Dear reader,
Welcome to a new edition of the monthly Energy and Climate Policy Update. The European elections brought plenty of change, but there still is a significant majority in the European Parliament in favour of continuing the European Green Deal. This is not the place to discuss the election results too extensively, however – for that, you can read our blog post on the elections (after you finish this newsletter, of course). Meanwhile, you will find more information on EU Energy and Climate policy here below. Enjoy!
Before you move on…
FRENCH ELECTIONS WEBINAR INCOMING
When? 10 July 2024 from 14:00 to 15:00 CET
The recent European elections marked a significant rise for conservative and far-right parties, with France’s National Rally securing 31.5% of the vote. In response, President Macron dissolved the National Assembly, triggering snap elections on 30 June and 7 July 2024. This political shift could have profound implications for EU leadership and policies amidst global challenges.
Following the speed of President Macron’s sudden decision, Publyon, in collaboration with Blue Star Strategies, is launching a new webinar to discuss the results, exploring the implications of these elections on domestic political dynamics and their broader consequences at the European level.
The spotlight
Environment & Transport Councils
While the European Parliament has been regrouping (both figuratively and literally, as Parliamentary groups are now deciding on their composition) after the European elections, both the Environment Council (17 June) and the Transport Council (18 June) convened this month to discuss various legislative initiatives. See an overview of the most important votes and discussions below.
Environment Council – 17 June
In a surprising turn of events, the Environment Council officially passed the groundbreaking Nature Restoration Law. Initially faced with significant hurdles, the law was finally adopted after Slovakia and Austria decided to vote in favour. Austrian Environment Minister Leonore Gewessler defied her own government’s stance, casting a decisive vote in favour. This ambitious law aims to restore at least 20% of the EU’s land and sea areas by 2030, with a vision to rehabilitate all ecosystems requiring restoration by 2050.
The Council also approved its position on the revision of the Waste Framework Directive, with a focus on reducing environmental impacts from textiles and food. These changes mark the start of extended producer responsibility for textiles across all Member States and establish binding targets to slash food waste by 2030. Further progressions were also made with the endorsement of the proposed Green Claims Directive, which should combat greenwashing.
EU Ministers also greenlit the Soil Monitoring and Resilience Directive. This directive aims for healthier soils by 2050, mandating comprehensive soil health monitoring, setting principles for sustainable soil management, and addressing the risks of soil contamination. Overall, it was a successful final Environmental Council, with the Belgium Presidency managing to push through votes on several key files.
Transport Council – 18 June
The day after the Environment Council, EU Transport Ministers came together. One of the main successes was adopting the Council’s general approach to regulating railway infrastructure capacity as part of the Commission’s Greening Freight Transport Package. The initiative should improve the efficiency of rail transport planning, which should make rail transport a more attractive option and thus contribute to greening the transport sector.
EU Ministers also took decisive steps to modernise maritime safety and reduce ship pollution by adopting a new approach to the European Maritime Safety Agency (EMSA) Regulation, which aims to enhance maritime safety across the EU. Ministers also focused on road traffic safety. They approved the European Court of Auditors’ conclusions on European road safety and reviewed a progress report on the draft regulation for passenger rights in multimodal journeys, marking another stride in their commitment to safer and more efficient transportation across the continent.
Next steps
With several files completed in the past few Council meetings, it now falls to the Hungarian Presidency, the new European Parliament, and the upcoming European Commission to continue work on outstanding files, such as the revision of the Waste Framework Directive, the Green Claims Directive, and the other files in the Greening Freight Transport Package.
Policy update
Hungarian Presidency presents energy and climate priorities
According to its recently published work programme, the upcoming Hungarian EU Council Presidency supports EU policy goals but underlines natural gas funding while only briefly mentioning renewables. Key focus areas include promoting geothermal and nuclear energy, and electricity grid development. Hungary, with the EU’s largest geothermal heating system, sees geothermal energy as vital for energy security.
The Presidency also aims to secure funding for natural gas projects and support nuclear power as part of the green transition. The programme stresses achieving climate targets, supporting emission reduction, and enhancing resilience. High-profile international events and strategic trade partnerships in the car and battery sectors are also highlighted. Hungary will take office on 1 July.
European internal combustion engine ban reversed?
Right-wing parties in the European Parliament might be targeting the ban on the sale of combustion engine cars and vans, set to take effect in 2035. Manfred Weber, EPP leader, called the ban a “mistake” and vowed to reverse it. Weber’s statements anger left-leaning groups, while right-wing groups like ECR support the revision.
Whether the EPP will take an official stance to reverse the ban remains uncertain. Weber’s political group will use study days from 2-5 July in Portugal to determine the future of internal combustion engines beyond 2035. That said, reversing the ban was at the core of EPP’s election campaign, making it difficult for the party to reconsider its stance.
EU introduces tariffs for Chinese EVs
As part of an ongoing investigation that formally began in October 2023, the European Commission has provisionally concluded that the Chinese battery-electric vehicle (BEV) value chain benefits from unfair subsidies. In response, the EU has imposed tariffs of up to 38% on Chinese imports. If no effective solution is found after discussions with Chinese authorities, these provisional tariffs will be implemented starting on 4 July.
With this in mind, the fifth EU-China high-level environment and climate dialogue took place in Brussels on 18 June. Looming EU tariffs on Chinese EVs sparked tensions, with Chinese think-tanker Huiyao Wang criticising the tariffs as a double standard. The dialogue did not resolve this conflict, but both sides agreed to support Azerbaijan’s COP29 focus on a new climate finance goal from 2025, despite ongoing challenges in including China in climate financing efforts.
