EU institution news

Libya: EU imposes additional sanctions for human rights abuses and arms embargo violations | EU Council Press

The Council today decided to impose targeted restrictive measures on two persons responsible for human rights abuses in Libya and three entities involved in violating the UN arms embargo in place for Libya. They will be added to the EU’s list of persons and entities subject to restrictive measures related to the Libyan conflict. The sanctions imposed comprise a travel ban and an asset freeze for natural persons, and an asset freeze for entities. In addition, EU persons and entities are forbidden from making funds available to those listed. With these new designations, the EU now has travel bans on 17 listed persons and has frozen the assets of 21 persons and 19 entities.

The EU imposes restrictive measures on persons and entities whose actions threaten the peace and security of Libya or obstruct the successful completion of its political transition. The EU has repeatedly called on all parties to respect human rights and international law and is committed to holding anyone violating them accountable. The EU is also determined to see the UN arms embargo in Libya fully respected. These new listings show the EU’s strategic use of its sanctions regime and ability to react to developments on the ground in support of the political process and to deter past and present perpetrators from further violations.

The EU’s sanctions complement and reinforce the sanctions adopted by the UN, which include an arms embargo and individual measures, including for human rights abuses. The UN has imposed a travel ban on 28 persons and an asset freeze on 23 persons.

The relevant legal acts, including the names of the persons and entities concerned, have been published in the Official Journal.

State aid: Commission opens in-depth investigation into Belgian capacity mechanism | EU Commission Press

The European Commission has opened an in-depth investigation to assess whether a Belgian capacity mechanism to safeguard security of electricity supply is in line with EU State aid rules.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “Capacity mechanisms have the important objective of ensuring security of electricity supply. But if they are not well-designed they may cause higher electricity prices for consumers, give undue advantages to certain energy operators or hinder electricity flows across EU borders. We will now investigate further if the nation-wide capacity mechanism that Belgium plans to introduce is in line with EU State aid rules, to ensure it is cost-effective and that it does not lead to undue distortions of competition.

Belgium notified the Commission of its plans to introduce a national market-wide capacity mechanism to incentivise energy capacity providers (both generators and demand side response operators) to offer their availability to the transmission system operator (TSO). The capacity mechanism would replace the Belgian strategic reserve that the Commission approved under EU State aid rules in 2018.

Under the capacity mechanism, the beneficiaries would be selected though a competitive bidding process and would be remunerated for their availability. The support would take the form of a capacity payment for the duration of the capacity agreement (which would range between one and 15 years). In exchange, the successful bidders would give their availability to the TSO during stress events experienced by the electricity system. 

With the capacity mechanism, Belgium aims at ensuring security of electricity supply, in particular in view of its decision to phase-out of all nuclear capacity by 2025. More specifically, the objective of the scheme is to ensure that there is sufficient capacity for the production of electricity and that such production meets the demand (so-called “resource adequacy”).

At this stage, the Commission has concerns that the capacity mechanism, as notified by Belgium, may not be in line with EU State aid rules, more specifically with the Guidelines on State aid for environmental protection and energy. In particular:

  • The Commission’s preliminary view is that Belgium has not so far sufficiently demonstrated, nor properly quantified, possible future issues of resource adequacy in the Belgian electricity market. This is essential to identify the actual need for public support and to determine whether the envisaged aid would be limited to what is necessary. In this respect, the Commission, has concerns that the support foreseen by the capacity mechanism may go beyond what is necessary to address the adequacy issue, possibly leading to over-procurement of capacity.
  • Moreover, the Commission is concerned that the measure may discriminate against certain technologies (e.g. renewable capacity) or unfairly limit participation of cross-border capacity.
  •  Finally, the Commission will examine whether the so-called “congestion revenues” that would be earned by the TSO from the allocation of cross-border tickets (i.e. access rights for foreign capacity providers to participate in the capacity mechanism) would be allocated in a way that effectively incentivises further interconnection between Belgium and its neighbouring countries and that does not lead to undue negative effects on competition and trade.

