act in a responsible manner and increase deliveries to international markets. The leaders also stated that the crisis reinforced their determination to limit the rise in global temperatures to 1.5°C, by accelerating reduction of the reliance on fossil fuels and the transition to clean energy.

MEPs CALL FOR STRONGER MEASURES TO TACKLE HIGH ENERGY PRICES: During the European Parliament’s Plenary session on 24 March, MEPs questioned representatives from the Council and the European Commission on the EU’s plans to overcome reliance on Russian energy. The debate followed the publication of the Commission’s REPowerEU Communication, which includes measures to cut EU demand from Russian gas by two thirds before end 2022 and completely by 2030. Although the Commission’s plan was found to be going in the right direction, MEPs called for more measures to counter the EU’s dependency on Russia, and to rapidly ensure cleaner and affordable energy for all. Such actions would include cuts on energy taxes, measures to stop speculation on energy markets, a speedy roll-out of renewable energy and joint purchases.

Would you like to know more about the impact of the energy crisis and sanctions on Russia on your organization? Dr2 Consultants’ European Green Deal & Fit for 55 Impact Scan offer targeted solutions to understand and anticipate the impact of the EU’s climate initiatives, as well as the EU’s countermeasures to mitigate the impact of the energy crisis and its sanctions on Russia. Don’t hesitate to contact us for more information.

Highlights of the week

EUROPEAN COMMISSION PRESENTS THE CIRCULAR ECONOMY PACKAGE I: On 30 March, the European Commission presented the Circular Economy Package I proposing new rules to make physical goods on the EU market more friendly to the environment, circular, and energy efficient throughout their whole lifecycle from the design phase through to daily use, repurposing and end-of-life. One of the proposals in the package is the Ecodesign for Sustainable Products Regulation. This sets new requirements to make products more durable, reliable, reusable, upgradable, reparable, easier to maintain, refurbish and recycle, and energy and resource efficient. The proposal also extends the existing Ecodesign framework by covering the broadest possible range of products and broadening the scope of the requirements with which products are to comply. Together with this proposal, the European Commission published also a Ecodesign and Energy Labelling Working Plan 2022-2024, which is a transitional measure that would cover new energy-related products, update and increase the ambition for products that are already regulated until the new regulation enters into force.

In order to support the deployment of sustainable products across the EU market, the European Commission presented also targeted sectoral initiatives. Firstly, the EU Strategy for Sustainable and Circular Textiles aims to ensure that by 2030 textile products placed on the EU market are long-lived and recyclable, free of hazardous substances and produced in respect of social rights and the environment. Secondly, the revision of the Construction Products Regulation wants to ensure that the design and manufacture of construction products is based on state of the art to make these more durable, repairable, recyclable, easier to re-manufacture. Moreover, the package includes a proposal on empowering consumers in the green transition. This entails consumers should be better informed about the environmental sustainability of products and better protected against greenwashing.

TRAN COMMITTEE PUBLISHES AMENDMENTS TO THE PROPOSED REVISION OF THE ALTERNATIVE FUELS INFRASTRUCTURE DIRECTIVE: On 29 March, the amendments of the Committee on Transport and Tourism (TRAN) in the European Parliament on Rapporteur Ismail Ertug’s (S&D, Germany) draft report on AFIR were published (132-392393-809810-1175). Rapporteur Ismail Ertug (S&D, Germany) gets support from the Greens/EFA group to phase-out the use of LNG for road transport (by deleting Article 8). However, MEPs from the EPP, Renew, S&D, ECR and ID groups include (bio-)LNG, as well as biomethane, biogas, (bio)-CNG and low-emission vehicles in their amendments (on articles 2(3) and 8 for instance). Some Renew members justify their amendments by stating that CNG and LNG have a continuing role to play in the future energy mix of heavy-duty transport. Most amendments are on electric cars and plug-in hybrids, many of them go further than what the Commission envisioned. Furthermore, most MEPs agree on maximum 60 km between charging stations and many MEPs support the inclusion of electric trains in the scope of the Directive.

DEVE COMMITTEE PUBLISHES ITS OPINION ON CARBON BORDER ADJUSTMENT MECHANISM: On 28 March, the Committee on Development (DEVE) published its final opinion on the proposal for a Carbon Border Adjustment Mechanism (CBAM), as adopted on 22 March. In the opinion, MEPs underline that CBAM revenues should be channeled to support developing countries, which should be protected from having to carry additional burdens due to CBAM as well as supported in handling the impact of climate change. In particular, the opinion proposes to increase EU’s contributions to climate finance to a broader list of countries, such as lower- and middle-income countries particularly affected by CBAM.

AGRI COMMITTEE PUBLISHES ITS OPINION ON EFFORT SHARING REGULATION: On 24 March, the Committee on Agriculture and Rural Development (AGRI) published its final opinion on the proposal for an Effort Sharing Regulation, as adopted on 22 March. The opinion calls for more ambitious greenhouse gas emissions targets, which should go beyond 2030 (e.g., how the agricultural sector can be merged with the LULUCF sectors after 2030). Furthermore, it underlines the need to consider the social and competitiveness aspect of the transition as well as the vulnerability of the outermost regions. AGRI MEPs propose Member States should finance incentives for farmers to deliver emission reduction, while maintaining food production at affordable prices.

AMENDMENTS IN ITRE COMMITTEE AIM TO RAISE TARGETS OF RED III DUE TO RUSSIAN INVASION ON UKRAINE: The Committee on Industry, Research and Energy (ITRE) published the more than 1300 amendments tabled by MEPs on the proposed revision of the Renewable Energy Directive (RED III). The available amendments are 77 – 243, 244 – 510, 511 – 705, 706 – 956, 957 – 1210 and 1211 – 1310. The Rapporteur Markus Pieper (EPP, DE) expands the definition of renewable hydrogen to include all types of renewable hydrogen and links the Directive with the objectives outlined by the REPowerEU Communication. Against the background of the Russian invasion on Ukraine, the Rapporteur highlights that a recalibration of our European energy policy is needed. For instance, he proposes to raise the target of the EU share of energy from renewable sources from 40% to 45% by 2030 as well as to improve the permit-granting process to accelerate the expansion of renewable sources of energy. Moreover, MEP Pieper underlines the importance of cross-border projects and the integration of intermitted renewable electricity in the power grid. The next debate in the ITRE Committee where MEPs will discuss the tabled amendments is planned on 20 April, while the vote is scheduled on 13 July.

TRAN COMMITTEE PUBLISHES AMENDMENTS ON REFUELEU AVIATION:  The Committee on Transport and Tourism (TRAN) published the amendments tabled by MEPs on the proposal for a ReFuelEU Aviation. MEPs tabled amendments underlining the need to reach climate goals as well as ensure air connectivity within the EU and avoid dependency from third country stakeholders. The EPP Group suggests the inclusion of provisions on sustainable aviation fuels (SAFs) in the EU air transport agreements and calls on Member States to avoid different national blending mandates. EPP MEPs propose the introduction of a ‘book and claim’ system as of 1 January 2025 enabling airlines would purchase SAF certificates. They also support free allocations for aircraft operators using SAFs and the establishment of an Aviation Transition Fund as well as a European SAF Alliance. The S&D Group wants to include all the available SAFs sources in SAF and expand the scope to all airports. The amendments by the S&D shadow Rapporteur Erik Bergkvist (Sweden) aim to boost SAFs allowing Member States to have higher targets and increase the minimum share of SAF to 15% by 2030, 30% by 2035, 50% by 2040, 75% by 2045, and 100% by 2050. The amendments will be discussed during the next TRAN meeting planned on 20 April.

What’s next?

On 5 April, the Economic and Financial Affairs Council will come together to notably discuss the economic and financial aspects of the Ukraine crisis. It can be expected that repercussions on the energy market and the impact of the wider economy will be addressed as these are strongly connected to the crisis.

On the same date, the Commission will publish its Emissions and Pollutants Package, which includes a revision of the Industrial Emissions Directive, an update of the European Pollutant Release and Transfer Register, a review of the EU rules on fluorinated greenhouse gases and a regulation on substances that deplete the ozone layer.

On 7 April, the Agriculture and Fisheries Council will discuss carbon removals and the ongoing revision of the Land Use, Land Use Change and Forestry Regulation, as part of the Fit For 55 package. This relates to the Commission’s objective to set a target of 310 million tonnes in carbon removals by 2030. The Council will also adopt its conclusions on the Commission’s Sustainable Carbon Cycles Communication.

No. 26 | 24 March 2022

EU ENERGY CRISIS

EU SANCTIONS ON RUSSIA AND THE IMPACT ON THE FIT FOR 55 POLICIES

EUROPEAN COMMISSION TO OBLIGE MEMBER STATES TO REFILL THEIR GAS STORAGE UP TO 80% BEFORE NEXT WINTER: On 23 March, the European Commission put forward a proposal to revise the Regulation on security of supply and the Regulation on conditions for access to the natural gas transmission networks. The European Commission aims to require Member States to fill up their gas stores at least 80% before 1 November 2022, rising to 90% for the following years. Moreover, it introduces a new certification scheme to prevent manipulation of gas storage by foreign operators. To incentivize the refilling of EU gas storage facilities, the Commission is proposing a 100% discount on capacity-based transmission tariffs at entry and exit points of storage facilities. Furthermore, the Regulation proposes solutions for Member States that do not have gas storage facilities, ensuring they have access to cross-border transmission capacity equivalent to 15% of the country’s annual gas consumption. Together with the legislative proposal, the European Commission adopted a Communication on security of supply and affordable energy prices. It provides options for market intervention at European and national level to limit the impact of high electricity prices. The Commission is also considering providing guidance to Member States on how to make best use of targeted country-specific derogations under the Energy Taxation Directive.

EUROPEAN COMMISSION PRESENTS REPOWEREU BEFORE THE ENVIRONMENT COMMITTEE: On 22 March, the European Commission presented the newly adopted Communication REPowerEU before the European Parliament’s Environment (ENVI) Committee. The representatives of the European Commission underlined that the main objectives of the Communication are the diversification of gas supply, mitigation of the impact of high energy prices, and improvement of the EU’s security of supply. In this light, the European Commission linked its response to the EU Green Deal boosting to renewables, energy efficiency and new technologies, such as hydrogen.

As regards the Fit for 55 package, the European Commission announced that it aims to find an agreement on all the proposals in order to implement them as soon as possible. In particular, the EU Emission Trading System (EU ETS) would strengthen the EU’s independence from fossil fuels, provide the regulatory stability required by the market as well as address the risk of carbon leakage. In response to the Commission’s presentation, the Rapporteur on EU ETS, Peter Liese (EPP, Germany), called for more concrete actions and greater ambitions as well as for recommendation for households to save energy. MEPs pointed at the need to focus more on energy efficiency and savings, and to ensure coordination at the Member State level.

