Rapporteur: Sven SCHULZE (DE/EPP), Minister for Economic Affairs, Tourism, Agriculture and Forestry of the Federal State of Saxony-Anhalt

POLICY RECOMMENDATIONS

THE EUROPEAN COMMITTEE OF THE REGIONS (CoR),

1.

underlines the need to drastically cut greenhouse gas emissions. Decisive action is needed particularly in road transport, which has so far failed to sustainably reduce its high share of emissions. The CoR therefore welcomes the decision to ban the registration of conventional petrol and diesel vehicles across the EU from 2035, which will enable a mobility transition. With regard to technological openness, it is important to ensure that engines running on various climate-neutral fuels can also continue to be authorised after this date;

2.

recognises the significance of less developed regions in achieving sustainability goals, and emphasises the need for targeted support and investments in these regions to ensure an inclusive and equitable transition to a low-carbon economy;

3.

calls on the European Commission to empower and support cities and regions in achieving these ambitious climate targets;

4.

points out that principally new battery electric and, in addition, already existing advanced propulsion technologies, as well as low-emission or climate-neutral fuels (1), can be used to cut exhaust emissions from new cars and light-duty vehicles. If used in the (worldwide) existing fleet, climate-neutral synthetic fuels and biofuels can make a significant contribution to mitigating climate change and can reduce dependence on fossil fuels and enhance Europe’s open strategic autonomy even before 2035. Together with battery electric propulsion technology, the digital connectivity of vehicles will pose the main challenge for the automotive sector;

5.

stresses that the entire mobility system must become more sustainable in order to achieve the climate targets. Efficient alternatives to individual cars must be considered, as well as more efficient use of raw materials and surfaces, including minimal sealing, especially in cities;

6.

underlines that this dual transition will have a far-reaching impact on regional automotive ecosystems. An overarching European transition strategy is therefore crucial for the EU, as the European automotive industry is highly integrated across national borders and mobility of people and goods is a key factor in a modern economic system. To be competitive on a global stage, Europe needs to embrace new technologies and stay at the forefront. This strategy should focus on how to support research and development of these new technologies, and at the same time how reskilling and upskilling can support the most affected and vulnerable automotive regions in making the transition;

7.

stresses that the transition of the automotive industry goes hand in hand with structural change in the regions, and underlines the need to help shape that change in particular and to explore appropriate support options, such as the Just Transition Mechanism (JTM) or a just transition strand in the next cohesion policy after 2027, with the involvement of local and regional authorities;

8.

emphasises, therefore, the need to carefully consider the state of automotive regions and their capacities during the transition so as not to drive away investments nor threaten the industry’s competitiveness;

9.

sees a need to foster expertise in the EU with new and extended forms of ongoing and lifelong professional training (education, training and further training);

10.

calls for a comprehensive territorial impact assessment on the employment consequences of the shift towards a zero emission automotive industry. The impact varies across regions, depending on how the regional automotive industry is structured (vehicle manufacturers or mainly suppliers), the technological priorities in the supply industry (e.g. a focus on propulsion systems) or the performance of the region as a whole. It is SMEs in the supply industry that need most to adapt, with limited room for manoeuvre owing to lack of financial resources or limited access to finance;

11.

welcomes the fact that Regulation (EU) 2023/851 of the European Parliament and of the Council (2) on strengthening the CO2 emission performance standards for new passenger cars and new light commercial vehicles has taken on board the CoR opinion’s proposal (3) to map the transition’s impact on structural change in automotive regions and to make timely proposals to support affected regions and workers in the automotive sector;

12.

stresses the need to involve citizens in this transition process to ensure public backing. Structural change in industrial regions and the relevant structurally weak regions must be not only environmentally but also socially sustainable to ensure public backing and avoid a new form of transport-related exclusion, especially for the most vulnerable;

13.

points out that the CoR, through its Automotive Regions Alliance (ARA) and the Interregional Group on the Future of the Automotive Industry (CoRAI), has proactively taken up this issue, as any structural change is also a question of territorial cohesion within the meaning of Article 175 TFEU;

14.

stresses the importance of the social dimension of change; recommends strategic transition planning with well-prepared communication, structured social dialogue, including, where appropriate, negotiated transition plans at company, regional and sectoral levels and binding social conditionality; mapping employment impacts at company, regional and national levels to ensure effective skills mapping, anticipation of change and appropriate training and reskilling measures;

15.

