Rapporteur:

Philip VON BROCKDORFF

Plenary Assembly decision	25.1.2023
Legal basis	Rule 52(2) of the Rules of Procedure
	Own-initiative opinion
Section responsible	Economic and Monetary Union and Economic and Social Cohesion
Adopted in section	27.6.2023
Adopted at plenary	12.7.2023
Plenary session No	580
Outcome of vote (for/against/abstentions)	195/7/10

1.   Conclusions and recommendations

1.1.

The EESC observes that the impact of the green transition will not be uniform across the EU and will vary substantially from country to country, as well as among different regions within Member States. In view of this, Member States must pay attention to the social challenges caused by the transition to enhance its legitimacy, maintain stability and avert populist opposition.

1.2.

The EESC considers that the Commission impact assessments carried out in support of several legislative acts concerning the green transition mainly take a general EU perspective, often lacking the depth required for a country-by-country and region-by-region approach needed to focus on the likely impact on local economies and communities (an exception is the proposal concerning the Energy Taxation Directive).

1.3.

The EESC also deems that a more targeted analysis should provide highly relevant data regarding households affected by the green transition, thereby allowing governments to take more appropriate measures to mitigate the impact of the ongoing process on poorer and vulnerable households.

1.4.

The EESC flags two main risks related to the green transition in terms of social and economic adverse implications and in particular: (i) growing income disparities; and (ii) the displacement of industrial sectors and related jobs.

1.5.

The EESC therefore underlines the need to pursue a fair transition able to address both the employment and the distributional effects of a shift to climate neutrality. In this context, the EESC calls for redistributive measures capable of directing financial resources in favour of low-income households and vulnerable groups to minimise social exclusion, by avoiding further deepening of income inequalities during the ongoing process.

1.6.

Provided that taxation relating to the green transition is within the remit of Member States, the EESC underlines the importance of national fiscal measures to make the green transition more sustainable and less impactful on the weakest parts of the population.

1.7.

Hence, fiscal policy should consist of three components during the transition: the polluter pays principle with complementary redistributive measures in support low-income households; targeted income support; and tax credits on energy-saving home products. This approach would (i) support the purchase of electric vehicles; (ii) incentivise the adoption of green technologies in homes; and (iii) improve the energy efficiency of buildings (admittedly the revised Energy Tax Directive (1) also aims to improve energy efficiency while protecting vulnerable groups). For the lowest income households who may have insufficient tax liability and may not benefit from tax credits, the recommended optimal measure is income support.

1.8.

The EESC also believes that the distribution of vouchers by the state allowing purchases and investments in green technologies and products could help in supporting vulnerable groups during the transition.

1.9.

The case of tax credits for individuals who purchase electric vehicles (EVs) implemented in the Netherlands is a good example of incentivising the purchase of environmental-friendly vehicles while minimising possible distortion caused by subsidies which often benefit suppliers at the expense of consumers (2).

1.10.

The EESC also considers that the experience of Member States such as Germany, France, and Italy, which have implemented lower VAT rates for energy-efficient products, energy-efficient technology and home renovations aimed at increasing the energy efficiency of buildings, could be explored. However, VAT is by definition not progressive. To tailor such an approach to low-income households, flanking measures such as lump-sum compensation may be required to encourage take-up among these households. Moreover, the EESC points out that energy communities (Directive (EU) 2019/944 (3)) and renewable energy communities (Directive (EU) 2018/2001 (4)) may become a key tool to help citizens and vulnerable groups cope with the green transition.

1.11.

The EESC underlines the strategic role of the Just Transition Fund (JTF). This financial instrument should be effectively aimed at tackling the socio-economic impact of the transition on EU economies currently relying heavily on fossil fuels or greenhouse gas-intensive activities and, above all, at smoothing the transition for workers and households impacted by the current change.

1.12.

As already pointed out in previous opinions, the EESC remarks that the Just Transition Fund, even if strategic, may not be enough to support the ongoing economic change and should therefore be supplemented by an adequately funded Social Climate Fund (SCF).

2.   Introduction and context

2.1.

The green transition is a huge challenge for the EU and for future generations, particularly with the protracted war in Ukraine causing economic uncertainty both in general terms and with specific regard to the energy sector. The EESC considers that, for the transition to succeed, social consensus is deemed necessary, and this can only be achieved if support measures are effectively implemented across the EU and populist opposition is averted.

2.2.

The EESC recalls that the Green Deal increased the EU’s 2030 greenhouse gas emissions reduction target from 40 % to at least 55 % in relation to the 1990 levels, setting at the same time the target of climate neutrality by 2050.

2.3.

The ‘Fit for 55’ package features a series of policy proposals for meeting the 2030 target, regarding which the EESC would like to put forward its contribution to advocate a green transition that is fully understood and shared by all the stakeholders involved, on the one hand, and not excessively damaging for households and vulnerable groups, on the other hand.

2.4.

Taking for granted that the green transition will bring about substantial and much awaited benefits across the EU, the present opinion focuses on the likely adverse effects of the ongoing green transition in the short term with a specific focus on social exclusion and income inequalities, urging a fair transition that is able to be proportionate towards low-income households and vulnerable groups.

3.   General and specific comments

3.1.

The EESC observes that the implications of the green transition will not be uniform across the EU and, on the contrary, will actually vary substantially from country to country, or even among different regions and areas within Member States, depending on several economic and social variables.

3.2.

In this respect, the EESC notes that regions with high dependency on carbon fossils are and will be especially vulnerable to the impact of the transition and to potential job losses. Therefore, the responses required to support social cohesion will need to be quite differentiated across Member States, or even from region to region, based on the differing local contexts in line with the subsidiarity principle. The EESC recognises, however, that the revised Energy Tax Directive proposes a ‘transitional’ period, and the possibility for Member States to exempt vulnerable households from heating taxation for 10 years after the implementation of the revised tax.

3.3.

From a methodology perspective, the EESC believes that the impact assessment analyses carried out by the Commission so far mainly take a general EU perspective, lacking the depth required by a country-by-country and region-by-region approach able to focus on the likely impact of the transition on local economies and communities. In this respect, the proposal concerning the Energy Taxation Directive is an exception, since it was anticipated by a targeted micro analysis that should be more broadly embraced in implementing the Green Deal.

3.4.

The EESC deems that a more targeted analysis, able to fully consider local specificities, should be useful in providing valuable information, especially regarding households affected by the green transition, thereby allowing governments to take appropriate measures to mitigate the impact of the ongoing process on poorer households and vulnerable groups who will face the most critical implications.

3.5.

The EESC is of the view that there are two main risks related to the green transition in terms of social and economic adverse implications: (i) growing income disparities; and (ii) the displacement of industrial sectors and related jobs.

3.6.

The EESC points out that the shift towards a climate-resilient and low-carbon economy is particularly challenging for low-income households and communities, especially in regions where the level of development lags behind the urban parts. Hence, it is paramount that the transition is supported by an appropriate range of fiscal measures, including financial support, to address the concerns expressed above.

3.7.

Moreover, the EESC would like to flag possible additional burdens on the weakest parts of population caused by the transition with particular regard to the prices of commodities that could significantly increase during the transitional process. The transition could indeed push up energy and fuel prices for those who can least afford it, as the higher cost of carbon is factored in. Such an impact is particularly of concern within the current macro-economic context, where earlier this year several Member States’ inflation rates were high (5).

3.8.

The EESC therefore advocates the need to pursue a fair transition that addresses both the employment and distributional effects of a shift to climate neutrality. Such an approach should be seen as an integral part of the green transition framework and not only as supplementary corrective measures.

3.9.

The EESC underlines the need for redistributive measures allowing for financial resources to be directed towards assisting low-income households and vulnerable groups with the objective of averting social exclusion and the deepening of income inequalities. Such measures could, for example, take the form of environmental taxation based on the ‘polluter pays principle’, with income earners above an established threshold paying higher tariffs for consuming carbon-intensive energy.

3.10.

Provided that, based on the subsidiarity principle, taxation relating to the green transition is within the remit of Member States, the EESC underlines the importance of fiscal measures adopted at the national level to make the green transition more sustainable and less impactful on vulnerable categories, possibly avoiding regressive effects that are often associated with environmental taxes.

3.11.

The EESC considers that fiscal policy during the transition should consist of three components: the polluter pays principle with complementary redistributive measures to support low-income households; targeted income support; and tax credits for energy-saving home products. This approach would (i) support the purchase of electric vehicles; (ii) incentivise the adoption of green technologies in homes; and (iii) improve the energy efficiency of buildings. The EESC acknowledges, however, that the revised Energy Tax Directive also aims to improve energy efficiency while protecting vulnerable groups. For the lowest income households who may have insufficient tax liability and may not benefit from tax credits, the recommended optimal measure is income support.

3.12.

The EESC also believes that the distribution of vouchers by the state for investing in green technologies and purchasing green products could help support vulnerable groups during the transition.

3.13.

Fiscal measures for individuals who purchase electric vehicles (EVs) implemented in the Netherlands are a good example of incentivising the purchase of new generation, environmental-friendly vehicles, reducing possible distortions related to more widespread subsidies. The tax-friendly approach to EVs in the Netherlands is extended also to registration and road taxes, completing a favourable legal framework. In this respect, tax credits could be specifically targeted to low-income households of the population which are expected to struggle the most during the transition toward green technologies.

3.14.

The EESC also considers that the experience of Member States such as Germany, France, and Italy, which have implemented lower VAT rates for energy-efficient products, energy-efficient technology and home renovations aimed at increasing the energy efficiency of buildings, could be further refined and explored. However, VAT is by definition not progressive. To tailor such an approach to low-income households, flanking measures such as lump-sum compensation may therefore be required to encourage take-up among these households.

3.15.

The EESC underlines the importance of the Just Transition Fund, which cannot be understated. This financial instrument should be effectively aimed at tackling the socio-economic impact of the transition on EU economies currently relying heavily on fossil fuels or greenhouse gas-intensive industrial activities and, above all, at smoothening the transition for workers and households impacted by the change under development.

3.16.

As already pointed out in its previous opinion on Public sector loan facility and amendment to the Just Transition Fund (6), the EESC remarks that the Just Transition Fund (JTF), though important, may not be enough to support the ongoing economic change in terms of its resources and scope. The JTF should therefore be supplemented by an adequately funded Social Climate Fund (SCF) as recommended in the EESC opinion on a Climate Adjustment Fund financed by Cohesion and NGEU (7).

3.17.

The EESC points out that the aim of such an additional fund should be to shield low income and vulnerable groups from the adverse impact of the transition, provided the SCF is coupled with good practices aimed at avoiding any widening of income inequalities in the first place. At the same time the EESC cautions that, in its current organisation and financial capability (not to mention the postponement of its implementation by one year), the SCF is unlikely to be enough to effectively support the most vulnerable parts of the population, as already highlighted by several stakeholders. To give an example, the cost of shifting from traditional to electric vehicles could prove too expensive, and hence too difficult, for low-income and vulnerable households without fiscal incentives or financial support (8).

3.18.

The EESC therefore suggests that the responsible authorities at European and local level develop appropriate fiscal policies to mitigate the adverse consequences of the transition, without undermining the incentives for changes in terms of green investments and consumption required by the transitional process. Importantly, such mechanisms should be accompanied by measures to ensure inclusive governance and the active involvement of those most affected by the green transition. The EESC recognises, however, that the revised Energy Tax Directive includes transitional periods for taxation of selected products or investments for reducing energy consumption.

3.19.

The EESC would like to remind all the institutions involved in the green transition of the importance of social dialogue and of the useful involvement of civil society at European, national, sectoral, and regional level. Social dialogue plays a crucial function in managing and facilitating the green transformation, ensuring a widespread involvement of all the interested stakeholders and, at the same time, protecting vulnerable groups and employment levels across the EU.

3.20.

The EESC points out that progressive taxation, targeted welfare systems and appropriate social dialogue mechanisms are already in place in several European countries and, hence, the adoption and further strengthening of such policies might build on the existing good practices and prove to be a very useful tool to avert further widening of inequalities and social exclusion.

3.21.

The EESC strongly believes that creating a wide understanding, as well as a political and social acceptance, of climate policies within European countries will be conducive to a stronger and better green transition which, on the contrary, is at risk of losing both legitimacy and strength should its burden and adverse implications fall disproportionately on poorer households.

3.22.

In this respect, the EESC stresses that governments, in consultation with civil society, should try to reduce the impact of the green transition on employment in the more affected areas of the EU also by means of targeted and innovative labour-market policies, including training and educational programmes for workers in high carbon industries.

3.23.

The EESC highlights the risk of growing regional disparities, due to the green transition process, between more advanced economies across the EU and those still heavily reliant on carbon-intensive industries. In the same vein, there could also be a deepening of disparities and competitive discrepancies across countries and between urban areas, on the one hand, and peripheral, rural and remote areas, on the other.

3.24.

The EESC is of the view that the green transition calls for realising the climate objectives of the European Green Deal and pursuing the social fairness agenda of the European Pillar of Social Rights simultaneously. The green transition involves structural change (with change expected at both economic and social levels). To be successful, it must be accompanied by social measures, including social investment aimed at facilitating climate neutrality and at achieving a transition conducive to dynamic and competitive European businesses that can generate, for example, green jobs and economic growth.

3.25.

The EESC therefore stresses the importance of enhanced collaboration across the EU, which should be developed based on an effective political and social dialogue with the aim of devising accompanying economic and social policies to support the ongoing transition, duly adapting it to the different social and economic conditions of the communities involved.

3.26.

Such a collaborative approach should be embraced also with regard to European countries that are not members of the EU, in order to avoid the transfer of business and employment towards countries not pursuing a greener and more sustainable economic development like the one pursued by the EU. That could have a negative impact on the internal market, as well as on the green transition itself both in terms of reduced effectiveness and enhanced adverse effects on the weakest parts of population.

3.27.

The EESC also calls for further action on the part of Member States to tackle fiscal evasion and avoidance and to avert misuse of public funds, as this would provide additional resources to fund the distributive measures supporting the transition.

3.28.

Finally, the EESC points out that energy communities (Directive (EU) 2019/944) and renewable energy communities (Directive (EU) 2018/2001) may become a key tool to help citizens and vulnerable groups in coping with the green transition. Such communities can take any legal form (associations, cooperatives, partnerships, non-profit organisations, or small/medium-sized enterprises), making it easier for its citizens, together with other market players, to team up and jointly invest in energy assets. This might contribute to a more decarbonised and flexible energy system, as the energy communities can enable citizens to access all suitable energy markets on a level-playing field with other players, reducing their energy costs or even allowing potential revenues.

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(1)  Council Directive 2003/96/EC of 27 October 2003 restructuring the Community framework for the taxation of energy products and electricity (OJ L 283, 31.10.2003, p. 51).

(2)  The Netherlands incentivises the purchase of environmental-friendly vehicles. According to a report by the Climate Group, subsidies of up to EUR 4 000 are available for the purchase or lease of new battery electric passenger cars, and EUR 5 000 for vans. There are also competitive tax incentives such as low road tax (MRB), no purchase tax (BPM) and no tax for private use/benefit. See Netherlands: Taking action on zero emission vehicles.

(3)  Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common rules for the internal market for electricity and amending Directive 2012/27/EU (OJ L 158, 14.6.2019, p. 125).

(4)  Directive (EU) 2018/2001 of the European Parliament and of the Council of 11 December 2018 on the promotion of the use of energy from renewable sources (OJ L 328, 21.12.2018, p. 82).

(5)  The inflation rate has slowed down in recent weeks.

(6)  Opinion of the European Economic and Social Committee on ‘Proposal for a Regulation of the European Parliament and of the Council on the public sector loan facility under the Just Transition Mechanism’ (COM(2020) 453 final — 2020/0100 (COD)) and on ‘Amended proposal for a Regulation of the European Parliament and of the Council establishing the Just Transition Fund’ (COM(2020) 460 final — 2020/0006 (COD)) (OJ C 429, 11.12.2020, p. 240).

(7)  Opinion of the European Economic and Social Committee on Climate Adjustment Fund financed by Cohesion and NGEU (own-initiative opinion) (OJ C 486, 21.12.2022, p. 23).

(8)  Joanna Gill, Can Europe’s new Social Climate Fund protect poor from rising carbon cost?, Reuters, December 2022.

Rapporteur: Philip VON BROCKDORFF

Plenary Assembly decision	25.1.2023
Legal basis	Rule 52(2) of the Rules of Procedure
	Own-initiative opinion
Section responsible	Employment, Social Affairs and Citizenship
Adopted in section	21.6.2023
Adopted at plenary	12.7.2023
Plenary session No	580
Outcome of vote (for/against/abstentions)	152/4/9

1.   Conclusions and recommendations

1.1.

The EESC notes that collective bargaining is an essential instrument in industrial relations (assuming of course that employers and trade unions are willing negotiators) and refers to recent research suggesting that trade union membership beyond a specified level contributes towards reducing income inequalities within countries, thus alleviating entrenched disparities across different strata of society.

1.2.

The EESC stresses the important finding of an OECD report that wage coordination plays a key role in helping social partners account for the macroeconomic effects of wage agreements on competitiveness. The EESC also notes that the same OECD report emphasises the role of dynamic and strong collective bargaining in promoting productivity, competitiveness and economic growth.

1.3.

The EESC is of the view that trade unions together with employers’ organisations continue to play an important role in shaping economic, employment and social policy. However, the number of workers covered by either company-level or sectoral agreements continues to fall, thereby weakening the bargaining power of trade unions.

1.4.

It is therefore necessary to find ways for trade unions, employers and governments to assume greater importance in a dynamic labour market and to identify opportunities for ensuring the viability of sound and solid structures for social dialogue, collective bargaining power included, and respecting the autonomy of the social partners as well as national industrial relations.

1.5.

The EESC is of the view that it is up to the social partners to determine suitable structures for collective bargaining, and where appropriate, for tripartite and bipartite social dialogue. The EESC also recognises that governments play a key role in recognising the importance of collective bargaining by providing the enabling conditions to facilitate its undertaking, to protect against discriminatory practices and to prevent attempts at restricting workers from exercising their legal right to union participation.

1.6.

The EESC notes that the European Pillar of Social Rights (EPSR) encourages the social partners to negotiate collective agreements in matters relevant to them, while respecting their autonomy and the right to collective action (1).

1.7.

The EESC also notes that new forms of work such as the platform economy create new challenges for industrial relations. This new reality has weakened the ‘traditional’ role of trade unions as institutions representing organised labour, as well as that of employers’ organisations as key stakeholders in the labour market.

1.8.

The EESC notes that innovation in the workplace is critical for the success of any business and therefore recommends that, as part of the collective bargaining process, innovation processes in the workplace are addressed as part of collective bargaining and social dialogue in general.

1.9.

The EESC is of the view that in the face of intense global competition and increased energy costs, a balance may need to be found that factors in mutual interests such as higher living costs for workers while recognising that social dialogue, including collective bargaining can help boost productivity at the workplace.

1.10.

The EESC also believes that collective bargaining and social dialogue can support industrial strategy in changing economic conditions, in line with national industrial relations. Whereas some degree of flexibility may be required, this should be subject to agreement among social partners and without undermining collective rights or working conditions.

1.11.

The EESC notes that the most extensive and most stable collective bargaining coverage in Europe exists in those countries whose bargaining systems are characterised by multi-employer bargaining, where negotiations mainly take place at sectoral or, in some cases such as in Belgium, even at cross-sectoral level.

1.12.

Lastly, the EESC calls for governments to use public procurement in appropriate cases as complementary means to promote and recognise collective bargaining.

2.   General comments

2.1.

Collective bargaining is a key process in industrial relations that establishes fair wages and working conditions across economic sectors. It involves employers on one side and trade unions on the other. Whereas collective bargaining has been in place for many years, trade union membership has consistently fallen over the years. Research shows that as trade union membership falls, the bargaining power of unions is weakened, with implications for acquired workers’ rights and collective bargaining (2). Similarly, it is important for businesses to participate in relevant employers’ associations to strengthen the collective bargaining process, with research indicating that such organisations play a key role in promoting compliance with legal, labour and occupational health and safety standards, particularly within the informal economy (3).

2.2.

Further research sheds light on the relevance of trade unions in achieving a balance of power that supports social justice and economic prosperity. The empirical results show that income inequality follows an inverted U-shaped trajectory with trade union density rate. Initially, income inequality rises as more individuals in employment become unionised, reaches the peak of the inverted U-shaped trajectory when trade union density is in the range of 35 to 39 per cent, and is followed by a fall in income inequality as union density continues to increase. Hence, this research suggests that as membership increases beyond a specified range, it contributes towards reducing income inequalities within countries (4).

2.3.

Whereas innovation in enterprise, competitiveness and productivity are recognised as key drivers of economic growth in a highly competitive global environment, all three rely heavily on the input of labour and the value-added that workers provide in achieving innovation, competitiveness, and productivity. Underlying all this is the active involvement and contribution of social partners.

2.4.

As the EESC stated in its earlier opinion (5), the creation of long-term value remains the duty of executive directors through the pursuit of long-term interests and, therefore, improving accountability on the part of executive directors towards business sustainability should be encouraged. Indeed, this has been explicitly acknowledged by the European Financial Reporting Advisory Group (EFRAG) as part of its proposed ESG reporting requirements under the Corporate Social Reporting Directive (CSRD), with eligible companies required to disclose the extent of collective bargaining coverage and social dialogue across their workforce, since having an empowered, engaged, and valued workforce is viewed as one of the key tenets of a business’s long-term sustainability (6).

2.5.

Economic resilience and sustainability indirectly support social cohesion since resilience and sustainability can only be achieved by prioritising the value-added that labour provides to the economy. This priority is prevalent in economies where collective bargaining and social dialogue in general thrive and create a balance of economic power that promotes innovation in enterprise, competitiveness and productivity, based on technology and the workforce.

2.6.

Despite falling trade union density across the EU, the EESC is of the view that trade unions continue to play an important, though in some Member States, declining role in shaping economic, employment and social policies. However, the number of workers covered by collective agreements is falling. The representativity of employers’ organisations is also of concern in some Member States. Therefore, it is important that social partners, supported by an enabling framework, find ways to ensure that collective bargaining and social dialogue can serve their purpose as relevant and meaningful instruments, according to national circumstances and practices. The EESC notes that collective bargaining is a fundamental right, rooted in the ILO Constitution (7). Collective bargaining is also a means through which employers, and their organisations and trade unions, can establish fair wages and working conditions, whilst also taking into account national economic and social interests. In this context, the EESC refers to ILO Convention 87 on Freedom of Association and Protection of the Right to Organise, which is also a fundamental right of both workers and employers, as is the right for non-association itself. Sound labour relations also assume that employers and trade unions are willing negotiators. Evidence has shown that this is not always the case (8).

2.7.

The aim of this opinion, therefore, is to explore the reasons for and implications of ways to stem this decline, highlight the roles of trade unions, employers and governments in a dynamic labour market and identify opportunities for ensuring the viability of sound and solid structures for collective bargaining, while respecting the autonomy of social partners as well as national industrial relations.

3.   Specific comments

3.1.

As noted in SOC/764 Strengthening Social Dialogue (9), the level of commitment and effectiveness of social dialogue (and implicitly collective bargaining) varies from country to country. However, the EESC is of the view that it is up to national social partners to agree on the design of collective bargaining most appropriate to the country context.

3.2.

The EESC recognises that the governments play a key role in recognising the importance of collective bargaining by providing the enabling conditions to facilitate its undertaking, to protect against discriminatory practices and prevent attempts at restricting workers from exercising their legal right to union participation. This tripartite framework should reflect the salient points emerging from the Commission Recommendation on strengthening social dialogue, with a focus on ensuring social fairness, while boosting Europe’s prosperity and resilience.

3.3.

The EESC notes that the European Pillar of Social Rights (EPSR) (10) encourages social partners to negotiate collective agreements, while respecting their autonomy and the right to collective action. Furthermore, the EESC calls for social partners to be consulted on the design and implementation of economic, employment and social policies. However, it regrets that consultations are not being applied with the same conviction and commitment across the EU. The EESC also notes that, in line with the EPSR, and where appropriate, agreements concluded between the social partners shall be implemented at EU level and that of its Member States. This principle assumes that a minimum level of protection is provided.

3.4.

