EU Energy & Climate Policy Update | No. 48

Dear reader,

Welcome to a new edition of the monthly Energy and Climate Policy Update. The European Parliament is wrapping up its work this week, with over 90 votes being held. The next time Parliament convenes will be in July, in a new set-up with many fresh faces (a record number, we think). You can find an overview of some of the most important energy and climate votes that took place below. In addition, we present the most relevant take-aways from Enrico Letta’s report on the Single Market.

The spotlight

Letta’s report on the future of the European Single Market

On 17 April, Enrico Letta, former Italian Prime Minister, published his High-level Report on the Future of the Single Market, which was commissioned by the European Council and President of the European Commission Ursula von der Leyen.

Letta’s report analyses the future of the Single Market and comes with several suggestions to improve it. It contains recommendations for the upcoming EU strategic agenda 2024-2029. The report pinpoints areas for improvement within the Single Market, seeking to come up with an improved version that narrows the innovation divide between the EU and economic competitors such as the US and China. This involves directing both public and private investments into crucial sectors to boost EU.

Energy integration advancing economic growth and security

According to Letta, the internal market has changed Europe fundamentally, with high levels of integration and success. However, the current Single Market has failed to adapt to the ever-changing European and global context, putting it at risk of being unable to address current challenges and maintain competitiveness.

Letta notes that, so far, the energy market – the same goes for finance and telecommunications – has been deliberately kept outside of the integration process. To advance economic security, Letta argues for significantly increasing investments in infrastructure networks, for example for electricity, hydrogen, and carbon capture and storage. The EU should also enhance coordination with reliable partners to secure its energy supply and clean technologies.

How is it financed? – Towards a “Savings and Investments Union”

For the EU to succeed in its fair, green, and digital transition, it is essential to move from policy design to practical application, Letta notes. On one hand, he proposes to create a European executive entity for the EU’s clean funding programs and incentive schemes, accelerating the energy integration process. On the other hand, Letta suggests to radically change the European financial framework. Without adequate financial markets, progress in other areas may stall.

Letta advocates for creating a Savings and Investments Union, evolving from the incomplete Capital Markets Union, to integrate financial services within the Single Market. The new union should help retain European private capital/savings and attract additional resources from abroad. Moreover, Letta addresses the state aid debate, advocating for targeted public support while maintaining a level playing field in the Single Market. He suggests expanding EU-level funding and accelerating European public investments for a competitive industrial strategy. Finally, Letta emphasises the European Investment Bank’s role in supporting long-term economic prosperity and sustainability goals.

Next steps

Letta’s report serves as a blueprint for the evolution of the EU’s Single Market. By integrating energy as a key area into the Single Market, the EU’s competitiveness and economic security should be strengthened. The report is therefore a call to action and should inform new policy in the upcoming mandate. Letta’s input will be used by EU heads of government, who are currently drafting their high-level priorities for the next mandate, the Strategic Agenda 2024-2029, to be presented in June.

Have any questions about the report and future EU policy on competitiveness? Feel free to reach out – we stand ready to support you!

Policy update

The final two European Parliament Plenary sessions of this mandate, held from 10-11 & 22-25 April, saw some key votes in energy and environmental policies. You will find a rundown here.

Adopted in the 10-11 April (Brussels) Plenary session:

• The Heavy Duty Vehicle (HDV) Regulation: this Regulation aims to drastically reduce the carbon emissions of HDVs by 2040, with targets aiming for a reduction of 45% by 2030, 65% by 2035, and 90% by 2040.
• The Methane Reduction Regulation: this Regulation aims to reduce methane emissions in the energy sector, by introducing measures for oil and gas operators in detecting, reporting and repair of methane leaks.
• The Gas and Hydrogen Package: a revised Regulation and Directive promoting the transition of Europe’s gas markets to hydrogen and laying the groundwork for a future hydrogen network development body.
• The Carbon Certification Framework: a new scheme for carbon removals establishing a registry for certified units of carbon dioxide removed from the atmosphere through industrial or nature-based processes.
• The Electricity Market Reform Regulation: a new Regulation for an energy market reform which focuses on consumer protection and price stability by promoting long-term supply contracts for renewable energy.

