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Tag: Press Release

  • PRESS RELEASE : British government must end reckless threats – John Finucane [October 2022]

    PRESS RELEASE : British government must end reckless threats – John Finucane [October 2022]

    The press release issued by Sinn Fein on 23 October 2022.

    Sinn Féin MP John Finucane has said the British government must end the reckless threats, stop fuelling instability and work with the EU to find solutions.

    Responding to comments by British government Minister Steve Baker on the media this morning, the North Belfast MP said:

    “Comments by Steve Baker this morning are a reiteration of the reckless Tory threats that have fuelled instability and caused damage on the international stage.

    “Whoever leads the incoming British government must make the restoration of the Assembly and Executive an immediate priority and end the cycle of pandering to the DUP.

    “People are struggling with huge energy bills and patients are suffering on chronic hospital waiting lists. They need an Executive formed now to help them.

    “The outcome of May’s Assembly election must be respected. People voted for real change and an Executive that will work together in their best interests, not a government on the DUP’s terms only.

    “Sinn Féin is ready to form an Executive today that will put money in people’s pockets to deal with the cost-of-living crisis and start to fix the health service.

    “The new British government must ensure that the Protocol continues to create jobs and investment by protecting our businesses from the damage of Brexit.

    “And they must end the reckless threats and continue to work constructively with the EU to find solutions for our businesses who need certainty not instability.“

  • PRESS RELEASE : Growth and competitiveness − speech by Sam Woods [October 2022]

    PRESS RELEASE : Growth and competitiveness − speech by Sam Woods [October 2022]

    The press release issued by the Bank of England on 27 October 2022.

    Sam Woods sets out how independent regulators can support the UK as a global financial centre.

    It’s a great pleasure to be here in the Egyptian Hall again – thank you Lord Mayor for hosting us. I’m afraid my remarks are even less amusing than they usually are when I inflict this annual speech on you all. But that’s because tonight’s topic is deadly serious.

    I want to use this speech to talk about how prudential regulation can contribute to the competitiveness of the United Kingdom as a financial centre, and to long-term economic growth. My argument can be boiled down to three points:

    • First, financial stability is the single most important ingredient of competitiveness in financial services. Delivering that stability must remain the core purpose of prudential regulation here in the UK.
    • Second, there is a good case for Parliament to require the regulators to place more weight on growth and competitiveness as part of post-Brexit reforms in which our role as a rulemaker is expanded. If Parliament agrees to make that change we are ready to embrace it.
    • Third, there are good ways of making that change and bad ways of making it. We fully support the Financial Services and Markets Bill as introduced to Parliament, because it strikes a sensible balance between the competing considerations at play.

    Regulation versus growth?

    Too much debate on this topic is premised on a simplistic trade-off between regulation and growth. In that view of the world, the way to promote growth is simply to de-regulate: either by releasing capital that would otherwise be tied up in prudential requirements, or by cutting through red tape to reduce compliance costs.

    A related view says that you can become a global financial centre by watering down standards, to attract international business with the promise of lighter regulatory burdens.

    Badly designed regulations can indeed reduce a country’s relative attractiveness as a place to do business, and should be removed or reformed. We have of course inherited some such rules from our time as a member of the EU, and probably also some that we have devised ourselves without any help from Brussels. The Financial Services and Markets (FSM) Bill before Parliament will require us to focus more on this aspect of regulation, which we are ready and willing to do.

    However, it may also be true that if you saw the keel off a yacht, for a little while and in light winds it may go a bit faster. Despite this, there are probably more sensible ways for sailors to make themselves more competitive, particularly if they want to compete globally and be able to navigate heavy weather without drowning.

    My point is that a well-designed regulatory regime supports economic growth, and that a credible regulatory framework is a necessary precondition for hosting a very large global financial centre. There is a balance to be struck here: on the one hand, to do its job here in the UK prudential regulation must be robust, global and independent; on the other, it must be proportionate and suitably open to innovation. Having left the EU it is right that we strike a balance that works for the UK and contributes to global financial stability, but we should do this with care and avoid suddenly all rushing to one side of the boat.

    Robust

    The single largest contribution prudential standards can make to economic growth is by reducing the frequency and severity of financial crises. It is absolutely clear from the history of financial crises that in order to achieve this to any tolerable degree prudential regulation must be robust. It took many years for the UK economy to recover from the 2008 financial crash – but in contrast, the stronger regulation we’ve put in place since 2008 has allowed us to navigate more recent severe shocks such as those resulting from the energy and Covid crises.[1]

    Now of course you would expect me to make that point. But the case for robust standards is about more than just avoiding crises. Strong financial regulation also promotes economic growth in a subtler way. It helps to create a high trust environment where you can do business without constantly being worried about your counterparties falling over. This brings down risk premia in the financial sector – reducing the cost of lending for households and businesses, and promoting productive investment – and makes the UK an attractive place in which to do international business.

    This gets to an important point: the world’s largest financial centres are not places with low standards. They are places with high, consistent standards, where you can do business with confidence. Any attempt to become a global financial centre by competitively de-regulating would be self-defeating by its nature: major international financial institutions want a safe harbour, not a wild west.

    It may be possible to become a regional centre of offshore finance by undercooking regulation. Some such minor centres exist. But I see no reason why the UK would seek that status. We are already, by some measures, the leading global centre of international finance. We should not be complacent about that status – but we should be clear that our reputation for strong regulation is an asset, not a liability. You don’t get to the top by racing to the bottom.

    Global

    Well-designed regulation must also be global. By this I mean a couple of things.

    First, adherence to globally agreed standards.[2] Having a consistent rulebook across jurisdictions makes it far easier to do cross-border business, and allows international centres like London to host global business.

    Being seen as a good citizen also enhances the credibility and reliability of the UK as a place to be based. And make no mistake: the world is watching. In a recent report on the United Kingdom’s financial sector, the IMF described UK financial stability as a global public good.[3]

    Second, a global approach means openness to international business, and establishing a level playing field on which firms from different home jurisdictions can compete. As part of this, we should avoid disadvantaging our own firms with needless ‘gold plating’ of international standards. At the same time, we are open, indeed welcoming to overseas firms that want to operate here. They can do so with confidence that the playing field is level and the referee is unbiased.

