EU Insight, 17 February 2023

Brussels, 17 February 2023

THE COMMISSION ANNOUNCES 10^TH SANCTIONS PACKAGE AGAINST RUSSIA

The Commission delivered to Member States its proposal for the 10^th package of sanctions against Russia, and publicly expressed its wish for the Council to adopt it by the first anniversary of Russia’s invasion of Ukraine on 24 February. The package introduces export bans worth more than €11 billion, targeting critical technologies and industrial goods. Other measures include the expansion of export control restrictions on dual use goods, additional individual sanctions, and ways to fight the circumvention of imposed sanctions. Additionally, the Commission issued a proposal to incorporate roaming into the EU-Ukraine Association Agreement, which would extend the EU’s free roaming rules to Ukraine.

COMMISSION PROPOSES NEW EMISSION TARGETS FOR HEAVY-DUTY VEHICLES

The Commission proposed revised CO2 emissions targets for new heavy-duty vehicles (HDVs) from 2030 onwards. The proposal entails the phasing in tighter CO2 emissions standards for almost all new heavy-duty vehicles with certified CO2 emissions. Specifically: 45% emissions reductions as of 2030; 65% emission reductions from 2035; 90% emissions reduction from 2040 onwards. The Commission also introduced the requirement for all new city buses to be zero-emission as of 2030. On a similar note, the Parliament approved, with 340 votes in favour, 279 against and 21 abstentions, the new CO2 emissions reduction targets for new passenger cars and light commercial vehicles as part of the “Fit for 55” package.

RENEWABLE ENERGY DIRECTIVE: COMMISSION LAYS OUT RULES FOR RENEWABLE HYDROGEN

The Commission proposed detailed rules defining what constitutes renewable hydrogen in the EU adopting two Delegated Acts as required by the Renewable Energy Directive. The first Delegated Act defines under which conditions hydrogen, hydrogen-based fuels or other energy carriers can be considered as renewable fuels of non-biological origin. The Delegated Act sets out different ways in which producers can demonstrate that the renewable electricity used for hydrogen production complies with additionality rules. The second Delegated Act provides a methodology to calculate life-cycle greenhouse gas emissions for renewable fuels of non-biological origin. The Acts will now be subject to the scrutiny of the European Parliament and the Council.

WINTER 2023 ECONOMIC FORECAST: EU SET TO AVOID RECESSION BUT CHALLENGES REMAIN

The Commission released its Winter 2023 Economic Forecast, which reports a better outlook for European economy in 2023 than anticipate in the Autumn forecast of 2022. Growth is expected to be 0.8% in the EU and 0.9% in the euro area for 2023, and inflation projections for 2023 and 2024 slightly lowered, enabling both areas to avoid the recession that was anticipated last year. Favourable developments with regards to energy independence since the Autumn Forecast have contributed to the growth outlook for this year. Continued diversification of gas supply sources and a sharp drop in consumption have left gas storage levels above the seasonal average of past years, and wholesale gas prices have fallen well below pre-war levels.

PARLIAMENT DEBATES GREEN DEAL INDUSTRIAL PLAN

The European Parliament held a debate on the Commission’s Communication on the Green Deal Industrial Plan. During the debate, Jessika Roswall, Swedish Minister for EU Affairs, expressed the Council’s wishes for a simpler state aid framework and an integrated Capital Market Union. Commissioner for Financial Services Mairead McGuinness strongly agreed on the latter, but also highlighted the need for the new state aid rules to be both temporary and targeted. Following the debate, the Parliament adopted a resolution stressing the importance of enhancing the EU’s manufacturing capability in strategic technologies like solar and wind energy, heat pumps, and batteries.

COMING UP NEXT WEEK

• 20 February: Foreign Affairs Council. On the agenda: Russian aggression against Ukraine, Afghanistan, Climate and energy diplomacy.
• 21 February: General Affairs Council. On the agenda: Preparation of March European Council, Earthquake om Türkiye and Syria.
• 22 February: College of Commissioners. On the agenda: Follow-up to the European Council debate on competitiveness.
• 22 February: European Central Bank Governing Council non-monetary policy meeting. On the agenda: Digital euro.

Karl Isaksson, Managing Partner Brussels, Kreab

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