The world of work continues to change with new work practices shaping the working lives of millions of Europeans. New forms of work as part of the platform economy present formidable challenges to labour relations. The EESC is of the view that this new reality has impacted both trade unions and employers’ organisations, and both need to adapt quickly to this reality while safeguarding the fundamental rights of workers, in the spirit of the Commission’s proposed directive on platform workers.

3.5.

Collective bargaining is critical to the very existence and relevance of trade unions and ensuring a balance of power between employers and workers. The EESC believes that collective bargaining, as well as social dialogue generally, should also support innovation in the workplace with a view to boosting productivity and addressing potential changes to work practices which impact well-being and the working lives of workers. The EESC recognises that this places an added challenge for trade unions. However, employers should of course remain responsible for the decisions taken at enterprise level. What we are recommending is that, while respecting national industrial relations systems, the role of trade unions in the innovation processes of the workplace should be recognised as part of the relevant role of social dialogue and collective bargaining.

3.6.

It is relevant to highlight the findings of an OECD report (11) that reiterates that collective bargaining, is a key labour right that can also improve performance in the workplace. The same report worryingly concludes that this right is under pressure from the general weakening of labour relations and the rise of new and often precarious forms of employment. The report confirms that collective bargaining across the EU is under pressure, and how great the political need for action is. The report provides all the evidence necessary to strengthen collective bargaining in a way that makes it more flexible and more responsive to the changing world of work. In this context, the EESC believes that a balance needs to be found that takes into consideration mutual interests such as higher costs of living for workers and intensified global competition, recognising that collective bargaining and social dialogue, can boost productivity through workplace innovation and fostering skills development. Moreover, collective bargaining and social dialogue could support industrial strategy in changing economic conditions, based on national industrial-relations. Though flexibility as agreed by social partners should serve as means to adapt to changing circumstances and to balance the needs of companies and workers, this should not be at the risk of undermining collective rights, or at the expense of working conditions. Furthermore, properly regulated by legislation or collective bargaining, work flexibility implies benefits for both workers and employers alike.

3.7.

As regards company level and sectoral agreements in the collective bargaining process, there is no formula to determine whether one is more applicable than the other. That said, to increase collective bargaining coverage, as stated in the Directive on Adequate Minimum Wages (12), it is incumbent on social partners in individual Member States to undertake an analysis of the strengths and weaknesses of both forms of agreement and determine whether sectoral, company level agreements, or a combination of both represent the best way forward to increase collective bargaining coverage. For example, research indicates that the highest and most stable collective bargaining coverage in Europe exists in those countries whose bargaining systems are characterised by multi-employer bargaining, where negotiations mainly take place at sectoral or, in some cases such as Belgium, even at cross-sectoral level (13). Of course, efforts to increase coverage must take into consideration the circumstances prevailing in each country.

3.8.

The EESC recognises that increasing membership in trade unions and employers’ organisations will remain a formidable challenge, and whereas social dialogue and collective bargaining is and should be of a voluntary nature, we do recommend that social partners in individual Member States address this challenge by exploring appropriate methods to ensure viable membership in their organisations.

3.9.

The EESC recognises that there is a large diversity of national industrial relations systems reflecting Member States’ different economic and political situations. According to a Commission note (14), collective bargaining has been characterised by a shift towards decentralised bargaining at company level. Evidence shows that collective bargaining coverage tends to be higher where bargaining is centralised; where employers’ organisation rates are higher; and where the extension of agreements to non-signatory parties is practiced.

3.10.

The EESC also stresses the important finding of the OECD report that wage-coordination plays a key role in helping the social partners account for the business-cycle situation and the macroeconomic effects of wage agreements on competitiveness (15). Furthermore, the EESC is of the view that the process of bargaining will depend on the circumstances prevailing at enterprise level, be it a small or large.

3.11.

The EESC urges social partners to enhance the relevance of collective bargaining systems by evaluating how the collective bargaining at all levels could, in a balanced way, ensure added value for workers and employers alike in all sectors of the economy and society. In this context, it is pertinent to note the OECD’s most recent Employment Outlook report emphasising the role of a dynamic and strong collective bargaining in promoting productivity, competitiveness and economic growth.

3.12.

The EESC notes the important role that governments play or could play in engaging with employers and trade unions for closer cooperation, and in support of macroeconomic policies. Governments are of course major employers themselves and often bargain with unions representing workers, which in some Memers States can set the pattern for the entire economy. Furthermore, governments play a key role in providing the right conditions for industrial peace, price stability, increased productivity and non-discriminatory employment patterns. To achieve these objectives, and while respecting the autonomy of social partners the EESC calls for strengthening of collective bargaining to reach better outcomes for businesses and workers. As one of the measures, we recommend that governments use public procurement in appropriate cases as complementary means to promote and support collective bargaining, as outlined in two previous opinions issued by the EESC (16).

3.13.

As stated earlier, agreed flexibility in collective bargaining may be necessary. However, the EESC is of the view that any agreed modifications to collective agreements need to balance the interests of and present benefits for both parties. While national and sectoral-level agreements should be promoted, the EESC recognises that, as regards company-level negotiations, work flexibility, properly regulated by legislation or collective bargaining can benefit both employers and workers alike. Such negotiations should be underpinned by mutual trust and effective negotiation structures, whilst ensuring that working conditions are not allowed to regress. That said and wherever possible, a middle ground needs to be found whereby decentralised systems become more organised and allow sectoral agreements to set broad framework conditions leaving detailed provisions to firm-level negotiations. Indeed, research suggests that hybrid systems of collective bargaining, entailing coordinated sectoral and multi-level systems, results in improved outcomes for both workers and enterprises alike (17).

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(1)  Principle 8.

(2)  Schnabel, C. (2020). Union membership and collective bargaining: trends and determinants (pp. 1–37). Springer International Publishing.

(3)  ILO (2013). The informal economy and decent work: A policy resource guide supporting transitions to formality. International Labour Office.

(4)  Montebello, R., Spiteri, J., & Von Brockdorff, P. (2022). Trade unions and income inequality: Evidence from a panel of European countries. International Labour Review.

(5)  Opinion of the European Economic and Social Committee on ‘No Green Deal without a social deal’ (Own-initiative opinion) (OJ C 341, 24.8.2021, p. 23).

(6)  https://www.efrag.org/?AspxAutoDetectCookieSupport=1.

(7)  It is also reaffirmed as such in the 1998 ILO Declaration on Fundamental Principles and Rights at Work.

(8)  Pisarczyk, Ł. (2023). Towards rebuilding collective bargaining? Poland in the face of contemporary challenges and changing European social policy. Industrial Relations Journal.

(9)  Opinion of the European Economic and Social Committee on the proposal for a Council Recommendation on strengthening social dialogue in the European Union (COM(2023) 38 final — 2023/0012 (NLE)) and on the communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on strengthening social dialogue in the European Union: harnessing its full potential for managing fair transitions (COM(2023) 40 final) (OJ C 228, 29.6.2023, p. 87).

(10)  Principle 8.

(11)  https://www.oecd.org/employment/negotiating-our-way-up-1fd2da34-en.htm.

(12)  Directive (EU) 2022/2041 of the European Parliament and of the Council of 19 October 2022 on adequate minimum wages in the European Union (OJ L 275, 25.10.2022, p. 33).

(13)  https://www.etui.org/services/facts-figures/benchmarks/what-s-happening-to-collective-bargaining-in-europe.

(14)  https://commission.europa.eu/system/files/2016-03/social-dialogue-involvement-of-workers_en.pdf.

(15)  https://www.oecd.org/employment/negotiating-our-way-up-1fd2da34-en.htm.

(16)  Opinion of the European Economic and Social Committee on ‘Decent minimum wages across Europe’ (exploratory opinion requested by the European Parliament/Council) (OJ C 429, 11.12.2020, p. 159); and Opinion of the European Economic and Social Committee on ‘Public procurement as a tool to create value and dignity in work in cleaning and facility services’ (own-initiative opinion) (OJ C 429, 11.12.2020, p. 30).

(17)  Braakmann, N., & Brandl, B. (2016). The efficacy of hybrid collective bargaining systems: An analysis of the impact of collective bargaining on company performance in Europe.

Rapporteur:

Felipe MEDINA MARTÍN

Plenary Assembly decision	25.1.2023
Legal basis	Rule 52(2) of the Rules of Procedure
	Own-initiative opinion
Section responsible	Section for Transport, Energy, Infrastructure and the Information Society
Adopted in section	26.6.2023
Adopted at plenary	12.7.2023
Plenary session No	580
Outcome of vote (for/against/abstentions)	151/1/2

1.   Conclusions and recommendations

1.1.

The purpose of this EESC opinion is to assess the impact of the energy crisis following the COVID-19 pandemic and Russia’s war of aggression against Ukraine on European businesses, their workers and Europeans in general. The EESC notes that wide-ranging problems have arisen throughout the economy. These include disproportionate increases in production costs, reorganisation of supply chains, difficulties in supplying food and other goods, increasing investment costs and loss of purchasing power for European households.

1.2.

The EESC is concerned about the high levels of inflation in Europe due to energy and raw material costs, followed by prices for services and industrial goods. Inflation in Europe is at its highest level since the creation of the euro. The EESC calls on the European institutions to establish control mechanisms such as those set out in the document drawn up by the European Consumer Organisation (BEUC). This should include, for example, fully implementing the measures set out in the draft Council Regulation, which provides for major reform, and redesigning the electricity market. The EESC calls on the EU Member States to implement EU acts that have already been adopted, such as the Clean Energy Package, which helps accelerate the green transition and deepen the internal market.

1.3.

The EESC believes that the amended EU Temporary Crisis Framework needs to be urgently reformed in view of the huge cost increases resulting from the war in Ukraine and the energy crisis. In addition, it recommends applying the Temporary Framework for State Aid in such a way that the aid provided for in the Energy Emergency Regulation and under the Recovery and Resilience Framework applies to all sectors affected by the energy crisis, with a particular focus on key sectors, so as not to undermine the ability of many companies to survive, and to avoid adversely affecting the cost of living for consumers and reducing their ability to find commodities on a daily basis. Moreover, the EESC once again calls for a ‘golden rule’ to be introduced enabling the necessary public investment to be made.

1.4.

The EESC believes that households and key sectors should benefit from plans to reduce the impact of high energy prices. Although very high profits were recorded in some sectors, with a substantial increase of 26,8 % compared to the previous quarter, bankruptcy declarations in the EU reached 113,1 — the highest level ever recorded — according to an index used by Eurostat to measure the level of bankruptcy in the EU compared to the benchmark of 100 in 2015. The EESC calls on the Commission and the Member States to work to ensure that households and key sectors can source energy constantly when measures to reduce demand at peak times are implemented. At the same time, some companies, mainly in the energy sector, have increased their profits in the shadow of existing inflation, as the ECB (1) points out. Profits in this sector have continued to drive inflation in the EU and must be tackled.

1.5.

The energy crisis has impacted the economy in terms of high inflation, weak economic growth, strong pressure on public finances and the purchasing power of households and businesses, and loss of external economic competitiveness. Based on the ECB’s recommendations, the EESC suggests establishing a ‘green triple T’ criterion to ensure that future interventions are tailored, targeted and transition-proof. Non-selective price measures such as the price cap for certain foods would only prolong the period of high inflation over the long term.

1.6.

The persisting high inflation, in particular due to energy prices, provokes a general loss of purchasing power of European workers, consumers and companies, affecting the living conditions of many families, internal demand and growth. This, together with the maintenance of the monetary policy of increasing interest rates, also negatively affects many companies. The EESC believes social dialogue in the energy sector is important to find the appropriate decisions at the national level.

1.7.

The EESC calls on governments to encourage businesses and households to implement energy-saving and -efficiency measures that will enable energy demand to be permanently reduced. To this end, the expansion of renewable energy should be encouraged (by setting the necessary legal and fiscal conditions, including introducing an ‘investment golden rule’) in order to reduce our dependence on fossil fuels. The current situation should be used as an incentive to speed up the decarbonisation of the EU economy. These measures should be accompanied by non-relocation guarantees linked to financial aid. It is time to make the necessary investment (and establish the required fiscal framework conditions) in Europe’s energy transition to reduce dependence on fossil fuels. Furthermore, the EESC is in favour of pressing forward with the changes proposed under REPowerEU to streamline and accelerate the granting of permits for installing renewable energy infrastructure. In this regard, the EESC urges the EU and the Member States to consider how to ensure that the price paid for excess energy fed into the grid enables viable investments to be made to maximise capacity for generating renewable energy and sharing it when it exceeds the generator’s own needs. The Commission’s long-term agenda should include revamping the energy market in order to avoid future disruption of energy supply and exorbitant prices.

2.   General comments

2.1.

The wave of inflation sweeping across Europe is widespread and two phases can be clearly distinguished. The first stemmed from the recovery period following the lockdowns imposed on the population during the COVID-19 pandemic. Relaunching all sectors at once created bottlenecks in supply chains that increased the costs of raw materials and transport freight. Raw material prices grew by 101 % between January 2020 and March 2022 (2), and freight costs by 545 % in the same period (3).

2.2.

In February 2022, Russia’s war of aggression against Ukraine and the subsequent war triggered a second phase of inflation. On this occasion, the shock was concentrated on energy and some products of which both Russia and Ukraine were major suppliers to the EU: natural gas, wheat, sunflower oil and fertilisers. Between February and April 2022, the prices of these goods increased by 18,6 %, 16,8 %, 38,6 % and 16,7 % respectively (4). These costs have since been contained, although in March 2023 the IMF primary commodity price index was still 40,9 % above January 2020 levels and freight still 3,6 % above.

2.3.

These developments have been reflected in the global and European economy in the form of inflation. The year-on-year rate of change for the euro area harmonised index of consumer prices (HICP) (5) reached 11,5 % (Eurostat) in October. Values this high have not been reached since the last century and, although they have fallen slightly in recent months (in March 2023 the rate was 8,3 %), they are proving very difficult to bring down. The evidence that the price shock will not be short-lived, as originally thought, is that underlying inflation (excluding energy) is on an upward trend in most of Europe. This may mean that the monetary policy launched by the ECB is not delivering the expected results.

3.   Impact of inflation on the European economy

3.1.

The EESC notes that the economic outlook worsened following Russia’s invasion of Ukraine in February 2022. The economic trend for the coming years is expected (6) to cool compared to 2022, although these projections are improving over the months. While in winter the Commission predicted a slight increase in GDP of 0,8 % in 2023 and a modest increase of 1,6 % in 2024 for the EU as a whole, in the recent spring forecast these percentages rose to 1,0 % and 1,7 % respectively. At the same time, inflation is expected to gradually reduce, albeit at a slower pace than initially forecast (9,2 % in 2022, 6,7 % in 2023 and 3,1 % in 2024). The labour market will be under strain due to low growth, and public debt is rising because of, among other things, the ECB’s sharp increase in interest rates, which will exert budgetary pressure on most Member States.

3.2.

The 96,5 million Europeans at risk of poverty or social exclusion are the most affected by high inflation. In a Eurobarometer survey, 41 % of respondents said that prices, inflation and the cost of living were among the biggest problems facing their country, ahead of health (32 %) and the economic situation (19 %).

3.3.

The EU has experienced an almost total cut-off of gas supplies from Russia as a consequence of the policy decisions adopted, and almost half of the Member States have been affected by reduced deliveries to a greater or lesser extent. Rising inflation and commodity prices, labour shortages and disruptions in global supply chains are negatively affecting Europe’s food and non-food supply chains. According to the OECD economic outlook, global growth is set to decelerate sharply to around 2,2 % in 2023.

3.4.

According to the ECB, the increase in energy prices has been responsible for two thirds of the inflation differential in the euro zone. According to the Commission, between 2019 and 2022 the increase in profit margins was 54 % in the energy sector, where wages only grew by 6 %. The general loss of purchasing power of European workers, consumers and companies is not only affecting the living conditions of many families, but if not rectified, it could also affect domestic demand and growth and thus other business sectors; all this also due to the continuity of the monetary policy of increasing interest rates. The EESC believes social dialogue in the energy sector is important to find the appropriate decisions at the national level.

3.5.

While consumer prices have risen in general in Europe, the pay trend has been less volatile, reducing the purchasing power of Europeans, especially the most vulnerable, who do not have the means to protect themselves against inflation. In fact, changes in consumer behaviour can already be observed due to the loss of purchasing power of households facing a major cost of living crisis caused by the sharp rise in energy bills and the impact of inflation. The tools used by the Member States to protect vulnerable household consumers vary considerably and, in some cases, they may have limited effectiveness. The European Commission should consider exploring minimum standards to be applied by regulators and policymakers to protect and support vulnerable household consumers.

3.6.

One of the sectors that is suffering the most from the combined impact of the pandemic and the war is food production — agriculture, livestock farming and the food industry — and its distribution to the final consumer. The proximity of the war and its impact on the energy and raw material markets is creating a price gap for agricultural products between Europe and international markets, where European prices have risen the most. Thus, according to the commodity price dashboard for April 2023, the price growth rate for most European agricultural products is higher than the global rate, especially for meat products. This trend is having three major effects. Firstly, Europeans are experiencing the highest level of inflation for all the products they need most. Secondly, European food products are becoming less competitive internationally. Thirdly, the prices paid to farmers have risen as a result of higher production costs.

3.7.

Russia’s war of aggression against Ukraine triggered huge challenges in the food supply chain beyond spiralling energy costs, namely an increase in the prices of key inputs (feed, fertilisers) and shortages of certain commodities (e.g. vegetable oils and wheat) that are needed to maintain a fully functioning supply chain. The domino effect of rising costs is leading to decisions to cut fertiliser production, which will further drive up prices. The droughts experienced across Europe in summer 2022 and thus far in 2023 are exerting greater pressure on prices because available supply is being reduced.

3.8.

Some key sectors — including businesses and workers — that cannot shut down their operations regardless of the situation are facing a double burden: fewer consumers willing to pay and growing costs — particularly sky-high energy bills. Businesses in the food sector have tried to limit the increase in costs to ensure competitive prices for consumers and are now fearing a consumer crisis (Hidalgo, M., 2023 (7); Eurocommerce, 2023). Recently, the government of Spain has published (8) in its first report of the margins observatory that margins among the food chain have decreased by 25 % since 2021, so that it is clear that the evolution of profit margins is very heterogeneous.

At the same time, some companies, mainly in the energy sector, have increased their profits in the shadow of existing inflation, as the ECB (9) points out. Profits in this sector had continued to drive inflation in the EU and must be tackled.

3.9.

The Bank of Spain (10) refers to the very positive effects that the so-called ‘Iberian exception’ or ‘Iberian mechanism’ has had on the electricity market pricing system. It also talks about the positive impact, although more limited, of the VAT reduction on food and fuel prices, although it adds that the measure would have had a lower cost if it had focused on aid for the lower-income families. The Bank of Spain also refers to the positive impact that the increases that the Government of Spain has made in the minimum interprofessional wage, pensions and minimum vital income have had to alleviate the effects of inflation on lower-income households.

4.   The impact of rising energy costs on the profitability of European companies

4.1.

Wholesale electricity and gas prices have increased by up to a factor of 15 since the beginning of 2021, with severe consequences for consumers and businesses. European governments have started implementing a set of policy responses. One type of policy is aimed at mitigating the impact of increased costs on consumers and businesses. Other measures seek to stabilise and reduce wholesale prices and ensure energy security. The EESC urges the European Commission and the Member States to undertake a comprehensive reform of the electricity market design and electricity price calculation system in line with opinion TEN/793 (11).

4.2.

Energy prices are affecting businesses’ costs in very different ways: firstly, through the cost of the electricity supply itself; secondly, indirectly, through the impact on the rest of the supply chain; and thirdly because of the possible financial consequences of this. By way of example, a study by the Bank of Spain published ex ante in spring 2022 (12) estimated that a cumulative increase of 25 % in businesses’ energy costs would reduce their gross value added (GVA) by 1,6 % in 2023. However, this is the average impact. The study found that some sectors are suffering more than others. The oil and natural gas extraction sector is benefiting the most. The sectors that would suffer the most harm are: fishing and aquaculture, land transport, waterborne transport, motor vehicle trade and repair, agriculture and livestock farming, education, air transport, real estate activities, manufacture of coke and refined petroleum products, health and social services, and hospitality services. Some of these sectors showed during the pandemic how important they are for a well-functioning EU economy. Many of the most affected sectors are not electricity-intensive in their productive operations but are major consumers.

4.3.

As well as the direct and indirect impact on businesses’ GVA (margins), greater financial vulnerability also has an impact. The Bank of Spain report identifies the sectors that are hardest hit. One group of sectors would be particularly vulnerable; not only would they have excessive debt, but they would also have negative profitability in 2023: motor vehicle trade and repair; land and pipeline transport; fishing and aquaculture; agriculture and livestock farming; and textiles, clothing, leather and footwear.

4.4.

As the accumulated stocks of natural gas in Europe decrease — the volume being stored in May 2023 was 68 % (13) — we will face additional challenges in managing our energy policy. There is still a difference between the quantities previously supplied from Russia and those from alternative suppliers and, therefore, prices are unlikely to drop in the short term. What has happened is a significant reduction in demand. The high energy prices are making our industry and our supply chains less competitive, in turn encouraging operations to be outsourced outside the EU, thus reducing the bloc’s strategic independence. The impact on households, in particular the most vulnerable, is particularly significant, with a growing proportion of people at risk of or living in poverty. This will be the case until at least 2024 (14). In order to combat these issues, the EESC recommends a number of measures including location guarantees linked to financial support, further necessary energy saving and energy efficiency measures for companies to reduce demand, massive investments and the necessary fiscal framework conditions in the expansion of renewable energy production to reduce dependence on fossil fuels.

4.5.

Consequently, due to the rocketing energy costs, the viability of many businesses and households is increasingly coming under threat. Although the winter was relatively warm, we cannot expect the environmental conditions to always be favourable to us. For this reason, measures must be taken to protect particularly vulnerable households, with specific measures being adopted for them in this area.

4.6.

For businesses, the huge increases in business costs, combined with consumer reluctance to spend, may even lead to mandatory relocation in some cases. However, this is not possible for companies which provide an essential service to customers and the rest of the supply chain, who cannot simply stop their operations due to energy price increases.

4.7.

While a large number of sectors and their workers were considered essential during the COVID-19 pandemic, this recognition is notably absent in the current energy crisis. So far, Member States have not provided specific support to many of these sectors. Businesses in these sectors and their workers have made an effort to protect consumers at the expense of their own margins and it is hard for them to pass on to customers the total cost of the exorbitant increase in energy bills. This situation cannot be maintained in the long term. Similarly, the EESC believes that governments are not protecting people to the same extent as they were during the pandemic.

4.8.

Many businesses are making a number of investments to reduce energy consumption and improve their capacity to access more renewable energy. The EESC believes that companies can also act as accelerators in the electrification of transport and can replace gas in heating, thereby playing a key role in the energy transition and in the EU’s renewable energy targets for 2030. However, this will require a favourable regulatory framework, such as granting permits and combating price disincentives for producing more energy.

4.9.

The EESC stresses the importance of aligning the REPowerEU and energy performance of buildings obligations with support and with operators’ capacity to bear the cost of the considerable investments they entail. These measures will be important in reducing dependence on fossil fuels, but the obligations must be linked to the availability of both public and private funding. The Commission’s long-term agenda should include revamping the energy market in order to avoid future disruption of energy supply and exorbitant prices. This revamp should consider training for the workforce that will be involved in the sector.

In the same vein, the EESC believes that the practical aspects related to the availability of equipment and skilled labour should also be reflected in the programmes’ obligations to install fast charging stations for vehicles and infrastructure for alternative fuels. It must be ensured that the funds disbursed through the new proposals can be used to ensure that this transition can be carried out within the deadlines set.

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(1)  ECB study on inflation, 2023.

(2)  IMF primary commodity price index, available at https://www.imf.org/en/Research/commodity-prices.

(3)  Freightos Baltic Index, available at https://fbx.freightos.com/.

(4)  IMF primary commodity price index, available at https://www.imf.org/en/Research/commodity-prices.

(5)  Eurostat, available at https://ec.europa.eu/.

(6)  https://economy-finance.ec.europa.eu/economic-forecast-and-surveys/economic-forecasts/spring-2023-economic-forecast-improved-outlook-amid-persistent-challenges_en.

(7)  Margins and profits of Spanish food retailers in 2022.

(8)  OME Informe Trimestral 2023T3 (bde.es).

