The European Commission today adopted a Communication reaffirming the EU’s commitment to accelerated climate ambition. Preparing for the Climate Action Summit by the United Nations Secretary General in New York on 23 September, the Commission recalls that the European Union has been at the forefront of global climate action, negotiating an inclusive international framework to respond to this challenge, while acting domestically with unity, speed and decisiveness. The EU has put concrete actions behind its Paris Agreement commitments, in line with the Juncker Commission priority of establishing an Energy Union with a forward-looking climate change policy.
Commission Vice-president for the Energy Union Maroš Šefčovič said: “With the Paris Agreement, for the first time all parties committed to reduce emissions. Now we must make sure these reductions are timely enough to avoid the worst of the climate crisis. The European Union will bring to New York the fruit of our work on the Energy Union: a realistic perspective of a climate-neutral Europe by 2050, backed by ambitious policies set in binding legislation. The EU has ensured that all sectors contribute to the transition. At the Climate Action Summit, we hope our plans will inspire other countries, and we hope to be inspired. Our message is simple: Europe delivers.”
Commissioner for Climate Action and energy, Miguel Arias Cañete said: “The European Union has a powerful story to tell at the UN Climate Summit later this month. We are a global climate leader and our climate action is an outstanding example of delivery, including in the context of our Long Term Strategy process. The EU’s approach is to ensure that climate ambition is not only about headline targets, but about actual delivery on our promises, about making sure that objectives will be fulfilled and emissions reductions will happen. As shown by the EU-wide survey published today, our approach has a very strong mandate from our citizens. I am proud to share these messages also in New York.”
The European Union is the first major economy to put in place a legally binding framework to deliver on its pledges under the Paris Agreement and it is successfully transitioning towards a low emissions economy, with a view to reach climate neutrality by 2050. Ambitious climate action enjoys strong democratic support. According to the latest special Eurobarometer on climate change as published today, 93% of Europeans believe that climate change is a serious problem.
Moreover, the EU and its member states, true to their commitment to multilateral action rooted in science, are actively preparing to communicate by early 2020 a long-term strategy with the objective of achieving climate neutrality by 2050, as proposed by the Commission. The Commission presented its vision for a prosperous, modern, competitive and climate neutral economy in November 2018 and a large majority of member states endorsed this vision in June 2019. According to the Eurobarometer, 92% of Europeans supported making the EU climate-neutral by 2050. Under the Paris Agreement, all parties have to present a long-term strategy by 2020.
The EU continues to deliver on its commitments:
The EU has the most comprehensive and ambitious legislative framework on climate action in place and it is successfully transitioning towards a low emissions economy, aiming at climate neutrality by 2050 – between 1990 and 2017 its greenhouse gas emissions were reduced by 23% while the economy grew by 58%.
The EU has already over-achieved its 2020 greenhouse gas emissions reduction target and has completed its unique binding legislative framework that will allow us to over-deliver on our climate targets for 2030. At the same time, the EU Adaptation Strategy has encouraged national, regional and local adaptation action since 2013.
Conscious that our emissions make up only around 9% of the global total, the EU is continuing its outreach and cooperation, financial and technical, to all partner countries. The EU remains the world’s leading donor of development assistance and the world’s biggest climate finance donor. Providing over 40% of the world’s public climate finance, the EU and its Member States’ contributions have more than doubled since 2013, exceeding EUR 20 billion annually.
Strong support from citizens
Ahead of the United Nations Climate Action Summit, the Commission carried out a special Eurobarometer on climate action and energy, which shows that in all EU Member States, citizens overwhelmingly support action taken to fight climate change, and want the EU and national leaders to increase their ambitions in this regard and strengthen Europe’s energy security.
The Eurobarometer shows that 93% of Europeans believe that climate change is a ‘serious problem’, and 79% see it as a ‘very serious problem’. Compared with the last Eurobarometer in 2017, climate change has overtaken international terrorism in being perceived as the second most serious problem facing the world today, after poverty, hunger and lack of drinking water.
