Committee on Industry, Research and Energy Ordinary meeting
Legend
Transcript markers
- text Sentence being played
- text Search result
- text Intervention cited by the link you opened
Click a sentence to play the video from that moment. Select text to quote it with the speaker, timestamp and link.
More options
ITRE European Parliament
Follow its sittingsSpeaker 9
Chair, ladies and gentlemen, once again, we've got a scandal which really should never occur in committee or in the European Parliament. There has never been a situation where, outside the usual formula of coordinators, points are distributed in this way. This is dualism. At the moment when we're giving out points, this should happen according to the rules. In committee, where we talk and exchange views, how is it possible to have a procedure done in this way?
Speaker 7
People meet behind closed doors and allocate projects for a minimum amount of points. Well, that's one thing. That's a scandal. And there's another thing as well, which, frankly, I have no words to describe, and that is divvying out proposals of the European Commission, which haven't yet even been published. Well, honestly, this has not yet been published.
So now, what could happen is that one morning, we'll wake up and find that overnight, you've been divvying up the work over the next 5 years without consulting anyone. We've got to respect the way points are divided up for each term. This is completely immoral. I really am astonished by the way some people are just ignoring this, where the rules have clearly been flouted. And I would make an appeal to everyone, mainly to the media and to public opinion.
We simply cannot allow this kind of situation to take place under those circumstances. And we cannot have a situation where these files are divided up without consultation. This is absolutely scandalous. And yes, people have invoked emergency powers or the emergency situation without telling us what that actually is. So this is something that is simply not on, and your group talks about fairness, democracy, respect, and the respect of democracy.
Speaker 11
Since the start of this Parliament, we have seen democracy flouted in this committee: urgent procedures that were not necessary, things happening behind closed doors, divvying up of files, and members of this committee being excluded from democratic debate. This flouts the rules of the parliament. We are seeing Trump's approach in many areas, and I think we're on a dangerous path here. That is not fair to the citizens who elected us. What all this proves is that the E Trade Committee serves the capitalist multinationals, the industrialists, not the workers, and we continue to denounce such practices.
Borys Budka
Merci beaucoup. I can't see any other members who want to take the floor. So now we will have the vote, but because we've got new tools for voting, let's make a test vote first. So, please start this test vote. The vote is open.
Ah, okay.
One.
Borys Budka
P. There are too many. Okay. Yeah. Now it's okay.
I close the vote, and it has been tested. So the first vote is on the contestation of the coordinator's decision of 27 January this year. This will be a roll call vote, a single vote. So, this is for the vote. I open the vote. I close the vote, and the decision is approved by the majority of the committee.
Let's start the vote on draft recommendation number 6. This is my report. I open the vote. Roll call vote, of course. One more. I close the vote.
It is adopted. Thank you. And, question for the oral answer and motion for resolution further to the question for oral answer on the upcoming European Research Area Act. And I open the roll call vote. The vote is open.
I close the vote, and it is adopted. Yeah. And the next one: adoption of the motion for a resolution further to the question for oral answer. I open the vote. I close the vote, and it is adopted.
Interim report on the proposal for the multi-annual financial framework for 2028 to 2034. And this is the single vote, the roll call vote. I open the vote. I close the vote, and it is adopted. Draft opinion and guidelines for the 2027 budget, section three.
And the first will be compromise amendment number one, by a show of hands. So, who is in favor? Who is against it? Abstentions, so it is adopted. And now, the final vote by roll call.
I open the vote. I close the vote, and it is adopted. Adoption of motion for a resolution objecting to delegated act pursuant to rule 114.
No. Ah.
Borys Budka
It will be a roll call vote, so I will open the vote. I close the vote. And the decision, please. Please. Oh.
Speaker 14
Sorry, Mr. Bugatcha. Sorry. We do not know what we are voting for, and we haven't voted because we don't know which file. It is not in the order of our list. Sorry.
What were we working on, please?
This was the promotion of this adoption.
So, number 10.
Borys Budka
Yeah. This was number 10. I said adoption of the motion of the resolution objecting to the delegated act. This voting list is number 10.
And it's done.
Borys Budka
And it's done. Okay. So, it was the last vote. Thanks a lot for your vote. And, of course, we'll start the next item.
Speaker 16
So, who needs to leave? One minute to leave the room? Okay. So, please take your seats, and we will start our item 11: presentation of the study overview of the diffusion of power purchase agreements and contracts for difference across member states, existing barriers, and tools to favor their uptake. I'd like to welcome Mr. Mohammed Ansarin and Mr. Andhra Demuthas.
Borys Budka
Thank you for accepting our invitation to present your study. We have approximately 30 minutes for this debate. So, first will be the presentation. Then I've got the speaker list. And if time permits, we will have to catch the eye procedure.
And please take your time, especially those of our members who will take part in the debate. So, I give the floor to our guests for the presentation. Join me in six minutes.
Speaker 15
They don't want us to talk, Mo. Thank you very much. So, thank you again for having us here. My name is Andre, and my colleague is Moe. We're going to share with you a few slides that summarize the results of our study on power purchase agreements and contracts for difference, the most popular ways to support the deployment of new renewable generation across Europe.
We are going to present an overview of the current situation and what has happened in the last few years. We will also look a bit at the future, what should be done, and what conclusions we can draw in terms of the role of the two instruments when we look at decarbonizing Europe up to 2050. I'm going to leave the floor to my colleague, Moe, and then I'm going to wrap it up with the last couple of slides. Please.
Speaker 17
Thanks, Andrea, and thanks, Mr. Chairman. I will do the initial part of the presentation, and then hand over to Andrea after a little bit. First, to introduce, power purchase agreements and contracts for differences are central to the EU's energy transition. On the market side, power purchase agreements play a significant role in the uptake of renewables by corporates, utilities, and other types of offtakers. Contracts for difference are one of the biggest support tools for governments to support investments into renewables, especially the newer ones coming more recently.
These instruments do two things. They, first of all, reduce the financing cost by ensuring a certain level of revenue certainty. And the main way they do this is by transferring the price risk and, in a few minor cases, also a few other types of risk as well to a different entity. The second way is that they can also bridge the gap between the cost of a given energy technology and its implementation, and the market price for energy. For both of these instruments, the main point is that the design is very important.