(9)  ECB study on inflation, 2023.

(10)  https://www.bde.es/f/webbe/SES/Secciones/Publicaciones/PublicacionesAnuales/InformesAnuales/22/Files/InfAnual_2022_En.pdf.

(11)  Opinion of the European Economic and Social Committee on the proposal for a Regulation of the European Parliament and of the Council amending Regulations (EU) 2019/943 and (EU) No 2019/942 as well as Directives (EU) 2018/2001 and (EU) 2019/944 to improve the Union’s electricity market design (COM(2023) 148 final — 2023/0077 (COD)) (OJ C 293, 18.8.2023, p. 112).

(12)  Available at: https://www.bde.es/f/webbde/Secciones/Publicaciones/InformesBoletinesRevistas/InformesEstabilidadFinancera/22/IEF_2022_1_Rec1_4.pdf.

(13)  Information available at: https://agsi.gie.eu/data-overview/eu.

(14)   EIU (2023): Energy crisis will erode Europe’s competitiveness in 2023, available at: https://www.eiu.com/n/energy-crisis-will-erode-europe-competitiveness-in-2023/.

Rapporteur:

Milena ANGELOVA

Plenary Assembly decision	25.1.2023
Legal basis	Rule 52(2) of the Rules of Procedure
	Own-initiative opinion
Section responsible	Single Market, Production and Consumption
Adopted in section	29.6.2023
Adopted at plenary	12.7.2023
Plenary session No	580
Outcome of vote (for/against/abstentions)	190/2/6

1.   Conclusions and recommendations

1.1.

Water is essential for life, the environment and the economy, and, as such, it is a common good that must not only be accessible and affordable for all, but, most importantly, respected and protected. Due to human impact and climate change, water scarcity is increasing — globally, as well as in Europe, where water stress affects around 20 % of the territory and 30 % of the population (1). The European Economic and Social Committee (EESC) welcomes the comprehensive EU legislation that has been introduced in this area (2) and calls for its swift and efficient implementation, so that efficient water consumption is ensured, and each EU citizen has access to water.

1.2.

The EESC calls for specific measures to be designed and promptly implemented to increase awareness of water-efficient consumption and to promote technological innovations for increasing water efficiency in production systems, as well as for waste minimisation and recycling strategies. In line with applying the ‘polluter pays’ principle, it urges the EU and the Member States to take decisive action to ensure compliance by all stakeholders (3).

1.3.

The EESC stresses the vital importance of informing, raising the awareness of, encouraging and guiding consumers towards water-efficient consumption. Policymakers, social partners, civil society organisations and all stakeholders have a shared responsibility to communicate clearly about the value of water and its footprint, promote the use of water-efficient appliances and provide incentives for consumers to be committed to water saving patterns and to strive for constant excellence.

1.4.

The EESC calls on the EU, Member States, competent authorities, water operators, and all parties involved in the process to endeavour, within their competences, to constantly improve water availability, accessibility and efficiency. Better protecting drinking water resources, moving towards circular water, ensuring public water supply at a fair price for services, and preventing water poverty are essential elements of this process.

1.5.

The EESC suggests that the following measures be swiftly implemented in order to enhance water-efficient consumption and consumer awareness of their water footprint and contribute to a Water-Smart Society (4):

1.5.1.   Measures focused on encouraging and guiding consumers towards water-efficient consumption

1.5.1.1.

Clear communication regarding the value of water (implemented by competent authorities, water operators). Communication campaigns to change long-term behaviour should be conducted to educate consumers on the value of water and water services and also to specifically address short-term emergency measures in response to crisis situations caused by climate change (drought, flood). One important target group is children. Substituting the use of drinking water with non-conventional water sources should become the norm (e.g., whenever possible, watering gardens, washing cars, etc. with collected rainwater).

1.5.1.2.

Promoting water-efficient appliances/devices (implemented by the EU and the Member States). Private households use numerous water-consuming appliances/devices today. Following the advancement of technology, many of them have considerably reduced their water use over the past years supporting an overall declining trend in per-capita water use. Further incentives are needed to motivate producers to keep innovating to improve water efficiency and the customers to buy and use them. All such appliances/devices should include a water consumption label.

1.5.1.3.

Informing consumers about their water footprint (implemented by the EU and the Member States). The actual water consumption of private households goes far beyond drinking water use. Every product and service consumed contains a certain amount of water (5) and often a substantial part of a consumer’s water footprint lies outside their home region/country or even the EU. Consumer choices therefore have an impact on regional, national and global water use. The water footprint is an effective parameter from an educational point of view — also recently included in the programmes developed by many utilities for schools. There are many footprint calculators available online, where a consumer can feed in their data and get their footprint figure. Consumers should be made aware of them through information campaigns.

1.5.2.   Measures focused on improving water availability, accessibility and efficiency

1.5.2.1.

Ensuring public water supply (implemented by the Member States, water operators). As part of a holistic approach, measures should be taken to improve the efficiency and resilience of the drinking water supply and distribution system through better leakage control, where necessary, the development of alternative drinking water sources and other appropriate measures. This also entails, with a view to protecting public health and well-being, Member States considering measures to ensure that the public water supply has priority over other water uses in periods of acute water scarcity.

1.5.2.2.

Ensure a fair price for water services based on full cost recovery while guaranteeing affordability for vulnerable groups (implemented by competent authorities). Directive 2000/60/EC requires the Member States to take account of the principle of recovery of the costs of water services, at least with regard to industry, households and agriculture. According to Commission and OECD data, full cost recovery of water services is only being achieved in nine Member States (6). In most cases, it is limited to private households. While the Member States should take measures to ensure the accessibility and affordability of water services for the most vulnerable groups (7), it is important that the water tariff reflect the real cost of water services. This, combined with the accurate metering of consumption, will ensure that consumers are better aware of the cost of water services. The Member States should discuss the possibility of charging based on the ‘value of water’, which would ensure that this scarce resource is preserved also for future generations. Water tariffs could contain price signals to increase water-use efficiency. For example, tariffs could increase when a certain amount of per capita consumption is exceeded in a household, or when water supply is threatened by temporary water scarcity.

1.5.2.3.

Efficient water consumption metering by increasing the accuracy of measurement (implemented by the Member States, municipalities, water providers): — ensure efficient water consumption measuring with accurate water meters and a water meter renewal policy to make end users aware of their actual consumption; — control consumption from private wells to limit water use directly from groundwater; — use smart metering to provide alerts to end users regarding high or abnormal consumption, and low flow consumption, which could be internal leakage.

1.5.2.4.

Better protection of drinking water resources (implemented by the EU and Member States). Drinking water resources must be protected from anthropological contamination. To achieve this, the EU Zero Pollution Action Plan must be rigorously implemented by applying the principles of precaution and control at source, consistent with the Polluter Pays Principle, to all substances of concern that may enter drinking water resources. Contaminants also come from industrial sources (PFAS, pharmaceuticals, disinfectants etc.) or agricultural sources (pesticides, nitrates). The EU is revising relevant legislative acts that can prevent pollution at the source including Directive 2010/75/EU (8), Regulation (EC) No 1907/2006 (9), Directive 2009/128/EC (10), Regulation 726/2004 (11) and Directive 2001/83/EC (12). It must be ensured that these future rules effectively protect our water resources.

1.5.2.5.

Moving towards circular water (implemented by the EU, the Member States and water operators). Water efficiency can be increased by reusing water. On the one hand, private households should be encouraged to collect rainwater whenever possible, and use it for appropriate purposes, including garden watering and cleaning). On the other hand, effective control-at-source measures must be taken to ensure that the wastewater produced by households does not contain contaminants that could jeopardise the reuse of treated wastewater for irrigation and other purposes.

1.5.2.6.

Climate change adaptation (implemented by the Member States, municipalities, wastewater operators). Regions are affected differently by climate change. It is important to adjust measures to local conditions. Generally, urban planning will need to be re-thought by transforming towns into ‘sponge cities’ (13). This will improve the urban climate, allow rainwater to seep away and reduce the number of combined sewer overflow events.

1.5.2.7.

Ensure good governance (implemented by the Member States, regions, and municipalities). Clear and efficient governance structures are needed to bring about change. This should strengthen cooperation between all players and determine responsibilities. Actions should be based on accurate forecasts of regional climate change impacts and the development of water demand patterns (agriculture, industry, population development etc.) for the decades to come.

1.5.2.8.

Public authorities as frontrunners (implemented by the Member States, municipalities). Being responsible for designing and implementing both policy measures and practical arrangements, public authorities, including European institutions, should assume a frontrunner role in reducing their water footprint.

2.   Premise

2.1.

As part of the EESC’s 2023 flagship initiative to address water as an important priority at European and global level, this own-initiative opinion explores the measures needed to ensure more efficient water consumption in the EU by consumers, taking into account environmental issues, knowledge gaps and the state of play in related technologies. It puts forward ideas on how to optimise household water consumption and release, based on a comprehensive vision of the role of consumers and their needs in terms of quantity and quality of water and makes specific proposals to that end.

2.2.

Water is essential for life, the environment and the economy, and, as such, it is a common good that must be respected and protected. However, Europe’s water resources are under threat due to climate change — as many water basins (and the Mediterranean in particular (14)) are seeing declining overall precipitation and longer drought periods, while in most regions there are more heavy rainstorm events with disastrous flooding. Furthermore, rising sea levels mean that salt water may penetrate freshwater aquifers.

2.3.

There is a growing imbalance between the availability of the local resource and the demand for water from end users, posing a significant threat of water shortages in the future. While water availability is determined by essential factors such as precipitation, geography, climate trends and contamination, water consumption and demand are determined mainly by human behaviour. Furthermore, human activities, including those of private households, affect the quality of available water resources. Man-induced pollution of the aquatic environment reduces the availability of usable water resources and increases the cost and environmental impacts of treating water to the quality levels required for certain activities (drinking water, industrial use, irrigation, etc.). Studies (15) identify lack of advanced water quality monitoring in EU water bodies as one of the main causes of ecological disasters due to water pollution.

2.4.

According to the European Environment Agency (EEA), on average, water stress affects around 20 % of the European territory every year and 30 % of the total population (16). The EEA states that ‘water stress occurs when there is not sufficient water available to meet the demands of the environment and our society and economy, in terms of quantity or quality. Water stress is a general term combining drought, quantitative scarcity, water quality and water accessibility’ (17).

2.5.

Water for drinking purposes represents about 10 % of total water use. Agriculture, forestry and fishing account for 58 %, and electricity, gas, steam and air conditioning supply for 18 % (18).

2.6.

In terms of water abstraction, water for drinking purposes represents about 20 % of the total amount. Abstraction for cooling in electricity generation (19) (32 %) and abstraction for agriculture (28 %) are the largest contributors to total annual abstraction (20).

2.7.

Given that the contamination of water resources with nutrients (nitrogen and phosphorus) and many hazardous substances (such as those with cumulative carcinogenic or mutagenic properties) poses a severe risk to health and the environment, and that the necessary treatment to purify water is costly and resource-intensive, the EESC calls for swift implementation of the comprehensive EU legislation currently in place. It reiterates that the EU’s industrial and agricultural policies must reduce pollutant emissions while supporting growth and competitiveness. As water is a common good, the EESC calls for drinking water to be made freely available to all EU citizens via accessible water fountains and sources in public places in line with Directive (EU) 2020/2184. In the case of mineral water concessions, an effort should be made to provide a tap source available to the public.

2.8.

While the focus of this opinion is mainly on the consumption and availability of water resources, it also aims to tackle quality-related problems, as they influence the actual usability of this resource. Hence, the policy objective is to prevent further deterioration, and protect and enhance the status of aquatic ecosystems, to ensure the progressive reduction of groundwater pollution and to prevent its further pollution.

2.9.

In order to guarantee water of sufficient quality and quantity for the current and future generations, a general awareness of all of the problems and their root causes is needed. Each and every citizen/consumer must be aware of the importance of water and its value as a finite resource, and a widespread awareness of the issues related to water resources needs to be cultivated, with measures adopted accordingly, starting from the private sphere. For this very purpose, the recent Directive (EU) 2020/2184 recommends measures to the Member States to encourage a growing awareness about the quality and consumption of drinking water.

2.10.

There are numerous factors and aspects to be considered, which affect, directly and indirectly, the significance and impact of household water consumption, including: — the various purposes of direct water consumption: e.g., drinking, washing, watering etc.; — the location of direct water consumption: e.g., at home, at work, in hobbies, etc.; — the types of water consumed: e.g., groundwater, surface water, reused water etc.; — indirect water consumption: water used to produce goods and services; — direct wastewaters: quantity and quality (nutrients, organic matter, chemicals etc.); — indirect wastewaters: wastewaters generated by the production of goods and services; — geographical water scarcity and quality aspects related to both direct and indirect consumption (ranging from local to global).

3.   Water use indicators

3.1.

While the overall approach towards optimising water consumption should be comprehensive, the indicators used should be as few and as simple as possible. The added value of increasing the number of indicators or of using complicated aggregated indicators (such as footprints and indices) may not be high in relation to the resources needed for monitoring, analysing and processing them. It is thus crucial to find the most relevant and influential indicators, taking into account the purpose of the information needed. A distinction should be made between the indicators used by economists/scientists/policymakers to define problems, develop strategies and measure progress towards defined goals, and the indicators used for communication purposes with consumers. For policy purposes, it is important to evaluate a series of indicators directly or indirectly connected to water consumption that will enable policy effectiveness to be assessed, with particular attention to the consistency and continuity of monitoring the parameters. The indicators used by the EEA provide a reference here.

3.2.

The development of the EEA indicators has been guided by the need to identify a small number of policy-relevant indicators that are stable (but not static) in time and that can provide answers to selected priority questions (environmental, social, economic, etc.).

3.3.

The most relevant indicator to measure water use by consumers (private households) is water consumption in litres per capita per day (L/cap/d). Available data show large variations ranging from 77 to 220 L/cap/d (21).

3.4.

Measures to stimulate water-efficient consumption must look at the full water cycle and cover both qualitative and quantitative aspects. They should not only look at drinking water abstraction/consumption, but should also include the benefits of circular water (water reuse) and develop the understanding that water is also embodied in products and services consumed. This will help private households to understand better the impact of their consumption choices on the quality and quantity of water resources in their region, country and worldwide. It will also help citizens to develop a culture of awareness regarding all aspects of their individual water consumption patterns — both domestic and non-domestic — and to be aware of how to make their consumption efficient. The role of civil society organisations is vital in helping them choose and implement strategies for increasing the effectiveness and efficiency of their consumption.

3.5.

While water-efficient consumption is a necessity in all parts of Europe, the urgency is greater in areas suffering from water scarcity or more frequent drought events. The efficiency of the water supply system should be included in the overall strategy with a view to ensuring a holistic approach. Possible solutions should also be found in more forward-looking strategies of water suppliers, including supply system risk assessment and risk management, leakage management, alternative water sources, etc.

3.6.

Although theory suggests using a plethora of other indicator parameters, (the theme of water is very suitable for this); it should be considered that not only the search for additional data, but also their validation and their dissemination involve significant work. These further activities fall within the remit of the European central structures, but also of the Member States and their respective agencies or operating companies that search for and produce such data. It is not always the case that adding an extra violin in an already large orchestra will necessarily improve the quality of the music. Therefore, rather than adding new indicators, it is better to make the best possible use of the existing ones.

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(1)  EEA Report No 12/2021 on Water resources across Europe — confronting water stress: an updated assessment, 2021.

(2)  Fit for 55 package, Water Framework Directive, Drinking Water Directive, Water Reuse Regulation, etc.

(3)  For example, https://ec.europa.eu/commission/presscorner/detail/en/IP_14_1151 and https://www.politico.eu/article/italy-biggest-steel-mill-mockery-eu-environmental-rules/.

(4)  https://watereurope.eu/wp-content/uploads/WE-Water-Vision-2023_online.pdf.

(5)  Water Footprint Network, Water Footprint Assessment, consulted on 22 May 2023.

(6)  OECD, Background note: Cost recovery, April 2022.

(7)  Directive (EU) 2020/2184 of the European Parliament and of the Council of 16 December 2020 on the quality of water intended for human consumption (OJ L 435, 23.12.2020, p. 1).

(8)  Directive 2010/75/EU of the European Parliament and of the Council of 24 November 2010 on industrial emissions (integrated pollution prevention and control) (OJ L 334, 17.12.2010, p. 17).

(9)  Regulation (EC) No 1907/2006 of the European Parliament and of the Council of 18 December 2006 concerning the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH), establishing a European Chemicals Agency, amending Directive 1999/45/EC and repealing Council Regulation (EEC) No 793/93 and Commission Regulation (EC) No 1488/94 as well as Council Directive 76/769/EEC and Commission Directives 91/155/EEC, 93/67/EEC, 93/105/EC and 2000/21/EC (OJ L 396, 30.12.2006, p. 1).

(10)  Directive 2009/128/EC of the European Parliament and of the Council of 21 October 2009 establishing a framework for Community action to achieve the sustainable use of pesticides (OJ L 309, 24.11.2009, p. 71).

(11)  Regulation (EC) No 726/2004 of the European Parliament and of the Council of 31 March 2004 laying down Community procedures for the authorisation and supervision of medicinal products for human and veterinary use and establishing a European Medicines Agency (OJ L 136, 30.4.2004, p. 1).

(12)  Directive 2001/83/EC of the European Parliament and of the Council of 6 November 2001 on the Community code relating to medicinal products for human us (OJ L 311, 28.11.2001, p. 67).

(13)   ‘ “Sponge cities” are urban areas with abundant natural areas such as trees, lakes and parks — or other good designs intended to absorb rain and prevent flooding.’ https://climatechampions.unfccc.int/what-are-sponge-cities-and-how-can-they-prevent-floods/, consulted on 7 June 2023.

(14)  An IPCC report (Cross-Chapter Paper 4: Mediterranean Region. In: Climate Change 2022: Impacts, Adaptation and Vulnerability) says that ‘the Mediterranean region is a hotspot for highly interconnected climate risks’.

(15)  EEA, Pollution in Europe’s rivers.

(16)  EEA Report No 12/2021 on Water resources across Europe — confronting water stress: an updated assessment, 2021.

(17)  EEA Report No 12/2021 on Water resources across Europe — confronting water stress: an updated assessment, 2021.

(18)  ECA Special Report 12/2021 The Polluter Pays Principle: Inconsistent application across EU environmental policies and actions (based on EEA figures).

(19)  However, the impact on resource availability of the use of water for cooling plants is not particularly clear. Usually, the water is taken from surface water bodies or from the sea, and usually all (or almost all) of it is returned to those water bodies.

(20)  EEA, Water abstraction by source and economic sector, 1 June 2022.

(21)  Eureau, The governance of water services in Europe, 2020.

Rapporteur:

Antje Sabine GERSTEIN

Referral	European Commission, 20.1.2023
Legal basis	Article 304 of the Treaty on the Functioning of the European Union
Section responsible	Single Market, Production and Consumption
Adopted in section	29.6.2023
Adopted at plenary	12.7.2023
Plenary session No	580
Outcome of vote (for/against/abstentions)	196/1/4

1.   Conclusions and recommendations

1.1.

The European Economic and Social Committee (EESC) supports the European Commission’s approach of mainly taking as the point of departure for the revision of the Textile Labelling Regulation (TLR) the possibility of new digital labelling technologies, new fibre technologies and their classification and new recycling technologies and thereby acknowledging the new, extensive EU regulatory context for textiles overall.

1.2.

Consumers have varying expectations of the level of detail provided by textile labels. The revision of the Textile Labelling Regulation has to satisfy these different degrees of expectations by offering basic and easily understandable information in the first place, while at the same time giving further access to more detailed information.

1.3.

Taking into account that the textile sector is one of the most globalised sectors, the EESC believes that it is of the utmost importance that the European Commission strive for an EU-wide and global alignment of labelling requirements with regard to indications of origin, care instructions, size and fibre composition.

1.4.

The EESC calls upon the European Commission to bear in mind the special needs of SMEs in this sector. In order to prevent further offshoring, and given the fact that the sector employs 1,3 million employees EU-wide, the new TLR requirements must provide enough flexibility to address SMEs’ needs and capacities so that employment and skills in this sector of the economy are not only kept, but can further evolve.

2.   General comments

2.1.

The EU strategy for sustainable and circular textiles announced the review of the Textile Labelling Regulation (Regulation (EU) No 1007/2011 (1)), which requires textiles sold on the EU market to carry a label clearly identifying the fibre composition and indicating any non-textile parts of animal origin. As part of this review, the strategy mentions the possibility to introduce mandatory disclosure of other types of information, such as sustainability and circularity parameters, products’ size and, where applicable, the country where manufacturing processes take place (‘made in’).

2.2.

In this opinion, the EESC explores the options to expand the scope of the current regulation by considering certain elements already listed in Article 24 of the regulation for a review and other parameters on sustainability and circularity in coherence with current legislative proposals such as the legislative proposal on eco-design requirements for sustainable products. The opinion will take account of the industrial perspective, including costs and improved exchange of information along the value chain, and the consumer perspective, in order to ensure correct, accurate and clear information.

2.3.

The EESC supports the approach from the European Commission to mainly take as point of departure the possibility of new digital labelling technologies, new fibre technologies and their classification and new recycling technologies and thereby acknowledge the overall new extensive EU regulatory context for textiles including the Green Claims initiative from the European Commission (2).

2.4.

In this context, the EESC underlines that many aspects in the textile sector are already addressed in highly complex horizontal regulatory proposals which are mostly already in the legislative process. Corporate social responsibility and labour-related issues are addressed in the Directive on Corporate Sustainability Due Diligence and the Regulation on Forced Labour. The Empowering Consumers Directive and the Directive on Green Claims will soon regulate the communication of sustainability claims, while the revised Waste Framework Directive will address the basic concepts related to end-of-life management.

2.5.

Consumers have varying expectations of the level of detail provided by textile labels. The revision of the Textile Labelling Regulation has to satisfy these different degrees of expectations by offering basic and easily understandable information in the first place, while at the same time giving further access to more detailed information, for example through the voluntary provision of standardised information about the production process.

2.6.

The EESC points out that revision of the Textile Labelling Regulation is a REFIT initiative with the clear aim of making EU law simpler, fit for purpose and less costly for businesses and consumers. For companies this must include the reduction of compliance costs as well as regulatory clarity and consistency. For consumers accurate, comprehensive and comparable information on textile products is needed. The EESC underlines the importance of maximum harmonisation in order to help the sector make a successful transition towards comprehensive circularity.

2.7.

The EESC calls for urgent action on the fibre classification system, as the current system is not flexible enough to address the development of innovative fibres, which often have a lower environmental impact than conventional fibres. For many producers of new fibres, this status quo is frustrating because they cannot label their fibres accurately. Furthermore, these novel fibres cannot yet be indicated on textile labels and, thus, identifying them remains a huge challenge for recyclers, which is currently hampering circularity in the sector. The EESC points out that this regulatory gap also negatively affects consumers’ perceptions, as some products might in reality be much more sustainable than is indicated on current labels.

2.8.

The EESC believes that it is of the utmost importance that the European Commission strive for an EU-wide and global alignment of labelling requirements with regard to indications of origin, care instructions, size and fibre composition. The textile sector is one of the most globalised sectors. Garments made in each place are destined for multiple geographical areas worldwide (EU, US, etc.), with many different labelling requirements (3). Global labelling requirements and global harmonised standards need to be considered where applicable.

2.9.

The requirement for maximum harmonisation is linked to a clear policy request from the EESC to avoid further jeopardising the internal market, as more and more disparate requirements on labelling across Member States seem to appear. The EESC therefore considers it vital and timely for the European Commission to propose the TLR revision in the year 2023, which happens to be the 30th anniversary of the single market.

2.10.

The EESC calls upon the European Commission to bear in mind the special needs of SMEs in this sector. In order to prevent further offshoring, and given the fact that the sector provides jobs for 1,3 million employees EU-wide (4), the new Textile Labelling Regulation requirements must provide enough flexibility to address SMEs’ needs and capacities so that employment and skills in this sector of the economy are not only kept, but can further evolve. For example, a generalised conformity control carried out by a certifying body is not feasible for SMEs, which are the backbone of industrial textile production in the EU. A reasonable approach would be to envisage ‘self-certification’ procedures, such as the internal production controls set out in Annex II to Decision No 768/2008/EC (5), whereby SMEs inform and provide guarantees to consumers.

