15 July 2022
On Wednesday 13 July, the European Parliament's Committee on Industry, Research and Energy (ITRE) adopted their reports on the revision of the Renewable Energy Directive (RED) and the Energy Efficiency Directive (EED). MEPs adopted the report on the RED with 54 votes to 14, with 6 abstentions, and on the EED with 50 votes to 7, with 13 abstentions.
On the revision of the RED, MEPs voted to raise the share of renewables in the EU's final energy consumption to 45% by 2030, as proposed by the European Commission under the REPowerEU package. They also agreed that all Member States will have to implement two cross-border projects to expand renewable electricity. One additional project will be implemented by 2030 for Member States with the highest annual electricity consumption. The Committee also demands that Member States set an indicative target for innovative renewable energy technology of at least 5% of newly installed renewable energy capacity.
On the revision of the EED, MEPs raised the EU target for reducing final and primary energy consumption: Member States should collectively ensure a reduction of energy consumption of at least 40% by 2030 in final energy consumption and 42.5% in primary energy consumption compared to 2007 projections. In addition, Member States should set binding national contributions to achieve these targets through measures at local, regional, national and European levels, in different sectors such as public administration and buildings.
SGI Europe generally welcomes the positions of the European Parliament on those texts, which should pave the way to faster deployment of renewable energy projects and leave more flexibility to Member States than the initial proposal from the European Commission.
Both reports will be voted in plenary for final approval by the European Parliament during the 12-15 September plenary session, initiating the trilogue negotiations with the Council (who agreed their position in June 2022). SGI Europe will closely monitor these negotiations' developments, which are essential to reach the EU Green Deal climate targets.
Contact: Ariel Carpanini
This week, the European Commission started consulting Member States about possible adjustments to the State Aid Crisis Temporary Framework. The Framework was adopted on 23 March following the Russian invasion of Ukraine as a response and a tool to mitigate higher energy prices in the EU.
The Commission is now considering three possible adjustment paths. The first one would see an increase of maximum aid ceilings foreseen in the provisions on limited amounts of aid. The Commission is also considering introducing two new sections (second and third adjustment) that would go beyond the mere compensation for the high energy prices, aiming at facilitating investments in renewables and diversification of energy supply.
The second path would introduce measures facilitating investments in renewables (including renewable hydrogen, biogas and biomethane, storage and renewable heat) in line with the REPowerEU Plan. Finally, the third adjustment path foresees the introduction of additional measures to accelerate the diversification of energy supplies further, reducing the dependency on imported fossil fuels by supporting energy efficiency measures and measures to decarbonise industrial processes. This would be achieved by simplifying tenders or setting up new tender schemes.
The Temporary Framework was discussed during SGI Europe's latest meeting of the Public Services Board on 7 July 2022. During the meeting, members pointed out that Member States do not as widely use the Crisis Framework as the Covid Framework. One reason is attributed to the fact that the amounts of aid are set very low, whilst Member States currently also provide support to affected undertakings through general measures, via taxation policy, for instance.
Contact: Manca Pocivavsek
The Employment and Social Developments in Europe (ESDE) review provides up-to-date economic analysis and policy proposals on employment and social affairs. The 2022 review underlines that the youth were among the most negatively affected by job losses during the economic crisis triggered by the COVID-19 pandemic.
The main challenges stressed in the report are the high share of fixed-term contracts, with nearly 1 in 2 young people on temporary contracts, and difficulties in finding a first job after leaving school, university, or training. In addition, young people are more likely to face a challenging social and financial situation, with 61% worrying about finding or maintaining adequate housing in the next ten years.
Youth unemployment is one of the priorities identified in the 2022-2024 work programme of the European social partners. SGI Europe is committed to improving employment opportunities, working conditions and skills matching for young people, including promoting quality and effective apprenticeships.
In this sense, the review of the Council Recommendation on the Quality Framework for Traineeships in 2023 can offer further guidance to the Member States on how to facilitate an environment that supports enterprises to hire and retain young workers.
Contact: Stefan Enica
On Thursday 14 July, the European Commission presented its Summer 2022 Economic Outlook. Heavily impacted by Russia's war of aggression against Ukraine, which continues to affect the EU economy negatively, the Economic Forecast projects that the EU economy will grow by 2.7% in 2022 and 1.5% in 2023. Growth in the euro area is expected at 2.6% in 2022, moderating to 1.4% in 2023. Annual average inflation is projected to peak in 2022, at 7.6% in the euro area and 8.3% in the EU, before easing in 2023 to 4.0% and 4.6%, respectively.
The EU economy remains particularly vulnerable to developments in energy markets due to its high reliance on Russian fossil fuels, and weakening global growth detracts from external demand. Momentum gathered with last year's rebound and a more robust first quarter is set to prop up the annual growth rate for 2022. Headline inflation until June has hit record highs as energy and food prices grew and price pressures broadened to services and other goods.
The forecast for inflation has been revised considerably upwards compared to the Spring Forecast. Besides the substantial price increase in the second quarter, a further surge in European gas prices is set to pass through to consumers via electricity prices.
Risks to the forecast for economic activity and inflation are heavily dependent on the evolution of the war and, in particular, its implications for gas supply to Europe, while the possibility that the resurging pandemic in the EU brings renewed disruptions to the economy cannot be excluded.
At the same time, recent downward tendencies of oil and other commodity prices could intensify, bringing about a faster decline in inflation than currently expected. Moreover, thanks to a strong labour market, private consumption could prove more resilient to increasing prices if households used more of their accumulated savings.
Contact: Guillaume Afellat
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