For example, we had the energy price crisis just a few years ago, which led to windfall profits in a few cases. This was a place where two-way CFDs were really promoted towards the European level to address this problem with windfall profits. However, of course, CFDs can still distort energy markets in various ways, and they can lead to inefficient investments and bidding choices. Optimal solutions for CFDs in the energy markets can be quite complex. And lastly, these two instruments, one thing to note is that they can both compete and also complement each other depending on the circumstances.
CFDs drive investments at scale, primarily by lowering investment costs. So, they are quite crucial for new technologies. On the other hand, PPAs can complement by bringing in private finance, while protecting large consumers from energy spikes, as it's called hedging their price risks. And they're best suited for established technologies. Nowadays, you would think of these as the solar wind that we are more commonly and more often known for, and maybe less so for other technologies.
A quick introduction to our results. We did an analysis on a few data sets that included CFDs and PPAs, and found that both instruments have effectively driven solar PV and wind investments. These two instruments together accounted for 17% of EU-27 renewable capacity additions between 2017 and 2024. The growth continues for two-way CFDs. Over 35 gigawatts of CFDs appeared in 2023, and up to 2024, it has come up to 190 gigawatts.
Likewise, for PPA. So, there is some evidence of stagnation since 2023. PPAs largely tend to be solar assets, but hybrid PPAs are also growing in relevance. Hybrid means solar or wind, some energy source, plus some sort of storage next to it. I want to take a quick moment to also mention that this analysis was done with some data limitations and some limitations in our scope.
The main point I'll make here is that the data for 2024 and 2025 was preliminary for CFDs and PPAs, respectively. And I invite you to check the report as well for other considerations here. And a quick note regarding where they're going and the intrinsic differences between these two instruments. On the CFD side, these are support instruments where national governments set the quantity and influence their uptake based on auction conditions. They can cover a significant share of generation, both in active contracts and also in plants that used to be on CFDs.
However, the more they are under CFDs, the more you can expect to see distortions and inefficiencies in the energy market. PPAs, on the other hand, are market-driven. Their uptake depends on market conditions and can be both supported or hindered indirectly by other policies. The role as an ESG instrument will decrease, but the role as a hedging instrument may increase. Over to you, Andrea.
Speaker 15
Apologies. We're going to just slightly go over time. I'm going to try to wrap it up quickly by saying that, after looking at the current situation, we try to look at 2050 and what is going to happen there. So, we developed these two scenarios. So, looking at what happens if we keep what we call the current rate of uptake, or what happens if we speed it up.
Well, we see important changes in the market, in the energy market, happening at the moment, and we try to increase significantly the share of the two instruments because of the distortion that Moe mentioned earlier. And we also see that the impact can be substantial, but this is often determined by the difference between the strike price, which is the price that the consumer will pay for each megawatt produced by this installation, and the market price of energy, which is actually very difficult to predict for next year, let alone on such a long time scale. So, just to please, the next slide. Just to wrap it up shortly, they are important instruments. They can offer a lot, but there needs to be some caution before saying okay.
We absolutely need to utilize them across the board to support as much as possible. I think, in the short term, there are important things that can be done regarding, for example, the design and the application of this instrument to other parts of the energy system other than power generation. But definitely removing barriers and improving accessibility is something that can be done now, that can reduce cost and that can be actually rather effective for speeding up the process of taking up renewables. And I would say, stop here and leave the floor for questions. Thank you very much.
Borys Budka
Thank you very much for this presentation. And now, I've got the speaker, please. So, on behalf of EPP, Mr. Shaun Kelley, the floor is yours. Two minutes.
Speaker 19
Thank you very much for the presentations. I think this is a critically important topic of discussion, and perhaps one we don't address enough. Commission President, Ursula von der Leyen, held a discussion with leaders at the informal retreat last week on future electricity market design. And I think this is an important discussion. We must make sure our markets are delivering what we want them to deliver.
Competitive prices for our consumers and industries are number one, and a clear investment signal to build out the suite of technologies we need to deliver net zero is number two. To me, CFDs and PPAs are the clearest ways we have to decouple electricity and gas prices. They enable stable prices for the consumer and the industrial buyer. And in the case of the public CFD, we'll even pay back to the consumer, offsetting the cost of the energy system. I'd like to ask a couple of questions.
What sort of instruments have been used effectively across member states to de-risk power purchase agreements? Can you give examples of where the state has stepped in to share the risk and enable agreements to proceed? Is there a potential role for EU budget programs or the European Investment Bank to help with this? We always hear about the drive to lower CFD strike prices, but at the same time, persistent downward pressure on strike prices poses a risk, as projects need to be able to recover costs in extremely constrained conditions. Have you seen any examples of particularly good auction design across Europe that strike the right balance here?
And CFD contract lengths across Europe are usually in the range of 15 to 20 years. However, often a renewable project will have a useful life in excess of 30 or more years. So, how do we best manage this risk over the years so that the best price is delivered to the consumer? And should we consider longer contract links, perhaps for the full duration of the project? Thank you very much.
Speaker 25
I'd like to thank the experts, and I would like to ask a couple of questions. At the beginning of this term, emphasis was placed on the costs of energy in Europe, first of all in the Draghi report and also in the Clean Industrial Deal. A plan for accessible energy beyond any initiatives, which include the Raiti package and the network package. Now, the idea was to merge climate neutrality and competitiveness via specific measures. I would say that especially in Italy, we've been talking about how we can detach energy prices from consumption, in what's known as decoupling, so that people can see this in their electricity bills.
Speaker 23
And the whole point is to ensure that the European energy market works smoothly. But we've got to also look at long-term contracts, which have already been mentioned in the study we have been listening to. Now, obviously, we've got to look at the different types of contracts. At the moment, only a few countries have the new types of contracts. We've got to have a look at the obstacles, but we've got to not only look at these; we've got to have a look at the kind of contracts that you've got in Spain and Germany.
Speaker 22
There's also another aspect, and that's creditworthiness, particularly for SMEs. And you've got to be able to divide the risks by using public coverage. And then it could be said that the 150 million could be considered a sort of success. This is reproducible. But the point is that we should perhaps create aggregation platforms so that we can knock down administrative costs.
As stated in the study, last July, a negotiating platform for PPAs was set up for renewable energy in Italy, coupled with a state guarantee measure that offers guarantees. And there is a law which establishes €45,000,000 a year for guarantees between '25 and '27, so that the instrument is financed. Now, in order to ensure that these guarantees are financed, there has to be input. Now, it would be interesting to weigh up the success of this scheme compared with, say, systems in Germany and Spain. Thank you.