    Again, I want to emphasise that the UK is already well ahead of the game on this score. We host 91 branches of international banks with total assets of £8.4 trillion. The IMF said this ‘puts the UK in a category by itself as a large host of international activity’ and we are ‘largely unique’ in our openness to international banks operating as branches. We also play host to many major subsidiaries of global banks, and a major international insurance market. This is not something that just happens without a lot of work to support it – most importantly in implementing international standards, but also in day-to-day supervision which enables us to manage the considerable risks involved by working closely with our counterparts in other jurisdictions. To facilitate this openness, we have recently updated our approach to international bank supervision and have put in place co-operation arrangements with nearly 50 jurisdictions.[4]

    Independent

    Which takes me to the next point – independence.

    Independent regulation is at the core of what we do in the PRA.

    There’s an extremely well-documented link between the independence of regulators and financial stability[5], but independent regulation also enhances our competitiveness in other ways. In part this is by ensuring that regulation is consistent and predictable: by removing regulation from day-to-day politics, Parliament can ensure that regulators follow more timeless objectives. This in turn provides certainty to businesses that the regulatory framework will be relatively stable over time.[6]

    Our independence is the basis for our international credibility. Independence is widely accepted as international best practice, and indeed is enshrined in the global standards which the UK has signed up to.[7] I believe our record of independence is a big part of why authorities in other countries are content for their firms to operate here at such scale.

    Of course, independent regulators must be transparent and accountable so we strongly support the measures in the FSM Bill to enhance our accountability to reflect our new powers. “Independence” is also a carefully circumscribed term in this context – it really means operational independence, to deliver objectives which are set for us by Parliament.

    Given this, I think we should be very cautious of any measure that would undermine – or be perceived to undermine – the independence of regulators from government. In particular, ministers have indicated that the government may amend the FSM Bill to introduce an ‘intervention power’. We do not know exactly what this power will look like, but a power which allowed ministers to override regulatory decisions just because they took a different view of the issues involved would represent a significant shift away from a model of independent regulation. Leaving aside the evidence on financial stability, some might think that such a power would boost competitiveness. My view is that through time it would do precisely the opposite, by undermining our international credibility and creating a system in which financial regulation blew much more with the political wind – weaker regulation under some governments, harsher regulation under others. These are not features which would make the UK a more attractive place for international firms to do business in.

    I appreciate of course that I am ill-placed to advance this argument, for the simple reason that it looks self-interested coming from the regulator. But all of my experience in this field tells me, as a citizen of the UK, that this point is true.

    Proportionate

    On which note, you might comment that of course, as a prudential regulator, I would say that competitiveness is all about high standards. But I appreciate that there is a limit to this logic and that we should recognise the need to minimise unnecessary regulatory burdens. Regulations that are excessively tight, or which are unnecessarily costly or complex to comply with, are negative for growth and competitiveness. Effective regulation needs to be proportionate, and only create burdens when necessary to achieve its objectives.

    Unnecessary or badly designed regulations can damage the financial sector’s productivity, imposing a dead-weight cost as firms spend resources on compliance rather than providing services. This raises the cost of finance to the real economy, harming economic growth. And they make the UK less attractive as a place to do business, while adding to the cost base of UK firms.

    So while we have no appetite to remove regulations that maintain financial stability and whose absence would lower important standards, we also recognise that unnecessary burdens should be removed. To quote the Chancellor who established the PRA, we have no desire to establish the ‘stability of the graveyard’.

    Innovative

    Regulatory reform is about more than just stripping away regulations. It is also about innovating within the regulatory framework, to keep pace with technological, economic and societal changes.

    This includes creating regulatory regimes for new forms of finance. Fintech, stablecoins and the like will only make a positive contribution to the economy if they can operate in a stable, high-confidence environment.[8]

    It also includes helping industry adapt to changing risks. Our work on operational and cyber resilience is an example: we create a coordination mechanism that allows firms to converge towards best practice. Feedback from industry has been strongly positive on this point.

    And it includes reducing barriers to entry and growth, so that innovators can enter the market and competition can drive productivity.

    Regulatory reform[9]

    Our exit from the EU undoubtedly offers significant opportunities to revisit regulations that just don’t make sense for the UK, particularly in the context of proportionality and innovation. This is a major priority for the PRA and we are already working intensively on early priority areas. I don’t want to prejudge that substantial package of work, and we will of course take an open, consultative and evidence-based approach to bringing forward policy proposals – including through regular dialogue with industry, Parliament and other stakeholders. But the programme includes:

    • Solvency II reform. I won’t dwell too long on this one, as I have spoken on it (at much greater length than most humans can tolerate) elsewhere.[10] But by reforming the insurance rules we have inherited from the EU, we hope to: enable insurers to invest in a wider range of assets, supporting economic growth; strip unnecessary bureaucracy away from the regime; and ensure the regime is credible, by fixing weaknesses in its design and calibration which could pose risks to insurance policyholders if left unaddressed. We issued a discussion paper on Solvency II in April, setting out our assessment of the reform package. We received very substantial feedback from industry and other stakeholders on our DP, and we hope to be able to publish a revised assessment very shortly.
    • We are also using our post-Brexit freedoms to develop a simpler prudential regime for smaller banks.[11] This ‘Strong and Simple’ project will deliver a more proportionate and less complex regime for smaller firms, while ensuring standards remain strong. We will also be considering the future regime for mid-tier banks.
    • We are implementing the final set of post-financial crisis Basel standards for banks – known as ‘Basel 3.1’. In doing so we will maintain the UK’s reputation for adherence to global standards, supporting our international competitiveness, and we will also have careful regard to other jurisdictions’ implementation of the standards. We will be bringing forward a comprehensive Basel 3.1 consultation by the end of this year.
    • We are also looking at reforms to remuneration standards in banking. Ever since it was first introduced, the PRA has set out its concerns around the prudential effectiveness of the EU’s bonus cap – and these concerns have been widely reported. We also intend to look more broadly at the whole structure of rules around remuneration. We will consider how these rules, which are a patchwork of EU and UK regulations, can be streamlined and made more effective and proportionate. In doing so, we will be clear that rules around remuneration are an important tool to ensure decision-makers and risk-takers have the right incentives. My own view, based on personal experience as a Treasury official through the global financial crisis, is that the 100% cash-out at year-end approach to bonuses which was common in banking up until 2008 was an important part of what drove the financial system over the cliff, and we should have no appetite to return to that heads-I-win tails-you-lose approach. But in the context of our competitiveness as an international financial centre I think it’s also sensible for us to take another look at the set of rules in this area, with more of a global view now that we are out of the EU.
    • Reporting rules are also ripe for simplification. Currently, under the inherited EU framework, we collect some data we don’t need because our reporting standards were a compromise across 28 member states with different needs. This puts an unnecessary burden on firms, and it’s a burden we want to remove. We have already removed some reporting requirements from insurance firms, particularly smaller firms, and will be consulting in the coming months on easing insurance reporting burdens further; we will then begin a review on the banking side.
    • We will be reviewing our enforcement policies to make them clearer and create options for quicker outcomes.
    • We are making our rules more accessible and user-friendly. This is a significant task but we have already started by publishing a Policy Index of our prudential and resolution policies, which received over 10,000 views in its first month.[12] And we plan to bring our policies together on one user-friendly website, streamline our materials, and adopt a more coherent approach to the structure and language we use in future.
    • Following our discussion paper last year, the Bank of England and PRA are moving forward to create a regulatory framework for systemic stablecoins. This will allow both non-banks and PRA-regulated banks to innovate in this space. The Bank will consult on this new regulatory regime in the New Year.

    Growth and competitiveness

    All of this is already under way while Parliament considers whether to add a secondary growth and competitiveness objective to our mandate. We need to be careful not to get ahead of those decisions by Parliament, but at the same time in view of that debate we are leaning more heavily on existing parts of our mandate (in the form of our “have regards” and remit letter) which cut in the same direction.

    Our authority derives from Parliament and we are accountable to Parliament for our exercise of it. Accordingly, if and when Parliament agrees to give us a new secondary objective we will take it forward with vigour, including in the areas listed above. This will require an evolution in our mindset, and this is appropriate given the change in our role – it is not unreasonable to require that, if we are to take on some functions which were conducted with political input when we were a member of the EU, then we should take more explicitly into our consideration some of the objectives which motivated that input. To this end we have already published a paper explaining how we would propose to approach policymaking in the future, including our new objective if Parliament sets it for us.[13]

    But as we make this shift we must do it carefully and without undercutting the primacy of safety and soundness in governing our actions.

    The UK’s reputation for robust, independent and open regulation is a hard-won asset, and it is a vital part of what makes the City an unparalleled global success story. The PRA and the Bank of England are committed to preserving this reputation, while also designing a proportionate and innovative regulatory regime which allows the UK economy to thrive. I look forward to working with you all to achieve these goals.

    My thanks to Hugh Burns and colleagues across the PRA for their help in preparing this speech.

    1. Of course, nobody advocates a return to pre-crisis bank capital ratios. But the recent turmoil in LDI funds reminds us not to be complacent about financial instability.
    2. Adhering to global standards does not mean being a rule-taker. The UK is highly influential in global standard setting forums, and the credibility of our own regulatory framework is important to maintaining that influence.
    3. United Kingdom: Financial Sector Assessment Program-Some Forward Looking Cross-Sectoral Issues. The IMF also specifically assesses compliance with Basel core principles. More broadly, the credibility of our regulatory regime will be of interest to a wide range of international observers, including ratings agencies.
    4. SS5/21 – International banks: The PRA’s approach to branch and subsidiary supervision | Bank of England.
    5. This evidence is summarised in Box 1 of our recent discussion paper: DP 4/22 – The Prudential Regulation Authority’s approach to policy.
    6. Of course, we also retain the flexibility to adapt the regime, quickly if needed – this is another benefit of putting the content of regulation in regulators’ rules rather than primary legislation. But the outcomes we are seeking to achieve will remain consistent over time.
    7. The independence of supervisors from governments is one of the pillars of the Basel Committee’s core principles for effective banking supervision, and compliance with this principle is regularly assessed by the IMF and the World Bank.
    8. My colleague Jon Cunliffe made this point in a recent speech: Innovation in post trade services – opportunities, risks and the role for the public sector − speech by Sir Jon Cunliffe | Bank of England.
    9. I focus here on reforms to regulation. We are also undertaking a programme of internal changes at the PRA, in part to support the regulatory reform agenda. These internal changes were summarised in my speech at Mansion House last year: Prudentist – speech by Sam Woods | Bank of England.
    10. Solvency II: Striking the balance − speech by Sam Woods | Bank of England.
    11. Discussion Paper 1/21 – A strong and simple prudential framework for non-systemic banks and building societies.
    12. Prudential and Resolution Policy Index | Bank of England.
    13. DP4/22 – The Prudential Regulation Authority’s future approach to policy | Bank of England.
  • PRESS RELEASE : National Trust Comment on the Retained EU Law Bill [October 2022]

    PRESS RELEASE : National Trust Comment on the Retained EU Law Bill [October 2022]

    The press release issued by the National Trust on 21 October 2022.

    The Retained EU Law Bill is to have its second reading in parliament today, Tuesday 25 October 2022. Here, our Director of Outdoors & Natural Resources, Patrick Begg, explains why this bill puts important environmental protections at risk and why an alternative process should be put in place:

    “Over 570 environmental, animal welfare and other important safeguards are at risk of being erased over the next 18 months, with little indication of what may replace them. This is deeply concerning. Nature is finite, once it’s gone we can’t get it back. And it’s already close to breaking point: global wildlife populations have declined by an average of 70% since 1970.

