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Mario Draghi is expected to present his report on European competitiveness next Monday, alongside his client: Ursula von der Leyen. Yesterday, Wednesday, the former ECB President presented some of his ideas behind closed doors in Brussels, first to the Committee of Permanent Representatives and then to the Conference of the Political Group Leaders of the European Parliament.
He used drastic words to call for a major effort: “If we don’t become competitive, the EU will go under“, warned the former Italian Prime Minister, according to participants. Europe was suffering from low productivity as a result of dwindling innovative strength, high energy prices, too few skilled workers and investments, fragmented capital, telecommunications, and arms markets.
Draghi did not want to specify yesterday how he intends to solve these problems. It is reported that in his 400-page report (including annexes), he intends to make very specific proposals for ten sectors. Among other things, Draghi will propose a common industrial policy focused on innovation, as well as new competition rules and more private and public investment. Some of his proposals are likely to be included in the terms of reference for the new Commissioners, which von der Leyen intends to present on Wednesday.
We should know more details next Monday – at the latest.
Frustration with the EU’s Carbon Border Adjustment Mechanism (CBAM) remains high even after several months of trial. Affected companies and their stakeholders continue to complain about the bureaucratic and financial overload caused by the new law. They consider the EU Commission and the national authorities obligated to better protect European companies.
CBAM officially came into force at the end of last year. Companies wishing to import cement, iron, steel, aluminum, hydrogen, fertilizers or electricity into the EU must declare the emission intensity of the product. Although a financial levy will not be imposed for almost a year and a half, severe penalties are already being imposed if the reports are incorrect or incomplete – up to 50 euros per non-reported ton of CO2. This affects not only non-European companies, but also EU companies that rely on deliveries from outside the EU.
The actual idea of the CBAM is first to obtain precise information on the emission intensity of products along the supply chains. In the second step, a CO2 levy will be gradually introduced from 2026, which will be based on the carbon price of the European Emissions Trading System (ETS). The aim is for importers to eventually pay the same carbon price as European companies to protect them from carbon leakage.
However, the collection of emissions data, in particular, poses significant challenges for companies. While it was still possible during the CBAM transition phase (until June 2024) to provide default values based on publicly available data for the product and country of origin, the actual data now needs to be reported for the current quarter. Only a small proportion of emissions (20 percent) along a supply chain can still be reported using standard values for processed products.
According to Sarah Brückner, Head of the Environment and Sustainability Department at the Mechanical Engineering Industry Association (VDMA), this is a considerable challenge for plant and mechanical engineering: “The actual data is often simply unavailable, either because the suppliers do not collect the data or do not want to release it.”
The problem is that individual companies often do not have the market power to force their suppliers to carry out costly and bureaucratically complex emissions assessments – especially for small, specialized parts for which there is hardly more than one supplier. On top of this, companies usually do not have just one supplier with a single emissions value, but several suppliers with different data. The importing companies are responsible for the accuracy of their suppliers’ data and must verify it accordingly.
Brückner explains that VDMA member companies have already visited their suppliers to convince them to hand over their data for CBAM. “But even then, they cannot guarantee the accuracy of the data.”
Support from the EU Commission has yet to materialize. When asked, the Brussels authority declined to comment on the industry’s problems, merely referring to an FAQ on CBAM reporting obligations. This states that if the declaring party cannot obtain actual emissions data from the supplier and instead reports standard values, the CBAM report will be deemed incorrect or incomplete.
National CBAM authorities do have discretionary powers when assessing CBAM reports if the actual data cannot be provided – for example, the German Emissions Trading Authority (DEHSt). However, this is entirely vague: If the actual emissions cannot be reported, documents must be provided to prove “that all reasonable efforts” have been made to obtain the data.
It is unclear what exactly “all reasonable efforts” means, especially as the size of the company and the import volume of CBAM goods will be considered when assessing the report. This leaves companies with uncertainty and fear of penalties.