recognises the importance of green and sustainable skills development programmes in less developed regions to ensure a just and inclusive transition. Calls for the establishment of regional innovation centres to foster green skills and drive local innovation;

16.

stresses that robust, excellent regional innovation systems contribute to green and social sustainability and to ensuring that European regions are global leaders in innovation and are competitive;

17.

underlines that the framework conditions created by the new emission standards ensure that businesses, as well as local and regional authorities, are in a position to offer, where possible, on-site education, training and further training for workers;

18.

stresses that the aforementioned aspects of regional industrial and structural policies, regional transition management plans and a European just transition mechanism must be developed within a multi-level political system involving all key stakeholders (employers’ and workers’ representatives, European, national and regional authorities, businesses, education, science, research and NGOs). The Committee underscores the central role and responsibility of manufacturers (original equipment manufacturers — OEM) throughout the value chain in the supply sector and in reskilling and upskilling their employees;

Policy context

19.

stresses that the EU must take into account the various technical solutions in the automotive sector. As long as the new technological solutions are carbon neutral from their production to their use, they should be subject to competition in innovation among industry and research, especially in an area as globally interconnected as the automotive industry;

20.

underlines that a successful transition requires the engagement of all stakeholders, including through public-private partnerships. It is therefore essential to step up EU resources in order to encourage collaboration between industry, SMEs, universities and research bodies, education and training institutions, local and regional authorities and all stakeholders in the sector, so that the regions can keep up with the latest technological developments with regard to mobility;

21.

supports the legislative taxonomy and legal incentive mechanisms, as in the Renewable Energy Directive, for the development of carbon-neutral technologies;

22.

notes that the transition of automotive mobility will also impact the service sector (garages, petrol stations, trade in spare parts, etc.) and must be socially mitigated. The transition of the automotive regions requires the transition of a whole service system around the car and its maintenance focussing on the re- and upskilling of the (regional) workforce and within the EU-wide framework for skills and jobs;

23.

welcomes the recent trends in EU data legislation, which will enable new business models to emerge;

24.

stresses the importance of EU State aid law and the role it plays in crises, and is convinced that State aid rules need to be adapted so that economically strong automotive regions too can further consolidate their innovation clusters. Clusters contribute to the prosperity of other regions through Interregional and Europe-wide value chains;

25.

calls for both the notification threshold and the maximum rate for regional aid to be raised in the General Block Exemption Regulation (GBER). A rate of 50 % for large firms in ‘a’ areas is far too low. This is the only way to also develop and market future-oriented technologies in Europe, which will be needed under the European Green Deal;

26.

stresses the need not only for a reform aimed at increasing the amount of aid, but also for measures to adapt the De minimis Regulation, with the current ceiling of EUR 200 000 rising to at least EUR 500 000;

27.

welcomes the reforms of the Important Projects of Common European Interest (IPCEI) announced in the Green Deal Industrial Plan. However, consideration should be given not only to speeding up authorisation procedures, but also to extending thematic areas to include future technologies (e.g. autonomous driving); the extent to which IPCEIs can be adapted to enable small and medium-sized enterprises (SMEs) to take part should also be explored;

28.

believes steps should be taken to avoid both overregulation and slow implementation of EU legislation by Member States; steps should also be taken to speed up public approval and decision-making procedures. At the same time, the authorities need to make a commitment to cutting red tape;

29.

proposes that it continue to be possible to temporarily regulate significant seasonal spikes in energy prices in a clearly time-limited way. Such price volatility is a major locational disadvantage in global competition, especially for energy-intensive production. On top of this, there are risks in terms of supply and reliability of the energy grid. For such intervention to be justified in the context of regional transitions, specific attention must be paid to SMEs in the supply sector;

Skills, infrastructure and raw materials

30.

warns that the current favourable position of the European automotive industry with its strong R&D activities is at risk because of the lack of engineering and software specialists; suggests, therefore, that structural change in the automotive sector be addressed in the European Year of Skills 2023 and beyond, and singles out the excellent work of the Automotive Skills Alliance;

31.

stresses that training people in the skills needed for the transition process in the automotive sector is a cornerstone of the required measures, including with a view to reducing impact on employment; the Committee further notes that it will be crucial to make full use of all resources and opportunities, including EU ones, for active labour policies;

32.

unequivocally supports the promotion and training of women professionals in STEM occupations and the automotive sector to ensure that the transition takes into account equality. During the transition, equality should be actively and systematically integrated into all areas of life and thereby guaranteed. Equal participation must be promoted through inclusive labour markets;

33.