The Commission will now investigate further to determine whether its initial concerns are confirmed. The opening of the in-depth investigation gives Belgium and other interested parties the opportunity to submit their comments. It does not prejudge the outcome of the investigation.

Background

The Commission’s 2016 sector inquiry into capacity mechanisms has formed the basis for a close cooperation between the Commission and EU Member States to ensure that capacity mechanisms are well-designed and fit for purpose.

The sector inquiry report confirmed that capacity mechanisms can be necessary where market and regulatory failures block the price signals necessary to maintain appropriate levels of security of supply. However, the report made clear that EU State aid rules are important to ensure that capacity mechanisms do not act as backdoor subsidies for specific technologies or cause other undue distortions of competition, or come at too high a price for electricity consumers.

Since the publication of the sector inquiry, the Commission has approved several capacity mechanisms, including the Belgian Strategic reserve which the Commission approved in 2018. All decisions can be find on the Commission’s dedicated webpage.

The non-confidential version of the decision will be made available under the case number SA.54915 in the State aid register on the Commission’s competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.

Council sets priorities for future Single Market policy in the post COVID-19 era | EU Council Press

The Council today adopted a set of conclusions on the role of a deepened and fully functioning Single Market for a strong economic recovery and a competitive and sustainable European Union.

If the recent crisis has taught us something, it is that the road towards a robust and resilient recovery of the EU economy passes through a fully functioning and more integrated Single Market. Enhanced compliance and enforcement of commonly adopted rules, better governance and structural reforms depend on all of us.

Peter Altmaier, German Federal Minister for Economic Affairs and Energy

In these conclusions, the Council acknowledges the importance of strengthening and deepening the Single Market with a view to relaunching the EU economy in the post COVID-19 era.

Member states are invited to improve the implementation and enforcement of EU rules in the area of the Single Market, as well as remove unnecessary barriers to cross-border trade in the EU.

The Commission is urged to include in its strategic report an assessment of the resilience of the Single Market drawing lessons from the COVID-19 crisis. This report, to be presented by 15 January 2021, should also cover the state of implementation of the 2020 Enforcement Action Plan and progress in addressing barriers in the Single Market and suggest on the basis of these assessments any action, including regulatory, that needs to be taken. It would provide the basis for future discussions ahead of the March 2021 European Council on the Single Market.

UN Biodiversity Summit: Council sends a united signal to step up global ambition for biodiversity | EU Council Press

The Council today authorised the Commission to endorse, on behalf of the EU, the “Leaders’ Pledge for Nature“, in order to send a united signal to step up global ambition for biodiversity. Commission President Ursula von der Leyen is thereby authorised to endorse the pledge at an UN event to be held virtually on 28 September 2020 in the context of the UN Summit on Biodiversity.

The pledge is a voluntary declaration which stresses that biodiversity loss and ecosystem degradation require urgent and immediate global action. It is an expression of the need to increase efforts to address the interrelated challenges of biodiversity loss, land, freshwater and ocean degradation, deforestation, pollution and climate change in an integrated and coherent way.

It is, inter alia, a commitment to putting biodiversity, climate and the environment as a whole at the heart both of COVID-19 recovery strategies and of the pursuit of national and international development and cooperation. The aim is to ensure that the response to the current health and economic crisis is green, just and contributes directly to recovering better and achieving sustainable societies.

The authorisation given today is in line with the Council’s ongoing efforts to protect biodiversity. In its conclusions of 19 December 2019, the Council encouraged the EU and its member states “to consider joining relevant global initiatives aimed at strengthening political awareness and ambition for the protection of biodiversity, such as high ambition coalitions, to urgently implement existing commitments and to make additional commitments, and thereby to significantly step up actions to halt biodiversity loss and to reverse ecosystem degradation, thus also contributing to the UN Decade on Ecosystem Restoration”.