GERMANY TURNS TO GULF COUNTRIES TO SECURE ENERGY SUPPLY: On 19 March, the German Vice-Chancellor, Robert Habeck, travelled to the Gulf region to secure energy contracts and make Germany less dependent on Russian gas. He first visited Qatar in order to secure liquefied natural gas (LNG) supply, where he claimed he was successful in securing short-term LNG supplies. However, despite the successful visit in Qatar, Germany lacks regasification facilities in the country and the closest LNG terminals (Polish port of Swinoujscie, Dutch port of Rotterdam and Belgian port of Zeebrugge) could not dedicate their entire capacity to German demands. Furthermore, Vice-Chancellor Habeck visited the United Arab Emirates (UAE), where he secured several hydrogen cooperation contracts. Reportedly, the contracts concern the supply of blue hydrogen, which is made from fossil gas, at least in the initial phase.

INTERNATIONAL ENERGY AGENCY PRESENTS ACTION PLAN TO CUT GLOBAL OIL DEMAND: In the context of Russia’s invasion of Ukraine resulting in lower supplies to oil markets, the International Energy Agency (IEA) presented on 18 March a 10-Point Plan to cut global oil demand within months, reducing the risk of major supply crunches and easing price pains for consumers. The IEA’s report also includes recommendations on how to transition from short-term emergency actions to sustained measures that would put countries’ oil demand into a structural decline consistent with a pathway towards net zero emissions by 2050. The key actions proposed by IEA mostly focus on transport, with measures such as reducing speed limits on highways by at least 10km/h, limiting commuting by working from home up to three days a week, introducing car-free Sundays in cities, incentivizing the use of public transport and other low-carbon mobilities, promote efficient driving for freight trucks, promoting high-speed and night trains, avoiding air travel when alternatives exist, and promote electric and energy-efficient vehicles.

Would you like to know more about the impact of the energy crisis and sanctions on Russia on your organization? Dr2 Consultants’ European Green Deal & Fit for 55 Impact Scan offer targeted solutions to understand and anticipate the impact of the EU’s climate initiatives, as well as the EU’s countermeasures to mitigate the impact of the energy crisis and its sanctions on Russia. Don’t hesitate to contact us for more information.

Highlights of the week

ENVIRONMENT COMMITTEE CONSIDERS EU ETS AMENDMENTS: On 22 March, the European Parliament’s Environment Committee (ENVI) discussed the more than 1700 amendments tabled on the revision of the EU Emission Trading System (EU ETS). Rapporteur Peter Liese (EPP, Germany) stressed the need to spend ETS revenues to invest in renewable energies and noted that MEPs would have to compromise on the provisions on the inclusion of buildings and road transport in the EU ETS and the ambition of the reform. The rapporteur also mentioned that during the past meetings with Shadow Rapporteurs, the majority agreed upon the exclusion of nuclear and fossil fuels from the Modernization Fund, which supports lower-income EU Member States in their transition to climate neutrality. He proposed to increase support for electricity-based technologies, such as heat pump and electric vehicles, insolation of houses and better public transport.

Shadow Rapporteur Jytte Guteland (S&D, Sweden) highlighted that the S&D Group proposed to increase the climate ambition of the ETS, strengthen the Market Stability Reserve as well as broaden the scope to maritime sector. Renew Europe tabled amendments to enhance innovation, reframe the innovation fund to ward net zero target, and reduce exemption and free allocations to current ETS. Michael Bloss (Greens/EFA, Germany) called for reducing surplus allowances and support industry decarbonization with the innovation fund. The Rapporteur for opinion in the Budget Committee underlined that part of the ETS revenues should reimburse Next Generation EU, while the ITRE Rapporteur for opinion raised the issue of the risk of carbon leakage with regards to ETS and called for stricter criteria for free allocations.

ENVIRONMENT COMMITTEE DISCUSSES CBAM AMENDMENTS: On 22 March, the MEPs in the ENVI Committee also discussed the over 1300 amendments tabled on the proposal for a Carbon Border Adjustment Mechanism (CBAM). Rapporteur Mohammed Chahim (S&D, Netherlands) noted that MEPs had diverging opinions on the phase out of free allowances, and therefore, they would have to compromise in order to find an agreement. Shadow Rapporteur Adam Jarubas (EPP, Poland) mentioned other issues that would require further negotiations, namely sectors to include in anti-circumvention measures (aimed at countering practices established to escape carbon pricing). MEP Nicolae Ştefănuță (Romania), Shadow Rapporteur for the Renew Group, underlined the need for CBAM to be aligned with WTO rules, with which INTA Rapporteur for opinion Karin Karlsbro (RE, Sweden) agreed. MEP Ştefănuță also called for feasible deadlines for phasing out free allowances, and for alignment with the EU ETS proposal. The Greens called for a rapid phase out of free allocations by 2025 and supported the creation of a centralized CBAM oversight authority. The Rapporteur on EU ETS Peter Liese (EPP, Germany) noted that the EU should motivate third countries to join its efforts and warned on the consequences of a fast phase out of free allowances for the industries.

REGIONAL DEVELOPMENT COMMITTEE PUBLISHES OPINION ON EFFORT SHARING REGULATION: On 21 March, the Committee on Regional Development published its opinion on the proposal for an Effort Sharing Regulation. The opinion underlines regions needing support and technical assistance in achieving their environmental goals in all the polluting sectors, from the industrial and transport sectors to the domestic and social ones. Furthermore, the opinion calls for realistic targets, which should be achievable and backed up by accurate data. This would be highly important in the context of cross-border areas and cohesion strategies at regional level. The opinion was adopted on 15 March with 23 votes in favor, 7 against and 11 abstentions.

INDUSTRY COMMITTEE PRESENTS STUDY ON DECARBONIZATION OF ENERGY: On 21 March, the Industry, Research and Energy (ITRE) Committee presented a study it had commissioned on decarbonizing energy. The study looks into the different decarbonization options for the energy sector and assesses their feasibility. The first scenario was based on the use of green gases, including green methane, synthetic methane, the second scenario assumed a very high penetration of hydrogen in the EU’s energy system, and the third one assumed that electrification based on renewables would dominate the EU’s energy sector. The study found that all three decarbonization options were feasible, so it was possible to design a system that relied on very high shares of either hydrogen, methane, or electricity. However, these scenarios imply different costs pathways. Nonetheless, the study emphasizes the importance of European solidarity and the role of the markets to distribute the resources where they were most needed. In the authors’ view, the EU should focus on building resilient systems with redundancies to protect against shocks.

ENVIRONMENT COUNCIL AGREES TO MOVE FORWARD WITH THE FIT FOR 55 PACKAGE AND REDUCE DEPENDENCY ON FOSSIL FUELS: On 17 March, EU environment ministers met during the Environment Council meeting to discuss the Fit for 55 files under its remit, most notably the EU Emissions Trading System. The current energy crisis linked to the war in Ukraine overshadowed much of the debate on Fit for 55. Most environment ministers called to speed up the energy transition and the phasing out of fossil fuels. Commissioner for Environment, Virginijus Sinkevicius, highlighted that the EU needed to address emissions in buildings and road transport if it wanted to meet its climate targets, notably including them under the scope of the EU ETS. Member States still clash on the question. Sweden, Denmark, Finland, Lithuania, Croatia, Germany and Portugal support the inclusion of transport and buildings in the EU ETS, stating that there is no sufficient alternative. Sweden also supports phasing out of internal combustion engines at a faster pace, as do The Netherlands, Austria and Luxembourg. On the other hand, Spain, Italy, Slovakia, Romania, Slovenia, Bulgaria, Hungary, Estonia, Czechia, Latvia, Slovenia, Greece and Malta worry about the socio-economic impacts of the extension of the EU ETS.

What’s next?

Today, and tomorrow, 24-25 March, the European Council is meeting to discuss sustained high energy prices and its impact on citizens and businesses, also in the context of the Russian aggression against Ukraine. According to leaked draft conclusions for the Summit, EU Member States will back the Commission in taking urgent measures to ensure adequate storage of gas before next winter, and will work together on a voluntary common purchase of gas, hydrogen and LNG .

Prior to the European Council summit, G7 leaders are also meeting in Brussels and will notably discuss another package of sanctions on Russia, including a temporary ban on energy imports from Russia.

Next week, on 28 March, the Council Working Party on Energy will gather to discuss potential actions in the energy sector in relation to Russia and Belarus, and the Commission will present its proposal for a Gas Storage Regulation. On 32 March, the Transport Committee will adopt its opinion of the Energy Efficiency Directive and on the Land Use, Land Use Change and Forestry Regulation.

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No. 25 | 17 March 2022

EU ENERGY CRISIS

EU SANCTIONS ON RUSSIA AND THE IMPACT ON THE FIT FOR 55 POLICIES

EUROPEAN COUNCIL EXPECTED TO BACK EMERGENCY PLANS FOR REFILLING GAS STORES: The leaked draft conclusions for next week’s European Council Summit, which will take place on 24 and 25 March, plan for EU Member States to back the Commission in taking urgent measures to ensure adequate storage of gas before next winter. Increased storage should come to mitigate further disruptions to supply from Russia, during the transition period in which the EU proceeds to reduce its dependency on Russian gas. The European Commission is expected to publish in the coming month rules requiring Member States to collectively ensure gas stores are at least 90% full by October of each year. EU gas stores are currently full only at 26% of their capacity.

EUROPEAN PARLIAMENT TO SUPPORT INCREASED RENEWABLE ENERGY TARGETS: In view of the Russian invasion of Ukraine and the need to reduce the EU’s dependency on Russian fossil fuels, consensus is growing in the European Parliament to further increase the EU’s renewable energy target under the revision of the Renewable Energy Directive. MEP Markus Pieper (EPP, Germany), rapporteur on the file, who had already planned to further increase the revision’s ambition, announced he will table new amendments to push the 2030 renewable energy target from 32% to 45% by 2030. This new ambition is gathering support across political groups, including from Renew Europe and the Socialists & Democrats. The Left and the Greens/EFA also wants more ambition, calling respectively for renewable energy targets over 50%. MEP Pieper also wants to facilitate cross-border energy projects in order to create a pan-European energy market.

