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European Official File Release : EICES COVID-19 (The Economic and Industrial Strategy for Emerging from the COVID-19 Crisis). The European Council is expected to shift EU leaders’ attention away from immediate and short-term priorities, such as limiting the spread of the coronavirus, to a longer-term strategic approach focused on a recovery strategy for the European Union, and the financing thereof. The recovery strategy could be based on four pillars.
The European Council is expected to shift EU leaders’ attention away from
immediate and short-term priorities, such as limiting the spread of the
coronavirus, to a longer-term strategic approach focused on a recovery
strategy for the European Union, and the financing thereof. The recovery strategy
could be based on four pillars:
1 – The internal market, including the Green Deal, the digital agenda and the EU’s
2 – An investment strategy, to be included in the next seven-year EU budget and
reflected in the work program of the European Investment Bank;
3 – A global recovery strategy reinforcing the external responsibility of the EU and
4 – Strengthening resilience and governance for a stronger EU after the crisis.
As the EU’s Multiannual Financial Framework (MFF) for the seven years from 2021
to 2027, which has yet to be agreed, touches upon all four pillars of the recovery
strategy, EU leaders will engage in a strategic discussion on the MFF.
Throughout history, pandemics have changed the destiny of people. They make us see the world in a different light and remind us the value of many of the simplest things in life – from our daily routines to giving our families a hug to appreciating the nature all around us. They also make us question our way of doing things and ask whether there is a better way of doing things. And they offer us a chance to redesign our future.
This pandemic will be no different. It has of course been a painful and anxious period for millions – and we must continue to stay vigilant as numbers rise again in some parts of Europe. But the last six months have also shown us the value of things, such as being in a Union where you can rely on 27 nations to pull each other up. And it presents us with an opportunity to emerge stronger together.
The historic agreement on NextGenerationEU – our 750bn euro plan for recovery and for the future – shows it can be done. Never before has Europe come together in this way. So now is the time to take that spirit and use it to move forward on other issues together.
Take migration. This has been an issue which has divided Europe for too long and that I am convinced can and must be managed together. But you only have to look at the news to see the urgency to find a sustainable solution for everyone. As I announced in my State of the Union speech earlier this week, the European Commission will come forward in the next days with a New European Pact on Migration. It will take a human and humane approach, and ensure that it is not only a European pact by name – but a common European solution by design. It will be based on solidarity, both between Europeans and with refugees and on collective responsibility of national governments. Migration will stay with us. We have to manage it well, with its challenges and opportunities.
This is the moment to get Europe back on its feet and design that better way of living. During the confinement, we longed for cleaner air and greener cities. Digital technologies allowed students to keep learning and businesses to keep running, but too many Europeans – in rural areas or disadvantaged families – have been left behind. The post-pandemic world must be better than this and we now have everything it takes to make it happen.
With NextGenerationEU we have the financial resources we need to take urgent and strategic action, from improving internet speeds to supporting our industry. We have the opportunity to do more than simply repairing our economy: we can shape a better way of living for the world of tomorrow. Nowhere is that more important than in our relationship with our planet. With the European Green Deal we have set the goal to become climate neutral by 2050. To make sure we can get there, we will now propose to increase our 2030 target for emissions reduction to at least 55% – up from 40% as it currently is.
This is a big ambitious jump, but it is both realistic and beneficial for our economy and industry. In the last weeks, I have received hundreds of letters from citizens to CEOs to NGOs, all asking for Europe to lead the way. And this is what we are ready to do. This is not just about cutting emissions – it is about building a better world to live in, from buildings to cleaner transport.
Changing our planet for the better also means changing our mentality for the better. The European Green Deal is not only an environmental and economic project: it needs to be a new cultural project for Europe. Culture is born when great minds come together. This is why I want the EU to set up a new European Bauhaus, inspired by the art school set up a century ago that mixed form and function. It will be a co-creation space for architects and artists, engineers and designers to come together to match style with sustainability.
This is only a small part of the work ahead. We will need to show determination whether on building a stronger European Health Union or ensuring that work pays for everyone. But I am convinced Europe has everything it needs to make it happen. We have the vision, the plan, the investment. And we also have a new-found unity. So let’s get to work and ensure that this pandemic changes our destiny for the better.
The only way for Europe to recover from the coronavirus crisis and build a better future is to work together and the pandemic has made that clearer than ever, according to EU Commissioner Mariya Gabriel. She told Horizon about the biggest impacts of the pandemic on research and innovation and her vision for where EU-funded research is headed.
When you started this role in December, I bet you didn’t think your first year as research commissioner would unfold like this. What have you learned?
This has been indeed an extraordinary year by anyone’s standards. For me, it was particularly interesting to see research and innovation receive an increase in public attention. We have all clearly seen the crucial role it plays in our lives – be it in protecting people’s lives from coronavirus or in Europe’s green and digital transitions.
I was proud to see the determination of scientists and innovators in Europe to find solutions, and how they came together, proving the importance of working together to tackle the biggest problems. I was also heartened by how flexible we can be in adapting quickly to new realities. As early as January, we mobilised Horizon 2020 (the EU’s current research funding programme) into urgently needed coronavirus research and innovation. All this gives us hope, as we continue to combat the virus and work hard to make Europe more resilient and sustainable.
Researchers are the main drivers of knowledge, attuned to the most pressing concerns of our contemporary societies. A well-performing education and research landscape will become even more necessary in order to face key challenges in the future.
At the end of September, I presented my key initiatives for a European research area, a European education area and a digital education action plan, which contribute to a more inclusive, greener and digital Europe when it comes to research and education.
Over the course of the pandemic, as the scientific advice and information has emerged, everyone has had to adapt. How did you choose the EU’s research priorities for coronavirus?
The European Commission started addressing the virus at the very beginning of the outbreak. Overall, we are investing more than €1 billion as part of the Coronavirus Global Response. And we coordinated European and global research efforts.
Of course, it all had to start with trying to understand the virus better. In January, we launched our first Covid-19 emergency call to advance our knowledge on the novel virus. Since then, we have continued with additional research and support actions, capitalising on Europe’s scientific capacity and the latest developments in the field. This includes support for infrastructures and data resources that enable decisive research.
We also launched short- and long-term activities. For example, nearly 30,000 people from 114 countries participated in the EUvsVirus hackathon to generate 2,150 innovative solutions by the end of April. A total of 2,235 partnerships which span different forms of funding and benefits, such as mentoring, were brokered by the European Innovation Council (EIC). The EIC also awarded €166m for the development of solutions to combat the coronavirus pandemic.
Thanks to the Horizon 2020 funding programme we are able to act on multiple fronts, from frontier research and cooperation with Member States, to start-ups and involving citizens.
How has the pandemic reshaped European research priorities and what impact will it have on these long-term?
To be ready for a next crisis, we must support researchers and innovators to work together, share results and data openly and acquire the skills they need to provide us with solutions for our societal challenges. With the plans for a new European research area unveiled on 30 September, we propose to join forces with all EU countries to prioritise investment and reforms in research and innovation, improve access to excellence for researchers across Europe and ensure results efficiently find their way to the market.
In April, we initiated an action plan, which was adopted by Member States and helped to coordinate all the research and innovation efforts with national administrations, focusing on coordination of funding, research data and information exchange. In less than two weeks (on 20 April) we launched the European Covid-19 data portal to enable the rapid collection and sharing of available research data to support researchers in Europe and around the world.
But it is not only about supporting the communities. It is essential to deliver concrete results, like Re-open EU, a platform that contains essential information allowing a safe relaunch of free movement across Europe. It provides real-time information on borders, travel restrictions, and public health and safety measures.
In Horizon Europe, the next EU research and innovation funding programme that runs from 2021-27, health projects will cover virology, vaccines, treatments and diagnostics, and the translation of research findings into public health policy measures. The climate, energy and mobility, digital industry, and space clusters will aid the scale-up of research resources in climate-related domains and ensure that European enterprises have access to the technologies and data they need.
Research and innovation are vital for fighting the pandemic, as well as for sustainable and inclusive recovery.
How exactly do you see the role of R&I in the recovery from the effects of the pandemic – including social, educational and economic?
I want Europe to emerge stronger and more resilient from this crisis. For that to happen, research, innovation and education are indispensable, and investments are key. The current crisis is also a unique opportunity for the EU and its Member States to strengthen their policy coherence and joint efforts towards achieving resilience and sustainability.
Horizon Europe will be crucial to this. It will support crucial health and climate-related research and innovation activities. Its new wave of European Partnerships will ensure long-term strategic cooperation between public and private actors covering critical areas such as energy, transport, biodiversity, health, food and circularity. The new EU missions will tackle some of our most pressing societal challenges, such as adaptation to climate change, saving more lives from cancer, restoring our ocean and waters, greener cities and healthy soils.
We also should not underestimate the impact this crisis has on people’s mental health, such as the psychological impact of quarantines. We will continue to support research in social sciences and humanities, as well as in behaviour and mental health. For example, we supported four new research projects with €28 million to investigate behavioural, social and economic impacts of the outbreak responses.
The proposed Horizon Europe budget has been cut at a time when arguably research has never been more visible and important. What’s your take on this?
Indeed. Research and innovation have never been so high on the political agenda. Only science and technology will help us to tackle concretely the ongoing global threats and challenges. And Covid-19 has served as a timely reminder to all of us of the necessity to invest in research and innovation as well as to cooperate with our partners despite tensions at a geopolitical level.
Research and innovation play an essential role in shaping Europe’s future.
Like President von der Leyen, I have expressed that the budget reduction is a regrettable decision. We believe that the original Commission proposal was ambitious, but also realistic. Nevertheless, after the July European Council, Horizon Europe still keeps a robust budget envelope to prepare the competitiveness of the European economy for the widest social benefit of the citizens. And we need to recognise that additional funds will also be allocated from Next Generation EU, the €750bn recovery instrument for Member States, to Horizon Europe.
On 29 September, Member States came to agreement on the last remaining open issues of Horizon Europe concerning budget, international cooperation and synergies with other EU programmes. The Commission will act as an honest broker in the forthcoming trilogues (negotiations between the Council, Parliament and Commission) on the new budget. A timely agreement on Horizon Europe is in the best interest of our researchers, innovators, companies but most importantly citizens.
One thing is certain, we will not be successful in our ambitions without collaboration from regions, cities and villages. We are working on a joint action plan with the Committee of the Regions to build an inclusive research and innovation landscape in Europe.
We need strong links with our neighbours in this area. The innovation agenda for the Western Balkans will contribute to this aim.
We need to be concrete about what we want to achieve in the short term: to bridge the innovation divide (the difference in innovation capacity between different parts of Europe), to foster a fair and just transition, to develop innovation ecosystems in every region in Europe, and to provide the necessary resources for all our talent.
Excellence and inclusiveness are the two sides of the same coin. The EU can only succeed if everyone progresses.
Today, the European Commission adopted a Communication on a new European Research Area for Research and Innovation. Based on excellence, competitive, open and talent-driven, the new European Research Area will improve Europe’s research and innovation landscape, accelerate the EU’s transition towards climate neutrality and digital leadership, support its recovery from the societal and economic impact of the coronavirus crisis, and strengthen its resilience against future crises.
The Commission set out strategic objectives and actions to be implemented in close cooperation with the Member States, in order to prioritise investments and reforms in research and innovation, improve access to excellence for researchers across the EU and enable research results to reach the market and the real economy. Additionally, the Communication will further promote researchers’ mobility, skills and career development opportunities within the EU, gender equality, as well as better access to publicly funded peer-reviewed science.
Executive Vice-President for A Europe Fit for the Digital Age, Margrethe Vestager, said: “The EU is already leading innovation through its research and scientific excellence. We want to build on that and step up our efforts towards achieving breakthrough market-driven innovations that will contribute to a green digital Europe and will boost growth, job creation and our competiveness in the global scene. Today we are setting a new ambition for a European Research Area to facilitate cooperation and contribute to a more competitive European industry.”
Mariya Gabriel, Commissioner for Innovation, Research, Culture, Education and Youth, said: “We live in times when scientific activities require faster and effective collaborations. We need to strengthen the European Research Area. An area embracing all of Europe, because knowledge has no territorial boundaries, because scientific knowledge grows with collaborations, because knowledge is trusted if there is open scrutiny of its quality. It has also more chances to achieve peaks of excellence and support an innovative and risk taking industry to shape a resilient, green and digital future.”
Launched in 2000, the European Research Area has made major achievements over the past years – yet, today’s context prompts us to rethink how to strengthen its role, better define and implement its key objectives, as well as make it more attractive as a common space for creating valuable research and innovation. Moreover, Europe is currently facing significant societal, ecological and economic challenges that are aggravated by the coronavirus crisis. Research and innovation is therefore crucial in addressing these challenges, delivering on Europe’s recovery and speeding up the twin green and digital transitions.
Objectives of the new European Research Area
Building on Europe’s innovation leadership and scientific excellence, the new European Research Area aims to incentivise better coordination and cooperation among the EU, its Member States and the private sector; lead to more investments in research and innovation; strengthen mobility of researchers, their expertise, and the flow of knowledge;
The Communication defines four strategic objectives:
MEPs debated ways to secure a quick and safe supply of COVID-19 vaccines on Tuesday, with representatives of pharmaceutical companies, research , and civil society.
During the public hearing, MEPs from the Committee on Environment, Public Health and Food Safety as well as the Committee on Industry, Research and Energy heard from key players including researchers, representatives from pharmaceutical companies and civil society organisations, and the European Medicines Agency (EMA). MEPs highlighted the challenge of ensuring that vaccines are available as soon as possible, while at the same time building public trust in vaccination.
A recording is available through the following links:
“Today, we have very little information on the content of the contracts that have been signed by the European Commission and some laboratories”, said the Chairman of the Committee on the Environment, Public Health and Food Safety Pascal Canfin (Renew Europe, FR). “We wanted to have more information on the state of research, the commitments made by laboratories, and whether they will be able to meet them. We do not even know how many of these contracts there are! The lack of transparency surrounding these contracts was very clearly highlighted during this hearing where Parliament played a role in ensuring democratic accountability”, he added.
“A good vaccine must be efficient, safe, affordable, developed quickly and able to achieve EU market authorisation. We all know that developing a vaccine is a very complex process and that it takes time. But with the European Union and the world in the midst of a COVID-19 pandemic, time is one thing that we simply do not have”, said Industry, Research and Energy Committee Chair Cristian Bușoi (EPP, RO). “The EU, however, has put a lot of effort and funding into accelerating the development, as well as making the vaccine available and securing sufficient supplies for its member states”, he added.
During the debate, industry representatives from Sanofi and Curevac reiterated their commitments to produce one billion doses in 2021, and the importance of keeping safety first. The EMA pointed out that no vaccine is 100% efficient and without risk, but vaccines will only be approved when the benefits outweigh the risks. Curevac and NGO Vaccines Europe advocated for the liability for hidden effects to be made public, as it is in the United States – a view opposed by some MEPs. A representative from Vaccines Europe also stressed that eight billion doses were needed to vaccinate 50% of the world population, whilst the annual global production is five billion doses. Members also questioned the rationale behind the confidentiality of the contracts signed between the European Commission and pharmaceutical companies, and warned against possible bottlenecks in the production of future vaccines. Some MEPs also questioned whether national legal frameworks are sufficient to ensure this production, and how to reconcile intellectual property with the need to make future vaccines widely available.
Developing and deploying an effective and safe vaccine against the virus is the most likely permanent solution to stop the pandemic. To this end, the Commission has proposed an EU vaccines strategy against COVID-19.
Today, the European Commission confirmed its participation in the COVAX Facility for equitable access to affordable COVID-19 vaccines, following its expression of interest on 31 August and its announcement of a contribution of €400 million.
In a joint effort between the European Commission and the 27 EU Member States, Team Europe will contribute with an initial €230 million in cash through a loan from the European Investment Bank, backed by the same amount in guarantees provided by the EU budget. A contribution of €230 million is equivalent to reserves or options to buy 88 million doses and the EU would transfer these to eligible Advanced Market Commitment (AMC) countries. This contribution is complemented with €170 million in financial guarantees from the EU budget.
Ursula von der Leyen, President of the European Commission, said: “It is not enough to find a vaccine. We must make sure that citizens around the world have access to it. Our strong commitment to the COVAX Facility is an another sign to all citizens who need the vaccine that we stand with them, wherever they are. No one is safe until everyone is safe”.
Stella Kyriakides, Commissioner for Health and Food Safety, said: “Being part of the COVAX Facility means ensuring its success and providing access to vaccines for low and middle income countries. It means ensuring access not only for those who can afford it – but to all citizens globally. And it means showing solidarity and global leadership. It is only together that we will be able to overcome COVID-19”.
Jutta Urpilainen, Commissioner for International partnerships, said: “With this contribution to COVAX, the EU is demonstrating that we are serious about leaving no one behind. The future vaccines for COVID-19 should not be a luxury for the rich but a global public good. We need to guarantee that those that most need it have access to it irrespective of where they live”.
