title: Council Recommendation of 20 July 2020 on the economic policy of the euro area 2020/C 243/01

text:
               23.7.2020

               EN

               Official Journal of the European Union

               C 243/1

      COUNCIL RECOMMENDATION
      of 20 July 2020
      on the economic policy of the euro area
      (2020/C 243/01)
      THE COUNCIL OF THE EUROPEAN UNION,
      Having regard to the Treaty on the Functioning of the European Union, and in particular Article 136 in conjunction with Article 121(2) thereof,
      Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies (1), and in particular Article 5(2) thereof,
      Having regard to Regulation (EU) No 1176/2011 of the European Parliament and of the Council of 16 November 2011 on the prevention and correction of macroeconomic imbalances (2), and in particular Article 6(1) thereof,
      Having regard to the recommendation of the European Commission,
      Having regard to the conclusions of the European Council,
      Having regard to the opinion of the Economic and Financial Committee,
      Having regard to the opinion of the Economic Policy Committee,
      Whereas:

                  (1)

                  The euro area is continuing to expand, but there are interconnected risks to the outlook and uncertainty on the horizon. Moreover, the risk of a further prolonged period of low growth and inflation driven by anaemic productivity and ageing populations looms. While the output gap has turned positive since 2017 and stood at 0,7 % of potential gross domestic product (GDP) in 2018, potential growth is set to remain below pre-crisis levels (3). Core inflation remained in the 1–1½ % range in 2018 and 2019, and is forecast to remain at approximately 1½ % in 2020 and 2021. Labour market indicators continue to improve, although at a slower pace, and employment growth is projected to slow further and challenges in terms of job quality remain. Nominal wage growth has firmed, having reached approximately 2¼ % growth in 2018, after several years below 2,0 %, is estimated to be at approximately 2½ % in 2019 and is projected to return to to 2¼ % in the period 2020–2021. In spite of good labour market conditions, real wage growth has increased only slowly and remains low, at below 1 % in 2018, is estimated to be at around the same level in 2019 and projected to be at 0,7 % and 0,8 % for 2020 and 2021 respectively. As stated in the 2020 Alert Mechanism Report adopted by the Commission on 17 December 2019, the euro area current-account surplus is projected to narrow, while remaining close to its peak. Deficit Member States narrowed or reversed their current-account deficits, even if they continue to record large negative net international investment positions (NIIPs).
                  At the same time, while some Member States narrowed their current-account surpluses, they continue to run persistently high current-account surpluses and therefore increase their NIIP. Current-account balance dynamics in the euro area are affected by weakening external demand, especially for export-oriented Member States with high current-account surpluses, which are highly dependent on foreign export demand. Favourable demand dynamics are also important, and large surplus Member States would also contribute to rebalancing by strengthening the conditions that support wage growth, while respecting the role of social partners, as well as public and private investment.

                  (2)

                  Increasing the growth potential while ensuring environmental and social sustainability and driving real convergence among euro area Member States requires structural reforms to enhance sustainable growth and investment in tangible and intangible capital to increase productivity. This would help particularly those Member States whose growth potential is clearly lower than the euro area average. This would also be necessary in order to prevent the euro area economy from falling into a protracted period of low potential growth and productivity, low price inflation and wage growth as well as rising inequality. Reforms and investment remain crucial for ensuring the euro area relaunches its growth momentum, overcomes stronger pressures over the medium to long term stemming also from deteriorating demographics, and facilitates the transformation towards a sustainable economy, helping the euro area and its Member States to achieve the United Nations’ Sustainable Development Goals.

                  (3)

                  The economic impact of climate change, one of the biggest systemic risks facing the world economy, financial systems and societies today, is beginning to be visible. Risks to the global economy from climate change and more broadly from environmental degradation are increasingly present, and these will have a widespread impact, including on the most vulnerable in our societies. If not accompanied by appropriate measures, there could be negative consequences on the resilience of our economies, on inclusiveness and on the long-term growth potential. In that context, investment and creating the regulatory and financial conditions for an orderly transition towards a sustainable economy would be essential. If tackled in the right way, environmental and climate challenges are also an opportunity to revitalise the European economy towards sustainable development. In that direction, the Commission has put forward a European Green Deal as Europe’s growth strategy which will include a proposal for the first European Climate Law to enshrine the 2050 climate-neutrality target into law. At the same time, the green transition will need to take the impact on different parts of society into account. Investment to facilitate transformation towards a sustainable economy will need to be accompanied by carbon pricing, appropriate regulation in all sectors, and investment in skills and support for job transitions to ensure that all citizens reap the benefits of technological change, particularly in the sectors and regions lagging behind in the digital and green transitions.

                  (4)

                  Mobilising public and private funds for investing in the green and digital transition can help to sustain growth in the short term and meet the long-term challenges facing our economies. While the digital revolution may entail opportunities in terms of productivity, growth and job creation, it may also give rise to challenges, in particular for less qualified workers, lacking skills to work with new technologies. Different speeds of transition to the digital economy among euro area Member States could prove a significant risk to convergence and macroeconomic stability. That could be reinforced by strong agglomeration effects, often benefiting large cities and winner-takes-all dynamics that are often present in the area of digital technologies, which can add to inequality and have adverse impact on convergence. Investments should be geared towards generating research and innovation but also towards wider diffusion of innovations across the economy.

                  (5)

                  A more coordinated investment strategy coupled with a stronger reform effort at the level of the euro area would be instrumental in supporting sustainable growth and responding to the long-term challenges such as the climate transition and technology transformation. The budgetary instrument for convergence and competitiveness (BICC) would provide financial support to euro area Member States for the implementation of proposals which should as a rule consist of packages of reforms and investments. InvestEU, which will also contribute to the Sustainable Europe Investment Plan, also aims to trigger additional investment to further foster innovation and job creation in the Union, including by financing sustainable infrastructure. Cohesion policy funds, which play a crucial role in supporting our regions and rural areas, also play a role in the climate and technological transition by promoting sustainable development. The European Investment Bank already dedicates 25 % of its total financing to climate investment, and has announced its intention to double that share. To achieve the Union’s sustainability objectives, it would be essential to carry out investment projects at national and sub-national level that cover climate adaptation and mitigation, energy transition, decarbonisation or the circular economy. Investment in network industries and infrastructure can help improve the euro area’s competitiveness and foster the transition to more sustainable transport. In addition, investments in intangible assets such as research and development, and skills are also key to preparing the euro area for the challenges ahead.

                  (6)

                  The effects of the economic expansion over the last years have not been felt evenly within Member States and across regions and Member States. While disposable income levels have recently risen, they remain below pre-crisis levels in several euro area Member States. The number of people at risk of poverty and social exclusion is declining in most Member States, and is now 5 million below the 2012 peak, but remains above 2008 levels in the euro area. Following a period of increased divergences, some Member States have converged towards the highest performers in GDP-per-capita over the past few years. However, the share of income held by the highest income levels has slowly increased in the past decade, and large divergences remain between Member States. In order to promote upwards convergence within and across Member States, it would be important to promote policies that aim at increasing both efficiency and equity, in line with the UN Sustainable Development Goals. Those policies should result in better macroeconomic outcomes with more equally shared benefits for society at large, that also help boost the cohesion of the euro area.

                  (7)

                  Consistency and balance in the macroeconomic policy mix of the euro area, including monetary, fiscal and structural policies, are crucial for ensuring robust, inclusive and sustainable economic growth and for responding effectively to persistent low inflation, a weakening outlook and risks to long-term growth. The European Central Bank is maintaining an accommodative monetary policy to help inflation edge towards its medium-term inflation objective, while supporting growth and job creation. Fiscal policy needs to complement the monetary policy stance, as do structural reforms across different sectors, including those necessary to complete the architecture of the Economic and Monetary Union (EMU).

                  (8)

                  Coordination of national fiscal policies with full respect for the Stability and Growth Pact, while taking into account available fiscal space and spillovers across Member States, supports the proper functioning of the EMU. The euro area fiscal stance is expected to be broadly neutral to slightly expansionary in 2020 and 2021. At the same time, national fiscal policies remain insufficiently differentiated. The pursuit of prudent fiscal policies by Member States with high levels of public debt would put public debt on a downward path, reduce vulnerability to shocks, and allow for the full functioning of automatic stabilisers in the event of an economic downturn. On the other hand, further boosting investment and other productive spending in Member States with a favourable budgetary situation would support growth in the short and medium term, while also helping to rebalance the euro area economy. If downside risks were to materialise, fiscal responses should be differentiated, aiming for a more supportive stance at the aggregate level, while ensuring full respect for the Stability and Growth Pact. Country-specific circumstances should be taken into account and pro-cyclicality avoided, to the extent possible. Member States should stand ready to coordinate policies in the Eurogroup.

