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Matthieu Coget

Matthieu Coget advises multinational companies and governments on EU public policy, trade, and regulatory environmental, social, and governance (ESG) matters.

Matthieu has particular experience advising clients on the European Union’s Green Deal, EU trade law and economic security measures. He also assists Covington’s clients in drafting their EU engagement strategies.

Contact:Read more about Matthieu CogetEmail

On 29 June 2024, the Net-Zero Industry Act (“NZIA”) entered into force.  The primary aim of the NZIA is to ensure that the EU has access to secure and sustainable net-zero technologies by scaling up their manufacturing capacity within the EU.

Here are the key takeaways:

  • The NZIA focuses on 19 Net-Zero Technologies (“NZTs”), including renewable fuels of non-biological origin (“RFNBOs”), solar, wind, nuclear, batteries, and carbon capture and carbon storage technologies.  The Regulation sets non-binding benchmarks for 40% local production of such technologies by 2030 and 15% global market share by 2040.  
  • To reach those benchmarks, Net-Zero Technologies Manufacturing Projects (“NZT Manufacturing Projects”) will benefit from streamlined permitting procedures.  Further, NZT Manufacturing Projects that are deemed “strategic” will benefit from expedited permitting timelines.
  • The NZIA introduces a target of achieving an annual injection capacity of at least 50 million tons of CO2 by 2030.  Oil and gas producers identified by Member States must contribute to this target, according to a proportion to be defined by the Commission for each individual producer.  Member States must adopt penalties for non-compliance.
  • National public procurement procedures for NZT Manufacturing Projects must include requirements for achieving a minimum level of environmental sustainability, to be set out in future implementing regulations.  In addition, for any given NZT Manufacturing Project, the contracting authorities and entities must consider the project’s so-called “resilience contribution”, which relates to supply chain diversification.  When the majority (or a near majority) of a specific net-zero technology (or any of its main components) originates from a third country, the contracting authority or entity must impose specific public procurement conditions to reduce dependency on that country.
  • Auctions to deploy renewable energy sources and schemes that incentivize households, companies, and consumers to purchase NZT final products must also be designed to favor bidders that contribute to increasing the sustainability and resilience of the supply of NZTs within the EU.
  • Member States may establish regulatory sandboxes, i.e., schemes enabling companies to test technologies in a controlled real-world environment under monitoring by a competent authority.

Continue Reading The EU Net-Zero Industry Act enters into force

On 23 May 2024, the EU’s Critical Raw Materials Act (“CRMA”) entered into force.  The Regulation’s adoption within just one year after it was first proposed in March 2023 signals the EU’s political commitment to strengthen Europe’s strategic autonomy on the supply of Strategic Raw Materials (“SRMs”) and the broader category of “Critical Raw Materials” (“CRMs”).   

Here are the key takeaways for companies:

  • The CRMA sets non-binding capacity targets within the EU for the extraction, processing, refining, and recycling of SRMs that are key to achieve the green and digital transition.
  • To reach such targets, the CRMA empowers the European Commission (“the Commission”) to recognize projects that extract, process, refine or recycle SRMs, including projects outside the EU, as Strategic Projects (“SPs”) so that they may benefit from easier access to financing, expedited permitting process, and matchmaking with off-takers.  The Commission is expected to recognize the first SPs by the end of 2024.
  • The Commission must monitor disruption risks and propose mitigation measures, if needed, to ensure a secure supply of CRMs.  To enable the Commission to do this effectively, companies may be subject to new specific obligations, such as participating in surveys, carrying out risk assessments of SRMs supply chains, mitigating possible vulnerabilities, reporting on the implementation and the financing of their SPs, labelling some products, and recycling a minimum content of permanent magnets.  
  • The Commission will also create and operate a Joint Purchasing Mechanism to aggregate the demand of interested EU off-takers consuming SRMs and seek offers from suppliers to match that aggregated demand.

Critical and Strategic Raw Materials and Capacity Targets

SRMs are indispensable raw materials for strategic sectors that facilitate transition to a greener, digital economy.  They are characterized by high forecasted demand growth and significant challenges in scaling up production in Europe to meet such demand.  Annex I to the CRMA lists 17 SRMs, including copper, gallium, lithium, manganese, and titanium metal.Continue Reading The EU Critical Raw Materials Act enters into force

In early March, the EU released its first-ever European Defence Industrial Strategy (EDIS), accompanied by a proposed regulation establishing the European Defence Industry Programme (EDIP). The aim is to boost defence capabilities in Europe through greater and more efficient spending. In particular, the strategy seeks to reverse recent trends, whereby 78% of defence acquisitions by EU countries since Russia’s full-scale aggression against Ukraine were made with non-EU producers, with U.S. firms accounting for 63%. It also addresses recent concerns by the defence industry over ESG constraints on obtaining private financing.

The ultimate benchmark for success, as recounted by one EU foreign minister, is whether these measures will help deter Russia and other adversaries. Nonetheless, it reflects greater operational focus of the EU on defence and security issues, and what in practice the European Commission and other EU institutions can do to bolster capabilities in a policy area that will remain the primary prerogative of EU Member States.

Plugging Defence Gaps

Since the end of the Cold War, European defence has suffered from perennial underinvestment and lack of policy support for the defence industry. Whereas Europe collectively spent on defence over half of the U.S. totals in the early 1990s, it now spends about one-third compared to the United States—arguably at a time of much greater security threats to Europe compared to America. There are simply not enough soldiers, tanks, planes, ships, missiles, guns, and ammunition in Europe, nor domestic facilities to produce the necessary weapons systems and materiel. Moreover, EU countries have procured defence products at a national level, exacerbating fragmentation within the European market. This fragmentation has led to the creation of national industrial silos and numerous defence systems that often lack interoperability.Continue Reading Mobilizing Greater Defence Capabilities in Europe: the EU’s Defence Industrial Strategy

On January 24, the EU Commission released a communication announcing the European Economic Security Package (EESP) – as trailed in our previous blog. The Communication, which implements the EU’s Strategy (published in June 2023), is aimed at strengthening the EU’s economic security in a number of areas:

  • improved screening
… Continue Reading Towards a stronger European economic security arsenal?

