Vulcan View: The latest EU developments 11 November – 15 November

Key takeaways from the first round of Commissioner-designate hearings 

The first round of confirmation hearings for the next College of Commissioners began on Tuesday (5 November). The hearings are part of the checks at the EU level to ensure transparency and accountability. During these hearings, MEPs aim to assess whether commissioners-designate are qualified enough to join the European Commission. After approving commissioners, the European Parliament then holds a plenary vote to approve or reject the Commission as a whole.

The Commissioner-designate hearings of note are:

• Maroš Šefčovič, Commissioner-designate for Trade and Economic Security; Interinstitutional Relations and Transparency: Šefčovič highlighted his overarching priority as fostering EU unity. He shared that better trade deals make the EU stronger at home and globally, highlighting the importance of the transatlantic bond between the U.S. and the EU. He promised to never sign off on a deal that is not in the EU’s best interests but confirmed that the EU will be “open for business and fair trade”.
• Michael McGrath. Commissioner-designate for Democracy, Justice and the Rule of Law: McGrath’s hearing focused mainly on his commitment to enforcing the Rule of Law. He committed to strongly engaging with Member States and civil society on the report and the overall enforcement of the Rule of law. He also ensured a closer link between the Rule of Law and access to EU funds.
• Ekaterina Zaharieva, Commissioner-designate for Startups, Research and Innovation: Zaharieva promised targeted investment in high-impact sectors and a commitment to stop the “Innovation Drain” by enhancing access to capital within the EU and developing a supportive environment that keeps high-potential businesses in Europe.
• Hadja Lahbib, Commissioner-designate for Preparedness and Crisis Management; Equality: When asked about crisis management, Lahbib shared that Europe can no longer just react to crises but must proactively prepare for them. She has promised to build a robust EU preparedness strategy which will focus on three key areas: an all-active approach to crises by boosting coordination between EU institutions and Member States, getting all of society and citizens involved in crisis management, and building a culture of preparedness across the continent.
• Maria Luís Albuquerque, Commissioner-designate for Financial Services and the Savings and Investment Union: Albuquerque presented a compelling vision for the SIU as the cornerstone of EU financial integration, breaking down barriers between member states and creating new opportunities for savers and investors and argued for reducing administrative burdens, especially for SMEs.
• Jozef Síkela, Commissioner-designate for International Partnerships: Síkela pledged to invest in digital transformation, equality, climate resilience, healthcare, education, energy and research. Síkela will also leverage public-private partnerships, de-risk investment and attract private capital. He recognised the importance of private money in achieving the above, particularly in relation to the Sustainable Development Goals (SDGs).
• Olivér Várhelyi, Commissioner-designate for Health and Animal Welfare: Várhelyi started his opening remarks by highlighting the importance of addressing drug shortages and bolstering EU pharmaceutical autonomy. As a key priority within his first 100 days, if confirmed, Várhelyi will propose a Critical Medicines Act.
• Valdis Dombrovskis, Commissioner-designate for Economy and Productivity; Implementation and Simplification: Dombrovskis pledged to ensure that economic policy is coherent with the EU’s main objectives, competitiveness, sustainability and social fairness. He will develop a new competitiveness tool and will work with the European Investment Bank to fulfil the EU’s investment goals, particularly in the areas of clean technology, AI, quantum computing and semiconductors.

All Commissioners-designate, apart from Olivér Várhelyi, were approved by MEPs. Várhelyi faced difficulties in questions surrounding women’s reproductive rights and was tasked with submitting a second round of written questions. The second round of hearings took place on Tuesday (12 November) and consisted of the six Executive Vice-Presidents.

Scholz’s coalition collapses as global pressure mounts

Following the mayhem of the U.S. election and Donald Trump’s decisive victory, Germany’s three-party ruling coalition collapsed in response to Chancellor Olaf Scholz’s announcement that he fired his Finance Minister, Christian Lindner. This is in response to persistent rifts in their spending and economic reforms, and it will pave the way for snap elections. However, Scholz’s announcement was less the outright ousting of a strong coalition and more like the final step in putting down a wounded animal.

Germany’s three-party ruling coalition is the result of a fragmented political landscape. The coalition consists of the Social Democratic Party (SPD) and the Greens on the left side of the aisle and the fiscally conservative Free Democratic Party (FDP) on the centre-right. Where the SPD and Greens favour strong social and economic safety nets and significant investment to boost growth and the green transition, the FDP prefers less spending and less government intervention in people’s lives. The rise of the far-right Alternative for Germany (AfD) party, polling nationally in second place, will exacerbate the fragmentation issue.