The revision of the Urban Wastewater Treatment Directive: will update rules for the collection, treatment and discharge of urban wastewater, which intends to better protect the environment and public health.

Adopted in the 22-25 April (Strasbourg) Plenary session:

• The Trans-European Transport Network (TEN-T) Regulation: this regulation concerns the massive development of Europe’s transport infrastructure network.
• The Withdrawal from the Energy Charter Treaty (ECT): the EU stated that the goals of the ECT no longer are compatible with the EU’s enhanced climate ambition regarding the Green Deal and the Paris Agreement.
• The Ecodesign Regulation: this regulation sets up a framework for defining ecodesign requirements for particular product categories, aiming to notably enhance their circularity, energy efficiency, and other environmental sustainability features.
• The Ambient Air Quality Directive: this directive establishes EU standards for 12 pollutants and guides the assessment of air quality by establishing a representative high-quality monitoring network.
• The Net-Zero Industry Act (NZIA): this Regulation aims to enhance Europe’s manufacturing capacity for net-zero technologies and address obstacles hindering the scaling up of manufacturing capacity across the continent.

But votes on agreements were not the only thing happening! Below you will find some more energy & climate developments from the past month.

Commission presents outcome of Clean Transition Dialogues

On April 10, the European Commission adopted a communication discussing the results of the Clean Transition Dialogues. These dialogues started in late 2023 and should help inform future EU industrial policy. The Commission highlights the need for a strengthened industrial approach and lists some key areas for improvement.

These include an effective and simplified regulatory framework, affordable renewable energy, modern infrastructure, access to finance for the transition, strengthening the single market for joint sourcing of raw materials and combating unfair global competition.

European Commission signs new European Charter for Solar Energy

On April 15, the European Commission signed a charter to support the solar energy sector, which encourages voluntary actions to bolster the European photovoltaic industry, or in other words, converting sunlight into electricity.

The charter also emphasises the need for the creation of a market for high-quality, sustainable products aligning with EU climate and energy objectives and to accelerate the deployment of renewable energy. Coupled with previous measures like the Net-Zero Industry Act (NZIA), the Commission aims to synchronise the green transition with European industrial goals.

International agreements on transport and storage of carbon across borders between five Northern European countries

Five northern European nations – Denmark, Norway, Belgium, the Netherlands, and Sweden – have recently concluded agreements enabling the cross-border transport and storage of captured CO₂, laying the groundwork for fast-growing European carbon capture and storage infrastructure.

These agreements build upon prior collaborations between the countries. By establishing these arrangements, the signatories are working towards creating an efficient carbon capture and storage market across the expansive North Sea region, facilitating the transition to a low-carbon future.

European Commission presents provisional criteria for dealing with harmful chemicals

On 22 April, the European Commission published its Communication providing criteria and principles to assess whether harmful chemicals can be classified as ‘essential uses’. The ‘essential uses’ criterium should help assess whether the use of harmful chemicals (i.e., PFAS) is justified from a societal point of view.

Harmful chemicals are deemed essential if they are necessary for health and/or safety, and/or it is critical for the function of society, and if there are no acceptable alternatives to replace the chemical. If this is the case, then this substance can continue to be used for a certain period. The Communication seeks to offer clarity to both industry and investors while also advancing the protection of human health, the environment, and European security and defence.

In the meantime, want to know more about EU PFAS policy? Read our latest deep-dive here!

Commissioner Thierry Breton pleads for a Nuclear Technologies Act

Commissioner Thierry Breton is pushing for a new EU law on nuclear technologies to foster an integrated nuclear industry in Europe. With the EU aiming for carbon neutrality by 2050, electricity demand is surging.

