EU Energy & Climate Policy Update

Dear reader,

Welcome to the latest edition of the monthly Energy and Climate Policy Update. In this issue, we provide you with an update of the next European Commission, as the Commissioners-designate responded to the Parliamentary Committees written questions in advance of the hearings scheduled for early November. Additionally, we will explore the potential impact of the upcoming ‘Clean Industrial Deal’ on businesses.

Stay tuned for insights that could shape your business strategies!

WEBINAR: 2024 United States elections

Wednesday, 13 November 2024

16:00 – 17:00 CET | 10:00 – 11:00 EST

Before you move on, perhaps you remember our series of ‘beyond the ballot’ webinars where we took a deep dive into the political elections within the EU? Now it’s time to cross the continental border to land in the US where we will soon find out who will enter the White House next. BlueStar Strategies and Publyon EU are thrilled to once again reunite for another timely and insightful webinar – this time focused on the US elections’ results and their consequences on the domestic political dynamics and the US-EU relations.

The spotlight

Hearings of European Commissioners-designate

The moment of truth for the European Commissioners-designate is coming closer, with Parliamentary hearings set for 4–12 November. Before the hearings, candidates were required to respond in writing to questions from each Parliamentary Committee. These written answers shed light on what we can expect from the upcoming hearings and, more importantly, what lies ahead in the next five years.

In this edition of the Spotlight, we will summarise the key responses from the most relevant Commissioners-designate in the Energy and Climate sectors. Join us as we explore their insights and what they could mean for the future of Europe’s energy and climate landscape.

Written responses from Commissioners-designate to Parliamentary questions

• Apostolos Tzitzikostas (Sustainable Transport and Tourism): Underlined that a Sustainable Transport Investment Plan will be developed to enhance infrastructure for electric vehicles and high-speed trains. Additionally, the Trans-European Transport Network (TEN-T) must be completed by 2030. The next Commission will also focus on multimodal transport and digital mobility services, including through the creation of a single digital booking system for public transportation.
• Dan Jørgensen (Energy and Housing): Will review the security of supply framework and introduce a Clean Energy Investment Strategy that includes a de-risking initiative. This strategy includes an Action Plan for Affordable Energy and an Electrification Action Plan while advancing initiatives for both imported and domestic hydrogen. Jørgensen emphasised the use of new technologies such as carbon capture, green hydrogen, and small modular reactors (SMRs) to effectively decarbonise hard-to-abate sectors.
• Jessika Roswall (Environment, Water Resilience and Circular Economy): Her key focus is the Circular Economy Act, which aims to create a unified market for waste and secondary materials by harmonising EU standards and boosting demand for recycled content through economic incentives. The Zero Pollution Action Plan and upcoming REACH revisions will impose stricter regulations on hazardous chemicals like PFAS, promoting safer alternatives. Additionally, Roswall’s Bioeconomy Strategy will focus on bio-based materials and nature-positive investments to help industries scale sustainable operations.
• Wopke Hoekstra (Climate, Net Zero and Clean Growth): Will focus on sustainable industrial carbon management through carbon pricing and removals, using the EU Emissions Trading System (ETS) and the Carbon Border Adjustment Mechanism (CBAM). This approach underscores that the EU’s international credibility depends significantly on its domestic actions. He will also support the removal of fossil fuel subsidies by advocating for a review of the Energy Taxation Directive (ETD). Furthermore, there is a strong push for taxing emissions in both the aviation and maritime sectors. Hoekstra will also propose setting a net emissions reduction target of 90% by 2040 in the European climate law.
• Teresa Ribera (Clean, Just and Competitive Transition): Pledged to provide swift and effective state aid to support the EU’s Clean Industrial Deal. Ribera emphasised that public funds could help unlock private sector investments for decarbonisation. The Clean Industrial Deal aims to help companies achieve the EU’s ambitious carbon-cutting targets and promote climate-friendly technologies, and the EU has committed to releasing its strategy within 100 days of Ribera taking office. More info on the Clean Industrial Deal can be found under the “Business Impact” header.
• Stéphane Séjourné (Prosperity and Industrial Strategy): Together with Ribera and Hoekstra, the aim is to develop the Clean Industrial Deal along with the Industrial Decarbonisation Accelerator Act. These initiatives are designed to streamline permit processes, improve access to infrastructure, energy, and raw materials, and enhance public and private funding, skills, and technology. Séjourné will also focus on advancing Important Projects of Common European Interest (IPCEIs) with support from the forthcoming European Competitiveness Fund.