State of the Union: Commission adopts revised EU Emission Trading System State aid Guidelines | EU Commission Press

In line with the European Green Deal and the EU’s objective to become the first climate neutral economy by 2050, the Commission adopted today revised EU Emission Trading System State aid Guidelines in the context of the system for greenhouse gas emission allowance trading post-2021 (the “ETS Guidelines”). They will enter into force on 1 January 2021 with the start of the new ETS trading period, and replace the previous Guidelines adopted in 2012.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “To sustainably tackle climate change and achieve our Green Deal objectives, we have to put a price tag on carbon emissions while avoiding carbon leakage. The revised EU Emission Trading System State aid Guidelines adopted today are an important element of this project. They enable Member States to support those sectors that, because of indirect emission costs, are most at risk of carbon leakage. At the same time, they help deliver on a cost-effective decarbonisation of the economy by avoiding overcompensation and undue distortions of competition in the Single Market”.

EU State aid control has an important role to play in enabling Europe to fulfil its Green Deal objectives. In order to reap the full benefits of limited public funds, it is crucial that State aid rules continue to do their part. This means ensuring that public money does not crowd out private spending and maintaining a level playing field in the Single Market, while minimising costs for taxpayers.

The ETS Guidelines aim at reducing the risk of “carbon leakage”, where companies move production to countries outside the EU with less ambitious climate policies, leading to less economic activity in the EU and no reduction in greenhouse gas emissions globally. In particular, they enable Member States to compensate companies in at-risk sectors for part of the higher electricity prices resulting from the carbon price signals created by the EU ETS (so-called “indirect emission costs”). At the same time, overcompensation of companies would risk running counter to the price signals created by the EU ETS to promote a cost-effective decarbonisation of the economy and create undue distortions of competition in the Single Market.

Against this background, the revised ETS Guidelines will:

  1. target aid only at sectors at risk of carbon leakage due to high indirect emission costs and their strong exposure to international trade. Based on an objective methodology, 10 sectors and 20 sub-sectors are eligible (compared to 14 sectors and 7 sub-sectors under the previous Guidelines);
  2. set a stable compensation rate of 75% in the new period (reduced from 85% at the beginning of the previous ETS trading period), and exclude compensation for non-efficient technologies, to maintain the companies’ incentives for energy efficiency; and
  3. make compensation conditional upon additional decarbonisation efforts by the companies concerned, such as complying with the recommendations of their energy efficiency audit.

The Guidelines also take into account the specificities of small and medium-sized enterprises (SMEs), in line with the SME Strategy for a sustainable and digital Europe, by exempting them from the new conditionality requirement in order to limit their administrative burden.

The Commission has completed an extensive evaluation and Impact Assessment, in line with the Better Regulation Guidelines, with the support of an external consultant. In this context, the Commission has conducted numerous consultations, including a public consultation based on a questionnaire and a targeted consultation to gather the input of interested sectors. The Commission also sought the views of relevant stakeholders on a proposal of revised Guidelines in a public consultation open from 14 January to 10 March 2020. All details about the public consultation are available online.

The new Guidelines, the Impact Assessment Report and all supporting documents are available here.

The Commission is also in the process of evaluating and reviewing other State aid guidelines, including the Energy and Environmental Aid Guidelines, to make sure they are fully aligned with the Commission’s green and digital objectives.

Background

In December 2019, the European Commission presented the European Green Deal,  a roadmap for making the EU’s economy sustainable and achieve climate neutrality by 2050 by turning climate and environmental challenges into opportunities across all policy areas and making the transition just and inclusive for all.

The EU ETS is a cornerstone of the EU’s policy to combat climate change and a key tool for curbing greenhouse gas emissions cost-effectively. Set up in 2005, the ETS is the world’s first major carbon market and remains the biggest one. It operates in all 27 EU countries plus Iceland, Liechtenstein and Norway. The United Kingdom is part of the EU ETS until the end of the transition period. Pursuant to the Ireland/Northern Protocol, the EU ETS will apply to and in the United Kingdom in respect of Northern Ireland insofar as it applies to the generation, transmission, distribution, and supply of electricity, trading in wholesale electricity or cross-border exchanges in electricity. By putting a price on carbon, it delivers concrete results for the environment: the European Union is already on track to meet its greenhouse gas emissions reduction target for 2020.