The proportion of European citizens who have taken personal action to fight climate change has increased in all EU Member States to an EU wide average of more than nine in ten citizens (93%). The Eurobarometer results also show a demand for national governments to step up their own targets for energy efficiency and renewable energy (92%), and to give more public funding to renewable energy (84%). A strong majority of Europeans (72%) feel that reducing energy imports will have a positive impact on the economy and energy security, and 92% believe that EU must secure access to energy for all EU citizens.
Commission approves 2022-2027 regional aid map for Greece
The European Commission has approved under EU State aid rules Greece’s map for granting regional aid from 1 January 2022 to 31 December 2027 within the framework of the revised Regional aid Guidelines (‘RAG’).
The revised RAG, adopted by the Commission on 19 April 2021 and entering into force on 1 January 2022, enable Member States to support the least favoured European regions in catching up and to reduce disparities in terms of economic well-being, income and unemployment – cohesion objectives that are at the heart of the Union. They also provide increased possibilities for Member States to support regions facing transition or structural challenges such as depopulation, to contribute fully to the green and digital transitions.
At the same time, the revised RAG maintain strong safeguards to prevent Member States from using public money to trigger the relocation of jobs from one EU Member State to another, which is essential for fair competition in the Single Market.
Greece’s regional map defines the Greek regions eligible for regional investment aid. The map also establishes the maximum aid intensities in the eligible regions. The aid intensity is the maximum amount of State aid that can be granted per beneficiary, expressed as a percentage of eligible investment costs.
Under the revised RAG, regions covering 82.34% of the population of Greece will be eligible for regional investment aid:
Twelve regions (Βόρειο Αιγαίο / Voreio Aigaio, Νότιο Αιγαίο / Notio Aigaio, Κρήτη / Kriti, Aνατολική Μακεδονία, Θράκη / Anatoliki Makedonia, Thraki, Κεντρική Μακεδονία / Kentriki Makedonia, Δυτική Μακεδονία / Dytiki Makedonia, Ήπειρος / Ipeiros, Θεσσαλία / Thessalia, Ιόνια Νησιά / Ionia Nisia, Δυτική Ελλάδα / Dytiki Elláda, Στερεά Ελλάδα / Sterea Elláda and Πελοπόννησος / Peloponnisos) are among the most disadvantaged regions in the EU, with a GDP per capita below 75% of EU average. These regions are eligible for aid under Article 107(3)(a) TFEU (so-called ‘a’ areas), with maximum aid intensities for large enterprises between 30% and 50%, depending on the GDP per capita of the respective ‘a’ area. The region Ευρυτανία / Evrytania, which is part of Στερεά Ελλάδα / Sterea Elláda, also qualifies as a sparsely populated area having fewer than 12,5 inhabitants per km². In sparsely populated areas, Member States can use operating aid schemes to prevent or reduce depopulation.
In order to address regional disparities, Greece has designated as so-called non-predefined ‘c’ areas the regions of Δυτικός Τομέας Αθηνών / Dytikos Tomeas Athinon, Ανατολική Αττική / Anatoliki Attiki, Δυτική Αττική / Dytiki Attiki and Πειραιάς, Νήσοι / Peiraias, Nisoi. The maximum aid intensities for large enterprises in Δυτικός Τομέας Αθηνών / Dytikos Tomeas Athinon is 15%. The other ‘c’ areas mentioned above border with ‘a’ areas. For this reason, the aid intensity in these regions has been increased to 25%, so that the difference in aid intensity with the bordering ‘a’ areas is limited to 15 percentage points.
Greece has the possibility to designate further so-called non-predefined ‘c’ areas (up to a maximum of 1.16% of the national population). The specific designation of these areas can take place in the future and would result in one or more amendments to the regional aid map approved today.
In all the above areas, the maximum aid intensities can be increased by 10 percentage points for investments made by medium-sized enterprises and by 20 percentage points for investments made by small enterprises, for their initial investments with eligible costs up to €50 million.
