Guten Morgen!

Once again you can start into the weekend with your favorite Newsletter from the old world.

Have a wonderful week, enjoy and ping us for more!

Anna                                Christian

What Do We Want? Charging Stations! When Do We Want Them? Uhh…

If you’ve been following Krautshell for a while now, you’ll recall that Europe, and especially Germany, is in the middle of an extremely ambitious green transition. However, according to six members within the Social Democratic Party (SPD), Merkel’s CDU/CSU party is hitting the brakes on expansion of one key component for green progress: electric vehicles.

The SPD politicians’ main point of contention focuses on the “Building Electromobility Infrastructure Act” (German: Gebäude-Elektromobilitätsinfrastruktur-Gesetz, have fun with that one), which has been approved by the government but stuck in parliamentary discussion since May. For the SPD’s parliamentary leader Sören Bartol, the government is moving far too slowly, stating the billions promised to companies for e-mobility can’t be used, as there is currently insufficient infrastructure to support significant expansion of electric transportation.

The proposed law should help accelerate this transformation by mandating that anyone building a new structure with more than ten parking spaces, or renovating parking spaces, must also install infrastructure for charging stations. Seems simple enough, but as always, there are grumbles and reservations about the costs of expanding charging infrastructure. That being said, if electric mobility is the future, SPD politicians make it clear the time to plan is now. That being said, two deadlines to pass the law in the Bundestag have come and gone, so we expect a resolution is still far away.

Last Christmas I Gave You My Insolvency Application

There is less than a month to go until Christmas Eve (for us MUCH MORE important than Christmas Day) and we have some new rules established for December. Angela Merkel met with the Head of States this week and they basically decided that the “Lockdown Light” will be in place for another month – with some exceptions for Christmas. School holidays will begin a few days earlier so that everyone can quarantine and welcome grandma and grandpa on Christmas Eve (if you are not in school anymore, however, you would of course need to take a few days off). The contact restrictions will be lifted for the days between Christmas and New Year’s Day, and families may come together with caution and distance.

To make this possible though, there must be some sacrifices. We get that. However, it’s getting slightly ridiculous. On one hand, Economics Minister Altmaier (CDU) reminded us that it is our “patriotic duty” to support small retailers with our Christmas shopping. On the other hand, Chancellor Merkel and the Head of States agreed on new restrictions concerning the number of customers per square meter in retail stores. This will either cause long lines or empty cities, and surely a lot of revenue for Amazon. Making policies these days is particularly hard and we wouldn’t want to make the decisions the government has to make right now. That being said, lifting contact restrictions for a few days just to have them reinstated in January due to new infections, and then the thing with the retailers… We definitely will experience some very unusual Christmas days, probably like many other people around the world.

Data Governance Act – What It Is, What It Isn’t & What People Want It to Be

This week, the EU Commission released its proposal for the Data Governance Act which shall extend and adjust existing open data regulation. To put it simply: the new act would enable use of the zettabytes of non-sensitive data that exist already but are not available for companies – like industrial data, environmental data, etc. The Commission’s thought process: this data should be public, especially given that significant parts of it are generated by public companies or even administrations. Furthermore, every person who wants to share an anonymized version of their personal data (concept of “data altruism”; e.g., this can be done with the German Corona Warning App), shall be able to do this within a regulatory framework.

Sounds good, huh? Well, the problems here are quite philosophical. The EU feels to have “lost the race” for personal data against US big tech and now wants to win the race for non-personal and industrial data. Data protection experts find this whole thought process irritating. For them, data is not an economic asset, but first and foremost a personal right that needs to be protected. And indeed, they got something right here. While the economic use of environmental data by startups producing green and innovative products will certainly benefit everyone (good part of the data governance act), vague definitions of concepts like “data altruism” could potentially undermine the GDPR – the EU’s gold standard for data protection. The proposal will now be discussed in the Parliament and the Council, the former being likely to reify concepts like data altruism according to what data protectionists and civil society prefer. We will keep you posted.

More Debt, Please

Don’t you hate it when you budget for something and then you end up overshooting your intended amount… by 69.9 billion euros? This is exactly what happened to the German government this week, as the Bundestag budget committee agreed on a so-called adjustment bill for the federal debt in 2021. As are most things in 2020, the Coronavirus is main culprit causing this significant increase in borrowing. In total, the federal debt is expected to reach a height of 163 billion euros in 2021.

Of the extra debt, most of it (around 40 billion euros) will go towards economic aid for individuals and businesses affected by the new lockdown measures issued at the end of October. Then, Federal Minister of Health Jens Spahn (CDU) will receive a portion of the money to continue fighting the Coronavirus (mainly for vaccine procurement), and Deutsche Bahn, Germany’s railway provider is to receive an extra seven billion euros as an increase in the government’s equity in the company. Critics of the increased borrowing, like the President of the German Court of Auditors Kay Scheller, pointed out it would make sense to cut certain subsidies before increasing borrowing. For example, the “environmentally damaging” diesel privileges that allow the automotive industry to pay lower energy tax and VAT on diesel than on petrol.