                  (9)

                  Fiscal structural reforms remain crucial for improving fiscal sustainability, strengthening growth potential and allowing for effective counter-cyclical fiscal policies in the event of a downturn. Well-functioning national fiscal frameworks, together with regular and thorough spending reviews and effective and transparent public procurement can strengthen the efficiency and effectiveness of public expenditure and improve the credibility and quality of fiscal policies. Improving the composition of national budgets, on both the revenue and expenditure sides, including shifting resources towards public investment in the context of well-designed investment strategies and developing green budgeting tools, would increase the growth impact of public budgets, raise productivity and begin meeting the urgent long-term challenges of the transition towards green and digital economies. Simplifying and modernising tax systems and addressing tax fraud, evasion, and avoidance, namely through measures against aggressive tax planning, taking account of the on-going discussions at the Organisation for Economic Cooperation and Development (OECD) Inclusive Framework on the remaining base erosion and profit shifting (BEPS) issues, are essential to making tax systems more efficient and fairer. The ease with which mobile resources can move within the euro area is one of the foundations of the internal market but also increases the scope for tax competition. Coordination among Member States is therefore essential as regards addressing profit-shifting and harmful tax practices and avoiding an overall race to the bottom in terms of corporate taxation.
                  Working towards an agreement for a common consolidated corporate tax base as well as an agreement on the OECD Inclusive Framework on the remaining BEPS issues to review profit allocation among countries and ensure minimum effective taxation could be instrumental in that endeavour. The tax burden in the euro area is relatively high and skewed towards labour, with property or environmental taxes representing a very small share of tax revenues. The property and environmental taxes, however, can be less detrimental to growth and labour supply and demand. An increased use of environmental taxes can contribute to sustainable growth by incentivising ‘greener’ behaviour by consumers and producers. Taxation would need to take better into account the climate dimension and address emissions and carbon leakage more consistently. Promoting worldwide coordinated action would further increase the effectiveness of those measures. Therefore, in order to help transitioning towards a green economy, fostering the design of budgetary policies conducive to environmental commitments and a review of Council Directive 2003/96/EC (4) will be proposed, as well as a World Trade Organization (WTO)-compliant carbon border adjustment mechanism, if needed to avoid carbon leakage.

                  (10)

                  Structural and institutional reforms that increase competition in product markets, promote resource efficiency, improve the business environment and the quality of public administrations, including the effectiveness of justice systems, are important for the resilience of euro area Member States. Resilient economic structures and appropriate policies prevent shocks from having significant and long-lasting effects on income and labour supply, and can facilitate the operation of fiscal and monetary policy and contain divergences, particularly in downturns, creating more favourable conditions for sustainable and inclusive growth. Better coordination and implementation of structural reforms, in particular those prescribed in the country-specific recommendations, can create positive spillovers across Member States. In that respect, the national productivity boards can play an important role in increasing the reform ownership and improving implementation. Reforms are also needed to face urgent long-term challenges such as the climate transition and technological transformation. Deepening single market integration, which has proven to be a major engine of growth and convergence between Member States, can also contribute to fostering productivity growth.

                  (11)

                  The European Pillar of Social Rights sets out 20 principles to foster equal opportunities and access to the labour market, fair working conditions and social protection and inclusion. It is designed as a compass to promote upward convergence towards better working and living conditions. Stronger and more inclusive economies and societies can in turn foster the resilience of the Union and the euro area. Reforms and investment in skills, job transitions and more effective social protection are also important to accompany a just and fair transition towards a green and digital economy. The full implementation of the European Pillar of Social Rights at all levels with due regard for respective competences will be essential for promoting upward convergence.

                  (12)

                  Reforms that increase labour market participation, tackle youth and long-term unemployment, promote quality job creation, support successful labour market transitions, reduce segmentation and promote social dialogue can help boost inclusive growth, improve economic resilience and automatic stabilisation, reduce inequalities, and address poverty and social exclusion. Individualised job transition support, training and requalification are key to promoting the timely reinsertion of job-seekers. Active labour market policies should be well integrated with social policies and promote active inclusion in the labour market and in society. Access to high-quality education and training throughout the life cycle requires adequate investment in order to improve human capital and skills, also in light of the digital and green transition. This contributes to improving employability, productivity, innovation capacity and wages in the medium and longer term, increasing the resilience of the euro area. Employment protection legislation needs to provide for fair and decent working conditions for all workers, especially in view of emerging atypical forms of employment which create new opportunities but also challenges related to job security and social protection.
                  Effective and sustainable social protection systems are also crucial for ensuring adequate income and access to quality services. Pension reforms and work-life balance policies can importantly foster labour market participation, safeguarding the long-term sustainability of European welfare systems. A shift away from labour taxation could usefully focus in particular on low-income and second earners. Social partners’ involvement in employment, social and economic reforms is crucial for strengthening ownership and supporting reform implementation. Similarly, the involvement of civil society organisations is beneficial. It is important that collective agreements contribute to the objectives of recommendations (1) to (5) below with full respect for social partners’ autonomy.

                  (13)

                  The robustness of the euro area financial sector has increased since the crisis, though vulnerabilities remain to be addressed. High corporate and household debt levels, to which the debt bias in many national tax systems contributes, can be a source of risk. The need to adapt banks’ business models, the low-interest-rate environment and increasing competition from other forms of finance continue to exert pressure on banks’ profitability. There has been steady progress in risk reduction, in particular on non-performing loan (NPL) reduction. Nonetheless, where NPL ratios remain high, they require further sustained efforts, and all Member States should put in place appropriate policies to prevent the build-up of NPLs. In March 2018, the Commission presented a risk-reduction package both to facilitate addressing legacy NPLs and to avoid their future build-up. As part of the legislative measures on NPLs, Regulation (EU) 2019/630 of the European Parliament and of the Council (5) was adopted in April 2019, which introduces a statutory ‘prudential backstop’ in order to prevent the risk of under-provisioning of future NPLs; further progress should be made to continue tackling the issue of NPLs, in particular by progressing with the draft Directive on NPLs secondary markets.
                  Progress has already been achieved to improve the existing framework on anti-money laundering. However, as highlighted in the Commission reports issued in July 2019, a more comprehensive approach to fighting money laundering and the financing of terrorist activities is needed in the Union to address structural shortcomings identified. This requires, in particular, considering ways to increase harmonisation, and improve supervision and enforcement of the rules, through Union action.

                  (14)

                  Strengthening the banking union has been a priority undertaking, since 2013, in order to ensure financial stability, reduce financial fragmentation and protect lending to the economy in times of crisis. This has continued to progress, including through the agreement on the European Stability Mechanism (ESM) legal framework on the common backstop for the Single Resolution Fund (SRF), but further strengthening is necessary. In that connection, the Euro Summit tasked the Eurogroup to continue to work on the ESM package of reforms, pending national procedures, and to continue work on all elements of the further strengthening of the banking union, on a consensual basis. A high-level working group (HLWG) was set up to work on a roadmap for beginning political negotiations on the European deposit insurance scheme (EDIS). It is important to move forward to unlock the banking union’s benefits in terms of private risk sharing, financial stability and economic growth, while reducing opportunities for arbitrage between Member States. Ultimately, such move should ensure Europe’s financial and economic sovereignty. This calls for continuing to work without delay, on all elements including those discussed in the HLWG on EDIS, and with the same level of ambition. The work on the ESM package of reforms should be finalised, including the introduction of a backstop for the SRF. The backstop for the SRF should be made operational and this should be anticipated, provided sufficient progress has been made in risk reduction.
                  There should be further work on solutions for overcoming limitations in the current set-up for liquidity provision in resolution. Finally, the Commission delivered on all of the actions announced in the Capital Markets Union (CMU) Action Plan of 2015. However, legal, tax and regulatory obstacles to the establishment of a CMU remain, and renewed efforts are needed to overcome them, in particular as regards the rules on access to finance, certain insolvency and tax divergences, and to achieve high, effective and convergent supervisory standards.

                  (15)

                  Strengthening the architecture of the EMU requires delivering on the actions identified in the Statement of the Euro Summit of 13 December 2019 as a matter of priority, while continuing discussions on other aspects. The Commission Communication of 12 June 2019 entitled ‘Deepening Europe’s Economic and Monetary Union: Taking stock four years after the Five Presidents’ Report’ presents the state of play and outlines the Commission view on areas where reform efforts should focus in the short and medium term. There has been some progress on the economic union, with a political agreement on the features of a BICC for the euro area. An agreement in principle, subject to completion of national procedures, was reached on further developing the ESM and revising the ESM Treaty. There has been no consensus in the Council on a euro area fiscal stabilisation function nor on reforming the governance of the euro area.

