The European Council, which took place during first two October days, has had a “special status” due to several extensive measures to forward regional integration. All of the steps needed approval of the EU-27 member states’ leaders: e.g. ten “projects” have acquired the status of the EU’s socio-economic importance, aimed to contribute to recovery and perspective growth, including modern energy and infrastructure systems in the Baltics and other EU regions. Other issues have had an external dimension, e.g. EU’s relations with Turkey and China, as well as reactions to recent events in the EU’s neighbourhood: post-election’s situation in Belarus, Armenian-Azeri’s conflict, etc.
The EU’s internal integration issues, such as the Baltic Synchronization process, are having a crucial importance for the regional integration, for delivering on the European Green Deal and meeting the continental ambitious 2030 climate targets. While supporting the European infrastructure and energy development is a vital internal issue, the EU’s external problems are important as well, being not so “external” after all…
The summit’s “internal part” has focused on the optimal member states’ efforts towards a fully functioning EU single market to enhance the states’ global competitiveness, an “autonomy” of the member states’ industries, acceleration of the digital transition, combating the COVID-19 aftermath, etc.
Reflecting on the Commission proposals, the member states leaders agreed to invest an unprecedented sum of almost a trillion euros (to be exact, € 998 million) in key European energy infrastructure projects under the Connecting Europe Facility, CEF; this investment will provide financial aid for research, development and implementation in ten projects in different parts of Europe. The largest amount of funding goes to the Baltic Synchronisation Project (€720 million) with the aim of a better integrating the electricity markets in the eastern Baltic states, i.e. Estonia, Latvia, Lithuania and Poland with the rest of the EU-27.
Other projects include a smart electricity grid linking Hungary and Slovakia (€102 million), and the first-ever CEF grant for the development of a “green-line”, i.e. CO2-free transport project for Belgian and Dutch sea ports.
More on the Baltic energy security issues in: https://ec.europa.eu/commission/presscorner/detail/en/IP_19_3337
General reference to: https://ec.europa.eu/commission/presscorner/detail/en/IP_20_1803
Summits’ decisions on the “green deal”
European transition to a modern clean economy implies a necessary adaptation of existing infrastructure and energy systems in the states to the “green deal’s” requirements. At the backbone of the integrated EU’s energy market are modified interconnections, which will improve states’ security in energy supply, reduce the dependence on single suppliers and give consumers more choice. Infrastructure projects are essential for renewable energy sources too, as they will help to deliver on the Paris-2015 Climate Agreement’s commitments and the EU’s ambition to become climate neutral by mid-century.
EU member states agreed during the present summit to invest €998 million in key European energy infrastructure projects under the Connecting Europe Facility (CEF); the agreement provides financial aid for works and studies for ten infrastructure and energy projects.
Adopted “projects of common interest”, PCIs are eligible for the CEF grants; the latest PCIs list was published in October 2019 and the next PCI list (already a fifth one) will enter into force in early 2021. CEF-Energy has already awarded almost €4 billion in grants since 2014 with 65% allocated to electricity projects, including smart grids.
On CEF projects in: https://ec.europa.eu/inea/en/connecting-europe-facility
Green deal projects
The allocation of funds for the infrastructure projects was in line with the objectives of the European Green Deal, with 84% of funds going to electricity or smart grid projects. The grants are aimed at providing financial aid for ten projects: two for electricity transmission, one for smart electricity grids, six for CO2 transport (including five studies), and one for gas.
More on the projects’ effect on the “green deal” in:
= Baltic Synchronization Project (phase II – €720 million): together with the previous investment, the new funding will go to the construction of a so-called “harmony link” – an electricity cable connecting Poland and Lithuania through the Baltic Sea. The cable will become a building block for the future offshore grid in the Baltic Sea. This funding will also cover investments such as synchronous condensers in Estonia, Latvia and Lithuania.
For historical reasons, however, the Baltic States’ electricity grid is still operated in a synchronous mode with the Russian and Belarusian systems.
The Baltic States region is now connected with the EU partners through recently established electricity lines: with Poland through the LitPol Link, with Sweden through NordBalt, and with Finland through Estlink 1 and Estlink 2.
More in a roadmap on synchronization target date of 2025 in June 2019 decision: https://ec.europa.eu/commission/presscorner/detail/en/IP_19_3337
= Danube Ingrid (€102 million): This smart electricity grid project in Hungary and the Slovak Republic will improve network management and increase the quality and security of supply for all market participants. It will also support the efficient integration of renewables.
= The Porthos CO2 transport network project (€102 million): This project between the Netherlands and Belgium will develop an open access CO2 transport network in three of Europe’s main ports (Rotterdam, Antwerp and North Sea Port) leading to an offshore storage site in the North Sea.
= The Bulgaria – Serbia Interconnector (€28 million): This priority project agreed under the CESEC High-Level Group will improve security of supply and diversification of gas imports in Southeast Europe.
= North Sea Wind Power Hub (€14 million): A study to support development of an important project for the roll-out of offshore wind in the North Sea.
