EU Insight 22 November 2024

Brussels, 22 November 2024

COP29: DIVISIONS PERSIST AND UNCERTAINTY LOOMS OVER FINAL AGREEMENT

The second week of COP29 begun amidst intense negotiations in which financing remains the most continuous issue. Talks have exhibited diverging opinions around the level of climate aid that wealthy nations should provide to developing countries. Another notable divergence came from The Arab Group who expressed that it would oppose any mention of fossil fuels or sector-specific targets in the final agreement. If removed from the final agreement, the COP29 text would differ substantially when compared to its predecessor and saw European Commissioner Wopke Hoekstra describe the current draft as “unbalanced, impractical, and unacceptable”. Although an agreement was expected today, delays appear imminent as delegates struggle to reconcile divergent positions on emission reductions and climate financing.

COUNCIL AND PARLIAMENT REACH DEAL ON EU BUDGET FOR 2025 

The Council and the European Parliament have reached an agreement on the EU budget for 2025, which will total €199.4 billion, up from €189.3 billion in 2024. Parliament negotiators successfully prevented cuts to research programmes, including Horizon Europe, and the Erasmus+ programme. The agreement aligns with policymakers’ thematic goals of enhancing competitiveness through initiatives such as the Strategic Technologies for Europe Platform (STEP) and addressing migratory pressures. The new budget also provides sufficient flexibility to tackle unforeseen challenges, particularly in light of the volatile geopolitical climate. Both the Parliament and the Council are expected to formally adopt the agreement in a vote next week.

EU DEFORESTATION LAW APPLICATION EXTENDED FOR BETTER PREPARATION

The Council of the EU approved of the European Commission’s proposal of 12-month deadline extension for the EU’s deforestation regulation. The Commission’s proposal will aim to provide affected stakeholders — including countries, traders, and operators — sufficient time and clearer guidance to meet due diligence obligations. The regulation, effective since June 2023, mandates that products such as cocoa, coffee, soy, and palm oil sold or exported in the EU are deforestation-free. Unlike the Parliament the Council’s position levies no further changes to the Commission’s proposal which does not modify the law’s intention to minimise deforestation worldwide. Co-legislators are aiming finalise a position by mid-December to effectively push the new rules to begin applying in December 2025.

AUTUMN 2024 ECONOMIC FORECASTS

While nearing the end of his mandate, European Commissioner for Economy, Paolo Gentiloni, presented journalists with the Autumn 2024 Economic Outlook. Gentiloni underlined the increasingly challenging macroeconomic context and associated risks under which the EU economy managed to return to moderate growth. While acknowledging stagnation in EU productivity, he highlighted the employment market’s growth of 750.000 new jobs in 2024 and emphasised the importance of completing the Capital Markets Union. With 2025 approaching, Gentiloni noted a shift in the EU’s focus from controlling inflation — now approaching the 2% target — to fostering growth and remaining vigilant about potentially protectionist moves from across the Atlantic.

VON DER LEYEN TARGETS CORPORATE REPORTING RULES WITH OMNIBUS PROPOSAL

Following an informal meeting of European Leaders in Budapest, Hungary, European Commission President Ursula von der Leyen delivered a statement regarding the joint Budapest Declaration by Member States. The statement overall called for the European Commission to focus its next mandate on cutting red tape and reduce reporting requirements by at least 25%. When delivering her address, von der Leyen highlighted the potentially reductions that could be achieved through amendments made to the sustainable finance frameworks. Concretely, the Commission President mentioned a possible solution begin a legislative package (Omnibus proposal) that would attempt to harmonise and clarify reporting rules in the Corporate Sustainability Reporting Directive (CSRD), Corporate Sustainability Due Diligence Directive (CS3D), and EU taxonomy.

COMING UP NEXT WEEK

• 25 November: European Economic Area Council. On the agenda: EEA Agreement, Political dialogue on Ukraine/Russia, Arctic, and the Middle East.
• 25 – 26 November: Education, Youth, Culture and Sport Council. On the agenda: Careers in higher education, future-proof skills and competitiveness, higher education.
• 26 November: College of Commissioners. On the agenda: Presentation of the Autumn 2024 European Semester Autumn Package.
• 25 – 28 November: Plenary session in Strasbourg. On the agenda: Election of the Commission, Ukraine/Russia, Middle East, gender pay gap, energy prices.
• 28 November: Competitiveness Council (Internal market and industry). On the agenda: Late Payments Regulation, EU competitiveness, exchange of views on better regulation.
• 28 November: General Affairs Council. On the agenda: Management of cohesion funds, cohesion policy, demographic challenges
• 29 November: Competitiveness Council (Research and Space). On the agenda: European competencies in the space sector, natural resources, bioeconomy

Tuomas Tierala, Managing Partner Brussels, Kreab

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Kreab • Tel: +32 2 737 6900 • tuomas.tierala@kreab.com • www.kreab.com/brussels • X: @KreabEU  •  LinkedIn: Kreab Worldwide