EU’s progress on SDGs
Eurostat on 18 June published its 2024 report on EU progress toward the UN’s Sustainable Development Goals (SDGs); it shows mixed results. The EU struggles with SDG 15 (“life on land”) due to biodiversity loss and land degradation, with common bird and butterfly populations declining. Other goals, like affordable and clean energy, have also been negatively impacted, for example by the war in Ukraine.
However, progress has been made in areas such as sustainable agriculture, consumption, life below water, and sustainable cities, with improvements in marine protected areas and fish stock recovery despite concerns about ocean acidification and eutrophication.
IEA report: efforts to upgrade renewable energy capacity lacking
The International Energy Agency’s (IEA) new report highlights a critical gap in global efforts to triple renewable energy capacity by 2030, a commitment made during COP28. As of the latest assessment, only 12 per cent of the required additional capacity has been formally planned by countries worldwide.
This shortfall underscores the urgent need for accelerated action and investment in renewable energy infrastructure to meet climate targets and reduce reliance on fossil fuels. The report urges governments and private sector stakeholders to ramp up commitments and initiatives to bridge this gap effectively.
Business impact
Gas and Hydrogen Package
On 13 June, the final legislative text of the Gas and Hydrogen Package was signed. This new package modernises the rules governing gas networks and market operations, aligning the gaseous energy sector with the broader objectives of the European Green Deal and Climate Law. The package can now enter into force. But what is in it? Let’s have a look.
What is in the package?
The Gas and Hydrogen Package comprises two key components: an updated Regulation on ‘internal markets for renewable gas, natural gas, and hydrogen’ (Gas Regulation), and an updated Directive on ‘common rules for internal markets for renewable gas, natural gas, and hydrogen’ (Gas Directive). The primary objective of these revisions is to ensure that the regulatory framework is adequately prepared for a future energy mix that increasingly incorporates renewable and low-carbon gases, while progressively reducing the reliance on fossil (natural) gas.
The gas package clarifies the debate surrounding renewable (e.g. green hydrogen) versus low-carbon gases (e.g. biomethane), including their incentives, disincentives, and phase-in/out strategies. While the Renewable Energy Directive (RED) primarily defines and classifies renewable energy sources, the gas package underscores that low-carbon fuels serve to mitigate emissions in the short term and midterm but that the EU should strive to switch to a renewable energy mix.
In line with this vision, the regulation locks in that low-carbon gases will receive a 75% discount from various entry and exit tariffs, whilst renewable gases receive a 100% discount. 2049 is set as the ultimate date to conclude long-term supply contracts for unabated fossil gas.
Regarding energy security and price volatility, the Regulation broadens the scope of security of supply rules to include renewable and low-carbon gases, while also introducing additional provisions on critical areas such as cybersecurity and supply disruptions.
The Directive, meanwhile, emphasises enhancing consumer protections and empowerment. This entails allowing consumers a maximum three-week period to switch suppliers without incurring fees for households and small businesses; ensuring the deployment of smart meters for natural gas and hydrogen by Member States; and establishing a ‘supplier of last resort’ regime or equivalent measures to guarantee continuity of supply.
Regarding EU network governance, most provisions governing the current natural gas network will apply similarly to decarbonised gases and hydrogen networks. However, the integration of hydrogen into the energy network consists of two phases. Until 2030, hydrogen networks will largely remain exempt from regulation.
Additionally, Member States have the flexibility to permit inter-temporal cost allocation for investments in hydrogen networks, ensuring that future users contribute to initial network development costs. In addition, two new entities will be established:
- the European Distribution System Operators (EU DSO) will be tasked with overseeing, coordinating, and planning the efficient functioning of the internal natural gas market. The EU DSO will also play a collaborative role in advancing the hydrogen market within the European Union.
- A new network association known as The European Network for Network Operators of Hydrogen (ENNOH) will be created specifically for hydrogen transmission network operators. ENNOH’s responsibilities will include developing non-binding ten-year network development plans and network codes across the EU to facilitate the integration and expansion of hydrogen infrastructure.
How does the package affect your organisation?
The revision of the Gas and Hydrogen Package should further promote the rollout of renewable gases in the EU. The push for a more integrated gas market across the EU should increase competition – companies must be ready to take advantage of the new rules, potentially by investing in modernised infrastructure.
The implementation of the package (along with that of other EU energy legislation, such as the revised Renewable Energy Directive (RED III)) will form an opportunity for organisations to provide input on both European and national level. If you want to know more specifically how the package will impact your organisation, reach out to us!
Blog
European elections 2024: outcomes and implications for organisations operating in the EU
In the European elections, which took place between 6 and 9 June 2024, citizens across the 27 Member States of the European Union cast their votes. With the European elections come a new European Parliament, a new European Commission, and new political priorities. Curious what that will mean for you and/or your organisation?
READ MORE
What’s next?
- Today and tomorrow (27-28 June), EU state leaders meet during the European Council meeting. They are set to agree their stance for the top EU jobs in the next mandate, but will also be discussing topics such as Ukraine, security and defence and competitiveness.
- The 10th Parliamentary term will officially start on Tuesday 16 July 2024, the start of the constituent Plenary session of the European Parliament in Strasbourg. Newly elected MEPs will elect their President, 14 Vice-Presidents and five Quaestors. Moreover, votes will be held regarding the composition of Parliament’s standing committees and subcommittees.
- The election of the Commission President is expected to take place on 16-19 September during the first Plenary session after summer recess. In October/November 2024, candidate-Commissioners will be heard and, if deemed to be qualified, confirmed by Parliament.
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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