3.   Specific comments

3.1.   Fibre classification

3.1.1.

In recent years, the textile industry has developed a number of novel fibres with proven lower environmental footprints compared to the more traditional fibre options. Although these materials may be based on a similar feedstock, their manufacturing technology and properties often differ significantly from those used in conventional fibres. The novel fibres are currently not recognised by the existing generic fibre classifications in Annex I. Consequently, the innovative fibre types are classified under different fibre names, or as ‘other’ fibre. Considering the green and circular transition, the revised Textile Labelling Regulation should allow for fibres with distinctive characteristics to be recognised as such in Annex I. The anticipated TLR revision should be better adapted to reflect the dynamic progress around innovative fibres.

3.1.2.

A wide array of novel fibre types with distinctive characteristics is already close to commercialisation or will become available on the market in the future. However, the current process of updating Annex I is not transparent and uncertain for applicants. Therefore, the EESC recommends that EU authorities assess and revise how to make the updating process more transparent and technically accurate.

3.2.   Fibre composition tolerance margin

3.2.1.

Considering the transition to the circular economy, the textile industry is increasingly using recycled fibres and materials in production of garments. The current regulation is not perfectly suited to accurately label fibre composition containing recycled content, hampering the transition to a circular economy. Article 20(3) allows for a maximum 3 % deviation between the fibre content stated on the label and the fibre composition established based on authority testing. The current state of technical development in textile sorting and recycling technology, however, generates variance in the fibre composition that sometimes surpasses the tolerance level of 3 %. This is because, particularly in mechanical recycling, it is not possible to fully ensure that the feedstock for recycling is free from impurities of other textile materials. This calls for a need to explore a higher composition tolerance margin in the revised TLR. Based on the expert input, the EESC recommends that the updated level be 3–5 %. An increased tolerance level should only account for the existing limitations in recycling technology, it should not justify poor manufacturing practice. A minor increase in tolerance levels is a welcome step in removing barriers to the uptake of recycled materials in garment production.

3.3.   Harmonisation with global standards and processes

3.3.1.   Harmonisation of testing standards

3.3.1.1.

The textile industry is a highly global industry that often applies international standards. The revision of the TLR is an opportunity to align testing methods of fibre composition with global standards. Currently, under Article 19, only EU (EN) standards are allowed for testing of fibre compositions. In most cases, EN standards are very similar to the international ISO standards, but minor existing differences in method parameters lead to discrepancies between ISO and EN test results. Due to the industry’s global value chains, ISO standards are widely applied and preferred by the sector. As a result, businesses are facing increased testing for products destined for the European market, which significantly raises costs. Therefore, the EESC recommends that the revised TLR accept ISO standards as accepted test standards. Furthermore, the EESC recognises current large strides in innovation around new fibre composition detection methods. The European Commission should take account of this progress when revising the TLR.

3.3.2.   Harmonisation with international standards and trade rules

3.3.2.1.

The EESC supports the idea of transforming the Textile Labelling Regulation into a rulebook of harmonised standards for a number of requirements (novel fibre classification, fibre composition testing, sizing, care instructions). As far as possible, these standards should have a global reach. This would lead to greater harmonisation of labelling requirements both within the single market and with the rest of the world.

3.3.2.2.

Given the global scope of the textile sector, it is crucial to consider international alignment and collaboration in the revision of the TLR. The European Commission should ensure coherence with the World Customs Organisation and the current revision of the HS codes as well as with the commitments in the WTO Technical Barriers to Trade Agreement on use of international standards.

3.4.   Digital labelling

3.4.1.

The EESC strongly welcomes the intention of the European Commission to digitalise composition labelling in the revised TLR. In addition, in the context of the Eco-design for Sustainable Products Regulation (ESPR), the EESC welcomes the digital labelling and consumer communication initiatives such as the Digital Product Passport. However, it is crucial that the European Commission align these digital initiatives to create a coherent and effective policy framework.

3.4.2.

Currently physical labels are, for multiple reasons, not as effective as desired. Labels are often cut off after product purchase. The text on labels can be washed out because of multiple laundry cycles. Furthermore, making large physical labels in multiple different languages is costly and contributes to plastic waste. The text is small and includes several translations, which also makes it hard for consumers to understand.

3.4.3.

Digital labels would make things easier for companies, as well as improving information provision to consumers by offering them clear text in the appropriate language versions. There is still a need to provide information to less technologically advanced consumers, but options exist, for example by providing information on demand at the point of sale. To be durable, an indelible ‘data carrier’ type marking on the product can guarantee easy access to digital information.

3.4.4.

Even if the Commission decides to leave some information on physical labels, this approach should nonetheless lead to an overall significant reduction in label size. The EESC supports the Commission’s view that physical labels, or physical carriers of digital information, should be made more difficult to cut off. Non-abrasive labelling methods are already available. Methods of making labels harder to cut off should ensure durability of information (e.g. information printed directly on the material can be washed out) and should not reduce the functionality of the product (e.g. sewing a label completely onto a garment could reduce its functionality).

3.4.5.

The European Commission should assess how the Digital Product Passport can be applied in the context of a digital label under the revised TLR. To enable consistency and facilitate implementation, a TLR digital label could also be put on the same data carrier as the Digital Product Passport.

3.5.   Labelling exemption for some types of products

3.5.1.

Annex V to the current Textile Labelling Regulation exempts 42 textile product types from the labelling obligation. These are small items (such as watch straps) where adding a label would reduce the product’s functionality. However, the list approach does not provide clear guidance on how operators should label products not listed in Annex V, but which also have reduced functionality with a label. The EESC recommends that the revised regulation provide clarity on how to correctly label products (such as stockings and socks) where mandatory labelling hampers the product’s functionality. For instance, the current list approach could be replaced by a definition of products exempted from mandatory labelling.

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(1)  Regulation (EU) No 1007/2011 of the European Parliament and of the Council of 27 September 2011 on textile fibre names and related labelling and marking of the fibre composition of textile products and repealing Council Directive 73/44/EEC and Directives 96/73/EC and 2008/121/EC of the European Parliament and of the Council (OJ L 272, 18.10.2011, p. 1).

(2)  COM(2023) 166 final — 2023/0085(COD).

(3)  Examples of such requirements are Canada’s Textile Labelling and Advertising Regulations (TLAR) and the US Textile Fiber Products Identification Act.

(4)  https://euratex.eu/wp-content/uploads/EURATEX_FactsKey_Figures_2022rev-1.pdf.

(5)  Decision No 768/2008/EC of the European Parliament and of the Council of 9 July 2008 on a common framework for the marketing of products, and repealing Council Decision 93/465/EEC (OJ L 218, 13.8.2008, p. 82).

Rapporteur:

Miguel Ángel CABRA DE LUNA

Request from the Spanish Presidency of the Council	Letter, 8.12.2022
Legal basis	Article 304 of the Treaty on the Functioning of the European Union Exploratory opinion
Section responsible	Employment, Social Affairs and Citizenship
Adopted in section	21.6.2023
Adopted at plenary	12.7.2023
Plenary session No	580
Outcome of vote (for/against/abstentions)	189/01/02

1.   Conclusions and recommendations

1.1.

The demographic challenge facing European society needs to be addressed by policies that trigger a paradigm shift, raising the profile of older people, moving away from a care-based approach to focus on empowering them, and eradicating ageist views. This demographic challenge means that barriers must be removed and that the opportunities inherent in the ageing population must be seized.

1.2.

Older people continue to face high unemployment rates, greater risks of discrimination and isolation, and inequality in access to a decent income, which hampers active ageing. As the employment rate among older workers in the EU remains below average, there is a need for measures to adapt jobs, provide training and promote employment up to the official retirement age.

1.3.

Health, prevention and health education systems are key to prolonging longevity while ensuring that people remain in good mental and physical condition. In this regard, accessibility — especially in people’s own homes and the surrounding areas — is critical in preventing injuries that lead to dependency, and physical and mental deterioration, and prevent an active and healthy life (1).

1.4.

Investment in R & D&I, including developing technologies, products and services that are accessible to everyone and meet the wide variety of needs of older people, is necessary to support healthy and active ageing.

1.5.

On 27 January 2021, the European Commission presented its Green Paper on Ageing. One of the Green Paper’s greatest shortcomings is that it treats age and older people as an expense or cost for society, ignoring the social and economic benefits of more actively including older people, as well as the emotional dimension of ageing.

1.6.

As there have not yet been any proposals on a comprehensive ageing policy or a policy that focuses exclusively on older people, the EU needs to adopt a new European Strategy for Older Persons, with the fundamental objectives of protecting all their rights and ensuring their full participation in society and the economy. A new European Strategy for Older Persons would help bring about the necessary change in the approach to policies on age and today’s and tomorrow’s older people.

1.7.

The strategy should develop proposals and measures in the areas of equality and non-discrimination, the gender dimension, rights and access thereto, participation in society, employment, education and training, decent income and social inclusion. It should also lead to the development of national plans by Member States, including specific targets and indicators.

1.8.

The EESC calls on the European Commission to urgently present the new strategy before the end of the current term of office, supported by a Guarantee for Older People — similar to the Youth Guarantee and the Child Guarantee — to serve as a tool to put the new strategy into practice.

1.9.

The EESC calls on the Member States to adopt a new Guarantee, which will enable them to use different EU funding frameworks, such as the European Social Fund Plus, for programmes to support older people, as well as to make demography a key aspect in the European Semester process and in the formulation of country-specific recommendations.

1.10.

The EESC encourages the European Commission and the Member States to urgently draft, develop, sign, implement and monitor a European Declaration on Older People to reflect the commitment to developing a European Strategy for Older Persons during the current term of office (2019–2024).

1.11.

As set out in the EESC opinion Towards a New Care Model for the Elderly: learning from the COVID-19 pandemic (2), the EESC requests that, as recognition of older people’s fundamental rights and access thereto, and as an expression of their contributions to society, the European Commission organise a European Year of Older People.

1.12.

The EESC underlines the role of social partners and social dialogue, in line with the European social partners’ autonomous framework agreement on active ageing and an inter-generational approach (3).

1.13.

The EESC calls for consultations to be launched with civil society organisations, in particular organisations that represent older people, their families and professional organisations that support them, as well as with equality organisations, representatives of people with disabilities, service providers, social economy organisations, and so on.

1.14.

The EESC calls for public-private partnerships to be used as a complementary means of harnessing the potential of active participation by older people in areas such as culture, education, sport, tourism, and so on.

1.15.

To encourage the exchange of best practices, technical training and concrete actions in the strategy’s areas of action, the EESC calls for the creation of a European Agency for Older People, Ageing and the Demographic Challenge (4).

1.16.

The EESC calls for the coordination of ombudsmen for older people between Member States, and between the administration and the private sector. They can help older people in their dealings with public authorities, receive complaints about age-based discrimination, facilitate access to basic services and ensure a minimum income for older people (5).

1.17.

At international level, the EESC calls for the adoption of a UN Convention on the Rights of Older Persons to ensure that human rights are enjoyed equally by older people, following the examples of the UN Convention on the Rights of the Child and the Convention on the Rights of Persons with Disabilities (6), by ensuring the active participation of civil society organisations representing older people and relevant stakeholders.

1.18.

The EESC welcomes the creation of a unit in the European Commission’s Directorate-General for Justice and Consumers dedicated to equality and non-discrimination based on age; the EESC encourages the Commission to set up a department dedicated to questions related to ageing and the demographic challenge that will coordinate policies for older people.

1.19.

In support of all these measures, and to reflect the EESC’s support for progress in policies for older people, the Committee recognises that it is worth considering setting up an ad hoc group to carry out initiatives related to ageing and demographic challenges and opportunities, in line with the EESC opinion ‘Towards a new care model for older people: learning from COVID-19’ (7).

2.   General comments

2.1.

The demographic challenge (the trend towards longer lives and lower birth rates in recent decades) is a central issue that will reshape society in the future, alongside climate change and the technological revolution resulting from artificial intelligence.

2.2.

It is estimated that the number of people older than 65 in EU countries will rise from 90,5 million people at the start of 2019 to 129,8 million in 2050. During this period, the number of people in the EU aged 75–84 will grow by 56,1 %, while the number of people aged 65–74 will increase by 16,6 %. By contrast, it is estimated that there will be 13,5 % fewer people aged under 55 living in the EU in 2050.

2.3.

Nevertheless, the employment rate among older workers in the EU remains below average. Only 59,1 % of those aged 55–64 were employed in 2019 versus 73,1 % of all those aged 20–64. People close to retirement age (55–64) have one of the highest poverty and social exclusion rates in the EU.

2.4.

The average retirement age in the EU is about 65, and average life expectancy is around 84, which means that most people will spend around 20 years in retirement. It is therefore necessary to promote longevity in tandem with good health.

2.5.

According to the 2019 Eurobarometer report on discrimination in the EU, age discrimination, together with gender discrimination, is the most prevalent form of discrimination in the EU.

2.6.

Older people are at greater risk of acquiring a disability, as ageing increases exposure to disability; 48,5 % of people with disabilities are over 65.

2.7.

While the aggregate pension replacement rates in the EU are 58 % (8), it is estimated that, in many countries, older people have 40 % of the wealth and a significant share in the purchasing power, which is unevenly distributed between women and men and across income groups. This gives older people considerable potential as major consumers.

2.8.

Older consumers make up a large part of the economy and their share in consumption will continue to grow. The silver economy is expected to grow across the EU by around 5 % per year to reach EUR 5,7 trillion in 2025 (9).

2.9.

The EU must put in place effective strategies that need to take into account each region’s demographic dynamic and economic development, as well as addressing the opportunities that may emerge from the silver economy (10).

3.   New EU policy on the rights of older people

3.1.

At the last World Assembly on Ageing, held in Madrid in 2002, the UN presented its International Plan of Action on Ageing, the first international agreement that recognises that older people contribute to the development of society, and set up the Open-ended Working Group on Ageing.

3.2.

On 27 January 2021, the European Commission presented its Green Paper on Ageing: Fostering solidarity and responsibility between generations (11), laying the groundwork for future policies to support older people.

3.3.

It concludes that healthy and active ageing has a positive impact on the labour market, employment rates and social protection systems, and thereby on the growth and productivity of the economy.

3.4.

The Green Paper acknowledges the need for concrete and decisive action to support older people in all policy areas but does not formulate a specific programme of initiatives as such to be developed by the EU and the Member States.

3.5.

New EU policies must trigger a paradigm shift, raising the profile of older people, moving away from a care-based approach to focus on empowering them, and eradicating ageist views.

4.   Towards a European strategy

4.1.

While the Green Paper was a further step towards implementing the commitments made in the Madrid Plan two decades ago, it has a number of shortcomings that need to be addressed, as there have not yet been any proposals for a comprehensive ageing policy or a policy that focuses exclusively on older people.

4.2.

One of the Green Paper’s greatest shortcomings is that it treats age and older people as an expense or cost for society, ignoring the social and economic benefits of more actively including older people. It continuously links age to decline, passivity and vulnerability. Harnessing the potential of ageing requires a vision based on human rights, well-being, older people’s contribution to society and the economy, and tools to enable this contribution.

4.3.

A number of initiatives closely linked to age have been presented and discussed over the last few years, such as the European care strategy, the 2020–2024 Action Plan on Human Rights and Democracy, the European Pillar of Social Rights Action Plan, the commitments made by Member States with regard to the UN initiative on the impact of COVID-19 on older persons, and the various EU Council conclusions on Human Rights, Participation and Well-Being of Older Persons in the Era of Digitalisation (12), on Mainstreaming Ageing in Public Policies (13) and on a human-rights-based post-COVID-19 recovery (14).

4.4.

A new European Strategy for Older Persons would help bring about the necessary change in the approach to policies on age and today’s and tomorrow’s older people, emphasising human, social and economic opportunities and improving active citizenship and participation, as older people still have intellectual, economic and social capital that often goes to waste. The strategy will support solidarity between generations and a life-cycle approach in order to prevent and reduce age-related challenges, correcting the current approach of seeing ageing as a cost.

4.5.

It will also make it possible to consolidate the fundamental principles of the initiatives drawn up by the EU and international organisations since the Madrid Plan was signed in 2002, while proposing concrete measures and plans for policymaking in the field of older people.

4.6.

The European Strategy for Older Persons will crystallise an intergenerational pact based on respect and solidarity between generations, with the fundamental objectives of access to lifelong quality education opportunities, to regulated employment with decent jobs and to extensive social protection systems covering all members of society (15).

4.7.

Furthermore, the strategy will be useful not only for older people but also for the entire population, including carers for older people, and it will also prepare the younger generations for their own ageing process.

5.   Pillars of the new European Strategy for Older Persons

5.1.

The new European strategy should address the challenges faced by all older people as the heterogeneous group that they are and at the same time promote the policy action needed to seize all the opportunities offered by active and healthy ageing.

5.2.

The European strategy should be built on policies to prepare for, prevent and anticipate the consequences of ageing, and policies for ensuring older people’s participation and active citizenship, such as lifelong learning, healthy ageing and active participation. These are the best areas in which to invest in order to minimise age-related inequalities and the social and economic burdens arising from ageing (16). The strategy will encourage people to take appropriate action to address the consequences of their ageing.

5.3.

As part of the strategy, Member States should develop their own national ageing plans with specific targets and indicators to measure the effectiveness of policies supporting older people. They should also propose specific measures to support the objectives and pillars of the European strategy.

5.4.   Equality and non-discrimination

5.4.1.

Equality and non-discrimination on the basis of age are fundamental principles that are laid down in the Treaties and in EU legislation. Yet ageism persists in too many areas of our lives, creating obstacles to older people’s full participation in our society.

5.4.2.

Therefore, the future strategy for older people should be used to:

5.4.2.1.

Strengthen equality regardless of age as a fundamental principle and as a dimension to be included in all EU policies, and support the adoption of the Council Directive on implementing the principle of equal treatment between persons irrespective of religion or belief, disability, age or sexual orientation (17).

5.4.2.2.

Propose concrete actions to raise awareness of age-based discrimination, older people and their rights and opportunities for including them, as well as promoting a positive image of age.

5.4.2.3.

Ensure that the Member States and national and European courts rigorously and impartially implement the Employment Equality Directive and propose guidelines to better define the principle of equality regardless of age in employment matters.

5.4.2.4.

Pay special attention to older women, as they enjoy longer life expectancy than men, can remain active for longer and are in turn more exposed to discrimination and loneliness.

5.4.2.5.

Propose measures to address the multiple and intersectional forms of discrimination experienced by older people, including problems faced by older people with disabilities, older LGBTIQ+ people, older people from ethnic minorities and older migrants.

5.4.2.6.

Rectify the current exclusion of older people from data, statistics and opinion polls produced by public bodies, including Eurostat and Eurobarometer, addressing age limitations in surveys, age brackets within the category ‘older people’ and the lack of information on older people living in institutions. Ensure that data are collected, disaggregated, analysed, used and disseminated for all ages and other characteristics and that Member States collect adequate, comparable and reliable data.

5.4.2.7.

Ensure that the EU Agency for Fundamental Rights better integrates the issues of age discrimination and older people’s human rights into its work.

5.5.   Participation in society

5.5.1.

Promoting older people’s participation, especially in economic life, will be instrumental in seizing the opportunities that their greater inclusion offers in social and economic terms.

5.5.2.

To ensure the full active participation of older people, the new strategy should propose specific initiatives, at the appropriate level of competence, to:

5.5.2.1.

Ensure that older people can access the built environment — including ensuring the accessibility of older people’s own homes — and digital goods and services, ensuring the implementation and monitoring of legal instruments such as the European Accessibility Act, the Web Accessibility Directive, legislation on the accessibility of transport and the various accessibility-related obligations laid down in the UN Convention on the Rights of Persons with Disabilities (CRPD).

5.5.2.2.

Promote initiatives and policies that comply with Article 19 of the CRPD, ensuring independent living and inclusion in the community for all ages.

5.5.2.3.

Support the Cities for All initiative — green and inclusive smart urban planning models — to address the risks of isolation and loneliness in both urban and rural areas. Design for all, mobility and interpersonal relationships are essential for a social life.

5.5.2.4.

Where necessary, remove barriers that exclude older people from democratic or constituent processes, such as elections to the European Parliament, by treating them like a significant electoral force with full rights.

5.5.2.5.

Overcome the digital divide and digital poverty by allocating financial support and launching initiatives to improve infrastructure, support equipment and training to contribute to digital literacy at all ages, while maintaining the obligation for essential goods and services to also remain accessible outside the digital sphere.

5.5.2.6.

Safeguard public transport and other essential services, such as care, healthcare, housing, culture, leisure, active participation in social life and so on.

5.5.2.7.

Support the European Commission’s recommendations to combat loneliness, ensuring that, in the context of the current demographic changes, mental health, social and long-term care services are accessible, affordable, integrated, community-based and easy to use. Moreover, support the Member States by collecting and sharing best practices through the new European Agency for Older People, Ageing and the Demographic Challenge (18).

5.5.2.8.

Suggest measures to protect the rights of older consumers, as they are considered vulnerable consumers in the EU acquis.

5.5.2.9.

Propose measures to promote volunteering with added value for older people, setting up mentoring programmes where older people can share their work experience with younger generations.

5.5.2.10.

Invest in R & D to support healthy and active ageing, including developing technologies, products and services that are accessible to everyone, with the direct involvement of older people, in order to meet their wide variety of needs, and to promote social innovation.

5.5.2.11.

Continue with the implementation of the action plan on digital education that will help the Member States create conditions conducive to developing advanced and specialised digital skills as part of lifelong learning (19) instead of being linked only to labour market participation, and to lay the groundwork for specific measures targeting older people and their environment.

5.6.   Employment, education and training

5.6.1.

The current demographic challenge means that barriers must be removed and opportunities seized to enable the inclusion in the labour market of older people and of those who wish to work beyond their retirement age. The strategy should encourage the exchange of best practices between Member States to improve employment among older people.

5.6.2.

The strategy should be built on a flexible model in which there are several periods of transition between learning, work, family care and inactivity/retirement at different stages of a person’s life, even after the statutory retirement age. Support and care services for all generations, including childcare and long-term care, should enable people of all ages — both women and men — to actively participate in society. The strategy should include specific measures to support informal carers given the crucial role they play in the lives of older people in care. In this respect, specific recommendations could be made in terms of work-life balance, wage compensation or financial support, a wide variety of respite options for those caring for dependent relatives, access to advice and training services, and so on.

5.6.3.

In this regard, the European Strategy should, in accordance with the competences of the Member States:

5.6.3.1.

Assess the impact of the age-based derogations set out in the employment and minimum wage Directives, propose guidelines for the implementation of age-based equality principles in employment and where necessary, identify other ways of or specific changes for improving the implementation of the directives and prevent discrimination against older people that wish to remain in the labour market.

5.6.3.2.

Encourage intergenerational mentoring through specific programmes.

5.6.3.3.

In line with current policies, combat and prevent physical and psychosocial risks such as stress and burnout in the next EU strategic framework on health and safety at work.

5.6.3.4.

Foster entrepreneurship among older people by assessing existing barriers such as loss of pension rights, facilitate access to finance and promote incubators for intergenerational co-entrepreneurship and transfers of businesses from older business owners or entrepreneurs to younger entrepreneurs (20), and encourage initiatives within the social economy.

5.6.3.5.

Promote the social economy as a person-centred sector providing benefits for society as it can offer older people new employment and entrepreneurship opportunities (21).

5.6.3.6.

Promote and improve accessibility to Erasmus+ and educational technology programmes for older people, making full use of their intergenerational outreach, offering older people learning and academic mobility opportunities, including in places where it is difficult to access education, such as long-term care facilities. The opportunities offered by micro-credentials and digital learning tools, such as massive open online courses (MOOCs), should also be fully exploited.

5.6.3.7.

Propose measures to improve older people’s financial education, which could lead to the use of inactive resources and greater competitiveness. Particular attention should be paid to developing older people’s skills to enable them to act as informed investors and to avoid inappropriate financial investments or consumption.

5.6.3.8.

Develop proposals to prevent brain drain from all generations, whether between Member States or outside the EU, building on the European Skills Agenda for sustainable competitiveness, social fairness and resilience (22).

5.7.   Decent income and social inclusion

5.7.1.

In 2019, the proportion of retired people aged over 65 at risk of poverty in the EU was 15,1 %. Between 2010 and 2019, the proportion of women over 65 receiving a pension who were at risk of poverty in the EU was between 3 and 4 percentage points higher than that of men.