                  (16)

                  Deepening the EMU would result in better macroeconomic outcomes. An incomplete EMU impedes financial integration. That limits financing opportunities for much-needed investment to foster an inclusive, productive, sustainable and stable economy. An incomplete EMU also hinders the smooth transmission of monetary policy across the euro area and limits Europe’s ability to determine its economic destiny. If agreed, a central fiscal stabilisation function would complement the capacity of euro area Member States to conduct counter-cyclical fiscal policy. The Council notes the Commission’s intention to propose a European unemployment benefit reinsurance scheme in order to better protect citizens in cases of economic shocks. Strengthening the EMU, together with sound policies at the European and national levels, is key to enhancing the clout of Europe in the world, to enhancing the international role of the euro and to contributing to an open, multilateral and rules-based global economy. It is important that discussions continue to be held in an open and transparent manner towards non-euro area Member States, while fully respecting the Union’s internal market.

                  (17)

                  The Employment Committee and the Social Protection Committee have been consulted on the employment and social aspects of this Recommendation,

            HEREBY RECOMMENDS that, in the period 2020–2021, euro area Member States take action, individually and collectively within the Eurogroup, to:

                  1.

                  In euro area Member States with current-account deficits or high external debt, pursue reforms to boost competitiveness and reduce external debt. In euro area Member States with large current-account surpluses, strengthen the conditions that support wage growth, while respecting the role of social partners, and implement measures that foster public and private investment. In all Member States, foster productivity by improving the business environment and the quality of institutions, enhance resilience by improving the functioning of goods and services markets especially by deepening the single market. Support a fair and inclusive transition towards a competitive green and digital economy through tangible and intangible investment, both public and private.

                  2.

                  While pursuing policies in a manner that fully respects the Stability and Growth Pact, support public and private investment and improve the quality and composition of public finances. In Member States with high levels of public debt, pursue prudent policies to put public debt credibly on a sustainable downward path. In Member States with a favourable fiscal position, use it to further boost high-quality investments, while preserving the long-term sustainability of public finances. If downside risks were to materialise, fiscal responses should be differentiated, aiming for a more supportive stance at the aggregate level, while ensuring full respect for the Stability and Growth Pact. Country-specific circumstances should be taken into account and pro-cyclicality avoided, to the extent possible. Member States should stand ready to coordinate policies in the Eurogroup. Improve the effectiveness of national fiscal frameworks and the quality of public finances and adopt growth-friendly tax and other relevant budgetary measures that foster a sustainable and inclusive economy. Support and implement Union actions to combat aggressive tax planning and avoid a race to the bottom in corporate taxation.

                  3.

                  Strengthen education and training systems and investment in skills. Increase the effectiveness of active labour market policies that support labour market integration and successful labour market transitions, including to more digital and green jobs. Promote participation in the labour market, including that of women and vulnerable groups, and shift taxes away from labour, in particular for low-income and second earners. Foster quality job creation, fair working conditions, promote work-life balance, and address labour market segmentation. Improve access to adequate and sustainable social protection systems. Enhance the effectiveness of social dialogue and promote collective bargaining.

                  4.

                  Follow up on the Statement of the Euro Summit of 13 December 2019 to further strengthen the banking union, with a view to its completion, by continuing to work, without delay, and with the same level of ambition, on all elements, including those discussed in the HLWG on EDIS. Finalise the work on the ESM package of reforms, including the introduction of a backstop for the SRF. Make the backstop for the SRF operational and anticipate this, provided sufficient progress has been made in risk reduction. Work further on solutions for overcoming limitations in the current set-up for liquidity provision in resolution. Strengthen the European regulatory and supervisory framework, including by ensuring consistent and effective supervision and enforcement of anti-money laundering rules. Promote orderly deleveraging of large stocks of private debt including by reducing debt bias in taxation. Continue to enable the swift reduction of the level of NPLs by banks in the euro area and prevent their build up. Renew efforts to deepen the CMU.

                  5.

                  Make ambitious progress on deepening the EMU, in particular by delivering swiftly on the actions identified in the Statement of the Euro Summit of 13 December 2019, including as regards the BICC, and discussing other aspects. Progress in this area will also enhance the international role of the euro and project Europe’s economic interests globally, and should fully respect the Union’s internal market and be pursued in an open and transparent manner towards non-euro area Member States.

         Done at Brussels, 20 July 2020.

               For the Council

               The President

            J. KLOECKNER

         (1)  OJ L 209, 2.8.1997, p. 1.

         (2)  OJ L 306, 23.11.2011, p. 25.

         (3)  All forecast figures in this document are from the European Commission Autumn 2019 forecast.

         (4)  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).

         (5)  Regulation (EU) 2019/630 of the European Parliament and of the Council of 17 April 2019 amending Regulation (EU) No 575/2013 as regards minimum loss coverage for non-performing exposures (OJ L 111, 25.4.2019, p. 4).


title: Council Recommendation of 9 October 2020 on the appointment of a member of the Executive Board of the European Central Bank 2020/C 338/02

text:
               12.10.2020

               EN

               Official Journal of the European Union

               C 338/2

      COUNCIL RECOMMENDATION
      of 9 October 2020
      on the appointment of a member of the Executive Board of the European Central Bank
      (2020/C 338/02)
      THE COUNCIL OF THE EUROPEAN UNION,
      Having regard to the Treaty on the Functioning of the European Union, and in particular Articles 283(2) and 139(2) thereof,
      Having regard to Protocol No 4 on the Statute of the European System of Central Banks and of the European Central Bank, and in particular Article 11.2 thereof,
      HEREBY RECOMMENDS TO THE EUROPEAN COUNCIL THAT:
      Mr Frank ELDERSON be appointed as a member of the Executive Board of the European Central Bank for a term of office of eight years with effect from 15 December 2020.

         Done at Brussels, 9 October 2020.

               For the Council

               The President

            M. ROTH


title: Council Recommendation (EU) 2020/1475 of 13 October 2020 on a coordinated approach to the restriction of free movement in response to the COVID-19 pandemic (Text with EEA relevance)

text:
               14.10.2020

               EN

               Official Journal of the European Union

               L 337/3

      COUNCIL RECOMMENDATION (EU) 2020/1475
      of 13 October 2020
      on a coordinated approach to the restriction of free movement in response to the COVID-19 pandemic
      (Text with EEA relevance)
      THE COUNCIL OF THE EUROPEAN UNION,
      Having regard to the Treaty on the Functioning of the European Union, and in particular Article 21(2), Article 168(6) and Article 292, first and second sentence thereof,
      Having regard to the proposal from the European Commission,
      Whereas:

                  (1)

                  Citizenship of the Union confers on every citizen of the Union the right of free movement.

                  (2)

                  Pursuant to Article 21(1) of Treaty on the Functioning of the European Union (TFEU), every citizen of the Union shall have the right to move and reside freely within the territory of the Member States, subject to the limitations and conditions laid down in the Treaties and by the measures adopted to give effect to them. Directive 2004/38/EC of the European Parliament and of the Council (1) gives effect to that right. Article 45 of the Charter of Fundamental Rights of the European Union (the Charter) also provides for freedom of movement and residence. Since the action of Union proves necessary to attain the objective laid down in Article 21 TFEU, and the Treaties do not otherwise provide the necessary powers, the Council may adopt provisions with a view to facilitating the exercise of the rights to move and reside freely.

                  (3)

                  Pursuant to Article 168(1) TFEU, a high level of human health protection is to be ensured in the definition and implementation of all Union policies and activities.

                  (4)

                  On 30 January 2020, the Director-General of the World Health Organization (WHO) declared a public health emergency of international concern over the global outbreak of novel coronavirus, which causes Coronavirus disease 2019 (COVID-19). On 11 March 2020, the WHO made the assessment that COVID-19 can be characterized as a pandemic.

                  (5)

                  To limit the spread of the virus, the Member States have adopted various measures, some of which have had an impact on Union citizens’ right to move and reside freely within the territory of the Member States, such as restrictions on entry or requirements for cross-border travellers to undergo quarantine.

                  (6)

                  On 13 February 2020, the Council adopted Conclusions on COVID-19 (2) in which it urged Member States to act together, in cooperation with the Commission, in a proportionate and appropriate manner to develop close and enhanced coordination between Member States to ensure effectiveness of all measures, including, if necessary, measures regarding travel, while safeguarding the free movement within the Union, to ensure optimal protection of public health.

                  (7)

                  On 10 March 2020, the Heads of State or Government of the European Union emphasised the need for a joint European approach with regard to COVID-19.