EU ANNOUNCES FOURTH PACKAGE OF SANCTIONS ON RUSSIA: Following the European Council meeting in Versailles on 10-11 March, the Council of the EU formally announced on 15 March a new wave of economic sanctions on Russia. These new sanctions notably prohibit new investments in the Russian energy sector, and introduce comprehensive export restrictions on equipment, technology, and services for the energy industry. Additionally, all transactions with certain sate-owned enterprises are prohibited, as well the provision of credit rating services. Tighter export restrictions are imposed on dual-use goods and technology which might contribute to the technological enhancement Russia’s defense and security sector. Finally, further trade restrictions are imposed on iron, steel, and luxury goods.

Separately, the Commission announced, together with other G7 countries and other partners such as the Republic of Korea or New Zealand, that they would not treat Russia as a most-favored-nation within the WTO framework anymore. In practice, it deprives Russia of key trade advantages as a WTO member, by ensuring that the products of Russian companies no longer receive most-favored-nation treatment in signatories’ economies.

EU MEMBER STATES ADOPT DECLARATION ON RUSSIAN AGRESSION AGAINST UKRAINE: On 10 and 11 March, EU Heads of States and Governments gathered in Versailles, France, for an exceptional summit addressing the Russian aggression against Ukraine. Following the summit, EU leaders adopted the Versailles Declaration,  in which they denounced Russia’s unprovoked and unjustified military aggression against Ukraine, in complicity with Belarus. The Declaration demands that Russia ceases its military action and withdraws all forces and military equipment from the entire territory of Ukraine immediately and unconditionally and warns that the EU and its Members States will continue to provide coordinated political, financial, material and humanitarian support to Ukraine. Additionally, in view of the growing instability, strategic competition and security threats, EU leaders announced that the EU will take more responsibility for its security, through three key dimensions: bolstering defense capabilities and capacity to act autonomously; reducing energy dependencies by accelerating the reduction of the reliance on fossil fuels and diversifying supplies and routes; and building a more robust and resilient economic base by reducing strategic dependencies.

ITRE COMMITTEE POINTS AT REMAINING ISSUES IN REPOWEREU: On 15 March, Commissioner for Energy, Kadri Simson, presented the REPowerEU Communication before the Industry, Research and Energy (ITRE) Committee. EPP Coordinator Maria da Graça Carvalho (Portugal) welcomed the plan but criticized the lack of ambition as regards the reduction of energy taxes, review of state aid and compensation for the most vulnerable. The need for a coordinated approach on gas storage as well as for rethinking the phase out of nuclear power and coal was also underlined. The S&D group welcomed the proposal on minimum level of gas storage and proposed to better monitor the energy market to prevent exceptional profits that would translate into inflation, bankruptcies and loss of jobs. Renew Europe called for further clarification on the coal and nuclear phase out timelines and questioned the Commission on the plans to diversify supply (e.g., LNG). The Greens/EFA stressed the need to further boost the deployment of renewable energies and to put in place targeted support measures to tackle high energy prices, in line with their first reaction to the Communication. The ECR group suggested lifting all barriers stifling the energy sector as regards ETS and The Left proposed to tax those profiteering from high energy prices.

Would you like to know more about the impact of the energy crisis and sanctions on Russia on your organization? Dr2 Consultants’ European Green Deal & Fit for 55 Impact Scan offer targeted solutions to understand and anticipate the impact of the EU’s climate initiatives, as well as the EU’s countermeasures to mitigate the impact of the energy crisis and its sanctions on Russia. Don’t hesitate to contact us for more information.

Highlights of the week

ECONOMIC AND FINANCIAL AFFAIRS COUNCIL ADOPTS GENERAL APPROACH ON CBAM: On 15 March, the Economic and Financial Affairs Council configuration (ECOFIN) adopted the Council’s general approach on the Carbon Border Adjustment Mechanism (CBAM). Only Poland voted against the text. The general approach plans for an assessment of the social impacts of the mechanism, and its impact on the Single Market’s competitiveness. Compared to the initial proposal by the Commission, the Council opted for a greater centralization of the CBAM governance, notably with the creation of new registry of CBAM declarants centralized at EU level. The draft also includes references to the creation of a “climate alliance”, gathering countries with similar carbon pricing instruments, with the goal to promote the adoption of ambitious climate policies worldwide, and move towards a global carbon pricing system. Finally, it includes provisions relative to the search for solutions to damaging consequences the CBAM could have on exports. The question related to the relation with the EU ETS and the phasing out of free allowances is to be decided on at a later stage. This general approach will now serve as a basis for negotiations with the European Parliament.

ECONOMIC AFFARIS COMMITTEE DISCUSSES NEW ENERGY TAXATION DIRECTIVE: On 14 March, the Economic and Monetary Affairs (ECON) Committee in the European parliament discussed its draft report on the Energy Taxation Directive (ETD). Rapporteur Johan Van Overtveldt (ECR, Belgium) agrees with the need for an update on the ETD but feels a global impact assessment on the overall impact of Fit for 55 policies on citizens and industries is needed. Additionally, he wants to maintain flexibility for Member States with minimum rates by deleting the automatic indexation on inflation of the proposed taxes. He also questions whether the ranking based on environmental performance is consistent with the ETS. Shadow Rapporteur Joachim Schuster (S&D, Germany) sees the Commission’s text as a good basis and wants to make sure to keep competitiveness in mind. He hopes for a stronger look on low-income households but supports the general approach. He also calls for an impact assessment of the overall impact of the Fit for 55 package. Shadow Rapporteur Ondrej Kovarík (RE, Czechia) sees good proposals in MEP Van Overtveldt’s draft report but stressed the importance of consistency across regulatory works. He also wants to discuss removed exemptions in fisheries and agriculture. Finally, Shadow Rapporteur Claude Gruffat (Greens/EFA, France) expressed support for an intelligent and healthy energy taxation aligned with other policy areas in light of current circumstances. He as well gave special attention to social impacts and warned he would oppose any watering down of the text.

TRANSPORT COMMITTEE DEBATE RENEWABLE ENERGY DIRECTIVE: On 14 March, the Transport (TRAN) Committee, debated its draft opinion on Renewable Energy Directive. Rapporteur Barbara Thaler (EPP, Austria) noted that increasing the share of renewable energy from 32 to 40% in 2030 would require a holistic and broad approach. Shadow Rapporteur Petar Vitanov (S&D, Bulgaria) noted that the RED revision was an opportunity to reduce the EU’s dependency on problematic stakeholders. In Vitanov’s view, the proposal aimed at introducing new measures ensuring that all potentials for the development of renewable energy were optimally exploited. MEP Pierre Karleskind (RE, France) pointed that he was rather reluctant to introduce low-carbon fuels for producing hydrogen into the scope of the directive. MEP Ciarán Cuffe (Greens/EFA, Ireland) was as well disappointed that the proposal included low-carbon fuels. He stated that using the term technological neutrality to support problematic biofuels and low carbon fuels was self-defeating and misleading.

NOTE BY THE FRENCH PRESIDENCY ON PROGRESS ON FIT FOR 55 PACKAGE: On 8 March, the French Council Presidency presented the state of play of the debates within the Council on the different initiatives that form the Fit for 55 package. The goal is to already distinguish between disagreements that are mostly technical and those that would require political decision-making. With regards to the EU Emissions Trading System (ETS), the Presidency notes technical support for the Market Stability Reserve and the earmarking of revenues towards the Innovation and Modernization Funds. Wide support was noted for maximum reduction rates for benchmark values, but political scrutiny will be needed for parameters regarding the ceiling and the use of ETS revenues by the Member States. Extension of the EU ETS to the maritime and the aviation sector received support but inclusion of road transport and buildings will require political negotiations. With regards to the Effort Sharing Regulation (ESR) the Presidency describes mostly support while disagreements are largely technical in kind and would not need political attention. This is different for the Regulation on CO² emissions performance standards for cars and vans, where disagreements are of a political nature: there is no agreement on the CO² reduction targets and on how to reach them, and opinions vary widely on the removal or adaptation of the incentive mechanism for low-and zero-emission vehicles, as is also the case for the derogation for smaller manufacturers.

FRENCH PRESIDENCY PRESENTS ITS COMPROMISE TEXT ON REFUELEU AVIATION: On 8 March, the Working Party on Aviation discussed the compromise text from the French Presidency of the Council of the EU on ReFuelEU Aviation. A leak of the compromise text has been circulated in Brussels addressing refueling obligations for aircraft operators. For instance, the compromise text proposes exemptions for aircrafts to uplift at least 90% of the yearly aviation fuel required at EU airports under certain circumstances, e.g. in case of structural market difficulties in the airport that would cause the aircraft competitive disadvantage and specific conditions that would create serious and recurrent operational difficulties in refueling. Moreover, the French Presidency aims to extend the transitional period until 31 December 2034 (compared to 2029 proposed by the Commission) and establish the ReFuelEU Aviation Committee to support the Commission as regards draft implementing acts. As regards the report that the Commission should present every five years, the compromise text indicates that the report should also include information on technological advancements on sustainable aviation fuels (SAFs).

What’s next?

Today, 17 March, EU Environment Ministers are taking stock of the progress of the Fit for 55 files falling under the Environment Council’s remit, notably the EU ETS and Social Climate Fund. On 21 March, the ITRE Committee will adopt its opinion on the Land Use, Land Use Change and Forestry Regulation.

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No. 24 | 09 March 2022

EU ENERGY CRISIS

EU SANCTIONS ON RUSSIA AND THE IMPACT ON THE FIT FOR 55 POLICIES

EUROPEAN UNION EXTENDS THE SCOPE OF THE SANCTIONS AGAINST RUSSIA AND BELARUS: On 9 March, the European Union adopted further targeted sanctions regarding Russia and Belarus in response to the situation in Ukraine. On the one hand, the new measures for Belarus exclude Belarus from the SWIFT payment system, and further expand the existing financial restrictions to align them with Russia’s sanctions. On the other hand, the EU adds restrictions for Russia that would target the export of maritime navigation and radio communication technology, limit financing to the Russian Maritime Register of Shipping and introduce a prior information sharing provision for exports of maritime safety equipment. Further measures target crypto-assets and add 160 individuals to the list of people individually subjected to the sanctions.

EUROPEAN COMMISSION PUBLISHES COMMUNICATION ON A MORE AFFORDABLE, SECURE AND SUSTAINABLE ENERGY: On 8 March, the European Commission presented REPowerEU: Joint European Action for more affordable, secure and sustainable energy. The energy crisis and the supply concerns led the European Commission to take actions to overcome dependence on external gas supplies, by unlocking investments and reforms for more affordable and sustainable energy production and by further diversifying supplies. The Communication presents actions to ramp up the production of green energy, diversify supplies and reduce demand, focusing primarily on gas.