Speaker 24
Bit too fast for me to get settled, but thanks. So the one question is, looking at the potential of electrification, we see that renewable PPAs are growing in popularity. What specific recommendations would you give for the uptake of hybrid PPAs? And the second question is a very basic question. How do you recommend incentivizing the uptake of renewable PPAs for hydrogen production?
Thank you very much.
Borys Budka
Thank you very much. And now, after this first session, I will give the floor to our experts, and then we've got to catch the eye procedure. Dominiczic.
Speaker 15
Thank you very much for the question. Let's start with the PPI, given that we have two questions regarding, for example, the current initiative at a new level, some of the initiatives of the Italian government, and what could be, again, the role of hybrid PPA. So, indeed, we've mapped a few policy initiatives to address one of the main barriers to PPA, which is the creditworthiness of the uptaker, those that want to be the counterparty to the generator. We've seen a lot of good intentions and good commitment. Unfortunately, there has been a rather low take-up of the schemes that have so far been deployed in Germany and in Spain.
And, well, the EIB is a bit early to say, but we think it's certainly a valuable initiative with a consistent budget size. A very positive view of that. I think the difference and the strength of the Italian case is that, next to the guarantee, there is a whole set of services, including a platform to favor the exchange. And this could really be, what the term is, the change. So, the difference of the Italian scheme versus the other is that it all happens in a sort of structured environment.
While every other scheme requires the submission of a request, going through a process of accreditation, paying some fees, and so on, we have seen very low uptake. It simply is a good instrument, but it doesn't meet the needs and the process that are currently set up to sign a PPA. And this is something that, yes, we suggest should be addressed. That's one of what we mean when addressing the barriers. Do you want to discuss something concerning consumer cost, please?
Speaker 17
Yeah. Maybe I can take a couple of questions regarding CFDs and good auction design. There were a couple of questions regarding that. There are quite a few good examples of good auction design across Europe. But, you know, to avoid being favoritist here, I avoid mentioning them, but do refer to our study where we speak in more general terms regarding the different ways that auctions are set up across Europe.
Some good points here are, for example, setting thresholds for returns to essentially prevent windfall profits in the case of a two-way CFD, because this can also be done in various ways. And having it be a specific maximum amount that is returned on an annual basis can be a good option. And often, of course, other things as well. I think I can't go into all the design options here. Second one, there was a question regarding the fact that there's usually a lower number of years that CFDs are supported for versus the number of years that a project is ongoing.
Indeed, that's often a question, a common dilemma for auction designers regarding how many years to support CFDs, and it tends to be a trade-off between derisking a specific investment further by adding more years to the number of years that the CFD is being offered and just kind of passing forward that, because otherwise, they could move that forward. The alternative is that they support more CFDs but for a lower time duration. Different countries have reached different conclusions regarding this. And we note some of this in our report on the diversity here. And there are different arguments both in favor of and against having that be anywhere from 10 years to 25 years.
Speaker 15
Maybe just going to add another point to that. So, I think we see CFDs; in particular, PPA is likely different, but CFDs are a way to incentivize investment. They're not there to incentivize the operation of existing plants. They can do it. In some cases, that may be appropriate, but they're mostly there to pass the initial hurdle of the investment, because of the long lead times between investing in our renewable installation and when we start to see a return.
So, they addressed that particular challenge. But after that, the installation can go back into the market and operate according to market principles. Now CFDs play an important role in, let's say, affecting the consumer price and guaranteeing a certain consumer price within a certain range, which could be good in case of high consumer prices or could be bad in case of low consumer prices. But overall, if we have to run the entire energy market in CFD, that may be beyond what they were made for, and that may actually not be the optimal solution. They are investment instruments.
They shouldn't be used to control the entire market.
Borys Budka
Thank you very much. And in my case, the list has three members. First, Mrs. Ana Lisa Corrado.
Thank you.
Speaker 27
You. I'm also going to speak in Italian. Now, in the Italian case, we've observed how the platform was useful, but then it wasn't used for a long period because the types of contracts allowed were too restrictive. So, producers and buyers didn't feel they had enough flexibility to really enter into the scheme. And if we've got aggregation and flexibility instruments, this will be useful because then small and medium-sized companies will be interested in getting involved in PPA agreements on fair terms.
Speaker 28
And the other thing concerns virtual PPAs. Now, I think that these are instruments which could speed things up, help to boost renewables, and help to boost buying. At the moment, there is a huge regulatory deficit, especially when we take into account the whole possibility of covering all our bases. So, I'm just wondering if that hybrid PPA and the virtual PPA couldn't be a possibility for creating good practices ahead of regulation, which is slower? Thank you.
Thank you very much.
Speaker 29
Thank you, Chair, and thanks to the authors of the study and their presentation. I have a general question, which is that if I look at the results of the study, I see that, on the one hand, the PPAs and CFDs are mature and performing instruments, but on the other hand, there is a lot of room for improvement and suggestions in improving the instrument, making it broader, and applying it in many more European countries. But I do think that what is essential is that it creates some credibility and long-term stability. And in that sense, I'm kind of curious about the reaction of the authors to the whole discussion that we are seeing now on reopening the whole electricity market design and the price-setting mechanisms, because it is my feeling that those would undercut that ambition of stability. It would create insecurity.
Speaker 30
It creates a lack of clarity in price setting. It would make it much more difficult to set strike prices, for example. So, I wonder what an idea is. Personally, I do believe that keeping the EMD as it is right now and developing the instruments that we have that accompany it, which is basically what the PPAs and the CFDs were in the directive, would make a lot more sense than reopening the whole discussion before it has even been implemented properly.
Speaker 31
Thank you, Chair. Thank you to the authors. And I have probably a very simple question that came to my mind after listening to all the contributions and speeches, because it seems to me that these both instruments have their place in the market at different stages of market development. You know, my perception is that CFD is very much a policy tool. So, if we want to have renewables, we should support CFDs because they work, and they work for both sides.
Speaker 32
It means investors, as well as final consumers. And PPAs, from my perspective, seem to have a good place in the market at the moment when the market with renewables is stabilized and the price doesn't fluctuate so much. So I would like to hear the opinion of the authors of the study, how they see this very simple question or point of view. Thank you.
