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EU Commission supports Member States in their transition to a climate-neutral economy

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The European Commission has approved all requests made by 18 Member States for support with the preparation of their territorial just transition plans, which each Member State will have to draw up to get access to funding from the Just Transition Mechanism. To recall, the Just Transition Mechanism is part of the European Green Deal Investment Plan and will mobilise at least €100 billion of investments to provide additional targeted support to the regions most impacted by the transition towards a climate-neutral economy and with less capacity to deal with the challenge. The approval follows a dedicated call, launched by the Commission at the end of February 2020 under the Structural Reform Support Programme.

Commissioner for Cohesion and Reforms, Elisa Ferreira, said: “Our work on delivering the European Green Deal continues. Climate change remains a reality. Fighting it is as pressing as before. The Commission is strongly backing Member States to ensure a just transition in all European regions. This support under the Structural Reform Support Programme is an important step – it will help to establish transition plans and allow Member States to benefit from the Just Transition Mechanism, making sure the transition towards a green economy happens in a fair way, leaving no one behind.

Under the Structural Reform Support Programme, the Commission will provide tailor-made expertise to, for example, help national and regional authorities:

  • assess the social, economic and environmental impacts of the transition and outline the transition process up to 2030;
  • build a dialogue among stakeholders, such as citizens, business and civil society, to reach a common vision on how to go about the transition;
  • and identify actions to achieve a successful just transition. 

Next steps

Over the next months, until end of 2020, the Commission will provide targeted support to help Member States with the preparation of territorial just transition plans. Member States will hold the pen in drafting and finalising the territorial just transition plans,in close consultation with relevant national, regional and local stakeholders, ensuring ownership of the transition. The plans will then be submitted to the Commission for approval.

Background

On 11 December 2019, the Commission presented the European Green Deal, with the ambition of becoming the first climate-neutral bloc in the world by 2050.

On 14 January 2020, the Commission announced the European Green Deal Investment Plan  to help finance the transition. But not all Member States start from the same point in their transition – some will be more impacted than others. The Just Transition Mechanism (JTM) is a key tool to ensure that the transition towards a climate-neutral economy happens in a fair way, leaving no one behind. The Mechanism provides 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. Special attention will be paid to regions strongly impacted by the transition but with less capacity to deal with its challenges.

To access funding, Member States have to draw up, in dialogue with the Commission, territorial just transition plans. In these plans, Member States will identify territories that would be most impacted by the transition towards a climate-neutral economy, set out the development challenges of these territories, and outline their pathways for transition until 2030, in close consultation with relevant national, regional and local stakeholders. The Commission’s approval of these plans will unlock the support of Member States through the 3 pillars of the Just Transition Mechanism: 1) the Just Transition Fund, which will provide grants that will mobilise €30-50 billion for social and economic transformation in just transition regions; 2) a dedicated scheme under InvestEU, which will crowd-in up to €45 billion in private investment, and 3) a public sector loan facility, which will mobilise €25-30 billion euros in public sector investment.

The Commission is providing swift support to Member States through the Structural Reform Support Programme (SRSP) to help prepare their territorial just transition plans and thus implement the European Green Deal. To do so, at the end of February, the Commission launched a dedicated call under the SRSP to help prepare the territorial just transition plans. 18 Member States (BE, BG, CY, CZ, EL, ES, FI, HR, HU, IE, IT, LT, LV, PL, PT, RO, SE and SK) requested such support and the Commission approved all 18 requests. Over the past two years, the Commission already provided hands-on support to regions through the SRSP to help prepare long-term economic strategies for their transition out of coal, such as in Slovakia’s Horna Nitra region, Greece’s Western Macedonia or Romania’s Jiu Valley.

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Why social fairness and solidarity are more important than ever

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EU Commission’s services have published the 2020 edition of the Employment and Social Developments in Europe (ESDE) review dedicated to the theme of social fairness and solidarity. The review provides evidence-based analysis on how to achieve greater fairness across the EU in the face of crises such as the COVID-19 pandemic as well as structural changes due to demographic ageing, and the green and digital transitions.

Commissioner for Jobs and Social Rights Nicolas Schmit said: “The ESDE report shows that strengthening social fairness is key to overcoming the crisis. This requires putting people front and centre. To ensure resilience, solidarity and cohesion, the EU’s response has to prioritise employment, reduce inequalities and ensure equal opportunities. The effective implementation of the European Pillar of Social Rights will serve as our guide.”