That’s why VDMA sustainability expert Brückner also believes national CBAM authorities have a duty. “The DEHSt can only be contacted for questions to a very limited extent.” It is hardly practicable to have to provide data when the responsible authority does not yet have the staff to answer questions about the implementation of the CBAM, Brückner says.
Because of the ongoing challenges associated with CBAM reporting, the VDMA calls for a longer transition period during which standard values can be reported. “In mechanical and plant engineering, with its often complex supply chains, switching to another supplier takes longer than in other industries and is estimated to take a year and a half on average.”
This problem could also be solved by increasing the so-called de minimis limits. This means that importers of CBAM products with a value below this limit would be exempt from reporting. Currently, the de minimis limit is 150 euros, which strictly speaking does not even exclude private individuals. “Many imports that reach this monetary value in mechanical engineering generate carbon emissions of 1 kg or less due to the high cost of very high-quality small parts and components,” says Brückner, adding that in these cases, the administrative burden for companies is disproportionate to the minimal climate impact of their imports.
The VDMA proposes a de minimis limit of at least 5,000 euros. This would exempt purchasers of tiny quantities from CBAM reporting obligations. At the same time, powerful market players who can persuade their suppliers to be more transparent would still have to collect emissions data.
The report, which Peter Strohschneider, Chairman of the Strategic Dialogue on Agriculture, presented to EU Commission President Ursula von der Leyen on Wednesday, is 110 pages long. Based on the paper, the re-elected EU Commission President intends to present a vision paper on agriculture in the first 100 days of her new term of office.
The panel of agricultural and industry representatives, environmentalists, animal rights activists and scientists agreed on 14 recommendations. Much remains vague. However, the panel’s proposals for a redistribution of EU agricultural subsidies could fuel the debate on the further development of the Common Agricultural Policy (CAP).
The members reject conditionality, meaning that direct payments should no longer be linked to environmental or animal welfare standards in future. This model is too complex and inflexible. Economic and social support for farmers should be independent of financial support for environmental protection measures.
The committee is therefore sticking to payments to support farmers’ incomes but is calling for a fundamental reform. The direct payments should no longer be awarded on an area basis, but should be prioritized to those who “need the support the most“.
Currently, the basic income support is hardly related to the socio-economic needs of the farms, the committee criticizes. The members want to improve this in order to use the CAP budget in a targeted manner and to be able to absorb additional costs resulting from the accession of new countries to the EU. The further development of the CAP is also intended to avoid inflating land prices.
However, the report omits one sensitive question: How will it be determined which companies have the greatest need? A task force of economists and social policy experts is to develop criteria for this. The task force is to assess which instruments are suitable for redistributing direct payments. The committee mentions options such as capping the amount of aid an individual farm can receive, economic allocation criteria or “mechanisms based on social policy”.
In addition to supporting low-income farms, the committee advocates financial incentives for environmental, climate and animal welfare services that go beyond mere cost recovery. Farmers who go above and beyond the statutory minimum should be “rewarded” for their performance. What is new is that the environmental premiums are to be linked to result indicators instead of to the implementation of specified measures, as was previously the case. The share of environmental premiums in the overall budget is to increase annually over the next two funding periods – based on the minimum share of 32% that is already mandatory for the member states.
The German Farmers’ Association (DBV) was dissatisfied with the proposals. Much of it sounds “like a confirmation of the Commission’s previous course”, criticized DBV President Joachim Rukwied. Federal Minister Cem Özdemir was of a different opinion: he welcomed the approach of rewarding public services through “attractive support”. In the wake of the farmers’ protests, the Green politician had campaigned in recent months to move away from requirements such as conditionality and instead strengthen incentives for voluntary environmental measures.
EU Commission President von der Leyen emphasized that she would work through the recommendations carefully with her team. In order for agriculture to work in harmony with nature, support and incentives are needed above all, and further bureaucracy must be reduced, she explained.
She was particularly impressed by the committee’s idea of maintaining the “spirit and energy” of the exchange. In concrete terms, this is to be achieved through a new advisory body that meets regularly, in which association representatives first exchange ideas with each other and then approach the Commission. “I really like this idea“, said von der Leyen.
