EU Insight, 9 February 2024

Brussels, 9 February 2024

COMMISSION RECOMMENDS 90% EMISSIONS REDUCTION TARGET BY 2040

The European Commission recommended a 90% reduction in net greenhouse gas emissions, compared to the 1990 levels, by 2040 as the EU’s 2040 climate target. For context, the 2040 climate target should serve as an intermediate milestone between the 2030 objective to reduce emissions by 55% and the 2050 climate neutrality target. In order to meet the target, the Commission emphasises necessary stakeholder engagement and legislative action post-European elections underlining the importance of industrial decarbonization and competitiveness. Notably, alongside the target announcement, the Commission published a communication on industrial carbon management, highlighting the key role of carbon removals, on the pathway to meet the 2040 target.

DEAL TO BOOST EU’S GREEN INDUSTRY

The Council and the European Parliament reached a provisional agreement on new rules aiming to strengthen the EU’s net-zero technology manufacturing capacity. The Net-Zero Industry Act aims to foster investments into EU manufacturing of net-zero technologies, and thus accelerate their deployment while securing the EU’s supply chains. Notably, the initiative identifies a list of key technologies manufacturing of which should gain access to faster accelerated permitting procedures and facilitated access to financing. These technologies include renewable energy, nuclear fission, energy storage as well as carbon capture, storage and utilisation technologies. The agreement awaits formal adoption by both EU co-legislators before its entry into force.

AGREEMENT ON ESG RATINGS AND DELAY FOR SUSTAINABILITY REPORTING

Co-legislators reached a political agreement on the ESG ratings Regulation, an initiative to establish a regulatory framework for providers of ESG ratings. As such, the new rules aim to boost investor confidence in sustainable products by improving the transparency and integrity of ESG ratings and preventing potential conflicts of interest within their providers. In parallel, co-legislators agreed to postpone the adoption deadline of the second set of European Sustainability Reporting Standards from 2024 to 2026. Despite the delay in the development of this new set of standards, which includes sector specific standards, as well as standards for third-country companies, companies under scope remain subject to the first set of existing standards.

MEMBER STATES ENDORSE THE PACT ON MIGRATION AND ASYLUM

EU Member States’ ambassadors endorsed the provisional agreement on migration and asylum reached between the Spanish presidency of the Council and the European Parliament in December. The Pact on Migration and Asylum represents a significant achievement for the EU, compromising five key laws aimed at strengthening the EU’s asylum and migration system. Furthermore, the ambassadors approved three asylum and migration laws, which had been previously agreed upon by the Council and Parliament in 2022, and a return border regulation that allows the application of the pact to European countries with different Schengen rules. The laws still need to be formally endorsed by the Council and the Parliament.

EU ATTEMPTS TO MOVE DERIVATIVE TRADING FLOWS AWAY FROM LONDON

Parliament and Council agreed on new rules to foster clearing activity in the EU. The deal comes after lengthy negotiations following the Commission’s proposal to channel more trading and clearing activity from London towards EU clearing houses. Large financial institutions trading in high volumes of derivative contracts would have to clear a portion of their volume in the EU instead of in third countries. Hence, EU clearing houses would see an increase in trading volumes, and supervisors in the Union would be able to assess the related risks. The deal is however less far-reaching than the Commission’s original proposal.

COMING UP NEXT WEEK

• 11 – 12 February: Informal meeting of ministers for development.
• 13 February: EU-Armenia Partnership Council. On the agenda: Comprehensive and Enhanced Partnership Agreement, Priorities, migration, trade, and sectoral cooperation
• 14 February: College of Commissioners. On the agenda: Annual single market and competitiveness report
• 14 – 15 February: Informal meeting of competitiveness ministers. On the agenda: Transformative nature of the European Framework for Research and Innovation

Karl Isaksson, Managing Partner Brussels, Kreab

_________________________________________________________

Kreab • Tel: +32 2 737 6900 • karl.isaksson@kreab.com • www.kreab.com/brussels • Twitter: @KreabEU.