5.7.2.

To remedy this situation and minimise the risks of poverty and social exclusion among older people, in line with the Member States’ exclusive powers and bearing in mind the role of the social partners, the strategy should promote decent incomes for older people by proposing initiatives to:

5.7.2.1.

Develop pension systems to provide adequate pensions so that pensioners need not rely on minimum income support as stated in the EESC opinion on the Council Recommendation on adequate minimum income ensuring active inclusion (23). In line with this, evaluate together with the Member States the possibility for convergent measures to ensure minimum income for all older persons and help them remain employed if they wish to.

5.7.2.2.

Develop a Guarantee for Older People that protects them from poverty and enables them to live a decent and participatory life from the age of 65, including specific support for those over 75/80, according to the characteristics of the Member States.

5.7.2.3.

Ensure that pensions remain adequate over time, guaranteeing, where appropriate, that pensions are indexed in line with the cost of living and taking into account the specific expenses incurred by older people (such as healthcare, long-term care, etc.).

5.7.2.4.

Reduce the gender pension gap and, where necessary, promote the introduction of care credits into social protection and/or tax systems.

5.7.2.5.

Create a framework for universal access to pension rights, including for men and women, self-employed people, people in new forms of employment such as the social economy, people with disabilities (including those in sheltered employment) and people excluded from the labour market.

5.7.2.6.

Propose action to raise awareness of and combat violence and abuse against older people, especially older women.

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(1)  For example, France’s anti-fall plan: Plan antichute des personnes âgées.

(2)  Opinion of the European Economic and Social Committee on ‘Towards a new care model for older people: learning from COVID-19’ (own-initiative opinion) (OJ C 194, 12.5.2022, p. 19).

(3)  European social partners’ autonomous framework agreement on active ageing and an inter-generational approach (2017).

(4)  Friends of Europe.

(5)   Current and future challenges for ombudsman institutions — Network in Focus 2019 (europa.eu).

(6)  As set out in the Report of the United Nations High Commissioner for Human Rights on the promotion and protection of the human rights of older persons from March 2022.

(7)  Opinion of the European Economic and Social Committee on ‘Towards a new care model for older people: learning from COVID-19’ (own-initiative opinion) (OJ C 194, 12.5.2022, p. 19).

(8)  Eurostat.

(9)  Silver Economy Study: How to stimulate the economy by hundreds of millions of Euros per year, Shaping Europe’s future digital (europa.eu).

(10)  European Commission Atlas of Demography.

(11)  COM(2021) 50 final.

(12)  Council Conclusions on Human Rights, Participation and Well-Being of Older Persons in the Era of Digitalisation (2020).

(13)  Council Conclusions on Mainstreaming Ageing in Public Policies (2021).

(14)  Council conclusions on a human-rights-based post-COVID-19 recovery (2021).

(15)  Opinion of the European Economic and Social Committee on ‘Towards a new care model for older people: learning from COVID-19’ (own-initiative opinion) (OJ C 194, 12.5.2022, p. 19).

(16)  UN report on the Decade of Healthy Ageing, 2021-2030.

(17)  Opinion of the European Economic and Social Committee on Improving equality in the EU (own-initiative opinion) (OJ C 75, 28.2.2023, p. 56), and Opinion of the European Economic and Social Committee on the ‘Proposal for a Council directive on implementing the principle of equal treatment between persons irrespective of religion or belief, disability, age or sexual orientation’ (COM(2008) 426 final (Additional opinion)) (OJ C 182, 4.8.2009, p. 19).

(18)  Communication from the European Commission on a comprehensive approach to mental health, COM(2023) 298 final.

(19)  Proposal for a Council Recommendation on improving the provision of digital skills in education and training, COM(2023) 206 final.

(20)  Opinion of the European Economic and Social Committee on Business transfers as promoters of sustainable recovery growth in the SME sector (own-initiative opinion) (OJ C 486, 21.12.2022, p. 9).

(21)  Opinion of the European Economic and Social Committee on ‘Towards a new care model for older people: learning from COVID-19’ (own-initiative opinion) (OJ C 194, 12.5.2022, p. 19).

(22)  COM(2020) 274 final.

(23)  Opinion of the European Economic and Social Committee on the Proposal for a Council recommendation on adequate minimum income ensuring active inclusion (COM(2022) 490 final — 2022/0299 (NLE)) (OJ C 184, 25.5.2023, p. 64) and Council Recommendation on adequate minimum income ensuring active inclusion (OJ C 41, 3.2.2023, p. 1).

Rapporteur:	Andrés BARCELÓ DELGADO
Co-rapporteur:	Monika SITÁROVÁ

Referral by the Spanish Presidency of the Council	Letter of 8 December 2022
Legal basis	Article 304 of the Treaty on the Functioning of the European Union Exploratory opinion
Bureau decision	13.12.2022
Section responsible	Consultative Commission on Industrial Change
Adopted in section	22.6.2023
Adopted at plenary	12.7.2023
Plenary session No	580
Outcome of vote (for/against/abstentions)	185/3/7

1.   Conclusions and recommendations

1.1.

The EESC believes strongly that the decarbonisation of EU industry must be coupled with enhanced digitalisation.

1.2.

Innovation is imperative if industry is to be fully decarbonised, as many technologies are still being developed.

1.3.

The EU cannot achieve decarbonisation without a strong workers’ involvement and social dialogue, and reskilling and upskilling programmes must be a top priority with a view to meeting the targets. Social dialogue and involvement of workers’ representatives must play a role in the reskilling and upskilling programmes that will be a prerequisite for the success of new technologies and working methods.

1.4.

The EU needs to both identify the technologies requiring specific support to develop manufacturing activities and propose additional measures.

1.5.

Carbon capture, utilisation and storage techniques must be developed to reduce ‘hard to abate’ emissions in industries such as cement and refineries; the carbon itself can be used as a raw material for efuels.

1.6.

America’s Inflation Reduction Act (IRA) is a serious challenge for the EU and its industry. The Commission proposal on Net Zero Industry could be an effective answer to the threat of massive relocation of industrial activities from the EU to third countries. The EU proposals must not overlook the social conditionality of IRA.

1.7.

Industrial companies need public support during the decarbonisation process (e.g. increasing the de minimis threshold, reviewing tax policies), but they must also abide by single market principles.

1.8.

The EESC notes that current examples of digital twins in industry, as pointed out by the CCMI/206 opinion, are encouraging in terms of improving industrial performance.

1.9.

The EESC urges the European authorities and Member States to accelerate permitting processes for renewable energy and industrial activities. Both the current lengthy procedure involved in obtaining permits and excessive red tape discourage new investments.

1.10.

The EESC welcomes the Hydrogen Bank initiative and hopes that it will help deploy hydrogen technology, particularly in hard-to-abate industries.

1.11.

Current infrastructure must be properly maintained in order to develop new industrial processes. Specific infrastructure programmes must be developed to accompany industrial decarbonisation.

2.   General comments

2.1.

The future Spanish presidency of the EU Council has asked the EESC to draw up an exploratory opinion on the decarbonisation of European industry and the role of digitalisation and innovation in this process.

2.2.

The EESC has previously issued an own-initiative opinion on decarbonisation technologies with a focus on ETS industries (1).

2.3.

European society has taken the necessary and radical decision to achieve full decarbonisation by 2050. Industry will be affected hardest by this, and some industrial activities will find it very difficult to adapt.

2.4.

Some industries have made heavy investments in recent years and will be forced to make yet more radical changes to reach the net zero target. European society must therefore support them as they move from fossil fuels to climate-neutral production.

2.5.

Some ‘hard to abate’ industrial activities must adopt carbon capture and storage technologies (CCS). In the future, CO2 emissions could be utilised to produce high added value goods.

2.6.

The extent of the EU’s dependence on third countries for the supply of some clean technologies makes it extremely challenging for the EU to reach its target of 40 % renewable energy by 2030. Europe is largely reliant on imports when it comes to cleantech; at the same time, the EU’s deployment of cleantech will have to be dramatically accelerated to reach the Fit for 55 objectives. The EU needs to identify the technologies requiring specific support to develop manufacturing activities and propose additional measures.

2.7.

European industry is under constant pressure from international competition, requiring a quick response and continuous development and adaptation of business so that it continues to be profitable to produce in the EU. This is already an important factor in modern production, but with new digital technologies, manufacturing companies can deliver major improvements in efficiency and tap completely new opportunities for developing products, services and business models.

2.8.

The digital transition envisaged by the EU Green Deal is a prerequisite for meeting the decarbonisation target.

2.9.

Nothing can be achieved without people. The European workforce is highly skilled in terms of current technology, but it must be retrained to seize the opportunity of the new technologies that will be developed and rolled out in the near future.

2.10.

Under the generally accepted principle of leaving no one behind, special attention must be paid to the local communities where industrial facilities are established, given the changes that will occur in the coming years and the impact that those changes will have, in the short term, on employment in the areas concerned.

3.   New landscape in the EU and elsewhere

3.1.

Meanwhile, the European Union must face the new challenges posed by the implementation of America’s new IRA (2), which may provide an incentive for the relocation of a large part of the European industrial value chain to the USA, particularly those related to renewable and low-carbon technologies. The IRA consists of a mixture of grants, tax incentives and loan guarantees, accompanied by various social and economic conditions. Corporate tax credits comprise the bulk of the legislation, amounting to approximately USD 216 billion.

3.2.

Tax credits for production are also available for wind and solar projects. Companies which want access to those production credits must comply with domestic content requirements: iron, steel and manufactured products of power-generating facilities must be produced domestically. All iron and steel manufacturing processes must take place in the United States, and manufactured products are considered domestically produced if a threshold percentage of the total manufacturing costs of products come from US-based mining, production or manufacturing processes. This threshold stands at 40 % and will increase to 55 % in 2026.

3.3.

The Commission has proposed new legislation to cope with the challenge of American and Chinese competition to the European Union. The EESC is drafting an opinion on this topic.

3.4.

The EESC recognises that the proposal is moving in the right direction; however, it is barely adequate to meet the ambitious target and improvements to the legislative process are needed.

3.5.

The gap between gas prices in Europe and in the USA is enormous, even with the recent drop in European prices. Some like-minded suppliers are using the ‘cost of opportunity’ approach in relation to natural gas supply and prices, and the EU, once almost free of its dependence on Russian gas, is now entangled in an even more expensive framework of gas and electricity prices. This is undermining both EU industry’s competitiveness and the deployment of electrification.

3.6.

The decarbonisation process will increase the demand for electricity; the EESC calls for climate-neutral technology that gives priority to an affordable carbon-free power supply and energy security.

3.7.

European companies must buy carbon certificates under the ETS framework. Carbon certificate prices are over EUR 80, and the price premium on electricity spot prices due to the increasing costs of carbon certificates is around EUR 40. With a few exceptions, the EU’s other main trade partners do not have this kind of carbon price, and so it will be difficult in the future for EU industry to compete in the international markets, even with the CBAM shield for the single market.

3.8.

The supply of affordable decarbonised energy is key to developing new industrial activities in Europe. The impact of the Net-Zero Industry Act (NZIA) on energy prices will be limited in the short term, and its long-term impact remains uncertain. The ambition of making Europe less dependent on imported energy and less exposed to global market volatility will not materialise overnight. Still, industry needs immediate solutions to cope with energy prices that are still higher in Europe than in many other parts of the world. The EU’s Green Deal Industrial Plan will only be successful if the EU also reforms its energy policy, notably with a revised Electricity Market Design Directive that loses no time in securing a supply of affordable, low-carbon electricity corresponding to the increasing need for electrification.

3.9.

The EU seems to be trapped between two approaches: it is striving to converge with the USA and keep a strong industrial footprint in Europe, while also complying with WTO rules which sometimes clash completely with the American approach.

3.10.

Keeping the EU single market alive is another challenge facing the EU. As the Commission has pointed out, flexibility as regards State aid has been concentrated in two Member States that account for more than 70 % of the total clearance provided by the Commission under the transitional exception (in the context of COVID-19 and Russia’s war against Ukraine).

3.11.

The European institutions and Member States must avoid providing companies with excessive State aid in order to safeguard the single market, the cornerstone of the European Union. However, in order to enable SMEs to become digitalised and promote innovation, the de minimis threshold could be increased as it hardly hampers competition. The experience of the Digital Innovation Hub (3) must be spread across the EU.

4.   The role of innovation

4.1.

Innovation is key to enabling the EU to meet the net zero targets, and more commercially available technologies must be placed on the market. The role of innovation in companies is the key tool for deploying new and green technologies that are both technically and economically viable.

4.2.

On the other hand, the need to encourage a fair market for ‘real and reliable green goods’, using public procurement as the main driver, must contribute to expanding the use of new green technologies.

4.3.

Europe lacks raw materials, but the proposed regulation on Critical Raw Materials will promote domestically produced recycled raw materials for industry. The main competitive advantage of EU industry is its technological capability and highly skilled workforce, which allows it to be the leader in global markets.

4.4.

This competitive advantage is now challenged by third countries, as the only tool for maintaining leadership is to shield innovation, striking the right balance between protecting the environment, people and innovation and speeding up regulatory authorisations, not only in ‘special areas’ as in the Commission proposal, but elsewhere as well. There are flagrant examples of unjustifiable delays in providing the clearance to develop new industrial facilities.

4.5.

SMEs are the backbone of European manufacturing and in order to drive on decarbonisation, special attention must be given to them, with specific programmes to promote effective innovation and digitalisation.

4.6.

As decarbonisation will require huge investments, the EESC suggests that the EU institutions use both Just Transition and NextGeneration EU funds to provide appropriate support for the decarbonisation process.

4.7.

Current infrastructure is inadequate for the necessary changes in industry and society, and the EESC strongly urges the public authorities to launch a programme to maintain and improve the infrastructure needed to deploy the new technologies smoothly.

4.8.

Hydrogen seems to be the best choice to decarbonise ‘hard to abate’ industries that are not eligible for full electrification. The EU’s recent Hydrogen Bank initiative would help properly deploy this technology, in terms of quantity and price. Some regional experiences of innovation with hydrogen are very useful, as they bring together big companies, research centres, universities and SMEs.

5.   The role of digitalisation

5.1.

Digitalisation and innovation contribute significantly to the decarbonisation of European industry. In fact, industry, where digital technology and the physical production of goods converge, can be considered a key player in digital transformation and industrial decarbonisation, as it favours the modernisation of industrial processes, products and business models, with a positive effect on productivity.

5.2.

Technologies such as sensors, machine-to-machine communication, data analysis and robotics create opportunities for manufacturing companies. Through production optimisation and automation, new technologies can make it possible for European companies to compete with countries with traditionally lower production costs.

5.3.

Many sectors have already been heavily automated and are further impacted by digital technologies, for instance smart robotics for assembly, process control computers in the chemicals sector, and 3D printing for producing components and spare parts. The second wave of digital transformation driven by Artificial Intelligence, the Industrial internet of Things and Big Data is likely to be more disruptive and may cause inequalities between companies and between EU regions.

5.4.

With the help of sensor technology, production can be monitored and optimised, for example by continuously monitoring the utilisation of production equipment, energy input, the need for raw materials and spare parts, product quality and emissions. Analysis of collected data can give the company insight into which processes work optimally and which can be improved, as well as the climate footprint.

5.5.

Digitalisation has great potential for reducing industry’s climate impact, but digitalisation and the handling of data must factor in the climate perspective.

6.   Reskilling and upskilling

6.1.

The green and digital transitions must be seen as an opportunity to create and promote high-quality jobs, while attracting diversity to the industry, and in particular seeking female talent, promoting openness to skilled workers from third countries and making an intensive effort to make the industry attractive to young people..

6.2.

The European Commission has presented a wide catalogue of initiatives developed under the European Skills Agenda, including the European Pact for Skills and the European Year of Skills 2023. Skills partnerships will be created or extended. Net-Zero Industry Academies will be established to support upskilling and reskilling programmes in strategic industries for the green transition. State aid and IPCEIs should also provide additional financial resources to support skills objectives, and the EU budget and NextGenerationEU are already providing EUR 64,8 bn to support the EU Skills Agenda. Some current projects, under the Erasmus+ umbrella, such as ESSA (4), are very promising.

6.3.

Social dialogue is key in order to properly deploy the new technologies and ease social and workers’ acceptance of the future changes in working processes.

6.4.

However, in order to take full advantage of digital technologies in production, it is important not to focus only on technology, but rather to think of the business and organisation as a whole. A digital strategy and action plans are needed to make digitalisation manageable.

6.5.

The challenge is to ensure that the digital transformation leads to more social progress and leaves no one behind. Workers must be able to anticipate the consequences of new technological developments and to influence employers’ decisions by means of an improved right to participation. The consequences of digital technologies must be discussed and lead to negotiated solutions at all levels: company, sector, national and European.

6.6.

The EU workforce must be properly reskilled and upskilled in order to have the new skills needed to master new job requirements. Current skills must be assessed, in the framework of social dialogue, as regards whether or not they are valuable for future developments.

6.7.

Keeping up a lively and effective social dialogue will definitely contribute to better deployment and acceptance of new technologies, minimising the social costs.

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(1)  Opinion of the European Economic and Social Committee on the Role of carbon removal technologies in decarbonising European industry (own-initiative opinion) (OJ C 486, 21.12.2022, p. 53).

(2)  Inflation Reduction Act of 2022.

(3)  https://european-digital-innovation-hubs.ec.europa.eu/.

(4)  https://www.estep.eu/essa/.

Rapporteur:

Javier GARAT PÉREZ

Referral	Letter from the Spanish Presidency of the Council, 30.1.2023
Legal basis	Article 304 of the Treaty on the Functioning of the European Union
Section responsible	Agriculture, Rural Development and the Environment
Adopted in section	28.6.2023
Outcome of vote (for/against/abstentions)	38/6/1
Adopted at plenary	12.7.2023
Plenary session No	580
Outcome of vote (for/against/abstentions)	155/0/0

1.   Conclusions and recommendations

1.1.

The EESC welcomes the strategy on the energy transition of the EU fisheries and aquaculture sector (1). The EESC recognises the need to reduce CO2 emissions and fully supports the search for sustainable, renewable and commercially viable energy alternatives, as well as the drive to reduce energy dependency on third countries. The EESC calls on society, businesses and, in particular, the fisheries sector to contribute to achieving climate neutrality by 2050.

1.2.

The EESC points out that the fishing industry is part of the solution to mitigating the effects of climate change: fishers provide one of the healthiest animal proteins, with one of the smallest carbon footprints. In fact, according to Unctad data, emissions from the sector will account for between 0,1 % and 0,5 % of the world total in 2023. The European fleet in particular has reduced its emissions by 50 % since 1990 (2). This is why it is a key strategic sector for our society, and essential for providing for the population and promoting a healthy diet. That said, the EESC calls for further efforts to increase energy efficiency and reduce emissions.

1.3.

The EESC calls for an appropriate and realistic decarbonisation timetable in which technological, logistical and legislative developments go hand in hand. Anything less will lead to a disproportionate increase in costs (which cannot be absorbed in the price of fish, as this would make it a luxury item) and to business losses, precariousness and unemployment. The cost of the transition should not be unbearable for employers and workers in the various maritime sectors, nor leave anyone behind.

1.4.

The EESC recognises that the development and global availability of alternative and innovative green technologies, new fuels and carbon-neutral energy sources are the biggest challenges facing the fisheries sector. Developing these fuels and the necessary infrastructure is fundamental for achieving decarbonisation. The EESC sees hybridisation as an intermediate solution, even though it does not constitute immediately abandoning fossil fuels.

1.5.

The EESC stresses that national and European administrations have a plethora of energy solutions at their disposal to address climate challenges. Today, 100 % of fishing vessels use diesel. According to specialists, renewable, low-carbon fuels that are not plant-based are the most viable alternative for steering the fisheries sector away from fossil fuels in the short term, although their price today is practically double that of diesel, and availability is still very low. While aviation is following a separate path with the development of sustainable aviation fuels (SAF), and since other technologies such as hydrogen and electricity are better suited to sectors like shipping and road transport respectively than to fishing vessels, the EESC calls for a clear political signal giving these substitution fuels in priority to the latter over the former. The EESC emphasises that, as long as these alternative fuels remain undeveloped, the ambitious targets set out in both the European Green Deal and the Fit for 55 package cannot be achieved (3).

1.6.

The EESC believes that the huge cost of decarbonising a sector as difficult to electrify as the fishing sector goes far beyond the scope of European funding. The challenge will be how to keep the fisheries sector and its contribution to food security alive. It is essential to have institutional support and targeted financing and credit measures that reach all Member States and their fleets. In this connection, the EESC is concerned about the current limitations of the European Maritime, Fisheries and Aquaculture Fund (EMFAF), which cannot be used to implement this transition, as recognised by the Commission itself. In addition, in order to meet these costs, the EESC calls for exploring other sources of financing, such as the European Investment Bank, using customs duties for carbon border adjustment, and mobilising resources linked to energy taxation and redirecting them to the fisheries sector. The EESC points out that the average age of the European fleet is 31,5 years (4), and calls on the European Commission to create an emergency fund that would speed up decarbonisation. The Committee also calls for stronger complementarity between existing policies and the cohesion and regional development funds in order to help channel funds and avoid competition between regions.

1.7.

The EESC notes that any energy source change will require new vessels designed in a completely new way, with a higher on-board capacity (gross tonnage) to accommodate new machinery. However, the definition and limits of fishing capacity set out in the Common Fisheries Policy complicate this progress. The EESC therefore calls on the European Commission to review the definition of fishing capacity in order to be able to implement new technologies related to the energy transition.

1.8.

The Committee asks that the EU refrain from introducing taxes on fuel (diesel) used for fishing operations until new propulsion technologies are commercially available and the legislative framework allows the modernisation, installation and use of such technologies.

1.9.

The EESC welcomes the Commission’s proposal to establish a new multi-stakeholder partnership on the energy transition. The EESC believes it is essential to consult not only the fisheries sector but also workers’ unions, technical specialists, shipyards, engineers and ports in order to find concrete, practical and sustainable solutions. The EESC calls for a comprehensive plan in order to strengthen European capacity to build environmentally friendly fishing vessels. Such a plan should provide for particularly favourable tax treatment for shipyards.

1.10.

In particular, the EESC calls for promoting pilot projects on new energy sources, creating innovative sea-industry value chains, providing new and unknown technologies to users, generating sustainable jobs by developing a new industrial activity, and enhancing the circular economy. The EESC also calls for resources to be allocated to train crews to handle new technologies on board safely and effectively. The only way to fairly withstand the impacts of the transition is to avoid burdens falling disproportionately on workers or companies.

1.11.

The EESC would like to take the opportunity of this exploratory opinion to place the problem of decarbonisation into a broader strategic framework. The last section of this opinion outlines a vision for the future of a sustainable EU fisheries sector that should guide the Committee’s future work.

2.   Background

2.1.

On 21 February 2023, the European Commission published the strategy for the energy transition of the EU fisheries and aquaculture sector. The strategy highlights the need to reduce dependency on fossil fuels and to switch to renewable and low-carbon energy sources as soon as possible, in line with the European Green Deal goal of reaching climate neutrality in the EU by 2050.

2.2.

The Commission notes that energy is one of the main operational cost items in the EU fisheries and aquaculture sector. The hike in energy prices resulted in marine-diesel prices more than doubling in 2022 compared to average prices in 2021, putting the economic viability of the EU fleet and aquaculture activities under tremendous pressure. In this context, about 40 % of the inshore fleet, 66 % of the deep-sea fleet and 87 % of the distant-water fleet were not profitable at the energy price levels of 2022. As a result, to continue operations, much of the fisheries and aquaculture sector had to rely on financial support provided by the Member States and by the financial tools made available at EU level.

2.3.

In this regard, the Commission highlights the structural vulnerability of the EU fisheries and aquaculture sector. To change this situation, the Communication proposes several lines of action: — apply innovative technologies and practices for the energy transition; — create a regulatory and financial framework for fisheries fit for the energy transition; — identify and address the challenges of and barriers to the energy transition; — enable the energy transition of the fisheries sector: set up platforms and studies.

3.   General comments

Emissions

3.1.

