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EU Update – March 2021


Parliament agrees on the EU’s Recovery and Resilience Facility

On 10 February, the European Parliament approved the Recovery and Resilience Facility (RFF), the biggest building block of the Next Generation EU stimulus package. The €672.5 billion in grants and loans will be available to finance national measures designed to alleviate the economic and social consequences of the pandemic. Projects eligible for financing need to focus on key EU policy areas, such as the green transition including biodiversity, digital transformation, and economic cohesion. Each plan has to dedicate at least 37% of its budget to climate and at least 20% to digital actions, which is intended to accelerate the green-digital twin transitions as part of EU member states’ recovery from the coronavirus crisis. The green conditionality and Do No Significant Harm (DNSH) principle will apply to the entire fund. EU governments need to have a clear methodology to demonstrate that none of their measures would jeopardise attaining the climate neutrality objective for 2050. The deadline for submitting the draft National Recovery and Resilience Plans (NRRP) is end of April, and those will be assessed by the Commission within two months.

No breakthrough in Climate Law negotiations

Following the endorsement of a binding collective EU target for a reduction of at least 55% in greenhouse gas (GHG) emissions by 2030, on 26 February, the Portuguese Presidency of the Council of the EU sent a set of new compromise proposals to Members States regarding demands made by the European Parliament. The points concerned are the 2030 GHG emission target, where the Parliament is pushing for a 60% cut, the creation of a ‘European Climate Change Council’ (ECCC), an independent scientific advisory body which could keep the EU on course to meet its targets and the establishment of an EU ‘greenhouse gas (GHG) budget’ to inform the future EU climate targets. Despite exploratory talks over the month of February regarding Parliament’s demands, and several rounds of interinstitutional negotiations, the Council and the Parliament failed to reach a breakthrough regarding any of the debated elements. The European Commission aims to achieve an agreement by the climate leaders’ summit on Earth Day (22 April), hosted by the United States. Both the U.S. and Canada are expected to announce their upgraded emissions reduction pledges under the Paris Agreement by then, signaling the importance of reaching a political agreement in the EU.

Brexit update

On 24 December 2021, after months of intensive negotiations and preparations for a no deal scenario, the European Commission and the UK reached an EU-UK Trade Cooperation Agreement on the terms of future cooperation. The agreement sets out arrangements in various areas, such as trade in goods and in services, aviation and road transport, energy or fisheries. Although EU national governments and the British parliament have already approved the deal, the European Parliament has not yet ratified the trade deal, which is the final step before the agreement would legally come into full force. In March, political group leaders in the Parliament decided to postpone their ratification vote after the U.K. unveiled plans to unilaterally extend grace periods of three months on post-Brexit customs checks at Northern Ireland’s ports for a further six months. The decision postpones the full implementation of the customs controls provided in the agreement between Northern Ireland and Great Britain. On 15 March, the European Commission launched the first phase of an infringement proceeding on the matter. The ratification is foreseen on the 26 April plenary, regardless of the U.K.’s actions, according to a recent interview with European Parliament President, David Sassoli.

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