The Communication “Updating the 2020 New Industrial Strategy: Building a stronger Single Market for Europe's recovery” addresses several requests from Member States on the assessment of the resilience of the Single Market, the identification of strategic dependencies in key vulnerable ecosystems, and the selection of Key Performance Indicators (KPIs) to monitor the implementation of the Strategy. The New Industrial Strategy includes three staff working documents that reflect on several of the main goals of the strategy: The Annual Single Market Report 2021, an analysis of strategic dependencies and capacities, and a document on a competitive and clean European steel.

On 4 May, the Commission published its roadmap on the revision of the Classification, Labelling and Packaging Regulation (CLP), laying out its policy objectives. 

On 4 May, the European Commission published its roadmap to revise the REACH Regulation, as part of the EU Chemicals Strategy for Sustainability (CSS). The Commission is expected to make wide-ranging changes to REACH, including the addition of PMT and vPvM properties to the criteria for the identification of Substances of Very High Concern (SVHCs).

The European Commission has also published a draft act proposing to amend Annex XVII on restricted substances of REACH by including substances recently classified as CMRs. Comments may be submitted till 2 June 2021 and Commission adoption is expected for Q4 2021.   

On 16 April, the Commission disclosed the full list of members of the newly formed high-level roundtable on the implementation of the Chemicals Strategy for Sustainability. The roundtable consists of 32 members classified in groups: Member State Authorities (Portugal – current Presidency), third sector organizations, scientific organizations, academia and research institutes, industries and business associations and international organizations.

The mission of the roundtable is to discuss the objectives of the Chemicals Strategy for Sustainability and to monitor its implementation in dialogue with concerned stakeholders.

Discussions will focus in particular on how to support the transition to safe and sustainable chemicals and to a toxic- free environment. Moreover, the group will discuss how to boost the development of innovative safe and sustainable chemicals, materials and products. On the contrary, it was highlighted that these discussions will not replace formal consultations and stakeholder engagement. The first meeting took place on 5 May 2021.

The Commission has confirmed that EU industries targeted by the EU carbon border adjustment mechanism (CBAM) will no longer be eligible for free CO2 allowances under the EU emissions trading scheme. Several members in the EU steel industry have raised concerns on this issue, claiming that carbon taxes will have indirect consequences on sustainable investment.

The CBAM aims to combat “carbon leakage”, where companies transfer production to countries with lower carbon costs or import finished products from these countries to avoid carbon taxes. Mr. Koefoed Quinn, a senior official at the Commission’s climate directorate, stated that, while several options are being considered, CO2 allowances are not WTO-compatible and that, by taking away free CO2 credits, the industry will be encouraged to invest in sustainable practices for steel production.

Steelmakers, on the other hand, argue that free CO2 allowances are essential to industry and, without them, investing in green energy will be unlikely. Replacing coal with hydrogen would cost €1 billion of capital expenditure for every one million tonnes of steel produced, with around 160 million tonnes of steel produced each year in Europe. To finance these investments, free CO2 allowances must continue.

While there is a consensus that green hydrogen is the most sustainable solution for the steel industry, the industry shares the concern that the increased operating costs arising from carbon taxes will hinder the industry’s ability to invest in green energy. The Commission has acknowledged these concerns and, while they may introduce a transition phase, they have made it clear that CO2 allowances will be phased out.

The CBAM proposal is expected to be disclosed as part of a climate policy package in June.

On 19 March 2021, the EU and Australia concluded their 10th round of negotiations for a bilateral trade agreement. The negotiations were held via a series of videoconferences by officials from the European Commission and Australia.

28 working groups met to discuss all aspects of the future trade agreement, going over textual proposals discussed in prior rounds. The parties agreed in principle on certain parts of the agreement that were acceptable to both sides. For instance, the chapters on Customs and Trade Facilitation and on Delivery Services were provisionally adopted during the round.

Negotiators reached an agreement on the objectives in the Chapter for Dispute Settlement and Mediation, which include transparent and efficient dispute settlement procedures, while further negotiations need to be held on import and export licensing procedures and non-tariff measures. The text of the chapter on public procurement is already complete, however, progress is still needed in reference to determining market access. Finally, for the Chapter of Energy and Raw Materials, negotiators discussed finding a solution on environmental impact assessments, offshore safety, and third-party access.

Overall, the discussions were deemed constructive and both parties shared a commitment to reach a comprehensive agreement that was beneficial for both sides. Further discussions on these chapters and several follow up actions are to be decided during the 11th negotiation round planned in June 2021.

On 21 April, the European Commission adopted a series of measures on sustainable finance to help define what can be labelled as sustainable and to improve the distribution of capital towards sustainable activities. The package is comprised of: (I) an EU Taxonomy Climate Delegated Act, (II) a proposal for a Corporate Sustainability Reporting Directive, and (III) six amending Delegated Acts on fiduciary duties, investment and insurance advice.

The EU Taxonomy Climate Delegated act provides the first set of technical screening criteria to define which activities contribute extensively to climate change adaptation and mitigation, two of the primary objectives in the Taxonomy Regulation. The Delegated Act will cover economic activities of 40% of the companies listed in the EU, in sectors such as energy, forestry, manufacturing, transport and buildings.

The proposal for a Corporate Sustainability Reporting Directive aims to bring sustainability reporting on a par with financial reporting. The Directive will extend sustainability reporting requirements to all large and listed companies with separate reporting standards for large companies and SMEs. The proposal will also simplify the reporting process for companies, providing a “one-stop-shop” for reporting across the EU.

The six amending Delegated Acts on fiduciary duties, investment and insurance advice aim to encourage the financial system to support sustainable businesses and businesses on the path to becoming sustainable. Financial advisers, together with their clients, will need to discuss methods for sustainability when assessing a client’s suitability for an investment. Manufacturers of financial products will also need to consider sustainability factors in the design of their products.

The EU Taxonomy Delegated Act will be formally adopted by the Commission at the end of May, once the Delegated Act is translated in all official languages, it will be sent to the European Parliament and to the Council. The Parliament and the Council will then have a period of 4 months to scrutinize the Delegated Act before it enters into force.

The second EU Taxonomy delegated act will allegedly cover mining and extracting of critical raw materials. Public consultations for the second act will be held in June and is expected to be adopted in Q1 2022. 

On 18 February, the European Commission published its new Communication on the Trade Policy Review - an Open, Sustainable and Assertive Trade Policy.

On 14 April, the European Commission published its report on the evaluation of the RoHS Directive. The report is based on a study prepared by the two external consultants Ecorys and Ramboll in March and concludes that, while the Directive has been successful in reaching the objective of reducing hazardous substances in electrical and electronic equipment (EEE) in the EU, there were delays in assessing and approving exemptions.

On 19 May, ERMA announced the RawMaterials Summit 2021, the global innovation and technology conference in the raw materials sector, which will take place on 17 June.

Registration is now open.