The EESC supports the commitment to have a carbon-neutral footprint by 2050 and stresses the need to accelerate the energy transition and the decarbonisation of the fisheries sector. This transition should be balanced so that the costs of retrofitting are distributed among all operators in a way that does not distort their ability to operate. Furthermore, the transition should be feasible and take into account the specific characteristics of the fleet (in particular the size and operation of vessels), so that the production structure is able to adopt new technologies leading to new propulsion methods.

3.2.

While GHG emissions from the maritime transport sector have increased globally in recent years, emissions from the EU fishing fleet have decreased by up to 50 % (5) thanks to improved energy efficiency (see examples in points 4.11 and 4.12) and reduced fleet size. On the latter point, despite EU enlargements, the number of EU vessels in 2020 was 73 716 (6), compared to 103 834 in 1996, which means 30 000 fewer fishing vessels in 25 years, with only 56 111 active vessels (75 % below 12 metres). European figures shrink further when viewed against global figures, with the world fleet estimated to comprise 4,1 million fishing vessels in 2020 (7). It is estimated that, with 564 000 vessels, China has the largest fishing fleet in the world. In terms of fisheries production, China accounted for almost 15 % of global catches in 2020, compared to the EU’s 4 %. In view of the above, it is essential to maintain a modern and competitive European fishing fleet.

3.3.

In order to assess progress in the fleet’s CO2 reductions, the EESC believes that it is essential to establish a base year that does not penalise the sector, that recognises its efforts and that continues to guide it towards neutrality. The EESC recognises that the EU fleet has been making progress on the path to climate neutrality since 1990. As a result, it believes that setting 2005 or 2008 as the base year for the reduction of emissions by the fisheries sector would simply not recognise the progress made and would penalise the fishing industry given its specific characteristics and limitations.

Moving to renewable and zero or low-carbon energy sources

3.4.

The fisheries sector is entirely dependent on fossil fuels, which means that any solution must be considered in the medium to long term. However, given the need to combat climate change and take advantage of technological progress in other sectors, the search for solutions for the fisheries sector needs to begin urgently, supported by an emergency fund to accelerate decarbonisation.

3.5.

The EESC highlights, as more realistic measures in the short term, mixed solutions such as the introduction of hybrid engines, the complementary or auxiliary use of existing renewable technologies (solar, wind, electric), as well as the use of advanced alternative fuels (not produced from food and feed crops).

3.6.

The EESC particularly points to renewable low-carbon fuels due to their compatibility with conventional combustion engines and with existing supply systems and their production. In addition, they can be distributed using existing industrial facilities such as refineries. They also increase Europe’s energy independence as indigenous raw materials are used to produce them, unlike the oil or minerals required for battery production. These fuels also create great opportunities for job creation and industrial wealth, and could play a crucial role in boosting Europe’s economy. However, it should be kept in mind that renewable low-carbon fuels are currently more expensive than diesel, and their availability is still very low.

3.7.

The EESC emphasises that some of the new alternative propulsion sources, such as electricity, surged in price before Russia’s unprovoked invasion of Ukraine. The EU must therefore bear in mind that switching from fossil fuels to other renewable energy sources will not always involve a drop in costs.

Need for fleet renewal and appropriate financing mechanisms

3.8.

In addition to the need to close gaps in technological knowledge and innovation, there is a limiting factor intrinsic to the current European fishing fleet: vessels are, on average, over 30 years of age. This means that vessel owners cannot consider the vast majority of potential modernisation investments. The EESC believes that simply changing the engine is neither sufficient nor feasible on such old vessels. As a result, it is essential to put in place an EU fleet renewal plan that will complete the move to sustainable fishing with modern 21st-century vessels. This strategy would also help to improve the fleet’s socioeconomic prospects.

3.9.

The EESC welcomes the Commission’s proposal to develop a specific guide and database on EU funding and financing instruments for the energy transition. However, the Horizon Europe programme currently does not have a specific call for fisheries. In addition, funding under the new European Maritime, Fisheries and Aquaculture Fund (EMFAF) is very limited, as it only has low aid rates for fleet investments, and subsidies depend on the size of vessels (e.g. engine replacement financing measures are limited to vessels under 24 metres). Moreover, funding is heavily dependent on factors such as fleet balance, absence of serious infringements and fishing capacity, which unfortunately is still not being properly measured. In view of the above, the EESC considers it essential to establish a specific fund and credit lines to modernise and renew the fleet.

Barriers to the energy transition

3.10.

As a general rule, alternative energy sources require more space and constitute an additional danger to safety on board. However, unlike the shipping industry, the fisheries sector is subject to capacity constraints in the EU in terms of gross tonnage (space), which makes it even more difficult for vessels to install new technologies and make investments. In this regard, it should be noted that the use of certain decarbonisation technologies on small-scale fishing vessels is even more problematic.

3.11.

The EESC stresses that the inadequate definition of fishing capacity in the common fisheries policy (CFP) not only makes it difficult in general to modernise the fleet by installing new technologies, but also hinders social and safety improvements. The space on board intended for the kitchen, cabins, toilets or recreational areas, which has nothing to do with the capacity to catch or store fish, is now included for fishing capacity purposes. The CFP is in clear contradiction with the requirements laid down in social legislation (8), such as the ILO Work in Fishing Convention C188.

3.12.

The EESC believes that the strategy for the energy transition should take these factors into account and therefore propose a review of capacity measurements, so that new technologies can be introduced and the fleet can be modernised. The new measurements that could be used are the ‘net tonnage’ or the formulas used in Norway and Iceland, which exclude from the calculation those areas intended for workers’ leisure and rest, on the basis of factors such as the allocated quota or the size of the vessel. Such a review could also include the improvements in habitability needed to make the sector more attractive to younger workers, to address the generational gap and to facilitate the inclusion of women in the fisheries sector.

Taxation of traditional fuels

3.13.

As a new structure will prove to be an exercise in economic risk for EU vessel owners, the EESC calls for policies to be adopted that will offer them legal certainty. It is therefore vital to delay the introduction of new taxes on traditional fishing fuel (diesel) until new propulsion and fuel technologies are commercially available and until the legislative frameworks for the necessary renovations are fully in place, otherwise the sector could suffer.

Energy Transition Partnership for EU Fisheries and Aquaculture

3.14.

The sector has no guidelines, either from technology providers or policymakers, on what direction it should take for decarbonisation. The EESC therefore welcomes the Commission’s initiative to set up an expert group to provide advice on the various alternatives available, future developments, market developments, etc. It is particularly important to identify the technologies that will work best for each fleet segment and region, and it may be necessary to combine different energy sources. In addition, it would be useful to carry out information and awareness-raising campaigns on the sea-industry chain in order to incentivise decarbonisation.

The blue economy

3.15.

The blue economy encompasses all economic activities that depend on the sea. The various sectors that make up the blue economy are interdependent (fisheries, biotechnology, seafaring, maritime transport, aquaculture, shipyards, supply chains, logistics and transport), as they are based on common competences and shared infrastructure (ports, logistics networks and electricity distribution), and on the sustainable use of marine resources. The EESC stresses the need to implement a holistic decarbonisation strategy and to find synergies between the various links in the chain. Furthermore, the EESC calls for adequate human resources and skills in order to design, build and operate modern vessels. It is imperative to attract skilled labour.

4.   Specific comments

Advanced fuels

4.1.

The EESC highlights the potential that advanced fuels not produced from food and feed crops offer in terms of the circular economy, the fight against coastal rural depopulation and, of course, the strengthening of the EU’s energy independence. In line with the EU’s CO2 neutrality targets, the net CO2 emissions of such alternative fuels when they are burnt in engines can fall to zero if they are produced with renewable electricity.

4.2.

For various reasons, the Commission limits the use of plant-based biofuels, which the EESC has welcomed in various opinions. However, there is no clear strategy for the development and introduction of alternative fuels, which would be important not only for the fisheries sector but also for other industries. There is also a lack of prioritisation as to which of the hard-to-decarbonise sectors (of which fisheries is one) should have priority access to such fuels. This complicates the fisheries sector’s efforts to advance decarbonisation as quickly as possible. The EESC points out that renewable, low-carbon fuels are a common sense option on the path towards decarbonising sectors that are difficult to electrify, such as fisheries. Advanced alternative fuels that are not produced from food and feed crops will be more expensive, due to their scarcity and more complex technology. As previously pointed out by the EESC (9), for this to happen, the price gap between fossil and alternative fuels needs to be bridged and cleaner fuels need to become more affordable and widely available.

4.3.

The EESC points out that current biodiesels come from crops (palm oil, rapeseed, soybean and sunflower) which do not ensure full decarbonisation; furthermore, there is not enough raw material. The solution (not yet available) would be to mix existing diesel with increasing amounts of electro-diesel, a synthetic fuel made of green electrolytic hydrogen and captured CO2. These e-fuels are produced from carbon dioxide that has previously been captured from the atmosphere or from industrial processes that produce CO2, before it is released.

4.4.

Initially, sustainable advanced fuels will not be produced in sufficient quantities to meet the demand of the fisheries sector, which is estimated to be 50 million tonnes worldwide in 2050 (maritime transport currently consumes around 300 million tonnes and heavy road transport about 900 million tonnes). However, by then, lorries are expected to be electric, so the entire amount could be used for maritime purposes. In 2020, the fisheries sector in Europe consumed around 1 900 million litres of marine diesel. Political decisions need to be made to make sure that such prioritisation will happen.

4.5.

The EESC therefore calls for the accelerated development and production of advanced fuels that are not based on food and feed crops (10) and for a clear political decision giving fishing vessels priority access to these advanced fuels at an affordable price.

Alternatives to decarbonisation: alternative propulsion systems

4.6.

Various energy initiatives have been developed around the world; however, most of them are pilot projects that face a series of challenges in terms of their installation and use in the fisheries sector. Another challenge that needs to be overcome is the need to develop infrastructure in Europe and in fishing ports in third countries to recharge fishing vessels, similar to what we have for land vehicles. In this regard, the EESC welcomes pilot projects launched for offshore charging through the use of buoys or offshore wind farms (11). This way an electric or hybrid vessel would be able to recharge its batteries without having to approach the port.

4.7.

Liquefied natural gas (LNG) as a marine fuel is already a reality, as it is produced and has infrastructure, especially in Europe. However, a recent study (12) shows that, although LNG engines emit 25 % less CO2 than diesel per unit of engine power, this gas is largely made up of methane, whose greenhouse effect is much higher than CO2. The study estimates that, over a period of 100 years, the benefits of using LNG would only be a 15 % reduction in GHG emissions. This is why LNG is an important step forward, but cannot be considered a definitive solution for the long term. In addition, it would have to be mixed with biomethane and e-methane, which are scarce and expensive fuels. Tanks are three times larger than normal and installed on the deck, causing capacity and safety problems.

4.8.

While also not a viable alternative as a means of propulsion, the EESC recognises the importance of ammonia in the decarbonisation process. Ammonia refrigeration is widely used in large fishing vessels, particularly in those that freeze or process their catches on board. This energy source is environmentally friendly because it has no known effect on the ozone layer. However, it is a gas, meaning that it would be vital to strengthen the safety of fishing vessels and better prevent leakage.

4.9.

Hydrogen (H2) also does not seem to be viable in the fisheries sector and is even problematic for merchant vessels. The main reason for this is that it requires storage tanks four times larger than for fossil fuels. However, hydrogen fuel cell engines deserve special mention. This is an electrochemical device that directly converts chemical energy into electrical energy. The electrochemical process that takes place is highly efficient and has minimal environmental impact, particularly if the electrolysis (which requires energy) is produced by solar or wind sources. The EESC believes that it would be worthwhile to assess the possibilities of developing this technology for fishing vessels, including its use as auxiliary energy on board.

4.10.

With regard to newly built vessels, the EESC is keen for technological solutions for merchant vessels to be explored and implemented. For example, it seems that methanol could be used in dual engines, based on using diesel and adding a methanol mixture, as green methanol becomes available. Other technologies and areas for improvement that could be effective include sail-assisted fishing vessels, improved hydrodynamics, improved energy systems, such as switching to electrical mechanisms from mechanical and hydraulic mechanisms, and light construction and materials (e.g. non-metallic trawl doors).

4.11.

It should also be noted that the fishing industry has been working together with the scientific community for decades to improve the design and efficiency of fishing gear. A great deal of technical progress has already been made, with many innovative fishing techniques, as a result of increasing selectivity, reducing contact with the seabed and/or navigation resistance, as well as reducing fuel use (13). An example of innovative gear is semi-pelagic trawl doors that can eliminate contact with the seabed by operating 2–5 metres from the bottom. This technique results in a significantly lower impact on benthic ecosystems and less by-catch. This new technology also reduces fuel consumption and therefore pollution and GHG emissions.

4.12.

The EESC points out that reducing the ecological footprint of fisheries will not depend solely on activities related to propulsion. To this end, the EU should invest in new commercial uses for marine products (pharmaceuticals, cosmetics, etc.) in order to make the maximum possible use of the fish caught. In parallel, the EU should also incentivise companies to use materials that can be recycled, promote circular economy initiatives on board vessels to reuse waste, and finance marine waste-collection programmes such as Fishing for Litter (14). The improvement in the state of fish stocks has also led to a reduction in fishing effort and, as a result, in fishing time, as well as in fuel consumption. Similarly, emission reductions can be achieved by optimising fleet management and logistics (5–50 % GHG reduction) and fishing trips (1–10 % GHG reduction) (15).

4.13.

The EESC notes that some new technologies offer fishing vessels only a limited range. For example, the current electrical energy prototypes offer a range of 5–6 hours, which would be insufficient for a full day of fishing (which can last up to 12–14 hours), not to mention fishing trips lasting several weeks. Improving vessel design and efficiency is equally important.

5.    ‘Friends of fish and fishers’: a vision for the future of a sustainable fisheries sector in the EU

5.1.

In recent years, the European Economic and Social Committee has developed strategic visions in several areas: in comprehensive food policy (16), in sustainable rural-urban development (17) and in a well-being economy (18). The time has come for the EESC to also develop a long-term comprehensive vision for a sustainable EU fisheries sector — a vision that, together with all efforts made in the areas of biodiversity, sustainable food policy, health and well-being, good working conditions, sustainable rural and urban development and strategic autonomy, should commit the EU to decarbonising the sector in order to ensure the economic viability needed to deliver on the European Green Deal and implement the 2030 Agenda. In line with the FAO’s blue transformation strategy, and in the context of the EESC’s broader call for an EU blue deal, the Committee highlights the need to ensure and sustainably increase the contribution of aquatic food systems to healthy, safe, nutritious and affordable diets for all, with the ultimate aim of reducing the EU market’s dependence on fish imports.

5.2.

The EESC would like to take the opportunity of this exploratory opinion to place the problem of decarbonisation into a broader strategic framework. A comprehensive approach for a sustainable fisheries sector should be implemented throughout the following six areas.

5.2.1.   Biodiversity

In line with SDG 14 on ‘Life below water’ and linked to the historic COP15 agreement on biodiversity (19), the EESC reaffirms its unwavering commitment to maintaining healthy and productive fish stocks, as well as to promoting other biodiversity-related aspects in the fisheries sector. All commercially exploited species should reach maximum sustainable yield (MSY) levels or higher within the shortest possible timeframes that would maintain the long-term economic viability of the various fishing fleets. In this regard, scientists carrying out the assessments at the International Council for the Exploration of the Sea (ICES) and the Scientific, Technical and Economic Committee for Fisheries (STECF) should be equipped with the necessary resources so that they can fill in the missing data. Where there is insufficient scientific data, the precautionary principle will be applied systematically to fish stock management, including reducing catches when recommended by scientists. Where necessary, scrapping schemes with adequate budgetary resources to adjust fleet size to fishing opportunities available will involve reskilling options for crew members.

5.2.2.   Decarbonisation

The EU fisheries sector should commit to achieving a CO2-neutral balance by 2050 by meeting the energy transition targets set by the European Union and supported by innovation and technology. A comprehensive study on the state of the art and available technologies is a first step towards finding a tailor-made solution (instead of a ‘one size fits all’) for each fleet segment.

5.2.3.   Fair wages, safety and working conditions

Fishers will receive the tools and guidance needed to focus on the impending and necessary transition, however they should also receive support both during the decarbonisation processes and during the wider structural transformation processes. Renewing fishing vessels in order to improve liveability, living conditions and safety on board (making the sector more attractive, and thus making generational renewal possible) is a priority. Other necessary improvements related to decarbonisation include the shift from propulsion systems and auxiliary systems to others that are more advanced and efficient, and the use of modern, energy-efficient and selective fishing gear that does not have a negative impact (or that has a negligible impact) on the health and biodiversity of the wider ecosystem. This requires a comprehensive study at EU level on the technologies available for the energy transition in the fisheries and aquaculture sector, and their respective costs and benefits for each fleet segment, taking into account national circumstances. Reskilling and upskilling the workforce is equally important so that workers in the maritime industry are trained and prepared for the energy transition (in line with the European Skills Agenda for sustainable competitiveness, social fairness and resilience). Given the precarious economic situation of the fishing industry in many parts of Europe and the continuous reduction of the fleet, strategic plans and instruments should be developed to improve the competitiveness of the sector, supporting its development and innovation to contribute to a fair standard of living for those who depend on fishing activities.

5.2.4.   Rural and remote coastal areas

Although diversification and partial conversion to other areas of activity (such as recreational fishing or other sustainable tourism sectors) can be introduced when allowed by spatial planning, it is undeniable that the fisheries sector remains the main source of employment and income in many coastal regions and localities, not only for on-board personnel but for workers in all related industries and services. Abandoning fishing would mean not only the decline and progressive depopulation of these regions, but also an irreparable loss of the cultural heritage that defines and determines the very essence of our European societies. All actors involved must work in a way that gives a more positive light to the fisheries sector. In addition, inland aquaculture can offer new economic opportunities for rural areas.

5.2.5.   Healthy and sustainable diets

Sustainable fishing provides animal proteins that not only have the lowest carbon footprint but also have excellent nutritional qualities. Current meat consumption patterns of Europeans should prioritise quality over quantity, however this is not the case with fish intake, which is below the dietary recommendations in most cases. Public authorities should prioritise promoting fish consumption at affordable prices for the population as a whole, for example by promoting less well-known species. As the cornerstone of a healthy and balanced diet (20), fish should benefit from reduced VAT.

5.2.6.   Strategic autonomy and the role of aquaculture

The European Union imports three quarters of the fish it consumes. Beyond the trade imbalance there is the problem of the unequal health security guarantees of these imports, which are not subject to ‘net-to-plate’ traceability. To address this shortcoming the EU should use bilateral and multilateral trade instruments to import only sustainable seafood products produced in third countries whose standards are equivalent to those in the EU, ensuring fair competition on a level playing field. Similarly, the aquaculture sector has an undeniable potential to meet the demands of the EU fisheries market. Sustainable growth can be achieved by providing space for new operations through adequate spatial planning and by streamlining the licensing process, which often relies on multiple departments and even different levels (national, regional, local) of public administrations. For the EU to ensure its food sovereignty, every opportunity to sustainably increase fish and seafood production must be seized.

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(1)  COM(2023) 100 final.

(2)  See annual emission data sent annually by the European Commission to the United Nations Framework Convention on Climate Change (Kyoto Protocol), in accordance with the guidelines defined by the IPCC, which display the evolution of CO2, CH4 and N2O emissions in tonnes between 1990 and 2020 for the EU fisheries sector (see Tables 1.A(a)s4, 3sl and 3s2, 1.A(a)s3, 1.D).

(3)  Opinion of the European Economic and Social Committee on ‘Proposal for a regulation of the European Parliament and of the Council on the use of renewable and low-carbon fuels in maritime transport and amending Directive 2009/16/EC’ (COM(2021) 562 final — 2021/0210 (COD)) (OJ C 152, 6.4.2022, p. 145).

(4)  https://oceans-and-fisheries.ec.europa.eu/facts-and-figures/facts-and-figures-common-fisheries-policy/fishing-fleet_en.

(5)  https://ebcd.org/wp-content/uploads/2021/11/Je%CC%81ro%CC%82me-UAPF.pptx.

(6)  https://op.europa.eu/en/publication-detail/-/publication/bba413d1-484c-11ed-92ed-01aa75ed71a1.

(7)  https://www.fao.org/3/cc0461en/online/sofia/2022/capture-fisheries-production.html.

(8)  Social impact study of gross tonnage and propulsion power ceilings and possible alternatives, carried out as part of a social dialogue project.

(9)  Opinion of the European Economic and Social Committee on ‘Proposal for a regulation of the European Parliament and of the Council on the use of renewable and low-carbon fuels in maritime transport and amending Directive 2009/16/EC’ (COM(2021) 562 final — 2021/0210 (COD)) (OJ C 152, 6.4.2022, p. 145).

(10)  Opinion of the European Economic and Social Committee on the communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — Towards a Strong and Sustainable EU Algae Sector (COM(2022) 592 final) (OJ C 228, 29.6.2023, p. 126).

(11)  https://www.maersksupplyservice.com/2022/01/25/maersk-supply-service-launches-venture-company-stillstrom/.

(12)  https://theicct.org/sites/default/files/publications/LNG%20as%20marine%20fuel%2C%20working%20paper-02_FINAL_20200416.pdf.

(13)  https://www.ices.dk/news-and-events/news-archive/news/Pages/InnovativeFishingGear.aspx.

(14)  https://fishingforlitter.org/.

(15)  NSAC Advice Ref. 17-2122. NSAC Advice on decarbonisation of fishing fleet.

(16)  Opinion of the European Economic and Social Committee on ‘Civil society’s contribution to the development of a comprehensive food policy in the EU’ (own-initiative opinion) (OJ C 129, 11.4.2018, p. 18.

(17)  Opinion of the European Economic and Social Committee ‘Towards a holistic strategy on sustainable rural/urban development’ (own-initiative opinion) (OJ C 105, 4.3.2022, p. 49).

(18)  Opinion of the European Economic and Social Committee on ‘The sustainable economy we need’ (own-initiative opinion) (OJ C 106, 31.3.2020, p. 1).

(19)  Decision 15/4, Kunming-Montreal Global Biodiversity Framework.

(20)  Opinion of the European Economic and Social Committee on ‘Promoting healthy and sustainable diets in the EU’ (own-initiative opinion) (OJ C 190, 5.6.2019, p. 9).

Rapporteur:

Florian MARIN

Plenary Assembly decision	25.1.2023
Legal basis	Rule 52(2) of the Rules of Procedure
	Own-initiative opinion
Section responsible	Economic and Monetary Union and Economic and Social Cohesion
Adopted in section	27.6.2023
Adopted at plenary	13.7.2023
Plenary session No	580
Outcome of vote (for/against/abstentions)	181/6/5

1.   Conclusions and recommendations

1.1.

The Committee considers access to safe, clean and quality water a fundamental right and finds it totally unacceptable that there are still people who have no access to water in the EU.

1.2.

Water economy development in the EU should be inclusive, well-regulated, transparent, highly digitalised, resilient, sustainable, predictable and secure, putting people first and generating added value. It is essential for all industries to bear the societal cost of their water consumption in a fair way.

1.3.

The Committee urges the EU institutions to accord equal significance and focus to the EU Blue Deal as it did to the EU Green Deal, with both being fully complementary.

1.4.

The future regulatory framework of the EU Blue Economy has to: — be based on the principle of a wellbeing economy; — transversally integrate social conditionalities and territorial solidarity; — strike a balance between environmental, social and economic concerns; — benefit from transnational innovative governance models that encourage financing, regulate the involvement of the private sector, improve the management of water resources and stimulate EU competitiveness; — adopt collaborative business models and shared economy principles; — adopt an institutional framework that will not burden the competitiveness of EU economic activities in the global market; — offer greater transparency regarding sustainability initiatives.

1.5.

The EESC is calling for: — a shift in the current economic model towards a more sustainable one that taxes overconsumption and is fully consistent with the Sustainable Development Goals (SDGs); — water prices across Member States to be evaluated in accordance with the ‘polluter pays principle’; — adapting basic economic concepts such as market rules, economic viability or productivity to take into account the multilateral values of water; — coherent legislation in all Member States on an EU mechanism for storing water during wet periods; — a long-term strategy to increase resilience against water scarcity; — the Extended Producer Responsibility (EPR) to be extended to residual water management; — addressing the issue of non-revenue water (NRW) (1) by prioritising ongoing maintenance; initiatives aimed at significantly reducing water leakages and research for new technologies for leakage detection; — thorough and immediate evaluation of the underground sewer systems in all Member States, including centralising data at EU level; — adaptation of the State aid rules to the characteristics of water investment; — prices that take long-term water security into account; — investments in working conditions, quality jobs and training and specific activities in this field, especially targeting the younger generation.