Once a future territorial Just Transition plan in the context of the Just Transition Fund Regulation will be in place, Greece has the possibility to notify the Commission an amendment to the regional aid map approved today, in order to apply a potential increase of the maximum aid intensity in the future Just Transition areas, as specified in the revised RAG for ‘a’ areas.
20 years of the euro in your pocket
Twenty years ago, on 1 January 2002, twelve EU countries changed their national currency banknotes and coins for the euro in the largest currency changeover in history. In these two decades, the euro has contributed to the stability, competitiveness and prosperity of European economies. Most importantly, it has improved the lives of citizens and made it easier to do business across Europe and beyond. With the euro in your pocket, saving, investing, travelling and doing business became much easier.
The euro is a symbol of EU integration and identity. Today, more than 340 million people use it across 19 EU countries, with 27.6 billion euro banknotes in circulation for a value of about €1.5 trillion. The euro is currently the second most widely used currency in the world behind the US dollar.
As it celebrates this 20th anniversary, the EU continues the work to strengthen the international role of the euro and adapt it to new challenges, including the rapid digitalisation of the economy and the development of virtual currencies. As a complement to cash, a digital euro would support a well-integrated payments sector and would offer greater choice to consumers and businesses.
Ursula von der Leyen, President of the European Commission, said: “It is now twenty years that we, European people, can carry Europe in our pockets. The euro is not just one of the most powerful currencies in the world. It is, first and foremost, a symbol of European unity. Euro banknotes have bridges on one side and a door on the other – because this is what the euro stands for. The euro is also the currency of the future, and in the coming years it will become a digital currency too. The euro also reflects our values. The world we want to live in. It is the global currency for sustainable investments. We can all be proud of that.”
David Sassoli, President of the European Parliament, said: “The euro is the embodiment of an ambitious political project to promote peace and integration within the European Union. But the euro is also a condition for protecting and relaunching the European economic, social, and political model in the face of the transformations of our time. The euro is a symbol, the coming to fruition of a historic political vision, an ancient vision of a united continent with a single currency for a single market.”
Charles Michel, President of the European Council, said: “The euro has come a long way — it’s a true European achievement. I would even say the euro has become part of who we are. And how we see ourselves as Europeans. Part of our mind-set. And part of our European spirit. The euro belongs to all of us all European citizens. But it isn’t just a success within our EU borders. It has also anchored itself on the international stage. Despite the crises, the euro has proven to be resilient — a symbol of European unity and stability. And never has that been truer than during COVID-19. The euro has served as a bedrock of stability. A stable asset for the Union. The euro also fuels our recovery. Unlocking the full potential of sustainable development, quality jobs, and innovation.”
Christine Lagarde, President of the European Central Bank, said: “The euros we hold in our hands have become a beacon of stability and solidity around the world. Hundreds of millions of Europeans trust it and transact with it every day. It is the second most international currency in the world. As European Central Bank President, I commit we will continue to work hard to make sure that we maintain price stability. And I also pledge that we will renew the face of those banknotes and that we will give them the digital dimension as well.”
Paschal Donohoe, President of the Eurogroup, said: “The euro has proven its mettle in dealing with great economic challenges. In particular, our response to the COVID 19 pandemic demonstrated that by sharing the euro we can achieve more collectively than we can individually. The euro has strengthened its foundations over the last 20 years. Now, we need to build on those foundations to make the euro the global currency for transitioning to a lower carbon future.”
A long journey
The euro has come a long way from the early discussions on an Economic and Monetary Union in the late 1960s. Specific steps towards a single currency were first approached in 1988 by the Delors Committee. In 1992, the Maastricht Treaty marked a decisive moment in the move towards the euro, as political leaders signed on the criteria that Member States had to meet to adopt the single currency. Two years later, the European Monetary Institute (EMI) started its preparatory work in Frankfurt for the European Central Bank (ECB) to assume its responsibility for monetary policy in the euro area. As a result, on 1 June 1998, the ECB became operational.
