Brussels, 20 May 2022
COMMISSION PRESENTS LONG-AWAITED PLAN TO CUT EU ENERGY DEPENDENCE ON RUSSIA
The Commission presented its plan to transform the EU’s energy system, in the twofold aim of reducing Europe’s dependency on Russian fossil fuels and tackling the climate crisis. The REPowerEU plan presents four different strands of action, which focus on increasing energy savings by promoting energy efficiency, as well as on diversifying energy supplies through the new EU External Energy Strategy. The Commission also proposes to accelerate the use of renewable energy sources through a dedicated EU Solar Strategy, as well as actions to reduce fossil fuels consumption both in industry and transport. The European Council is set to discuss the proposed plan during its summit on 30-31 May.
INSTITUTIONS REACH POLITICAL AGREEMENT TO ENSURE ENERGY SECURITY IN THE EU
The EU institutions reached an agreement in principle in trialogues on the European Commission’s proposal for a new gas storage regulation that was published back in March 2022. The new regulation introduces an obligation for Member States to fill their underground storage to at least 80% of the capacity before the winter of 2022/2023 and to 90% before the following winter periods with the EU collectively aiming to fill 85% of the capacity in 2022. Countries will coordinate joint purchases of gas and Member States without their own storage facilities will be able to access the gas reserves in other EU countries.
KEY COMMITTEE STRENGTHENS EU’S COMMITMENT TO TACKLE CLIMATE CHANGE
The Environment Committee in the European Parliament adopted five reports of the “Fit for 55 package”. The package aims to reduce greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels, to be climate neutral by 2050, and supports the goal to become energy independent, explicitly from Russian fossil fuels, before 2030. The reports adopted this week are the reform of the Emission Trading System (ETS), the EU Carbon Border Adjustment Mechanism (CBAM), the Effort Sharing Regulation (ESR), the Land use and forestry regulation (LULUCF), and the Social Climate Fund.
COMMISSION REVISES GROWTH AND INFLATION PROJECTIONS IN LIGHT OF THE WAR
The Commission published its Spring 2022 Economic Forecast. Compared to the Winter Forecast, the growth prospects have been revised downwards, while inflation is expected to rise further due to the increased geopolitical tensions, increased commodity prices and disruptions of supply chains. Notwithstanding, the Commission notes the recent resilience of the labour market and expects unemployment rates to decline further. Lastly, as both the budget deficit and overall debt ratio is forecasted to decline, the Commission notes that fiscal supportive stances across the EU are appropriate and warns that a resurgence of a pandemic cannot be ruled out.
EU AND THE US STRENGTHEN THEIR COOPERATION ON TRADE AND TECHNOLOGY TOPICS
The EU and the US held a second Ministerial Meeting of the Trade and Technology Council (TTC) in Paris to discuss trade, economic and technology issues. The parties agreed to continue supporting Ukraine against the Russian aggression and agreed to support the country to rebuild its economy. Additionally, they agreed to establish a Trade and Labour Dialogue, advance the resilience of supply chains, and to develop a roadmap on evaluation and measurement tools for artificial intelligence. The next meeting of the TTC is planned to take place before the end of 2022 in the United States.
COMING UP NEXT WEEK
Karl Isaksson, Managing Partner Brussels, Kreab