highlights the important role played by education, training and further training when it comes to meeting the changing requirements for suppliers’ and OEMs’ business models and products. Still, it is important for suppliers to have the opportunity to develop new products, services and business models. This is made possible by test and demo environments, which need to be made more accessible to small and medium-sized enterprises, both nationally and across the EU. Test and demo environments with the possibility of producing hardware in low volumes are a necessity for SMEs that should be addressed to a greater extent, in order to foster a transition in sustainable production and to develop new business models for SMEs;

34.

stresses the importance of electrification of the automotive industry and that the focus should be on its value chains, battery efficiency and the manufacture of equipment used in that industry. Manufacturing is becoming more process-oriented and vehicle manufacturers are doing more themselves. The old industries need to be transformed into suppliers for the new technologies and new sectors. A shift in skills is an important element in meeting the challenges of the future;

35.

recommends that the European Commission issue clear guidance on how to improve and strengthen the ability of Member States and regions to provide the necessary safety nets for all workers and citizens who could be negatively impacted by the changes ahead. This should also specifically address workers that might not benefit from re-training and upskilling due to their age profiles and find mechanisms to incentivise retaining their skills and qualifications in the transition process;

36.

is concerned about the current competitive disadvantage of the European electric vehicle industry compared to that of players such as China, which is distorting the electric vehicle market through high state subsidies. The European Commission president’s announcement of an anti-subsidy investigation into these practices is an important step. Unfair trading practices must be tacked decisively to ensure fair competition;

37.

stresses that a comprehensive territorial impact assessment should be carried out on the employment impact of the transition on a climate-neutral automotive industry. This analysis should map the individual challenges and risks facing each region and identify possible courses of action;

38.

underscores, with reference to Articles 145 and 147 TFEU, the social component of this transition and notes that the availability of relevant skills is an issue not only for the automotive industry, but also extends to other sectors of the economy and thus primarily protects jobs. The Committee urges to address the potential knock-on effect for sectors with close ties to the automotive industry and calls attention to prevent new disparities between regions resulting from the asymmetric social and economic consequences of the transition;

39.

calls on the European Commission to link up initiatives on supply chain resilience, critical raw materials security and the semiconductor industry in order to ensure that locations are competitive. The Committee urges the European Commission to accelerate the enhancement of European strategic autonomy and security in the raw materials supply chain with a view to diversifying imports (particularly lithium and cobalt for batteries, and rare earth elements), while ensuring diligent management and oversight of emissions and pollution at every stage of the value chain. The share of European semiconductor production as a proportion of global production is set to double by 2030;

40.

stresses the need for the EU to secure its digital sovereignty. A European framework is needed for the optimal use and sharing of mobility data, especially as regards cooperation between public and private data providers. Europe-wide end-to-end mobility services are as important as data security and full use of the potential of AI while minimising the associated risks. It is important for the envisaged AI Act to correspond to the needs of the European automotive industry and its transformation. AI issues are crucial in a number of areas of development within the mobility sector, and national actors should contribute to a holistic approach to AI issues related to the development of new innovations in mobility;

41.

calls on the Commission to put forward without delay a specific proposal on access to non-personal data — along the lines of the Data Act — also for the automotive sector, with a view to promoting the data economy and new business models;

42.

underlines the need for a mandatory and comprehensive EU-wide supply of recharging and refuelling infrastructure for battery electric propulsion units and alternative carbon neutral fuels such as biofuels. The agreed targets under the AFIR Regulation may only be minimum targets. The supply should primarily be carried out by private sector providers. If development in some areas is too slow, then it must be ensured using public construction, without being constrained by State aid rules; when building e-mobility, the development of electricity grids and generation of electricity from renewables must go hand in hand;

43.

stresses the necessity of involving local and regional authorities in the planning and implementation of recharging and refuelling infrastructure for alternative fuels. Encourages partnerships between public and private sectors in less developed regions to expedite the development of such infrastructure, ensuring equitable access and affordability;

Budgetary framework

44.

points out that the Just Transition Mechanism (JTM) is crucial for the climate-neutral industrial transition as well as for publicly acceptable structural change in regions. Not only is the Just Transition Fund (JTF) essential, but also the InvestEU programme and the new public sector loan facility, which help successfully tackle the challenges of structural change in the regions;

45.

calls on the European Commission, as part of the mid-term review of the current multiannual financial framework (MFF), to provide funds for the just transition of automotive regions and automotive suppliers, regardless of where they are based, and to take this into account now while planning the next MFF. In this context, the regions must be allowed flexibility in the use of funds, as the challenges vary widely;

