On June 16th we were lucky enough to have led a webinar in which our guests discussed some of the legal aspects of charging network expansion and business approach towards state legislatures and incentives while entering e-Mobility markets.
Our respectable panelists:
Michel Bayings (EV Roaming Foundation)
Pawel Gora (Nexity)
Below, you will find a video recording as well as a full transcript of the discussion.
Webinar - video:
Webinar - transcript:
What is the European status of e-mobility, now reaching mid-2021?
Michel: Yeah, well, it is an interesting question because it is always hard to really get the latest figures. But I think in general, in the electric mobility part, for this kind of overview, you need to split it into two things. One is how well the electric vehicle car sales are doing. And of course, you can split that also between busses, trucks, passenger cars in general, and the other part is the charging infrastructure. And in general, you can say that currently in the electric vehicle sales, new sales are going very well, I think better than expected. That's also one of the challenges that we face from your side, because, on the charging infrastructure side, everyone is doing their best, but it is hard to catch up with the number of vehicles coming in. So also a lot of new models. That's very good. We didn't see or we don't see any more concrete effects of COVID. We saw that last year. We could also register that amount of charging stations because at a certain moment everyone stayed at work from home. So we should withdraw directly, which was actually quite large, I think 20, 30 percent of the energy usage, the same for the old-fashioned fuel vehicles. I mean, no one needed fuel anymore because everyone worked from home. So there was definitely an effect. But currently, we see in the most recent statistics which show the amount of energy use is getting a bit back to normal. So in general, the progress is good. You still see a lot of differences in different countries. And I think that's one of the European concerns that we have both on electric vehicle sales sites, but also on the charging infrastructure side.
Have you noticed any particular countries that noted a boost when it comes to the growth of the e-Mobility market within this year?
Michel: We see that. Most of the time, there are almost the most obvious countries. I mean, Norway, of course, is one of the leading countries, especially in electric vehicles. When it comes to the electric vehicles infrastructure, you see that the Netherlands is leading. But we definitely see that countries like Iceland, Sweden, Finland, Denmark, are really doing great. Also, Germany and France are doing very well. On the lower side, we see that the numbers are not great when we look at countries like Greece, Czech Republic. But also, to be honest, Poland is not yet really on the move. So there are definitely countries that could take advantage of their current situation and what happened before the COVID period. But the good thing is, I think that I see from the European Union, the European Commission, that now they will really focus on the countries that are lagging behind a bit. So from that point of view, it's definitely positive that the movement is going on.
When it comes to you, EU directives, what updates can be expected during the next few months or next year?
Pawel: OK, so we should start with the Green New Deal, which was issued on May 27th. Recent year.. It is a long-term recovery strategy because everyone, especially in Europe, but also in the whole world, was harmed and touched by the crisis caused by the COVID outbreak. So, the Commission prepared and issued this green new deal. First of all, the biggest today’s goal for Europe is to become a climate-neutral continent by the end of 2050. European Commission and European Parliament are performing many activities to achieve this target. European Commission will announce new legislative proposals in the coming year. And many of them will, of course, target e-mobility with special concern. That includes the benefits for the EV users, Charge Point Operators, and more restrictions, which can and will lead to automotive concerns and developers.
It can also be seen in the current legislation in both European and member states legislation. When it comes to regulations, we must say that in the field of electromobility and related sectors, there are plenty of examples of new, recent, and upcoming legislation. The most important one, that's happening now, is so-called the Clean Energy Package, which includes a set of updated and ongoing regulations, especially a review of the European Union taxonomy system and the Performance of Buildings Directive, which especially touches developers, renewable energy directive and the market design directive and regulation on energy efficiency. Maybe I will provide you with some more detailed information about those directives and regulations so everyone will have a little bit more knowledge about what's going on and what changes in the near future will occur. First of all, the European Union taxonomies climate is changing and it's a classification system that consists and establishes a list of environmentally sustainable economic activities. It’s a very important system because it's enabled to scale up sustainable investments and help to implement this European green deal. And a new and recent classification consists of some provisions which open and enable operators to provide financing for the companies, to entities which really, really need this financing to make some sustainable investments.
Another very important directive, which is currently changing and shaping is the Energy Efficiency Directive. It's an old directive because; it dates back to 2009, when the main reason to appoint was to reduce CO2 emission from new vehicles. The last version was passed by the parliament in 2013, and these regulations required lowering CO2 emission from new cars in 2013 to be lower by 37,5%. For 2021 protection will also be high - 41%. So in the nearest, eight, nine years this reduction will take like one-third of the emission, which is now. In June 2021, the European Commission will present a proposal to revise these targets and raise them, but they will need the support of the European Parliament because the European Parliament, as you know, is now very much in favor of ambitious climate targets. In the current term because it was said that up to 2015, we will have no emissions system in the European Union. And it's very interesting how the member states today react to this directive, because some of the member states are very clear in the favor of the rapid decarbonization of road transport, especially in Norway, but not only. There was a filed, joint open letter to the European Commission, which demands ban of the registration of combustion vehicles up to 2030. And this letter was prepared by a group of nine member states: Austria, Belgium and Denmark and Greece, Netherlands, Malta, Ireland, Lithuania and Luxembourg. So we may assume that the states declare that. Nevertheless, even if the European Commission wants to ban this registration of combustion engines, they will probably do that and perform some measures and activities to ban this registration.