While renewable energy has been a focal point, attention is now turning to nuclear energy as well. Breton’s proposal seeks to harness nuclear power to meet Europe’s energy needs while aligning with its climate goals.

Business impact

What will be the impact of the revised Energy Performance of Buildings Directive (EPBD)?

On 12 April, the Council of the EU adopted the political agreement on the revision of the Energy Performance of Buildings Directive (EPBD). Since the European Parliament had already given its approval in March, that means the legislative process is as good as finished – 20 days after publication (still upcoming), the revision can enter into force.

Since it concerns a Directive, Member States will then need to transpose the law into national legislation (in this case, they have two years upon entry into force to do so). Final approval of the law also means that it is high time to look at the content of the EPBD: what is in the revision and what will be the impact on your organisation?

Why the revision?

The European Commission published its proposal to revise the existing EPBD in December 2021 to align Europe’s building stock with its climate goals. The reason for revision is simple: buildings account for a significant portion of European emissions. Over a third of the EU’s energy-related greenhouse gas emissions come from buildings. The EPBD is thus a key part of the Fit for 55 Package.

What is in the revision?

Some of the main takeaways of the final agreement:

• The new rules set targets to reduce energy consumption in residential buildings by 16% in 2030 and by 20 to 22% by 2035. A minimum of 55% of this reduction will need to come from renovating 43% of the worst-performing residential buildings.
• The 16% worst-performing residential buildings will need to be renovated by 2030. By 2033, this number is 26%. All new buildings must be zero-emission by 2030, with the entire EU building stock achieving this by 2050.
• All new buildings should be zero-emission buildings by 2030, while the entire building stock should be transformed into zero-emission buildings by 2050, for example by better isolation and installing solar panels on roofs.
• Energy labels will be standardised across the EU to reflect the energy performance of buildings more clearly.
• The revision introduces requirements to install sustainable mobility infrastructure in or adjacent to buildings (i.e. charging points, bicycle parking spaces).
• EU Member States will have to elaborate their plans for implementation through roadmaps with targets for 2030, 2040 and 2050. These roadmaps should be updated every five years and should also include how to address barriers such as financing and training skilled workers in the construction sector.

How does the EPBD impact your organisation?

Very few pieces of EU energy legislation will have a broader impact than the EPBD. The legislation impacts all sectors dealing with both new and existing buildings. In essence, any organisation which owns or operates a building will be directly or indirectly affected by the EPBD requirements, as non-energy-efficient buildings will have to be renovated to comply. The market for renovations should get a boost, which should provide a boost to EU construction companies.  

Financing of renovations remains a major issue as Member States and other organisations will have to start gearing up for renovations. On 22 April, the European Commission launched the European Energy Efficiency Coalition, which should help accelerate private investment in energy efficiency as required by both the EPBD and the revision of the Energy Efficiency Directive (EED).

As mentioned, the EPBD will have to be transposed into national legislation. That means organisations will have an opportunity to share on a national level which measures are needed to comply with the broader EPBD targets. That requires having a good overview of how you will be affected. Want to get a more specific grasp of how the revision will impact your organisation’s bottom line? Or want to know more about EPBD implementation? Reach out to us!

Blog

EU’s PFAS restriction proposal: implications for European companies

With terms like the ‘forever chemical’ or the ‘new asbestos’ thrown around, few chemical substances have been more in the eye of the storm than PFAS (per- and polyfluoroalkyl substances). This blog post analyses the EU’s PFAS restriction proposal, its clear merits, challenges and the specific case of fluoropolymers, a group of substances with widely used applications and a different toxicological profile than other PFAS.

READ MORE

What’s next?

• On 7-8 May, an informal meeting of high-level representatives from Member States and the European Commission on competitiveness and growth will take place.
• On 24 May, ministers responsible for the Internal Market and Industry will convene to discuss competitiveness.
• The European elections are taking place from 6-9 June.
• The European Sustainable Energy Week will take place from 11-13 June, both in Brussels and online, focusing on net-zero energy solutions for a competitive Europe. Registration is now open.

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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