46.

underlines that funding complementary to the Structural Funds has to be made available in order to generate synergies and spill-over effects. All options for speeding up procedures need to be employed. A possible successor to the JTF should be integrated into a transition strand in the ERDF and the ESF, while respecting the partnership principle and shared management and with the aim of facilitating support. This would prevent further fragmentation of the support instruments. The reader is referred to the opinion on the future of cohesion policy, to be adopted in late 2023;

47.

stresses that multiple industrial transitions are under way at the same time and underlines the need for a successor to the JTF to be open to other sectors; sufficient account must also be taken of the remaining funding needs of existing JTF regions and especially coal regions. It is important to ensure that these regions do not suffer any disadvantages as a result of possible further development of the JTF. For example, an indicator linking CO2 emissions and value creation could be considered in this regard;

48.

points out that a successor to the JTF — while always taking into account the situation of and impact on each region, as specified in the territorial impact assessment — should support the most affected regions, and particularly small and medium-sized enterprises (SMEs) in the supply sector, in seeking out new business models and putting them into practice, as well as in ensuring the skills and training of their workforce;

European transition strategies

49.

welcomes the Route 35 process initiated by Commissioner Thierry Breton and points out that the CoR’s Automotive Regions Alliance (ARA) has proposed an additional key performance indicator (KPI) on regional impacts as a measure of success of the just transition, and calls on the European Commission to include it in the process;

50.

urges the European Commission to request the necessary analyses and a territorial impact assessment at an early stage, as was the case with the design of support for coal regions, in order to map the transition process in the automotive regions, its impact and any need for support, and thus lay the foundations for the follow-up;

51.

expects the CoR, ARA and CoRAI to be actively involved in the European Commission’s further work to identify funding gaps and just transition strategies, as stipulated in Regulation (EU) 2023/851;

52.

calls on the European Commission and automotive regions to learn how other regions, such as coal and industrial regions, have dealt with major economic transitions in the past. Studying the experience of these regions can provide relevant insights and suggest ways in which a transition for automotive regions can be leveraged as an opportunity for positive social and economic transformation;

53.

welcomes the ongoing Transition Pathway process for the mobility sector, the direct involvement of regions with strong automotive and supply industries;

54.

stresses that transitions always entail reform and that the Technical Support Instrument (TSI) can provide lasting support to local and regional authorities and SMEs for the transition process;

55.

highlights the positive experience of smart specialisation strategies (S3) developed under the EU cohesion policy. These promote structural change through a place-based strategy and play a key role in overcoming the innovation divide in the EU;

56.

underlines that other EU policies also need to support this structural change and calls on the European Commission to step up its support for the Partnerships for Regional Innovation (PRI) (4) as a bridge between smart specialisation and other EU policies and with the aim of achieving the overarching objectives of the European Green Deal using local solutions;

57.

notes that it is important to encourage public-private collaboration aimed at setting up research and development hubs, particularly those focusing on innovation, while also doing more to harness synergies between national and regional policies and European programmes;

58.

highlights the special role played by the EU interregional network-building programmes (Interreg Europe, I3, Regional Innovation Valleys) in promoting cooperation between automotive regions on developing new technologies or transition strategies;

59.

refers to its opinion on the Sustainable and Smart Mobility Strategy and the need for a fundamental shift in mobility. This mobility change starts from the principle that mobility should be sustainable and accessible to all citizens. Public transport and active mobility are sustainable and cost-efficient means of transport. This mobility transition requires a change in behaviour, to which users and social innovation are key. Reachability, accessibility, affordability, health, spatial planning, demographic change and alternatives to individual transport are relevant here;

60.

asks the European Commission, after five years of the European Green Deal, to make a successful transition its priority for the next five-year term of office and calls for a coordinated effort by all Commission services to make the transition a success.

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(1)  Climate-neutral or carbon-neutral fuels are fuels for which there are no emissions from production to utilisation.

(2)  Regulation (EU) 2023/851 of the European Parliament and of the Council of 19 April 2023 amending Regulation (EU) 2019/631 as regards strengthening the CO2 emission performance standards for new passenger cars and new light commercial vehicles in line with the Union’s increased climate ambition (OJ L 110, 25.4.2023, p. 5).

(3)  CDR 4913/2021.

(4)  Partnerships for Regional Innovation have been developed as part of a CoR pilot project with the Joint Research Centre and come under the New European Innovation Agenda.