    “Government’s role should be to nurture our natural world, our rivers, seas, woodland and wildlife which underpin the economy as much as they do society’s wellbeing. Halting, and then reversing, serious declines in nature is fundamental to all our lives, and that starts with maintaining basic protections.

    “We urge the Government to withdraw the REUL Bill and instead put in place a more appropriate process, giving any new environment laws the time and resources needed for proper scrutiny through parliament.”

  • PRESS RELEASE : Statement by Executive Vice-President Vestager on amendment to State aid Temporary Crisis Framework in context of Russia’s war against Ukraine [October 2022]

    PRESS RELEASE : Statement by Executive Vice-President Vestager on amendment to State aid Temporary Crisis Framework in context of Russia’s war against Ukraine [October 2022]

    The press release issued by the European Commission on 28 October 2022.

    Today, the European Commission has decided to prolong and amend the State aid Temporary Crisis Framework in order to address the evolving needs of Member States to support the economy in the context of the continued invasion of Ukraine by Russia.

    Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “Russia’s continued unjustified war against Ukraine and its weaponisation of energy resources has serious effects on Europe’s economy. All European households and companies face extraordinary increases of energy costs. In this context, the Temporary Crisis Framework provides a horizontal tool enabling Member States to support those that need it, using the full flexibility of State aid rules, while preserving a level playing field in the Single Market.

    The Temporary Crisis Framework has been designed with a number of objectives in mind. First, we need to enable Member States to support companies that are seriously affected by the current energy prices today. This support must be geared for addressing the current needs and allow a transition to a situation of more stable energy prices in the future – even if likely at higher levels than in the past. Second, we need to ensure that there are clear incentives to reduce energy consumption, as without more energy efficiency, we will increase scarcity, driving prices even higher. Third, we need to continue working on the root causes of the current energy crisis and invest into a future where we are less dependent on fossil fuels. And fourth, we need to protect the level playing field. We must overcome this crisis together and prevent support to companies that don’t need it or that otherwise risks fragmenting the Single Market.

    The amendment of the Temporary Crisis Framework adopted today by the Commission is in line with this logic: it gives Member States more flexibility to set up support schemes tailored to the needs of their economy, continuing to incentivise the green transition, while maintaining safeguards to ensure that aid remains targeted and proportionate. At the same time, it also maintains market incentives for those same companies to further reduce energy consumption, since they will have to shoulder also parts of the higher prices. Furthermore, the amendment expands the tools for Member States to accelerate the roll-out of renewables and industrial decarbonisation efforts. Overall, we have prolonged the application of the Framework until end of 2023 in view of the continued crisis, giving Member States more predictability and time to implement support schemes and providing a stable legal framework for companies.

    Today’s changes have been discussed intensely with Member States in three rounds of consultations, involving a survey on Member States’ needs and two subsequent consultations on specific drafting proposals. We will continue to work closely with Member States and coordinate our action to make sure our Framework serves all European consumers and continues to support the Commission’s policy initiatives in the field of energy.”

  • PRESS RELEASE : Zero emission vehicles – first ‘Fit for 55′ deal will end the sale of new CO2 emitting cars in Europe by 2035 [October 2022]

    PRESS RELEASE : Zero emission vehicles – first ‘Fit for 55′ deal will end the sale of new CO2 emitting cars in Europe by 2035 [October 2022]

    The press release issued by the European Commission on 28 October 2022.

    The European Commission welcomes the agreement reached last night by the European Parliament and Council ensuring all new cars and vans registered in Europe will be zero-emission by 2035. As an intermediary step towards zero emissions, the new CO2 standards will also require average emissions of new cars to come down by 55% by 2030, and new vans by 50% by 2030. This agreement marks the first step in the adoption of the ‘Fit for 55′ legislative proposals tabled by the Commission in July 2021, and demonstrates ahead of COP27 the EU’s domestic implementation of its international climate commitments.

    Executive Vice-President for the European Green Deal, Frans Timmermans, said: “The agreement sends a strong signal to industry and consumers: Europe is embracing the shift to zero-emission mobility. European carmakers are already proving they are ready to step up to the plate, with increasing and increasingly affordable electric cars coming to the market. The speed at which this change has happened over the past few years is remarkable. It is no wonder that this file is the first one in the entire Fit for 55 package where Member States and the European Parliament have come to a final deal.”

    This clear signal to manufacturers and citizens will accelerate the production and sale of low- and zero-emission vehicles and put road transport on a firm path to climate neutrality by 2050. This new legislation will make the EU’s transport system more sustainable, provide cleaner air for Europeans and marks an important step in delivering the European Green Deal. It clearly shows the commitment of the EU to reach its climate goals and shows that Russia’s war of aggression in Ukraine is not slowing our clean energy transition but rather accelerating our work and making us progress faster to become the world’s first climate neutral continent by 2050.

    Next steps

    Today’s provisional agreement now requires formal adoption by the Parliament and the Council. Once this process is completed, the new legislation will be published in the Official Journal of the Union and enter into force.

  • PRESS RELEASE : EU provides €1 million in funding to the Office of the Envoy on Technology of the UN’s Secretary-General [October 2022]

    PRESS RELEASE : EU provides €1 million in funding to the Office of the Envoy on Technology of the UN’s Secretary-General [October 2022]

    The press release issued by the European Commission on 28 October 2022.

    The EU will provide €1 million to support the work of the Envoy on Technology of the UN’s Secretary-General over the next two years. This contributes to the financing of the Office’s work as well as the Envoy’s outreach activities.

    This will be done under a cooperation agreement signed between the Commission ant the Office of the Envoy on Technology.

    This agreement reflects the commitment by the EU and its Member States to support the UN Envoy on Technology in implementing the digital aspects of the UN Secretary-General’s ‘Our Common Agenda’, notably the development of a Global Digital Compact and the promotion of the multi-stakeholder model of internet governance. EU Member States will also offer their support to the Office of the Envoy on Technology in a Team Europe spirit.

    Executive Vice-President Margrethe Vestager said: “The European Union is committed to contribute to an Open Internet, and to a global digital transition firmly grounded in human rights and freedoms. All this in line with Sustainable Development Goals. This is at the heart of our digital ambition, and of the cooperation agreement we signed with the UN. I am looking forward to working with the new UN Tech envoy on ensuring that many more people benefit from the digital transformation.”