The COVAX Facility, co-led by Gavi (the Vaccine Alliance), the Coalition for Epidemic Preparedness Innovations (CEPI) and WHO, aims to accelerate the development and manufacturing of COVID-19 vaccines and to guarantee fair and equitable access for every country in the world.
The Commission, Member States and European financial institutions, notably EIB, jointly committed to mobilise resources for the Coronavirus Global Response. The Commission participates with €400 million in cash and guarantees to support COVAX and its underlying objectives as part of a Team Europe effort. The detailed terms and conditions for the EU’s participation and contribution are currently being worked out between all parties concerned. Team Europe is ready to offer expertise and resources to the COVAX Facility to accelerate and scale-up the development and manufacturing of vaccines for citizens across the world, in poor and rich countries.
The EU’s participation in COVAX will be complementary with the ongoing EU negotiations with vaccine companies launched under the EU Vaccines Strategy. The EU’s efforts to develop and produce an effective vaccine will benefit all in the global community. The EU investment in scaling up manufacturing capacity will be to the service of all countries in need. Through its Advanced Purchase Agreements, it requires manufacturers to make their production capacity available to supply all countries and calls for the free flow of vaccines and materials with no export restrictions. For instance, the pharmaceutical company Sanofi-GSK with whom the Commission concluded an Advanced Purchase Agreements today will endeavour to provide a significant portion of their vaccine supply through the COVAX facility.
COVAX is the vaccines pillar of the Access to COVID-19 Tools (ACT) Accelerator, a global collaboration to accelerate the development, production, and equitable access to COVID-19 tests, treatments, and vaccines.
The COVAX Facility aims to purchase 2bn doses by the end of 2021. It will help to develop a diversified portfolio of vaccines, negotiated with different suppliers, and covering different scientific technologies, delivery times and prices. The COVAX Facility is a risk-sharing mechanism: it reduces the risk for manufacturers who invest without being sure about future demand, and it reduces the risk that countries would fail to secure access to a viable vaccine.
The European Commission is committed to ensuring that everyone who needs a vaccine gets it, anywhere in the world and not only at home. No one will be safe until everyone is safe. This is why it has raised almost €16 billion since 4 May 2020 under the Coronavirus Global Response, the global action for universal access to tests, treatments and vaccines against coronavirus and for the global recovery. Team Europe’s contribution was: EU Member States (€3.1 billion), European Commission (over €1.4 billion) and EIB (almost €2 billion pledged in May and 4.9 billion pledged in June).
Today, the Commission announces the first provisional results of the implementation of the Coronavirus Response Investment Initiative (CRII) and Coronavirus Response Investment Initiative Plus (CRII+).
From the beginning of the crisis, and thanks to the flexibility introduced in the Cohesion Policy, the EU mobilised over €13 billion in investments to tackle the effects of the coronavirus pandemic, through the European Regional Development Fund (ERDF), the European Social Fund (ESF) and the Cohesion Fund (CF). The EU funds helped national, regional and local communities in countering the negative socio-economic impact of the coronavirus pandemic.
In total, €4.1 billion have been reallocated towards healthcare to purchase vital machinery and personal protective equipment to save lives. €8.4 billion have been mobilised through issuing grants, loans and a series of personalised financial instruments to support the economy and, in particular, Small and Medium enterprises (SMEs) to adapt to the crisis. Finally, around €1.4 billion have been channelled through the ESF to help people and save jobs.
To ensure maximum transparency and accountability, the Commission launches today a dedicated webpage on the Cohesion Open Data Platform to show how the EU Cohesion policy is supporting Member States to overcome the coronavirus crisis. With daily updates, the platform will show all information regarding programme amendments, where the resources are going and how these are invested. With a constant update, the overview of the platform will become everyday more complete.
Commissioner for Cohesion and Reforms, Elisa Ferreira, said: “Cohesion policy is at the heart of fighting the coronavirus pandemic and ensuring a rapid recovery. The results of our stocktaking show that all Member States are taking advantage of the Coronavirus Response Investment Initiative for the benefit of citizens, businesses and the health sector. As from today, such successful results are clearly visible to everyone on our interactive Coronavirus Dashboard, at just a click away.”
President of the European Committee of the Regions, Apostolos Tzitzikostas, added: “Thanks to simplified rules, cohesion policy has shown its added value bringing together EU’s Member States, regions and cities, to protect our people, save jobs and preserve local economies during the pandemic. We need to treasure this lesson making easier the access to EU funds and involving all levels of government to shape and deliver recovery plans. To get the utmost out of every invested euro and ensure that money goes where it is needed the most, we need cohesion to be the guiding compass for all EU investments.”
The Coronavirus Response Investment Initiative (CRII) and Coronavirus Response Investment Initiative Plus (CRII+) allow Member States to benefit from a temporary increase of the EU co-financing up to 100% and to use Cohesion policy funding to support the most exposed sectors because of the pandemic, such as healthcare, SMEs and labour markets.
Anna König Jerlmyr, Mayor of Stockholm and President of Eurocities, said: “Cities are at the forefront of climate ambition in Europe and will be the engines of the European Green Deal. The EU must support them with a fit-for-purpose COVID19 recovery plan that directs massive investments to the green and just transition in cities.”
Mayors of 58 major European cities say that “it’s time for a revision of the EU 2030 energy and climate targets to at least 55% by 2030 compared with 1990 levels, legally binding at member-state level.” They also call for EU funding to be channelled to a green and just recovery in cities, especially to “unlock the full potential” of leading cities that have made even higher reduction targets of 65%. The call follows the vote by the European Parliament in favour of higher targets and ahead of the European Council meeting starting today in Brussels.
In an open letter to German Chancellor, Angela Merkel, in her role as President of the Council of the EU, and President of the European Council, Charles Michel, the mayors say their proposal would be, “a natural milestone on the road to a climate neutral continent by 2050”.
Cities are a critical part of the European Green Deal, but cannot act alone. “…that’s why we ask you to use EU funding and recovery policies to support leading cities aiming to do their part of this goal with an even higher reduction target of 65%. We will not be able to unlock the potential of Europe’s cities without an ambitious EU policy framework in place,” reads the letter.
The mayors, representing millions of Europeans, also call for:
By adopting these measures, the letter concludes, “you will be sending a clear signal that Europe means business on green recovery and supports strong climate action ahead of COP26.”
The letter was coordinated through the Eurocities network. The cities that have signed are: Amsterdam, Athens, Banja Luka, Barcelona, Bergen, Bordeaux, Burgas, Braga, Brighton & Hove, Bristol, Budapest, Chemnitz, Cologne, Copenhagen, Coventry, Dortmund, Dublin, Eindhoven, Florence, Frankfurt, Gdansk, Ghent, Glasgow, Grenoble-Alpes Metropole, Hannover, Heidelberg, Helsinki, Kiel, Lahti, Linkoping, Lisbon, Ljubljana, London, Lyon, Lyon Metropole, Madrid, Malmo, Mannheim, Milan, Munich, Munster, Nantes, Oslo, Oulu, Paris, Porto, Riga, Rome, Seville, Stockholm, Strasbourg, Stuttgart, Tallinn, Tampere, Turin, Turku, Vilnius, Wroclaw
Media contact: Alex Godson: +32 495 298 594 // firstname.lastname@example.org
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CNR is a company with a unique business model. Has this been an advantage in getting you through the Covid crisis?
The CNR model is unique in that it allows an integrated and systemic management of the Rhone River. This is evidenced by our three combined missions to produce hydroelectricity, develop the waterway and irrigate the surrounding farmland. As territorial developer, our ability to integrate environmental issues into our industrial developments, our territorial anchoring and the fact that we are the leading French producer of 100 % renewable energy thanks to our wind and photovoltaic production assets make up the strength of our business model.
The health crisis we are currently experiencing has a strong impact on all territories. The Rhôdanian territory has not been spared. In the Auvergne-Rhône-Alpes Region alone, the number of jobseekers in the 3rd semester rose by 10 % in one year. CNR’s business model responds favorably to this situation, but we need to be vigilant and step up our efforts in these challenging times for our economy and society. More than ever, this model’s strengths should be used to preserve the entrepreneurial fabric and promote innovation in the region.
In these difficult times, all our teams are engaged on a daily basis and act to help preserve the economic and social fabric that surrounds CNR. Our missions as developer depends on the economic dynamism of our stakeholders. How can navigation on the Rhône be developed if transport companies no longer have the capacity to charter barges there? How can we develop wind or photovoltaic farms and achieve our ambitious development objectives for 2030 if the companies we work with no longer have the means to produce the elements that make them up? Innovation and ecological transition must be collective adventures in which we need the strength of each and every one of us. This is what CNR’s efforts today are directed towards.
Local integration and support for the economic fabric are central to your priorities. Are these two elements key to a rapid and sustainable economic recovery?
Without companies, we will not be able to meet the challenges of the 21st century that are once again highlighted by the current health crisis: the protection of our environment, the protection of the Living, and the fight against global warming.
If we do not act quickly and on a large scale, this situation, which seems exceptional to us, is likely to last and be repeated. In order to preserve our model of society and our economic equilibrium, it is imperative that we carry out a profound transformation of what guides our actions. The recent decision of the French Conseil d’Etat to speed up the implementation of the Paris Agreement by requiring the State to justify its actions in the fight against greenhouse gas emissions is part of this dynamic.
I am convinced that businesses have a decisive role to play as they harness the power to act and invest towards meeting the challenges of implementing the ecological transition and protecting biodiversity. These are two transversal and fundamental aspects of CNR’s action.
In order to make a quick and efficient transformation of our models, businesses must not stand alone. Public authorities have a responsibility to encourage and guide these actions. In this respect, national and European recovery plans represent strong political incentives, accompanied by unprecedented financial resources, which will facilitate innovation and put the economy at the service of the environment. The ongoing votes on the European budget and recovery plan are a real opportunity to set ambitious objectives for the environment, the climate and a just recovery of the European economy. In opposition to yesterday’s world, we have been talking a lot about the world of tomorrow. It is time to accelerate its construction to make it the world of today.
European organisations are currently mobilising to shape the future of the European Union in a carbon neutral environment. How are you involved in this process?
Thanks to our business model, we have positioned ourselves as a partner of the European Union in implementing the ecological transition within the territories. For this purpose, the Green Deal brings an unprecedented vision for Europe. It points the way forward and demonstrates a deep commitment to systemic change. CNR intends to join this dynamic in order to carry out ambitious and collaborative actions to stimulate both development and structuring of future European industries.
It is in this perspective that we have decided to join forces with local partners such as the Port of Marseille and Voies navigables de France as part of a large-scale initiative on the Mediterranean-Rhône-Saône axis that aims to model the sustainable and intelligent port of the future. It will demonstrate innovative technical and organisational solutions for green energy, the greening of transport and the optimisation of logistics operations. CNR is developing several actions for efficient and sustainable logistics as well as the deployment of renewable hydrogen for mobility, industry and storage uses. In order to promote the implementation of these innovations on a large scale, several European port actors are involved alongside us.
By making good practices high-profile and enabling funding barriers to be lifted, multi-thematic and highly collaborative projects encouraged and supported by the European Union represent an effective means to bring a systemic transition on several levels.
As the most important industrial continent in the world, Europe has great responsibilities in leading the way. We have set a clear ambition: to become the first climate neutral economy by 2050. President Von Der Leyen has made this the central pillar of this Commission’s political priorities, since an ambitious industrial policy is a prerequisite for the successful transition towards a climate-neutral economy.
Our vision is of a competitive and sustainable EU industry that contributes to the strategic autonomy of the EU. One that is firmly rooted in the European social model, and makes the most of its strengths while seizing new opportunities and tackling the “twin transitions” that are the Green Deal and digitalization. Industry will play a central role in leading this dual transformation.
As theCommissioner for Industry, one of my main tasks in this mandate is to support the green transformation of our industry, ensure it continues to prosper and deliver benefits for Europe and its citizens. To translate this ambition into concrete actions, my teams and I have been fully mobilized during the 100 days of the Von Der Leyen Commission to present a new European Industrial Strategy taking into account this twin transition, together with geostrategic challenges underlined by the outbreak of Coronavirus. This strategy puts the importance of sustainable transformation right at the very center, also because it can maintain Europe’s strategic autonomy in the context of global action. Of course, this is an incredible challenge. Transforming our industrial base on this scale requires a generation – 25 years – and consistent efforts by all industrial actors and different government levels. Together we will ensure that this base is globally integrated, sustainable and competitive.
We have little time to prepare this transition and set it on the right track – but we will make it together by starting now because this challenge is also an incredible opportunity.
We will seize it to ensure that our industries become world leaders in green technologies and reap the benefits of being the first movers and early adopters. Digitalization is a key enabler of circular economy and the shift towards climate neutrality. The good news today is that we are ahead of global competitors when it comes to patents, clean technology and the regulatory framework.
But while Europe leads in increased resource and material efficiency, at the same time China and India produce carbon-intensive products for consumption by Americans and Europeans. Global as well as internal market aspects impose upon us to get better at scale-up and investment in low carbon technology. Our European efforts must surpass so called “carbon leakage” which could lead to relocation of companies to places with lesser climate protection.
The pathways we choose to decarbonize our production and consumption patterns will be compatible with WTO commitments with international partners. As an example of the actions that the Commission is taking, a highly sensitive and strategic point is that European value chains are vastly dependent on foreign suppliers of critical raw materials, and manufacturing industries are facing strong competition from fast-growing economies on the global raw materials markets.
That means that we have to ensure strategic autonomy – access to sustainable raw materials – such as rare earths or cobalt that are crucial for the future of the EU industrial value chains, particularly e-mobility, batteries, renewable energies, aerospace, defense and other digital applications. Improving the diversification of raw materials’ sourcing and good circular economy practices that result in higher recycling rates could both help to reduce our dependencies.
This challenge is recognized in the EU Industrial Strategy, which in addition to horizontal measures to create favorable framework conditions, provides more targeted strategic actions along value chains.
In order to remain globally competitive in key technologies and strategic value chains, the EU will encourage more risk-taking and step up investment in research and innovation. By announcing a new alliance on clean hydrogen together with our new industrial strategy, we have set the pace, allowing Member States and companies of all sizes to partner. We have a strong existing industrial base, talents, and most crucially, sufficient political will to make it happen.
Europe has a potentially unique leadership role to play globally as a climate neutral market: low carbon technology that results in circular products and services are the way to get there.
As many European countries carefully ease their lockdowns, there are glimmers of optimism that we may soon have seen the worst of this crisis.
However, the pandemic is far from over.
By necessity, we still have limits on our private and professional lives to contain the spread of the virus. Economic activity remains constrained.
The next weeks and months will be critical for smaller businesses in particular, not to mention households and consumers in general.
Many of them are going through illness, unemployment and a fall in income.
Most businesses face disruption in supply chains, temporary closures and weaker demand. Those who have no revenue, or very little, are already unable to meet their payment obligations.
And many consumers are finding it difficult to repay mortgages and other loans.
If they cannot pay an insurance premium, for example, they risk losing coverage altogether.
That goes for businesses too. While they may have assumed they were covered for virus-related losses, their cover may not have materialised as expected.
Foreclosure action taken on household and business property could result in lasting damage, following liquidity strains that are, in fact, temporary. And long-term damage is what we really need to avoid for our wider economic recovery.
It is in all our interests – including the financial industry – that consumers and businesses get through this difficult period before the rebound starts in earnest.
For a long time, we have been saying that it is vital to keep credit flowing to the real economy, to make sure enough liquidity is in place for those who need it.
Financial institutions and national public authorities across the EU have put a series of measures in place to provide that liquidity – including moratoria on payments of credit obligations, for consumers and businesses.
For households in particular, this should help them avoid the property foreclosures that I mentioned earlier.
The banking package that the European Commission presented in April helps to clarify the regulatory treatment of these and other measures.
It encourages banks to use all the flexibility in EU prudential and accounting rules to keep liquidity flowing. And it gives further relief to support lending to the real economy.
I would like to thank the financial sector representatives here today for all the efforts that you have been taking in this regard.
Unfortunately, it has not all been plain sailing.
That is why we are meeting now: to find ways to solve the very real problems faced by companies and households.
We are proposing a practical discussion between financial institutions and their customers about what the private sector can do under these particular circumstances – beyond the public measures that are already in place.
And I welcome the recent joint statement by small and medium-sized enterprises and banks with Recommendations for Improving the Flow of Credit to SMEs.
To start with, what we see is that the measures taken across the EU vary considerably by country.
There are voluntary measures taken by the industry as a whole or just by some institutions. In some cases, all affected consumers and businesses can benefit. In others, eligibility criteria are strict and gaining access can be a lengthy process.
So the first objective of today’s roundtable is to share best practice in this area – and avoid damaging fragmentation.
We need a collective and coherent European effort to provide relief to business and households.
There are substantial differences in the length of the period for which the payment deferral schemes are granted and who bears their final cost. Scheme features also vary: for example, whether the deferral is interest-free or not.