1.6.

Acknowledging that achieving progress towards climate-neutral industries should also consider industrial emissions into water, the adverse impacts on human health, and the resulting social costs for society, the EESC calls for the development of specific standards on water usage in different economic sectors, such as agriculture or industry. This can be accomplished by establishing an expert group tasked with creating sector-specific guidelines for water use.

1.7.

The EESC is proposing: — to develop an EU Blue Deal and an EU Water Agenda in close synergy with the EU Urban Agenda (2), the Ljubljana Agreement (3) and the Long-Term Vision for Rural Areas (4); — a rationalisation of water consumption through the implementation of the following measures: — price differentiation between consumption for domestic use and essential public services, and consumption for productive use; — a pricing system that effectively discourages unsustainable consumption while incentivising consumption for productive purposes; — that the design of the price include a minimum requirement of free water to ensure human rights; — to ensure full transparency of the costs and price of water towards all stakeholders; — public planning exclusively at a river basin level (including underground water) in such a way that the EU general interest is protected and ensuring that the required ecological water flow is maintained at the originating body of water; — to adopt and strengthen regulatory frameworks on water concession agreements to manage water as a public good, more than as a commodity that can be traded. Prices for the population should reflect that water is a public good; — to dedicate specific attention and financing to cross-border water projects; — exchange of significant water-related innovations among Member States and encouraging bottom-up experimentation taking into account the specificity and complexity of water.

1.8.

The Committee considers EU funds vital for sustainable transition of water and is calling for: — Member States to treat water investment as a high priority in reallocations within the various programmes; — increased complementarity between European Structural and Investment Funds (ESIF) (5), the Recovery and Resilience Facility, InvestEU, Interreg Europe and other funds; — a dedicated call for proposals and guidelines that take the complexity and specificity of water into account; — a dedicated operational programme for water and for Integrated Territorial Investments (ITI) for the blue economy; — water sectors to be recognised as a strategic priority in the 2028–2034 programming period and, where relevant, a dedicated operational programme for water; — a Blue Transition Fund; — assuring technical assistance for Member States to implement water projects.

1.9.

The Committee considers it crucial to incorporate resilience into water-related investment evaluation criteria, as it can reduce the expenses associated with recovery from unpredictable events, when paired with optimal investments in risk-reduction measures.

1.10.

Efficient coordination and complementarity should exist between the European Commission, European Investment Bank (EIB) and European Bank for Reconstruction and Development (EBRD) in terms of financing water investments alongside common Key performance indicators (KPIs) within the EU strategic framework.

2.   Policy and strategic framework

2.1.

Water economy development should be inclusive, well-regulated and transparent, while taking into account the many differences across regions and communities. It should also be highly digitalised, resilient, sustainable, predictable and secure, ensuring complementarity across industrial sectors and actors, putting people first, protecting life and generating added value through a tailored approach in a sustainable and fair ecosystem.

2.2.

The EESC highlights the importance of new perspectives on policy frameworks, institutional arrangements and investment planning, including greater transparency regarding sustainability initiatives and the creation of precise guidelines and classifications for sustainable and innovative investments. Since the sustainable use and protection of water and marine resources is one of the six environmental objectives established in the Taxonomy Regulation (6), specific delegated act for sustainable use of water are needed (green labels, ecosystem restoration). The EESC highlights the EU’s shared values pertaining to services of general economic interest, as defined in Article 14 of the Treaty on the Functioning of the European Union (TFEU), and outlined in Protocol No 26 on services of general interest attached to the Treaty on European Union (TEU) and the TFEU (7).

2.3.

The specificity of water requires the water economy to be regulated with full respect for human dignity and rights, transversally integrating social conditionalities, equitability and basic human and societal needs. The EESC calls for an adapted judicial system for the water sector, built in cooperation with international organisations, with fast procedures to deal with water-related disputes. Dedicated supranational and multisectoral monitoring structures and governance bodies should be established for more efficient and appropriate control of businesses in the water sector and water use in general. The role of the public sector in water management should be increased, when the market is incapable of guaranteeing fair access to water for everyone.

2.4.

The EESC concludes that specific institutions in all Member States should be established with the goal to ensure that informed decisions are made regarding water use and that water is used responsibly and efficiently. In order for citizens to fully exercise democratic control, it is necessary to ensure that citizens know the water cycle and its price. The Committee calls for the EU Blue Deal to have the same level of importance and attention as the EU Green Deal did.

3.   The Blue Economy

3.1.

The EESC believes that the future of the water economy should be based on the principle of a wellbeing economy and calls for basic economic concepts such as market rules, economic viability or productivity to take into account the various values of water. Competitiveness should be redefined so that it generates prosperity, taking into account human needs and fair access to water for people, communities and industries. The social aspects should be transversally integrated in the water economy.

3.2.

There is a clear need for a paradigm shift in governance to consolidate the water economy, including striking a balance between environmental, social and economic concerns. Innovative transnational governance models that encourage financing, regulate the ethical involvement of the private sector, improve the management of water resources and stimulate EU competitiveness are necessary.

3.3.

The pressure on water economy business models is fuelled by the effects of climate change, greenhouse gas emissions, rapid urbanisation, migration, population growth in industrialised urban areas and industrial activities, but also innovative sectors such as blue bio-economy, bio-technology and desalination. Businesses should integrate collaborative business models and shared economy principles to better respond to current water-related societal and environmental challenges. Interaction and cooperation between local, regional, national and international institutions taking into account the many types of stakeholders present in the water sector and cross-sectorial dialogue must be intensified.

3.4.

The Committee urges the Commission to establish a fair competition framework for EU-based companies as regards their global counterparts, and to strengthen the implementation of international agreements on economic collaboration, working conditions and environmental protection.

4.   Water economics

4.1.

The EESC believes that the current economic model that encourages water consumption through taxes and incentives should be reversed to become a more sustainable one that is fully consistent with the SDGs. Water use should not only be sustainable, but also contribute to restoring nature in the short and long term. The EESC is asking for a global fiscal deal for financing the climate efforts and water investments.

4.2.

Clear and efficient coherence between various taxes imposed on water at local, national and European level should be facilitated. The EESC is calling for: — the development of a water tax system for ground and surface water based on deductions for facilitating access to water for every person and industrial actor; — water prices across Member States to be evaluated in accordance with the ‘polluter pays principle’; — imposing taxes and surcharges for unsustainable water use, while incentivising sustainable use of water; — a revision of the EU Industrial Emissions Directive (8) as regards impact on the EU water ecosystem.

4.3.

The EU is facing increased demand for water, a situation which will become more prominent in the future. Differences between water supply and demand can be a result of either water scarcity or floods, which can have devastating consequences. The imbalances between water supply and demand are negatively impacting industries, consumers and citizens. Progress towards achieving climate-neutral industries should consider industrial emissions into water (9), as well as the adverse effects on human health and the resulting social costs to society. It is essential for industries to bear the societal cost of their water emissions.

4.4.

The EESC demands coherent legislation in all Member States on an EU mechanism for storing water during wet periods, namely though construction of storage tanks and underground aquifer recharge systems. The EESC is asking for a long-term strategy to increase resilience against water scarcity, taking into account the regional climatic specificities and industrial characteristics.

4.5.

Restructuring water price design in Europe needs to take into account sharing the burden for ecosystem services among stakeholders and a differentiated approach in implementing the full-cost pricing principle. One of the approaches is that water for domestic use and essential public services should have a significantly lower price than the water used for productive activities. Price incentives should take into account the link between marginal cost pricing and economic efficiency, equitability and sustainability, and be part of a larger package that encourages sustainable water consumption.

4.6.

The Committee demands full transparency of the costs and price of water towards all stakeholders. The EESC is asking for administered prices in certain well-defined situations and requires careful monitoring to ensure household consumers receive the services they are paying for. Water commercial speculation should be avoided.

4.7.

The EESC notes that the impact of pollution and overexploitation of groundwater aquifers places a disproportionately high burden on poor and socially vulnerable people. Water tariffs must be evaluated with great attention, as they can have distortive effects, generate water poverty and create social distress among the population. The EESC is asking that constructive discussion at EU level on a fair water price design be started. The design of the price should include a minimum requirement of free water to ensure human rights. The structure of the prices should take into account current and future societal, climate and industrial challenges. The EESC is suggesting that the price design transversally take into account long-term water security.

4.8.

The EESC believes that Extended Producer Responsibility should be extended to residual water management and supports the current revision of the Urban Waste Water Treatment Directive (10) (11). Synergy between EPR schemes, eco-design and information requirements should be introduced. Dedicated awareness campaigns connecting disparate and diverse stakeholders should be put in place for consumers in order to understand and recognise the sustainable use of water.

4.9.

To ensure adequate maintenance of water systems and encourage increased water supply, it is crucial to address the issue of non-revenue water by prioritising ongoing maintenance initiatives aimed at significantly reducing water leakages. In order to properly finance such initiatives, the introduction of a ‘golden rule’ for public investments is necessary. The EESC underlines that poorly managed and underfunded maintenance, coupled with inadequate asset management, are causing significant economic losses. New technologies to detect leaks have to be developed immediately and dedicated support should be developed in this regard.

4.10.

The Committee is worried about insufficient assessments of the condition of underground sewer systems in many Member States and demands a thorough and immediate evaluation, including centralising data at EU level. The cost of not intervening is far greater than the cost of repairs in sewer networks.

5.   Regional implications of water

5.1.

Access to safe, clean and quality water is a fundamental right and vital to everyone’s health, dignity and prosperity. The Committee finds it totally unacceptable that there are still people who have no access to water in the EU.

5.2.

The EESC considers it vital for water to be mainstreamed in all related policies (energy, commercial, industrial, agriculture, etc.) and that Member States ensure synergies between investments in various sectors adjacent to water, like urban development, food, agriculture and energy. Water is crucially important for urban and rural development.

5.3.

The EESC is proposing that an EU Blue Deal and an EU Water Agenda based on water investment partnership be developed, in close synergy with the EU Urban Agenda, along with a thematic partnership concerning water in accordance with the Ljubljana Agreement and in full complementarity with the Long-Term Vision for Rural Areas. Assuring territorial solidarity, adapted multilateral governance structures for dealing with differences between rural and urban areas and consolidation of regional water operators are important.

5.4.

Particular attention should be given to islands in the Mediterranean area and outermost regions that face water supply shortages during specific drought periods due to their geographical location. For these areas, the necessary water supply must be ensured through a system that guarantees supply to families and economic operators.

5.5.

The EESC is proposing public planning exclusively at a river basin level (including underground water) in such a way that the EU general interest is protected, and ensuring that the required ecological water flow is maintained at the originating body of water. Measures and water investments to protect areas from flooding or, anticipating droughts and protecting navigability, aim to retain more water, should aim at the same time to enhance biodiversity and respect geomorphological characteristics of the river basin.

5.6.

Considering its public nature, the EESC is suggesting that the right of use of water should be well defined, measured and monitored, taking into account all legal forms like concessions, permits, licenses, contracting rights and outright ownership, along with respecting water as a common good. The use rights should be easily measurable in well-defined terms.

5.7.

The EESC recommends that the EU adopt and strengthen regulatory frameworks on water concession agreements to manage water as a public good, beyond and more than as a commodity that can be traded. Prices for the population should also reflect that water is a public good with full respect of Article 14 of TFEU and Protocol 26 annexed to TEU and TFEU. The EESC is calling for restrictive rules in order to protect the water resources of the EU from being used in the interest of non-EU stakeholders.

6.   EU funds

6.1.

The EESC is asking for more synergy at the level of the call for proposals and operational programmes to tackle the specificities of water investments and maximise the quality absorption of the EU funds dedicated to water and the blue economy. The seasonal and cyclical characteristics of water activities at the call for proposal level and in programming should be taken into account. The Committee is calling on the Member States to treat water investment as a high priority in reallocations within the various programmes, and for the adaptation of the State aid rules to the characteristics of water investment.

6.2.

The EESC considers the European Maritime, Fisheries and Aquaculture Fund (12) insufficient to support the development and transition of the blue economy. It is urgent to diversify the eligible activities, increase complementarity between ESIF (13), the Recovery and Resilience Facility, InvestEU, Interreg Europe and other funds. Furthermore, the competition principle of ESIF water projects should account for the basic needs that water is meeting.

6.3.

The EESC notes that Community-Led Local Developments, Fisheries Local Action Groups and Integrated Territorial Investments (ITI) are instruments which only partially cover water investment needs. The EESC calls for a dedicated operational programme for water and for an ITI for the blue economy, a correlation between different calls for proposals and an impact assessment of investment financed by EU funds which are targeted at water infrastructure. The EESC suggests that a Blue Transition Fund should be established by either ensuring a thematic concentration of the existing funds, or adding new funds. The fund should be dedicated to water-poor regions and should cover the transition towards sustainable water management, avoiding inequalities concerning water access and to support the EU 2050 targets being in full complementarity with the Just Transition Fund.

6.4.

The EESC concludes that water sectors should be recognised as strategic in the 2028–2034 programming period of the next MFF, and, given its recognised role as the voice of EU organised civil society, the EESC should be involved in the Smart Specialisation Platform for Sustainable Blue Economy (14). The EESC is proposing to add a mandatory ex ante conditionality for the 2028–2034 programming period.

7.   Financing the transition to new sustainable business models

7.1.

The EESC advises Member States to investigate how public budgets and risk-mitigation tools (like guarantees and credit enhancement instruments) can be strategically employed to improve the risk-return profile of investments and attract commercial finance, crowdfunding and equity investments. The Committee is worried that public funding allocation will be problematic in some Member States due to the current level of public debt, increased interest rates and deterioration of sovereign credit rating. The EESC notes that the financing of private investments in the construction of water networks can be discouraged by the risk of facing corruption and regulatory unclarity, as well as, by the fact that such investments have a medium to long-term time horizon.

7.2.

The EESC believes that water-related sustainable investments should be enhanced by using sustainable financing instruments like green bonds, social bonds and green loans, accompanied by consistent definitions of sustainability across various jurisdictions and greater level of standardisation and transparency in data. The EESC is proposing the regulation of blue bonds for water investments at EU level, along with tailored investment instruments for water dedicated to SMEs (e.g. via seasonal credits). The EESC is also asking Eurostat to provide a dedicated chapter and statistics for water economy data.

7.3.

Incorporating ESG (15) factors into the investment decision-making process enables a wider range of investment opportunities and promotes financial stability. The EESC demands investments in infrastructure, working conditions, quality jobs and training, and calls for specific activities and campaigns for water literacy, especially targeting the younger generation. Assuring a predictable and long-term career path and adequate wages is crucial for maintaining the human resources in the water sector.

7.4.

Member States must understand, promote and support water investments, including using technical assistance funds, and dedicated support should be delivered by the Commission in this regard, especially in opportunities to reuse water. The EESC considers it crucial to direct financial resources towards projects that reduce water consumption and generate water re-use in all Member States, in line with Article 9 of the Water Framework Directive (16).

7.5.

Efficient coordination and complementarity should exist between the European Commission, EIB and EBRD in terms of financing water investments. This includes the development of common KPIs within the EU strategic framework, as well as the cyclical monitoring within the European Semester. Public banks across the EU also have an important role regarding water investments, and stakeholder collaboration with private banks should be consolidated.

8.   Investments

8.1.

Investment decisions in the EU must follow a thorough evaluation of the long-term water demand, availability of water resources and financing options, while also considering the challenges posed by climate change adaptation. The Committee believes that long-term investment planning should also quantify specific demographic trends and should be aligned with initiatives in other sectors, such as urban planning, land use or agriculture. Improvement in water facilities should also take into account maximising blue carbon storage. The EESC is urging Member States to implement synchronised spatial planning initiatives and big data analytics systems. Investment and financing in the water sector should take the operational expenses into account in an integrated way.

8.2.

The EESC is asking for dedicated standards concerning water use in various economic sectors, for instance agriculture and industry, by building an expert group to develop sectorial water use guidelines, which would include the EESC.

8.3.

Innovation and technology are key to drive efficiency in water management. The exchange of significant water-related innovations among Member States and the encouragement of bottom-up experimentation are crucial. Additional efforts are necessary to evaluate the economic, social and environmental costs and benefits of various investment pathways, ranging from local level to basin, national, trans-boundary and even global level. Implementing innovative technologies, such as low-cost satellite monitoring systems that track critical water parameters, can enhance the collection and analysis of water data. The involvement of the Member States should be taken into account in this regard.

8.4.

To raise adequate long-term capital aligned with the SDGs, natural capital projects related to water that face higher structural risks often require de-risking. Higher costs, lower earnings and financial losses related to water risks need to be carefully considered. Traditional loans and grants, venture capital, private and public equity, pension and investment funds should also be used. The possibility of green-washing persists as a result of a lack of consistent standards for green bonds and ESG investment funds.

8.5.

The Commission must encourage the use of all relevant EU funds and partnership opportunities through social partners and civil society organisation networks to reach all stakeholders, with particular emphasis on SMEs. Blended finance can play an important role due to the low return of water infrastructure projects, nevertheless water service companies are still a good investment vehicle.

8.6.

The EESC considers it crucial to incorporate resilience into water-related investment evaluation criteria. Resilience can reduce the expenses associated with recovery from unpredictable events like storms, floods, wildfires, droughts, cyber-attacks or pandemics when paired with optimal investments in risk-reduction measures. Specific attention and financing should be directed towards cross-border water projects.

8.7.

Insufficient investment and lack of efficiency expenditure in water-related projects is the main reason why the EU and the rest of the world are not making significant progress in achieving SDG 6 on water and sanitation. The EESC highlights that Europe has the opportunity to transform water-related challenges into novel prospects for technology development, societal advancement and business growth, with the ultimate goal to achieve a water-secure and resilient economy, with full and productive employment opportunities and quality jobs for all. The EU can become a global leader in the water reusage field.

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(1)  Non-revenue water (NRW) is water which is lost in the water distribution system, never reaching its final destination. This means water not used or paid for, which affects local economies as well as available local resources.

(2)  Urban Agenda for the EU.

(3)  Ljubljana Agreement and Multiannual Working Programme — Renewing the Urban Agenda for the EU.

(4)  Long-term vision for rural areas: for stronger, connected, resilient, prosperous EU rural areas.

(5)  2014-2020 European structural and investment funds.

(6)  Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (OJ L 198, 22.6.2020, p. 13).

(7)   OJ C 202, 7.6.2016, p. 307.

(8)  Directive 2010/75/EU of the European Parliament and of the Council of 24 November 2010 on industrial emissions (integrated pollution prevention and control) (OJ L 334, 17.12.2010, p. 17).

(9)  Industrial pollutant releases to water in Europe, European Environment Agency.

(10)  Proposal for a revised Urban Wastewater Treatment Directive.

(11)  Council Directive 91/271/EEC of 21 May 1991 concerning urban waste-water treatment (OJ L 135, 30.5.1991, p. 40).

(12)  European Maritime, Fisheries and Aquaculture Fund.

(13)  2014-2020 European structural and investment funds.

(14)  https://s3platform.jrc.ec.europa.eu/blue-growth.

(15)  Environmental social governance (ESG).

(16)  Directive 2000/60/EC of the European Parliament and of the Council of 23 October 2000 establishing a framework for Community action in the field of water policy (OJ L 327, 22.12.2000, p. 1).

Rapporteurs:

Kinga JOÓ and Carlos Manuel TRINDADE

Plenary Assembly decision	25.1.2023
Legal basis	Rule 52(2) of the Rules of Procedure
	Own-initiative opinion
Section responsible	Employment, Social Affairs and Citizenship
Adopted in section	21.6.2023
Adopted at plenary	13.7.2023
Plenary session No	580
Outcome of vote (for/against/abstentions)	171/19/22

1.   Conclusions and recommendations

1.1.

The EESC fully endorses the United Nations resolutions affirming that water is a basic human right (1) and that it is fundamental to the enjoyment of life and all human rights (2). The UN Sustainable Development Goals (SDGs), in Goal 6, and the European Pillar of Social Rights (EPSR) of the European Union, in principle 20, establish the general principles of the right of access to water. In a scenario of climate change, water poverty takes on greater importance and requires public policies to combat it. In a situation of water scarcity, it is the vulnerable population that is more affected.

1.2.

The EESC calls on the European Commission and the Member States to apply a human rights-based approach to all water policies, and to address water poverty, thereby also aligning with the EPSR. Water and sanitation services (WSS) should be sustainable, equitable, effective, of high quality and affordable for all, and should pay special attention to vulnerable social groups.

1.3.

The EESC believes that universal access to drinking water and sanitation of high quality at fair prices for the population should be treated as a public good and not merely a commodity, which is why it should not be managed according to the rules of the single market.

1.4.

The EESC calls on the Commission to promote a common approach to understanding water poverty at EU level and develop a comprehensive definition of water poverty that allows for a tangible and shared understanding of water poverty (3), and within which each Member State can develop its own context-dependent definition, in accordance with the European one.

1.5.

The EESC calls on the Commission to develop common guidelines to monitor access to quality and affordable WSS (4) and their spatial, social and gender disparities at Member State and EU level, as well as to map the state of play and regularly monitor developments. Data should be reliable, valid and publicly available. This is also necessary in order to comply with Article 16(a) of Directive (EU) 2020/2184 of the European Parliament and of the Council of 16 December 2020 on the quality of water intended for human consumption (5) (called hereafter the Drinking Water Directive (DWD)), and the EESC expects that the European Commission proposal for the Recast of the Urban Wastewater Treatment Directive (UWWTD) (6), introducing an Article 19 on Access to Sanitation, will be adopted.

1.6.

The EESC proposes to the Commission that the forthcoming review of the DWD should include the guarantee of universal access to WSS, as set out in UN SDG 6. The EESC advises the Commission to adopt common guidelines for the pricing of water and sanitation, within which the Member States can develop their context-dependent regulatory frameworks. Such guidelines should respect the human right to water and the principle of non-degradation, similar to that recommended by the UN on human rights and access to drinking water and sanitation.

1.7.

The EESC emphasises that paying for WSS services should not compromise the fulfilment of other social needs. Therefore, the EESC calls on the Commission to make an overview of measures applied in all Member States concerning affordability and specifically on vulnerable consumers. On the basis of this overview, we call on the Commission to develop common guidelines for Member States to identify households with affordability problems, and more specifically vulnerable consumers, and measures to address them. Such guidelines should ensure that no users in a situation of vulnerability have their water supply disconnected (7). Measures should be based on a holistic view of affected households’ situations and should apply social policy instruments, housing policy measures, and specific measures concerning WSS services in a context-specific manner. The principle of solidarity should be taken into account in financing such measures; in addition to public funding, innovative forms of funding should be explored, e.g. establishing dedicated funds incorporated in water bills.

1.8.

The EESC recommends that the EU adopt and strengthen regulatory frameworks on water concession agreements to manage water as a public good rather than as a commodity that can be traded. Such regulatory frameworks should: (a) be aligned with human rights; (b) promote sustainability of aquatic ecosystems; (c) be established and implemented in a transparent manner with public participation; (d) complement the framework of concession rights with public institutions to recover water use rights in exchange for fair compensation and reallocate them during drought crises to users in emergency situations.

1.9.

The EESC notes that there is a fundamental difference between public and private water management and good and bad examples can be found in both. However, private management, due to its focus on profit, may have difficulty meeting the fundamental requirement of universality of service, i.e. serving 100 % of the population. The EESC believes that public water management is in a better position to guarantee universal access to water and sewage systems at a fair price and with adequate quality standards and the restoration and protection of ecosystems.

1.10.

The EESC believes that the EU and all Member States should adopt an environmental vision and develop programmes to fund water distributors to achieve a reduction of leaks and losses, one of the greatest scourges of water resource management. The EESC calls on the Commission and the Member States to consider and support new and innovative technical solutions to tackle water scarcity, such as increased use of grey water and treated wastewater, and decentralised, small-scale waste water treatment facilities.

1.11.

The EESC calls on the Commission and the Member States to provide public funding for infrastructure development, with specific regard to resource-poor property owners and socially deprived urban and rural neighbourhoods with prolonged infrastructure renovation needs. Development of water and sanitation infrastructure related to the Renovation Wave should be considered. Furthermore, in spatial planning, environmentally, economically and socially sustainable provision of WSS services should be considered.