Borys Budka
Thank you very much. Okay. So this is the time for our experts to answer these questions. So, I give the floor. You decide first.
Speaker 15
Thank you very much. I'm going to start actually from the last question. We absolutely agree with that interpretation of the different roles of CFDs and PPAs. I would add an element that PPA is a market-driven instrument, so it can happen or may not happen depending on market conditions and actual external factors to PPA in our report, to indicate the drive to electrification or the requirement of corporate sustainability reporting. So, while it's true that PPAs are better targeted than existing and performing technologies.
We cannot be sure that they will happen, and we are fairly sure they cannot happen at a scale sufficient to meet the target. So, this is why we do not recommend abandoning CFDs for established generation, but rather to supplement whatever the PPA market is able to deliver. Now, some very interesting considerations concerning the PPA instrument in Italy from Ms. Corrado. I would also like to take on this.
Indeed, their platform is new and far from perfect, but the platform itself can set up the mechanism to address some of these challenges, including the aggregation of users, but also other types of services, including, for example, demand response and so on. Now, the fact that the current setup is not in line with what the counterpart in a PPA agreement needs is something that we have observed for all the support schemes that we've seen so far. We understand why some of these elements are in place. There needs to be some form of guarantee for the guarantor, in this case, that they will not have to intervene. But at the same time, the two Regis structures may stop these contracts from going ahead.
So, this is where our recommendation goes. There is certainly a lot that can be done to streamline and remove some of these barriers. When it comes to SMEs and smaller users, we provide a warning here in the sense that, yes, it's helpful for those who want to engage. But if we think about the concept of a PPA, which is invested in renewables to have, generally, a guaranteed price over the long term, well, currently, commercial energy suppliers can offer green contracts with a guaranteed price for a shorter length of time, which is very similar to what a PPA could do for small enterprises with less administrative complexity for them. So, there are cases where, indeed, aggregation is an excellent choice, but there are cases where, possibly, the market already has the solution.
It just has not arrived. There is not sufficient demand for it, for example, to be a fully mature solution. Do you want to take some of the...
Speaker 17
Yeah. Please. So, I also think there was a question regarding the reopening of the electricity market design and what our thoughts on this were. And I want to emphasize that this is not something we have an opinion on or express in our study here. Rather, our study is trying to highlight that we need a vast toolbox of different options to reach decarbonization goals in Europe, and CFEs and PPAs are two instruments in that toolbox.
There will be many other tools as well that will need to be used along the way. And, for example, a lot of smaller scale projects will need to come in via other instruments because a household is not going to have a fun time trying to participate in a CFD auction. Or, for example, some large, specific project developers might have a much better time going to market rather than participating in CFDs and so forth. And summing all this up, we don't really look at whether the electricity market design as it is is good, bad, or neutral, but simply highlight that all the different tools inside it are relevant. And, yeah, we specifically focus on how relevant PPAs and CFCs will be in this mix and try to put the spotlight on those.
Borys Budka
Okay. Thanks very much for your answers. Thanks to all the people involved in our discussion. And, of course, I'd especially like to thank you for being with us today and for this very interesting report. So, it will be useful for future discussions in our ITRE committee.
So now we close this item 12. Thanks a lot. And immediately, we—no. I'm sorry. We closed item 11, and now we will switch to item 12, presentation of the study on per- and polyfluoride substances and their role in European industry.
So, I'll okay. So let me welcome Mr. Robert White, senior economist, and Dr. David Callander, director at Risk and Policy Analyst, Ltd. Thank you for accepting our invitation to present the study on this topic. And now we've got approximately 30 minutes in the debate, with the same rules that we just finished. So first, I'm giving the floor for six minutes to our guest for the introduction.
You will share this time, then I have the speaker list, and then the cut-eye procedure. So, the floor is yours.
Speaker 33
Good morning all, and thank you to the chair and the committee for your time and attention to this matter. And yes, we are here to present the results, findings, conclusions, and recommendations of our study looking into the role of PFAS, its use in European industry, and its role as an enabler of European competitiveness in the scope of the universal PFAS restriction being considered by ECA, which will also come to this parliament. Now, of course, given the scale of PFAS use and PFAS prevalence within European industry, it is vitally important to define the scope that is used within such a study. So, firstly, what is the purpose?
This is a PDF.
Speaker 34
So, firstly, with regards to the purpose of this study. It effectively had several aims: to act as an in-depth analysis in order to provide an overview of alternatives that were available within European sectors, and to advise and guide on the substitutability of PFAS materials. To conduct an impact assessment on the potential ban and use of PFAS within this industry, using established socioeconomic analysis methodologies, and to consider third-party regulations and legislative agendas in order to assess impacts on European competitiveness around the globe. The focus of this study was not to assess the environmental or health impacts of PFAS. It was to assess industrial and competitiveness impacts.
Speaker 33
However, environmental and health concerns were considered good practice under the socioeconomic analysis. However, there were data limitations and impacts on the capability of doing such an assessment, as I will explain shortly. Now, the scope we have looked at is limited to only 6 key fluoropolymers, and it is looking at only 4 key industrial uses. The fluoropolymers that we have used are understood to represent about 90% of the fluoropolymer market within Europe. These four key industrial areas were advised and guided to us by the committee and our request in the tender.
So, while the study itself does not look at all PFAS, it can, however, make conclusions with regard to all fluoropolymers. So, the conclusions or recommendations of this study must be considered within this context. And, of course, no study is without its limitations. There was a time constraint on this study being conducted, which, of course, limited the amount of consultation and consideration that could be given to industry input from both pro and anti-PFAS sentiments. While our best practice is to look at socioeconomic analysis for health and environmental effects of fluoropolymers, there is currently a lack of evidence and information regarding the emission routes of PFAS fluoropolymer materials, the potential degradation products of these fluoropolymers, and their possible health effects.
Speaker 34
This has also been substantiated in work conducted recently for the European Commission and by the OECD themselves. So, the conclusions of our study across our industrial sectors are as follows. With regard to the aerospace sector, there is considered to be low substitutability of PFAS currently in use. This is because there are a very high number of products that use PFAS, and all of these products are highly interconnected. Replacing a single component means that other components must maintain their current performance, which makes replacement incredibly difficult.