That said, the Commission very much welcomes these schemes in the banking and non-bank lending sectors. Consumers and smaller businesses in the most affected industries are already making good use of them.
But it is important to make sure that these schemes do not cause harm, such as by changing contract terms to the detriment of borrowers.
That means no higher interest or premium rates in the future.
No hidden fees, no other extra charges, and to the extent possible avoiding excessive collateral requirements.
It is equally important that these schemes provide suitable access to lending, especially for small and medium-sized enterprises. The same goes for non-bank lending, and leasing in particular.
This brings me to today’s second objective: making sure that the schemes are implemented effectively and at the appropriate time for those who need them more.
These principles of fairness should also apply to similar schemes offered by the insurance sector.
I will return to this a little later.
I would like to mention some other measures, such as credit guarantees and subsidised funding schemes.
While most of these are backed by public funds, banks play an important role in making sure they are effective.
They should pass on the advantages of public guarantee and subsidised funding to borrowers.
We designed the banking package to make it easier for banks to lend, which is already a major step forward. It grants prudential relief for banks to use freed-up capital and liquidity to channel funds to businesses and households directly affected by the pandemic.
Due to the difficulties that borrowers are now facing, that extra liquidity would not otherwise be available.
However, banks should not reduce or cross-subsidise lending to other firms or use the guarantees to fund financially unconstrained firms.
Lastly, all this good work and effort should not get lost in bureaucracy. It should reach business and consumers in practice and on the ground.
Moving onto the insurance sector:
Insurers have also been working hard to maintain normal service and help their policyholders during this crisis. They are offering many voluntary initiatives and similar schemes to the lending moratoria.
These include adjusting or suspending premiums and contributions, extending or cancelling premium payments, and switching between tariffs.
As a show of goodwill, sometimes there is compensation going beyond the strict contractual minimum.
Business interruption is a particularly sensitive area. Here, the terms and conditions of policies – and their interpretation – vary between insurers.
Some insurers are obliged to compensate policyholders – smaller businesses like restaurants, for example – for having to close their doors due to the pandemic.
Other policyholders may not receive any compensation at all.
Unsurprisingly, small businesses holding this type of insurance policy are frustrated at their unequal situation.
This has led to litigation in some cases; in others, to intervention by public authorities to bring about some degree of coordination.
As a guiding principle, it is important to strike a balance between providing as much support to businesses and households as possible, upholding contracts, and protecting the financial solidity of the insurance sector.
Looking ahead, we will also need to reflect on how best the insurance sector can cover pandemic risks.
Some ideas have already been floated, and the Commission is ready to engage fully in these discussions.
So there is a lot of food for thought. For today’s meeting, I would like to understand better how all these different measures have worked on the ground.
I would also like to discuss how we might approach the need to lend in a more systematic way.
Voluntary and national initiatives often cause unequal situations where consumers or companies may be treated differently from one another.
But in particular, I would ask these questions:
This is not something we should overthink.
The bottom line is to support the EU economy, to help companies of whatever size, and their workers to get through this crisis.
And we can do that together, by keep the liquidity flowing in the most efficient way to those who need it. Thank you and I wish you a useful and fruitful discussion.
What is the Capital Markets Union (CMU) and why is it important?
The CMU is the EU’s plan to create a truly single market for capital across the EU. It aims to get investment and savings flowing to the companies and projects that need them across all Member States, benefitting citizens, investors and companies, regardless of where they are located. The CMU provides new sources of funding for businesses, helps increase options for savers and makes the economy more resilient.
Fully functioning and integrated capital markets will allow the EU’s economy to grow in a sustainable way and to be more competitive. An economically stronger Europe will better serve its citizens and help the EU play a stronger role on the global stage.
The CMU is essential for delivering on all of the EU’s key economic policy objectives: ensuring Europe’s recovery from the coronavirus crisis, an inclusive and resilient economy that works for all, the transition towards a digital and sustainable economy, and a strategically autonomous EU in an increasingly complex global economic context. Meeting these objectives requires massive investment that public money and traditional funding through bank lending alone cannot deliver. Only well-functioning, deep and integrated capital markets can provide the scale of support needed to recover from the crisis and power the transition. The CMU is not a goal in itself, but a fundamental policy to progress on key European priorities.
Completing the CMU requires support from the European Parliament and Member States at the highest level and from technical experts in public administration. It also requires that market participants make good use of the measures. The EU can offer tools and put in place supporting conditions, but it is for national authorities to implement them on the ground, and for private actors to take the initiative, seize business opportunities and innovate.
Work on the CMU was launched well before the coronavirus crisis. But the pandemic has injected real urgency into the CMU. Public support and bank loans have helped households and businesses stay afloat by addressing the short-term liquidity squeeze caused by lock-downs. In order to stay solvent in the medium and longer term, however, businesses need a more stable funding structure. The EU’s industry, including small and medium-sized businesses, needs more equity to recover from the economic shock and become more resilient.
What has been done so far?
Efforts to put in place a single market for capital started with the Treaty of Rome more than fifty years ago. The Maastricht Treaty of 1992 and the Financial Service Action Plan of 1999 sought to deliver on that vision, revealing however that the complexity and importance of European capital markets merited a further dedicated and targeted set of measures. The Commission therefore adopted the first dedicated CMU Action Plan in 2015. Responding to evolving challenges and priorities, this was further complemented with new actions in the CMU Mid-Term Review of 2017.
The Commission has delivered on all the individual actions announced in the 2015 CMU Action Plan and the 2017 Mid-term Review. The European Parliament and the Member States have agreed on 12 out of the 13 legislative proposals on the key CMU building blocks and on all three proposals on sustainable finance. While the EU has made significant progress, creating and deepening the CMU is complex and no single measure will complete it. Progress on some controversial issues has been slow and there are still significant barriers to a well-functioning CMU. There are difficulties in many areas, including supervision, taxation and insolvency laws. These barriers exist for a number of reasons, including the specific financial culture in any given Member States. These differences are deep-rooted, and will take time to tackle. The transition towards a Capital Markets Union remains a long-term EU-wide structural reform that requires time, effort, resources and – above all – unwavering political commitment.
What are the benefits of a Capital Markets Union (CMU)?
The CMU will complement Europe’s strong tradition of bank financing and will help to:
What does the new CMU Action Plan seek to achieve?
While significant progress has been made in the previous CMU Action Plan, some of the critical barriers to a single market remain. Therefore, it is time for complementary measures to be put forward, allowing the EU to also tackle the new challenges that the EU faces today with the coronavirus pandemic.
In today’s Action Plan, the Commission has set out a list of measures to make real progress on completing the Capital Markets Union. These measures build on detailed discussions with stakeholders as well as the recommendations of the High Level Forum on Capital Markets Union, which brought together high-calibre industry representatives, academics and representatives of civil societies. They also take into account and build on the Capital Markets Recovery Package announced by the Commission on 24 July and the Banking Package of 28 April, which both aim to facilitate bank lending to households and businesses and make it easier for capital markets to support European businesses to recover from the crisis.
The Commission has committed to 16 new measures to achieve three key objectives:
Individually, each measure represents one more piece of the puzzle: a step forward in areas where progress has been slow or where further work is necessary to achieve CMU. Taken together, they move the EU closer to the vision for CMU: a single market for capital across the EU that works for all Europeans, wherever they live and work.
How will CMU contribute to economic recovery?
The Commission has put forward “Next Generation EU” – an emergency temporary recovery package to help repair the immediate economic and social damage brought by the coronavirus pandemic, kick-start Europe’s recovery and prepare for a greener and more digital future. In parallel, the European Central Bank, Member States, and regional and local authorities have taken extraordinary measures and injected public funds on an unprecedented scale to support the recovery. Banks have so far broadly continued lending to businesses. However, this financing – despite being absolutely essential for Europe’s short-term recovery – will not be sufficient given the magnitude and expected duration of financing needs. Market financing will be the lifeblood that sustains the recovery and future growth over the long-term.
The strength and durability of the economic recovery will crucially depend on the availability of sufficient funding to EU companies. The use of market funding and especially of equity will therefore be paramount to support the economic rebound. Given the high level of domestic savings and openness of the EU financial system to global investors, there should not be a genuine shortage of funding. At the same time, savers must have the confidence to invest in a safe way, benefitting from the opportunities offered by the economic recovery.
What measures are being put forward to facilitate the financing of companies?
The ability of a company to access funding has a strategic importance in enabling it to grow, create jobs and innovate. As such, ensuring diverse availability of financing sources is crucial, as some types of funding would be more appropriate to some companies than to others. While bank financing is used by an overwhelming majority of SMEs, it might not be appropriate or too costly for some, especially small innovative companies without existing assets or regular revenues. Equity finance via capital markets can therefore often be more suitable for them and allow for more flexibility. In addition, diversifying sources of funding also contributes to economic and financial stability, by making sure that options remain for companies to fund themselves even when other channels are not available.
Bonds and private equity have increasingly played an important complementary role to bank lending in recent years. Access to some forms of funding, such as public equity, remains limited in most Member States. The new measures put forward by today’s Action Plan aim to further facilitate the use of market funding and to help companies employ all possible funding sources, tailoring to their business models and individual needs. As one of the measures, the Commission will assess the feasibility of setting up a scheme where banks would be required to redirect SMEs whose credit application they have turned down towards alternative finance providers.
Further to that, the Action Plan will seek to make companies more visible to cross-border investors and better integrate markets by setting up an EU-wide platform that provides investors with seamless access to comparable company information. It will also seek to simplify the listing rules for public markets and encourage more long-term investment by investment funds. It will seek to support the re-equitisation of the corporate sector by incentivising institutional investors and review the existing securitisation framework to enhance the provision of credit to EU companies, in particular SMEs.
What measures are being put forward to make capital markets more attractive for retail investors?
Europe has one of the highest individual savings rates in the world. However, the level of retail investor participation in capital markets remains very low compared to other economies. This fails to serve the interests of people whose savings generate low or even negative real interest rates. It also deprives EU companies, and the EU economy in general, of much needed long-term investment. The individual investors who invest in the EU capital markets should, in many cases, be able to receive higher returns than is currently the case. At present, retail investors do not benefit sufficiently from the investment opportunities offered by capital markets and cannot adequately address their retirement needs.
Encouraging capital market investments from European households and savers can help meet the individual challenges posed by population ageing and low interest rates. It would allow people to build or protect their wealth and to meet their financing needs related to health, education and retirement.
Availability of deep and efficient capital markets can also contribute to the development of funding sources alternative to bank credit, therefore funnelling money into other financial instruments that firms use to diversify their funding. This can help improve access to financing also for SMEs and benefit the real economy in general by enabling companies to invest and create jobs.
The new CMU Action Plan puts forward a number of measures that seek to enhance the financial literacy of retail investors in order to enable them to make better financial decisions and leverage the possibilities provided for by capital markets. It will assess and review the applicable rules in the area of inducements, meaning the practices that encourage individuals to buy a particular item, such as the promise of a price reduction. This will ensure that investors receive fair advice and comparable product information. It will seek to improve the level of professional qualifications of financial advisors as well as facilitate the monitoring of pension adequacy in Member States and seek to develop best practices in the area of pension systems.
Why does CMU seek to facilitate capital market integration? What measures are being put forward in that respect?
European capital markets today remain fragmented along national lines. This locks out people and businesses in smaller local markets from the benefits of integration, notably access to a large investor base. It is essential to have well-developed local capital markets across the EU that can serve the needs of companies and savers, while at the same time integrating those markets into one single market of capital. As the benefits of larger-scale markets remain underexploited, EU financial actors are disadvantaged compared to their global peers. The departure of the UK from the EU means that parts of the financial industry are relocating to the EU, which will contribute to its multi-centre financial architecture. Ensuring the optimal flow of information and capital across the EU is therefore essential.
Today’s Action Plan aims to tackle key remaining obstacles to market integration. Many of the measures set out in the previous CMU Action Plan have now been agreed and are being implemented. This is, however, not enough. Progress on some controversial issues has been slow. There are still significant barriers to a well-functioning CMU in many areas, including taxation, company and non-bank insolvency law. In these areas, the Commission will propose targeted measures, focusing on the most significant barriers that cause market fragmentation and deter cross-border investment.
For example, the stark divergence between national insolvency regimes is a long-standing structural barrier to cross-border investment. Harmonisation of certain targeted areas of national insolvency rules or their convergence could enhance legal certainty. To make the outcome of insolvency proceedings more predictable, the Commission will bring forward an initiative for minimum harmonisation or increased convergence in targeted areas of non-bank insolvency law. In addition, together with the European Banking Authority, the Commission will explore possibilities to enhance data reporting in order to allow for a regular assessment of the effectiveness of national loan enforcement regimes.
Another example is taxation. A significant burden in this area is caused by divergent, burdensome, lengthy and fraud-prone refund procedures for tax withheld in cases of cross-border investment. These procedures lead to considerable costs that dissuade cross-border investment where taxes on the return on investment need to be paid both in the Member States of the investment and of the investor, to be reimbursed only afterwards, after a lengthy and costly process. In order to lower costs for cross-border investors and prevent tax fraud, the Commission will propose a common, standardised, EU-wide system for withholding tax relief at source.
How will the CMU support the EU’s key policy objectives?
The Capital Markets Union is the project that seeks to improve the EU’s financial system so that it best contributes to addressing Europe’s immediate and long-term challenges. More diversified funding sources can mobilise trillions of euros of investments in the twin transition, green and digital. Moreover, capital markets need to function efficiently to be able to redirect large-scale investments and to make the economy more resilient.
Public funds will not be sufficient to meet these financing needs. An efficient single market for capital is needed to mobilise the necessary funds and to ensure that sustainability considerations are rigorously incorporated in financing decisions. Digitalisation will also continue to require significant private investment if the EU’s economy is to remain competitive globally.
As stated in the EU strategy on ‘shaping Europe’s digital future’, innovative companies need funding that only capital markets can provide. This is partly because many of these companies lack the physical collateral required for bank loans. This adds to the urgency of deepening the CMU. Mastering technological advancement is also critical for the EU’s financial sector to gain in efficiency, to improve access to capital and to be able to better serve Europe’s people, as well as to remain competitive globally. The CMU will also improve the opportunities for SMEs to access funding and therefore will contribute to meeting the objectives of the EU’s March 2020 SME strategy for a sustainable and digital Europe.
The strategies on CMU, sustainable finance, digital finance and SMEs, as well as the Recovery Plan and Next Generation EU are all mutually reinforcing. They are a joined-up package of measures to strengthen Europe’s economy and make it more competitive and sustainable, and to better serve its people and companies.
How will the Commission monitor progress towards CMU?
The Commission regularly reports on the progress of legislative proposals and other measures under the first CMU Action Plan and will continue to do so also for the second Action Plan. The Commission will complement this regular reporting of legislative progress with the monitoring of how EU capital markets evolve. It has for this purpose commissioned a study that reviewed available data and indicators, with a view to establish a tool for regular measuring of progress.
I look forward to working with ministers in my new capacity.
Our dialogue highlighted once again the important role that trade plays in the Union’s wider ambition for a sustainable economic recovery.
It must be a key component in making sure we have an economy that works for people.
Let me highlight some points from the two crucial topics on our agenda today:
Let me start with the WTO, which is currently selecting its new Director General.
The discussions today have shown strong agreement amongst ministers that the EU needs a Director General, who is capable of managing a profound reform of the organisation.
This reform should focus on three main things:
To be credible, the new leader of the WTO:
The EU will view the remaining five candidates in this light.
And as Minister Altmaier already outlined, ministers also stressed the importance of the Union continuing to remain united through the next steps of the WTO selection procedure.
Let me turn now to trade’s role in the recovery; and, in particular, our own Trade Policy Review.
This review was launched before the summer and runs until mid-November.
It will help the Commission to map out the EU’s new strategic direction for a global trade policy.
We are using the Review to stimulate a debate across the Member States and have organised events in 18 Member States so far.
We want to hear directly from those impacted by trade policy: citizens, businesses – big and small, non-governmental organisations, and of course, Member States governments themselves.
The Commission will draw these strands together in a new policy Communication early in 2021.
Even if the details still have to be worked out, there was general agreement today that trade can and should play a crucial role in our economic recovery.
There was consensus that trade policy creates opportunities to grow through open trade with third countries
This is all the more important as businesses of all sizes, as well as our societies at large, seek to diversify supply chains and make them more resilient to future shocks.
There was also agreement that trade policy also helps protect European companies against abuse and unfair trade.
We agreed that the biggest risk for European industries in the long term is unfair competition. So level-playing field issues will also be very important in our trade policy.
We need to ensure we are able to act in situations where others break the rules, creating an uneven playing field that undermines or harms European industries.
Levelling the playing field should never mean lowering our own standards.
It is about bringing everyone else to a higher level.
That is the only way we can keep the rule of law, the trust and the consistency that business and economies need in order to grow in a sustainable manner.