The first part of the Communication focuses on the urgent actions needed to address the energy prices emergency. For instance, it provides guidance on how to mitigate electricity market price surges and provide short-term relief to companies and farmers affected by high energy prices (e.g., state aid rules and temporary tax measures). In addition, the Commission announced that it will present a legislative proposal on EU gas storage by April 2022, requiring Member States to have a minimum gas storage of at least 90% by 1 October each year.

The core section of REPowerEU includes measures to reduce EU dependence on fossil fuels imported from Russia before 2030. This goal is based on two pillars: the diversification of gas supply and the reduction of dependence on fossil fuels. Notably, the Commission invites the European Parliament and the Council of the EU to boost the Fit for 55 proposals with higher or earlier targets for renewable energy and energy efficiency. Additionally, the Commission proposes to diversify gas supplies by increasing imports of Liquefied natural gas (LNG) and production of biomethane, and boosting hydrogen infrastructure and storage facilities. Finally, the Communication underlines the need to accelerate the roll out of solar and wind energy, and the deployment of heat pumps. The decarbonization of the industry as well as the reduction of administrative burdens enabling fast permitting would also contribute to reduce dependency on fossil fuels.

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EXECUTIVE VICE-PRESIDENT TIMMERMANS ON THE IMPACT OF THE WAR IN UKRAINE ON EU CLIMATE AND ENERGY POLICY: On 7 March, Commission Vice-President Frans Timmermans spoke to the ENVI Committee to address the repercussion of the ongoing military conflict between Russia and Ukraine and the subsequent sanctions put in place against Russia. He condemned Putin’s actions in grave terms and emphasized that the crisis was making the European Green Deal and Fit for 55 package not less but more important. He also stressed how increasing sustainability would also increase resilience to these crises. The transition to renewables will need to be sped up, and during said transition, diversification will have to be increased. Energy reserves will also need to get up to 80 or 90% by next winter. Addressing and avoiding energy poverty would also be essential to the success of the Green Deal because the project cannot succeed if citizens are not on board. In reaction, most MEPs agreed with the need to raise ambitions regarding renewable energy and energy efficiency targets to free the EU from its energy dependency on Russia, but some MEPs also highlighted the need for short-term measures to tackle the current energy prices crisis. MEPs also stressed the need that, next to diversifying the EU’s energy mix, there was a need to improve the EU’s energy storage capacities. Certain MEPs also highlighted that the unity displayed in the reaction against Russia’s aggression, should also be demonstrated by the EU in fighting the climate crisis.

RENEW MEPs CALL FOR EU FUNDING FOR GAS PROJECTS TO GO TOWARDS DECREASING DEPENDANCE ON RUSSIAN GAS: On 7 March, seven Renew Europe MEPs signed an opinion piece calling other MEPs to vote against the 5th list of EU Projects of Common Interest (PCIs), which is being submitted to Plenary vote on 9 March. Indeed, MEPs consider that this list, which identifies key cross-border energy infrastructure projects and grants them favorable permits and (public) funding conditions, is not in line with the EU’s climate objectives and the current need to reduce dependency on Russian gas.  Therefore, Renew MEPs call on the European Parliament to vote down the 5th list of PCIs, and on the Commission to propose a new list ensuring that included energy projects meet European Green Deal requirements and increase the EU’s independence from Russian gas.

INTERNATIONAL ENERGY AGENCY PROVIDES ACTION PLAN FOR EUROPE TO CUT NATURAL GAS IMPORTS FROM RUSSIA: On 3 March, the International Energy Agency (IEA) presented to the EU a 10-point action plan for reducing reliance on Russian gas supply by over a third in a year. The IEA’s action plan includes a range of complementary actions that can be taken in the coming months. The key actions recommended include not signing any new gas contracts with Russia; maximizing gas supplies from other sources; accelerating the deployment of solar and wind; making the most of existing low emissions energy sources, such as nuclear and renewables; and ramping up energy efficiency measures in homes and businesses. The proposed measures are supposed to be fully consistent with the European Green Deal and Fit for 55 package, paving the way for further emissions reductions in the years to come.

INDUSTRY MEPs HIGHLIGHT RENEWABLE ENERGIES TO REDUCE DEPENDENDCY ON RUSSIAN ENERGY SUPPLIES: On 3 March, the ITRE Committee hosted Commissioner for Energy, Kadri Simson, for an exchange of views on the energy-related aspects of the Ukraine/Russia crisis. MEP Cristian-Silviu Busoi (EPP, Romania), Chair of the ITRE Committee, highlighted the relevance of the Fit for 55 Package to safeguard the EU’s energy supply, by boosting renewables and energy efficiency. He was joined in this position by most MEPs. Furthermore, MEP Morten Petersen (RE, Denmark) called for an urgent action plan with concrete short, medium and long-term measures to speed up the clean energy transition. Considering the social impact of the crisis, MEP Patrizia Toia (S&D, Italy), expecting the energy crisis to be long-lasting, called on flexibility to be granted to Member States to adopt measures to protect households, consumers and businesses. Additionally, she enquired about the possibility to finally implement an Energy Union through a proper legislative framework on interconnectivity, storage and pooled purchases.

In response, Commissioner Simson explained that the Commission, with the new Communication on more affordable, secure and sustainable energy, is adding additional measures to its Toolbox on energy prices (first published on 13 October 2021). She also noted that the development of renewables was the way forward to reduce dependency on Russian energy supplies. To conclude, she called on the ITRE Committee to contribute to speeding up the adoption of the Fit for 55 package.

GREEN MEPs CALL FOR EXTRAORDINARY ACTIONS AND AMBITIONS FOR THE EU’S ENERGY TRANSITION: On 3 March, Greens/EFA MEPs addressed a letter to the European Commission on the response to the Ukraine crisis and its impact on the energy sector. In this letter, MEPs warn that the share of Russian gas in the EU gas consumption is still nearly 40% and that Russia remains the EU’s main supplier of crude oils and coal, the revenues from which indirectly contribute to fund the military aggression against Ukraine. Green MEPs welcome the Commission’s announcement of a new strategy on affordable, secure and sustainable energy, which will aim once more at reducing the EU’s dependency on Russia’s energy supplies. However, they warn that this new strategy should not be based solely on more gas, specifically liquified natural gas (LNG), as it would only create new dependencies on other external actors. The statement also calls biogas a “false solution”, as increased reliance on biogas would lead to higher emissions and climate damage. Green MEPs therefore call for an emergency strategy that invests in a highly efficient, 100% renewable-based economy. They also call for increase ambitions in the Fit for 55 package, notably with increased targets for the Energy Efficiency Directive, the Renewable Energy Directive and further incentives for uptake of renewables and low-emission fuels in the transport sector.

Would you like to know more about the impact of the energy crisis and sanctions on Russia on your organization? Dr2 Consultants’ European Green Deal & Fit for 55 Impact Scan offer targeted solutions to understand and anticipate the impact of the EU’s climate initiatives, as well as the EU’s countermeasures to mitigate the impact of the energy crisis and its sanctions on Russia. Don’t hesitate to contact us for more information.

Highlights of the week

FRENCH PRESIDENCY PRESENTS CBAM COMPROMISE TEXT: On 4 March, a draft of the Council Presidency compromise text on the Carbon Border Adjustment Mechanism circulated, together with a Presidency report on the state of play of the Council negotiations on the file. Compared to the Commission proposal, the compromise text restricts the scope of the mechanism, notably excluding plastics and chemicals. In addition, following the Commission’s position but diverging from Rapporteur Mohammed Chahim (S&D, The Netherland)’s draft report, the French Presidency’s text does not plan to take into account indirect CO2 emissions. It also makes no mention of default punitive values to be applied if importers do not provide sufficient data on emissions embedded in their products. This can predict tough negotiations with the Parliament, as Rapporteur Mohammed Chahim as well as several amendments submitted by MEPs in the ENVI Committee, go in that sense.

The compromise text will be used as basis for final negotiations between the Member States on the Council’s General Approach. The Presidency notes that certain questions relative to the implementation of the CBAM, and notably its relation to the EU Emissions Trading System and the phase out of free allowances under this scheme, still need to be discussed. These discussions will take place at Council Working Party level in the coming months, but do not prevent from the adoption of a General Approach on the file, expected on 15 March within the Economic and Financial Affairs Council. A General Approach would provide the Presidency with a mandate to open informal Trilogue negotiations with the European Parliament.

INDUSTRY COMMITTEE DEBATES DRAFT ENERGY TAXATION DIRECTIVE OPINION: Following the presentation of the Economic and Monetary Affairs Committee (ECON)’s draft report on the Energy Taxation Directive (ETD), the Committee for Industry, Research and Energy (ITRE) and the Transport Committee (TRAN) both debated their opinions on 3 March. In ITRE, the opinion was drafted by Rapporteur Robert Hajšel (S&D, Slovakia), and focuses on five main areas: social monitoring and reporting by Member States; replacement of the current definition of “vulnerable customers” with a quantitative definition of energy poverty; stronger support for the uptake of renewables; avoidance of double taxation by ensuring that taxation always applies to final consumption; and development of a common certification framework to specify the origin and source of electricity. MEP Hajšel was supported by Shadow Rapporteur Ivars Ijabs (RE, Latvia) on the idea of creating a common certification and on the need for mandatory tax exemptions for renewables. MEP Ijabs also called for clearer legal provisions for news energy products (e.g. alternative fuels, synthetic fuels and biomethane. MEP Henrike Hahn (Germany), Shadow Rapporteur for the Greens/EFA, highlighted several shortcomings of the Commission’s proposal that she intends to address through her amendments, notably to eliminate preferential treatment given to fossil or nuclear based low carbon energy and to limit in time make tax exemptions for energy intensive industries and make them conditional to investments in more energy efficient operations in switching to green production technologies.

In the TRAN Committee, Rapporteur Maria Grapini (S&D, Romania) presented her draft opinion, which includes a proposal for a national threshold for taxation on electricity and renewables and removes differences in rates between commercial and private use of fuel. Shadow Rapporteur Marian-Jean Marinescu (EPP, Romania) explained that he would submit amendments to replace minimum taxation rates for electricity by maximum rates in order to decrease taxation of electricity, in line with the Fit for 55 package electrification objectives. Additionally, rates on LNG, non-bio renewables and sustainable crop biofuels should also be decreased for a transitionary period. MEP Caroline Nagtegaal (RE, The Netherlands) described the draft as reasonable and argued that exemptions on maritime and air transport were no longer fitting the objectives of the Fit for 55 package. She proposed to re-invest tax revenues into these sectors to support their efforts to transition. On the other hand, MEP Anna Deparnay-Grunenberg (Greens/EFA, Germany) called for more ambition and taxation on carbon fuels, as inconsistent taxation harms environmental goals.