    High Representative/Vice-President Josep Borrell said: “Every day, we see a battle of narratives and values. This battle is waged using and misusing all the advances of technologies and digital space. Digital issues are not just technical matters, they affect every single aspect of our lives. So it is crucial that we build a set of shared principles for an open, free and secure digital future for all: a Global Digital Compact. This is the task of the UN Tech Envoy, and the EU will be supporting very closely this work as part of our digital diplomacy.”

    The Office of the Envoy on Technology aims to play an advocacy role in the global debate on digital transitions, helping advance a digital transformation in line with Sustainable Development Goals, while putting the emphasis on the open internet and human rights as cornerstones of digitalisation.

    The EU and its Member States advocate for a global multi-stakeholder effort to close the digital divides across the world. The free, open, secure and un-fragmented internet, underpinned by a concern for Human Rights, should be at the very centre of the digital transition, upholding the right to privacy, free speech and data protection, addressing arbitrary and mass surveillance while actively combatting internet shutdowns, online censorship, hate speech online, disinformation and cybercrime.

  • PRESS RELEASE : Executive Vice-President Timmermans’ and Commissioner Sinkevičius’ remarks on the new legislative proposals: the Zero Pollution Package [October 2022]

    PRESS RELEASE : Executive Vice-President Timmermans’ and Commissioner Sinkevičius’ remarks on the new legislative proposals: the Zero Pollution Package [October 2022]

    The press release issued by the European Commission on 26 October 2022.

    Executive Vice-President Timmermans

    Onto our proposals to tackle pollution, to have less people die prematurely, and with which billions of euros can be saved.

    The European Green Deal aims for an environment that’s free of harmful pollution by 2050. Because getting to climate neutrality is about more than pushing down greenhouse gas emissions. That’s why we call it climate neutrality and not just carbon neutrality.

    To have a zero-pollution environment in 2050, we need to step up action today.

    We have ample reason to do so.

    Each year about 300.000 Europeans die prematurely as a result of air pollution. Many more suffer from lung diseases or pollution-induced cancers. So, this is also completely in line with our strategy to attack cancer and to make sure that we have a European policy on cancer. This is very dear as you know to our President.

    Day in, day out, we get new information about the degree to which public health is directly endangered by pollution. Babies now have microplastics in their blood. And there’s PFAS in self-caught fish and homegrown vegetables.

    The directives we are revising now are outdated, one even 30 years old. Scientific knowledge and technology have advanced, and we need to bring our legislation up to par.

    Moreover, we pay for pollution.

    With taxes, health, and human lives – we pay.

    And the longer we wait to reduce this pollution, the higher the costs to society.

    Today’s proposals tackle pollution at both sides: first we prevent, and when pollution does occur, those who created it should pay for cleaning up.

    Let me give you a little more detail on each of the three proposals.

    First, we need to bring our air pollution norms in line with the new WHO standards. Already now, this will take well over a decade to achieve. We will set stricter norms for fine particulate matter, or PM 2.5 – cutting the maximum allowed level by more than half by 2030. Air pollution standards to date have not been easily enforceable, so we’re also tackling this and ensuring there will be easier access to justice for those affected by poor air quality.

    We also need to update our frameworks for water pollution and urban wastewater. The massive death of fish this summer in the Oder river shows how the combination of climate extremes and pollution can create tipping points for biodiversity.

    In our proposals today, we add 25 new substances to the directive on integrated water management. They all have carefully calibrated limit values which stipulate maximum levels for substances that pollute our waters. These norms will also take into account combination effects, reflecting scientific progress.

    On urban wastewater, we start to monitor microplastics release and create the European framework to routinely monitor pathogens like covid-19. This is something we have learned during the pandemic: wastewaters were a great indicator and a great way of pinpointing where we needed to be active to combat these pathogens.

    So, we will provide rules to stimulate the recovery of crucial minerals and nutrients from sludge and make wastewater treatment plants a source of renewable energy. It is a good business model.

    And we introduce the polluter pays principle. Right now, residues from pharmaceutical products and cosmetics cause 73% of pollution in urban wastewater. The costs of removing these are borne by water companies and ultimately of course by taxpayers.

    Let me finish by emphasizing that a toxic-free environment demands that all related policies maintain and deliver the required level of ambition. A healthy, zero-pollution future is possible if we say goodbye to fossil fuels, move to clean mobility, sustainable agriculture, healthy diets, etcetera.

    In the end, this is about protecting our health and that of the environment, against costs that are already borne by society.

    And if we learned one thing from the pandemic, our citizens want us to do this. That is why the Commission today is delivering on this.

    —–

    Commmissioner Sinkevičius

    Good afternoon everyone.

    Today we took another big step forward for citizens’ health, health of our environment, sustainable development of our economy and for the European Green Deal.

    As you know, this Commission has a zero pollution ambition, as part of the deal. We have already delivered half of actions foreseen in the Zero Pollution Action Plan.

    But if we want to see pollution come down to levels that no longer harm human health or the environment, there is still a huge amount of work to do.

    What we are presenting today has three major components, one to improve air quality, one to address freshwater quality, and one to modernise wastewater treatment.

    Let’s start with the air.

    This is an area where we have already seen major improvements thanks to EU policies. Nevertheless air pollution is still the largest environmental threat to our health and a serious challenge to our economies.

    The impacts are worst for the most vulnerable ones, notably children, the elderly, people with certain medical conditions and the economically disadvantaged. It’s clear that we need to do more here, and that we need to act with determination.

    What we propose is to set interim 2030 targets, to align EU air quality standards more closely with the recommendations of the World Health Organisation. At the same time, we are setting the EU on a trajectory to achieve zero pollution for air at the latest by 2050, through regular reviews of those standards to take into account scientific and technological progress.

    When you add this revision to existing policies, the result will be at least 70% less premature deaths from bad air quality in the next ten years.