                  (8)

                  Since March 2020, the Commission adopted a number of Guidelines and Communications with the aim of supporting coordination efforts of Member States and safeguarding the free movement within the Union in times of the COVID-19 pandemic (3).

                  (9)

                  As the COVID-19 pandemic has caused an unprecedented health emergency, the protection of public health has become an overriding priority for both the Union and its Member States. On the basis of the protection of public health, Member States may take measures that restrict the free movement of persons within the Union. According to Article 168(7) TFEU, the definition of national health policies, including the organisation and delivery of health services and medical care, are the responsibility of Member States and may therefore vary from one Member State to another. While Member States are competent to decide on the most appropriate measures to safeguard public health, including for instance quarantine or testing requirements, it is appropriate to ensure the coordination of such measures, with a view to safeguarding the exercise of the right of free movement and combatting a serious cross-border threat to health such as Covid-19.

                  (10)

                  When adopting and applying restrictions to free movement, Member States should respect principles of EU law, in particular proportionality and non-discrimination. This Recommendation is intended to facilitate the application of these principles, in a coordinated manner, to the exceptional situation caused by the COVID-19 pandemic. Therefore, the mechanisms put in place by this Recommendation should be strictly limited in scope and time to restrictions adopted in response to this pandemic.

                  (11)

                  Unilateral measures in this area have the potential to cause significant disruptions as businesses and citizens are confronted with a wide array of diverging and rapidly changing measures. This is particularly harmful in a situation where the European economy has already been significantly affected by the virus.

                  (12)

                  This Recommendation seeks to ensure increased coordination among Member States considering the adoption of measures restricting free movement on grounds of public health. To limit restrictions to what is strictly necessary, Member States should, in a non-discriminatory manner and as much as possible, apply those restrictions to persons coming from specific areas or regions particularly affected rather than to the entire territory of a Member State.

                  (13)

                  A coordinated approach among Member States requires joint efforts on the following key points: the application of common criteria and thresholds when deciding whether to introduce restrictions to free movement, a mapping of the risk of COVID-19 transmission based on an agreed colour code, and a coordinated approach as to the measures, if any, which may appropriately be applied to persons moving between areas, depending on the level of risk of transmission in those areas.

                  (14)

                  The criteria and thresholds outlined in this Recommendation are based on the data made available by Member States. A comprehensive data set and maps outlining the status of the common criteria for EU regions should be published and updated weekly by the European Centre for Disease Prevention and Control, using the data provided by the Member States.

                  (15)

                  In view of the evolving epidemiological situation, the Commission, supported by European Centre for Disease Prevention and Control, should regularly assess the criteria, data needs and thresholds outlined in this Recommendation, including whether other criteria should be considered or the thresholds adapted, and transmit its findings to the Council for its consideration, together with a proposal to amend the Recommendation, where necessary.

                  (16)

                  This Recommendation should not be understood as facilitating or encouraging the adoption of restrictions to free movement put in place in response to the pandemic, but rather seeks to provide a coordinated approach in the event that a Member State were to decide to introduce such restrictions. The decision as to whether to introduce restrictions to free movement remain the responsibility of the Member States, which have to comply with the requirements of Union law. Equally, Member States retain the flexibility not to introduce restrictions even if the criteria and thresholds outlined in this Recommendation are met.

                  (17)

                  Restrictions on free movement should only be considered when Member States have sufficient evidence to justify such restrictions in terms of their benefit for public health and they have reasonable grounds to believe that the restrictions would be effective.

                  (18)

                  To limit the disruption to the internal market and family life while the pandemic is ongoing, travellers with an essential function or need, such as workers or self-employed persons exercising critical occupations, cross-border workers, transport workers or transport service providers, seafarers, and persons travelling for imperative business or family reason, including members of cross-border families travelling on a regular basis, should not be required to undergo quarantine.

                  (19)

                  Clear, timely and comprehensive information to other Member States and the general public is crucial to limit the impacts of any restrictions to free movement put in place, ensuring predictability, legal certainty and compliance by citizens,

            HAS ADOPTED THIS RECOMMENDATION:

         General Principles

      When adopting and applying measures to protect public health in response to COVID 19 pandemic, Member States should coordinate their actions based, to the extent possible, on the following principles:

                  1.

                  Any restrictions to the free movement of persons within the Union put in place to limit the spread of COVID-19 should be based on specific and limited public interest grounds, namely the protection of public health. It is necessary for such limitations to be applied in compliance with the general principles of Union law, in particular proportionality and non‐discrimination. Any measures taken should thus not extend beyond what is strictly necessary to safeguard public health.

                  2.

                  Any such restrictions should be lifted as soon as the epidemiological situation allows it.

                  3.

                  There may be no discrimination between Member States, for example by applying more generous rules to travel to and from a neighbouring Member State as compared to travel to and from other Member States in the same epidemiological situation.

                  4.

                  Restrictions cannot be based on the nationality of the person concerned, but should be based on the location(s) of the person during the 14 days prior to arrival.

                  5.

                  Member States should always admit their own nationals and Union citizens and their family members resident in their territory, and should facilitate swift transit through their territories.

                  6.

                  Member States should pay particular attention to the specificities of cross-border regions, outermost regions, exclaves and geographically isolated areas and the need to cooperate at local and regional level.

                  7.

                  Member States should regularly exchange information on all matters covered by the scope of this recommendation.

         Common criteria

                  8.

                  Member States should take the following key criteria into account when considering to restrict free movement in response to the COVID-19 pandemic:

                              (a)

                              the ‘14-day cumulative COVID-19 case notification rate’, that is, the total number of newly notified COVID-19 cases per 100 000 population in the last 14 days at regional level;

                              (b)

                              the ‘test positivity rate’, that is, the percentage of positive tests among all tests for COVID-19 infection carried out during the last week;

                              (c)

                              the ‘testing rate’, that is, the number of tests for COVID-19 infection per 100 000 population carried out during the last week.

         Data on the common criteria

                  9.

                  To ensure that comprehensive and comparable data is available, Member States should, on a weekly basis, provide the European Centre for Disease Prevention and Control with data available on the criteria mentioned in point 8.
                  Member States should also provide this data at the regional level to ensure that any measures can be targeted to those regions where they are strictly necessary.
                  Member States should exchange information on any testing strategies which they pursue.

         Mapping of risk areas

                  10.

                  Based on the data provided by the Member States, the European Centre for Disease Prevention and Control should publish a map of EU Member States, broken down by regions, in order to support Member States’ decision-making. This map should also include data from Iceland, Liechtenstein, Norway and, as soon as conditions allow (4), the Swiss Confederation. In this map, an area should be marked in the following colours:

                              (a)

                              green, if the 14-day cumulative COVID-19 case notification rate is less than 25 and the test positivity rate of tests for COVID-19 infection is less than 4%;

                              (b)

                              orange, if the 14-day cumulative COVID-19 case notification rate is less than 50 but the test positivity rate of tests for COVID-19 infection is 4% or more, or, if the 14‐day cumulative COVID-19 case notification rate ranges from 25 to 150 but the test positivity rate of tests for COVID-19 infection is less than 4%;

                              (c)

                              red, if the 14-day cumulative COVID-19 case notification rate is 50 or more and the test positivity rate of tests for COVID-19 infection is 4% or more, or if the 14-day cumulative COVID-19 case notification rate is more than 150 per 100 000 population;

                              (d)

                              grey, if not sufficient information is available to assess the criteria in points (a) to (c) or if the testing rate is 300 or less COVID-19 tests for infection per 100 000 population.

                        The European Centre for Disease Prevention and Control should also publish separate maps for each key indicator contributing to the comprehensive map: the 14-day notification rate at a regional level, as well as the testing and test positivity rates at a national level during the last week. Once data is available at regional level all maps should be based on this data.

                  11.

                  Each week, the European Centre for Disease Prevention and Control should publish updated versions of the maps and the underlying data.

         Common thresholds if considering restrictions of free movement for public health reasons

                  12.

                  Member States should not restrict the free movement of persons travelling to or from another Member State’s areas classified as ‘green’ pursuant to point 10.

                  13.

                  If considering whether to apply restrictions on an area classified other than ‘green’ pursuant to point 10,

                              (a)

                              Member States should respect the differences in the epidemiological situation between orange and red areas and act in a proportionate manner;

                              (b)

                              Member States could take into account additional criteria and trends. To this end, ECDC will provide data on the population size, the hospitalisation rate, the rate of ICU admission and the mortality rate, if available, on a weekly basis;

                              (c)

                              Member States should take into account the epidemiological situation in their own territory, including testing policies, the number of tests performed and test positivity rates, and other epidemiological indicators;

                              (d)

                              Member States should take into account testing strategies and pay particular attention to the situation of areas with high testing rates.