Speaker 33
Also, given the value and wide-scale place of aerospace within European industry, economic impacts from PFAS removal in this industry are expected to be high. Passenger safety is considered to be greatly impacted by the removal of PFAS without suitable alternatives being in place. The defense sector, unfortunately, cannot be assessed in substantive detail due to the private, confidential nature of much of the information in the supply chain, as is to be expected. However, given the use of aerospace elements and semiconductor elements assessed in this study within the defense sector, some assumptions or considerations can be made that the substitution potential of PFAS within the defense sector is also limited. And the defense sector, of course, it is paramount that the safety and security of Europe are ensured as well.
The green technology market is, however, far more complex and far more variable. Overall, the substitution potential and the economic impact on this sector are incredibly dependent on an application-by-application basis. It has therefore not been possible for this study to make a conclusive result as to what the substitution potential of the overall sector would be. There are some uses which, of course, will be able to replace PFAS immediately. Some will be able to replace PFAS over a longer term, and some may never be able to replace PFAS, as PFAS is an enabler of future technologies.
This is why PFAS could therefore be considered a potential enabler, and its removal would be a risk to future green technologies as well as the greening of existing technologies such as the hydrogen economy and the automotive industry. With regards to semiconductors, they are considered to have very low substitution potential and very high economic impacts due to the importance and prevalence of semiconductors within European life and digitalization. So, what are our recommendations? This report does not propose any regulation on PFAS. We propose, for the aerospace sector and for defense, a time-unlimited derogation under the PFAS restriction.
This would enable the industry to continue using PFAS as it currently does. The purpose of this is to fund, study, and further identify the uses and potential alternatives in each of these sectors. And to stay within the ethos of the review of the restriction, reviewing these time-limited derogations at set intervals of 10 to 15 years would also be recommended. With regards to the green energy and semiconductor sectors, it is recommended to exclude F gases, which have also been a key part of this study but have only been considered under green energy. Exclusion of F gases is based on the recommendation of regulating these solely under the F gas regulation.
Then, for all other uses of fluoropolymers in semiconductors and green energy, unlimited or lengthy timed derogations are recommended to allow suitable alternatives to be developed, but time-limited derogations may be required to allow the markets to have a mix of suitable alternatives and materials. Given the potential need for long-term use of PFAS in these markets, exceptionally stringent investment and controls on emissions are also highly recommended. And with that, I would again just like to highlight that we are proposing recommendations that are not considered silver bullets. They are food for thought as alternative packages that could be combined with the universal PFAS restriction to achieve the environmental goals of reducing PFAS consumption, while also preventing damage to European industry. And I thank the committee and the chair again for their time.
Borys Budka
Thanks a lot. And now, on my speaker list, we've got Mr. Massimiliano Salini. Thank you.
Speaker 35
You, chair. I would say that I'm very happy with the contents of the study, as well as the way it gives a solid approach to industry concerns. But I think that, together with this report, which talks about the fact that PFAS cannot be substituted by other materials, that could be addressed by another study, especially looking at the environmental impact, because I think it's very interesting from a scientific point of view. Now, we know about 10,000 PFAS types today, and actually around 600 of these are used, but only 30 are really hazardous. So I think we could also take into account the fact that substitution of a PFAS isn't really necessary because most of the time we're talking about non-hazardous PFAS; they don't enter into that list of 30 dangerous ones.
Speaker 36
And if in REACH we could introduce a sort of risk analysis where we can state what the true risk of individual PFAS is, because if you look at the strategic indicators which you've indicated, there's another way in which the use of a PFAS is determined, and that is in medical devices. In the healthcare sector, these are very broadly used in devices that are extremely important for public health. Thank you.
Speaker 37
Thank you for the floor, and thank you for presenting the study. As you stated in your opening remarks, no study is without limitations. But I fear or doubt whether we limited ourselves too much with this. I think we have limited ourselves in a way that makes it difficult to draw any conclusions or to provide actual policy recommendations because we fail to remind ourselves what's really at stake. PFAS pollution is one of the most serious environmental and public health crises Europe faces today.
Speaker 38
We see how forever chemicals are everywhere. They're in our drinking water, in our soil, and in our food. They're inside our bodies. They are linked to cancer. They're linked to immune system damage, infertility, and developmental harm in children.
Speaker 37
We see how they pass from mothers to children even before they are born. So today, millions of Europeans already carry PFAS in their blood at levels that pose a real health risk. We know that the societal costs are enormous. We pay through health care costs, environmental cleanup, lost productivity, or irreversible damage to ecosystems. And yet, you choose to conduct a study like this with this reality being almost entirely absent.
I think it's particularly concerning given that we know the two independent scientific committees at ECA have been conducting a comprehensive assessment for several years. They are examining the cause, the risk, and the alternative, and the scientific opinions are expected very soon. So, I find it difficult to see the added value of a report that is so limited in scope, yet so far-reaching in its conclusions. Because the conclusions of the study are concerning, it assesses only a small number of PFAS and sectors. Yet, with these limitations, the recommendations are still very broad and potentially allow unlimited derogations. That's not a precautionary approach.
It's a risk of locking in pollution for decades, while it also disincentivizes industry to develop alternatives to foster innovation and research. Critically, the study looks at fluoropolymers mainly during the use phase, while ignoring the manufacturing and waste phases, where the most harmful emissions often occur. This emission fundamentally undermines the conclusions. So, I would like to know, maybe ask directly, why these life cycle stages were excluded? And finally, the conclusions on F Gas are equally concerning to me, as alternatives already exist and are widely used.
So this is exactly why I think we need a broader PFAS restriction, because while the F-gas regulation addresses the climate impact, it doesn't address the breakdown into persistent pollutants that contaminate our water and our food. I think we owe the Europeans a serious, comprehensive, and scientifically robust analysis. It's not just about industry or competitiveness. It's also about public health, the environment, and the safety of both current and future generations.
Borys Budka
Thank you very much. And now, on behalf of the Greens, Miss Jutta Paulus.
Speaker 39
Yes. Thank you very much for your presentation. Thank you very much for giving me the opportunity to ask a few questions. But first, let's take a step back. PFAS pollution is one of the most serious environmental and public health crises Europe faces today.
These forever chemicals, as my colleague has just pointed out, are everywhere in our drinking water, in our food, and in our bodies, proven to cause cancer and infertility. And it's clear that the widespread use of PFAS needs to end. And this is why the universal PFAS restriction is actually on ECA's table right now. This makes this the ETRIP study. I know that EIPOL insists that it is an in-depth analysis.