Our discussion on the specific challenges of the Steel Sector, where we were joined by Commissioner Bretton and by the President of Eurofer, illustrated the importance of joined up policy across the Commission, and between the European, national and local levels.
More specifically, the EU’s industrial policy and trade policy are working hand in hand to find the most effective ways to support the EU’s economic recovery, climate neutrality and digital leadership.
They are also able to offer an exciting and competitive future for the most innovative parts of our economies.
I take away three main things from today’s conversation:
The European Commission has adopted a White Paper dealing with the distortive effects caused by foreign subsidies in the Single Market. The Commission now seeks views and input from all stakeholders on the options set out in the White Paper. The public consultation, which will be open until 23 September 2020, will help the Commission to prepare for appropriate legislative proposals in this area.
Executive Vice-President Margrethe Vestager, in charge of competition policy and responsible for the cluster Europe Fit for the Digital Age, said: “Europe’s economy is open and closely interlinked to the rest of the world. If this is to remain a strength, we must stay vigilant. That is why we need the right tools to ensure that foreign subsidies do not distort our market, just as we do with national subsidies. Today’s White Paper launches an important discussion on how to address effects caused by foreign subsidies. The Single Market is key to Europe’s prosperity and it only works well if there is a level playing field.”
Commissioner for the Internal Market, Thierry Breton, said: “With today’s White Paper we deliver a key element for our vision of Europe’s New Industrial Strategy based on competition, open markets and a strong Single Market. The level playing field in the Single market is at the heart of this initiative and will help our companies operate and compete globally and thus promote the EU’s open strategic autonomy. As part of our Single Market rule book we need to prevent foreign subsidies from distorting procurement procedures and ensure that firms benefit from fair access to public contracts.”
Commissioner for Trade Phil Hogan said “The EU is amongst the most open economies in the world, attracting high levels of investment from our trading partners. However, our openness is increasingly being challenged through foreign trade practices, including subsidies that distort the level playing field for companies in the EU. Along with other tools available at EU level such as foreign direct investment screening and trade defence measures, the White Paper is a welcome addition to the toolbox for our open strategic autonomy.”
EU competition rules, trade defence instruments and public procurement rules play an important role in ensuring fair conditions for companies in the Single Market.
Subsidies by Member States have always been subject to EU State Aid rules to avoid distortions. Subsidies granted by non-EU governments to companies in the EU appear to have an increasing negative impact on competition in the Single Market, but fall outside EU State aid control. There is a growing number of instances in which foreign subsidies seem to have facilitated the acquisition of EU companies or distorted the investment decisions, market operations or pricing policies of their beneficiaries, or distorted bidding in public procurement, to the detriment of non-subsidised companies.
Moreover, the existing trade defence rules relate only to exports of goods from third countries and thus do not address all distortions caused by foreign subsidies granted by non-EU countries. Where foreign subsidies take the form of financial flows facilitating acquisitions of EU companies or where they directly support the operation of a company in the EU, or facilitate bidding in a public procurement procedure, there appears to be a regulatory gap.
The White Paper therefore proposes solutions and calls for new tools to address this regulatory gap. In this context, it puts forward several approaches. The first three options (so-called “Modules”) aim at addressing the distortive effects caused by foreign subsidies (i) in the Single market generally (Module 1), (ii) in acquisitions of EU companies (Module 2) and (iii) during EU public procurement procedures (Module 3). These Modules may be complementary to each other, rather than alternatives. The White Paper also sets out a general approach to foreign subsidies in the context of EU funding.
General instrument to capture distortive effects of foreign subsidies (“Module 1”)
Module 1 proposes the establishment of a general market scrutiny instrument to capture all possible market situations in which foreign subsidies may cause distortions in the Single Market.
Under this Module, the supervisory authority, which would be a national authority or the Commission, could act upon any indication or information that a company in the EU benefits from a foreign subsidy. If the existence of a foreign subsidy is established, the authority would then impose measures to remedy the likely distortive impact, such as redressive payments and structural or behavioural remedies. However, it could also consider that the subsidised activity or investment has a positive impact, which outweighs the distortion and not pursue the investigation further (the “EU Interest Test”).
Foreign subsidies facilitating the acquisition of EU companies (“Module 2”)
The first module could be complemented by Module 2, which is intended to specifically address distortions caused by foreign subsidies facilitating the acquisition of EU companies. This module aims at ensuring that foreign subsidies do not confer an unfair benefit on their recipients when acquiring (stakes in) EU companies, either directly by linking a subsidy to a given acquisition or indirectly by de facto increasing the financial strength of the acquirer.
Under Module 2, companies benefitting from financial support of a non-EU government would need to notify their acquisitions of EU companies, above a given threshold, to the competent supervisory authority. The White Paper proposes that the Commission is the competent supervisory authority. Transactions could not be closed whilst the Commission’s review is pending. Should the supervisory authority find that the acquisition is facilitated by the foreign subsidy and distorts the Single Market, it could either accept commitments by the notifying party that effectively remedy the distortion or, as a last resort, it could prohibit the acquisition. Under this Module, the Commission could also apply the EU Interest Test.
Foreign subsidies in EU public procurement procedures (“Module 3”)
Foreign subsidies could also have a harmful effect on the conduct of EU public procurement procedures. This issue is addressed under Module 3. Foreign subsidies may enable bidders to gain an unfair advantage, for example by submitting bids below market price or even below cost, allowing them to obtain public procurement contracts that they would otherwise not have obtained. Under this Module, the White Paper proposes a mechanism where bidders would have to notify the contracting authority of financial contributions received from non-EU countries. The competent contracting and supervisory authorities would then assess whether there is a foreign subsidy and whether it made the procurement procedure unfair. In this case, the bidder would be excluded from the procurement procedure.
Foreign subsidies in the context of EU funding
Finally, the White Paper sets out ways to address the issue of foreign subsidies in the case of applications for EU financial support. All economic operators should compete for EU funding on an equal footing. Foreign subsidies may however distort this process by putting the beneficiaries of such subsidies in a better position to apply. The White Paper proposes options to prevent such unfair advantage. Among others, in case of funding distributed through public tenders or grants, a similar procedure would apply as the one foreseen for EU public procurement procedures. Moreover, the White Paper emphasises the importance of ensuring that international financial institutions that implement projects supported by the EU budget, like EIB or EBRD, mirror the approach to foreign subsidies.
The White Paper is now open for public consultation until 23 September 2020. In light of the input received, the Commission will present appropriate legislative proposals to tackle the distortive effects of foreign subsidies on the Single Market.
The European Council in its Conclusions of the meeting on 21 and 22 March 2019 tasked the Commission to identify new tools to address the distortive effects of foreign subsidies on the Single Market.
In its Communication “A New Industrial Strategy for Europe” of 10 March 2020, the Commission confirmed that by mid-2020 it would adopt a White Paper on an Instrument on Foreign Subsidies, to address distortive effects caused by foreign subsidies within the Single Market.
The European Commission has decided to prolong and extend the scope of the State aid Temporary Framework adopted on 19 March 2020 to support the economy in the context of the coronavirus outbreak. All sections of the Temporary Framework are prolonged for six months until 30 June 2021, and the section to enable recapitalisation support is prolonged for three months until 30 September 2021.
Executive Vice-President Margrethe Vestager, in charge of competition policy, said “The Temporary Framework has supported Member States in their efforts to deal with the effects of the crisis. Today, we prolong the Temporary Framework to cater for the continued needs of businesses, while protecting the EU’s Single Market. We also introduce a new measure to enable Member States to support companies facing significant turnover losses by contributing to part of their uncovered fixed costs. Finally, we introduce new possibilities for the State to exit from recapitalised companies while maintaining its previous stake in those companies and limiting distortions to competition.”
Prolongation of the Temporary Framework
The Temporary Framework was initially set to expire on 31 December 2020, except for recapitalisation measures that could be granted until 30 June 2021. Today’s amendment prolongs at current thresholds the provisions of the Temporary Framework for an additional six months until 30 June 2021, except the recapitalisation measures which are prolonged for three months until 30 September 2021.
The objective is to enable Member States to support businesses in the context of the coronavirus crisis, especially where the need or ability to use the Temporary Framework has not fully materialised so far, while protecting the level playing field. Before 30 June 2021, the Commission will review and examine the need to further prolong or adapt the Temporary Framework.
Support for uncovered fixed costs of companies
Today’s amendment also introduces a new measure to enable Member States to support companies facing a decline in turnover during the eligible period of at least 30% compared to the same period of 2019 due to the coronavirus outbreak. The support will contribute to a part of the beneficiaries’ fixed costs that are not covered by their revenues, up to a maximum amount of €3 million per undertaking. Supporting these companies by contributing to part of their costs on a temporary basis aims at preventing the deterioration of their capital, maintaining their business activity and providing them with a strong platform to recover. This allows more targeted aid to companies that demonstrably need it.
Exit of the State from previously State-owned companies
The Commission has also adapted the conditions for recapitalisation measures under the Temporary Framework, in particular for the State’s exit from the recapitalisation of enterprises where the State was an existing shareholder prior to the recapitalisation. The amendment allows the State to exit from the equity of such enterprises through an independent valuation, whilst restoring its previous shareholding and maintaining the safeguards to preserve effective competition in the Single Market.
Extension of the temporary removal of all countries from the list of “marketable risk” countries under the Short-term export-credit insurance Communication
Finally, taking into account the continued general lack of sufficient private capacity to cover all economically justifiable risks for exports to countries from the list of marketable risk countries, the amendment provides for an extension until 30 June 2021 of the temporary removal of all countries from the list of “marketable risk” countries under the Short-term export-credit insurance Communication.
Background on Temporary Framework and ongoing work to support the Recovery and Resilience Facility
On 19 March 2020, the Commission adopted a new State aid Temporary Framework to support the economy in the context of the coronavirus outbreak, based on Article 107(3)(b) of the Treaty on the Functioning of the European Union. The Temporary framework was first amended on 3 April 2020 to increase possibilities for public support to research, testing and production of products relevant to fight the coronavirus outbreak, to protect jobs and to further support the economy. It was further amended on 8 May to enable recapitalisation and subordinated debt measures, and on 29 June 2020 to further support micro, small and start-up companies and to incentivise private investments.
The Temporary Framework recognises that the entire EU economy is experiencing a serious disturbance. It enables Member States to use the full flexibility foreseen under State aid rules to support the economy, while limiting negative consequences to the level playing field in the Single Market.
Moreover, as Europe moves from crisis management to economic recovery, State aid control will also accompany and facilitate the implementation of the Recovery and Resilience Facility. In this context, the Commission will:
In addition, the Commission will assess in which areas State aid rules could be further streamlined in view of achieving the recovery objectives. The Commission will assess all State aid notifications received from Member States in the context of the Recovery and Resilience Facility as a matter of priority.
Ten months ago, we presented the European Green Deal. A transformative agenda to combine policies to tackle climate change, to reverse biodiversity loss, and eliminate pollution by moving to a circular economy.
But it is more than that.
The Green Deal is Europe’s new growth strategy. A strategy where environmental, economic and social sustainability go hand-in-hand. Because for too long, they didn’t go hand in hand. For too long, different policies to boost sustainability had been uncoordinated or worse: at odds with each other. After working on this for quite some time now my main conclusion is that the green deal will be social or it will not happen.
That is why we are trying to bring it all together.
When we first presented the Green Deal, we seemed to be in a good position.
The financial crisis had faded into the past. Fears about the economic pillars of our Union – our single market, our common currency – had receded into the background. And macroeconomic numbers had turned positive again. We had the highest levels of employment in European history.
But you just had to scratch the surface to discover what still lingered below.
An untenable economic model relying on the ever-increasing use of a dwindling set of resources. Social injustices created by previous crises. Failure to distribute the benefits of our growth fairly. Insecurities due to disruptive technological change. And existential challenges posed by climate change.
Just below the surface, an undertow of fear, loss, disruption, and even outright decline has been swelling. It is a toxic cocktail that permeates our societies and our politics at all levels. Left unchallenged, such an undertow could become a tidal wave, ready to swallow all. And I have to say in some places, this has already begun.
From the outset, the overriding priority of this Commission has been to help navigate our continent and everyone living on it through these tumultuous times. To respond to the calls for change coming from our voters, our businesses, our scientists, our children.
The European Green Deal was a big part of the solution. It was an effort to provide certainty amidst all the turbulence. To dare to re-imagine our future. The Green Deal was our claim to a different destiny: a more inclusive, greener, and overall stronger society.
It still is.
As I said, we are now ten months into the Green Deal. We are putting our political commitment to climate neutrality in to law. We are setting out how we will build our new future, whether it regards energy, industry, farming, food, or biodiversity. And soon, very soon, we will propose a new emissions reduction target for 2030.
We will raise our ambition and will support it with the necessary policy actions and legal changes. This autumn, we will share our proposals on how to trigger a renovation wave across Europe, to improve energy efficiency and ensure green jobs close to home. Our upcoming offshore energy strategy will help create required increase in renewable energy.
By June next year, we will also propose revisions to our legal framework for climate and energy our enhanced ambitions, covering everything from the Emissions Trading System to new CO2 emissions standards for cars and vans. And we will proceed with the carbon border adjustment mechanism so we can uphold the promise made in Paris without having to pay undue economic costs if international partners do not show enough ambition. If they simply do not do what they promised to do in Paris and if we have to protect our citizens and industries from inaction by others, we will certainly do that.
They are all measures we had planned from the beginning. But, to use a massive understatement, 2020 has not been what we were planning for.
Ten months ago, who was expecting the global health crisis that burst onto the scene a mere three months later? A crisis of such proportions that our immediate priorities had to change overnight as we reacted to the virus and its effects on our economies?
We put out the Green Deal to change the direction of growth in the long term but the virus turned growth negative in the shortest of terms.
We proposed the Climate Law to give European industries and investors predictability but the virus enveloped them in the thickest of fogs.
We set a course to make Europe the first climate-neutral continent but the virus has thrown the world as we knew it off course.
It would have been easy and maybe even understandable to just drop everything on the spot, throw our green ambitions out the window. For who has time to think about what the planet needs ten years from now, when loved ones are ill or when you have to worry if you’ll still have a job next week? People’s priorities have changed.
As uncertainty grows, so does the pressure on governments to provide quick fixes.
Yet, here we are, not just maintaining our ambitions, but doubling down on the Green Deal. It was our growth strategy, and now it is also our roadmap out of this crisis, a lifeline to a better future.
We are in a very different place today from where we were and from where we expected to be, but the simple fact is thatthe Green Deal made sense then, and it makes even more sense now.
I would like to provide you with three reasons why.
First, the climate and environmental crisis is still very much upon us. While we fight the health and economic crises that have taken over our daily lives, we cannot forget that the climate crisis already has one foot in the door. The cost of climate action may seem high, but it is dwarfed by the cost of inaction. It makes sense to avoid that bill and improve our lives in the meantime. We can do both.
Second, the European Union will be spending 1,8 trillion to help reboot the economy. An unprecedented amount of resources that will be used in unprecedented ways. European leaders agreed last July that 30% should be spent in support of our climate objectives. That’s a huge step. It makes sense but it is still a huge step.
There’s no going back to business as usual. Even the strictest penny pinchers will admit that by now. It’s just bad economics. Why spend money to keep things as they are, when you know you’ll require money again to change them in the near future? It think this has also become part and parcel of the thinking of the financial world in the past couple of months. It would be wasteful and even irresponsible, as new money might no longer be available in a world burdened with post-Covid debt. And we would have billions and billions of stranded assets.
The money we use now is money borrowed from next generations. Spending it on their future, instead of our past, is a moral imperative and a matter of economic good sense. We have no choice. We have to borrow and spend that money now, but I want us to do it in a way that makes us responsible in the eyes of our children, that makes us accountable to them in terms of what we achieve with this money.
Finally, to overcome the Covid-crisis, we need expansionary macroeconomic policies. Green Deal investment will offer a double dividend. The investments needed for the transition are the same kind of investments that are needed for the recovery. So why choose one if you can have both?
Several of them are easy to get going and will have a high impact on employment and the rest of the economy: think of energy efficiency renovation in buildings. Others offer strong prospects for current and future global industrial leadership, like offshore energy and the hydrogen economy.
Of course, money will be spent on the immediate priorities of the crisis as well.
But we must avoid, the trap we fell into after the financial crisis. Yes, we absolutely have to protect incomes and jobs. And yes, we absolutely have to make sure the current crises do not permanently widen injustices within our societies.
But what we absolutely should not do is equate income and job protection with the blind preservation of sources of income and employment that we know have no future. Then you are wasting money and people’s time.
And we cannot win our fight for greater fairness, for a just transition, if we defend an economic model that delivered growing inequality on the back of an dwindling set of resources.
Nor can we get to a fairer world if we hit ‘pause’ and let climate change run its course. We see the effects on a daily basis already and we’ve also seen them this summer.
The climate transition of course has distributional effects that we need to keep a watchful eye on when we design our policies. But we cannot forget that the greatest number of losers would come from unchecked climate change, raining its misery on the least resourced countries and the poorest of our people.