Next steps

Now that the Commissioners-designate have submitted their written answers to the Committee questions, they will study all the topics within their policy domains in preparation for the upcoming Parliamentary hearings scheduled for 4 – 12 November. Check out the full schedule here.

Publyon will be closely following the proceedings and will keep you updated on relevant developments.

Policy update

EU sees increased share of Russian LNG imports

A new report from the European Union Agency for the Cooperation of Energy Regulators (ACER) reveals that the EU’s overall demand for liquefied natural gas (LNG) has decreased, despite a global increase in production. In the third quarter of 2024, EU imports represented 18% of the global market, down from 24% in the first half of the previous year. However, the share of Russian LNG in EU imports has significantly increased, rising from 14% to at least 20%, making Russia the second-largest export partner after the U.S.

The European Commission is expected to propose measures in early 2025 aimed at reassessing the design and enforcement of sanctions to enhance their effectiveness and close existing loopholes. Member States are advocating for increased transparency and traceability of Russian LNG due to concerns that cargoes may arrive without clear information on their country of origin.

EU prepares for COP29

European Commissioner for Climate Action Wopke Hoekstra (The Netherlands) will lead the EU negotiation team at the Conference of Parties (COP29) from 11-22 November in Baku, Azerbaijan. Discussions are expected to focus primarily on financing the green transition, including through the introduction of a New Collective Quantitative Goal (NCQG) for climate investments. Member States stressed that private investment would have to provide the largest share of the required investment in the green transition. Additionally, the EU will aim to ensure that countries worldwide adhere to the agreements made at COP28 in Dubai – the so-called UAE Consensus. This includes phasing out fossil fuels, tripling renewable energy capacity, and doubling energy efficiency improvements by 2030.

Push for cross-border CO₂-transport guidelines

Six EU Member States – Denmark, Finland, Sweden, France, the Netherlands and Germany – are urging the European Commission to formulate guidelines for establishing a Europe-wide transport network for captured CO₂. To promote investment and ensure the timely, sustainable, and cost-effective development of the market, it is essential to eliminate regulatory and economic uncertainties and improve regional and cross-border cooperation, according to the joint statement.

Pressure to revoke the ban on combustion engines in 2035 increases

Pressure is mounting to delay the 2035 ban on combustion engines. Both the automotive industry and political groups, such as the European People’s Party (EPP), warn of potential negative impacts on European industry. Italy has requested the European Commission to postpone the ban, while France seeks more “flexibility” in implementation, and Germany’s coalition wants to allow combustion engines that run on eco-friendly alternative fuels.

However, internal documents reveal that the European Commission is firm on the 2035 ban. According to EU climate chief Wopke Hoekstra, reversing course is not an option, as the rules offer investment stability, support CO₂ reduction goals, and strengthen Europe’s automotive competitiveness. Hoekstra reiterated this point in his written responses to questions from the European Parliamentary Committee ahead of the parliamentary hearings.

The European car industry has faced sustained pressure in the past years, partly due to rising competition from more affordable Chinese EVs. Recently, Volkswagen announced significant layoffs and plans to close three of its plants in Germany.

Friends of Renewables urge the Commission for more concrete action

To achieve the EU’s 2050 climate neutrality goal, eleven Member States, known as the Friends of Renewables, are urging ambitious action to meet the 2030 targets of the European Green Deal and REPowerEU.  A coalition that includes Germany, Italy, and The Netherlands is promoting accelerated renewable energy adoption across Europe and shared a new set of recommendations on 14 October.

Key proposals include revising the Renewable Energy Directive (RED III) for stable investment conditions, substantial investments in grid development, streamlined permitting for renewables, incentives for hydrogen infrastructure, and encouraging private financing for green projects. A proposed EU Green Bond Standard aims to boost renewable and energy efficiency investments.

Commission aims to foster SMR market development

With nuclear energy back in the spotlight as a potential cornerstone of the EU’s energy strategy, the European Commission has recently selected nine small modular reactor (SMR) projects in its first round of applications for the European Industrial Alliance for Small Modular Reactors. These projects are set up to form specialised working groups to drive progress in this field.

The Alliance is tackling key areas to make SMRs a reality in Europe, focusing on improving conditions for SMR development, rebuilding a resilient nuclear supply chain, and smoothing the path for deployment. By supporting these specific projects, the Alliance aims to accelerate SMRs’ entry into the European market – helping shape a cleaner, more independent energy future for the EU. In line with this, a new report from consultancy firm Compass Lexecon suggests that investing in new nuclear power plants could greatly diminish the EU’s reliance on foreign energy sources.

Business impact

 (How) will the Clean Industrial Deal reconcile decarbonisation objectives with European competitiveness?