Mario Draghi is expected to present his report on European competitiveness next Monday, alongside his client: Ursula von der Leyen. Yesterday, Wednesday, the former ECB President presented some of his ideas behind closed doors in Brussels, first to the Committee of Permanent Representatives and then to the Conference of the Political Group Leaders of the European Parliament.
He used drastic words to call for a major effort: “If we don’t become competitive, the EU will go under“, warned the former Italian Prime Minister, according to participants. Europe was suffering from low productivity as a result of dwindling innovative strength, high energy prices, too few skilled workers and investments, fragmented capital, telecommunications, and arms markets.
Draghi did not want to specify yesterday how he intends to solve these problems. It is reported that in his 400-page report (including annexes), he intends to make very specific proposals for ten sectors. Among other things, Draghi will propose a common industrial policy focused on innovation, as well as new competition rules and more private and public investment. Some of his proposals are likely to be included in the terms of reference for the new Commissioners, which von der Leyen intends to present on Wednesday.
We should know more details next Monday – at the latest.
Frustration with the EU’s Carbon Border Adjustment Mechanism (CBAM) remains high even after several months of trial. Affected companies and their stakeholders continue to complain about the bureaucratic and financial overload caused by the new law. They consider the EU Commission and the national authorities obligated to better protect European companies.
CBAM officially came into force at the end of last year. Companies wishing to import cement, iron, steel, aluminum, hydrogen, fertilizers or electricity into the EU must declare the emission intensity of the product. Although a financial levy will not be imposed for almost a year and a half, severe penalties are already being imposed if the reports are incorrect or incomplete – up to 50 euros per non-reported ton of CO2. This affects not only non-European companies, but also EU companies that rely on deliveries from outside the EU.
The actual idea of the CBAM is first to obtain precise information on the emission intensity of products along the supply chains. In the second step, a CO2 levy will be gradually introduced from 2026, which will be based on the carbon price of the European Emissions Trading System (ETS). The aim is for importers to eventually pay the same carbon price as European companies to protect them from carbon leakage.
However, the collection of emissions data, in particular, poses significant challenges for companies. While it was still possible during the CBAM transition phase (until June 2024) to provide default values based on publicly available data for the product and country of origin, the actual data now needs to be reported for the current quarter. Only a small proportion of emissions (20 percent) along a supply chain can still be reported using standard values for processed products.
According to Sarah Brückner, Head of the Environment and Sustainability Department at the Mechanical Engineering Industry Association (VDMA), this is a considerable challenge for plant and mechanical engineering: “The actual data is often simply unavailable, either because the suppliers do not collect the data or do not want to release it.”
The problem is that individual companies often do not have the market power to force their suppliers to carry out costly and bureaucratically complex emissions assessments – especially for small, specialized parts for which there is hardly more than one supplier. On top of this, companies usually do not have just one supplier with a single emissions value, but several suppliers with different data. The importing companies are responsible for the accuracy of their suppliers’ data and must verify it accordingly.
Brückner explains that VDMA member companies have already visited their suppliers to convince them to hand over their data for CBAM. “But even then, they cannot guarantee the accuracy of the data.”
Support from the EU Commission has yet to materialize. When asked, the Brussels authority declined to comment on the industry’s problems, merely referring to an FAQ on CBAM reporting obligations. This states that if the declaring party cannot obtain actual emissions data from the supplier and instead reports standard values, the CBAM report will be deemed incorrect or incomplete.
National CBAM authorities do have discretionary powers when assessing CBAM reports if the actual data cannot be provided – for example, the German Emissions Trading Authority (DEHSt). However, this is entirely vague: If the actual emissions cannot be reported, documents must be provided to prove “that all reasonable efforts” have been made to obtain the data.
It is unclear what exactly “all reasonable efforts” means, especially as the size of the company and the import volume of CBAM goods will be considered when assessing the report. This leaves companies with uncertainty and fear of penalties.
