Welcome to Better Europe’s weekly update on EU Affairs.
PARLIAMENT CHOOSES LEADERS FOR FIRST HALF OF THE MANDATE
This week’s first plenary of 10th European Parliament revolved around organisational matters, ensuring that the European House of Democracy runs smoothly. Roberta Metsola (EPP, Malta) was re-appointed as President, for a second stint of 2,5 years. She will surround herself with three Vice-Presidents from her own party, five from Socialists and Democrats (S&D), two from Renew and two from European Conservatives and Reformists (ECR), and one each from the Greens and the Left. Neither of the newly formed far-right parties, Patriots for Europe (PfE) nor Europe of Sovereign Nations (ESN), were able to grab the senior positions. However, the “cordon sanitaire” clearly no longer applies to ECR, with 2 Vice-Presidents. New MEPs also voted on the size of their committees, with ENVI (Environment, Public Health, and Food Safety) and ITRE (Industry, Research, and Energy) to be the largest ones, with 90 members each. This should not come as a surprise, as the newly elected Commission President Ursula von der Leyen announced that she would come forward with a New Clean Industrial Deal in her first 100 days in office.
NEW HYDROGEN TARGETS UNREALISTIC, ACCORDING TO COURT OF AUDITORS
In 2020, the EU adopted one of the world’s first hydrogen strategies. Four years later, the gas and hydrogen package was officially published in the EU’s Official Journal, paving the way for green and renewable hydrogen to take its role in the EU internal market. While the legislation seems appropriate to enable the development of hydrogen networks and usage, the ambition level seems to be greatly exaggerated. According to a European Court of Auditors report on hydrogen, the hydrogen strategy needs a reality check, as market supply is not expected to reach even half of the EU’s 20-million-ton usage target by the end of the decade. The 2030 use-of-hydrogen goal seems to be based on political motivations, rather than robust analyses. Another issue identified by the Court is funding – the Commission does not have sufficient data on the planned or allocated member state level public funding, yet it plans to distribute €18.8 billion in the 2021-2027 period through its different hydrogen programmes.
ECOFIN APPROVES RECOVERY PLANS BUT BIG BUDGET DISCUSSIONS STILL TO COME
With the focus on the new five-year mandates for the Parliament and Commission, few are paying attention to the overlaps with EU’s seven-year budget cycle, discussed this week by Finance Ministers. In fact, one of the main tasks for the new Parliament in 2025 will be to start negotiations for the new budget which will cover 2027 to 2033. Ursula von der Leyen in her speech in Strasbourg this week made a few references to the end of the Recovery and Resilience Fund and its REPowerEU plan, and the need to develop both public and private finance to finance the digital and climate transitions, but few realise that these negotiations in fact will start pretty soon. As in 2020, the major question will be about how much Member States are prepared to give into their shared pool that is the EU budget. It is unlikely that all the funds that have been raised on financial markets by the Commission will have been compensated by the new own EU resources such as the Carbon Border Adjustment Mechanism and a Financial Transaction Tax. In short: the EU will have a joint debt that will have to be refinanced, also known as a “transfer union”.