         Coordination among Member States

                  14.

                  Member States intending to apply restrictions to persons travelling to or from an area classified other than ‘green’ pursuant to point 10, based on their own decision-making processes, should inform the affected Member State first, prior to entry into force. Particular attention should be paid to cross-border cooperation, outermost regions, exclaves and geographically isolated areas. Other Member States and the Commission should also be informed of the intention prior to entry into force. If possible the information should be given 48 hours in advance.
                  For informing other Member States and the Commission, Member States should use established networks of communication including the Integrated Political Crisis Response (IPCR) network. The IPCR contact points should ensure that the information is passed on to their competent authorities without delay.

                  15.

                  Member States should immediately inform other Member States and the Commission of the lifting or easing of any previously introduced restrictive measures, which should enter into force as soon as possible.
                  Restrictions to free movement should be lifted when an area is again classified as ‘green’ pursuant to point 10, provided that at least 14 days have elapsed since their introduction.

                  16.

                  At the latest 7 days after the adoption of this Recommendation, Member States should phase out restrictions applied on areas classified as ‘green’ pursuant to point 10 before the adoption of this Recommendation.

         Common framework as regards possible measures for travellers coming from higher-risk areas

                  17.

                  Member States should in principle not refuse the entry of persons travelling from other Member States.
                  Member States that consider necessary to introduce restrictions to free movement, based on their own decision-making processes, could require persons travelling from an area classified other than ‘green’ pursuant to point 10 to

                              (a)

                              undergo quarantine/self-isolation; and/or

                              (b)

                              undergo a test for COVID-19 infection after arrival.

                        Member States may offer travellers the option to substitute the test mentioned in letter (b) by a test for COVID-19 infection carried out prior to arrival.
                  Member States should strengthen coordination efforts on the length of quarantine/self-isolation and substitution possibilities. Wherever possible and in accordance with strategies decided by Member States, the development of testing should be encouraged.

                  18.

                  Member States should mutually recognise the results of tests for COVID-19 infection carried out in other Member States by certified health bodies. Member States should enhance cooperation on different aspects related to testing, including verification of test certificates, taking into account research and advice of epidemiological experts as well as best-practices.

                  19.

                  Travellers with an essential function or need should not be required to undergo quarantine while exercising this essential function, in particular:

                              (a)

                              Workers or self-employed persons exercising critical occupations including health care workers, frontier and posted workers as well as seasonal workers as referred to in the Guidelines concerning the exercise of the free movement of workers during the COVID-19 outbreak (5);

                              (b)

                              transport workers or transport service providers, including drivers of freight vehicles carrying goods for use in the territory as well as those merely transiting;

                              (c)

                              patients travelling for imperative medical reasons;

                              (d)

                              pupils, students and trainees who travel abroad on a daily basis;

                              (e)

                              persons travelling for imperative family or business reasons;

                              (f)

                              diplomats, staff of international organisations and people invited by international organisations whose physical presence is required for the well-functioning of these organisations, military personnel and police officers, and humanitarian aid workers and civil protection personnel in the exercise of their functions;

                              (g)

                              passengers in transit;

                              (h)

                              seafarers;

                              (i)

                              journalists, when performing their duties.

                  20.

                  Member States could require persons entering their territory to submit passenger locator forms in accordance with data protection requirements. A common European Passenger Locator Form should be developed for possible use by Member States. Wherever possible, a digital option for passenger locator information should be used in order to simplify processing, while ensuring equal access to all citizens.

                  21.

                  Any measures applied to persons arriving from an area classified as ‘red’, ‘orange’ or ‘grey pursuant to point 10 may not be discriminatory, that is, should apply equally to returning nationals of the Member State concerned.

                  22.

                  Member States should ensure that any formal requirements imposed on citizens and businesses provide a concrete benefit to the public health efforts to combat the pandemic and do not create an undue and unnecessary administrative burden.

                  23.

                  If a person develops symptoms upon arrival at the destination, testing, diagnosis, isolation and contact tracing should take place in accordance with the local practice, and entry should not be refused. Information on cases detected on arrival should be immediately shared with the public health authorities of the countries the person concerned has resided in during the previous 14 days for contact tracing purposes, using the Early Warning and Response System.

                  24.

                  Restrictions should not take the form of prohibitions on the operation of certain transport services.

         Communication and information to the public

                  25.

                  Member States should provide relevant stakeholders and the general public with clear, comprehensive and timely information about any restrictions to free movement, any accompanying requirements (for example negative tests for COVID-19 infection or passenger locator forms), as well as the measures applied to travellers travelling from risk areas as early as possible before new measures come into effect. As a general rule, this information should be published 24 hours before the measures come into effect, taking into account that some flexibility is required for epidemiological emergencies.
                  This information should also be made available on the ‘Re-open EU’ web platform, which should contain a cross-reference to the map published regularly by the European Centre for Disease Prevention and Control pursuant to points 10 and 11.
                  The substance of the measures, their geographical scope and the categories of persons to whom they apply should be clearly described.

         Review

                  26.

                  This recommendation should be regularly reviewed by the Commission, with the support of the European Centre for Disease Prevention and Control. The Commission should report thereon regularly to the Council.

         Done at Luxembourg, 13 October 2020.

               For the Council

               The President

            M. ROTH

         (1)  Directive 2004/38/EC of the European Parliament and of the Council of 29 April 2004 on the right of citizens of the Union and their family members to move and reside freely within the territory of the Member States amending Regulation (EEC) No 1612/68 and repealing Directives 64/221/EEC, 68/360/EEC, 72/194/EEC, 73/148/EEC, 75/34/EEC, 75/35/EEC, 90/364/EEC, 90/365/EEC and 93/96/EEC (OJ L 158, 30.4.2004, p. 77).

         (2)  OJ C 57, 20.2.2020, p. 4.

         (3)  Commission Guidelines for border management measures to protect health and ensure the availability of goods and essential services (OJ C 86I, 16.3.2020, p. 1), Commission Guidelines concerning the exercise of the free movement of workers during COVID-19 outbreak (OJ C 102I, 30.3.2020, p. 12), ‘Joint European Roadmap towards lifting COVID-19 containment measures’ of the President of the European Commission and the President of the European Council, Commission Guidance on free movement of health professionals and minimum harmonisation of training in relation to COVID-19 emergency measures (OJ C 156, 8.5.2020, p. 1), Commission Communication towards a phased an coordinated approach for restoring freedom of movement and lifting internal border controls (OJ C 169, 15.5.2020, p. 30), Commission Communication on the third assessment of the application of the temporary restriction on non-essential travel to the EU COM(2020) 399 final, Commission Guidelines on seasonal workers in the EU in the context of the COVID-19 outbreak (OJ C 235I, 17.7.2020, p. 1), Commission Communication on the implementation of the Green Lanes under the Guidelines for border management measures to protect health and ensure the availability of goods and essential services (OJ C 96I, 24.3.2020, p. 1), Commission Guidelines on Facilitating Air Cargo Operations during COVID-19 outbreak (OJ C 100I, 27.3.2020, p. 1), and Commission Guidelines on protection of health, repatriation and travel arrangements for seafarers, passengers and other persons on board ships (OJ C 119, 14.4.2020, p. 1).

         (4)  Subject to an agreement concluded between the EU and the Swiss Confederation on the cooperation on public health, including on the participation of the Swiss Confederation to the European Centre for Disease Prevention and Control according to Regulation (EC) No 851/2004 of the European Parliament and of the Council of 21 April 2004 establishing a European Centre for disease prevention and control (OJ L 142, 30.4.2004, p. 1).

         (5)  OJ C 102I, 30.3.2020, p. 12.


title: Council Recommendation (EU) 2020/1551 of 22 October 2020 amending Recommendation (EU) 2020/912 on the temporary restriction on non-essential travel into the EU and the possible lifting of such restriction

text:
                  26.10.2020

                  EN

                  Official Journal of the European Union

                  L 354/19

         COUNCIL RECOMMENDATION (EU) 2020/1551
         of 22 October 2020
         amending Recommendation (EU) 2020/912 on the temporary restriction on non-essential travel into the EU and the possible lifting of such restriction
         THE COUNCIL OF THE EUROPEAN UNION,
         Having regard to the Treaty on the Functioning of the European Union, and in particular Article Article 77(2)(b) and (e) and Article 292, first and second sentence thereof,
         Whereas:

                     (1)

                     On 30 June 2020, the Council adopted a Recommendation on the temporary restriction on non-essential travel into the EU and the possible lifting of such restriction (1) (‘Council Recommendation’). On 16 July 2020, the Council adopted Recommendation (EU) 2020/1052 of 16 July 2020 amending Council Recommendation (EU) 2020/912 on the temporary restriction on non-essential travel into the EU and the possible lifting of such restriction (2). On 30 July 2020, the Council adopted Recommendation (EU) 2020/1144 of 30 July 2020 amending Council Recommendation (EU) 2020/912 on the temporary restriction on non-essential travel into the EU and the possible lifting of such restriction (3).
                     On 7 August 2020, the Council adopted Recommendation (EU) 2020/1186 of 7 August 2020 amending Council Recommendation (EU) 2020/912 on the temporary restriction on non-essential travel into the EU and the possible lifting of such restriction (4).