INDUSTRY COMMITTEE DEBATES ENERGY EFFICIENCY DIRECTIVE DRAFT REPORT: Also on 3 March, the ITRE committee met to discuss the Committee’s draft report on the revision of the Energy Efficiency Directive. Rapporteur Niels Fuglsang (S&D, Denmark) noted that his report dated from before the invasion of Ukraine, but gas prices were already high. He had hoped for the Commission to be more ambitious, and his report therefore included amendments to set an energy efficiency target for final energy consumption of 43% by 2030 and to plan for more investments in increasing efficiency. He also proposed a carbon factor in the energy efficiency efforts as well as milestones for 2025 and 2027. Lastly, he favored that 3% of all public buildings, as well as social housing, should be renovated each year. Shadow rapporteur Pernille Weiss (EPP, Denmark) praised the ambitious report that should move forward rapidly without taking the interests of the industry too much into account. Still, an analysis of benefits for industries should be made. She was however not sure whether the targets for renovation of public buildings and social housing were realistic for all Member States. She also expected more ambition on energy poverty. Shadow rapporteur Nicola Danti (RE, Italy) stressed the need for science-based and economically realistic targets. Lastly, shadow rapporteur Jutta Paulus (Greens/EFA, Germany) welcomed the report that was more ambitious than the Commission’s proposal, but hoped for even more ambition, through more long-term investments and more attention to the building and transport sector.

TRANSPORT MEPs DEBATE DRAFT REPORT ON REFUELEU AVIATION: On 3 March, the Committee on Transport and Tourism (TRAN) discussed the draft report on ReFuelEU Aviation by Rapporteur Søren Gade (RE, Denmark). Presenting his draft report, MEP Gade underlined that the ability to fly should be preserved for all citizens considering the positive impacts it has on citizen mobility. The Rapporteur explained that he proposes to broaden the scope of the proposal period extending the period during which sustainable aviation fuels (SAFs) will not have to be supplied in all airports until 2023 while enforcing the blending mandate. Moreover, he highlighted the need to address the risks of carbon leakage via stops and hops on long-hauls to protect European jobs and businesses, tankering, and the uphold of technology neutrality (hydrogen and electricity). He clarified that the use of ‘book and claim’ systems is envisaged only during the transition system.

During the debate, several MEPs pointed at the current lack of SAFs availability in the market and therefore the need to accelerate the rollout of SAFs large scale production. EPP Shadow Rapporteur, MEP Cláudia Monteiro De Aguiar (Portugal) called for a broader definition of SAFs, the inclusion of hydrogen and other types of fuel in the scope, and further incentives for the production and development of SAFs (e.g., relying on the ETS and exploring solutions related to credit purchases). MEP Erik Bergkvist (S&D, Sweden) called for the different infrastructure and resources between large and small airports should be considered in the Regulation to prevent carbon leakage. MEP Kosma Złotowski (ECR, Poland) advocated for a 1% SAF requirement by 2030, that would increase to 5% in 2035 as well as offsetting measures that would preserve the competitiveness of the sector.

ITRE MEPs DEBATE DRAFT REPORT ON RENEWABLE ENERGY DIRECTIVE: On 3 March, MEPs in the Committee on Industry, Research and Energy (ITRE) debated Rapporteur Markus Pieper (EPP, Germany)’s draft report on the Renewable Energy Directive (RED III). MEP Pieper argued that the development of renewable energy was of public interest. He also added that the EU had to be more modern and innovative in its approach, and that new digital origin generation and technological benchmarks for renewable energies were needed and should be binding. S&D Shadow Rapporteur Nicolas Gonzales Casares (Spain) emphasized that the current crisis showed that a higher level of ambition was required for the development of renewable energy sources. He also pointed that renewable energy would strengthen the EU’s energy autonomy and decrease dependency on Russian gas. Renew Europe criticized the report by stating that it lacked enough emphasis on innovation, whereas supporting research was vital to develop the necessary innovative technologies to address climate challenges. MEP Ville Niinisto (Greens/EFA, Finland) underlined the link between security and climate policies, and suggested looking at how to ensure that the EU used less energy, used energy smarter, and limited the use of fossil fuels. The ID group added that some solutions were not taken into consideration by the Commission, such as biomass and low impact gases which would increase supply while respecting the environment and creating jobs.

What’s next?

Despite the Commission’s call for a speed adoption of the package, the current crisis is expected to delay the examination process of the Fit for 55 files in the European Parliament and in the Council, as policymakers take stock of the situation and reassess their positions, in light of how the package can help mitigate the crisis’ impact.

Nonetheless, the TRAN Committee is planning to discuss its draft opinion on the Renewable Energy Directive and draft report on the Alternative Fuels Infrastructure Regulation during its 14 March meeting. On the same date, the Economic and Monetary Affairs (ECON) Committee will debate the Energy Taxation Directive report.

On 17 March, Environment ministers will discuss several files of the package: EU Emissions Trading System, Land Use and Land Use Change and Forestry Regulation (LULUCF), Effort Sharing Regulation and CO2 emission performance standards for cars and vans.

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No. 23 | 03 March 2022

Highlights of the week

ECONOMIC AND MONETARY COMMITTEE RAPPORTEUR ON ETD CALLS FOR OVERALL FIT FOR 55 IMPACT ASSEMENT: On 28 February, MEP Johan Van Overtveldt, Rapporteur in the Economic and Monetary (ECON) Committee, presented its draft report on the Energy Taxation Directive. The rapporteur is concerned that the revised ETD could cause significant social costs, in terms of a rise in energy poverty and unemployment. MEP Van Overtveldt is concerned about the lack of overall impact assessment on the entire Fit for 55 package. To accommodate these concerns, he proposes to link the date of entry into force of the Directive to a comprehensive overall impact assessment (instead of 2023, as set in the Commission proposal). Furthermore, the rapporteur considers that Member States should remain free regarding the updating of the tax rates and therefore removed the provisions for their automatic indexation, which would result in a chronic tax increase. MEP Van Overtveldt also includes amendments to further strengthen the “technology neutrality” aspect of the ETD.

INTERNATIONAL TRADE COMMITTEE VOTES AGAINST DRAFT OPINION ON CBAM: On 28 February, the Committee on International trade (INTA) voted against the draft opinion finalized by Rapporteur for opinion Karin Karlsbro (RE, Sweden) on the Carbon Border Adjustment Mechanism (CBAM). Following the vote on approximately 500 amendments, the opinion was rejected with 19 votes in favor, 20 against and 3 abstentions. Therefore, the INTA Committee will not contribute to the report of the Committee on the Environment, Public Health and Food Safety (ENVI). The proposed opinion called, amongst others, for CBAM revenues to contribute to climate action in low-income countries and a more rapid phase out of free allowances. Despite the support of most political groups for the principle of CBAM, MEPs did not agree on the rapid phasing out of free allowances and were disappointed that the draft opinion did not address exports and left room for recognizing implicit carbon pricing in third countries. The ENVI Committee is expected to vote on the draft report in May.

FRENCH PRESIDENCY OUTLINES NEED FOR EXTRA INVESTMENTS IN INDUSTRIAL MOBILITY: In a preparatory note on the ‘Green transition in the industrial mobility sector’ submitted to the Permanent Representatives Committee (COREPER) in view of its 24 February meeting, the French Presidency describes the costs and benefits attached to the sustainable transition of the industrial mobility sector. The sector, together with the entire mobility eco-system, will see a radical overhaul of its regulatory framework after the adoption of Fit for 55 legislative files. The sector is impacted by almost all proposed legislation, from the EU Emissions Trading System, to the Alternatives Fuels Infrastructure Regulation or the Renewable Energy Directive. Value chains will have to be strongly transformed to keep up with new demand, especially in the automotive sector, which will be strongly impacted by the revision of the Regulation on CO2 emissions from new light-duty vehicles and future texts on gaseous pollutant emissions (Euro7) and vehicle data.

Other sectors, such as the manufacturing of electric batteries, will however create new jobs. For a green transition in transport, renewables and infrastructure, a yearly extra investment of 230 billion will be needed, according to the French Presidency.

RAPPORTEUR IN TRANSPORT COMMITTEE PRESENTS RENEWABLE ENERGY DIRECTIVE OPINION: On 23 February, the European Parliament’s TRAN Committee published its draft opinion on the Revision of the Renewable Energy Directive (RED), drafted by MEP Barbara Thaler (EPP, Austria). The report states that the proposals’ provisions should equally take into account the rising energy demand to prevent mobility reduction and energy and transport poverty. The report also mentions that a further tightening of available bio feedstock is against economic and environmental rationale, since conventional biofuels are the only affordable option to replace conventional fuels in sufficient quantities for the time being.  The legislation has to ensure a level playing field between all energy carriers and all possible technologies, while the responsible authorities must ensure proper enforcement.

The Development Committee (DEVE) had also previously published its own opinion on RED, drafted by MEP Hildegard Bentele (EPP, Germany). The opinion suggests that there is a huge potential for developing countries in terms of technology cooperation, renewable energy projects and clean energy exports. Regions dominated by developing and emerging countries remain consistently underrepresented in renewable energy investments, attracting only about 15% of them. Union energy partnerships should target renewable energy generation projects as well as support the development of renewable energy projects and set legal and financial frameworks.

ENVIRONMENT COMMITTEE TABLES AMENDMENTS TO EU ETS DRAFT REPORT: On 22 February, the Committee on Environment, Public Health and Food Satefy (ENVI) made public the amendments submitted to Rapporteur Pieter Liese’s (EPP, Germany) draft report. The most supported amendments include additions further highlighting the need for just transition mechanisms to accompany the file, provisions for regular assessments of the impact of the EU ETS on economic activities, new wording to specify that greenhouse gases not released in the atmosphere thanks to carbon capture should not be considered emissions under the ETS. With regards to the inclusion of emissions from the maritime sector in the scope of the ETS, amendments were submitted to include ships with a gross tonnage above 400 and which have annual emissions over 1000 tonnes CO2 equivalent per year. The amendments will be debated in the ENVI Committee on 14 March, for a vote scheduled on 16 May.

