New European Commission, new policy program

On 1 December 2019, the new European Commission lead by President Ursula von der Leyen took office, following the endorsement of its composition by the European Parliament and the European Council. The European Parliament gave her a relatively solid majority of 461 votes in favour, 157 against and 89 abstentions.

Six Headline Ambitions

The new 27 members-strong Commission started to work on the basis of the six “headline ambitions”[1] set by Ms von der Leyen in July, which she developed in a speech to the European Parliament on 27 November. In this speech, she insisted on the European Green Deal, presented as a “our new growth strategy”, with “at its core an industrial strategy that enables our businesses – big and small – to innovate and to develop new technologies while creating new markets”, and on digitalisation, which amongst others should “enable us to handle resources more effectively and more efficiently, because we will be able to calibrate everything precisely: water consumption, energy all the precious resources of our planet”, outlining six priorities in this area. The “transformative power of this twin digital and climate transition” should help “strengthen our own industrial base and innovation potential” recalling that “competitive sustainability has always been at the heart of our social market economy”.

To develop these ambitions into concrete policies, three 3 Executive Vice-Presidents have been nominated: Frans Timmermans (NL), Executive Vice-President for ‘European Green Deal’, who will also manage climate action policy, Margrethe Vestager (DK), Executive Vice-President for ‘Europe fit for the digital age’, and also Commissioner for Competition and Valdis Dombrokvskis (LV), Executive Vice-President for ‘Economy that works for the people’, and Commissioner for Financial Services.

They will be supported by other Commissioners such as Thierry Breton (FR) nominated as the Internal Market Commissioner, who will lead the work on Industrial Policy (DG GROW), the Digital Single Market (DG CONNECT), and Space and Defence (newly created DG SPACE); Didier Reynders (BE), nominated as Commissioner for Justice; Phil Hogan (IE) nominated as Trade Commissioner; Paolo Gentiloni (IT) nominated as Economy Commissioner; Kadri Simson (ET) nominated as Energy Commissioner; Virginijus Sinkevičius (LT) nominated as Environment Commissioner and Janusz Wojciechowski (PL), in charge of Agriculture.

A European Green Deal

Under this framework, the European Green Deal was presented on 11 December, followed by the Sustainable Europe Investment Plan and Just Transition Mechanism on 14 January. Other initiatives should follow beginning 2020, as shows an indicative timeline provided by the Commission:

  • 29 January 2020: 2020 Commission Work Programme
  • 19 February 2020: Proposals developing the European approach to Artificial Intelligence
  • 26/02: European Climate Law on 2050 climate neutrality
  • 4 March 2020: Industrial Strategy, SME strategy, Single Market Barriers Report, Single Market Enforcement Action Plan, Circular Economy Action Plan, and White Paper on an Instrument on Foreign Subsidies.

The Communication on the European Green Deal, accompanied by an annex containing an initial roadmap of key policies and actions, proposes a set of political objectives that the new Commission aims to achieve. It is presented as the EU’s “growth strategy” for the next years and focuses on eight main sectors: climate action, energy, industry, buildings, toxic-free environment, biodiversity, agriculture and mobility. In addition, the Communication proposes horizontal actions to be taken in the areas of finance, research and innovation, data, training and education, as well as trade relations. The overall objective is a “climate neutral Europe in 2050“. Of specific interest could be: a “Zero pollution action plan for water, air and soil” is foreseen for 2021 and the greening of the Common Agricultural Policy (the examination of the draft national strategic plans, is scheduled for 2020-2021.

A €-1 trillion Investment Plan

The Green Deal is accompanied by an investment plan presented on 14 January with two components: a  Sustainable Europe Investment Plan and a Just Transition Mechanism (for the latter a legislative proposal is announced to follow in March 2020).

The purpose of the Plan is to mobilise public investment and help to unlock private funds through EU financial instruments, notably InvestEU, which would lead to at least €1 trillion of investments. For those regions that will be particularly affected and undergo a profound economic and social transformation, the Just Transition Mechanism will provide tailored financial and practical support to help workers and generate the necessary investments in those areas.