                     (2)

                     The Council Recommendation provides that Member States should gradually lift the temporary restriction on non-essential travel to the EU as from 1 July 2020 in a coordinated manner with regard to the residents of the third countries listed in Annex I to the Council Recommendation. Every two weeks, the list of third countries referred to in Annex I should be reviewed, and as the case may be updated, by the Council, after close consultation with the Commission and the relevant EU agencies and services following an overall assessment based on the methodology, criteria and information referred to in the Council Recommendation.

                     (3)

                     Discussions have since then taken place within the Council, in close consultation with the Commission and the relevant EU agencies and services, on the review of the list of third countries set out in Annex I to the Council Recommendation and in application of the criteria and methodology laid down in the Council Recommendation. As a result of these discussions, the list of third countries set out in Annex I should be amended. In particular, Canada, Georgia and Tunisia should be deleted from the list while Singapore should be added. It should also be clarified that, subject to confirmation of reciprocity, travel should be possible with the Hong Kong SAR and Macao SAR.

                     (4)

                     Border control is in the interest not only of the Member State at whose external borders it is carried out but of all Member States which have abolished internal border control. Member States should therefore ensure that measures taken at the external borders are coordinated in order to ensure a well functioning Schengen area. To that end, as of 22 October 2020, Member States should continue lifting the temporary restriction on non-essential travel into the EU in a coordinated manner with regard to the residents of the third countries listed in Annex I of the Council Recommendation as amended by this Recommendation.

                     (5)

                     In accordance with Articles 1 and 2 of Protocol No 22 on the Position of Denmark annexed to the Treaty on European Union and to the TFEU, Denmark is not taking part in the adoption of this Recommendation and is not bound by it or subject to its application. Given that this Recommendation builds upon the Schengen acquis, Denmark shall, in accordance with Article 4 of the said Protocol, decide within a period of six months after the Council has decided on this Recommendation whether it will implement it.

                     (6)

                     This Recommendation constitutes a development of the provisions of the Schengen acquis in which Ireland does not take part, in accordance with Council Decision 2002/192/EC (5); Ireland is therefore not taking part in its adoption and is not bound by it or subject to its application.

                     (7)

                     As regards Iceland and Norway, this Recommendation constitutes a development of the provisions of the Schengen acquis within the meaning of the Agreement concluded by the Council of the European Union and the Republic of Iceland and the Kingdom of Norway concerning the latter’s association with the implementation, application and development of the Schengen acquis which fall within the area referred to in Article 1, point A, of Council Decision 1999/437/EC (6).

                     (8)

                     As regards Switzerland, this Recommendation constitutes a development of the provisions of the Schengen acquis within the meaning of the Agreement between the European Union, the European Community and the Swiss Confederation on the Swiss Confederation’s association with the implementation, application and development of the Schengen acquis which fall within the area referred to in Article 1, point A, of Decision 1999/437/EC (7) read in conjunction with Article 3 of Council Decision 2008/146/EC (8).

                     (9)

                     As regards Liechtenstein, this Recommendation constitutes a development of provisions of the Schengen acquis within the meaning of the Protocol between the European Union, the European Community, the Swiss Confederation and the Principality of Liechtenstein on the accession of the Principality of Liechtenstein to the Agreement between the European Union, the European Community and the Swiss Confederation on the Swiss Confederation’s association with the implementation, application and development of the Schengen acquis which fall within the area referred to in Article 1 point A, of Decision 1999/437/EC (9) read in conjunction with Article 3 of Council Decision 2011/350/EU (10).

               HAS ADOPTED THIS RECOMMENDATION:
         Council Recommendation (EU) 2020/912, as amended by Recommendation (EU) 2020/1052, by Recommendation (EU) 2020/1144 and by Recommendation (EU) 2020/1186, on the temporary restriction on non-essential travel into the EU and the possible lifting of such restriction is amended as follows:

                     (1)

                     first paragraph of point 1 of the Council Recommendation is replaced by the following:

                                 ‘1.

                                 As from 22 October 2020, Member States should gradually lift the temporary restriction on non-essential travel to the EU in a coordinated manner with regard to the residents of the third countries listed in Annex I.’;

                     (2)

                     Annex I to the Recommendation is replaced by the following:

                           ‘ANNEX I
                           Third countries and Special Administrative Regions, whose residents should not be affected by temporary external borders restriction on non-essential travel into the EU:

                                       I.

                                       STATES

                                                   1.

                                                   AUSTRALIA

                                                   2.

                                                   JAPAN

                                                   3.

                                                   NEW ZEALAND

                                                   4.

                                                   RWANDA

                                                   5.

                                                   SINGAPORE

                                                   6.

                                                   SOUTH KOREA

                                                   7.

                                                   THAILAND

                                                   8.

                                                   URUGUAY

                                                   9.

                                                   CHINA (*1)

                                       II.

                                       SPECIAL ADMINISTRATIVE REGIONS OF THE PEOPLE’S REPUBLIC OF CHINA

                                                   1.

                                                   Hong Kong SAR (*1)

                                                   2.

                                                   Macao SAR (*1)

                        (*1)  Subject to confirmation of reciprocity."

                        (*1)  Subject to confirmation of reciprocity."

                        (*1)  Subject to confirmation of reciprocity."

            Done at Brussels, 22 October 2020.

                  For the Council

                  The President

               M. ROTH

            (1)  OJ L 208 I, 1.7.2020, p. 1.

            (2)  OJ L 230, 17.7.2020, p. 26.

            (3)  OJ L 248, 31.7.2020, p. 26.

            (4)  OJ L 261, 11.8.2020, p. 83.

            (5)  Council Decision 2002/192/EC of 28 February 2002 concerning Ireland’s request to take part in some of the provisions of the Schengen acquis (OJ L 64, 7.3.2002, p. 20).

            (6)  OJ L 176, 10.7.1999, p. 36.

            (7)  OJ L 53, 27.2.2008, p. 52.

            (8)  Council Decision 2008/146/EC of 28 January 2008 on the conclusion, on behalf of the European Community, of the Agreement between the European Union, the European Community and the Swiss Confederation on the Swiss Confederation’s association with the implementation, application and development of the Schengen acquis (OJ L 53, 27.2.2008, p. 1).

            (9)  OJ L 160, 18.6.2011, p. 21.

            (10)  Council Decision 2011/350/EU of 7 March 2011 on the conclusion, on behalf of the European Union, of the Protocol between the European Union, the European Community, the Swiss Confederation and the Principality of Liechtenstein on the accession of the Principality of Liechtenstein to the Agreement between the European Union, the European Community and the Swiss Confederation on the Swiss Confederation’s association with the implementation, application and development of the Schengen acquis, relating to the abolition of checks at internal borders and movement of persons (OJ L 160, 18.6.2011, p. 19).


title: Commission Recommendation (EU) 2020/1563 of 14 October 2020 on energy poverty

text:
               27.10.2020

               EN

               Official Journal of the European Union

               L 357/35

      COMMISSION RECOMMENDATION (EU) 2020/1563
      of 14 October 2020
      on energy poverty
      THE EUROPEAN COMMISSION,
      Having regard to the Treaty on the Functioning of the European Union, and in particular Articles 168 and 194 thereof,
      Having regard to 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 (1) (‘the recast Electricity Directive’), and in particular Article 29 thereof,
      Whereas:

                  (1)

                  Energy poverty is a situation in which households are unable to access essential energy services. With nearly 34 million Europeans unable to afford to keep their homes adequately warm in 2018 (2), energy poverty is a major challenge for the EU.

                  (2)

                  As recognised by the co-legislators, adequate warmth, cooling, lighting, and energy to power appliances are essential services that underpin a decent standard of living and health. Access to energy services is essential for social inclusion. Tackling energy poverty thus has the potential to bring multiple benefits, including lower spending on health, reduced air pollution (by replacing heating sources that are not fit for purpose), improved comfort and wellbeing, and improved household budgets. Taken together, these benefits would directly boost economic growth and prosperity in the European Union.