In 1999, the euro was launched in 11 Member States as an accounting currency on financial markets and used for electronic payments. It was finally on 1 January 2002 when Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain swapped their national notes and coins for euros. Slovenia joined the euro area in 2007, followed by Cyprus and Malta (2008), Slovakia (2009), Estonia (2011), Latvia (2014) and Lithuania (2015). Currently, Croatia is taking the preparatory steps to join the euro area, which it plans to do on 1 January 2023, provided it fulfils all the convergence criteria.
Twenty years of benefits for citizens and businesses
The euro has brought many benefits to Europe, especially to its citizens and businesses. The single currency has helped to keep prices stable and protected the euro area economies from exchange rate volatility. This has made it easier for European home buyers, businesses and governments to borrow money and has encouraged trade within Europe and beyond. The euro has also eliminated the need for currency exchange and has lowered the costs of transferring money, making travelling and moving to another country to work, study or retire simpler.
A large majority of Europeans support the single currency. According to the latest Eurobarometer, 78% of citizens across the euro area believe the euro is good for the EU.
A strengthened international role
The euro is the second most important currency in the international monetary system. Its stability and credibility has made it an international invoicing currency, a store of value and a reserve currency, accounting for around 20% of foreign exchange reserves. Sixty other countries and territories around the world, home to some 175 million people, have chosen to use the euro as their currency or to peg their own currency to it. Today, the euro is used for almost 40% of global cross-border payments and for more than half the EU’s exports.
Since the global financial crisis of 2008 and the subsequent sovereign debt crisis, the EU has continued to strengthen and deepen the Economic and Monetary Union. The EU’s unprecedented recovery plan NextGenerationEU will further improve the euro-area’s economic resilience and enhance economic convergence. The issuance of high-quality-denominated bonds under NextGenerationEU will add significant depth and liquidity to the EU’s capital markets and make them and the euro more attractive for investors. The euro is also now the leading currency for green investment: half of the world’s green bonds are denominated in euros, and this figure is rising thanks to the new green bonds issued to finance NextGenerationEU.
To further develop the international role of the euro, the Commission has launched outreach initiatives to promote euro denominated investments, facilitate the use of the euro as an invoicing and denomination currency, and foster a better understanding of the obstacles for its wider use. This outreach will take the form of dialogues, workshops and surveys with the public and private sector, financial regulatory agencies, and institutional investors in regional and global partner countries of the EU.
The Commission proposes the next generation of EU own resources
The Commission has today proposed to establish the next generation of own resources for the EU budget by putting forward three new sources of revenue: the first based on revenues from emissions trading (ETS), the second drawing on the resources generated by the proposed EU carbon border adjustment mechanism, and the third based on the share of residual profits from multinationals that will be re-allocated to EU Member States under the recent OECD/G20 agreement on a re-allocation of taxing rights (“Pillar One”). At cruising speed, in the years 2026-2030, these new sources of revenue are expected to generate on average a total of up to €17 billion annually for the EU budget.
The new own resources proposed today will help to repay the funds raised by the EU to finance the grant component of NextGenerationEU. The new own resources should also finance the Social Climate Fund. The latter is an essential element of the proposed new Emissions Trading System covering buildings and road transport, and will contribute to ensuring that the transition to a decarbonised economy will leave no one behind.
Johannes Hahn, Commissioner in charge of Budget and Administration, said: “With today’s package, we lay the foundations for the repayment of NextGenerationEU and provide essential support to the Fit for 55 package by putting in place the financing of the Social Climate Fund. With the set of new own resources, we, therefore, ensure that the next generation will truly benefit from NextGenerationEU.”
Today’s proposal builds on the Commission’s commitment undertaken as part of the political agreement on the 2021-2027 long-term budget and the NextGenerationEU recovery instrument. Once adopted, this package will strengthen the reform of the revenue system started in 2020 with the inclusion of the non-recycled plastic waste-based own resources.