Let me now conclude by addressing the two most common objections to our green deal agenda in times of COVID.
One is that the massive mobilization of public funds for the recovery and transition has indeed never been seen before – and will never be seen again. That it is not a sustainable model. And that ultimately, we will again face one of the fundamental challenges of the Green Deal: how to ensure enough private funds are mobilised for the transformation of our economy.
I understand that criticism. But we need a structural shift, and it can only happen if private financial flows are redirected towards green assets and sustainable business models. This is a matter of redistribution. Like in any industrial revolution, in any tectonic change in human history, at the end of the day the matter of redistribution will be on the table. In democracies that have the pretence to act for the common good, the largest possible definition of the common good, redistribution on the basis of solidarity becomes an imperative. This needs to happen now as well.
Finance used to be the problem. But in the 2020 crises, finance can help us find the solution. If it takes steps to move away from “brown” investment.
It is why our Sustainable Finance agenda, spearheaded by Valdis Dombrovskis, is such an important part of the Green Deal. It boosts the durable mobilization of private funds in support of our transition to climate neutrality.
Our top priority in the agenda has been to end “greenwashing”. Thanks to the EU Taxonomy, by the end of the year, we will – for the first time – have clear criteria that determine which economic activities truly help achieve our climate goals.
Savers will be directly asked for their sustainability preferences. This means that everyone with a bank account can directly drive change. And I am convinced that more and more Europeans will want their money to contribute to building a better future.
And this takes me to the second common objection to our agenda. Because some will say ‘sure, continue with your plans, but this is not the time for more ambition.’
I tell them, it is exactly the time for more ambition.
As you know, the Commission will present a new greenhouse gas emission reduction target for 2030 in the coming weeks. For obvious reasons, I cannot yet provide too many details. Nevertheless, if one thing stands out from the underlying assessment, it is that an increased target in the range of 50 to 55% is doable, and that it can underpin sustainable economic growth.
So increasing our ambition, especially now, makes sense.
First, we do not have time to waste. Reaching climate neutrality by 2050 will require EU action in ALL sectors. The lead-times in sectors like land use and transport are long, and they require that we step up action already over the coming decade. It’s a matter of providing certainty and investment security. That is what the market and investors are asking for.
Secondly, holding off now because “we cannot afford it for the moment” is the surest way to not being able to afford it in the future either. Because with climate change, we do not get to choose the time horizon. We cannot stop the clock on climate change.
We have no choice but to act now, to develop new technologies and ensure their costs come down within a time frame where we can still benefit from them. Science shows that tipping points are getting nearer the longer we wait. We should move now that we still have the freedom to choose how. We can choose how we move. If we wait any longer, choices will be forced upon us and these choices will be far more painful and far more unjust on humanity.
Similarly, we need to invest now to ensure a smoother transition for our business and citizens into the future when the carbon price will be higher. When that is the case, we need to have the infrastructure in place to allow people to switch to electric cars. And we should not wait for heating bills to rise before we start the renovations to make our houses energy-efficient.
This is so important for the fairness of the transition and for its political feasibility in the medium term that it should be a no-brainer for any leader.We can leave no one behind.
Providing clarity in a moment where so much seems uncertain is therefore crucial. If there is uncertainty about the future direction of our policies, businesses will simply wait and not invest. In today’s economy, that would harm us twice, because we need more private investment and we need them to flow towards the green transition and we need that to happen now.
Our response to the Covid-19 crises gives us the opportunity to save jobs not for years but for decades to come, and create new jobs. We may never again spend as much to reboot our economy – and I sure I hope we will never again have to. Yet the debt we are loading on the shoulders of our children and grandchildren makes it even more necessary to ensure we provide them with a better future. A cleaner future, a healthier future, and a fairer future.
So we must stand firm, and get this right from the start.
As pressure grows, we must continue toresist the temptation to throw money at a carbon economy that will soon peter out. Backsliding into business as usual because it is faster, it is easier, and it is what we know, just isn’t an option. Of course it is more difficult to do something we don’t know yet, but it would be wrong and a disservice to next generations if we just did what we knew out of convenience.
As money begins to flow, governments, businesses and other players must resist the temptation to profit from the recovery effort by greenwashing policies and by pursuing projects that do not contribute to these goals. They must avoid creating stranded assets.
And as time goes by, we should resist the temptation to focus exclusively on short-term recovery efforts – even if they are green – and neglect to invest in the technologies and models that are necessary for our long-term transformation. We should do both: quick results but keeping an eye on the long term.
We have it in us to succeed. We have the money, the brainpower, and we have the commitment. And I have hope, even in the midst of this pandemic.
Because the confrontation with a completely unknown virus has ushered in a newfound respect for science and fact-based policy-making. Because, after an initial resurgence of borders and ugly nationalism, Europeans rediscovered that we are strongest together. And finally, just as with climate change, the pandemic underlines that no matter how much we are part of the cause, we are also proving that we can be part of the solution as well.
As we work to overcome Covid-19, I am convinced that the path to a brighter future, to an inclusive, greener, and stronger society is right in front of us. It requires us all to think beyond the immediate horizon and to avoid the reflex to restore what was and make what needs to be made.
With the European Green Deal to guide our way, we shall get there.
When we look around us, at the state of our environment and our climate in 2020, things can seem pretty bleak. We all see the results of climate change in the terrifying orange skies in California, and temperatures of 38 degrees in Siberia. We feel the dirty air in our lungs that drives 400,000 early deaths in Europe every year.
But very often, the darkest hour is before the dawn. Things are changing. Our world is coming to grips with the choices we need to make, to protect our environment, and keep climate change from running out of control. The European Green Deal aims to make Europe the first climate-neutral continent by 2050 – and last week, in her State of the Union Address, President Von der Leyen set out our proposal to increase our 2030 target for emissions reductions from 40% to at least 55%.
The Commission also committed to put new proposals on the table by mid-next year on key energy and climate legislation, including to adapt the EU Emissions Trading System, and to tighten energy efficiency rules and CO2 standards for cars, trucks and buses. And we will show solidarity with the most affected regions in Europe to make sure our transition is socially fair.
So we’re heading in the right direction. But the task ahead won’t be easy. To succeed, everyone in Europe will have to play their part – every individual, every business, every public authority. And that includes competition enforcers.
How EU competition policy can best support the Green Deal ?
So the time has come to launch a European debate on how EU competition policy can best support the Green Deal.
In the next few weeks, we’ll publish a call for contributions on some fundamental questions about how competition rules and sustainability policies work together – and whether they could do that even better. We’ll be looking for ideas, not just from competition experts, but from everyone with a stake in this issue – from industry, from environmental groups and consumer organisations. We need to work – and listen – fast. So, we’ll ask for contributions to be send to us by mid-November. That will allow us to plan a conference for early next year that will bring those different perspectives together.
We’re open to all ideas, no matter where they come from. But we have to be realistic. Competition policy is not, and it cannot be, in the lead when it comes to making Europe green. There are dozens of much better, much more effective ways of driving the fundamental changes that we need – such as binding targets for cutting carbon emissions, and more than a trillion euros of public investment to help reach those targets. Competition policy has to do its bit, of course. But it cannot replace the essential role of regulation.
And in any case, as competition enforcers, we also have our own task to carry out – to protect consumers, by defending competition. It’s a task that’s been given to us by the Treaties – and one that’s essential to keep our economy working fairly for everyone, in the green future.
So competition policy is not going to take the place of environmental laws or green investment. The question is rather if we can do more, to apply our rules in ways that better support the Green Deal.
Why competition policy is already a green policy ?
The competition rules already play a vital supporting role, in helping us achieve our green goals.
Competition drives the innovation that develops new technologies which can help us do more, with less harm to the environment. Competition also helps to keep prices down, so we can more easily afford to invest in going green – whether that means paying a few thousand euros less to buy an electric car, or a few hundred thousand less for a giant wind turbine.
And competition gives industry a powerful incentive to use our planet’s scarce resources efficiently. In a market that’s competitive, companies have no choice but to keep down the costs of doing business – which includes using less resources, like raw materials and energy.
But of course, they’ll only do that if those resources are costly. If industry can just emit as much pollution as it likes, while leaving the rest of us to pick up the bill, then no amount of competition will fix that market failure.
So competition enforcement works best, as a green policy, when it works hand in hand with regulations that make companies bear the cost of the harm that they do. And when we enforce our rules on antitrust and mergers, we defend the competition that helps those green regulations to achieve their goals.
With the right incentives from competition and public policies, European businesses will be well-placed to become world-leading climate efficient businesses, able to thrive in tomorrow’s green economy.
That’s even more true of our state aid rules.
To achieve our green goals, Europe will need a huge amount of sustainable investment. And though a lot of that money will have to come from private business, we’ll need the catalyst of public spending to make it happen fast enough. That’s why more than a third – at least 37% – of the more than 670 billion euros from Europe’s new Recovery and Resilience Facility will have to go to projects that pursue Europe’s green goals. It’s also why our state aid rules encourage green investment – with conditions that help to make sure that investment is done in the most effective and affordable way.
Last year, we approved a plan for seven EU countries to jointly invest more than three billion euros in an “IPCEI” – an important project of common European interest that aims to develop innovative, greener batteries. Those new batteries will help us shift away from fossil fuels – they’ll also be made and recycled sustainably, so a healthier climate doesn’t come at the cost of more pollution.
That project is clearly good news – but we had to make sure it didn’t undermine competition. Otherwise, we’d have ended up with higher prices, and less innovation, for batteries in the future. So we made sure the money went to many different companies, not just a few; and that key results will be shared widely, with scientists and the whole of European industry.
The state aid rules also play a vital part in helping to make sure the green transition is affordable. They make sure aid doesn’t go beyond the amount that’s really needed, and that taxpayers’ money isn’t wasted on investments that the private sector would have made anyway. For instance, since our rules started to require competitive tenders for aid to big renewable plants, the cost of that aid has come down incredibly fast. In Germany, the cost of supporting solar power has been cut in half. Some offshore wind projects in Europe now happen with no public subsidy at all.
Our rules on state aid for energy and the environment help to make all this possible. And we need to make sure that those rules are ready for the vast increase in green investment that’s coming, with the Green Deal.
So in the next few weeks, we’ll launch a public consultation on those state aid rules. We want to make sure they give Europe’s governments all the scope they need to make those green investments – without wasting taxpayers’ money, by “greenwashing” what is really an unsustainable race between EU countries to prop up their national industries.
We also want to look at whether too much state aid is being used to protect some energy-intensive industries from having to bear the environmental costs of the energy they use. That aid can stop emissions from moving outside Europe. But it doesn’t help us decarbonise our economy – and it leaves other industries with even more to do, to reach our green goals.
This is why we’ve just updated our rules on state aid to help energy-intensive industries deal with higher electricity prices from the EU’s emissions trading system. In those rules, we’ve made sure that only industries that face a genuine risk of carbon leakage because of those costs can get help. We’ve also required them to improve their energy efficiency in return for aid. And we’ll have to examine whether our rules on state aid for environmental protection and energy should also contribute to redressing this balance.
State aid rules could help for a greener competition policy ?
In the green transition, competition rules are not the engine of change – that’s the job of regulation and investment. But they are a vital part of the transmission, which links that engine to the wheels, and produces results on the ground.
And the question we’re asking, in this new public debate, is whether we could do more to keep that transmission working smoothly, and helping to reach the goals of the Green Deal.
A large part of the state aid that governments give today already supports the environment and cleaner energy. But we still want to see if there are ways to make the rest of Europe’s state aid spending greener.
One possibility might be to give an incentive to governments that think green – that require the building projects they fund to use recycled materials, to take just one example. Our rules set limits on how much of a project can be financed with public money, to make sure the private sector also contributes. And we could think of giving a sort of “green bonus”, which allows governments to use more state aid for projects that make a genuine contribution to our green goals. We could also look at how to build on the success of competitive tenders in keeping renewable energy costs down, by seeing if we could extend that approach to other areas.
At the other end of the scale from this kind of encouragement, we could look at the possibility of firm rules, requiring that aid mustn’t undermine the Green Deal. We might refuse to approve aid that would harm the environment, or would keep polluting factories or power plants operating. Obviously, that would have to happen within the limits of the Treaty, and in line with the rights of Member States’.
And antitrust rules too ?
We also want to see if the way we apply our antitrust rules could do more to support industry’s efforts to become greener.
We’ll only reach our green goals if everyone – including business – takes on their share of responsibility. So several of Europe’s national competition authorities are looking at how the antitrust rules could help support industry’s green projects.
In July this year, the Dutch competition authority proposed new draft guidelines, which aim to make it easier for companies to agree to produce greener products, without breaking the competition rules. And in just the last few days, the Greek competition authority published a very interesting paper, which looks at how competition policy could contribute more to support the green transition.
These are vital questions, for our green future. And the public debate that we’re launching will give us the chance to look at these issues with a European perspective.
We welcome it when companies decide to work together, to help them move even faster to go green. And our rules make sure those sustainability agreements are done in a way that doesn’t undermine competition, and harm Europe’s consumers.
But we know that in practice, it’s not always easy for companies to be sure that their agreements fall on the right side of the line. So we’re looking at how we could give more clarity in in our guidance on horizontal agreements between competitors. We’re also ready to give comfort, in the right cases, that particular agreements are in line with the rules – which will give companies real-world examples they can rely on. And I want to encourage businesses to get in touch with us, if they think they have a good candidate for that guidance.
Your conclusion ?
Because the green transition is bigger than any one of us. And we need an effort from our whole society will make sure we get on the right track.
That’s a big challenge for competition enforcers. But it’s also a reminder that we can’t do it all. This is a team effort – and none of us has to be, or can be, the saviour of Europe’s environment on our own.
So as our debate on greening competition policy takes shape, we won’t be competing to win applause, by single-handedly making Europe green. Instead, we want to find the right place in the team that will make sure we leave a healthier world to our children.
The objective of the Destination Earth initiative is to develop a very high precision digital model of the Earth to monitor and simulate natural and human activity, and to develop and test scenarios that would enable more sustainable development and support European environmental policies.
Destination Earth (DestinE) will contribute to the European Commission’s Green Deal and Digital Strategy. It will unlock the potential of digital modelling of the Earth’s physical resources and related phenomena such as climate change, water/marine environments, polar areas and the cryosphere, etc. on a global scale to speed up the green transition and help plan for major environmental degradation and disasters. By opening up access to public datasets across Europe, it will also represent a key component of the European Strategy for Data.
Users of DestinE will be able to access vast amounts of natural and socio-economic information in order to:
At the heart of Destination Earth will be a federated cloud-based modelling and simulation platform, providing access to data, advanced computing infrastructure (including high performance computing), software, AI applications and analytics. It will integrate digital twins – digital replicas of various aspects of the Earth system, such as weather forecasting and climate change, food and water security, global ocean circulation and the biogeochemistry of the oceans, and more– giving users access to thematic information, services, models, scenarios, simulations, forecasts, and visualisations. The platform will enable application development and the integration of users’ own data.
Initially DestinE will serve public authorities. It will gradually be opened up to scientific and industrial users, in order to spur innovation and enable the benchmarking of models and data.
DestinE will be implemented gradually over the next 7-10 years, starting in 2021. The operational core platform, the digital twins and services are scheduled to be developed as part of the Commission’s Digital Europe programme, whilst Horizon Europe will provide research and innovation opportunities that will support the further development of DestinE. Synergies with other EU programmes, such as the Space Programme, and related national initiatives will also be explored.
A digital twin is a digital replica of a living or non-living physical entity. The digital twins created in DestinE will give users access to high-quality information, services, models, scenarios, forecasts and visualisations (e.g. in climate modelling and weather forecasting, hurricane evolution and more). Digital twins are based on the integration of continuous observation, modelling and high performance simulation, resulting in highly accurate predictions of future developments.
Preparing for DestinE
The first stakeholder workshop on DestinE was organised in November 2019, bringing together a large number of potentially interested parties from public authorities and the industrial and scientific communities.
The Joint Research Centre is currently conducting a study “Destination Earth – Use Cases Analysis”, expected by October 2020. It will provide a state-of-the-art analysis of requirements for the development of digital twins at the performance levels needed for DestinE, through the integration of user-driven use cases, as well as the technical architecture and an initial mapping of existing developments in Europe in the area of digital twins. Institutions such as the European Space Agency (ESA), the European Centre for Medium-Range Weather Forecasts (ECMWF) and the European Organisation for the Exploitation of Meteorological Satellites (EUMETSAT), as well as the Commission’s services and agencies, are being consulted for this study. A further series of stakeholder workshops on the development of the digital twins are planned for the final quarter of 2020.
DestinE will be developed gradually through the following key milestones:
The protection of the environment is more and more a major concern. What exactly is DPDgroup’s ambition?
