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EU Update – September 2020

30/09/2020

EU leaders agree on long-term budget and recovery plan

On 21 July EU Member States agreed on a proposal from the European Commission on the multiannual financial framework (MFF) 2021-2027, the EU’s long-term budget, and Next Generation EU, a €750 billion recovery fund to overcome the crisis inflicted by the pandemic. The recovery fund, to be composed of €390 billion in grants and €360 billion in loans, will be attached to a new €1.074 trillion seven-year budget, bringing the total financial package to €1.82 trillion. The final agreement is currently subject to interinstitutional negotiations (trilogues) between the European Parliament and the Council of Ministers, representing the EU Member States. The European Parliament is calling for an additional €110 billion to be added to the MFF, as well as a legally binding declaration to introduce new own resources for the EU to repay the recovery borrowing. The co-legislators are aiming to conclude an agreement before the end of the year.

European Commission college reshuffled after resignation of Trade Commissioner

On 26 August EU Commissioner for Trade Phil Hogan (Ireland) resigned over violations of coronavirus travel restrictions, forcing European Commission President Ursula von der Leyen to reshuffle her team. Valdis Dombrovskis, European Commission Executive-Vice-President and previously Commissioner for financial services and stability, was nominated as the new Commissioner for Trade. Dombrovskis, a centre-right European People’s Party (EPP) politician, is a two-term European Commissioner and former Prime Minister of Latvia. In addition to his new trade job, Dombrovskis will retain his oversight over the eurozone, economic and social policy, as well as digital taxation. Following nominations by the Irish government, the Commission proposed MEP and European Parliament First Vice-President Mairead McGuinness for the position of Commissioner for financial services and stability. Also from the EPP, she has significant political experience on EU issues, having been an MEP since 2004 and the EPP’s lead negotiator in Parliament on the reform of the EU’s Common Agricultural Policy. Both the change in Dombrovskis’ role and the appointment of McGuiness will require a confirmation vote by the European Parliament.

European Commission ramps up climate ambition for 2030

On 16 September, European Commission President Ursula von der Leyen confirmed in her State of the Union address that the European Commission will propose an increase to the EU’s 2030 GHG emissions reduction target to at least 55% as part of a broader plan to achieve climate-neutrality by 2050. The following day, Frans Timmermans, Commission Vice-President for the European Green Deal, and Kadri Simson, Commissioner for Energy, presented the Commission’s impact assessment and a detailed plan on all relevant policies that will be reviewed, ranging from agriculture to energy and transport. Notably, the Commission will propose an expansion of the EU Emissions Trading Scheme (ETS) in the aviation, maritime transport, road transport and buildings sectors, with the goal to eventually include all emissions from fossil fuel combustion. The Commission will also look at increasing the CO2 reduction targets for carmakers, setting a phase out date for combustion engine cars, and pushing cleaner fuel options under the Renewable Energy Directive and the upcoming ReFuelEU initiative. The Commission will come up with several legislative proposals by June 2021 and has pledged that 37% of the new €750 billion Next Generation EU fund will be allocated to ensure the success of these climate objectives.