    Nearly 300,000 Europeans die prematurely each year as a result of air pollution, so this is a huge number of lives we aim to save.

    These new rules will be easier to enforce, and – very importantly – will provide citizens with strong tools to claim justice.

    Because fresh air should not be something luxurious. It must be taken as a basic human right.

    Thus we want to give citizens a collective right to claim compensation when their health has suffered as a result of laws not being enforced, for air and waste water.

    At the same time we’re harmonising the rules for competent authorities, so that they can impose more dissuasive penalties against polluters who breach air quality measures at the national or local level.

    We are also proposing to strengthen the rules for monitoring and modelling air quality, and improve the framework for air quality plans. And we are strengthening the way Member States need to cooperate in tackling cross-border cases.

    As I said, this is good for human health and the environment.

    And it will also relieve the economy of the cost burden from illness, lower productivity, loss of crop yields and damages to materials and ecosystems. The benefits are at least 7 times greater than the costs.

     

    The second proposal is for freshwater.

    Indeed, the incident in Oder river is a good example what can happen if you fail to protect a river from pollution in times of drought. Reducing pollution means making rivers more resilient.

    Today it’s still a case that pharmaceuticals, pesticides and PFAS, the ‘forever chemicals’ can be found in Europe’s freshwaters, at levels that endanger the aquatic environment.

    So we’re raising the standards for rivers, lakes and groundwaters, as part of our drive towards zero pollution.

    Key changes include tackling new pollution threats by bringing their concentrations down to safe levels, introducing an early warning mechanism for water pollution, increasing the availability and transparency of pollution data and requiring Member States to alert each other about pollution events, avoiding situations like we saw with the Oder.

    The benefits will be significant, for water, soil, and human health.

     

    The third proposal is for a revision of a major piece of legislation, which has already brought enormous benefits to European citizens – the Urban Wastewater Treatment Directive.

    What we propose will save energy and produce renewable energy, including “green” biogas, and reduce the sector’s emissions by almost fifty percent by 2040.

    As a matter of fact, our goal is energy neutrality for the sector by 2040.

    We’re also bringing in new rules to reduce micropollutant emissions, in line with the ones identified in the freshwater proposal.

    And I want to stress what Frans already said – for two categories which typically reach freshwaters from waste water treatment plants – pharmaceuticals and personal care products – producers will be required to contribute to the cost of cleaning waste water.

    That way we avoid taxpayers having to pay those costs in full.

    High standards for air and water quality are wonderful. But on their own, they’re not enough. We have to make sure that they are implemented effectively on the ground.

    So all three of these proposals share one common feature.

    And that is, they all come with suggestions for improving their enforcement.

    The result should be laws that are more effective, with what actually amounts to a reduction in the administrative burden for Member States.

    Delivering zero pollution is not getting any easier in the geo-political context of today. But we cannot afford to be distracted. If we did start to deviate from our long-term path to zero pollution, the consequences would be very serious and very real.

    Europe needs these improvements. Our citizens and science ask for them and so I’m very proud to put this proposal forward.

    Thank you.

  • PRESS RELEASE : State aid – Commission approves €1.25 billion Hungarian scheme to support companies in context of Russia’s war against Ukraine [October 2022]

    PRESS RELEASE : State aid – Commission approves €1.25 billion Hungarian scheme to support companies in context of Russia’s war against Ukraine [October 2022]

    The press release issued by the European Commission on 26 October 2022.

    The European Commission has approved a €1.25 billion Hungarian loan and guarantee scheme to support small and medium enterprises (‘SMEs’) and large companies in the context of Russia’s war against Ukraine. The scheme was approved under the State aid Temporary Crisis Framework, adopted by the Commission on 23 March 2022 and amended on 20 July 2022, based on Article 107(3)(b) of the Treaty on the Functioning of the European Union (‘TFEU’), recognising that the EU economy is experiencing a serious disturbance.

    Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “This €1.25 billion scheme will enable Hungary to provide them with liquidity support necessary for the continuation of their activities. We continue to stand with Ukraine and its people. At the same time, we continue working closely with Member States to ensure that national support measures can be put in place in a timely, coordinated and effective way, while protecting the level playing field in the Single Market.”

    The Hungarian measure

    Hungary notified to the Commission, under the Temporary Crisis Framework, a €1.25 billion loan and guarantee scheme to provide liquidity support to SMEs as well as to large companies in the context of Russia’s war against Ukraine.

    Under this measure, the aid will take the form of (i) loans with subsidised interest rates; and (ii) guarantees on loans granted by the Export-Import Bank Private Limited Company Eximbank (“Eximbank”), the State-owned export credit agency.

    The measure will be open to companies active across sectors affected by the current geopolitical crisis, with the exception of financial institutions.

    The Commission found that the Hungarian scheme is in line with the conditions set out in the Temporary Crisis Framework. In particular, when it comes to aid in the form of guarantees: (i) the maturity of the guarantees cannot exceed six years; (ii) the maximum coverage cannot exceed 90% of the underlying loan; and (iii) the guarantee premiums respect the minimum levels set out in the Temporary Crisis Framework. When it comes to aid in the form of loans: (i) the maturity of the loans cannot exceed eight years; and (ii) the interest rates on the loans respect the minimum levels (modulated by an increase reflecting the duration of the guaranteed loans) set out in the Temporary Crisis Framework; and (iii) for indirect loans, the financial intermediary will pass on the advantage to the beneficiary to the largest extent possible. Finally, the loans and guarantees will be granted no later than 31 December 2022.

    The Commission concluded that the Hungarian scheme is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Crisis Framework.

    On this basis, the Commission approved the aid measure under EU State aid rules.

  • PRESS RELEASE : European Green Deal – Commission proposes rules for cleaner air and water [October 2022]

    PRESS RELEASE : European Green Deal – Commission proposes rules for cleaner air and water [October 2022]

    The press release issued by the European Commission on 26 October 2022.