The review notes that the COVID-19 pandemic is having profound health, economic, employment and social effects, threatening much of the progress that the EU had achieved previously. All Member States are experiencing a greater economic shock than in 2008-2009. Economic output has contracted sharply and unemployment is on the rise. The most vulnerable persons, including Europe’s youth, are hit particularly hard.

Against this background, the ESDE report points to the following findings:

Adequate minimum wages and minimum income can have a beneficial effect on the social mobility of Europeans.

Strengthening social fairness, including through investments in people, pays off. Closing gender-related gaps brings particularly high returns, while extending working lives, and raising educational attainment also have positive effects.

Structural change, such as the green transition, has to be accompanied by social measures to be successful. Notably, this transition requires social investment in the form of re-skilling programmes and/or unemployment benefits. According to ESDE, this social investment could amount to €20 billion or more until 2030.

Short-time work schemes are protecting jobs effectively. The EU is helping Member States to provide such support through solidarity mechanisms like the instrument for temporary Support to mitigate Unemployment Risks in an Emergency (SURE).

Social dialogue and collective bargaining influence fairness and its perception at the workplace by promoting more equitable wages, better working conditions and more inclusive labour markets.

More generally, to repair the damage done by COVID-19 and prepare an economy and society for a future of faster structural changes, the EU and Member States need to embrace fully the opportunities offered by the transition to a greener, digitalised economy and build inclusiveness, solidarity and resilience into the design of all policies. Ensuring a broad-based recovery is a key policy objective of our policy action, which will help strengthen social resilience in the longer run.

Background

The annual Employment and Social Developments in Europe review prepared by the Directorate-General of Employment, Social Affairs and Inclusion, provides up-to-date economic analysis of employment and social trends in Europe and discusses related policy options. It is the European Commission’s analytical flagship report in the area of employment and social affairs, mandated by Articles 151, 159 and 161 of the Treaty on the Functioning of the European Union (TFEU).

There are many examples in which the Commission focuses on addressing the challenges raised in the yearly ESDE reports. In April 2020, the Commission proposed the SURE instrument, which will provide €100 billion in financial support to help protect jobs and workers affected by the coronavirus pandemic. In May 2020, the Commission put forward a powerful, modern and revamped long-term EU budget boosted by NextGenerationEU, an emergency temporary recovery instrument, to help repair the economic and social damage brought by the coronavirus pandemic, kickstart the recovery and prepare for a better future for the next generation. The Recovery and Resilience Facility will be one of EU’s main recovery tools, providing an unprecedented €672.5 billion of loans and grants in frontloaded financial support for the crucial first years of the recovery. The European Social Fund Plus (ESF+) will continue to invest in people, while an improved European Globalisation Adjustment Fund (EGF) will be able to intervene even more effectively to support workers who have lost their jobs. The European Pillar of Social Rights and its upcoming Action Plan, as well as initiatives and tools such as the European Skills Agenda, the Youth Employment Support initiative or the Digital Europe Programme will all contribute to address challenges identified in the ESDE.

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EU-China Leaders’ Meeting: Upholding EU values and interests

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The European Union and China held a Leaders’ Meeting via videoconference on 14 September 2020. An EU-China Leaders’ meeting with the participation of leaders of all EU member states was initially scheduled to take place on this date. President of the European Council, Charles Michel, President of the European Commission, Ursula von der Leyen, and the Federal Chancellor of Germany, Angela Merkel, for the Council Presidency, conducted the videoconference with Chinese President Xi Jinping. The meeting provided an opportunity to follow up on discussions at the 22nd EU-China Summit (22 June). The meeting was important to maintain the momentum of EU-China high-level exchanges in order to achieve concrete results in line with EU interests and values.

The comprehensive agenda of the Leaders’ meeting covered trade and investment, climate change and biodiversity, the response to the COVID-19 pandemic, as well as international affairs and other issues.

With regard to the negotiations for an ambitious EU-China Comprehensive Investment Agreement (CAI), while both sides registered progress on the rules regulating the behaviour of State-owned-enterprises, on forced technology transfer and on transparency of subsidies, the EU emphasised that more work was urgently needed on the issues of rebalancing market access and on sustainable development. The EU called on China to step up its ambition on these issues. The two sides reaffirmed their objective of closing the remaining gaps before the end of the year. The EU side emphasised that high-level political engagement would be required within the Chinese system to achieve a meaningful agreement.

On other trade and economic issues, the EU reiterated its call on China to engage in future negotiations on industrial subsidies in the WTO. The EU stressed that, in line with China’s stated commitment to open up and ensure that EU producers are fairly treated on the Chinese market, more needed to be done to improve market access in the agri-food trade, financial services and the digital sector. The EU also again made clear its concerns on overcapacity, both in traditional sectors such as steel and aluminium as well as in high tech.