The Plan is based on three dimensions:

  • Financing: mobilising at least €1 trillion of sustainable investments over the next decade. A greater share of spending on climate and environmental action from the EU budget than ever before is expected to crowd in private funding, with a key role to be played by the European Investment Bank.
  • Enabling: providing incentives to unlock and redirect public and private investment. The EU will provide tools for investors by putting sustainable finance at the heart of the financial system and will facilitate sustainable public investment by encouraging green budgeting and procurement, and by designing ways to facilitate procedures to approve State Aid for “just transition” regions.
  • Practical support: the Commission will provide support to public authorities and project promoters in planning, designing and executing sustainable projects.

The Just Transition Mechanism (JTM) will provide targeted support to help mobilise at least €100 billion over the period 2021-2027 in the most affected regions, to alleviate the socio-economic impact of the transition. It aims at creating the necessary investment to help workers and communities which rely on the fossil fuel value chain. It will come in addition to the substantial contribution of the EU’s budget through all instruments directly relevant to the transition. The Just Transition Mechanism will consist of three main sources of financing:

  • A Just Transition Fund, which will receive €7.5 billion of new EU funds, coming on top of the Commission’s proposal for the next long-term EU budget. In order to receive money available from the Fund, Member States will, in dialogue with the Commission, must identify the eligible territories through dedicated territorial just transition plans. They will also have to commit to match money from the Just Transition Fund with an equivalent amount from the European Regional Development Fund and the European Social Fund Plus and provide additional national resources. Taken together, this will to provide between €30 and €50 billion of funding, which is expected to mobilise even more investments. The Fund will primarily provide grants to regions. It will, for example, support workers to develop skills and competences for the job market of the future and help SMEs, start-ups and incubators to create new economic opportunities in these regions. It will also support investments in the clean energy transition, for example in energy efficiency.
  • A dedicated just transition scheme under the InvestEU programme to mobilise up to €45 billion of investments. It will seek to attract private investments, including in sustainable energy and transport that benefit those regions and help their economies find new sources of growth. 
  • A public sector loan facility with the European Investment Bank backed by the EU budget to mobilise between €25 and €30 billion of investments. It will be used for loans to the public sector, for instance for investments in district heating networks and renovation of buildings. The Commission will come with a legislative proposal to set this up in March 2020.

A new Circular Economy Action Plan

As part of the European Green Deal, the Commission will develop a new Circular Economy Action Plan (to be presented in March 2020), which main elements were published in a Roadmap on 23 December 2019. These are:

  • Sustainable products policy: Will provide tools for industry to improve management of their supply chains and to support circular design.
  • Consumer empowerment: Mainly through the availability of product information to support consumers in making informed choices and combating ‘false green claims’.
  • This should be achieved by using a robust and comparable methodology, which, although not explicitly stated, will likely be based on the Product Environmental Footprint.
  • The roadmap additionally mentions identifying options for prioritising reuse and repairs before recycling. We would like to remind you in this context of the ongoing discussions for establishing a potential new label to inform consumers on the reparability/durability of products.
  • Initiatives on waste: Namely, implementing measures to reduce waste generation and to modernise certain waste laws. Furthermore, additional emphasis will be placed on treating waste domestically by addressing the quality of recycling installations and waste exports.
  • Internal market for secondary raw materials: by fostering market conditions to ensure that these materials are safe and competitively priced – as these concerns are often cited as key barriers for the uptake of recycled materials in products.
  • Measures for high-impact sectors: Mainly textiles, construction and electronics. As regards plastics, the focus will be on tackling microplastic pollution, requirements for packaging, and addressing bio-based and biodegradable plastics
  • Innovation and investment: fostering conditions to support circular business models and enabling technologies.

[1] These six headline ambitions form the priorities of the new Commission for the period 2019-2024: A European Green Deal, an economy that works for people, a Europe fit for the digital age, protecting our European way of life, a stronger Europe in the world and a new push for European democracy