Welcome to Better Europe’s weekly update on EU Affairs.
GREEN ON PAPER: CAN TAX BREAKS REALLY DRIVE SUSTAINABILITY?
It’s already been seven months since the Draghi report highlighted the crucial intersection between financing the green transition and maintaining competitiveness – and these issues are still very much on the table. As Brussels continues its deregulatory frenzy, with Omnibuses piling up across sectors, the questions raised by the Draghi report are more relevant than ever. Next week, the Parliament’s FISC subcommittee will hold a public hearing to explore whether tax incentives for clean energy can truly support the green transition. While the Draghi report suggested that these fiscal measures could help align these sectors with sustainability goals, the hearing will discuss whether they’re enough to ensure real progress, or if they’re just another form of greenwashing. Experts from academia, the OECD, and key industries will weigh in. But let’s be honest, putting a price tag on the green transition might just let the biggest polluters off the hook. It’s a step in the right direction, but we’d much rather see fewer handouts and more genuine accountability. Stay tuned for the hearing and let’s see if these tax incentives are really the green solution they claim to be, or just another case of greenwashing?
TRADE TENSIONS ALIVE AND WELL, BUT MELONI TO THE RESCUE?
After three visits to Washington DC in the past few weeks, EU Trade Commissioner Maros Šefčovič has still not managed to relieve EU-US trade tensions or strike a deal, despite having promised to reach a transatlantic trade agreement that would “truly benefit both sides”. The negotiations follow the EU’s halt on its own counter tariff package after Trump’s U-turn 90-day pause on planned tariffs due to the US bond market tanking. Although Ševčovič arrived back to Brussels on Monday empty handed after his meeting with US Secretary of Commerce Howard Lutnick and US Trade Representative Jamieson Greer, his spokesperson did mention the talks were ‘productive’ and that the “dialogue was not of the deaf’’. Trump’s demands and their scope, however, continue to remain unclear. But have no fear! Despite the EU only having three months to convince the US to back off on a trade war, Trump-whisperer Giorgia Meloni visited DC on 17 April to convince her good friend Trump of exactly that. With trade surplus with the US of nearly 40 billion euro, she was even expected to push for concessions for Italy. Other EU leaders stand divided on her trip, with French President Macron warning that granting bilateral agreements could be Trump’s tactic to divide the Union. Incoming German Chancellor Merz, on the other hand, appears more open to the meeting, stating that Meloni could put her “good connections” to Trump “to the service of Europe”.
OMNIBUS II TO ARRIVE FIRST AT THE FINISH LINE
With all the fuss about Omnibus I, the Commission’s proposal to stop-the-clock and then wreck corporate sustainability reporting and responsibilities, and at least three new Omnibuses due this quarter, one would almost forget that Omnibus II is almost at its final destination. The initiative on the InvestEU regulation saw a Council negotiating position adopted by Member States earlier this week, ahead of negotiations with the Parliament. Member States agree with the aim to mobile 50 billion euros of investments by increasing the EU’s guarantees and restructuring three existing EU money pools: the European Fund for Strategic Investment, the Connecting Europe Facility debt instrument and the EIB’s InnovFin debt facility. Still here? The problem is that there is a lot of wishful thinking about being able to raise these huge amounts of funding, as only a small part of ‘fresh’ money will come from reallocated underspending on other programmes with their own added value. The rest has to come from the “possibility for Member States to contribute in a fully funded manner to a financial instrument”. But the appetite to “fully fund” EU instruments is quasi non-existent, with Member States not even willing to rack up more debt for more ‘urgent’ needs such as military spending.