Special EU Council reaches agreement on the EU’s COVID Recovery Plan and Long-Term Budget: following 5 days of negotiations, the leaders of the EU Member States reached an agreement on a €1.824 trillion budget deal. This budget is composed of a 3-year Recovery plan named ‘Next Generation EU’ for the period 2021-2024 (“NGEU”, €750 billion, composed of €390 billion in grants and €360 billion in loans) and a 7-year Multiannual Financial Framework for 2021-2027 (“MFF”, €1,074 billion).
Key highlights for the solar industry from the Council conclusions, available here, include:
- 30% climate mainstreaming and “do no harm” consistency: A target of 30% of expenditures from NGEU and the MFF (€550 billion of the total) will be destined to contribute to climate neutrality by 2050 and contribute to the EU’s 2030 climate and energy targets. This is an increase from the 25% initially proposed by the European Commission. Overall, EU expenditure should be consistent with the Paris Agreement and the “do no harm principle”.
- More funds and stronger green conditionality for the Recovery and Resilience facility: The Council approved a €672.5 billion budget for the Recovery and Resilience Facility (up from the €560 billion proposed by the Commission). Importantly, the Council notes that an “effective contribution to the green and digital transition shall […] be a prerequisite for a positive assessment”.
- InvestEU budget slashed under NGEU: The budget for the fund aiming to de-risk private investments through budget guarantees was reduced to €5.6 billion, down from the €30.3 billion proposed by the European Commission. The budget for this programme was slightly increased in the MFF, from €1.3 billion to €2.3 billion for the period 2021-2027
- Severe reduction to Just Transition Fund: from 40 billion (€10 billion in MFF + €30 billion in NGEU) to €17.5 billion (€7.5 billion + €10 billion). This is, however, still higher than the 7.5 billion initially foreseen for the Just Transition Fund.
- No Solvency Support Instrument: the €26 billion emergency fund to support viable private companies and projects was scrapped.
European Commission regrets cuts to climate and innovation: In a joint press conference with the EU Council President, the European Commission President Ursula von der Leyen said it was “regrettable” that member states had made significant adjustments to InvestEU and that they had not taken up the Solvency Support Instrument.
European Parliament may withhold consent to the Deal reached by the Council: An extraordinary plenary meeting took place on Thursday during which MEPs debated on the Tuesday’s Council agreement. They approved a resolution (465 votes in favour, 150 against, and 67 abstentions, provisional version here) that “does not accept the political agreement on the 2021-2027 MFF as it stands”. Whereas they welcome the Recovery Plan, they deplored the cuts to the grant components of NGEU. MEPs also disapproved of the budget reductions to “future oriented programmes in both the 2021-2027 MFF and NGEU” as they “undermine the foundations of a sustainable and resilient recovery.
European Parliament negotiators ready to negotiate with the Council: Trilogues to reach an agreement for the MFF to be approved will begin as soon as possible. The Parliament’s negotiating team will be composed by MEPs Johan Van Overtveldt (ECR, BE), Jan Olbrycht (EPP, PL), Margarida Marques (S&D, PT), José Manuel Fernandes (EPP, PT), Valérie Hayer (RENEW, FR), and Rasmus Andresen (Greens/EFA, DE). They had already signalled their discontent with the MFF agreement of the Council.
TEN-E Regulation: Theimpact assessment report on the TEN-E Regulation should be finalised by October 2020. A first draft version will be shared with the European Commission at the end of July.
- The European Commission has adopted new rules on methodology of EU Climate benchmarks. The delegated act sets out minimum technical requirements for EU Climate Benchmarks, as well as a number of Environmental, Social and Governance (ESG) disclosure requirements. For example, it sets out minimum requirements that would exclude assets that significantly harm ESG objectives. These new rules will help orient the choice of investors who wish to invest in the transition towards a climate-neutral economy.
- The Technical Expert Group (TEG) on Sustainable Finance has issued guidance on how the EU Taxonomy could support the EU recovery. The TEG proposes five high-level Principles for Recovery & Resilience supported by detailed recommendations for applying the EU Taxonomy to the EU’s Recovery Package (Multiannual Financial Framework and Next Generation EU).
Consultation on the Environmental Performance of Products and Businesses: On the 20th of July 2020, the European Commission opened a new consultation as an initiative to require companies to substantiate claims they make about the environmental footprint of their services/products by using standard quantitative methods. The consultation is open until the 31st of August and the European Commission is planning to provide feedback during the third quarter of 2020 as well as adopt the regulation in the second quarter of 2021.
Consultation on carbon border adjustment mechanism for the EU Green Deal: On the 22nd of July 2020, the European Commission opened a new consultation linked to putting a carbon price to imports from outside the EU in order to reduce the global emissions and ensure that Europe would reach climate-neutrality by 2050. The consultation is open until the 28th of October and the European Commission will adopt the regulation on the second quarter of 2021.
Altmaier hearing in ITRE: During the ITRE Committee meeting, the German Federal Minister for Economic Affairs and Energy Peter Altmaier presented the priorities of the German presidency for energy and industry. He stressed the role of gas, both natural gas and blue hydrogen, as bridging technologies in the energy transition. This requires support to industries with the necessary investments especially when it comes to producing steel from green hydrogen. He also mentioned that:
- The agreement on the MFF, recovery funds and sectoral program are significant to support programs and businesses related to green technology, climate neutrality and digitalisation.
- A European Industrial Strategy and European SME Strategy will help in dealing with fast pace innovations in many fields such as biotechnologies, Green Deal technologies, particularly, hydrogen and alternative drive system for vehicle and aircraft.
- A European value chain must be boosted using a common European instrument. For instance, Important Projects of Common European Interest should be mutually developed between the European countries for hydrogen technologies, 5G and quantum technologies besides IPCEIs that have already been developed in microelectronics, semiconductors and battery cell manufacturing.
- Regarding the relations with China, Europe wants an open world trade with a modernised trade law that is not based on protectionism and that the European Industrial Strategy would ensure that European countries can have the same trade right as countries from other continents.
COUNCIL OF THE EU
European Commission’s presentation on the Energy System Integration and Hydrogen Strategies: On 9th of July, a presentation on “The Energy System Integration and Hydrogen Strategies” was presented by the European Commission to the Energy Working Group in the European Council. You can access the presentation here, which was followed by a Q&A with EU Member States. France, Austria, Spain were reassured by the inclusion of local production of hydrogen. The Netherlands, Poland and Romania also requested more information on the access criteria to the Clean Hydrogen Alliance.
- 28 September – 2 October: #SolarPowerSummit goes online.
As we slowly recover from the COVID-19 pandemic, the SolarPower Summit arrives at a crucial time for the solar industry, and promises to take stock of the impact and remedies to ensure a truly green recovery in service of the objectives of the European Green Deal. Register here
This was the last weekly policy update before the summer break. The next weekly policy update will be out on 24th August. Happy holidays!