EU emissions trading
The Fit for 55 package of July 2021 aims to reduce net greenhouse gas emissions in the EU by at least 55% by 2030, compared to 1990, to stay on track to reach climate neutrality by 2050. This package includes a revision of the EU Emissions Trading System. In future, emissions trading will also apply to the maritime sector, auctioning of aviation allowances will increase, and a new system for buildings and road transport will be established.
Under the current EU Emissions Trading System, most revenues from the auctioning of emission allowances are transferred to national budgets. Today, the Commission proposes that in future, 25% of the revenue from EU emissions trading flows into the EU budget. At cruising speed, revenues for the EU budget are estimated at around €12 billion per year on average over 2026-2030 (€9 billion on average between 2023-2030).
In addition to the repayment of NextGenerationEU funds, these new revenues would finance the Social Climate Fund, put forward by the Commission in July 2021. This Fund will ensure a socially fair transition and support vulnerable households, transport users and micro-enterprises to finance investments in energy efficiency, new heating and cooling systems and cleaner mobility, as well as, when appropriate, temporary direct income support. The total financial envelope of the Fund in principle corresponds to an amount equivalent to around 25% of the expected revenue from the new emissions trading system for buildings and road transport.
Carbon border adjustment mechanism
The objective of the carbon border adjustment mechanism, which the Commission also proposed in July 2021, is to reduce the risk of carbon leakage by encouraging producers in non-EU countries to green their production processes. It will put a carbon price on imports, corresponding to what would have been paid, had the goods been produced in the EU. This mechanism will apply to a targeted selection of sectors and is fully consistent with WTO rules.
The Commission proposes to allocate to the EU budget 75% of the revenues generated by this carbon border adjustment mechanism.Revenues for the EU budget are estimated at around €1 billion per year on average over 2026-2030 (€0.5 billion on average between 2023-2030).CBAM is not expected to generate revenue in the transitional period from 2023 to 2025.
Reform of the international corporate taxation framework
On 8 October 2021, more than 130 countries that are members of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting agreed on a reform of the international tax framework: a two-pillar solution to tackle tax avoidance and aims at ensuring that profits are taxed where economic activity and value creation occur. The signatory countries representing more than 90% of global GDP. Pillar One of this agreement will reallocate the right to tax a share of so-called residual profits from the world’s largest multinational enterprises to participating countries worldwide. The Commission proposes an own resource equivalent to 15% of the share of the residual profits of in-scope companiesthat are reallocated to EU Member States.
The Commission has committed to propose a Directive in 2022, once the details of the OECD/G20 Inclusive Framework agreement on Pillar One are finalised, implementing the Pillar One agreement in line with the requirements of the Single Market. This process is complementary to the Pillar Two Directive for which the Commission adopted a separate proposal today. Pending the finalisation of the agreement, revenues for the EU budget could amount to roughly between €2.5 and €4 billion per year.
In order to incorporate these new own resources in the EU budget, the EU needs to amend two key pieces of legislation:
First, the Commission proposes to amend the Own Resources Decision to add the three proposed new resources to the existing ones.
Secondly, the Commission also puts forward a targeted amendment of the regulation on the current long-term EU budget 2021-2027, also known as the Multiannual Financial Framework (MFF Regulation). This amendment offers the legal possibility to start repaying the borrowing for NextGenerationEU already during the current MFF. At the same time, it proposes to increase the relevant MFF expenditure ceilings for the years 2025-2027 to accommodate the additional expenditure for the Social Climate Fund.
The Own Resources Decision needs to be approved unanimously in Council after consulting the European Parliament. The decision can enter into force once it is approved by all EU countries in line with their constitutional requirements. The MFF Regulation needs to be adopted unanimously by the Council after obtaining the consent of the European Parliament.
The European Commission will now work hand in hand with the European Parliament and the Council towards swift implementation of the package within the timelines set in the interinstitutional agreement.
Furthermore, the Commission will present a proposal for a second basket of new own resources by the end of 2023. This second package will build on the ‘Business in Europe: Framework for Income Taxation (BEFIT)’ proposal foreseen for 2023.
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