Last week, the Commission put forward a plan to further cut emissions by at least 55% by 2030. By June 2021, the Commission will also review and, where necessary, propose to revise all relevant policy instruments, including the EU ETS Directive, to deliver additional greenhouse gas emissions reductions.

Following the review of climate-related policy instruments, including the initiative for the creation of a Carbon Border Adjustment Mechanism, the Commission will check whether any revision or adaptation of the ETS Guidelines is necessary to ensure consistency with, and contribute to, the fulfilment of the climate neutrality objective while respecting a level playing field.

For more information

Factsheet

State of the Union webpage

Financial Stability: EU rules on third-country central counterparties enter into force | EU Commission Press

On 1 January 2020, new EU rules under the ‘European Market Infrastructure Regulation’ or EMIR 2.2 on the supervision of EU and non-EU central counterparties (CCPs) became applicable. CCPs play a systemic role in the financial system as they act as a buyer for every seller and a seller for every buyer of derivatives contracts. In order for the new rules to be given full effect, they needed to be complemented with three delegated acts. The acts have been published today in the Official Journal of the European Union and will enter into force tomorrow. These new rules will improve the EU’s capacity to manage and address external risks to the financial system. They will also contribute to the resilience of financial market infrastructure, which is important to promote the international role of the euro and strengthen Europe’s open strategic autonomy. The delegated acts specify, among other things, how the European Securities and Markets Authority (ESMA) can supervise non-EU CCPs, depending on the degree of systemic risk that they pose to the EU’s financial system or to any of its Member States. They set out criteria on how ESMA should tier third-country CCPs based on their systemic importance, and how ESMA should assess if CCPs’ compliance with third country rules is comparable to EU rules. Executive Vice-President Valdis Dombrovskis, Executive Vice-President for an Economy that Works for People said: “Protecting financial stability is one of our key priorities and CCPs play a systemic role in our financial system. We need to have predictable, proportionate and effective rules to address risks related to non-EU CCPs. This is in line with international efforts to bring stability and transparency to global derivative markets.” For more information, see here and here.

Financial stability: Commission adopts time-limited decision giving market participants the time needed to reduce exposure to UK central counterparties | EU Commission Press

The European Commission has today adopted a time-limited decision to give financial market participants 18 months to reduce their exposure to UK central counterparties (CCPs).

A CCP is an entity that reduces systemic risk and enhances financial stability by standing between the two counterparties in a derivatives contract (i.e. acting as buyer to the seller and seller to the buyer of risk). A CCP’s main purpose is to manage the risk that could arise if one of the counterparties defaults on the deal. Central clearing is key for financial stability by mitigating credit risk for financial firms, reducing contagion risks in the financial sector, and increasing market transparency.

The heavy reliance of the EU financial system on services provided by UK-based CCPs raises important issues related to financial stability and requires the scaling down of EU exposures to these infrastructures. Accordingly, industry is strongly encouraged to work together in developing strategies that will reduce their reliance on UK CCPs that are systemically important for the Union. On 1 January 2021, the UK will leave the Single Market. Today’s temporary equivalence decision aims to protect financial stability in the EU and give market participants the time needed to reduce their exposure to UK CCPs.

Valdis Dombrovskis, Executive Vice President for an Economy that Works for People said: Clearing houses, or CCPs, play a systemic role in our financial system. We are adopting this decision to protect our financial stability, which is one of our key priorities. This time-limited decision has a very practical rationale, because it gives EU market participants the time they need to reduce their excessive exposures to UK-based CCPs, and EU CCPs the time to build up their clearing capability. Exposures will be more balanced as a result. It is a matter of financial stability.”

Background

On the basis of an analysis conducted with the European Central Bank, the Single Resolution Board and the European Supervisory Authorities, the Commission identified that financial stability risks could arise in the area of central clearing of derivatives through CCPs established in the United Kingdom (“UK CCPs”) should there be a sudden disruption in the services they offer to EU market participants. This was addressed in the Commission Communication of 9 July 2020, where market participants were recommended to prepare for all scenarios, including where there will be no further equivalence decision in this area.