EUROPEAN COMMISSION REPLIES TO IRISH PARLIAMENT’S OPINION ON FIT FOR 55 PACKAGE: On 22 February, the European Commission replied to the Reasoned Opinion by the Irish Parliament on the Fit for 55 package. The Reasoned Opinion argued that a detailed statement with sufficient quantitative and qualitative indicators has not been provided and that the Fit for 55 proposals are therefore neither proportionate nor compliant with the principle of subsidiarity. Notably, concerns were raised as regards the proposals on CO2 standards for cars and vans, the Alternative Fuels Infrastructure Regulation, FuelEU Maritime, EU ETS for aviation and CORSIA, and ReFuelEU Aviation. The Commission’s reply underlines that all the proposals are supported by specific impact assessments as well as the comprehensive impact assessment set out in the Communication 2030 Climate Target Plan. The Commission stresses that it also endeavored to combine the different policy proposals in a Member State scenario assessment that tries to capture their combined impact as much as possible.

EU ENERGY CRISIS

EU SANCTIONS ON RUSSIA AND THE IMPACT ON THE FIT FOR 55 POLICIES

EUROPEAN COMMISSION TO PUBLISH COMMUNICATION ON A MORE AFFORDABLE, SECURE AND SUSTAINABLE ENERGY: On 8 March, the European Commission will publish a Joint European Action for more affordable, secure and sustainable energy, of which leaks are already circulating. The Communication is expected to present actions that would make the EU more resilient by accelerating the deployment of renewable energy as well as ensuring the security of energy supply. These actions would be needed in light of the current energy crisis and the outlook indicating that energy prices will remain high and volatile at least until 2023. Measures are expected to include:

  • Following the Russian invasion of Ukraine, the Communication is expected to have a strong focus on decreasing Europe’s energy dependency on gas imported from Russia. The Communication will thus propose measures to diversify supplies away from Russian pipeline gas towards liquified natural gas (LNG) and other natural gas suppliers.
  • Moreover, to avoid low storage of gas in the future, the Commission is expected to propose that the EU’s average storage should be at least 80% by 30 September 2022 and to put forward legal requirement for Member States to ensure a minimum level of gas storage by 30 September every year.
  • To boost the deployment of renewables, the draft Communication presents a ‘New Energy Compact’ that would boost renewable energy across the EU. This would mobilize investments in renewables and related grid infrastructure. The Communication aims to promote the rollout of renewable and low carbon gas production with a focus on hydrogen and biogas. In this regard, the draft suggests an ambition to produce 35 billion cubic meters of biogas by 2030 and to import 10 million tons of green hydrogen by 2030.
  • Other actions would set out measures to improve permitting procedures to allow a rapid and large-scale renewable energy generation development, to create ‘active consumers’, who use power when there is less demand and it is cheaper, and to promote heating and building renovation to reduce the amount of energy consumed.

COMMISSION PRESIDENT OUTLINES SANCTIONS ON RUSSIA: On 1 March, the European Parliament held an extraordinary Plenary session in Brussels to assess Russia’s military assault on Ukraine. In her speech, President of the European Commission Ursula von der Leyen highlighted the three waves of sanctions adopted by the EU against Russia, targeting its financial system and economy. Notably, the EU put forward a ban for Russia to access the EU airspace; to upgrade its oil refineries; to repair and modernize its aviation and space industry; and to access technologies (e.g., semiconductors or cutting-edge technologies). Moreover, she stressed the effort of the Commission to enhance energy security and reduce the EU dependency on Russian gas, for instance boosting deployment of renewables (solar, wind, hydropower or biomass energy), hydrogen and LNG gas. She also indicated that Norway is willing to step up as an alternative gas supplier.

EVP TIMMERMANS CALLS FOR ACCELERATED ENERGY TRANSITION: Commission Executive Vice-President and Commissioner for the European Green Deal, Frans Timmermans, discussed the impact of the emerging conflict and subsequent sanctions regime, on the European energy policies. The immediate ambition is clear: the EU’s dependence on Russian gas must be decreased, firstly by increasing the European effort for a transition to green energy, but also secondly by diversifying the EU’s gas import. Regarding the former, efforts to reach climate neutrality by 2050 will be amplified and rolled out sooner.

ENERGY COUNCIL EXCHANGES VIEWS ON THE ENERGY SITUATION IN EUROPE: On 28 February, the EU energy ministers held an extraordinary meeting to discuss the energy situation in the EU following the crisis in Ukraine. During the discussions, energy ministers presented their views on the situation and on the current state of energy supplies, stocks and flows in their respective countries. The Member States and the Commission agreed that the EU was not immediately at risk in terms of supplies of gas or fuel, even in the event of a disruption in the supply of Russian gas. Moreover, they are coordinating the EU’s contribution to any action in terms of oil supply. Member States are also prepared to mobilize strategic stocks if the situation regarding oil supplies or prices evolves in such a way that it becomes necessary. Furthermore, ministers underlined the importance of the European Green Deal and the Fit for 55 legislative package to reduce the EU’s hydrocarbon dependency.

GERMANY TO BUILD NEW PORT TERMINALS TO REDUCE DEPENDANCY ON RUSSIAN GAS: On 27 February, the German Chancellor Olaf Scholz announced that Germany will upgrade its port infrastructure to receive supply of liquified natural gas (LNG) and therefore reduce the country’s reliance on Russian gas. “The events of the last few days and weeks have shown us that a responsible and forward-looking energy policy is not only crucial for our economy and our climate, but also crucial for our security,” Scholz said, adding that his government will “change course to overcome our dependence on imports from individual energy suppliers.” Currently, Germany is the most dependent EU country on Russian gas. On 22 February, Germany halted the certification process of the Nord Stream 2 pipeline, owned by a subsidiary of the Russian state-owned Gazprom.

EUROPEAN PARLIAMENT PRESENTS IMPLICATIONS OF RUSSIA’S WAR ON UKRAINE ON ENERGY SUPPLY: The note was published by the Parliament this week as a quick oversight of the situation in the context of the current crisis in Ukraine. It is clear that the EU is highly dependent on Russian gas import as a result of reduced domestic production of non-renewable energy. The green energy transition, implemented by the European Green Deal and the Fit for 55 package, aims at decreasing this dependence by increasing the domestic production of renewable energy, but gas still plays an important role in the transition period. Imports of gas will be halted as most of the imported Russian gas runs either through Ukraine itself, or through the Nord Stream Pipeline, which is mostly Russian-owned and the Nord Stream 2 pipeline has been halted by the German Government in reaction to the crisis. Therefore, although the national energy mix is a Member State competence, diversification of the European energy supply will be core and center of future policy: increased gas storage, liquid hydrogen and LNG play a role in this, but most important is an increased production of renewable energy supported by a flexible non-renewable capacity and real ambition in the realm of energy efficiency and a more integrated European energy infrastructure.

Would you like to know more about the impact of the energy crisis and sanctions on Russia on your organization? Dr2 Consultants’ European Green Deal and Fit for 55 Impact Scan offer targeted solutions to understand and anticipate the impact of the EU’s climate initiatives, as well as the EU’s countermeasures to mitigate the impact of the energy crisis and its sanctions on Russia. Don’t hesitate to contact us for more information.

What’s next?

In the coming weeks, European Parliament’s committees will discuss the draft reports and opinions on several Fit for 55 files, inter alia the Renewable Energy Directive, ReFuelEU Aviation and the Energy Efficiency Directive.

On 30 March, the European Commission will communicate on the Circular Economy Package I, which will include the Sustainable products initiative, the Strategy on sustainable textiles and Empowering consumers for the green transition. On 5 April, we can expect the publication of the Emissions and pollutants package.

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No. 22 | 24 February 2022

Highlights of the past weeks

MEPS CALL FOR BOOST FOR OFFSHORE RENEWABLE ENERGY SOURCES: On 16 February, the European Parliament’s plenary session adopted a report setting out recommendations on how to deploy offshore wind infrastructure more quickly in order to meet the EU’s climate targets. MEPs stress that existing infrastructure must urgently be improved and expanded, while still managing maritime space and coasts sustainably. MEPs highlight the importance of shortening procedures for permits and call on Member States to set up a transparent process and consider introducing time limits for issuing permits where necessary. MEPs also stress that work needs to be done in order for the public to accept offshore wind and to convince citizens that renewable energy is key to achieving energy independence and security of supply.

EU GREENHOUSE GAS EMISSIONS NEARLY BACK TO PRE-PANDEMIC LEVELS: Data published by Eurostat on 16 February show that greenhouse gas emissions from economic activities in the EU are almost back to pre-COVID 2019 pandemic levels. Greenhouse gas emissions in the third quarter of 2021 increased by 6% compared to 2020. This increase is explained by the economic rebound after the decrease of activity in 2020 due to the COVID-19 crisis. In the third quarter of 2021, the economic sectors responsible for most emissions of greenhouse gases were manufacturing (23% of the total), electricity supply (21%), and households and agriculture (both 14%).

POLAND CALLS FOR CONTROL MECHANISM IN ETS TO STOP SPECULATION: On 15 February, in the context of the revision of the EU Emissions Trading System, the Polish Government called for the introduction of control mechanisms to stop financial speculation on carbon prices which, Poland says, drives the carbon prices up. Poland did not specify what these control mechanisms should entail, apart from effectively preventing financial institutions from participating in the ETS market. Poland is supported by Hungary, Czechia and Slovakia in these demands. In reaction, a group of industry bodies representing the energy and financial sectors addressed a letter to the Commission, warning against the damaging effect a Commission intervention could have in the functioning of the ETS market.

PASCAL CANFIN CALLS EU ETS EXTENTION TO TRANSPORT AND BUILDINGS A MISTAKE: In an interview published on 9 February, MEP Pascal Canfin (Renew Europe, France), Chair of the ENVI Committee, called the inclusion of emissions from transport and buildings in the scope of the EU ETS “a mistake”. Canfin wants to ensure that no majority will back this proposal in the Parliament, as he believes the environmental benefits of such a proposal would not outweigh the negative social impacts. Instead, he suggests including only emissions from businesses in the scope, but many other MEPs, as well as the Commission do not think this would be sufficient to significantly reduce emissions and reach climate neutrality.

FOCUS – Continuation of the examination process in the European Parliament

Rapporteurs continued to deliver draft reports and opinions at a fast pace in the past two weeks.