That’s why VDMA sustainability expert Brückner also believes national CBAM authorities have a duty. “The DEHSt can only be contacted for questions to a very limited extent.” It is hardly practicable to have to provide data when the responsible authority does not yet have the staff to answer questions about the implementation of the CBAM, Brückner says.
Because of the ongoing challenges associated with CBAM reporting, the VDMA calls for a longer transition period during which standard values can be reported. “In mechanical and plant engineering, with its often complex supply chains, switching to another supplier takes longer than in other industries and is estimated to take a year and a half on average.”
This problem could also be solved by increasing the so-called de minimis limits. This means that importers of CBAM products with a value below this limit would be exempt from reporting. Currently, the de minimis limit is 150 euros, which strictly speaking does not even exclude private individuals. “Many imports that reach this monetary value in mechanical engineering generate carbon emissions of 1 kg or less due to the high cost of very high-quality small parts and components,” says Brückner, adding that in these cases, the administrative burden for companies is disproportionate to the minimal climate impact of their imports.
The VDMA proposes a de minimis limit of at least 5,000 euros. This would exempt purchasers of tiny quantities from CBAM reporting obligations. At the same time, powerful market players who can persuade their suppliers to be more transparent would still have to collect emissions data.
The report, which Peter Strohschneider, Chairman of the Strategic Dialogue on Agriculture, presented to EU Commission President Ursula von der Leyen on Wednesday, is 110 pages long. Based on the paper, the re-elected EU Commission President intends to present a vision paper on agriculture in the first 100 days of her new term of office.
The panel of agricultural and industry representatives, environmentalists, animal rights activists and scientists agreed on 14 recommendations. Much remains vague. However, the panel’s proposals for a redistribution of EU agricultural subsidies could fuel the debate on the further development of the Common Agricultural Policy (CAP).
The members reject conditionality, meaning that direct payments should no longer be linked to environmental or animal welfare standards in future. This model is too complex and inflexible. Economic and social support for farmers should be independent of financial support for environmental protection measures.
The committee is therefore sticking to payments to support farmers’ incomes but is calling for a fundamental reform. The direct payments should no longer be awarded on an area basis, but should be prioritized to those who “need the support the most“.
Currently, the basic income support is hardly related to the socio-economic needs of the farms, the committee criticizes. The members want to improve this in order to use the CAP budget in a targeted manner and to be able to absorb additional costs resulting from the accession of new countries to the EU. The further development of the CAP is also intended to avoid inflating land prices.
However, the report omits one sensitive question: How will it be determined which companies have the greatest need? A task force of economists and social policy experts is to develop criteria for this. The task force is to assess which instruments are suitable for redistributing direct payments. The committee mentions options such as capping the amount of aid an individual farm can receive, economic allocation criteria or “mechanisms based on social policy”.
In addition to supporting low-income farms, the committee advocates financial incentives for environmental, climate and animal welfare services that go beyond mere cost recovery. Farmers who go above and beyond the statutory minimum should be “rewarded” for their performance. What is new is that the environmental premiums are to be linked to result indicators instead of to the implementation of specified measures, as was previously the case. The share of environmental premiums in the overall budget is to increase annually over the next two funding periods – based on the minimum share of 32% that is already mandatory for the member states.
The German Farmers’ Association (DBV) was dissatisfied with the proposals. Much of it sounds “like a confirmation of the Commission’s previous course”, criticized DBV President Joachim Rukwied. Federal Minister Cem Özdemir was of a different opinion: he welcomed the approach of rewarding public services through “attractive support”. In the wake of the farmers’ protests, the Green politician had campaigned in recent months to move away from requirements such as conditionality and instead strengthen incentives for voluntary environmental measures.
EU Commission President von der Leyen emphasized that she would work through the recommendations carefully with her team. In order for agriculture to work in harmony with nature, support and incentives are needed above all, and further bureaucracy must be reduced, she explained.
She was particularly impressed by the committee’s idea of maintaining the “spirit and energy” of the exchange. In concrete terms, this is to be achieved through a new advisory body that meets regularly, in which association representatives first exchange ideas with each other and then approach the Commission. “I really like this idea“, said von der Leyen.