Speech by Executive Vice-President Margrethe Vestager on the Digital Package | EU Commission Press

“Check against delivery”

Today, we present you two proposals to advance our digital agenda. The first proposal is a new regulation for the European High Performance Computing Joint Undertaking. The second proposal is a recommendation for Member States to boost investment in connectivity infrastructure.

High-performance or Supercomputers are important for our future. They support the health sector by creating a digital human twin. Like this, we can simulate the trillions of processes and molecules of the human body to advance treatments, tackle diseases or viruses and improve diagnostics. We can use supercomputers to investigate options and design an efficient Earth system modelling capacity – the so-called Planet Earth twin – to inform and advance policymaking and help us to find solutions to fight climate change. Supercomputers can support businesses to innovate, test and scale up much beyond what we have today.

In October 2018, we put together with Member States and private contributors 1.5 billion euros to the first Joint Undertaking on High Performance Computing We now want to scale up this ambition in the next Multiannual Financial Framework, with further 8 billion euros to be invested in this key digital capacity.

Connectivity is the backbone for digital solutions. We want to speed up investment in high-speed internet for businesses, public services and citizens. It is needed to accelerate our efforts when it comes to 5G development. With the pandemic many connectivity projects and 5G spectrum auctions were delayed. But we should not slow down investment in connectivity. So we call on Member States to develop a toolbox with best practices to invest in connectivity. These are just two tangible examples of how we can advance our digital agenda. Because if not, we remain in the situation we are here now, a lot of people and business realise we have to push further on. All changes need a driver, a purpose for them to happen. For the coming decade, we need to have these drivers clear in our mind.

Our main driver is to serve the people. A digital transformation that includes an accountable, democratic and fair economy will help us do this better. We all agree that digital transformation have brought many advantages to our society: access to innovative and convenient services for our citizens, and new ways for companies to reach their customers. But in that respect, in spite of all the progress made, it is important that we don’t let a handful of privately owned companies define the rules of the game for the market places that they have created if they do so in an unfair manner.

With size comes responsibility. With size also came the economic power for some companies to dominate markets in ways that threaten fair competition. So in December, we will table the Digital Services Act and propose a New Competition Tool. The aim of these proposals is to ensure a fully functioning and competitive single market for digital services based on European values.

For each and every one of us, the things that happen close to home are those who matter the most. Solutions that ease our lives will change our behaviour. For instance, digital tax declarations that are simpler and faster to do opposed to filling in on paper. Connected cashiers that directly transmit data to the tax authorities to prevent tax evasion and long processing of paper accountings at the end of the year. Electronic medical prescriptions that allow you to pick up necessary medicines at every pharmacy you pass by. This is useful in any Member State.

We want to enable access to public, private and cross-border services. To use these in a seamless manner it is important that we can identify ourselves. So we will soon propose a secure European E-identity. This will not only enable us to identify ourselves or make transactions online, it will also include getting control over our data, which we still struggle to get today.

During COVID-19, Greece set up within 24 hours a special number where request for permission for specific outings were sent by SMS and the authorisation was sent back on the mobile so that everyone know they had the permit on their phone when going out during lockdown. This simple idea empowered citizens and created much trust for other digital services that the government launched during past months. The public sector can be a strong enabler of change. Latvia has for example introduced a large-scale communication and training programme to improve peoples’ digital skills and to facilitate the use of digital services. These changes benefit all citizens and businesses.

In order to create this drive, we propose to invest 20% of the Recovery and Resilience Facility in digital transformation. This target will focus minds when discussing how to use the recovery funds in a way that enables and supports Europe’s future.

There is a lot of money to spend in the Recovery Fund. These target will help us spend it wisely. We need to make sure that the public spending will fosters additional private investments and stimulates innovation and competition in Europe. A combination of public and private investment is necessary to achieve the digital transition and the recovery we want

The target of 20% is ambitious as the challenges ahead of us are huge. We will work closely with Member States on how to integrate digital components in their recovery plans. Cross-border and multi-country projects are particularly important in that context and a well-functioning Single Market is necessary for Europe to be successful.