1.12.

Carefully noting the existence of numerous river basins in Europe that involve multiple Member States, the EESC advises the adoption of a political and technical governance framework and the participation of civil society for each of the existing basins in the EU (see points 6.4 and 6.5). The EESC suggests that the Commission assess the performance of river basin management and introduce political, technical and participatory mechanisms to improve it. The Commission should introduce a River Basin Council that represents all stakeholders as a body to assist the River Basin Authority and give itself a role as mediator in transboundary conflicts.

1.13.

The EESC recommends that the Commission: — regulate super-water-intensive agricultural and industrial projects in relation to downstream environmental and social problems and, in some cases, develop a phase-out stage for these projects, finding solutions for the businesses, workers and territories involved, and allocating the necessary funds to achieve a balance in the solution found; — develop legislation to ensure a minimum flow that reaches the sea; — ensure that the EU adopts emergency plans prioritising access to water for human consumption in a scarcity crisis.

1.14.

The EESC suggests that the EU draw up policies to protect consumers, ensuring that everyone has access to safe drinking water at a fair price and to adequate sewage systems. These policies should include the participation of the various stakeholders concerned (consumers, workers, businesses) in consultation bodies.

1.15.

The EESC calls on the Commission and Member States to take measures to improve the awareness of EU residents on the value of water, the importance of access to water and sanitation for all. The potential of communication and education to raise awareness should be utilised to promote more sustainable use of WSS services (8). Children and young people should be targeted as key actors in sustainable use of WSS services in the future, however, awareness raising should encompass all age groups. In the case of households in water poverty, awareness raising should be integrated into other measures to improve households’ access to quality and affordable WSS.

1.16.

The EESC emphasises that the EU’s and the Member States’ water policies should be accompanied by systematic surveys of the personnel requirements in the water sector including the necessary qualifications, workforce development, and occupational health and safety management. These should be carried out together with the social partners in the sector.

2.   Introduction and scope of the opinion

2.1.

Water is fundamental to all aspects of life. It is also a key part of sustainable development and is essential for the peace of our civilization. Climate change has already exacerbated water-related problems, and it will continue to do so on an even larger scale in the future. Inadequate freshwater supplies are putting an increasing strain on human communities, especially vulnerable groups.

2.2.

In 2010 (9), the UN General Assembly explicitly recognised the human right to water and sanitation, reinforced by the 2023 UN Water Conference (10). The UN also acknowledges that clean drinking water and sanitation are essential to the realisation of all human rights. The 17 internationally agreed SDGs of the UN include Goal 6 — ‘Ensure availability and sustainable management of water and sanitation for all’. Alongside these global commitments, principle 20 of the European Pillar of Social Rights states that ‘everyone has the right to access essential services of good quality, including water and sanitation’.

2.3.

The EU has established a comprehensive legal and governance framework to ensure the sustainable management of its water resources, and has made progress in implementing it (11) (12). Previous EESC opinions advocate linking challenges associated with water to measures to tackle poverty and the goal of eradicating it (13), promoting the provision of water and sanitation as vital public services for all (14), and facilitating access to drinking water for vulnerable groups and people living in isolated locations and in disadvantaged or peripheral rural areas (15).

2.4.

This own-initiative opinion draws attention to the current challenges concerning access to clean water and sanitation. It also explores measures to be taken at European, national and local level and the role of organised civil society in tackling water poverty and its effects, notably on the most vulnerable. Finally, it examines ways to mitigate the social, political and economic effects of water poverty and its impact on human health.

2.5.

Water poverty is present in the EU, despite the EU’s relatively favourable position in global terms. Lack of access to good quality and affordable water and sanitation, a situation which can be described as water poverty, is an everyday experience for millions of EU citizens. In other words, millions of Europeans are denied the right to access affordable and good quality water and sanitation.

2.6.

However, water poverty has far-reaching social, economic and environmental consequences, including health risks at the individual and community level, decreased employability, and the deterioration of the local economy, social exclusion, environmental pollution, movements/migration of population, and political instability. Such consequences are vastly disproportionate to households’ share of water use and wastewater production compared to industry and agriculture. This is reflected in the fact that the first successful European Citizens’ Initiative concerned access to water and sanitation, demanding guaranteed WSS services for all in the EU, human rights above market interests in water provision and increased EU efforts to ensure universal access to water and sanitation (16). Addressing water poverty is necessary in order to achieve the political priorities of the EC, with specific regard to the Green Deal and its promise to leave no one behind.

2.7.

The DWD establishes an obligation for Member States to take all measures necessary to ensure access to drinking water for vulnerable and marginalised groups. However, it fails to recognise the universal right of access to safe drinking water and sanitation, as included in the SDGs. The EESC calls on the EC to include this recognition in the next revision of the DWD.

2.8.

The EESC notes with regret that the available data are limited and fragmented, which makes obtaining a comprehensive overview of the scale and characteristics of the phenomenon difficult.

3.   Access to quality water and sanitation

3.1.

2,2 % of the EU population, approximately 9,8 million people, do not use safely managed drinking water from an improved source, accessible on their premises (17). A further 2 %, approximately 9,4 million people, can only access basic drinking water services outside their premises (18). Approximately 450 000 people resident in the EU (19) do not have access to even basic drinking water services. 6,7 million people in the EU, 1,5 % of the population, live without sanitary facilities, that is to say in a household with neither a bath, a shower or an indoor flushing toilet, while 84,5 million people, 19 % of the population, live without access to at least secondary wastewater treatment (20).

3.2.

Water poverty particularly affects vulnerable individuals and households. — Households in poverty are more than three times likely to live without sanitary facilities (21). — Lack of access to water, sanitation and hygiene (‘WASH’) has a disproportionate impact on women in multiple ways, for example due to their disproportionate role in performing household chores, and due to issues associated with menstrual hygiene management. — Children are disproportionately affected, being more prone to the consequences of poor hygiene. — People living with a disability or specific needs also experience increased exposure to the consequences of water poverty. — Homeless people, especially rough sleepers, are severely hit by the lack of WASH, due to their extreme housing poverty. — Europe’s largest ethnic minority, Roma people, are highly affected by a lack of access to safe and affordable drinking water and sanitation. Every third Roma person lives in housing without tap water (22), and just over a half have an indoor flushing toilet or a shower (23). There are examples of marginalised communities, in which Roma are overrepresented, being denied even basic drinking services, through public taps being closed down (24), and living in areas impacted by groundwater contamination due to economic activities (25). — Migrants, especially undocumented migrants in emergency accommodation and informal accommodation can be especially exposed to poor access to WSS. — Lack of access to affordable water and sanitation can impact vulnerable households’ family businesses, creating social and economic problems.

3.3.

Spatial disparities in water and sanitation infrastructure are an important — though not the only — factor in socially disparate access. In many areas, infrastructural problems and social problems intersect. Marginalised rural communities may be in an especially disadvantaged situation. In addition, in resource-poor neighbourhoods with prolonged renovation needs, poor quality infrastructure contributes to water poverty and environmental problems.

3.4.

Meanwhile, demographic changes affect the spatial distribution of demand for WSS services. Urbanisation increases pressure on WSS services in many densely populated urban areas. In other parts of the EU, especially — but not exclusively — rural areas, population decrease poses challenges to the operation of networks.

3.5.

While the aforementioned problems with lack of access to WSS primarily affect social groups, a much higher proportion of the EU population — 30 % on average — is affected by some form of water stress, i.e. a mismatch between the demand and supply of water (26). People in southern Europe face severe water stress problems throughout the year. In other parts of Europe, water shortages occur occasionally and in specific hotspots. In total, 8 million people in Europe live in areas of high drought frequency or water stress (27). Climate change is projected to cause a further seasonal reduction in water availability in most parts of Europe.

3.6.

Moreover, by altering hydrological cycles, altering rainfall patterns, and increasing temperatures, climate change is a major factor affecting water stress, and has a direct impact on WASH in multiple ways. Droughts, temperature increase and even extreme rainfall reduce water availability and quality, and damage infrastructure, leading to difficulties in maintaining hygiene and sanitation behaviours. Sea-level rise may reduce the availability of drinking water due to flooding and saline intrusion. Evidence specifically for Europe is scarce; however, based on global trends it can be reasonably assumed that climate change has disproportionate effects on vulnerable individuals, households and communities (28).

3.7.

The amount of water used by households changes considerably depending on the Member State, varying between 77 to 220 litres per capita per day (29). In eastern Member States, consumption tends to be lower than in western Member States, with some southern Member States being the largest consumers; however, there are outliers (30).

3.8.

Though the quality of water in the EU is generally good, quality problems persist in some areas, as shown by the non-compliance cases launched against some Member States based on the DWD. In addition, lack of access to safely managed drinking water, especially basic water services, does carry a high risk of unsafe drinking water use.

3.9.

Satisfaction with drinking water quality is generally high, though not universal. Survey data from the mid-2010s shows that 82 % of EU residents considered the quality of drinking water in the area where they live to be good (31), with approximately 7 % disagreeing. The general assessment of drinking water in the EU was much less favourable, with just 27 % agreeing with the statement there is good access to wholesome and clean water in the EU overall.

3.10.

While the overwhelming majority of EU residents use tap water for washing, personal hygiene and cooking, the proportion of people using tap water for drinking is somewhat lower. In the mid-2010s, over 90 % reported using tap water for cooking, while only 55 % said they always use tap water for drinking directly, with an additional 10 % always drinking tap water after filtering it.

3.11.

Over recent decades, water has gone through a process of commodification and WSS services have undergone a process of privatisation and financialisation. In more recent years, these processes have been called into question and there are already examples of municipalities that have taken water services back. Water is essential to life, a common good, and a human right. In this context, the EESC believes that, as services of public interest, WSS services should be subject to a clear regulation guaranteeing service obligations, in order to ensure that water and wastewater management are universally achieved at an affordable price and with sufficient quality of service. The Commission should maintain exemptions for water and wastewater in the Concessions Directive (2014/23/EU) (32) granted as a result of the successful European Citizens’ Initiative on the ‘Right2Water’. The EESC recommends that the Commission exempt water services from the rules of the single market.

4.   Affordability

4.1.

The affordability of WSS services is a growing concern for EU residents — among other reasons, due to the recent energy price increase — and expenditure for these services is expected to increase. Though, generally speaking, WSS costs do not pose an excessive burden on households, they often do so for low-income households, and the number of households affected is likely to increase. Using a 3 % threshold, in 13 EU countries the poorest 5 % of the population faces affordability problems for WSS, and in some countries even the lowest 10 % of the population are affected (33). Meanwhile, such an approach to measuring affordability problems may be debated, may be difficult to measure, and may not indicate the full scale of the problem in that it fails to take into account households that under-consume, differences in water pricing (34), and the relative income situation of households.

4.2.

The price of WSS shows a high degree of spatial disparity between and within countries (35), and, due to the lack of detailed statistics, no comprehensive overview can be made. However, distribution systems in rural areas are characterised by longer networks and higher operation costs, leading to higher tariffs.

4.3.

In addition to lower income, vulnerable households may be more prone to issues of affordability due to poorer quality, less efficient equipment, and more time spent at home. Marginalised women, children and young people, as well as unemployed people, are disproportionately affected.

4.4.

While prevailing affordability problems call for targeted and effective social measures, at present no comprehensive view can be obtained on EU Member States’ measures to address affordability problems, including measures concerning vulnerable consumers. In addition, no comprehensive view is available on the possibility — or lack thereof — of service discontinuation, and on minimal service. However, partial information is available for some countries (36), which shows a variety of such measures to address issues of affordability.

4.5.

The WFD has deepened the concept of the polluter-pays principle through the objective of full cost recovery to guarantee the health of ecosystems. However, the application of this principle clashes with the principle of universal access to high-quality drinking water at affordable prices and in practice produces serious social consequences, in particular an increase in inequalities, since the poorest populations either face proportionally higher tariffs or are not subject to the principle set out above. The EESC believes that the principle of universal access to high-quality drinking water at affordable prices should be fundamental and considered along with the environmental concerns that are behind the polluter-pays and full cost recovery principles.

4.6.

In order to comply with the human right to water, the protection of ecosystems, and social concerns, the water tariff structure is an important lever for affordability, efficiency, equity and water conservation. For that multiple purpose, there exist various tariff structures, including that of the Special Rapporteur (37) on the human rights to safe drinking water and sanitation at the 76th UN General Assembly (38).

5.   Sustainability

5.1.

In the framework of this opinion, we do not look at environmental problems such as saline intrusion or pollution, which may ultimately be responsible for social problems. The focus is on the human activities leading to overexploitation and causing conflicts of use. The most well-known similar problem is when one’s own use of water prevents the use of another party. EU and national legislation try to deal with this through river basin management (39), which has seen varying levels of implementation and achievement throughout Europe.

5.2.

Overexploitation gives rise to an increase in scarcity and degradation of water quality and the quality of service. However, degradation of water quality also increases scarcity, not in a lack of the amount of water itself, but by decreasing the amount of water suitable for any purpose or at least increasing the funds needed to bring that water back to acceptable standards. To address the problem of overexploitation, we should focus on the causes instead of the consequences, which were discussed in the previous point. Overexploitation cause environmental problems, which are responsible for social problems, since human activities depend on ecosystems, particularly healthy ones.

5.3.

A particular problem is emerging, namely the development of super-intensive agricultural and industrial projects in areas that are poor in water, whereby these projects are only possible with the transfer of water from other basins and by the overexploitation of surface waters, leading to environmental and social problems downstream. For instance, the overexploitation of a river leads to a decrease in sediments and nutrients reaching the sea, increasing the degradation of coastal areas and reducing fish stocks. On the whole, overexploitation leads to the depletion of ecosystems, which most affects the most vulnerable populations.

5.4.

Social problems arise from the decrease in fisheries and, potentially, from a decrease in tourism on the seashore. While we can mitigate coastal degradation problems to sustain tourism through large investments, the same cannot be said for fish stocks. On the other hand, if the EU legislates in order to cease the projects responsible for overexploitation, it will have to face the unemployment of the workers involved.

5.5.

Leaks and losses (40) do not involve overexploitation, but constitute an inefficient and unacceptable use of water. However, this is an issue that requires a unique vision. When it comes to leaks and losses, the main vision of distributors of water for human consumption is an economic one (41). Leaks and losses are tackled to the point where it is more expensive to continue tackling them than to live with them. Typically, that point is around 15 % of leaks and losses (42). Another vision is possible and, nowadays, with scarcity rising, such a vision is also much needed to go beyond 15 %.

6.   Governance

6.1.

The EESC notes that worldwide water distribution and sanitation are a municipal competence, with different types of distributors (companies or municipal services) serving one or more municipalities, as well as the fact that in the European Union and around the world the overwhelming majority of people are served by public water companies. In addition to the different forms that water distributors can take, there is one key distinction: public and private management. Under each one of them, we can find different types of management. We can also find good and bad examples of both public and private management. Nonetheless, private management, with its focus on profit, may have difficulties meeting the requirements of service universality, a dimension that public service is in a better position to achieve efficiently at an affordable price and with sufficient quality of service. The EESC notes that this conclusion is supported by the examples of remunicipalisation of WSS in the last two decades.

6.2.

To ensure quality of service, affordability and universal services, the participation of all stakeholders, at management level and in regulatory bodies, is the best means of keeping water distribution and sanitation on track to comply with SDG 6 in a scenario of growing scarcity and increasing prices. At water distributor level, there is a success story in Córdoba, where the municipal company EMACSA has a shared board involving stakeholders, being an example of participatory management (43). The regulatory bodies, instead of being headed by a single person, should have a board that involves stakeholders, in order to assure more effective regulation.

6.3.

International rivers and water bodies can be a source of tensions and ultimately conflicts between states, even inside the EU. The EESC considers and proposes that the EU should become involved in the segment of river basin governance in which several Member States are involved, defining general principles, tangible objectives and qualified monitoring, as the best way to contribute to water management in times of scarcity, which provoke crises of various kinds.

6.4.

Currently, the water governance model (dispersion and lack of hierarchical supervisory bodies and bureaucratic opacity) is inefficient. There is an urgent need to find a new model of governance for hydraulic ecosystems, particularly those involving several Member States. There are numerous authorities in the water sector with responsibilities at different steps of the water cycle, with conflicting visions and objectives and, sometimes, with overlapping responsibilities. The EESC proposes to the Commission that there should be a river basin governance framework with political and technical bodies at river-basin level to ensure, with maximum efficiency, general political guidance and technical management, as well as the involvement of all stakeholders through effective participation mechanisms.

6.5.

In particular, the EESC proposes a governance model that is both political and technical, democratic and open, geared towards putting into practice the principle of universal access to quality drinking water at affordable prices for the public. The EESC proposes that there should be ‘governance committees’ made up of members from all of the countries concerned, with the task of providing political management and resolving any conflicts of interest between countries. These river basin governance committees should be assisted by a technical committee of experts and provide the technical management of the river basins. The ‘governance committee’ should publicly and rigorously establish the hierarchy of responsibilities between itself and the various entities that exist in the countries involved in the river basin so that there are no incompatibilities and no confusion regarding responsibilities. A ‘consultative council’ should operate alongside the river basin governance committee. This council will be made up of civil society organisations, in particular environmental, climatic and consumer organisations and the social partners, and will have the role of having a structured civil dialogue with the ‘governance committee’ and help resolve possible conflicts of interest.

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(1)  https://www.ohchr.org/en/water-and-sanitation.

(2)  https://digitallibrary.un.org/record/687002.

(3)  Opinion of the European Economic and Social Committee on Tackling energy poverty and the EU's resilience: challenges from an economic and social perspective (exploratory opinion requested by the Czech Presidency) (OJ C 486, 21.12.2022, p. 88).

(4)  Complementing the monitoring set in the Drinking Water Directive (Directive (EU) 2020/2184).

(5)   OJ L 435, 23.12.2020, p. 1. ‘Identify people without access, or with limited access, to water intended for human consumption, including vulnerable and marginalised groups, and reasons for such lack of access’, https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32020L2184.

(6)  Proposal for a Directive of the European Parliament and of the Council concerning urban wastewater treatment COM(2022) 541 final, 2022/0345 (COD).

(7)  See also: https://www.aquapublica.eu/article/news/access-water-and-sanitation-must-be-priority-commission-action-plan-implement-pillar.

(8)  As also emphasised, among other things, in the messages and policy recommendations of the 2016 Budapest Water Summit (https://www.budapestwatersummit.hu/hu/Vilagtalalkozo/Letoltheto_dokumentumok) and the Budapest Appeal of the 2019 Water Summit (https://www.budapestwatersummit.hu/en/Summit/Budapest_Appeal).

(9)  Resolution 64/292: The human right to water and sanitation (2010), https://www.un.org/waterforlifedecade/human_right_to_water.shtml.

(10)  https://sdgs.un.org/sites/default/files/2023-03/Closing%20press%20release_waterconference_FINAL_24Mar.pdf.

(11)  Recast of the Drinking Water Directive (2018).

(12)  Proposal for a revision of the Urban Wastewater Treatment Directive (2022).

(13)  Opinion of the European Economic and Social Committee on ‘Integration of water policy into other EU policies’ (exploratory opinion at the request of the Hungarian presidency) (OJ C 248, 25.8.2011, p. 43).

(14)  Opinion of the European Economic and Social Committee on the Communication from the Commission on the European Citizens’ Initiative Water and sanitation are a human right! Water is a public good, not a commodity! (COM(2014) 177 final) (own-initiative opinion) (OJ C 12, 15.1.2015, p. 33).

(15)  Opinion of the European Economic and Social Committee on the ‘Proposal for a Directive of the European Parliament and of the Council on the quality of water intended for human consumption (recast)’ (COM(2017) 753 final — 2017/0332(COD)) (OJ C 367, 10.10.2018, p. 107).

(16)  https://right2water.eu/.

(17)  https://data.worldbank.org/indicator/SH.H2O.SMDW.ZS?locations=EU (reference year: 2020). The percentage of people not using drinking water from an improved source that is accessible on the premises, available when needed and free from faecal and priority chemical contamination. Improved water sources include piped water, boreholes or tubewells, protected dug wells, protected springs, and packaged or delivered water.

(18)  https://data.worldbank.org/indicator/SH.H2O.BASW.ZS?locations=EU (reference year: 2020). This indicator encompasses both people using basic water services as well as those using safely managed water services. Basic drinking water services are defined as drinking water from an improved source, provided collection time is not more than 30 minutes for a round trip. Improved water sources include piped water, boreholes or tubewells, protected dug wells, protected springs, and packaged or delivered water.

(19)  Eurostat, https://ec.europa.eu/eurostat/databrowser/view/sdg_06_10/default/table?lang=en. https://ec.europa.eu/eurostat/databrowser/view/demo_pjan/default/table?lang=en.

(20)  Eurostat, https://ec.europa.eu/eurostat/databrowser/view/sdg_06_20/default/table?lang=en. https://ec.europa.eu/eurostat/databrowser/view/demo_pjan/default/table?lang=en.

(21)  https://ec.europa.eu/eurostat/databrowser/view/ilc_mdho05/default/table?lang=en.

(22)  https://fra.europa.eu/en/content/fra-opinions-eu-midis-ii-roma.

(23)  https://www.europarl.europa.eu/news/en/headlines/society/20200918STO87401/roma-what-discrimination-do-they-face-and-what-does-eu-do.

(24)  http://www.errc.org/uploads/upload_en/file/thirsting-for-justice-march-2017.pdf.

(25)  https://eeb.org/wp-content/uploads/2020/04/Pushed-to-the-Wastelands.pdf.

(26)  https://www.eea.europa.eu/publications/water-resources-across-europe-confronting.

(27)  First hearing on ‘Time for a Blue Deal’, 27 February 2023.

(28)  https://www.preventionweb.net/understanding-disaster-risk/risk-drivers/poverty-inequality.

(29)  Eureau, The governance of water services in Europe, 2020 https://www.eureau.org/resources/publications/5268-the-governance-of-water-services-in-europe-2020-edition-2/file.

(30)  https://smartwatermagazine.com/news/locken/water-ranking-europe-2020.

(31)  https://circabc.europa.eu/sd/a/0070b535-5a6c-4ee4-84ba-6f6eb1682556/Public%20Consultation%20Report.pdf.

(32)  Directive 2014/23/EU of the European Parliament and of the Council of 26 February 2014 on the award of concession contracts (OJ L 94, 28.3.2014, p. 1).

(33)  https://www.eesc.europa.eu/sites/default/files/files/blue_deal_fiasconaro.pdf.

(34)  https://www.oecd-ilibrary.org/sites/e1b8a4b6-en/index.html?itemId=/content/component/e1b8a4b6-en.

(35)  https://www.eureau.org/resources/publications/eureau-publications/5824-europe-s-water-in-figures-2021/file.

(36)  https://www.wareg.org/documents/affordability-in-european-water-systems/, https://www.oecd.org/env/resources/15425332.pdf.

(37)  His proposition is a stepped tariff, whereby the first step should be affordable, and even free in certain circumstances, complying with the human right to water; a second step should be a cost recovery tariff; and the third step with much higher prices, generating a cross-subsidy from luxury to basic uses and preventing overexploitation. The EECS considers that the definition of the values of each step should be defined by every Member State or even by every WSS.

(38)   ‘Risks and impacts of the commodification and financialisation of water on the human rights to safe drinking water and sanitation’, Report presented to the 76th UN General Assembly by the Special Rapporteur on the human rights to safe drinking water and sanitation, Pedro Arrojo Agudo, A/76/159.

(39)  Directive 2000/60/EC of the European Parliament and of the Council of 23 October 2000 establishing a framework for Community action in the field of water policy (OJ L 327, 22.12.2000, p. 1) (Water Framework Directive).

(40)  On the whole, leaks and losses refer to water physically lost and water not billed, keeping in mind that some of the water not billed is however authorised. For more detail, please consult a hydric balance.

(41)  For this paragraph, in the case of losses we are not referring to non-billed authorised consumption.

(42)  This is the typical goal value in use in Portugal. Other EU countries can have different target values, but the value itself has no relevance to the development of our idea.

(43)  Enrique Ortega de Miguel and Andrés Sanz Mulas, ‘Water Management in Córdoba (Spain): A Participative, efficient and Effective Public Model’ in Reclaiming Public Water, TNI ed., 2005.