Nevertheless, they themselves market it as a study on their homepage, and you also called it a study, which is a bit absurd because ECA has now spent years with dozens of scientists and large consultations on their risk and socioeconomic assessment of the PFAS restriction. They have gathered, for example, more than 5,000 stakeholder inputs on the socioeconomic assessment. And our committee commissions, via EIPOL, three consultants to draft a report in a few weeks. You yourself mentioned that there is a limited budget and limited time, which, of course, also limits the scope of this report. And therefore, it's really surprising that by looking at a very limited number of PFAS and very narrowly selected applications, very broad and far-reaching recommendations are given in the conclusion.
In conclusion, I could sum it up as forever exemptions for forever chemicals, which would guarantee forever pollution. So it's like saying that because some fluoropolymers are hard to replace in defense, we should allow all PFAS for an unlimited time in heating and cooling. That's absurd, and I tend to believe that the researchers know this very well. Coming to the F gases, the study makes a sweeping recommendation with regard to F gases, saying they should be excluded from the scope of the restriction and that one should focus all regulatory control of F gases into the existing F gas regulation. Well, do you know the name of the F-gas regulation?
It's a regulation on fluorinated greenhouse gases. So, it solely deals with the greenhouse gas potential of fluorinated gases, and this is intentional. It's completely blind to health effects and to environmental issues created by those persistent F gases. So, could the study authors please explain how a law that doesn't even look at these issues should be the place to work on the restriction that is actually supposed to address those issues? In my view, this recommendation illustrates the direction this report is supposed to take because it is deliberately misleading.
And you know what? Unlimited exemptions actually harm competitiveness because, with unlimited exemptions, there is zero incentive for innovation. In your presentation, you recommend that the industry conduct research on alternatives. Well, why should they when they have unlimited derogations? Why should they waste money on something they actually don't have to do?
And in this committee, we keep talking about China as a champion in electric vehicles, solar panels, and so forth, and it seems that China is already leading in developing PFAS-free alternatives, be it in the semiconductor sector, the insulation sector, or all the sectors that you just mentioned in your presentation. Is that what we want for our economy? Do we want to protect outdated technologies, or should we let the rest of the world take the lead? And regarding the cost of restricting PFAS, first of all, as said, the study doesn't look at the high cost of PFAS for society. There has been a study commissioned by the European Commission, which found that pollution from just four PFAS could cost the EU up to €440,000,000,000 a year by 2050.
And without stricter controls, these costs, including health issues, water treatment, and environmental remediation, could even reach €1,700,000,000,000 a year, meaning €85,000,000,000 a year. And do you honestly believe that industry does not need drinkable water or healthy workers? I do. In addition, what the paper doesn't look at are the potential economic gains from putting PFAS-free alternatives on the market, which would give the front runners a head start also in third countries. In the US, we have companies now turning away from using PFAS because the high legal risk associated with the use of these substances is leading them to make this decision.
So, by developing PFAS-free alternatives, we could actually have a head start on this market and create new economic possibilities and opportunities for our industry. So for us, it's clear: we want a balanced, evidence-based approach based on ECA's findings, which they are going a long way to conclude. And we should phase out the PFAS group as far as possible in order to protect public health, the environment, and, in the end, also our competitiveness. Thanks.
Borys Budka
Thanks. We've finished the first round of questions. So now it's time for our experts, and then I've got three or four more members for the catch-up procedure. So, the floor is yours.
Speaker 33
Thank you very much. Yes. So, with regards to some of the mentions about the number of PFAS that are known to be harmful or of potential concern, there is a very varied body of evidence. And there is, of course, also a need to address the nomenclature. PFAS is the name for all 10,000 substances that are grouped together.
Within this broader category, there are also subcategories and families of chemistries. Some of the items, materials of PFAS that are very well studied and understood, such as PFOA and PFOS, are more legacy PFAS materials that have been studied and have been found to cause health issues. And so, absolutely, there is a justification for those being restricted, regulated, and their use being reduced. However, as we indicated in our study and in my presentation, we have been looking at fluoropolymers. And with regard to fluoropolymers, there is significantly less information about the environmental pathways through which they are emitted, even during manufacturing or end of life.
There is still a confused body of evidence as to the degradation products of these materials and what harms may be caused by those degradation products. And there is also a lack of information about the potential health effects caused by fluoropolymers. Now, of course, that is not to say that fluoropolymers are safe. It is simply to say that the current body of evidence is inconclusive as to the health effects of fluoropolymers themselves. So that is why the conclusion that there are health effects of PFAS is true for only a select number of substances.
And there was indeed mention of a European Commission report that looked at the cost of PFAS pollution. Indeed, we are, of course, aware of this report and have reviewed it. With regards to the environment and the health effects, the report itself concludes that only 4 of 10,000 chemicals have substantive evidence regarding their known health effects for them to be assessed. Likewise, in the environmental aspect, the 1,700,000,000,000 cost is a high-sensitivity bracket analysis. And that report also doesn't account for aspects such as the learning curve, whereby over time, the market will become more effective and efficient at remediating and removing PFAS from the environment, as well as the potential for innovation in the sector to remove PFAS.
So that is why our recommendations, such as those for green energy and the semiconductor sector, are also investments in emission controls. The ability to more effectively and potentially cheaply remove PFAS from the environment is also an area of innovation that should not be overlooked. There is innovation both within the industries themselves and in the capability of removing PFAS from the environment. Again, in keeping with the ethos of the precautionary principle and the chemical regulations to reduce harmful substances when they are known to be harmful, and also control the substances in a manner that is not detrimental to the economy. And that is why our recommendations are built around this principle of honoring the ethos of regulation to prevent potential harm, but doing so in a more controlled manner that would not be detrimental to certain key industries.
And while, of course, China is developing certain technologies in certain sectors, we do know that sectors, for example the semiconductor sector, have built their entire physics of the manufacturing process around the properties of PFAS. When an industry has completely designed itself around these materials, it will potentially take decades for it to innovate into a new technology. That is not to say it is impossible, but it is time-consuming. And that is why longer derogation periods are required. And it is incorrect.
Our report does not categorically recommend only time-limited derogations. We do propose time-limited derogations, but with subsequent measures, either emission controls or additional funding to review those derogations, incentivize innovation in the industry, and also still control PFAS emissions themselves.