As delivery experts at DPDgroup we have acknowledged, quite some time ago, that sustainability is a major topic and a major concern. And the current pandemic has certainly accelerated the understanding and the awareness that this will be a key topic going forward. So back in 2012 already we launched a first bold initiative of carbon compensation.
The carbon footprint of every parcel delivered since 2012 in the DPDgroup network has been compensated and offset. This has been ground-breaking in our industry and many of our competitors have been inspired by our initiative and have followed the lead that we took. But today we have to recognize that compensation is not good enough. We need to reduce the CO2 emissions. And so, it’s time to embark on the next bold programme.
By 2025, we want to reduce our CO2 emissions of every parcel by 30%, and we will put the means and investments to achieve this goal and continue leading the path in our industry.
Actions are louder than words. What actions is DPDgroup taking to achieve its ambition?
We want to make the fastest and the most meaningful impact, and we will therefore concentrate on those areas where the pollution and the population density is the highest. Our target is therefore to become fully CO2 free in the 225 largest cities in Europe by 2025. In fact, we’ve already started. In five cities in Europe; Warsaw, Dublin, Hamburg, parts of London, and all the city centre of Paris we are ensuring full CO2 free deliveries since last year. We will supplement this deployment of electric vehicles in those 225 cities with urban depots. Smaller infrastructures, closer to our customers, which will help us to reduce our transportation footprint. And finally, we will equip our fleet and our infrastructure with air quality monitoring devices. They will tell us how the pollution is evolving, they will help us, and they will help the municipalities with which we will feed this information to become more effective because information inspires action.
As Chairman & CEO of DPDgroup, what is your long-term objective for the business?
Our long-term objective is two-fold. First, we want to build on this first ambitious plan of deploying CO2 free delivery methods in the 225 largest cities in Europe to become fully CO2 free within the next 20 years.
The second objective is to become an active player, a partner of cities or municipalities of our customers. To help them in their sustainable development programmes. To jointly make our planet a better place, because we all share the same address.
How does an international operator such as DPDgroup manage to take European challenges into consideration?
DPDgroup is the largest parcel delivery network in Europe. Our strength relies on our decentralized management model where the business units are the local experts of their market. That’s why DPDgroup is attentive to the needs of each country and city and, thanks to our experience, gear our offering of innovative solutions, urban depots and alternative delivery fleet accordingly for example. We engage with local authorities to anticipate and react quickly to new requirements and legislation. At DPDgroup we know one size fits all solution doesn’t exist. The global health crisis and the Brexit are also two concrete examples of how DPDgroup manages to tackle European challenges. While the Covid-19 pandemic has highlighted how essential delivery services are, DPDgroup has supported healthcare professionnals and local businesses. We are also fully prepared for the hard Brexit on January 1st 2021 thanks to our expertise in the management of new customs procedures and regulations.
DPDgroup is the largest parcel delivery network in Europe.
DPDgroup combines innovative technology and local knowledge to provide a flexible and user-friendly service for both shippers and shoppers. With its industry-leading Predict service, DPDgroup is setting a new standard for convenience by keeping customers closely in touch with their delivery.
With 77,000 delivery experts and a network of more than 46,000 Pickup points, DPDgroup delivers 5.3 million parcels each day – 1.3 billion parcels per year – through the brands DPD, Chronopost, SEUR and BRT.
DPDgroup is the parcel delivery network of GeoPost, which posted sales of €7.8 billion in 2019. GeoPost is a holding company owned by Le Groupe La Poste.
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The European Commission lead by President Von der Leyen has made clear from the outset that the European Green Deal is the main priority for its five-year mandate. Our principal objective is to move to a climate-neutral economy by 2050, and the Green Deal coordinates our approach across all policy areas and all sectors. Energy is of course one of the domains that will play a crucial role in the transition. If we look at Europe’s economy, we see that energy generation, transmission and conversion is responsible for 75% of the EU’s emissions. A lot has already been done to make EU energy policy legislation fit for the new challenges. Finalized in 2019, the Clean energy for all Europeans package addressed the three main priorities of EU energy policy: security of supply, affordability, and sustainability.
The Green Deal aims to continue in this path across all sectors and complete the transformation of our energy system into one which is not only carbon-neutral, but also, more cost effective, energy efficient and secure. At the same time, some areas face a larger transformation than others, and so we must ensure that we do not leave any person or region behind.
The principle of ‘Energy efficiency first’ is at the heart of the Deal. The cheapest and cleanest energy is the one we do not use, so the more we can do to reduce energy consumption, the better. This approach is also good news for consumers – saving energy will not only cut emissions but shrink their energy bills. This efficiency principle will be applied at all levels of Commission policymaking. In particular, we will focus on further improving the energy efficiency of our buildings, through a “renovation wave”, aiming to triple the existing, insufficient rate of renovation in Europe.
A crucial aspect is the inclusion of social housing in the wave, to help address the challenge of energy poverty in the EU. Our latest figures indicate that up to 50 million people around the EU are not able to properly heat their homes. This is not acceptable! Energy efficiency is important, but so is the source of our energy.
We need to increase the share of renewable energy by making it easier to incorporate renewables into our energy system. For this to succeed, we must move towards smart sector integration, which will promote stronger integration of the electricity, heating and cooling, transport, gas, industry, and agricultural sectors.
We have already achieved impressive results in decarbonizing the electricity sector, where 31% of electricity is produced from renewable sources.
In order to further boost decarbonization, we will present a new strategy to boost offshore renewable energy, addressing all the opportunities and challenges, such as the impact on energy grids and markets, the management of maritime space and the industrial policy dimensions of offshore wind.
That said, the decarbonization of our energy system cannot happen overnight. Natural gas still constitutes almost one quarter of the EU’s energy mix and will therefore have a role to play in the medium term, as a substitute for more polluting sources like coal, lignite or oil shale. While the role of gas in the transition is up to each Member State to decide upon, much like their energy mix in general, the EU can and should contribute to the decarbonization of the gas sector – ultimately, the gas we use in the EU has to be clean. We are already working on creating an environmentwhere clean gases can have a significant presence in the EU gas sector.
The EU has managed to diversify our sources of energy supply in recent years – in terms of more varied forms of energy and different suppliers – but we remain dependent on imports. Security of energy supply continues to be crucial and, amongst other policies, we need a forward-looking, modern, secure and smart energy infrastructure to safeguard it.
To ensure consistency with Europe’s climate neutrality objective and the Green Deal, we will review the regulatory framework for energy infrastructure this year, through a proposal to modify the TEN-E regulation. As for technology and innovation, the Green Deal will trigger a major push towards digitalization in all sectors, facilitating the clean energy transition in all parts of the energy supply chain, from generation to transmission to distribution, and including smart meters at home.
As we increase the digitalization of energy, we will also need new rules on cybersecurity that are tailor-made for the energy sector. Given the variability of certain renewables such as solar and wind, we also need to improve our capability to store energy. Our forthcoming Strategic Action Plan on Batteries will address the urgent need for progress on batteries and other forms of storage.
Other new and innovative technologies that will be fostered by the Green Deal are Carbon Capture, Use & Storage, and an increase in the use of hydrogen, which has the potential to play a major role in our move towards climate neutrality. Making the Green Deal a reality will depend on funding the necessary investment – and the smartest combination of public and private finance. Just to meet our 2030 climate and energy targets, we need an estimated additional €260 billion in annual investments. Public money alone cannot foot this bill. In fact, we will have to rely primarily on the private sector. By setting clear long-term goals, we are already reducing the risks for investors. Public spending can also play an important role in leveraging private support and providing guarantees.
In this context, the Commission has already outlined a Green Deal Investment Plan, which, over the course of the decade, can generate as much as €1 trillion to fund sustainable projects.
In a similar vein, the Commission has also already published the Just Transition Mechanism – a series of elements to encourage the necessary public and private investment in regions that face the biggest challenges, such as those, which have been most dependent on coal and other fossil fuels. This includes € 7.5 billion of new funding in the EU budget from 2021-2027 for the Just Transition Fund – aimed at the most vulnerable people and regions.
Our ambition will be achieved, if Member States are not on board. Under existing rules, each Member State has been required to put together integrated National Energy & Climate Plans for 2021 to 2030, outlining how it intends to contribute to our 2030 targets. Commission experts are currently analyzing these plans – and assessing the cumulative impact. We are still missing some, so I urge the countries who are still behind schedule to move with haste. This assessment, due out in the summer of 2020, will provide a clearer picture of where we stand – and where we are likely to be in 2030. It will also tell us to what extent we can and should raise our ambition, individually or collectively.
We know that moving towards a climate neutral economy by mid-century will be a long journey and that the energy sector will need to make a major contribution. But we are not starting from scratch and we are more efficient and stronger by joining forces at EU level.
The sense of urgency we need when talking about the transition towards a circular economy can be conveyed by a single equation: if we keep on with our growth model, by 2050 the world will be consuming as if there were three planets Earth. Global consumption of materials such as biomass, fossil fuels, metals and minerals are expected to double in the next forty years and annual waste generation is projected to increase by 70% by 2050.
The circular economy is about providing positive solutions to reversing these trends, reducing pressure on the environment and supporting sustainable jobs and growth at the same time,
while ensuring security of supply. The time to accelerate the transition to a circular economy has come. The commitment of European Green Deal to respond with decisive actions to the challenges of achieving carbon neutrality and decoupling economic growth from resource use, has been described as this generation’s defining task.
The next five years will likely put us on a path that will directly impact our well-being in 2050. Future generations will be affected by the decisions we make today in ways that probably have no comparisons in human history. The circular economy is a crucial pillar of the European Green Deal. It is about making the necessary changes in the way we produce and consume so that we can solve the many environmental and climate pressures that are directly linked to the current unsustainable “take-make-use-discard” growth model. The new Circular Economy Action Plan adopted in March this year will make a considerable difference. We have introduced actions to address inefficiencies along the entire life cycle of products.
The cornerstone of the Action Plan is a new Sustainable Product Policy Framework, which will ensure that green products become the norm. Products will have a longer lifetime, will be easier to repair and upgrade, and will have lower environmental impacts. This will unleash new business opportunities and provide high-quality products and cost-saving solutions to citizens.
The Action Plan will help protect consumers better: a new “right to repair” will be established, complementing the efforts to design sustainable products. Consumers will also have reliable information on the reparability and durability of products, as well as on them
environmental performance. Companies will have the confidence to invest in a fair market for green products, since we will tackle misleading green claims. Furthermore, in synergy with actions on products, we will work to prevent the generation of waste as a matter of priority. Where waste cannot be avoided, the focus should be on transforming it into valuable resources.
The Commission will review a number of legislative instruments to increase their contribution to a circular economy and continue supporting Member States in the implementation of the EU waste legislation. In parallel to horizontal measures, smart policymaking means also tackling priority sectors and value chains where there is considerable potential for more circularity. This is the case of “electronics and ICT”, “batteries and vehicles”, “packaging”, “plastics”, “textiles”, “construction and buildings”, “food, water and nutrients”.
The Action Plan announced comprehensive strategies or tailored actions for each of these key product value chains. These sectorial actions will bring significant benefits. Textiles, for example, are the fourth highest-pressure category for the use of primary raw materials and water, after food, housing and transport, and fifth for GHG emissions. It is estimated that less than 1% of all textiles worldwide are recycled into new textiles. We want to adopt a strategy that can trigger circular business opportunities, give consumers more information and reduce the environmental impacts of this sector. At the same time, we want to make sure the transition is fair and just for everyone. We will work on strengthening the social angle of circularity, for example by promoting the uptake of the right skills for Europe’s workforce of tomorrow. We will also support investments in infrastructure, innovation and digitalization that will enable the circular economy to become the mainstream in our lives. We are also aware that the circular economy in Europe will work only if we achieve progress at the international level.
The EU has an important role as a global frontrunner in the circular economy, and we can use this position of leadership to actively engage with partners at bilateral and multilateral level to scale-up the uptake of the circular economy worldwide. The new Circular Economy Action Plan offers an inclusive, future-oriented agenda for achieving a cleaner and more competitive Europe in co-creation with economic actors, consumers, citizens and civil society organizations. It has been well received by a broad range of stakeholders because it offers win-win solutions: to protect the environment, but also to create lead markets, to expand sustainable and job-intensive economic activities, and to ensure EU leadership on circular, climate-friendly and safe products and technologies globally. This Action Plan is a plan for all people in the EU and beyond. It is essential that it delivers on the ground for national and regional policymakers, for businesses, for all EU consumers and citizens. Therefore, its implementation will be successful only if informed by the same collaborative spirit we share today. I am confident this will be the case.
We have set our sights on a climate neutral Europe by 2050.
That gives us just thirty years to transform our energy system from the current model to a greener, more efficient system.
Recently we proposed a landmark rise of ambition for the next stage in the journey – our targets for 2030. We are committing to a reduction of at least 55% of greenhouse gas emissions. This means that we must accelerate the pace of the transition and explore new solutions.
Hydrogen has the potential to be a game changer in this context and in Europe, we want to be the ones leading the way. The moment is right:
Today, hydrogen is mainly a feedstock in industry and is produced from natural gas.
In the future, hydrogen will become a new clean energy carrier, along with electricity.
With this in mind we have mapped out three clear steps in our Hydrogen Strategy we presented in July:
First, we need to scale-up supply and demand in parallel.
On the supply side, we have set ourselves ambitious targets aiming at 6GW electrolyser capacity by 2024 and 40 GW by 2030. Electrolyser production must become more industrialised to reach this capacity and this will further reduce the costs. In fact, renewable hydrogen, produced from water and green electricity should outbid conventional hydrogen as of 2030. To kickstart this process, we have launched first calls to fund such projects from the EU budget, under the Horizon 2020 research programme and the Innovation Fund.
Today, we consume around 10 million tonnes of conventional hydrogen in Europe, which still creates emissions. Carbon capture technologies can help to rapidly decarbonise this existing production, while the volumes of renewable hydrogen scale up.
On the demand side, we expect in the near future local demand to develop as a first step. Later on, as of the mid-2020ies, new sectors like steel-making or certain areas of transport will likely turn to clean hydrogen to replace their current coal and oil demand. To do this, we will certainly invest in more research, but will also work on common standards, certifications and terminology. This will be important in order to drive demand for renewable and low-carbon hydrogen and to promote transparency and trade. To ensure that these forms of hydrogen can compete in the market, we will pilot a Carbon Contracts for Difference programme to bridge the current cost gap between conventional and cleaner forms of hydrogen.
After improving the supply and demand sides of things, the second<.b> step will be creating competitive markets and infrastructure for cross border trade of hydrogen. Several national hydrogen strategies have identified a clear scope for EU and international cooperation and trade: these plans imply that hydrogen will at some point travel across borders. Cost-efficiency matters, so we will look at using existing assets, like our natural gas pipeline network – they can be made fit for hydrogen at relatively low cost, especially when compared to new infrastructures.
To trade renewable and low-carbon hydrogen reliably across borders, we will need proper rules. When I say trade, I do not mean only within the EU, but also with our international partners, starting with our close neighbourhood, in particular Morocco and Ukraine. We have an interest in placing hydrogen high on the agenda of the structured energy dialogue with countries including the US, Japan, South Korea, while strengthening our engagement in the major multilateral initiatives, such as the International Partnership for Hydrogen in the Economy, the Clean Energy Ministerial and Mission Innovation. We should use these discussions to create a global rules-based market for hydrogen solutions, including harmonised safety and environmental standards. If we do it right and take the lead we can establish benchmarks, giving our currency, the euro, a stronger role.
The third step in our strategy is our ongoing work to keep industry in Europe.
We are establishing the European Hydrogen Alliance in a strategic full-value-chain approach that should build up a robust project pipeline for clean hydrogen in Europe.
This will be underpinned by the EU budget. The proposed recovery package, Next Generation EU, like the general budget, will have earmarked funds for delivering the climate goals of the European Green Deal. The Commission will closely work with Member States to ensure that there is a strong emphasis on hydrogen related projects in the national measures.
The Strategic Investment Facility that the Commission proposed will be able to unlock 150 billion euros to invest in key technologies and value chains, like hydrogen technologies.
With this ecosystem approach we should be able to better exploit EU industrial leadership.
For all this, we have started to review current EU legislation. We are looking at renewable energy, energy efficiency, trans-European networks and the internal gas market legislation to see how we can introduce a robust regulatory framework for the new developments we are expecting and encouraging.
This brings me to another important point: hydrogen is a universal opportunity. Every Member State can benefit from developing hydrogen in its economy.
Bart Biebuyck, Executive Director Fuel Cells and Hydrogen Joint Undertaking (FCH 2 JU)
2020 has been a historical year for hydrogen. With the launch of the EU Hydrogen Strategy on 8 July 2020 and the creation of an industry-led Clean Hydrogen Alliance, Europe has strengthened its global leadership on hydrogen beyond any doubt.
2020 has been a historical year for hydrogen. With the launch of the EU Hydrogen Strategy on 8 July 2020 and the creation of an industry-led Clean Hydrogen Alliance, Europe has strengthened its global leadership on hydrogen beyond any doubt.
