Week Ahead (23 January)

Monday, 23 January – ESMA and ACER to share their early assessment of the EU’s gas price cap

Today, the European Securities and Markets Authority (ESMA), together with the Agency for Cooperation of Energy Regulators (ACER) will share their early assessment of the EU’s gas price cap.

Last month, the EU energy ministers finally reached an agreement on the Commission’s highly-contested gas price cap proposal, also known as a ‘’temporary gas market correction mechanism’’. The regulation will enter into force on 15 February 2023, lasting one year. It will apply to natural gas derivatives contracts at the TTF trading hub in the Netherlands, with a price cap triggered in case the month-ahead contract price exceeds €180 per megawatt hour (MWh) for three days.

ESMA and ACER were tasked by the European Commission with analysing whether the fast implementation of the market correction mechanism could affect the security of supply or result in negative consequences for financial or energy markets. Both appear to be sceptical about its possible effects on market liquidity. Today’s publication will only be the interim version of the assessment, with a second assessment to be published on 1 March, two weeks after the mechanism enters into force.

W/C Monday, 23 January – Large-scale protests against pension reform to continue across France

Large-scale protests against the government’s plans to raise the retirement age from 62 to 64 are expected to continue this week in France. Last Thursday, more than a million people joined protests across the country, alongside a series of nationwide strikes disrupting public transport, blocking refineries, and curbing power generation. The unions have called for another day of industrial action on 31 January.

Under the proposals tabled by prime minister Élisabeth Borne, from 2027 people will have to work 43 years in order to qualify for a full pension, from the 42 years required now. The government insists that this is necessary due to the rapidly diminishing ratio between the working population and those in retirement. However, 68% of the population seems to oppose the reform, according to an IFOP poll published earlier last Monday. Due to the lack of a parliamentary majority, Macron’s Renaissance party will need to secure the support of 60 MPs of the conservative Republicans party.

Tuesday, 24 January – European Parliament’s ITRE Committee to adopt position on European Chips Act

On Tuesday, the Committee on Industry, Research, and Energy (ITRE) of the European Parliament is expected to vote on the European Chips Act report, after the Council adopted its own position last month.

Unveiled by the European Commission last February, the Act aims to boost the bloc’s semiconductor capacity, by establishing a mechanism for preventing and managing supply chain crises. This is in line with its long-term goal of catching up with other regions in the production of semiconductors, by doubling its share of global chip production capacity to 20% from its current level of 10%. To that end, the Act is set to mobilise €43 billion in public and private funding for the semiconductor industry.

According to reports, the text’s compromise amendments include calls for additional budgetary resources for the Act’s Research & Development (R&D) programme, and for greater diplomatic engagement and cooperation with ‘’like-minded strategic partners’’, such as Taiwan. Once the ITRE Committee approves the text, it will pass it to the plenary for adoption. Therefore, the final vote on the text is expected to take place at the Parliament’s plenary session in February, paving the way for the beginning of trialogue negotiations in March.

Wednesday, 25 January – Vestager to discuss state aid policy with the Committee on Regional Development, following the announcement of the Net-Zero Industry Act

On Wednesday, Margrethe Vestager, the Commission’s competition chief, will meet with the European Parliament’s regional development committee to discuss state aid policy.

Last week, President von der Leyen announced in Davos the ‘’Net-Zero Industry Act’’, the EU’s own response to the U.S Inflation Reduction Act of 2022 (IRA), a protectionist €360 billion scheme including a mix of tax credits and subsidies which is viewed in Brussels as discriminatory, unfairly protectionist, and a threat to European industry. It will include plans to boost clean tech by 2030, putting forward new goals on renewables.

This could be achieved by national funding, through the further loosening of EU state aid rules in the coming years allowing member states to more easily use subsidies, and through the establishment of a ‘’European Sovereignty Fund‘’ at an EU level. France and Germany are favoring the former, calling for tax breaks and more relaxed state aid rules for clean tech. On the other hand, smaller member states favor European funding that would ensure a level playing field. Meanwhile, Sweden, the country holding the EU six-month rotating presidency, has warned against a subsidy race.

Earlier this month, Vestager, who is traditionally more sceptical of subsidies than Internal Market Commissioner Breton, suggested a new temporary state aid framework, including the introduction of ‘’anti-relocation investment aid’’ in order to prevent firms from leaving the EU.