ReFuelEU Aviation

On 11 February, MEP Soren Gade (Renew, Denmark) published the draft report on ReFuelEU Aviation on behalf of the TRAN Committee. In his report, the Rapporteur insists on the need to maintain the same blending mandates for sustainable aviation fuels (SAF) across the EU, to avoid a fragmentation of the market and feedstock supply shortages.  As regards the issues of physical supply and uplift of the mandated SAF volume at EU airports, the Rapporteur introduces a flexibility mechanism due to last eight years, providing flexibility for fuel suppliers and airlines to meet their obligations of providing and uptaking SAF in the most cost-effective manner, and to avoid imposing undue burdens on air transport operations at small airports. Furthermore, to incentivize the uptake of SAFs, MEP Gade proposes that the EU Emissions Trading Scheme (ETS) applying to aviation should be used to further boost the uptake of SAF. Finally, as regards new technologies, the draft report aims to already include electricity and hydrogen in the scope of the Regulation.

The report will be considered by the TRAN Committee on 3 March, and MEPs have until 10 March to submit their amendments.

The ENVI Committee debated Rapporteur Nicolas Gonzalez Casareses’ (S&D, Spain) opinion on 14 February. MEP Gonzalez Casareses highlighted the main points of his opinion, by which he wants to increase the ambition of the legislation. Mainly, the opinion revises the targets for SAF volume share in fuel blends: the 2040 target is increased from 32% to 45%, while the 2050 target is increased from 63% to 100%. The opinion also calls for non-drop-in fuels and energy vectors, such as hydrogen or electricity based on renewable energy sources, to be included in the definition of SAF.

During the debate, the EPP Shadow Rapporteur Hildegard Bentele (Germany) suggested broadening the definition of SAF to include all biofuels compliant with the defined sustainability and greenhouse gas criteria and including more aircraft operators in the scope of the regulation. MEP Frederique Ries (Belgium), Shadow Rapporteur for Renew, stressed the need to ensure that strong sustainability criteria are included in the legislation, and also called for the inclusion of hydrogen and electricity in the definition of SAF. However, she denounced the Rapporteur’s proposed amendments to target 45% of SAF in fuel blends by 2040 and 100% by 2050, calling them unrealistic. Green Shadow Rapporteur Jutta Paulus (Germany) disagreed, welcoming the more ambitious targets. She also agreed with MEP Gonzalez Casareses on the need to broaden the scope of the Directive and announced she will table amendments to include all airports with a minimum of 300 000 passengers per year, as well as private and business flights.

MEPs had until 23 February to submit their amendments. The ENVI Committee will vote on the opinion on 28 April.

FuelEU Maritime

On 14 February, the ENVI Committee debated Rapporteur Tiemo Wolken’s (S&D, Germany) draft opinion on FuelEU Maritime. MEP Wolken is proposing several amendments to further strengthen the Regulation. The main change consists in removing all mentions of “low-carbon fuels” in the text, to focus only on the uptake of renewable fuels. Additionally, the opinion would extend the scope of the regulation to the entirety of the energy used by ships travelling between a third country and an EU port or between two EU ports. The Rapporteur also extends the application of the Regulation to all ships with a gross tonnage above 400 (instead of 5 000 as planned in the Commission proposal), to cover a larger panel of ships. During the debate, MEP Catherine Chabaud (France), the Shadow Rapporteur for Renew Europe, welcomed this change.

Shadow Rapporteur Maria Spyraki (EPP, Greece) informed that she would table amendments that would introduce reporting requirements for maritime fuel suppliers on the availability and volume of renewable and low carbon fuels in EU ports. She moreover expressed worry over the Rapporteur’s ambition to cover the full use of energy for ship coming from third countries, as she feared this would hamper the implementation of the regulation.

Green Shadow Rapporteur Jutta Paulus (Germany) welcomed MEP Wolken’s opinion, but called for even more ambition, by further promoting wind propulsion and wind energy in general. Speaking on behalf of The Left, MEP Nikolaj Villumsen echoed the need for further ambition, and informed that the group would propose amendments to strengthen the targets for uptake of renewable and zero-emission fuels, as well as scale down the use of liquified natural gas (LNG) faster.

MEPs had until 23 February to submit their amendments. The ENVI Committee will vote on the opinion on 28 April.

Alternative Fuels Infrastructure Regulation

On 14 February, the TRAN Committee’s draft report on the Alternative Fuel Infrastructure Regulation, drafted by Rapporteur Ismail Ertug (S&D, Germany), was published. MEP Ertug’s report strongly focuses on e-mobility and hydrogen for road transport and wants to ensure a rapid, complete, fair and geographically inclusive development of e-mobility across the EU. The report also plans to speed up the deployment of hydrogen refueling and recharging stations by setting distance-based targets to be reached by 2025 instead of 2030. The Rapporteur also introduces provisions to strengthen the fleet-based target through a higher minimum power output per vehicles. Finally, the report includes amendments laying down rules on penalties for infringements by Member States that would not be taking the necessary measures to reach the defined targets.

Renewable Energy Directive

On 15 February, the ITRE Committee draft report on RED III, prepared by rapporteur Markus Pieper (EPP, Germany) was leaked. Pieper’s report aims to reduce red tape in the uptake of renewable energy and the deployment of renewable energy infrastructure. It includes provisions to make Member States invest in and support at least two cross-border projects related to clean energy supply or transmission. Moreover, the Rapporteur aims the simplify and speed up permit delivery for wind farms and expansion of electricity grid networks by labelling them as projects of public interest. Additionally, the report includes provisions to increase imports of renewable electricity and green hydrogen, including import targets per Member State. The report also amends the Commission proposal by increasing greenhouse gas reduction targets for renewable fuels and electricity [in transport] from 13% to 20%.

Energy Efficiency Directive

On 22 February, the ITRE Committee draft report on the Energy Efficiency Directive was presented by Rapporteur Niels Fuglsang (S&D, Denmark). Firstly, MEP Fuglsand proposes to increase the EU target for energy efficiency to at least 43% for final energy consumption by 2030. Moreover, he plans to increase the yearly energy savings obligation for Member States, and to introduce a carbon factor in the calculation of the national contributions. In addition, the report includes an amendment to exclude fossil fuels from counting towards the energy savings obligation. To ensure that the 2030 energy consumption reduction target is reached, MEP Fuglsang proposes two intermediate milestones (2025 and 2027) in order to create a linear trajectory and avoid that Member States postpone the actions required to achieve the target.

Energy Taxation Directive

On 14 February, the Rapporteur for opinion in the TRAN Committee, MEP Maria Grapini (S&D, Romania), finalized her draft opinion on the Energy Taxation Directive. Rapporteur Grapini welcomes the Commission’s proposal to no longer fully exempt kerosene used as fuel in the aviation industry from energy taxation for intra-EU voyages in the EU. She also proposes that sustainable fuels and electricity used in rail should benefit from a minimum tax rate of zero. Moreover, the draft opinion proposes that the minimum levels of taxation should be applicable to products as of 2025 (instead of 2023 as proposed by the Commission) and that the gradual increase in the minimum levels of taxation should be fixed until 2035 (instead of 2033). On interinstitutional rules, the Rapporteur wants the Commission to have the power to adopt the delegated act for a period of five years and to review the Directive every three years.

On 16 February, it was the Rapporteur for opinion in the ITRE Committee, MEP Robert Hajšel (S&D, Slovakia), who presented his draft opinion on the ETD. The Rapporteur proposes changes to the Commission’s proposal in four main areas. Firstly, he introduces a social monitor and energy poverty reporting by Member States on how they use the increased revenues to tackle direct consequences of the revised taxation. Secondly, MEP Hajšel proposes to replace the current definition of vulnerable consumers with a quantitative definition of energy poverty. Furthermore, the draft opinion strengthens provisions to incentivize the uptake of renewables by making the tax exemption mandatory and proposes that neither energy use within the energy value chain nor any form of conversion and storage should be taxed. Finally, the Rapporteur wants the Commission to develop and adopt a common certification framework to specify the origin and the source of the electricity consumed. The draft opinion will be discussed in the ITRE Committee on 3 March and the deadline to table amendments is scheduled on 9 March.

What’s next?

Final reports and opinions that must still be published will be presented in the following weeks, and MEPs are in the process of submitting their amendments to those that are already out.

On the Council side, the examination continues at working party level, with little information transpiring so far. The French Council Presidency announced a European Climate Conference on 7 and 8 March. It will bring together high-level representatives of the EU Member States, the European Commission and the European Parliament, as well as prominent figures from civil society, the scientific community, businesses and local governments. The event will aim to mobilize Europe to meet climate challenges and achieve the European Union’s 55% by 2030 greenhouse gas emissions reduction target.

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No. 21 | 10 February 2022

Highlights of the past weeks

CONTINUATION OF THE WORK IN THE EUROPEAN PARLIAMENT: As presented in our last update (27 January 2022), the examination of the Fit for 55 files in the European Parliament is at full speed.

One of the files moving the fastest is the Carbon Border Adjustment Mechanism (CBAM). Rapporteur Mohammed Chahim (S&D, NL, ENVI Committee) presented his draft report just before the holiday recess. Following a debate on 2 February, in which MEPs clashed on the questions of speeding-up the phase out of free ETS allowances, including indirect emissions in the scope, and using the ETS revenues as own resource, MEPs have until today, 10 February, to submit their amendments. The vote in Committee is tabled for 11 May.

In the meantime, rapporteurs in the various Committees for opinion are starting to share their draft opinions. In the BUDG Committee, co-Rapporteurs Jose Manuel Fernandes (EPP, Portugal) and Valerie Hayer (RE, France) defended the compatibility of the instrument with WTO rules since it is a climate policy and not a fiscal instrument; and highlighted the need for the revenues earned from the CBAM to be used as own resources to finance the EU’s budget.

Rapporteur Evin Incir’s (S&D, Sweden) opinion in the DEVE Committee focused on including provisions to use CBAM revenues as support to climate protection measures in developing countries to improve the instrument’s legitimacy and WTO compliance.

The ITRE Committee also debated on 2 February the draft opinion presented by Rapporteur Izabela-Helena Kloc (ECR, PL) on 10 January.

The examination of the EU Emissions Trading System (EU ETS) is also advancing fast. Following the presentation of the draft report by Rapporteur Peter Liese (EPP, Germany) in the ENVI Committee, MEPs have until 16 February to submit their amendments. Vote in Committee is scheduled in May 2022, for a Plenary sitting expected in June. In the meantime, opinions are also coming in. In the DEVE Committee, Rapporteur Antoni Comin i Oliveres (NI, Spain) published its opinion on 2 February, calling for the revenues from the EU ETS to be used as compensation for the main victims of pollutions (e.g. countries and people who experience the worst impacts of climate change). In the BUDG Committee, co-Rapporteurs Jose Manuel Fernandes (EPP, Portugal) and Valerie Hayer (RE, France) presented their draft opinion on 27 January. The proposed amendments include an explicit mention that a certain share of the ETS revenues is to become an own resource for the overall EU budget but, according to the universality principle, cannot be earmarked to a specific budget line.