In previous blogs, we have written about the EU-China relationship and how the EU was increasingly focused on delivering its policy of Strategic Autonomy. We are beginning to see the concrete implementation of this strategic intent, with the EU Commission approving a €902 million German State aid measure to support the construction of an electric vehicle battery production plant.  As Margrethe Vestager, EVP for Competition Policy noted, this is the first individual aid to have been approved under the Temporary Crisis and Transition Framework since March 2023 and its approval will keep the battery plant in the EU, rather than it moving to the US.

And the EU is planning to take further measures to enhance and protect its economic security in pursuit of the goal of strategic autonomy. On December 10, the Commission unveiled its Agenda outlining for items to be addressed in early 2024. Of note is the European Economic Security Package (EESP), due for discussion on 24 January.

It had been planned to adopt the EESP by the end of 2023.  However, its adoption faced delays due to Member States’ concerns about ceding authority to Brussels in an area traditionally reserved for national competence. For its part, the Commission argues that a “Europeanization” of the EU trade rules was required to ensure consistency across the bloc following decisions by various Member States to issue their own trade measures (for example, on export controls).

Although full details of the EESP have not yet been released, key components of the EESP will include a revision of the Foreign Direct Investment Screening Regulation and an initiative regulating outbound investments. The Agenda for 24 January also includes a non-binding Communication restricting export of dual-use items.Continue Reading The European Economic Security Package

On December 14, 2023, the U.S. Congress passed the National Defense Authorization Act for FY 2024 (NDAA), authorizing $886 billion in defense spending. Amid its numerous provisions, there is the concept of the “national technology and industrial base,” which now includes the United States, Canada, the United Kingdom, Australia, and New Zealand and could potentially serve as the basis for wider industrial cooperation with European and other global partners. This could provide useful synergies with ongoing efforts in Europe to galvanize defense production and help ensure an enduring competitive edge for the wider West over potential adversaries—within NATO and with global partners.

The Global “National Technology and Industrial Base”

The national technology and industrial base (NTIB) is defined in U.S. law as “the persons and organizations that are engaged in research, development, production, integration, services, or information technology activities” in national security and dual-use areas. First established in 1994, NTIB initially included only Canada in addition to the United States. In 2016, however, United Kingdom and Australia were added, followed by New Zealand in 2022. NTIB entities may receive preference for certain limited procurement actions and may be exempted from certain foreign ownership or control/influence requirements.

The logic behind this initial expansion was to foster industrial defense cooperation among the Five Eyes allies, which already had provisions for intelligence sharing potentially required for sophisticated military projects. And the expected benefits were to leverage economies of scale, promote innovation, and increase interoperability.

Given Russia’s large-scale war of aggression against Ukraine and the longer-term challenge from China, the NTIB could be expanded further to ensure that the wider West is able to produce the military materiel required to deter and confront any security challenges. The United States and its NATO Allies have already faced stockpile constraints in providing weapons supply to Ukraine to continue waging its defense. Now, the 2024 NDAA has added Israel and Taiwan to a program started to expedite delivery and replenishment of munitions to Ukraine, which will put further pressure on existing production. The NTIB could also serve as the fulcrum to leverage European defense initiatives in light of Russia’s war of aggression.

European Defense Initiatives

The European defense landscape has long been characterized by severe under-investment and fragmentation among Member States, with less than one-fifth of investments in defense programs conducted in cooperation. In 2009, the European Union expressed its willingness to facilitate joint procurement with the adoption of procurement rules for munitions, arms, and war material in the Defense Procurement Directive. However, implementation was lacking, and most procurement contracts were still awarded without an EU-wide tender.Continue Reading U.S. Defense Bill’s Implications for European and Global Partners

A would-be technical development could have potentially significant consequences for cloud service providers established outside the EU. The proposed EU Cybersecurity Certification Scheme for Cloud Services (EUCS)—which has been developed by the EU cybersecurity agency ENISA over the past two years and is expected to be adopted by the European Commission as an implementing act in Q1 2024—would, if adopted in its current form, establish certain requirements that could:

  1. exclude non-EU cloud providers from providing certain (“high” level) services to European companies, and
  2. preclude EU cloud customers from accessing the services of these non-EU providers.

Data Localization and EU Headquarters

The EUCS arises from the EU’s Cybersecurity Act, which called for the creation of an EU-wide security certification scheme for cloud providers, to be developed by ENISA and adopted by the Commission through secondary law (as noted in an earlier blog). After public consultations in 2021, ENISA set up an ad hoc working group tasked with preparing a draft.

France, Italy, and Spain submitted a proposal to the working group advocating to add new criteria to the scheme in order for companies to qualify as eligible to offer services providing the highest level of security. The proposed criteria included localization of cloud services and data within the EU – meaning in essence that providers would need to be headquartered in, and have their cloud services provided from, the EU. Ireland, Sweden and the Netherlands argued that such requirements do not belong in a cybersecurity certification scheme, as requiring cloud providers to be based in Europe reflected political rather than cybersecurity concerns, and therefore proposed that the issue should be discussed by the Council of the EU.Continue Reading Implications of the EU Cybersecurity Scheme for Cloud Services