    Today the Commission is proposing stronger rules on ambient air, surface and groundwater pollutants, and treatment of urban wastewater. Clean air and water are essential for the health of people and ecosystems. Air pollution alone means nearly 300,000 Europeans die prematurely each year, and the proposed new rules will reduce deaths resulting from levels of the main pollutant PM2.5 above World Health Organization guidelines by more than 75% in ten years. Across air and water, all of the new rules provide clear return on investment thanks to benefits in health, energy savings, food production, industry, and biodiversity. Learning the lessons from current laws, the Commission proposes to both tighten allowed levels of pollutants and to improve implementation to ensure pollution reduction goals are more often reached in practice. Today’s proposals are a key advance for the European Green Deal‘s zero pollution ambition of having an environment free of harmful pollution by 2050. They also respond to specific demands of the Conference on the Future of Europe.

    Executive Vice-President for the European Green Deal, Frans Timmermans, said: “Our health depends on our environment. An unhealthy environment has direct and costly consequences for our health. Each year, hundreds of thousands Europeans die prematurely and many more suffer from heart- and lung diseases or pollution-induced cancers. The longer we wait to reduce this pollution, the higher the costs to society. By 2050, we want our environment to be free of harmful pollutants. That means we need to step up action today. Our proposals to further reduce water and air pollution are a crucial piece of that puzzle.”

    Commissioner for the Environment, Oceans and Fisheries, Virginijus Sinkevičius, said: “The quality of the air we breathe and the water we use is fundamental for our lives and the future of our societies. Polluted air and water harm our health and our economy and the environment, affecting the vulnerable most of all. It is therefore our duty to clean up air and water for our own and future generations. The cost of inaction is far greater than the cost of prevention. That is why the Commission is acting now to ensure coordinated action across the Union to better tackle pollution at source – locally and cross-border.”

    Cleaner ambient air by 2030, zero pollution aim by 2050

    The proposed revision of the Ambient Air Quality Directives will set interim 2030 EU air quality standards, aligned more closely with World Health Organization guidelines, while putting the EU on a trajectory to achieve zero pollution for air at the latest by 2050, in synergy with climate-neutrality efforts. To this end, we propose a regular review of the air quality standards to reassess them in line with latest scientific evidence as well as societal and technological developments. The annual limit value for the main pollutant – fine particulate matter (PM2.5) – is proposed to be cut by more than half.

    The revision will ensure that people suffering health damages from air pollution have the right to be compensated in the case of a violation of EU air quality rules. They will also have the right to be represented by non-governmental organisation through collective actions for damage compensation. The proposal will also bring more clarity on access to justice, effective penalties, and better public information on air quality. New legislation will support local authorities by strengthening the provisions on air quality monitoring, modelling, and improved air quality plans.

    Today’s proposals leave it to national and local authorities to determine the specific measures they would take to meet the standards. At the same time, existing and new EU policies in environment, energy, transport, agriculture, R&I and other fields will make a significant contribution, as detailed in the factsheet.

    Today’s proposal will help achieve dramatic improvement in air quality around Europe by 2030, leading to gross annual benefits estimated at €42 billion up to €121 billion in 2030, for less than a €6 billion costs annually.

    (WHO guidelines: <5 µg/m³, annual; 2030 proposal: <10 µg/m³; current directive: <25 µg/m³)[i]

    Air pollution is the greatest environmental threat to health and a leading cause of chronic diseases, including stroke, cancer and diabetes. It is unavoidable for all Europeans and disproportionately affects sensitive and vulnerable social groups. Polluted air also harms the environment causing acidification, eutrophication and damage to forests, ecosystems and crops.

    Better and more cost-effective treatment of urban wastewater

    The revised Urban Wastewater Treatment Directive will help Europeans benefit from cleaner rivers, lakes, groundwaters and seas, while making wastewater treatment more cost-effective. To make the best possible use of wastewater as a resource, it is proposed to aim for energy-neutrality of the sector by 2040, and improve the quality of sludge to allow for more reuse contributing thus to a more circular economy.

    Several improvements will support health and environmental protection. These include obligations to recover nutrients from wastewater, new standards for micropollutants and new monitoring requirements for microplastics. Obligations to treat water will be extended to smaller municipalities with 1,000 inhabitants (from 2,000 inhabitants currently). To help manage heavy rains, made more frequent by climate change, there is a requirement to establish integrated water management plans in larger cities. Finally, building upon the Covid-19 experience, the Commission proposes to systematically monitor wastewater for several viruses, amongst which CoV-SARS-19, and anti-microbial resistance.

    EU countries will be required to ensure access to sanitation for all, in particular vulnerable and marginalised groups.

    As 92% toxic micro-pollutants found in EU wastewaters come from pharmaceuticals and cosmetics, a new Extended Producer Responsibility scheme will require producers to pay for the cost of removing them. This is in line with the ‘polluter pays’ principle and it will also incentivise research and innovation into toxic-free products, as well as making financing of wastewater treatment fairer.

    The wastewater sector has significant untapped renewable energy production potential, for example from biogas.  EU countries will be required to track industrial pollution at source to increase the possibilities of re-using sludge and treated wastewater, avoiding the loss of resources. Rules on recovering phosphorus from sludge will support their use to make fertiliser, benefiting food production.

    The changes are estimated to increase costs by 3.8% (to €3.8 billion a year in 2040) for a benefit of over €6.6 billion a year, with a positive cost-benefit ratio in each Member State.

    Protection of surface and groundwater against new pollutants

    Based on up-to-date scientific evidence, the Commission is proposing to update lists of water pollutants to be more strictly controlled in surface waters and groundwater.

    25 substances with well-documented problematic effects on nature and human health will be added to the lists. These include:

    • PFAS, a large group of “forever chemicals” used among others in cookware, clothing and furniture, fire-fighting foam and personal care products;
    • a range of pesticides and pesticide degradation products, such as glyphosate;
    • Bisphenol A, a plasticiser and a component of plastic packaging;
    • some pharmaceuticals used as painkillers and anti-inflammatory drugs, as well as antibiotics.

    The substances and their standards have been selected in a transparent and science-driven process.