A critical moment in the decline of Scholz’s coalition came about a year ago when Germany’s top court decided the government’s decision to fund its green transition with €60 billion in unused debt from the COVID-19 pandemic violated the “debt brake” and was therefore unlawful. Without these “special funds,” which Scholz’s coalition had been relying on, they suffered a wave of electoral defeats and record-low approval ratings. The loss of these funds worsened relations in the coalition as its parties began utilizing partisan-style politics, playing to their bases. Following repeated threats from the FDP Leader Christian Lindner and his colleagues to force new elections, Scholz announced his decision to fire Lindner, prompting the FDP to cede from the coalition.

Holding a snap election is a complicated process. Scholz must call and lose a confidence vote in parliament. Then, Germany’s president can dissolve the parliament within 21 days, followed by a snap election within 60 days. Initially, Scholz announced that he would continue with a minority government, holding a confidence vote on 15 January, leading to a snap election at the end of March. However, Frederick Merz, leader of the CDU and candidate for chancellor, pleaded with Scholz to ensure an election happens before Trump takes office in January. On top of this, The German federal body that oversees elections wrote to Scholz that an election in the first two months of 2025 poses “incalculable risks at all levels.” On Sunday, Scholz said he was ready to hold a confidence vote before Christmas. Snap elections will take place in Germany on 23 February 2025.

Merz’s CDU and the Christian Social Union (CSU) -their Bavarian allies-, are currently leading in the polls by a steep margin, with 32 per cent support, followed by AfD, with 17 per cent support. The CDU, that vowed not to form a coalition with AfD, could form a coalition with Scholz’s SPD, polling at 16 per cent support.

As German leaders are arguing about when to hold their snap elections, it’s worth noting that Russian and North Korean soldiers are preparing an assault on Ukrainian forces in the Kursk region. The return of Donald Trump to the White House, who is threatening to cut funding to Ukraine and promising new tariffs on German cars, could also spell disaster if Germany continues to be consumed by domestic issues and electoral deadlock, even unable to pass a budget for 2025.

The importance of COP 29 from an industry perspective

The 29^th Conference of Parties is currently underway in Baku, Azerbaijan. Negotiations will take place until 22 November with governments from across the world assessing global performance regarding climate targets established by the Paris Agreement. So far, it has been revealed that carbon emissions will hit a new peak in 2024 with “no downward trajectory in sight”. Therefore, global emissions could exceed the crucial 1.5-degree target set out in the Paris Agreement.

Simon Stiell, UN Climate Change Executive Secretary, highlighted the fact climate disasters increase costs for businesses. He emphasised that “bolder climate action” and clean energy initiatives can stimulate economic growth by creating more jobs, stronger businesses and healthier citizens. According to the Minister for Environment, Climate and Communications Eamonn Ryan, climate adaption is “vital” to how infrastructure is built.

There is a diverse array of initiatives relevant to a variety of industries, such as tech and AI, pharmaceuticals and health, agriculture and sustainability at COP 29. These include:

• Green Energy Zones and Corridors: Targets to promote investment, boost economic development, modernise infrastructure and enhance regional cooperation.
• Energy Storage and Grids: The goal is to increase global energy storage capacity by 60 per cent.
• Green Digital Action: Advance climate-positive digitalisation and emission reductions in the ICT sector.
• The Baku Initiative on Human Development for Climate Resilience: Further investment in education, jobs, green skills, and youth to encourage environmental literacy.

Tech  

The semiconductor industry could potentially lead the charge against climate change in the tech sector. The SEMI Sustainability Initiative, a platform which works towards the reduction of the industry’s carbon footprint, is participating in COP 29. The initiative will launch a pilot programme to develop a climate-literate workforce within the semiconductor industry.

Pharmaceuticals and Health  

At COP 28 in 2023, the innovative pharmaceutical industry released a joint statement which outlined their commitment to investing in science and research and global cooperation to achieve climate targets. The statement was issued in relation to the COP 28 Declaration on Climate and Health. The declaration placed importance on global collaboration regarding health challenges such as antimicrobial resistance. Ireland signed up to the declaration.

This year, health is taking centre stage once again. Notable developments include The Baku Initiative on Human Development for Climate and a possible coalition like COP26’s Alliance for Transformative Action on Climate and Health. Elmar Mammadov, co-lead of the COP29 Global and Regional Initiatives and Action Agenda Team, stated: “We would like the COP29 Presidency to prioritize health on a permanent basis, to make it a long-term, sustainable topic to all COPs in the future”.

COP 29 Agrees International Carbon Market Standards 

On Monday (11 November), parties agreed to set standards for a centralised carbon market. This move lays the groundwork for the development of a U.N.-backed global carbon market. The establishment of standardised carbon markets will lower the costs associated with reducing carbon footprints. Additionally, such markets will accelerate climate plan implementation while lowering emissions. In theory, carbon credits give countries or companies the ability to fund projects, in any location, which reduce CO2 emissions. The country/firm may then use the credits derived from such projects to compensate for their emissions.

From an industry standpoint, carbon credits can reduce operational costs, illustrate a firm’s commitment to decarbonisation, and help attract capital investment.

Compliments of Vulcan Consulting – a member of the EACCNY