The two sides welcomed the signature of the EU-China Agreement on Geographical Indications which will improve access to the Chinese market especially for high-quality European agricultural products.

The EU underlined the need for reciprocity and a level playing field in the area of science and technology, underpinned by high ethical and integrity standards. Leaders welcomed and agreed to continue the high level digital dialogue. They looked forward to concrete progress on ICT standards, product safety and research and innovation.

On climate change and biodiversity, the EU encouraged China to strengthen its climate commitments in terms of peaking carbon dioxide emissions and setting the goal of climate neutrality domestically. The EU also stressed the importance of a moratorium in China of building coal-fired power plants and financing their construction abroad, at least as part of a global initiative. The EU also encouraged China to launch its national emission trading system soon. The two sides agreed to establish a High-Level Environment and Climate Dialogue to pursue ambitious joint commitments on these issues.

The EU noted that joint commitments by both sides on biodiversity could be a game-changer at global level and China has a key role to play as host of the Conference of the Parties next year. An ambitious global agreement would be a major achievement.

On the COVID-19 response, the EU emphasised the shared responsibility to participate in global efforts to stop the spread of the virus, boost research on treatments and vaccines, and strengthen the role of the World Health Organisation, including through the full implementation of the World Health Assembly resolution of May 2020. The EU also underlined that the recovery measures should support the transition to a greener and more sustainable economy. China’s full engagement in G20 efforts to support low-income countries and effectively implement the G20 – Paris Club Debt Service Suspension Initiative will also be essential.

With regard to Hong Kong, EU Leaders voiced their grave concerns about the erosion of the fundamental rights and freedoms following the imposition of the national security law on Hong Kong on 30 June, which is contrary to China’s international commitments. They also reiterated the EU’s concerns at the postponement of the Legislative Council election and the disqualification of candidates.

The EU reiterated its serious concerns about the treatment of ethnic and religious minorities, the situation of human rights defenders, as well as the limitations to freedom of expression and access to information. The two sides agreed that the Human Rights Dialogue will take place as a physical meeting in China later this year.

On regional and international issues, the EU referred to the escalating tensions in the South China Sea, urging for self-restraint and a peaceful resolution of disputes in accordance with international law. Leaders welcomed the start of the intra-Afghan negotiations in Doha. They also confirmed their commitment to upholding the Joint Comprehensive Plan of Action (the Iran nuclear deal).

The EU also expressed readiness to continue to discuss the Strategic Agenda for Cooperation 2025, which can only be concluded once significant progress has been made in the negotiations on the Comprehensive Investment Agreement.

An EU-China Leaders’ Meeting with the participation of the Heads of State and Government of the EU member states and President Xi is foreseen to be held in 2021.

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Commission adopts proposal to make EU-U.S. agreement on tariffs effective

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The European Commission today published a proposal for a Council and European Parliament regulation to scrap duties on certain imports to the EU. In return, the United States will reduce its duties on certain EU exports to the U.S. market. This will put into effect the agreement announced by the EU and the U.S. on 21 August 2020. These tariff reductions between the EU and the U.S. will increase access to both EU and U.S. markets by around €200 million per year.

Executive Vice-President Valdis Dombrovskis said: “The EU and the U.S. share the most important economic partnership in the world, with trade in goods and services worth over €1.3 trillion annually. This deal provides both sides with a true win-win outcome, helping us to strengthen our partnership even further. Lowering tariffs on both sides improves access for our exporters and reduces the cost of imported goods. Those are both critically important factors in this time of coronavirus-related economic crisis. From the EU side, we view this agreement as an important step towards improving our relationship and resolving outstanding disputes. We remain eager to deepen transatlantic cooperation wherever possible as we firmly believe that, when it comes to truly global challenges, the chances of achieving successful global outcomes are improved if the European Union and United States work together.”

Once approved in line with the relevant procedures on either side of the Atlantic, the agreement will entail the reduction of U.S. tariffs on EU exports worth some $160 million a year. This includes prepared meals, crystal glassware, surface preparations, propellant powders, lighters and lighter parts. On its side, the EU will eliminate tariffs on imports of U.S. live and frozen lobster products. U.S. exports of these products to the EU are worth some $111 million.

Both sides will eliminate those tariffs on a most-favored nation (MFN) basis, i.e. for any partner, in line with the existing multilateral commitments. The measures will apply with retroactive effect as of 1 August 2020.

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