    In addition, learning the lessons from incidents such as the mass death of fish in the Oder river, the Commission proposes mandatory downstream river basin warnings after incidents. There are also improvements to monitoring, reporting, and easier future updates of the list to keep up with science.

    The new rules recognise the cumulative or combined effects of mixtures, broadening the current focus which is on individual substances solely.

    In addition, standards for 16 pollutants already covered by the rules, including heavy metals and industrial chemicals, will be updated (mostly tightened) and four pollutants that are no longer an EU-wide threat will be removed.

    Next steps

    The proposals will now be considered by the European Parliament and the Council in the ordinary legislative procedure. Once adopted, they will take effect progressively, with different targets for 2030, 2040, and 2050 – giving industry and authorities time to adapt and invest where necessary. 

  • PRESS RELEASE : Opening remarks by Commissioner Simson at the press conference of the Energy Council [October 2022]

    PRESS RELEASE : Opening remarks by Commissioner Simson at the press conference of the Energy Council [October 2022]

    The press release issued by the European Commission on 25 October 2022.

    Thank you, Jozef, and good afternoon, everyone.

    Exactly a week ago, the Commission presented the most recent package of proposals to tackle the energy crisis, dedicated to gas prices in particular. Following the endorsement and guidance of the European Council last week, we now had a more detailed discussion with the ministers on how to move forward.

    The package has a number of important elements that we will jointly work on, to be ready for adoption at the next Extraordinary Council.

    First, making joint purchasing of gas a reality. There was strong support for this idea among the ministers and a keen interest in the details of the set-up. It is clear that combining our strength on the global market is to our advantage. If the proposed two-step model will be agreed at the November Council, we will be ready to jointly buy gas to refill the storage after this heating season.

    This process will cover at least 13.5 billion cubic meters of gas, enough to be attractive to the suppliers and meaningful for the market. In parallel, we will continue negotiations with our partners to secure necessary supplies for this winter and beyond. I will be in Norway after tomorrow for a High-Level Energy Dialogue.

    Second, addressing the high gas prices. With our proposal, we ask ACER to develop by 31 March a new complementary EU gas benchmark that adequately reflects the current market situation. There is a broad consensus that this is a useful step to take to increase transparency and predictability of prices.

    While the new benchmark will be ready by the next filling season, we have also proposed to establish a dynamic cap on TTF that can be used immediately to address excessively high gas prices. Based on the constructive discussion today, the Commission will swiftly work on the details of the proposal. As we develop this short-term tool, we must ensure security of supply and avoid increasing gas consumption.

    In addition to these two measures, the Commission has tasked ESMA with developing circuit breakers for intra-day derivatives trading.

    The third pillar of the package is strengthening solidarity between Member States in case of severe supply disruption in the coming winter. Our proposal includes default rules that will apply in case there is no bilateral solidarity agreement in place. We will also propose a mechanism for the allocation of gas between Member States for which an emergency has been declared.

    Following the European Council conclusions, we will further examine the cap on gas used for electricity production, including a cost-benefit analysis. The Member States have received a Commission analysis of the measure as input for today’s discussions.

    The European Council conclusions also invite a fast-track simplification of permitting procedures for renewables and grids, including through emergency measures.  As you know, the Commission already proposed in May measures to streamline and speed up the permitting process. I am calling on both the Council and the European Parliament to have their position ready by early November.

    As we are tackling the current energy crisis, we cannot forget about our longer-term plans. I therefore very much welcome today’s discussion on the hydrogen and gas markets decarbonisation package. Scaling up green hydrogen and biomethane will help us to phase out Russian fossil gas fully and for good. Today’s discussion makes me confident that the Council can agree on its position by December.

    We took one step closer to a more energy-efficient future with the Council reaching a political agreement on the Energy Performance of Buildings Directive. Buildings consume 53% of gas in the EU, making it a key sector for decarbonisation and energy security, as well as reducing energy bills. Today’s agreement is less ambitious than the original Commission proposal. But it is a step forward and a basis for engaging in the negotiations with the Parliament as soon as possible – to give the necessary certainty to people and businesses involved.

    Finally, today’s Council gave me the opportunity to inform Ministers about the critical energy situation of two countries in our European family.

    In Ukraine, Russia’s recent shelling has targeted energy infrastructure and caused severe damage. 30% of Ukrainian equipment, such as transformers, circuit breakers and power lines have been destroyed, causing mass outages.

    It is urgent that the EU steps up its support to quickly replace the damaged infrastructure. What is at stake, is the protection and well-being of tens of thousands of households, vulnerable people, children and elderly this coming winter. I have written to all the ministers and called for their urgent support in this.

    As you remember, we have set up months ago a fund at the Energy Community Secretariat, dedicated to repairing specific energy infrastructure in Ukraine. We have now collected 20.5 million euros in donations, but we clearly need more. I recalled that Member States have another option available to help Ukraine’s energy repair and reconstruction. This is to donate energy equipment through Commission’s Emergency Response Coordination Centre. This mechanism has already facilitated more than 60 energy-related donations.

    Private companies have also been generous and delivered supplies worth over 10 million euros. We are encouraging them to do even more and can help with transporting the donated equipment to Ukraine. Besides energy equipment, we need to continue supplies of gasoline and diesel.

    In Moldova, the situation is also increasingly challenging. Moldova relied on Ukraine for 30% of its electricity imports. The forced suspension of electricity exports from Ukraine poses a major problem for Moldova

    Last week, Moldova was also informed that gas flows from Gazprom will be further reduced and so will the electricity supplies from Transnistria. This is another clear example that Russia is weaponising energy supplies. Moldova has secured some alternative supplies from Romania for a limited period, but this is not enough.

    We are working with the Energy Community to ensure Moldova can import gas and electricity from alternative sources other than Transnistria. But the challenge is not only the access to supply, but the financing as well.

    We are looking into ways of stepping up the EU support.

    This Council was in the end about solidarity and a united response to the crisis. I am glad that today’s discussions, and the decisions taken on the EPBD, show that we remain united both in driving forward our Green Deal agenda and in shaping effective solutions to the energy crisis, both for the EU Member States  and our neighbours.