COMMISSION PRESENTED SECOND ROUND OF FIT FOR 55 FILES IN PARLIAMENT: On 2 February, Energy Commissioner Kadri Simson presented to the ITRE Committee the second round of Fit for 55 files published in December 2021, namely the revisions of the Gas Directive and Gas Regulation, the proposal on methane emissions reduction in the energy sector, and the revision of the Energy Performance Building Directive. MEPs generally welcomed the proposals, agreeing with the Commission that joint purchasing of gas could in the short-term help remedy the energy price crisis. Most MEPs also agreed that developing renewables was necessary to ensure long-term energy sovereignty. On methane emissions, all MEPs welcomed the proposal. On building renovation, MEPs agreed with the Commission’s ambition, but highlighted the need to ensure that vulnerable citizens are protected and that the cost of renovations does not fall on individuals. The rapporteurs and shadow rapporteurs for the files are yet to be appointed.

COMMISSION LABELS NUCLEAR AND GAS GREEN UNDER TAXONOMY: On 2 February, the European Commission officially presented the Taxonomy Complementary Climate Delegated Act on climate change mitigation and adaptation covering certain gas and nuclear activities. The Delegated Act identifies gas and nuclear-related activities as being necessary for the transition towards a more low-carbon energy mix. The Council of the EU and the European Parliament will now have four months to scrutinize the document. If neither of the co-legislators object, the Act would enter into force and apply as of 1 January 2023. However, several Member States and many MEPs, especially from the Greens, the Socialists & Democrats and The Left, strongly oppose the inclusion of nuclear and gas in the Taxonomy. Germany, Austria and Luxemburg are even considering launching legal proceedings against the Act.

FRENCH PRESIDENCY PRESENTS FIT FOR 55 PRIORITIES IN EP COMMITTEES: French Ministers started to tour European Parliament Committees to highlight the French Council Presidency priorities, with a strong focus on Fit for 55 files.

On 2 February, Jean-Baptiste Djebbari, Minister for Transport, visited the TRAN Committee. He announced that an informal Transport Council meeting would take place on 21-22 February, during which the Fit for 55 files would be discussed, with a general agreement on the package to be drafted by June. On specific files, Mr. Djebbari mentioned the Alternative Fuels Infrastructure Regulation (AFIR), underlining that the French Presidency will also explore how to facilitate the use of hydrogen and electric cars. On RefuelEU Aviation, the Presidency will try to find the right balance between promotion of sustainable fuels and maintaining the competitiveness of the aviation sector. Finally, on FuelEU Maritime, the Presidency will ensure to preserve competitiveness while still offering new fueling options.

On 27 January, the ITRE Committee hosted Barbara Pompili, Minister for the Ecological Transition, and Agnes Pannier-Runacher, Minister Delegate for Industry. The ministers highlighted that the French Presidency will focus on advancing negotiations on the Energy Efficiency Directive (EED) and on the Renewable Energy Directive (RED), as well as on the proposal for a Carbon Border Adjustment Mechanism (CBAM). Ms. Pompili reiterated that the EED and RED are a priority as they are key to ensuring the EU’s energy sovereignty. Ms. Pannier-Runacher also stressed the urgency to adopt the CBAM, and reassured that discussions with China, Russia and Turkey, which would be most affected by the mechanism, showed that the instrument would have a positive impact on accelerating the transition at a global level.

SEVEN MEMBER STATES SEEK MORE AMBITION ON SUSTAINABLE AVIATION FUELS: Seven Member States, including Denmark, The Netherlands and Germany, addressed on 1 February a letter to the European Commission, regretting that the RefuelEU Aviation proposal, put forward in July 2021, is not more ambitious, and calling for Member States to be allowed to set their own tougher requirements. Signatories assured that higher national targets would not distort competition in the EU market. Among the signatories, Denmark and Sweden have pledged to make their domestic flights fossil fuel free by 2030. They worry that the Commission’s proposal will put a brake on their ambitions. Signatories believe that higher national targets can incentivize sustainable aviation fuels production and bring down costs sooner.

What’s next?

Debates and submission of amendments are continuing at Committee level in the European Parliament. Today, 10 February, the ENVI Committee is considering the draft report on the Effort Sharing Regulation and will consider the draft opinions on RefuelEU Aviation and FuelEU Maritime on 14 February.

In the Council, the examination of the files is slightly slower, with technical discussions still taking place at working party level. An informal Transport Council meeting will take place on 21-22 February, during which Fit for 55 files would be discussed.

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No. 20 | 27 January 2022

Highlights of the past weeks

INTENSIFYING WORK IN THE EUROPEAN PARLIAMENT: In recent weeks, Committees intensified their work on the files of the Fit for 55 package. Following the presentation of MEP Mohammed Chahim’s (S&D, The Netherlands) draft report on the Carbon Border Adjustment Mechanism (see our policy update of 13 January 2022) at the end of December, many new reports, by which Committees make amendments to the Commission’s proposals, are currently being presented and debated.

On 24 January, MEP Pieter Liese (EPP, Germany), presented its draft report on the revision of the EU Emissions Trading System (EU ETS) to the ENVI Committee. The report notably includes amendments to the Commission proposal to move forward the implementation of the new EU ETS by one year (2025 instead of 2026), but also to allow Member States to delay emissions trading for fuels for private road transport and residential building heating until 2027, in light of the current energy price crisis.

On 14 January, the EMPL and ENVI Committees presented the joint draft report on the proposal for a Social Climate Fund, intended to mitigate the impact of the green transition on the most vulnerable. The main modification made by the two rapporteurs, Esther de Lange (EPP, The Netherlands) and David Casa (EPP, Malta), to the Commission proposal is the inclusion of definitions “energy poverty” (households in the lowest income deciles whose energy costs exceed twice the median ratio between energy costs and disposable income after deduction of housing costs) and “transport poverty” (households that have a high share of mobility expenditure to disposable income or a limited availability of affordable public or alternative modes of transport required to meet essential socio-economic needs). The report also calls on Member States to monitor the evolution of those forms of poverty and seek remedies.

On 13 January, the ENVI Committee debated MEP Jan Huitema’s (Renew Europe, The Netherlands) draft report on the revised CO2 emissions performance standards for cars and vans. MEP Huitema’s draft report intended mainly to update the proposal to consider an average lifespan of cars of 14 to 19 years, create a second-hand market for zero-emissions cars, move up transitional targets and provide more legal certainty to the automotive sector. The report received mixed reviews from other ENVI MEPs. Many of them worried the report was too ambitious and that uptake of charging infrastructures would not be fast enough to move to a full electric vehicles fleet by 2035. MEPs also worried that the negative impact of the standards on the automotive industry were not being addressed properly.

On 14 January, MEP Jessica Polfjard (EPP, Sweden), rapporteur on the Effort Sharing Regulation in the ENVI Committee, presented her draft report. The report strengthens the Commission’s proposal by revising national targets to reduce discrepancy between Member States. The report also addresses “loopholes” that were left in the Commission proposal, notably by restricting the ability for Member States to borrow emission allowances from their future emissions budget. The rapporteur has also added a requirement that any proceeds by a Member State from emissions trading within the ESR must be allocated to climate action. In order to let Member States reach their targets in ways that work best for them, the Rapporteur also introduced the option for Member States to use new technologies such as carbon capture and utilization (CCU) and carbon capture and storage (CCS) to meet part of their targets.

Draft opinions are also being presented and debated. On 25 January, MEP Beata Szydlo (ECR, Poland), rapporteur for opinion in the ITRE Committee also presented its draft opinion on Social Climate Fund. The main amendments focus on extending the scope of vulnerable households also to large families, and not only to middle-income or single-parent families. On the same date, the TRAN Committee considered rapporteur Petar Vitanov’s (S&D, Bulgaria) draft opinion on the CO2 emissions performance standards. On 12 January, the AGRI Committee had received its rapporteurs’ draft opinions on the Renewable Energy Directive and the Carbon Border Adjustment Mechanism.

SENEGAL PRESIDENT CALLS FOR AFRICA NOT TO BE INCLUDED IN CBAM: Ahead of the EU-African Union summit that will take place in Brussels in February, Macky Sall, Senegal’s president, warned that the EU needed to ensure that African countries do not bear the burden of the upcoming Carbon Border Adjustment Mechanism. President Sall called for a joint EU-Africa strategy that takes into account the level of development of African countries and does not include their exports of fossil fuels and minerals in the EU’s carbon border levy. The African continent only accounts for about 3% of global greenhouse gas emissions.

COMMISSIONERS URGE ENERGY MINISTERS TO SPEED UP FIT FOR 55 EXAMINATION PROCESS: From 20 to 22 January, EU energy ministers gathered in Amiens for an informal meeting under the auspices of the French presidency. On the agenda were discussions on how to protect consumers from volatile and historically high gas and electricity prices. Commissioner Vice-President Frans Timmermans and Commissioner for Energy Kadri Simson also attended the meeting.

In his opening remarks, Commissioner Timmermans reminded that the ongoing energy price crisis is the results of political tensions, and not due to the European Green Deal or the Fit for 55 proposals, and therefore urged Member States not to use the crisis as an excuse to not continue the examination process. He also pressed Member States to speed up the process in order to not fall too far behind the European Parliament.

In her closing remarks, Commissioner Simson highlighted that the only lasting solution to the EU’s dependence on fossil fuels and volatile energy prices is to complete the green transition, through the quick implementation of the Fit for 55 package, especially the Energy Efficiency Directive.

TRAN COMMITTEE EXCHANGES VIEWS WITH TIMMERMANS ON FIT FOR 55: On 13 January, the TRAN Committee hosted Commission Vice-President Frans Timmermans to debate the Fit for 55 package. Commissioner Timmermans reminded of the urgency to act to reach the 2030 climate targets, and of the critical contribution the transport sector needs to make. MEPs discussed the inclusion of transport in the scope of the Emissions Trading System (ETS), called for the competitiveness of the EU transport sector to be safeguarded and highlighted the need to also improve public transport and public mobility to reduce transport emissions.

What’s next?

Work will continue in the European Parliament, with additional draft reports and opinions to be published, and amendments to be put forward by MEPs. The ENVI Committee will notably debate the reports on the CBAM and EU ETS in February.

Within the Council, work is also advancing, although at a slower pace. On 27 January, the Working Party on Energy will continue its examination of the Energy Efficiency Directive.

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