As recently outlined by former Italian Prime Minister Mario Draghi, Europe’s industries are struggling: demand declines while production costs are rising, and investments are flowing to regions outside of the EU at a critical time where capital is mostly needed to finance the EU’s transition towards a net-zero, sustainable economy.

EU industry faces competition from its US counterparts, which benefit from a massive subsidy package through the Inflation Reduction Act (IRA), as well as those in China, heightening the challenges already faced by European industry.

The 2024 Antwerp Declaration (which has now been signed by more than 1,250 organisations) called on European policymakers to complement the European Green Deal with a European Industrial Deal that offers clarity, predictability, and confidence, thereby restoring the business case for investments to protect European industry and preserve quality jobs within the EU.

What can the European industry expect?

The European Commission has committed to publishing its strategy for a Clean Industrial Deal within the first 100 days of the new College’s term in office. Although the new College of Commissioners has not yet taken office, with hearings for the Commissioners-designate scheduled between November 4 and 12, the European Commission is actively engaged at the technical level to establish the groundwork for the upcoming mandate. We can thus expect the strategy to be published early 2025, whereupon legislative initiatives will follow later in the Commission’s mandate, likely in 2026. Below, Publyon offers insights into what can be anticipated.

The overarching goal of the Clean Industrial Deal is to ensure that EU industry remains competitive in a challenging global environment, while at the same time fostering a successful green and digital transition. This involves addressing various obstacles, such as rising production costs and competition from other regions, grid congestion hindering the uptake of clean technologies, and other administrative burdens.

The Clean Industrial Deal aims to safeguard Europe’s innovation and heavy industry by establishing a robust framework that promotes long-term sustainable practices while ensuring economic viability. What can we expect the Clean Industrial Deal to focus on? We expect the European Commission to focus on four key themes:

1. Simplification of existing EU legislation and procedures by removing unnecessary complexities to foster a more conducive business environment. For example, a Net-Zero Decarbonisation Accelerator Act should further streamline permitting and planning procedures for clean tech projects.
2. Energy prices remain a critical concern for large energy consumers, such as the chemical and steel sector. A crucial aspect of the deal will focus to ensuring competitive EU energy prices vis-à-vis non-EU markets.
3. Value-driven investments: exploring smart and innovative uses of public funds can help maximise the impact of investments. A key factor for success is understanding the associated risks faced by companies and identifying how public funds can mitigate these risks.
4. Enhance economic security by establishing new support mechanisms for innovation, reassuring the EU possesses high-quality, well-paying jobs in future-oriented and solid sectors.

What is the impact on businesses?

The Clean Industrial Deal can be viewed as a European Green Deal 2.0, supporting the transition to a sustainable, low-carbon European economy by fostering innovation and investment in clean technologies. It seeks to ensure that European industries remain competitive and resilient, while also keeping them aligned with the EU’s climate goals. The Clean Industrial Deal has a wide range of implications for businesses and will provide opportunities including improved access to capital markets and financing opportunities, reduced administrative burdens, and further harmonisation of specific bottlenecks within the European single market.

If your industry has ideas to help shape European industrial policy in the coming mandate, or if you’d simply like to learn more about the upcoming Clean Industrial Deal and how this may impact your business activities, feel free to reach out us at eu@publyon.com.

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What’s next?

From 4-12 November, the hearings of the Commissioners-designate will take place at the European Parliament in Brussels. In addition to the publication of the written questions, the timings of the hearings have been confirmed. Hyperlinks hereunder will direct you to the webpage where you can watch the hearings live. Discover Publyon’s insights regarding the priorities and challenges that these nominees aim to tackle.

• 4 November 18h30-21h30 – Commissioner-designate for Sustainable Transport and Tourism, Apostolos Tzitzikostas (Greece)
• 5 November 14h30-17h30 – Commissioner-designate for Energy and Housing, Dan Jørgensen (Denmark)
• 5 November 18h30-21h30 – Commissioner-designate for Environment, Water Resilience and Circular Economy, Jessika Roswall (Sweden)
• 7 November 09h00-12h00 – Commissioner-designate for Climate, Net Zero and Clean Growth, Wopke Hoekstra (The Netherlands)
• 12 November 18h30-21h30 – Executive Vice-President-designate for Clean, Just and Competitive Transition, Teresa Ribera (Spain)

Martijn Meijer

Hi, my name is Martijn and I am curating the Energy & Climate Policy Update, aiming to bring you insightful updates straight from Brussels. At Publyon, I work mainly on transport and energy files. Do you have any questions on EU energy and climate policies or how these might impact your organisation? Feel free to reach out!

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