Speaker 40
And to add to what Rob just mentioned, we are, of course, producing this one report, study that is in addition to the huge report that will be produced by ECA and supported by the five member states. So, this is clearly not the final word. This is a subsection where we look at fluoropolymers and draw the recommendations based on the evidence found in this study. Thank you.
Speaker 41
Thank you. I'm going to speak French. So, thank you for coming and giving us this presentation. I'd also like to thank the Commission for having started a deal and dealt with this PFAS issue, which affects our industry. I've got a couple of questions, even if many of them have already been covered. But I have a few additional points I would like to raise.
Speaker 42
Now, the first one: what was the context for the study? Let me try to explain. What is the interest between the European Parliament and private industry? What could there be? What are the interests being served? Because, taking into account the scope of the study, it would be interesting to hear something about future studies and any possible conflicts of interest.
Speaker 41
Perhaps you will dispel all doubts about any conflicts of interest between Parliament and industry. But it would be interesting to be familiar with the rules concerning conflicts of interest. They have quite a broad scope, and they can affect the confidence of people wishing to enter into contracts. And I think that it would be very interesting for people to have oversight and to be reassured. Then there's another subject which you have just touched on now, and that concerns legacy contaminants because you've got industries which use PFAS, and I mean, they are toxic chemical products at the end of the day. But what about the actual production of PFAS, and how is this placed in the context of competitiveness?
And what about the principle of the polluter pays? And if we talk about competitiveness and PFAS, even the title which has been given to the study, which was decided by the coordinators, even with this, who bears the brunt? Who pays? And is the principle of the polluter pays respected? And then the other thing, and that concerns the title, and that's really up to the coordinators, but I'm really just wondering about the wording which was adopted, which was chosen. I mean, this is for this study because China at the moment is applying for many patents for PFAS substitutes.
Some of my colleagues have already talked about this, but I think that we have got to be careful. We don't want to be late to the party, do we? Because PFAS does pose a problem for our industries. But I think that the authors have also talked about the issue of removing PFAS. We've got some practices concerning the depollution of water and soil.
We shouldn't forget that dimension. But I'm curious because this was also mentioned by the authors about how they envisage the impact on competitiveness and industry. But I would urge our committee to be interested in this issue as well because it would be a good thing if we could be pioneers in this area, not just over the next few years, but over the next few decades. Thank you.
Christian.
Speaker 43
I speak German. The more Madame Toussaint and Madame Paolo write, the more we can show how that heart hit them. Does this kind of study
Speaker 44
This is not a study on the toxicological effects of PFAS. It's a study that was carried out on the economic consequences of a complete prohibition, this radical approach. And that's what the Greens are really fearing: that every attempt to do so results in insults. But what you're really ignoring here, and this was the topic of the study, are the economic consequences of having a radical prohibition? What are the economic estimates?
Speaker 45
What are the evaluations about what can be substituted? What are the results of the study? It's the economic impact, if we say yes. Tomorrow, we'll have problems. And it's just a joke because the question is, in this study, to what extent a radical prohibition would inhibit innovation and a slow phasing out.
Speaker 43
Rather, it's saying, "Well, no, it'll end up being sent to China, and that's going to be produced there." So, what the study was intended to do, and it's not insulting or biased or whatever, is simply to really hit the greens because they don't want to look at the economic results of a radical prohibition. So, the toxicological evaluation has an economic impact, and the fact that this could impact industrial production. So, cost-benefit analysis, an impact analysis, of course, has to be looked at in terms of the relevant economic segments. So, this is an analysis of the use.
Speaker 44
It is not saying that this is a completely harmless substance. Rather, it's looking at actual economic impacts, not hypothetical ones. And so these are specs you have to look at in analysis. But it really hits you like a whip, and that's why you're really ignoring the content. And you have to stand; we have to know what's going to happen in the defense area, medical uses, and aerospace uses.
How are those sectors of the economy going to deal with a radical prohibition? Because you're actually endangering the health of patients in hospitals if you have a radical prohibition. And what about fire protection on ships and tanks? Do you think soldiers and sailors would rather burn to death than have that protection? So if you just say, if you start questioning the design of the study, we are addressing what you have been ignoring, that you have this amazing idea that this can all be replaced tomorrow by magic.
Speaker 43
No. We're looking at the key industries and saying what is going to happen. What are the competitive risks? In which areas are we not yet capable of finding adequate substance? That was the study.
Speaker 44
So I think I completely object to what is being insinuated here, that these people were doing these studies and saying they're somehow dependent. The people doing the studies are dependent on the business sector. No. You don't want to look at the economic impact of radical prohibition. I think you have to openly prove that there has been some kind of impact on this study. You can't just vaguely hint about bias.
We have asked to have a very limited study on the economic impact of the prohibition. And I think you have a very differentiated, balanced, realistic study being produced because you're dealing with questions that the Greens have never addressed.
Borys Budka
Thank you, Christian. And last but not least, it's Christina Guara from the Greens.
Speaker 46
Thank you very much to all of you, and thank you for sharing this study. I will speak Italian if it does not bother you. Thank you.
Thank you. I'm happy to be able to participate in this discussion. I've been dealing with PFAS for the last 11 years. Let me just say something about what we've experienced in our territory, where the consequences of PFAS contamination have been felt more than anywhere else. And now, finally, we've got real clarity about the health impact, not just long-chain PFAS, but other hard products and their half-lives as well.
And it's not just a question of the health impact, but also a question of the costs for industry. We've also got to have a look at the impact on sectors that bear the consequences. I'm talking about the farming sector, water management, textiles, or consumer goods, where they have to manage PFAS phasing out now, and they have to bear very high costs because managing this is very expensive. So, you've got to approach this issue from many points of view. I know that this study was limited in time, so it could only clarify certain points, but for example, F Gas.
Well, there's a whole coalition of companies working hard to substitute F gas with green F gas. There are many companies that have already done this, and some are asking for help from European funds to be able to do it. And then, regarding electronic components, PV cells, batteries, solar panels, even fuel cells and electrolyzers, these are identified as critical sectors in the study. There are various companies in Europe that have decided to phase out, and I think that it's very important to be clear about this. And even from what certain people have said today, I think that some people have only heard information from one area, from one branch of the chemical industry, which gives them a one-sided view.