The enormous political support for hydrogen technologies visible in the considerable investment programmes at European and national level, was highlighted in our first edition of the European Hydrogen Week in November 2020.
At Fuel Cells and Hydrogen Undertaking (FCH JU), we are convinced that constant innovation will further drive the hydrogen revolution. Our unique public-private partnership has worked relentlessly to develop and further promote hydrogen technologies in Europe, realising their potential in achieving carbon-clean energy systems.
In the past twelve years, we have extensively funded research and demonstration projects with the aim of increasing market viability and commercialisation of fuel cell and hydrogen technologies. Since its setup in 2008, the public-private partnership has funded a total of 285 research and demonstration projects with an overall budget of over 1 billion Euro.
During this time, the European market has considerably scaled up, making us leaders in electrolysers, hydrogen refuelling stations (HRS), fuel cell trucks and fuel cell buses. A growing demand for other applications such as micro-combined heat and power units can also be observed. These innovative technologies will allow Europe to integrate the use of renewable electricity in many sectors that up to now were difficult to decarbonise, in particular heavy-duty transport and energy-intensive industries.
Cheaper, more robust and efficient electrolyser will allow to produce renewable hydrogen, a clean energy carrier that can reduce dependence on fossil fuels.
Renewable hydrogen is therefore an important part of the overall solution to meet the 2050 climate neutrality goal of the European Green Deal.
It is clearer than ever that lower hydrogen-production costs are making sustainability a great opportunity for a more inclusive, clean and circular economy.
The decarbonisation of transport sector is absolutely essential to ensure Europe’s transition to a carbon-neutral economy and encompasses all aspects of hydrogen utilisation in transportation:
By supporting projects on hydrogen-powered buses and taxis, used across major cities such as Paris, Cologne or London, the FCH JU has demonstrated that the technology can be used on a large scale and is ready for widespread use.
Fuel cell electric vehicles (FCEVs) show great promise in reducing CO2 emissions. Powered by hydrogen, FCEVs have short refuelling times and the only waste they produce is water. The lack of hydrogen refuelling stations however has discouraged captive fleet operators such as taxi companies from adopting them quicker. Now the FCH JU is working with industry leaders and municipal authorities to bring vehicles such as taxicabs and police vehicles onto Europe’s streets.
Three FCH JU-financed projects have helped promote the adoption of FCEVs in European cities: Zero Emission Fleet vehicles for European Roll-out (ZEFER), Hydrogen Mobility Europe (H2ME) and Hydrogen Mobility Europe 2 (H2ME 2).
Looking specifically at FC Buses, where significant advancement in technology solution and its costs has been realised, more manufacturers are launching fuel cell bus products and interest is growing at European level. Including the latest JIVE 1 and JIVE 2 projects, 360 hydrogen buses should be on the road in total by next year. The scaling up has an important impact on the costs which remains one of the major challenges. The first hydrogen bus in 2010 had a price of 1.8 million euros. Today, the H2Bus Consortium has set the goal of reducing that figure to under 650,000 euros.
Furthermore, the FCH JU is supporting the uptake of fuel cells and hydrogen in the road heavy-duty transport segment. The H2HAUL and REVIVE projects aim at validating the use of FCH solutions in real life condition. The project PRHYDE will deliver recommendations for refuelling protocols for heavy-duty applications.
The FCH JU has recently commissioned a study on business opportunities for FCH HD applications in the EU and triggered a coalition statement of over 50 companies drawn from FC suppliers, OEMs, HRS manufacturers and fleet operators committing to the deployment of up to 100.000 FC trucks and 1.500 HRS in the EU by 2030.
Moreover, the FCH JU funded study on the use of hydrogen in the rail system has demonstrated that there are no show-stoppers for this technology to make a difference in the race to decarbonisation of transport. The European train sector is probably one of the most decarbonized transport means. With over 64% of the rail tracks electrified corresponding to 85% of the rail trips, it is the cleanest transport system. Cheaper than catenary and much more appropriate than batteries, fuel cell trains will allow to fully decarbonize this transport mode. The first models of multiple unit trains are already in operation in northern Germany. The FCH JU has recently signed a 13M€ project to develop and demonstrate a bi-mode train which will run on the catenary when available but will switch to hydrogen when needed. This technology offers the flexibility and compatibility to train operators to reach full decarbonisation without jeopardizing cooperativity or economy.
At FCH JU we are also convinced that hydrogen will play a key role in transforming aviation into a zero-carbon system over the next few decades. Hydrogen – as a primary energy source for propulsion, either for fuel cells, direct burn in thermal engines or as a building block for synthetic liquid fuels – could feasibly power aircraft with entry into service by 2035 for short-range aircraft. This was backed by a recent study we commission together of Clean Sky 2 Joint Undertaking. Very recently first flights with hydrogen propulsion have been performed.
Finally, I would like to stress the crucial importance of regional and international cooperation in exploiting hydrogen’s huge potential along the whole value chain. In order to enhance collaboration between hydrogen project developers and raise awareness among policy makers, we recently (19 January) launched the Mission Innovation Hydrogen Valley Platform. Featuring 32 hydrogen valleys from 18 countries, the platform presents and connects the most advanced regional hydrogen clusters around the globe. By combining several hydrogen applications into an integrated hydrogen ecosystem covering production, storage, distribution and final use, Hydrogen Valleys can offer the right pathway for scaling up and making this technology a reality across all sectors of society. This builds on the many years of our work to reach out to all European regions and cities having an interest in the potential of hydrogen technologies and led to the creation of our ambitious collaboration platform, the FCH Region’s Hub.
In our new partnership launched at the end of the year we are determined to make the most of this unprecedented political momentum, and >I can only agree to Vice-President of the European Commission, Mr Frans Timmermans when saying that “Hydrogen truly rocks!”
Study on Fuel Cells Hydrogen Trucks, released on 15 December 2020. https://www.fch.europa.eu/publications/study-fuel-cells-hydrogen-trucks
Study on the use of Fuel Cells and Hydrogen in the Railway Environment,released on 17 May 2019
FCH2RAIL- Fuel Cell Hybrid PowerPack for Rail Applications, https://www.fch.europa.eu/page/transport#FCH2RAIL
Study on Hydrogen’s potential for use in Aviation, released on 22 June 2020 – https://www.fch.europa.eu/publications/hydrogen-powered-aviation
Today, the European Commission is proposing an upgrade of the Single European Sky regulatory framework which comes on the heels of the European Green Deal. The objective is to modernise the management of European airspace and to establish more sustainable and efficient flightpaths. This can reduce up to 10% of air transport emissions.
The proposal comes as the sharp drop in air traffic caused by the coronavirus pandemic calls for greater resilience of our air traffic management, by making it easier to adapt traffic capacities to demand.
Commissioner for Transport, Adina Vălean, declared: “Planes are sometimes zig-zagging between different blocks of airspace, increasing delays and fuel consumed. An efficient air traffic management system means more direct routes and less energy used, leading to less emissions and lower costs for our airlines. Today’s proposal to revise the Single European Sky will not only help cut aviation emissions by up to 10% from a better management of flight paths, but also stimulate digital innovation by opening up the market for data services in the sector. With the new proposed rules we help our aviation sector advancing on the dual green and digital transitions.”
Not adapting air traffic control capacities would result in additional costs, delays and CO2 emissions. In 2019, delays alone cost the EU €6 billion, and led to 11.6 million tonnes (Mt) of excess CO2. Meanwhile, obliging pilots to fly in congested airspace rather than taking a direct flight path entails unnecessary CO2 emissions, and the same is the case when airlines are taking longer routes to avoid charging zones with higher rates.
The European Green Deal, but also new technological developments such as wider use of drones, have put digitalisation and decarbonisation of transport at the very heart of EU aviation policy. However, curbing emissions remains a major challenge for aviation. The Single European Sky therefore paves the way for a European airspace that is used optimally and embraces modern technologies. It ensures collaborative network management that allows airspace users to fly environmentally-optimal routes. And it will allow digital services which do not necessarily require the presence of local infrastructure.
To secure safe and cost-effective air traffic management services, the Commission proposes actions such as:
The current proposal will be submitted to the Council and the Parliament for deliberations, which the Commission hopes will be concluded without delay.
Subsequently, after final adoption of the proposal, implementing and delegated acts will need to be prepared with experts to address more detailed and technical matters.
The Single European Sky initiative was launched in 2004 to reduce fragmentation of the airspace over Europe, and to improve the performance of air traffic management in terms of safety, capacity, cost-efficiency and the environment. A proposal for a revision of the Single European Sky (SES 2+) was put forward by the Commission in 2013, but negotiations have been stalled in Council since 2015. In 2019, a Wise Person’s Group, composed of 15 experts in the field, was set up to assess the current situation and future needs for air traffic management in the EU, which resulted in several recommendations. The Commission then amended its 2013 text, introducing new measures, and drafted a separate proposal to amend the EASA Basic Regulation. The new proposals are accompanied by a Staff Working Document, presented today.
Citeo, the French company in charge of Extended Producer Responsibility (EPR) for household packaging and graphic papers, believes in the involvement of all the actors of the value chain from public authorities to brand owners in order to build a truly Circular Economy with measures to reinforce competitiveness of recycled material, a common vision on recyclability, on reusable models and on littering issues. This vision requires not only the commitment of all actors, but also coherence and harmonization at the European level for both standards and targets. This is a key factor for future investments in eco-design as well as new technologies of recycling.
Citeo believe the EU recovery plan proposed by the EU Commission is a great opportunity to shift towards a real circular economy within the EU Single Market. Citeo have therefore several recommendations for the implementation of the EU recovery plan in order to improve circularity among packaging and papers.
In order to answer the challenge of competitivity between Primary and Secondary Raw Materials, Citeo believes it is essential to move towards a more circular and ecological fiscal system both within Member States and at the EU level. Citeo believes in a harmonized approach based on a Life Cycle Analysis at the EU level. Indeed, Citeo welcomes new initiatives taken at the EU level and within the EU Member States to reduce the use of single use plastic and promote the incorporation of recycled materials in products through incentive fiscal measures. However, some points need to be stressed out. First, it is important to avoid putting on the EU market alternatives to plastic that have a negative or more harmful environmental impact and to look at all materials (especially when it comes to littering) and not only to focus on single-use, and especially single-use plastics. Regarding the plastic levy of 0,8€/kg announced by the European Commission under the MFF project for 2021-2027, and underlined in its recovery plan published on 27th May 2020, we believe that such measure, if decided at the European level, needs to be translated consistently and efficiently at the national scale. Indeed, the taxation of use of virgin plastics, such as the Italian plastic tax project is a different approach than the English one, with a plastic taxe based on the recycled content of plastics products, and the Spanish one linked on the use of plastics packaging. Such fiscal measures should aim at increasing the use of recycled plastics within packaging and reduce the spread between the price of recycled plastic and the price of virgin plastic in a context of low oil prices in the aftermath of the Covid-19 crisis.
In this perspective, we strongly encourage the Commission to pay attention to the implementation of this new levy within the EU member States so that it does not lead to the fragmentation of the EU single market and may have economic and environmental consequences that are the opposite of the intended objectives.
Protecting biodiversity by reducing littering is at the heart of EU’s climate strategy and the SUP Directive. The EU recovery plan should thus support the modernisation and economic development of waste collection. Cities and municipalities have a key role to play as they can help to improve collection and sorting performances and thus meet European collection targets by encouraging the development of collection points especially on on-the-go consumption places, public events (festival, etc) and in public establishments. Moreover, in order reach its targets the EU should make waste management a valuable business in order to incentivize businesses to invest in circular solutions.
The 40 billion euros dedicated to the Just Transition Fund could act as a tool, within EU member states national recovery plans in order to support EU industries to upgrade their production lines to 100% recyclable and reusable materials. The revised EU industrial strategy should also act as a mean to enhance circularity among European industries. Finally, the concept of industrial symbiosis have should be developed: it has proven to be a mean to reduce the extraction of resources and to enhance the circularity of materials.
Furthermore, to develop reuse model, local and regional authorities must be fully involved in the implementation of the EU Circular Economy Action plan and targeted by EU regional and cohesion funds. Indeed, local policy makers can act as key stakeholders in order to develop and promote reuse schemes (recycle shops, reusable packaging, DRS or RVM systems…). The spread of this kind of economic activities requires the development of specific infrastructures: massification zones (return logistics platform), washing plants or washing tools, etc. Support from local and regional authorities is thus necessary towards reuse schemes’ development.
Cities and regions can also enhance circularity in public procurements, and it is necessary for regional and local public authorities to introduce binding targets for buyers in terms of circular economies in the coming years. For examples, local and regional authorities can encourage public purchase of reusable goods in order to reduce the consumption of single-use plastics. They can also require in their specifications the procurement of goods with a minimum threshold of incorporated recycled material.
The EU funds should be specifically directed towards environmental-friendly and innovative industries especially technical centers and SMEs. The latest are indeed the main actors providing circular solutions and new recyclable materials helping to close the loop of circular economy for packaging and paper.
Citeo is willing to collaborate with the European stakeholders and the European commission on developing new recycling solutions at the EU level in order to reach the recycling targets. Completing mechanical recycling technologies with chemical recycling technologies, in order to better recycle complex and multilayered materials, should be considered as a solution at the EU level.
The paper and cardboard industries are an essential part of the circularity and competitiveness of materials in the European single market.
In France and like in most member States, cardboard packaging is experiencing an increase in consumption due to three factors: the expansion of e-commerce, demographic factors and the fact that it is an alternative to plastics. Furthermore, graphic papers have seen their apparent consumption decrease over the last 15 years, due to lower newspaper circulation and the growth of digital uses.
There is in France and within most of the member States an extra output of recycled cardboard and papers, which is one of the causes of the current price turbulence.
This sector is indeed experiencing an economic crisis. Reference prices for paper and cardboard for recycling have followed a comparable trend in the price of market pulp (peak in 2018 between 800 and 1,000 euros per tonne, depending on fiber size). This price subsequently declined due to the closure of Asian markets (China, Vietnam, Malaysia), which chose to increase their requirements in terms of the quality of the material to be recycled. The closure of these markets has thus led to a drop in European PCR exports of 25 to 30% in 2018.
Several levers exist to ensure the restructuring of a sustainable recycling industry adapted to the evolution of paper and cardboard consumption in Europe:
In this time of Covid-19 crisis, marketplaces have been solicited far more than usual. As e-commerce is growing exponentially, the problem of similarly growing waste packaging grows with it. The main issue raised by online platforms and e-commerce regards the financing of the EPR schemes. Indeed, a phenomenon of “free-riding” in the EU has been observed. Member States have difficulties to ensure that online sellers correctly contribute to waste recycling by paying their eco-contributions in the countries they are operating. In order to correct this lack of information, and to improve the financing of extended producer responsibility channels, and limit the environmental footprint of this sector of activity, Citeo recommends to subject e-commerce to the following obligations: extended producer responsibility with all related obligations (operational or financial management of the end of product life, prevention and reuse objectives according to national regulations, etc.), and environmental labelling and legal warranty.
As world leaders, negotiators and civil society congregated in Madrid for the annual United Nations climate change conference earlier this month, Secretary-General Antonio Guterres’ stark warning rang loud and clear: “The point of no return is no longer over the horizon. It is in sight and hurtling towards us.”
In this article, I would like to highlight Europe’s approach to addressing climate change, the greatest challenge and opportunity of our times. We are working simultaneously on adapting to the effects of climate change we are experiencing, while at the same time constructing a policy environment that will enable a societal shift towards a prosperous, modern, competitive and climate-neutral economy. The good news is that we possess both the technical knowledge and the physical means to prevent the worst effects of climate change. Humanity’s top priority is therefore to halt climate change in its tracks, keeping it within limits to which our species can adapt.
The European project was part, parcel and even motor of the continent’s reconstructive efforts post-WWII. The twin premises of economic progress and the absence of war were the foundation for the European Community and later the European Union. War was a close neighbour; most people had experienced it, and their children – my generation – still felt it as a real threat. However, other priorities arose: equality, social customs, feminism and gender, the sexual revolution, education, democracy “from the street”. We took economic welfare for granted and wanted it to extend to those still on the margins. We did not take peace for granted and wanted better guarantees that war would not return.
Why does all this matter? It matters in order to give us a bare minimum of perspective, to frame where we are today in Europe. It also allows us to make three important initial observations:
First, that economic stability remains fundamental to our society and that the European project remains the glue for this, whether or not everyone acknowledges it.
Second, European society has coalesced around fundamental values of democracy, equality, social fairness and environmental integrity. This remains true in spite of constant challenges to these values from within our society. Again, the European Union and its institutions are the essential anchor for these values.
Third, there is a new awareness throughout Europe that climate change is a threat that requires urgent action. This may not be universal, but is widespread and cuts across the political spectrum and most other philosophical, religious or social differences.