                  (3)

                  The European Pillar of Social Rights, jointly proclaimed by the European Parliament, the Council and the Commission on 17 November 2017, includes energy among the essential services which everyone is entitled to access. Support for access to such services must be available for those in need (3).

                  (4)

                  A fair transition towards a climate-neutral Union by 2050 is central to the European Green Deal proposed by the Commission in December 2019 (4). A centrepiece of this Green Deal is the Renovation Wave (5), a major initiative designed to boost the structural renovation of private and public buildings, thereby reducing emissions, boosting recovery and addressing energy poverty. Such structural renovation shall help boost EU efforts in climate change mitigation. For this reason, it has been considered vital that the Renovation Wave and this Recommendation be jointly adopted in order to mutually strengthen the calls to tackle energy poverty and worst-performing buildings.

                  (5)

                  Energy poverty is a key concept consolidated in the legislative package entitled ‘Clean Energy for All Europeans’, which is designed to facilitate a just energy transition. Under Regulation (EU) 2018/1999 of the European Parliament and of the Council (6) (‘the Governance Regulation’) and the recast Electricity Directive, the Commission is required to provide indicative guidance on appropriate indicators for measuring energy poverty (7) and on the definition of a ‘significant number of households in energy poverty’ (8). There is no standard definition of energy poverty, and it is therefore left to Member States to develop their own criteria according to their national context. However, the recently adopted legislative package provides useful general principles and insights into the possible causes and consequences of energy poverty. It also underlines the importance of policies to tackle the problem, especially those associated with national energy and climate plans (‘NECPs’) and with long-term renovation strategies (‘LTRSs’) (9).

                  (6)

                  In their NECP, Member States have to assess the number of households in energy poverty. In the event that a Member State finds that it has a significant number of households in energy poverty, it shall include in its plan a national objective as well as policies and measures to reduce energy poverty. In the context of the fifth report of the State of the Energy Union, the Commission has published staff working documents for each Member State containing individual assessments of each final NECP. These staff working documents also assess how the final plans addressed the related 2019 Commission recommendations, including on energy poverty, and include a guidance on the implementation of the NECP.

                  (7)

                  The recast Electricity Directive requires Member States to take appropriate measures to address energy poverty wherever it is identified, including measures addressing the broader context of poverty. Member States must also protect vulnerable customers, in particular those in remote areas. Directive 2009/73/EC of the European Parliament and of the Council (10) contains similar provisions.

                  (8)

                  A novelty in the new legislative framework is that it requires determining the number of households in energy poverty. Article 29 of the recast Electricity Directive refers to Member States’ obligation to assess the number of households in energy poverty and states that they must establish and publish the criteria underpinning this assessment. Where there are significant numbers of such households, Member States must include in their national energy and climate plans an indicative objective for the reduction of energy poverty, provide a timeframe, and outline relevant policies. They are then required to report to the Commission, in accordance with the Governance Regulation, on any progress they make towards the goal of reducing the number of households in energy poverty.

                  (9)

                  The Energy Efficiency Directive 2012/27/EU of the European Parliament and of the Council (11), as amended by Directive (EU) 2018/2002 of the European Parliament and of the Council (12), requires Member States to take account of the need to reduce energy poverty in the context of their energy efficiency obligations. Article 7(11) requires, to the extent appropriate, a share of energy efficiency measures to address vulnerable households as a priority, including those affected by energy poverty (13). The Governance Regulation also contains similar obligations.

                  (10)

                  Under the revised version of the Energy Performance of Buildings Directive (EU) 2018/844 Member States must outline relevant national measures to help alleviate energy poverty, as part of their long-term renovation strategies to support the renovation of the national stock of residential and non-residential buildings (14).

                  (11)

                  The EU legislative framework also contains safeguards to ensure that measures taken to address energy poverty do not impede the opening up or the operation of the market. Retail markets that operate smoothly are essential for a fair transition. These safeguards are enshrined in Article 28 of the recast Electricity Directive and are operationalised chiefly in Article 5(5) thereof.

                  (12)

                  Article 27 of the recast Electricity Directive strengthens the principle by requiring Member States to ensure that all household customers, and, where Member States deem it appropriate, small enterprises, enjoy universal service, i.e. the right to be supplied with electricity of a specified quality within their territory at reasonable, easily and clearly comparable, transparent and non-discriminatory prices. To ensure the provision of universal service, Member States may appoint a supplier of last resort.

                  (13)

                  As Recital 59 of the recast Electricity Directive recapitulates, energy poverty arises from a combination of low income, high expenditure on energy, and poor energy efficiency of dwellings. The impact of volatile energy market prices and poor energy efficiency, especially in terms of the performance of buildings, in combination with a broad range of socioeconomic factors associated with general poverty and issues arising from housing tenure systems, make the issue complex to address.

                  (14)

                  In 2018, 6,8 % of people living in private households across the EU (30,3 million people (15)) were unable to keep up with utility bills, including energy bills, and so were at risk of having their supply cut off. Meanwhile, 7,3 % of the EU population (37,4 million people) experienced uncomfortable ambient temperatures in their homes.

                  (15)

                  The Covid-19 crisis has highlighted the urgency of addressing energy poverty if we are to create a social Europe that caters for the needs of all its inhabitants. Energy poverty levels across Member States will be in the spotlight as more Europeans may struggle to afford access to essential energy, particularly with rising unemployment. Against this background, it is vital to achieve the European Green Deal milestones, despite the current unprecedented disruptions to Europe’s economies.

                  (16)

                  The Next Generation EU (16) Recovery Package was presented to ‘guide and build a more sustainable, resilient and fairer Europe for the next generation’. Europe’s recovery plans must be guided by the principles of environmental sustainability, solidarity, cohesion and convergence and the determination not to leave behind any Member States, regions or individuals. Next Generation EU confirms the Renovation Wave’s role as one main facilitator of the green recovery.

                  (17)

                  National long-term renovation strategies and other instruments designed to meet the 2030 and 2050 energy efficiency targets should be steered towards protecting energy-poor households and empowering vulnerable energy consumers by helping people save money on energy bills, providing healthier living conditions, and reducing energy poverty.

                  (18)

                  Identifying the households most in need of protection and dwellings most in need of renovation helps in targeting and better managing public interventions, thereby producing practical outcomes for consumers, improving energy efficiency, and minimising any distortions in the functioning of the internal energy market.

                  (19)

                  In providing this Recommendation and making Commission guidance on energy poverty available to Member States in an accompanying staff working document, the Commission is fulfilling the obligation referred to above and helping Member States transpose the new provisions on energy poverty. The Commission also provides information on emerging good practices (17).

                  (20)

                  The main difficulty with any definition is how to obtain reliable numerical data. A set of statistical indicators measuring likely drivers of energy poverty and its consequences has been developed at EU level. These are aggregate indicators. Since energy poverty is a multi-dimensional phenomenon, no single indicator can fully reflect all of its aspects.

                  (21)

                  Aggregate indicators have been developed at European level and are listed in the Annex to this Recommendation. Developed by the Statistical office of the European Union (‘EUROSTAT’) and the European Energy Poverty Observatory (‘EPOV’) and derived from harmonised EU data collections, these indicators allow to monitor the situation EU-wide and identify national specificities, as well as to promote more efficient, mutual learning and exchanges of best practice. National indicators can help complement these and refine the identification of energy poverty, where relevant.

                  (22)

                  This calls for close cooperation between the relevant competent authorities, and in particular for properly coordinated efforts at regional and local levels, so that any analysis based on indicators at EU or national level is counterpointed and complemented by a bottom-up approach. Regional and local authorities are well placed to identify the key financial and social challenges facing households in energy poverty and to play a significant role in designing and implementing green transition which is fair, inclusive and sustainable for everyone in Europe.

                  (23)

                  The Commission will continue to support the sharing of good practices between Member States, both in cooperation with the Social Protection Committee and in other ways. The EU funding programmes, including cohesion policy,, the Technical Support Instrument and other forms of support can be mobilised to address the challenges identified through channels including the platforms provided by the European Energy Poverty Observatory and the Covenant of Mayors Initiative.

                  (24)

                  The fourth European Commission report on energy prices and costs also looks at the particular circumstances of people living in energy poverty and vulnerable consumers (18). The Commission will also pay particular attention to how Member States implement Article 5 of the recast Electricity Directive, which allows public intervention in price setting for the supply of electricity to energy-poor customers or those living in vulnerable households.

            HEREBY RECOMMENDS THAT MEMBER STATES:

                  1.

                  Develop a systematic approach to the liberalisation of energy markets, with the aim of sharing the benefits with all sections of society, particularly those most in need.

