The EU is trying to reallocate €40 billion for help with energy bills

Good morning and welcome to Europe Express.

The European Commission is today presenting a series of proposals to stem rising energy prices, increase collective purchases and fund bills for households and small businesses.

One idea that will be part of the package is the reallocation of cohesion funds from the previous EU budget. We will look at this draft proposal and what other measures are to be presented in Strasbourg – a package aimed at placating as many capitals as possible. EU ambassadors in Luxembourg gave an overall thumbs-up last night for what the Commission described as a “heroic” package, but expect more trouble with the fine print in the coming days.

Also in Luxembourg yesterday, EU foreign ministers said they would support fresh sanctions against Iran if Kiev’s claims – namely that Russia had used Iranian-made drones in Ukraine – are proven correct. And independently, the bloc’s diplomatic service is considering options to cover the cost of Elon Musk’s Starlink technology for Ukraine.

We’ll also bring you the latest on the EU’s strategic autonomy front, with France and Germany taking the lead in defining even less cutting-edge microchip technology as eligible for subsidies.

And we’ll look at why the bloc’s Covid-19 vaccine-buying program is becoming something of a poisoned chalice for Commission President Ursula von der Leyen.

Repower grab

Ursula von der Leyen is doing everything possible to prove that the Commission will not come to Thursday’s energy summit empty-handed, they write Sam Fleming and Alice Hancock in Brussels.

That means not only unveiling a complex set of proposals aimed at improving gas purchases and lowering energy prices, but also helping the capitalists find extra cash to cushion the impact of rising energy costs (by 40 percent vs the last year).

Part of the energy package to be presented today is the reallocation of up to €40 billion in EU regional and structural funds. According to plans by Europe Express, the money will be used to protect vulnerable households and SMEs from the energy price shock and to support short-time work regulations.

The programme, led by Commissioner for Cohesion and Reforms Elisa Ferreira, would allow member states to reallocate the cohesion funds still disbursed under the previous EU budget (2014-20) and increasing co-financing rates.

It reflects an effort launched shortly after the start of the war where additional flexibility was found via the so-called CARE schemewhich made it easier for Member States to use cohesion funds to pay for the millions of refugees who came to the EU from Ukraine.

However, the more contentious elements of today’s package are likely to overshadow the financial solutions proposed ahead of Thursday’s summit.

This discussion focuses on the Commission’s role in temporarily setting the maximum gas price on the Dutch Title Transfer Facility exchange, which is used as a benchmark for European gas prices. (We wrote about this yesterday).

Italy and Greece last night called for tougher language on price caps, fearing further delays would only worsen the crisis. Northern countries like Germany insist on carefully assessing the impact of such market intervention before signing off on it.

“We don’t want to end up like Britain, which does something despite all the warnings and is then punished by the markets,” said an EU diplomat.

Other actions proposed today, for which support may be a little easier to find, are:

1. The establishment of a common “purchasing tool” to aggregate gas demand and coordinate purchasing

2. Measures that allow EU capitals to require non-vulnerable consumers to reduce their gas consumption more

3. A structure for member states to negotiate supply arrangements in the event another EU country is cut off.

Chart du jour: Gas supply diversification

The need for Member States to work better together on gas purchases, rather than focusing on bilateral deals, is underscored today by new figures released by the Bruegel think tank. Italy is the EU country that has had the most success in getting supplies, especially when compared to the gas deals struck by Germany.

Blunt chips

Member States have reached a compromise in the debate over what is cutting-edge technology that can be subsidized to boost Europe’s ‘strategic autonomy’.

Not surprisingly, France and Germany won the day, meaning even older generation technologies are still considered “first of their kind” and can benefit from government aid, writes Javier Espinoza in Brussels.

Margrethe Vestager, Competition Commissioner, was clear earlier this year: Europe needs to boost its production of chips to break free from dependence on Asia and other parts of the world. But not just any old “legacy” chips should be subsidized, she said in May. Rather, state aid should be geared towards the cutting edge of nanotechnology.

Her remarks came as she unveiled the so-called Chips Act, a €43 billion investment plan aimed at boosting microchip production to reduce the continent’s dependence on the US and Asia.

But feverish negotiations with Paris and Berlin have watered down that criterion, meaning even older chips are now eligible for state aid as long as they introduce an “innovative element” into manufacturing or the final product, according to draft text seen by Europe . (This would allow state aid to flow to Intel chip factories, mainly in Germany, which are not up-to-date at an early stage).

The text explains that such elements of innovation are related to the size of the microchips, the materials used, or “approaches that lead to performance gains in computing power”.

EU officials familiar with the negotiations have tried to put a positive spin on the compromise: “There will be no universal support for any type of chip. There has to be an element of innovation.”

The chips law is due to be passed before the end of the year, but has come under criticism. While Paris and Berlin may have won this round, other capitals remain unhappy with the compromise as a coalition of countries including Denmark and the Netherlands have warned that Brussels is being overly protectionist and using its powers in its attempt to limit supplies secure transcend chain for this technology.

vaxing problems

EU Commission President Ursula von der Leyen has celebrated the EU’s Covid 19 vaccination program as a great success. But it also gave her some headaches, she writes Andy Bounds in Brussels.

The latest is a request from the Independent European Public Prosecutor’s Office (EPPO) “in the acquisition of Covid-19 vaccines in the European Union”.

The EPPO’s job is to investigate and prosecute fraud, corruption and misappropriation of EU funds in almost all member states. EU institutions also fall within his area of ​​responsibility. The office declined to provide further details on this ongoing investigation.

When asked about the EPPO announcement, a Commission spokesman said he was not aware of the investigation and had not been contacted by the agency.

The emergency procurement program secured access to cans for European citizens, but at a significant cost. The Commission has entered into pre-purchase agreements with manufacturers to receive a specific number of vaccine doses within a specific time frame and at a specific price. Unspecified amounts were used from an EU fund of €2.7 billion as a down paymentto secure supplies at a time when developed countries were in a bidding war over scarce supplies. Member States then bought their own cans. In total, Brussels signed contracts worth 71 billion euros for 4.6 billion vaccine doses.

The program has already drawn criticism from other EU bodies, most notably direct negotiations between von der Leyen and Pfizer CEO Albert Bourla in early 2021. They exchanged several text messages, but the Commission has declined to provide them as part of freedom of information requests .

The European Ombudsman, an independent supervisory authority found the commission guilty Maladministration in July for failure to check for the news. The Commission claims that such messages are “ephemeral” and not public documents that need to be preserved.

The European Court of Auditors, a financial watchdog, also criticized the Commission in September for a lack of transparency on vaccine contracts and refused to provide details of discussions surrounding the 1.8 billion doses of the BioNTech/Pfizer vaccine contract signed in May 2021.

Pfizer declined to comment on the EPPO investigation.

Meanwhile, the chair of the European Parliament’s special committee on the Covid pandemic has announced that it will ask Pfizer’s CEO to appear before him. He had agreed to come in early October but backed out and sent a colleague. “It is important that he is accountable,” said Kathleen van Brempt, a Belgian socialist.

What is there to see today?

1. European Commission presents energy pricing measures in Strasbourg

2. EU affairs ministers meet in Luxembourg

Remarkable, quotable

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