Today the European Commission (EC) released the much awaited policy manual for the next five years of its legislative mandate – also known as Competitiveness Compass.
All new legislation will be geared towards strengthening the EU competitiveness by ramping up productivity driven by innovation to make the EU “an economic powerhouse, an investment destination and a manufacturing centre.” In other words, the EU is getting ready to bring its money home.
Simplify baby simplify
A competitive Union is one that attracts investments but investors are often scared away by excessive red tape and regulatory constraints – reports the document. This is why the Commission – one of the most active regulatory bodies in the world – promised industry that it will regulate less, better and faster. This “unprecedented simplification effort” will start from de-bureaucratising sustainable finance reporting, due diligence and taxonomy under a Simplification Omnibus proposal expected by 26 February.
The proposal is a sight of relief for many utilities who have been experiencing an unsustainable surge in ESG practice requests from investors, slowing down their reporting process. The proposal should therefore put a stop to regulatory bodies’ endless creation of new guidelines and Q&A documents causing legal uncertainty. It should also allow time to implementing recent legislation such as the EU Taxonomy, the Corporate Sustainability Reporting Directive (CSRD), and the Corporate Sustainability Due Diligence Directive (CSDDD).
What happens to energy?
It depends on the type of vector. The Commission reaffirmed its intention of phasing out Russia oil and gas with a roadmap now expected by end of March 2025. Electrification, on the other hand, is promoted as an enabler of energy independence, provided it is supported by a well-functioning integrated market and a reinforced digitalised distribution grid.
“Eurelectric welcomes the Competitiveness Compass calls for deeper market integration, incentives for long-term contracts and the implementation of the Grid Action Plan. These measures all play to Europe’s strengths and will aid our global competitiveness.”
Electricity will also play a key role in boosting Europe’s industrial competitiveness by ensuring clean and affordable power. This issue will be tackled upfront by the upcoming Affordable Energy Action Plan also expected by 26 February.
The electricity industry stands ready to supply consumers with clean and affordable power. It also recalls the importance of keeping a strong business case for investors to ensure continuous deployment of net-zero generation that will ultimately drive down the costs. We must continue financing power generation and infrastructure projects which are at the core of our energy transition.
Speaking of affordability, the Compass also flags energy taxation as a key gap in the energy market that will need urgent fixing via a revision of the European Taxation Directive.
“We strongly support a revision of the current energy taxation rules which perversely tax electricity more than gas. Fixing this imbalance is critical to aligning energy bills with the energy transition and make power prices more competitive.”