Finally, we hope that many member States will invest in digital skills. Over 40% of Europeans do not even have basic digital skills today. If we want everybody to benefits from the advantages of digital education, if we want to use digital applications in our daily lives, we need to create these skills. If we want to lead in digital technologies, we have to step up investments in advanced digital knowledge and well-trained digital innovators.

The recovery and resilience plans are a powerful tool to enhance Europe’s future. It may seem that this is long overdue, but if you look at Member States that have been pushing forward, you see the benefits that comes with a digital recovery.

Today we have taken two very tangible and concrete steps to enhance the best use of digital technologies.

Commission supports Estonia in increasing the efficiency of its transport sector | EU Commission Press

The European Commission, in cooperation with OECD International Transport Forum (ITF), has been providing support to Estonia through the Structural Reform Support Programme (SRSP) to help prepare a new transport and mobility development plan for the period 2021-2035. The result of the support project, an analysis of the transport sector in Estonia, was presented today during an event in Tallinn. The analysis focuses on the main challenges and opportunities facing the Estonian transport sector and identifies the country’s needs in terms of infrastructure and reforms. The final report provides recommendations to guide reforms and collects best practices from other Member States. The outcome of the project should help Estonia develop better policy on transport and ultimately contribute to reduce CO2 emissions for the benefit of its people and businesses. The SRSP offers expertise to all EU countries for the implementation of growth-enhancing reforms. The support is based on request and is tailor-made for the beneficiary Member State. Since 2017, the programme has been supporting over 1,000 reform projects in all 27 Member States.

State aid: Commission opens in-depth investigation into allocation of mobile radio frequencies by Poland to telecoms operator Sferia | EU Commission Press

The European Commission has opened an in-depth investigation to assess whether the allocation by the Polish authorities of a frequency block for the provision of 4G services to Sferia S.A (“Sferia”) is in line with EU State aid rules.

Sferia is a Polish telecommunications operator, controlled by the Cyfrowy Polsat capital group, which is active in the telecommunications and broadcasting markets in Poland.

The Commission received complaints from a number of competing telecoms operators, alleging that, in 2013, the Polish authorities allocated a frequency block from the 800MHz “digital dividend band” to Sferia without a selection procedure, at no additional cost, and without coverage obligations. By contrast, other operators were assigned the remaining blocks of the 800 MHz “digital dividend band” only in 2016, through a competitive process, against a payment (on average) of approximately €390 million (PLN 1,7 billion) and with coverage obligations. According to the complainants, the allocation of mobile radio frequencies to Sferia in 2013 was not in line with EU State aid rules.

Under the EU regulatory framework for electronic communications, Member States may allocate frequencies from their national spectrum to operators without maximising their revenues. Such allocation does not in principle constitute State aid within the meaning of EU rules, provided that the operators concerned are treated equally, in line with the principle of non-discrimination. If, instead, operators are treated differently, the allocation may constitute State aid that, if not objectively justified, may be incompatible with the Internal Market.

At this stage and based on the information available, the Commission’s preliminary view is that Sferia may have been awarded by the Polish authorities 800 MHz frequencies on more favourable terms than other operators and that, hence, the allocation may have amounted to State aid. 

The Commission will also investigate if a possible difference in treatment between Sferia and other operators, should it be confirmed, was justified and whether the allocation in question may have given Sferia an undue economic advantage vis-à-vis its competitors, in breach of EU State aid rules.

Furthermore, given the structural, functional, personal and capital links between Sferia and Cyfrowy Polsat capital group, the Commission will investigate if the potential State aid benefitted not only Sferia, but also the Cyfrowy Polsat group as a whole.

The Commission will now investigate further to determine whether its initial concerns are confirmed. The opening of an in-depth investigation gives Poland and interested third parties an opportunity to submit comments. It does not prejudge the outcome of the investigation.

The non-confidential version of the decisions will be made available under the case number SA.37489 in the State aid register on the Commission’s competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.