On the Baltic Sea regional energy supply
During the summit a special and big step was taken towards connecting Europe showing European solidarity in action with all the states around the Baltic Sea involved. On the first day of October 2020, the EU awarded € 720 million from the Connecting Europe Facility to link the Baltic energy grid with the rest of Europe. This project is a landmark moment to end the Baltic States’ energy market isolation: most of the funding will go to a new interconnector in the Baltic Sea called the “Harmony Link”. It will reduce the region’s over-dependence and over-reliance on a single source of energy imports by connecting it in full harmony to the rest of the European Union. It also looks into the future: the new offshore energy grid will bring electricity from renewables to all countries around the Baltic Sea. Besides, the Baltic Declaration for Offshore Wind Energy was signed too by the Commission and eight EU states adjacent the Baltic Sea region; the project is good example of connecting Europe, of the EU’s energy security and the European Green Deal.
Source: Commission press release at: https://ec.europa.eu/commission/presscorner/detail/en/STATEMENT_20_1812 – 2.x.2020.
Single market and digital agenda
Among the main summit’s topic were the issues of the EU’s single market, the digital agenda, states’ competitiveness and prosperity. A well-functioning single market is crucial for all states: trade among the states amounts to about 25 percent of the Union’s GDP, and 60 million jobs depend on it. Then, developing a competitive industrial sector in the states becomes a necessity: industry provides 37 million jobs in the EU and two-thirds of the Union’s exports. Finally, a successful digital transition requires additional efforts in the states.
In order to improve the single market, the remaining barriers for trade (i.e. in services) shall be eliminated and problems restricting the SMEs’ involvement in the big companies’ activities shell be resolved; the Commission intends to present a first monitoring report in early 2021 on these issues.
On digital economy
In the digital transition, the Commission suggested to arrange a European “digital decade” with delivering on three priorities:
a) On data, in particular, in the area of industrial data; the quality of this data and the quantity will quadruple in the next five years: the process has to be harnesses to enable companies to use existing potentials; presently, about 80 percent of these industrial data never been used by the states’ industries. The Commission suggests two directions “to unlock” hidden industrial data: first, creating a common European industrial data space; and second, creating a “European cloud” for such data. As to the former, all companies, universities and researchers in the member states shall have access to the “European industrial data”; and as for the latter, the creation of a “common data space” can offer opportunities for students, researchers and SMEs a direct access to data with increased opportunities for cooperation in such advanced areas as energy, transport, health, etc. Besides, creation of the “European industrial cloud” will be based on a new digital platform, Gaia-X financed from the NextGenerationEU
The EU’s digital decade will include artificial intelligence with new rules to ensure a proper use and oversight of existing potentials, which will be drafted in 2021, including a secure European digital identity. The latter is vital as the peoples’ digital identity will be used in numerous occasions: e. g. paying taxes, renting a car, etc.
The Commission forces the states to concentrate investments on secure connectivity, on the expansion of 5G, 6G and fiber-connections; the EU initiates the next Digital Decade, by investing 20 percent of the NextGenerationEU program on the digital society and economy issues to safeguard European digital sovereignty and peoples’ wellbeing.
On industrial development
With regards to industry, the priority is to join states’ forces in key strategic areas and ensure that their industrial sectors are able to compete on a global scale. The EU’s new industrial strategy was presented in March 2020, to ensure that industrial sectors could lead the European twin green and digital transition. The last six months have accelerated this transition and changed some traditional spheres: e.g. supply chains have been disrupted, the lack of production facilities in the states for certain critical products have been apparent, and remote digital working methods became the norm for millions of workers.
The EU’s industrial strategy will be updated in the first half of 2021 in the view of increasing industrial alliances for key technologies, such as batteries, microelectronics or hydrogen, and efforts to improve states’ resilience in these raw materials. For these alliances to be effective, the EU will ensure a proper level playing field with two priorities: a) carrying out a comprehensive review on how to adapt EU competition rules in a globalised and digital world; b) preparing legislative proposals on foreign subsidies from third countries; the latter can significantly distort the functioning of the single market and disadvantage the EU’s market operators.
The summit also focused on the EU’s external relations, in particular with Turkey and China; as to the former, the EU leaders have hold a strategic discussion on Turkey in view of the situation in the Eastern Mediterranean and the growing tensions arising from Turkey’s drilling activities. As to the latter and following the virtual EU-China summit in June and the online meeting with President Xi on 14 September, the summit discussed the state of EU-China relations and the EU’s perspective approaches.
It is expected that the US will either “renew corporation” with its traditional global partners, including the European Union, or will continue a policy of “angry unilateralism”. Trump’s victory in the coming US elections would mean additional EU’s efforts to safeguard regional political and economic security and sovereignty reflecting an aggressive “America First” strategy in international affairs.
Tensions in the Mediterranean have been very high because of Turkey’s drilling activities in the Cypriot Exclusive Economic Zone and exploratory activities in Greek waters; a reliable dialogue between Turkey and Greece on these issues has begun. However, in the Commission’s opinion Turkey has not made similar constructive gestures towards Cyprus; the EU would prefer to work on a new long-term EU-Turkey relationship to include a modernized customs code and stronger cooperation on migration on the basis of the 2016 EU-Turkey statement.
On Belarus: certain sanctions have been agreed upon; on Armenia and Azerbaijan, the EU leaders reiterated the need for an urgent de-escalation of tensions and military activities with possible external interference.