                  2.

                  Take particular account of the accompanying staff working document that provides guidance on indicators on energy poverty as well as on the definition of what constitutes a significant amount of energy poor households. Importantly, Member States should use the Commission’s guidance when implementing and updating their current national energy and climate plans in accordance with Article 14 of Regulation (EU) 2018/1999 on the Governance of the Energy Union and Climate Action.

                  3.

                  Use the indicators outlined in the Annex in their energy poverty assessments.

                  4.

                  In line with Recital 60 of the recast Electricity Directive, produce integrated policy solutions as part of energy and social policy. These should include social policy measures and energy efficiency improvements that reinforce each other, especially in housing.

                  5.

                  Assess the distributional effects of the energy transition, in particular energy efficiency measures in the national context, and define and implement policies that address associated concerns. Due attention should be given to barriers to investment in energy-efficient housing and the profile of dwellings in most need of renovation, in line with national long-term renovation strategies.

                  6.

                  Develop all policies to tackle energy poverty on the basis of meaningful and accounatable processes of public participation and broad stakeholder engagement.

                  7.

                  Develop measures to address energy poverty that build on close cooperation between all levels of administration, enabling, in particular, close cooperation between regional and local authorities on the one hand, and civil society organisations and private sector entities on the other.

                  8.

                  Take full advantage of the potential to deploy Union funding programmes, including cohesion policy, to tackle energy poverty by analysing the distributional effects of energy transition projects and prioritising measures targeting vulnerable groups to ensure access to support.

                  9.

                  When allocating public funds, especially grants, target low-income households in those categories of beneficiaries that have very limited resources of their own and limited access to commercial loans. Explore the role of energy service companies (ESCOs) and energy performance contracts in providing renovation financing solutions for energy poor households that enable these vulnerable households to overcome high upfront costs.

         Done at Brussels, 14 October 2020.

               For the Commission

            Kadri SIMSON

               Member of the Commission

         (1)  OJ L 158, 14.6.2019, p. 125.

         (2)  Data from 2018. Eurostat, SILC [ilc_mdes01]).

         (3)  EPSR, Principle 20 ‘Access to essential services’: https://ec.europa.eu/commission/priorities/deeper-and-fairer-economic-and-monetary-union/european-pillar-social-rights/european-pillar-social-rights-20-principles_en

         (4)  COM(2019) 640 final – Commission Communication on the European Green Deal.

         (5)  Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee, the Committee of the Regions ‘A Renovation Wave for Europe – greening our buildings, creating jobs, improving lives (COM(2020) 662 final).

         (6)  Regulation (EU) 2018/1999 of the European Parliament and of the Council of 11 December 2018 on the Governance of the Energy Union and Climate Action, amending Regulations (EC) No 663/2009 and (EC) No 715/2009 of the European Parliament and of the Council, Directives 94/22/EC, 98/70/EC, 2009/31/EC, 2009/73/EC, 2010/31/EU, 2012/27/EU and 2013/30/EU of the European Parliament and of the Council, Council Directives 2009/119/EC and (EU) 2015/652 and repealing Regulation (EU) No 525/2013 of the European Parliament and of the Council (OJ L 328, 21.12.2018, p. 1).

         (7)  Article 3(3)(d) of Regulation (EU) 2018/1999.

         (8)  Article 29 of Directive (EU) 2019/944.

         (9)  As pursuant to Article 2a of the Energy Performance of Buildings Directive 2010/31/EU of the European Parliament and of the Council (OJ L 153, 18.6.2010, p. 13), amended by Directive (EU) 2018/844 (OJ L 156, 19.6.2018, p. 75).

         (10)  Directive 2009/73/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC (OJ L 211, 14.8.2009, p. 94).

         (11)  Directive 2012/27/EU of the European Parliament and of the Council of 25 October 2012 on energy efficiency, amending Directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/EC (OJ L 315, 14.11.2012, p. 1).

         (12)  Directive (EU) 2018/2002 of the European Parliament and of the Council of 11 December 2018 amending Directive 2012/27/EU on energy efficiency (OJ L 328, 21.12.2018, p. 210).

         (13)  This builds on existing obligations under Directive 2012/27/EU. See also the Annex to the Commission Recommendation on the transposition of the energy savings obligation under the amended Energy Efficiency Directive (C(2019) 6621 final).

         (14)  This builds on existing obligations under Article 4 of the Energy Efficiency Directive 2012/27/EU that have been moved to the Energy Performance of Buildings Directive and strengthened as regards the need to address energy poverty. Recital 11 of Directive (EU) 2018/844 clarifies that the need to alleviate energy poverty should be taken into account, in accordance with criteria defined by the Member States. The Recital further clarifies that while outlining national actions that contribute to the alleviation of energy poverty in their renovation strategies, the Member States have the right to establish what they consider to be relevant actions.

         (15)  Based on an estimated EU27 population of 446 million inhabitants on 1 January 2018: http://ec.europa.eu/eurostat/statistics-explained/index.php/Population_and_population_change_statistics

         (16)  European Commission, Communication From The Commission To The European Parliament, The European Council, The Council, The European Economic And Social Committee And The Committee Of The Regions Europe’s moment: Repair and Prepare for the Next Generation, 27 May 2020.

         (17)  Recital 59 of Directive (EU) 2019/944 provides that the Commission should actively support the implementation of the provisions of that Directive on energy poverty by facilitating the sharing of good practices between Member States.

         (18)  Report from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on energy prices and costs in Europe (COM(2020) 951) and its accompanying staff working document (SWD(2020) 951).

         ANNEX
         ENERGY POVERTY INDICATORS
         The indicators outlined below are available with the Statistical office of the European Union European Statistical Office and the European Energy Poverty Observatory for Member States to consult when assessing national energy poverty levels.
         In order to assist Member States, the Commission provides guidance on the interpretation of such indicators developed at EU level to better quantify the concept of significant number of energy poor households identified by national definitions of energy poverty (1).
         Member States can further disaggregate some of the indicators listed under points 1 and 2, to deepen the analysis of the potential drivers of energy poverty at the national level.
         Indicators can be divided into four groups:

                     (a)

                        indicators comparing spending on energy with income: these quantify energy poverty by comparing the amount households spend on energy with an income measure (e.g. percentage or number of households spending more than a certain proportion of their disposable income on domestic energy services)

                     (b)

                        indicators based on self-assessment: households are asked directly to what extent they feel able to afford energy (e.g. ability to keep the home warm enough in winter and cool enough in summer)

                     (c)

                        indicators based on direct measurement: these indicators measure physical variables to determine the adequacy of energy services (e.g. room temperature)

                     (d)

                        indirect indicators: these measure energy poverty by through associated factors, such as arrears on utility bills, number of disconnections, and housing quality.

               1.   Indicators focusing on the affordability of energy services

                     —

                     Share of population at risk of poverty (below 60% of national median equivalised disposable income) not able to keep their home adequately warm, based on the question ‘Can your household afford to keep its home adequately warm?’ (Eurostat, SILC [ilc_mdes01])

                     —

                     Share of total population not able to keep their home adequately warm, based on the question ‘Can your household afford to keep its home adequately warm?’ (Eurostat, SILC [ilc_mdes01])

                     —

                     Arrears on utility bills: share of population at risk of poverty (below 60% of national median equivalised disposable income) having arrears on utility bills (Eurostat, SILC, [ilc_mdes07])

                     —

                     Arrears on utility bills: share of population having arrears on utility bills (Eurostat, SILC, [ilc_mdes07])

                     —

                     Expenditure on electricity, gas and other fuels as a proportion of total household expenditure

                     —

                     Proportion of households whose share of energy expenditure in income is more than twice the national median share (source Eurostat, Household Budget Surveys, 2015)

                     —

                     Share of households whose absolute energy expenditure is below half the national median. (Eurostat, Household Budget Surveys, 2015)

               2.   Complementary indicators

                     —

                     Electricity prices for household consumers – average consumption band (Eurostat, [nrg_pc_204])

                     —

                     Gas prices for household consumers – average consumption band (Eurostat, [nrg_pc_202])

                     —

                     Gas prices for household consumers, lowest consumption band (Eurostat, [nrg_pc_202])

                     —

                     Share of population at risk of poverty (below 60% of national median equivalised disposable income) with leak, damp or rot in their dwelling (Eurostat, SILC [ilc_mdho01])

                     —

                     Share of population with leak, damp or rot in their dwelling – total population (Eurostat SILC, [TESSI292])

                     —

                     Final energy consumption per square metre in the residential sector, climate-corrected (Odyssee-MURE project database)

            (1)  SWD(2020)960“EU Guidance on Energy Poverty”