As a silver lining, Federal Minister of Finance Olaf Scholz (SPD) pointed out that borrowing for the current year is significantly below than originally estimated, keeping the sum for both 2020 and 2021 under 300 billion euros. (Moderate cheering allowed).

France Will Collect The Tax

France is a major advocate of a worldwide tax on digital services as an instrument to combat tax avoidance by big companies like Amazon, Facebook, Apple and so on. Because international plans on OECD level weren’t proceeding fast enough for the French government, they introduced their own tax last year. To not escalate their trade war with President Trump, France put the collection of the tax “on hold” at the beginning of the year under the condition that the OECD comes to an agreement on a global tax before the end of the year. While there was optimism this could be achieved by people like German Finance Minister Olaf Scholz (SPD), nothing happened. An agreement on OECD-level won’t come before mid-2021 and even that is ambitious given how far off the mark prior estimates for a resolution were.

So, France will begin collecting 3% of digital services revenue if a company makes more than €25 million in France with digital services (and at least €750 million globally). France is betting on President Trump being a “lame duck” now that President-elect Joe Biden will take over in January 2021. France is also probably wagering they can convince Biden to agree on the necessity of such a tax on a global level. This would save the French from any retaliatory measures by the new US administration. In the EU, we can definitely understand the US administration’s motivation to protect their home industry. On the other hand, the notion prevails that everyone should pay their fair share, mainly if they are making THIS MUCH money.

Is the Potential Ban on Skiing Becoming A Political Issue?

Angela Merkel doesn’t want the Germans to go skiing. She did that even though every year her winter vacation is… cross-country skiing. Still, Merkel remembers quite well the first wave of Corona virus cases in early spring 2020 when people returned from Bavaria, Austria, Italy, Switzerland and France from their skiing vacations. Cases went up HIGH, and many of the skiing regions themselves had to be locked down completely with some experiencing heartbreaking death numbers like in Northern Italy. Italian Prime Minister Conte agrees with Merkel and so does French President Macron. All three want the people to not go skiing and are currently assessing whether they can even forbid the ski area operators to open.

Enter Austria and Switzerland: “We don’t want that. Ski means money.” Both countries want to protect their tourism industry which had to suffer a lot from the Corona virus. In the Summer, the low case numbers and increased vacation activity enabled some wounded regions to heal again, albeit slowly. A skiing ban in the Winter holidays (at least until mid-January according to the current plans) would be an economic catastrophe. However, a second “Ischgl” (the city in Austria with one of the highest infection rates in February and March) would be a medical and also social disaster. If things are getting out of control, it would prove that we hadn’t learned from anything so far. The discussion between the countries could get more intense and make skiing unusually political – even without Angela Merkel on the loipe.

• IT Security Law on the Home Stretch: A few weeks ago, we reported that Germany had developed a half-hearted solution concerning IT security and use of Huawei technology for its 5G network. The government is now working with a new draft, obliging manufacturers to submit a “guarantee explanation,” which declares and describes the security of their components. The declaration will then be verified by the Ministry of the Interior. The amendment also provides for the introduction of a uniform IT security label for products. We’ll keep you posted on any developments.

• We will have an election – and we know when: The federal elections in Germany will take place on the 26^th of September 2021. This is clear now. The German constitution only demands a certain timeframe and now after considering all relevant holidays and so on and so forth, Minister for the Interior Seehofer (CSU) came up with the date that needs to be confirmed by Federal President Frank Walter Steinmeier (only a formality).

• European Health: How did we handle the pandemic in Europe (so far)? How is the health situation in general? How many people still die of smoking? All these questions are answered in the new European Health Report, published by the EU Commission in collaboration with the OECD. If you are active or interested in health, it might be worth looking at it.

Last year the youth stood up and started an impressive and legitimate movement to wake everyone up about climate change. We all remember Greta Thunberg and the demonstrations, even though until today I am not entirely sure what drove all those kids onto the streets: a real concern about the environment or the prospect of school-free Fridays…

Then Corona hit and the focus shifted a bit. Still, while the topic was not front-page anymore, a significant decline of air travel cut CO2 emissions. From 2022 there will be no plastic bags in German supermarkets. Just last week, the German authorities agreed on a complete relinquishment of paper in any form of communication between all federal and state authorities. This should save around 1 billion sheets of paper annually.*

Of course, all of this has a rather symbolic meaning, given that e.g. plastic bags amount to only about 1 % of the overall plastic use in Germany.

And here I fully agree with Greta and environmental NGOs criticizing the recent measures. We need more ambitious actions. We need an international joint effort. I applaud President-elect Biden on his announcement to make the environment a priority of his presidency and to rejoin the Paris Agreement. I even dream about a truly global alliance, including the US, China AND Russia with the common goal to save the planet. Even though I am not entirely sure what drives this applause: a real concern about the environment or the apprehension of Greta being back…

*Fun Fact: Apparently Germany had the highest per capita use of paper of all G20 nations.