Action in and by Europe alone is of course inadequate to address this global challenge. Yet Europe ought to lead, especially by example, and persuade and help others to step up the fight against climate change. Young Europeans in particular are angry, as indeed they have a right to be. Yet this appears to be a constructive anger based on the premise of overthrowing “business as usual” in all aspects of life, to make our society and economy more efficient, resilient and ultimately sustainable.
We have the means to achieve this, as well as a little time left in which to take action. Yet this will be an enormous undertaking. In half a century, the world needs to reverse gears on a century and a half of economic development. Economically and technologically advanced countries ought to do this in thirty years or so.
Europe’s awareness of climate change and determination to act has a long history. In fact, Europe’s greenhouse gas emissions peaked in the late 1970s and have since decreased steadily. The European Union will likely exceed its 2020 target of a 20% reduction of emissions compared with 1990 levels, and is on track to meet its targets of a 20% increase in renewable energy share and of 20% improvement in energy efficiency.
In the meantime, policy has progressed further. In 2014, the European Council agreed to a target for the reduction of emissions: at least 40% by 2030, compared with 1990 levels. This was translated into the EU’s Nationally Determined Contribution, namely a voluntary commitment subject to reporting and transparency obligations and peer review under the Paris Agreement. By now the European Union has agreed a comprehensive package of binding legislation to achieve this overall target.
This includes the recent reform of the EU Emissions Trading System (EU ETS), a cap and trade system under which the power generation sector and virtually all industrial sectors are obliged to reduce – or pay for – their emissions. Overall, the emissions under the EU ETS need to reduce by 43% by 2030 compared to 2005. The revision of the EU ETS, including the introduction of a Market Stability Reserve to ensure there is no surplus of EU ETS allowances on the market, has already strengthened the EU carbon price signal – the price of a ton of carbon, which had gone as low as €5, now fluctuates around €25.
Under the Effort Sharing Regulation, Member States have a collective obligation to reduce emissions in sectors not covered by the ETS – namely transport, buildings, waste, and agriculture and forestry – by 30% by 2030 compared to 2005. This is split into national targets, based on the principles of fairness, cost-effectiveness and environmental integrity.
The Land Use, Land Use Change, and Forestry Regulation obliges Member States to ensure that accounted emissions from land use are entirely compensated by an equivalent removal of CO₂ from the atmosphere through action in the sector, known as the “no debit” rule.
The EU Energy Union Governance Regulation mandates Member States to establish National Energy and Climate Plans, subject to peer review and to recommendations for their improvement by the European Commission. The EU has also set standards for CO₂ emissions from cars and trucks. By 2030, CO₂ emissions from new cars will have to be 37% less than in 2020, plus a 30% reduction for trucks.
Finally, we have EU legislation that require require a 32% increase in the share of renewable energies in the energy mix by 2030 as well as a 32.5% improvement in energy efficiency by 2030.
Taken together, these measures should enable the EU to exceed its target of at least a 40% reduction in greenhouse gas emissions by 2030 compared with 1990, and in fact achieve a reduction of around 45%. It is very clear that present-day Europe is firmly on the path to decarbonisation and that it is possible to decouple emissions from economic growth. In other words, Europe has shown that it is possible to profit, in good economic climates and bad, from greenhouse gas emissions reduction.
Despite the transformative nature of Europe’s 2030 target, more needs to be done. Now is the time to transition from a logic of progressive emissions reductions to a goal of true climate neutrality.
On 1 December 2019, the new European Commission, led by Ursula von der Leyen, assumed office. One of the new Commission’s key priorities is to address the issue of climate change and within its first two weeks in office, it had already presented the European Green Deal. Steered by Executive Vice President Timmermans, it is poised to be a new growth strategy for Europe that will transform the EU into a fair, prosperous society with a modern, resource efficient and competitive economy, where there are no net emissions of greenhouse gases by 2050 and where economic growth is decoupled from resource use. This is the most ambitious package of measures to date that should enable European citizens and businesses to benefit from a sustainable green transition. It combines a set of transformative policies and measures to tackle climate change, biodiversity loss and pollution, and to reform the inefficient use of resources by moving to a more circular economy. It will not only provide cleaner air and water for citizens, but will strengthen the economy to the benefit of all. It will put Europe on track to a sustainable and prosperous future whilst leaving no citizen behind.
A key component of the European Green Deal is the objective of climate neutrality by 2050. In 2018 the Commission presented its vision for a climate neutral EU by 2050, based on seven building blocks (increased energy efficiency; increased use of renewables; a clean and connected mobility system; a competitive circular economy industry; connected high-standard infrastructures; a boost in the bio-economy and natural carbon sinks; and the use of carbon capture and storage). Following an extensive stakeholder debate, the objective is was endorsed by the European Council in December – with one Member State requiring more details for implementation. This will now allow the EU to submit its long term strategy under the Paris Agreement by 2020. Furthermore, as part of the European Green Deal, the 2050 objective will also be transposed into EU law within the first 100 days of President von der Leyen’s mandate.
Under the Green Deal, the EU will also look at ambitious climate action for 2030. By summer 2020, the Commission will present an impact-assessed plan to increase the EU’s greenhouse gas emission reductions target for 2030 to at least 50% and towards 55% compared with 1990 levels in a responsible way. Similar assessments will be undertaken on other key pieces of legislation that underpin our climate policy, including the EU Adaptation Strategy to adapt to the inevitable changes in the climate.
The Green Deal covers all aspects of the economy, from transport to energy, agriculture, buildings and industry. For instance, we we will work to transform our industry to address the twin challenge of a green and digital transformation. Together with a new industrial strategy, a new circular economy action plan will facilitate the transition to a more circular economy. We will take ambitious measures for a more environmentally friendly mobility and for greening agriculture as part of a sustainable food policy. We also propose to work with stakeholders on a buildings renovation wave across Europe. This is a condition of Europe’s ability to achieve our climate and energy efficiency objectives. We know that meeting the objectives of the European Green Deal will require significant additional investment. The Commission therefore will present a Sustainable Europe Investment Plan to help meet additional funding needs. It will combine dedicated financing to support sustainable investments, and proposals for an improved enabling framework that is conducive to green investment. Moreover, at least 30% of the InvestEU Fund will contribute to fighting climate change. Projects will be subject to sustainability proofing to screen the contribution that they make to climate, environmental and social objectives.
The EU budget will play a key role; indeed, the Commission has proposed a 25% target for climate mainstreaming across all EU programmes. As part of the revision of the EU Emission Trading System, the Commission will also review the role of the Innovation and Modernisation Funds, with the aim of strengthening their role and effectiveness in deploying innovative and climate-neutral solutions across the EU.
Fighting climate change and environmental degradation is our common endeavour but not all regions and Member States start from the same point. Yet this transition can only succeed if it is conducted in a fair and inclusive way. The Commission will therefore propose a Just Transition Mechanism, including a Just Transition Fund, focusing on the regions and sectors that are most affected by the transition because they depend on fossil fuels or carbon-intensive processes. It will draw on sources of funding from the EU budget as well as the EIB group to leverage the necessary private and public resources to ensure a socially fair transition that leaves no citizen behind.
Last but not least, civil society’s active engagement in the transition is paramount if businesses and all citizens are to endorse and support the necessary policies and measures. The Commission will launch a Climate Pact later in 2020 to give civil society a voice in designing new actions, sharing information and highlighting grass-roots activities to improve the environment.
The global challenges of climate change and environmental degradation require a global response. The Green Deal outlines the ambition of the EU to act a global leader of change though a number of initiatives to be pursued in multilateral and bilateral formats. If we do not show European leadership, nobody else will lead the way. We need to demonstrate our working model for a clean, prosperous and sustainable society that leaves no one behind. Then others will follow.
It is clear that we must concentrate our efforts into the next decade or so, putting the necessary policies and measures in place and deploying our investment correctly if we want results to unfold at a timely pace between now and 2050. In the EU, we have a plan to get there and busy agenda for the coming years to deliver on a prosperous and fair transformation towards a climate-neutral European Union.
For more information:
European Green Deal Communication:
The Commission has proposed today to make 2021 the European Year of Rail, to support the delivery of its European Green Deal objectives in the transport field. A series of events, campaigns and initiatives in 2021 will promote rail as a sustainable, innovative and safe mode of transport. It will highlight its benefits for people, the economy and the climate and focus on the remaining challenges to create a true Single European Rail Area without borders.
There’s no doubt that railway transport means huge benefits in most areas: sustainability, safety, even speed, once it’s organized and engineered according to 21st century principles. But there’s also something more profound about railways: they connect the EU together not only in physical terms. Setting up a coherent and functional network across all Europe is an exercise in political cohesion. The European Year of Rail is not a random event. It comes at an appropriate time, when the EU needs this kind of collective undertaking.
As one of the most sustainable and safest modes of transport we have, rail will play a major role in Europe’s future mobility system. Rail is not only environmentally friendly and energy-efficient – it is also the only mode of transport to have almost continuously reduced its CO2 emissions since 1990, at the same time as it increased transport volumes.
Rail connects people, regions and businesses all across the EU. Moreover, it is proof of European engineering expertise and part of our European heritage and culture.
The European Year of Rail in 2021 will help to step up the pace of rail modernization, which is needed to make it a more popular alternative to less sustainable transport modes.
2021 will be the first full year in which the rules agreed under the Fourth Railway Package will be implemented throughout the EU. 2021 also marks several important anniversaries for rail: the 20th anniversary of the first Railway Package, the 175th anniversary of the first ever rail link between two EU capitals (Paris-Brussels), as well as 40 years of TGV and 30 years of ICE.
The international arts festival EUROPALIA has already chosen railways as their 2021 theme and will be an active contributor to the wide range of activities taking place throughout the European Year of Rail.
In its Communication of 11 December 2019, the European Commission set out a European Green Deal for the EU and its citizens, with the goal of achieving climate neutrality by 2050. As transport accounts for a quarter of the EU’s greenhouse gas emissions, the sector will play a crucial role in achieving this target and has been set the objective of reducing its emissions by 90% by 2050.
As part of the European Green Deal, the Commission is currently working on a strategy for sustainable and smart mobility that will address emissions from all transport modes. As a matter of priority, a substantial part of the 75% of inland freight carried today by road should shift onto rail and inland waterways.
The Commission’s proposal on declaring 2021 the European Year of Rail needs to be adopted by the European Parliament and the Council.
At the end of the 1960s, the railways in France were facing strong competition from the “all-car” and the prowess of the Concorde. It was the invention of the TGV, from the 1980s onwards, that once again enabled the railways to become a real path to the future.
In 2020, it is a completely different kind of context that makes rail, like all public transport, vulnerable, namely the de-mobility imposed by the Covid-19 pandemic. It would be a strategic error to see it as a simple blip that would naturally end as the epidemic recedes. Some of its consequences will be long-lasting.
Admittedly, the 2021 context is not that of 1960. The train, because it emits 30 times less greenhouse gases than the car and 20 times less than the airplane, will naturally be carried along with the growing ecological aspiration, especially among the youngest. Letting this trend happen in this manner would be tempting, but it would not be enough.
Today, as in the past, it is through innovation that rail will be able to strengthen its usefulness and performance for the benefit of all.
The French and European plans place rail at the heart of the recovery because it is a major solution to the accelerating challenges: the climate imperative, growing economic and social inequalities, and territorial fractures.
In this context, the SNCF’s responsibility is to invent the mobility of tomorrow, one that will combine economic, social and environmental performance. The public utility of our activity obliges us to do so.
We are giving ourselves the means to do so, thanks to our “Tous SNCF” transformation project. Innovation is one of the four pillars of this project – alongside people, regions and the environment – and we are resolutely choosing to work together with other sectors and with our European partners because a large-scale transformation is essential.
Innovating for an ever more sustainable railway
Mobility is at the heart of our daily lives. The SNCF has an essential role to play in making the ecological transition a success by giving everyone the means to get involved and take action.
In addition to supporting regions in implementing their local ecological transition and strengthening the environmental performance of their operations, SNCF is innovating to make rail an increasingly carbon-free mode of transport. We have set ourselves an ambitious goal: to reduce our greenhouse gas emissions by 30% by 2030 and achieve carbon neutrality by 2050.
To do so, we adapt what can be adapted. Starting next year, and with the objective of entering commercial service by the end of 2022, we are testing the first hybrid TER in partnership with Alstom and four Regions. Replacing two of the four diesel engines with lithium batteries will reduce greenhouse gas emissions by 20% and cut energy consumption by 20% as well. In 2022, we will test the first battery-powered train with a range of 80 km, and the first five trainsets will be put into service in five regions by 2023. 2023 should also be the year in which the first hydrogen train will be in service.
And we invent what needs to be invented. Almost 40 years after the TGV, we are creating the train of the future that will combine economic, ecological and social performance. The “TGV M”, made up of 97% recyclable materials, will be deployed as of 2024. It will be modular and will be able to carry 20% more passengers on board while being more spacious and more energy-efficient. It will also be economical in terms of maintenance costs, thanks to the predictive maintenance tools it will be equipped with.
With its Autonomous Train program, the SNCF is making the choice to transport more passengers and more goods in the future. We have a strong conviction: autonomy is a major asset for trains. It will enable us to provide new rail solutions to support the ecological transition by encouraging modal shift and reducing the energy consumption of trains. Two years after the launch, in 2018, of two consortia dedicated to developing a prototype autonomous train, one for freight and the second for passenger transport, SNCF has taken a vital first step. At the end of October 2020, a locomotive operated in partial autonomy on the national rail network between Longwy and Longuyon, in eastern France, on a line equipped with the European signalling system ERTMS, under the supervision of a driver. This project, carried out with Alstom, Altran, Apsys, Hitachi Rail and the Institute for Technological Research (IRT) Railenium, is geared towards its final objective: to run a prototype in complete autonomy in 2023. This objective also guides the autonomous TER prototype project, which brings together SNCF, Bombardier, Bosch, Spirops, Thales and the IRT Railenium. A TER Regio 2N trainset is currently being modified to start its first semi-autonomous tests at the end of February 2021.
All the work carried out on autonomy is being shared with our European counterparts as part of Shift2Rail, with a view to preparing future regulations.
Building the future European rail system as part of the Shift2Rail program
The SNCF Group, a major European operator, has invested resolutely in the Shift2Rail partnership as part of the Horizon 2020 programme. This is because the movement of people and goods by rail must be conceived within a single European rail area, because the competitiveness of the European rail industry is only guaranteed on European and global markets, and because research and innovation at European level support the necessary collective effort of European players. The collaborative work of manufacturers and operators from resource management/asset management through to freight control and command is accelerating the technological and digital evolution of rail transport. The results of the projects are renewing the image of trains as a carrier of more innovation. SNCF is actively involved in defining the successor partnership for Europe’s Rail, scheduled for the end of 2021, with the whole sector to transform and amplify the results already achieved around nine major themes: automation/autonomization, decarbonization, intelligent resource management, rail freight, the digital twin, and a shared technical architecture capable of rapid change.
Innovating for a rail system that is increasingly connected to the needs and expectations of passengers and local communities alike
Innovating for a rail system that is increasingly connected to the needs and expectations of passengers and local communities alike
While this pandemic has not created radically new needs in terms of mobility, it has nevertheless revealed the importance of some of our customers’ expectations, both passengers and local authorities, and has accelerated new uses.
Undeniably, Covid-19 has generated many upheavals and uncertainties within our European societies, hence a reiterated need for dialogue, proximity and trust. At the SNCF, this leads us to further strengthen the fundamentals of rail service quality – the basis of the contract of trust that binds us to passengers and to the regions. Our aim is to reduce the number of breakdowns by a factor of three for greater safety, better punctuality and faster passenger information. This is why, since October 2020, we have been deploying our predictive maintenance tools on all TGV and TER trains that do not yet benefit from them, and are extending them to other parts of already equipped trains. As the world leader in this field, SNCF is developing tools capable of analysing more than 2,000 variables in a train in real time across more than 300 units simultaneously.
By forcing us to distance ourselves physically and socially, this crisis has very clearly led to an acceleration of the digital transition in numerous industries and the increased digitalization of uses. The SNCF has always been a pioneer in digital innovation at the service of mobility. Its e-commerce site, OUI.sncf, celebrated its 20th anniversary in 2020 – 20 years during which it has been able to anticipate and support passenger usage. With the SNCF Assistant, we are developing a resolutely intermodal mobility system that combines the advantages of the different modes of transportation around rail in all regions for seamless mobility, even on the last mile. In 2021, the Group will further strengthen this dynamic by bringing all these solutions together in a single application for a smoother customer experience, more proximity and conversation with our users, and more services at their disposal. Furthermore, because our ambition is to make this application a true platform for French and European mobility, it will also be open to all our stakeholders, particularly the Mobility Organizing Authorities.
At SNCF, we are firmly convinced that innovation is synonymous with progress. However, there is one condition for this: that technology complements and strengthens human relationships, without ever feeling tempted to supplant them.
Today, as in the past, the SNCF will rely on innovation to strengthen its proximity and usefulness in the service of its employees, passengers and territories.