European Commission focuses on Covid-19, climate and data
October 2020
The State of the Union address by the Commission President suggested that many areas of relevance for lessors and automotive rental will be at the centre of major regulatory developments going forward.
Covid-19 still dominating policy work
On 16 September the Commission President, Ursula Von der Leyen, gave the annual State of the Union speech to the European Parliament. Unsurprisingly, a major topic was the ongoing COVID-19 pandemic, where she noted that efforts should remain focused on the ongoing crisis and that now is “definitely not the time to withdraw support” as we are not yet in the recovery stage. While support measure differ by country, they have generally included wage subsidies, deferred payments on loans, taxes and social contributions, sectoral rescue packages, corporate loans and liquidity support and increased healthcare spending. The measures most relevant for the leasing and automotive rental sector include those related to loan/lease payment moratoria, ECB liquidity support and support for the tourism sector.
Looking to the future, the European Commission has proposed a major recovery plan for Europe which focuses on initiatives related to sustainability and digitalisation. Next Generation EU is a proposed 4 year recovery instrument of €750 billion which would aid member states in their recovery, boost the economy and private investment, and build better crisis support. The long-term EU budget will also be enhanced with more than €1 trillion available over the next 7 years. The European Parliament is currently negotiating these measures and calls for greater diversity of revenue sources. For example, they propose utilizing income from new taxes on digital services, financial transactions, emissions and plastic packaging. This new budget, once ratified, will be in operation from January 2021.
Sustainability a top priority
A main theme of the State of the Union speech was sustainability, and Von der Leyen confirmed the Commission’s intention to increase the targeted emissions reduction to 55% by 2030, a more ambitious goal than the original 40% reduction proposed. This measure would be paired with a carbon border adjustment mechanism, which suggests a carbon tax on imports to deter European factories from relocating outside the EU. The European Green Deal has formed the cornerstone of the EU’s work on sustainability and many post-Covid recovery plans and budgets are linked to the sustainability goals included here. For example, the Just Transition Fund was increased more than five-fold to €40 billion as a response to the Covid-19 crisis.
Digitalisation work picking up pace
Another important discussion point of the speech was data, where she spoke on the need to make use of industrial data and make it fully accessible. She noted that algorithms used in AI and machine learning should not create black boxes, and for there to be procedures in place for when things go wrong. Their flagship regulation in this area, the Digital Services Act, has just finalized its public consultation period and the final proposal is expected to be published towards the end of the year.
This stance was echoed by Commissioner Thierry Breton during a Politico interview in early September. He stressed that EU data, especially industrial data, should stay in the EU to be processed and stored. While recognising the importance of regulation, he stated that the data subject can be dealt with using soft law and that the Commission will propose some specific tools. Breton announced that the EU needs to build an umbrella for digital sovereignty based on three pillars: EU secured cloud; legislation for industrial data; and controlling and maintaining connectivity using satellites. He stated that the Commission is planning to launch a consultation on data sharing.