But I think you've got to take into account many other aspects, and we've got to look at the practical aspects as well. Certainly, there are critical sectors, but in this study, we've got to have an impact study that doesn't just take into account the costs, which are not really properly calculated. And they're already a burden for industry, for example, depolluting water. And there is an analysis now, not just of social and economic impacts, but also the environmental impact and the impact on health, because even fluoropolymers, I do understand, with the use of these, there is no contamination. But the management of waste with cars, for example, presents a problem of pollution.
And you've got soil pollution, air pollution, and so on. I think that we've got to really consider all these other aspects. There is a hazard problem which cannot be looked at just by individual companies, but there has got to be a look at the bioaccumulation of these substances, including the products which are the half-life products, and there are studies which shed light on what I'm saying here. So I think that we've got to have a holistic approach, and I think that when you ask for a limited waiver, this will suggest to legislators that you don't really want to take this seriously. And there's a big risk, which was mentioned by my colleague before, and that is that we will not be competitive compared with the rest of the world. If we're talking about competition, we've got to have regulatory certainty.
We've got to have investments in European solutions. We've got to have innovation, and we've got to respect all the social, economic, and health needs, and we've got to bear in mind the economic aspect. So thank you very much for producing this study, and I think that this has got to be enlarged, and other industries have got to be consulted too.
Speaker 33
Thank you very much. Yeah. Absolutely. So, with regards to the economic focus of this study, it was solely focused on the economic impacts of the ban as currently outlined within the universal PFAS restriction, which is via either an 18-month, a 5-year, or a 12-year transitionary period. And that is why, effectively, for some of these industries, even a 12-year derogation is tantamount to an effective ban because they are unable to substitute within these periods.
So, by considering that, what is the state of play regarding the economic impacts? Some of those impacts are going to be very large within these sectors. But when considering aspects of substitution and alternatives being available, F-gas has, of course, been mentioned several times. Absolutely. F gas is an area that has been regulated separately for quite some time now.
Both the F-gas market itself and the non-fluorinated market alternatives have been innovating under the guise of the F-gas regulation, primarily to bring down the global warming potential (GWP). That regulation has already outlined a framework in which it has incentivized the industry to conform to a set of environmental concerns and issues. And so, that is why existing legislation, such as the F-gas regulation, could be expanded to also capture the PFAS concerns of some of the F-gases that also classify as PFAS. So that is why our recommendation there is to capture that, because that regulation also has a level of nuance that the current PFAS restriction is missing. It is true that there are applications within the green energy and clean technology sectors where alternatives to F-gases and fluoropolymers exist.
Absolutely. Our report is not saying that none of it can be replaced. Some of it has already been done. Some of it can be. But in some applications as well, such as heat pumps or commercial refrigeration, we know there are further aspects, such as climate considerations.
So, even if an alternative is useful in one area of the continent, it doesn't actually mean it's a universal solution. So the universality of some of these alternatives also has to be considered if they are to be seen as viable alternatives. And this is why we have mentioned that there may be a need for a market mix. There may be a need for PFAS to remain for a longer period so that alternatives either become universally available or may never be available, meaning PFAS may still be needed in the long term but at a much reduced level. The secondary part to that is if PFAS is going to be needed in some of these critical sectors across the long term, there is a field of further innovation to put Europe at the leading forefront, and that would also be in the abatement and capture technology.
This is research, and these are fields that have been exploding since regulation began. And this regulation is one of the most extreme and forward versions, with no other area proposing such a regulation so far. So, Europe is at the forefront. It could be deemed extreme, but it is taking bold steps which are needed to address this issue. What our report has now been looking at is, based on this strong position of the regulation, how that then feeds through into the individual sectors and individual materials.
And the other thing to consider is that this is the first time that the grouping approach has also been used in the restriction process. And so, this report has also begun to address the issue that if the grouping approach is to be used going forward, especially under the REACH process, there need to be wider considerations, as blanket assumptions and blanket conclusions often cannot be made. They need to be much more tailored and nuanced. And this may mean that there have to be additions to the restriction process as well. F gases are just an example of that, as well as other green energy areas such as the automotive sector moving towards battery electric or even the hydrogen economy.
The hydrogen economy is, again, a conflicting body of evidence because the industry is in its infancy. The hydrogen economy has not developed in recent years because of the economic unviability of using certain alternative technologies in their proton exchange membranes, but some PFAS-based ones have allowed the industry to begin to establish itself. So, there also becomes an aspect, as I completely agree. There is a need to consider environmental effects; they don't just regard the environmental effects of the PFAS. If we take a green technology, then there is the effect of what the technology itself has on the environmental standards of Europe.
So the total transition of the energy infrastructure over to a hydrogen-based system, which might use some PFAS, is that a trade-off worth making? Of course, we haven't looked at that, and I can't give that answer right now. But these are further questions that need to be asked. And that's also why one of our key recommendations is further study and investigation into many of these applications and areas of interest, because this is nuanced. This is highly complex, and it is the first time this group approach has been made.
And Europe is at the forefront of this. Innovation can be driven by this regulation, and it can be driven by government intervention working with industry, the PFAS industry, the alternative industry, and the abatement technologies industry. It is possible that all three of these areas could see innovation if the restriction is combined with appropriate other measures. There is that prospect, and that is what our report has begun to explore. As I said, we're not presenting our conclusions as the absolute silver bullet that solves the problem of PFAS.
Certainly not the case for people who have been investigating PFAS far longer than I have. But it shows this complexity and difficulty, and that there may be a need for other metrics and measures to be combined to achieve the goals of reducing environmental and health effects. Once those are also known, as I will come back to, there is still a limited body of evidence for environmental and health effects on fluoropolymers in particular. So that should also be the first port of call to better understand just what the issue with these materials being used is. We know the issues with legacy, and they are justified to be restricted and removed.
And most of them have been. The semiconductor industry, for example, used to use a lot of PFOA and PFAS. Once the issues and concerns of these materials were found, they moved away from using them. Now, they are using a different set of materials where these health effects are not known. So, once those effects are known, the industry has previously shown it's willing to transition.
So, it may be willing to do so again, but it takes time, and it will need a level of investment and collaboration. And defense, green technology, and aerospace would be no different because of the essential nature of these sectors.
Borys Budka
Thank you very much for this; it was a very interesting discussion. Thanks for being with us today. Thank you for this report on research, but I think that we will come back to this discussion also during our ITRE committees. Thanks a lot, and we will meet after midday.
Ask anything about this video — I analyse its transcript to answer.