Even if in this group there is no Germany but the experience so far shows that Germany will also play a key role in the European Council because they are very cautious about raising the bar for vehicle facturers., We may see a direct course from a Volkswagen Group - a largest car manufacturer in Europe, and it may mean the Germany will finally stop acting as a brake and will support a more ambitious policy to reduce the emission.
There is also a Renewable Energy Directive. And today, it must be stated that a majority of European Union member countries have not incentivized the use of electricity as, for instance, bio fuels, even despite that, obviously, electricity is the cleanest alternative to oil and it's even cleaner than biofuels.
This directive was refreshed and offers a chance to move away from the biofuels and to cleaner fuels. This creation of this credit system would, and I believe will help in increasing the rise of renewable fuels, since this electricity requires a separate infrastructure to be introduced to the market and everyone needs financing to implement that. It is important that the deadline for transposition of this directive in the member countries expires in June 2021. So this is happening now.
There is also energy performance of the buildings directive, which obligates new buildings and the buildings undergoing major renovations to either install charging stations or assure the installation of ducting infrastructure in parking spaces. So it also helps the growth of electric mobility.
Last but not least - in December 2010, 20 European Union proposed the revision of the directive to set the highest standards in the world for the acquisitions of raw materials from which batteries come and the recycling of batteries, especially car ones. And it will help us have the whole Europe to be self-sufficient too, because right now we have a little problem with getting and exporting, importing lithium, cobalt Netco, which are required for battery production. And by 2014,, battery production will be mainly obtained from the recycled European batteries. So it's a huge boost finally to end this topic, referring to the legislation which committed to European Union climate neutrality by 2050. The European Commission proposed to increase the 2030 greenhouse gas reduction target to 55%. These kind of activities are very crucial for the growth of electro mobility, and I believe that will help us to have a cleaner planet.
Michel: In my opinion, there are two important things like Pawel said. All you have to do is legislation in which you are definitely focused on stimulation and support of electric mobility, like similar legislation regarding buildings, parking. Those requirements will definitely show several issues and ensure that you have the right, i.e. to get a charging infrastructure, a parking garages, etc. for buildings that it should be. On the other side, we see influence, which will come from the revised Alternative Fuel Directive. That will come in 2023 and actually the whole market is busy with that. The good thing is from one point of view, that it will be more strict in a way that the first alternative fuel directive, they gave too much room for the different implementations. This will be more strict. The kinds of sites that I see is that if the changes are too big, it will also not support all the new infrastructure which is needed. I mean, currently we talk about approximately 150 000 new charging points that need to be installed every year to meet targets. So we talk about 3000 chargers per week at least to meet the targets. So I hope the whole market, especially with its alternative fuel directive, contains a lot of different aspects like Pawel said, this is this very wide subject legislation. But I hope that it will be more strict that we are also part of that fight for your own foundation, but also in all kinds of ways that it will indeed help the market. But it's definitely one of the things to keep an eye on, the developments which are going on there.
When it comes to network fees and network development, can we witness something that could be called the road to unification?
Michel: We have a lot of different networks across Europe and then there is indeed a challenge. One of them is indeed based on the fees because you have different ways you make use of roaming hooks, you can do with peer to peer. You need to connect an operator with service providers to ensure that the service providers get access to the networks and finally, to the EV drivers. There are all kinds of arrangements there, to be honest, I don't expect many regulations on the fees. And I do hope and do currently already see that because of the competition, the fees will not be raised extremely. But it is a complicated market. From that point of view, unification will be done. But I don't expect it directly on the fees because finally, that is also up to the market. As an EV driver, you have the choice to choose your own insurance provider, a service provider, you have the choice to choose the different operators. But of course, it's a big market with a lot of money involved where companies make choices. So I do see that the next networks connect to each other. But in the concrete fees that you need to pay, for example, to roaming or to a service provider or the service provider to an operator, I don't expect there will be much of a registration from the EU site.
It would be good and that's maybe an interesting view that if the consumer authorities would keep an eye on it. There are in all countries and also by the EU, there are authorities to look at to assure honest competition. And I think that's an important role. But in my opinion, that role is not yet taken or not yet managed. I think it would be good to have those types of organizations more proactive in this, because there are definitely threats. I mean, if we look at the current developments via the car industry, like I'm using the 15118 ISO protocol, which is a possibility that via your car, you can directly connect to networks. In itself, it's not a bad development. But if it would exclude certain service providers or other parts of the market, then you get an issue. And I know that from their point of view, I don't think that the fees need to be regulated, but I hope that the authorities will keep an eye on it and assure that an open, valid or equal competition landscape will be there. And that's actually what could help in this
From the point of view of operators and the Union, what regulations can soon arise?
Michel: Yeah, well, I think regarding the operator, some mean the biggest regulations that also Pawel mentioned earlier, tax regulations are definitely a hot topic which will influence them, which was actually also rare for a long time. We were not really involved in this. I think at this moment, countries unite there and talk more or less with one vote or work together on that. The alternative fuel directive, which we have, which will have impact. We work together with a lot of companies and the Sustainable Transport Forum, where the EU is thinking about the legislation, about short term data formats, those kinds of things. So there are things which will definitely have an impact on the operator and which might also influence the way that they work. I mean, if I currently see, for example, that you need to offer outlook charging. So that means the ability to charge without subscription cards, those kinds of activities or activities will have an influence. There is another movement where you see that companies, or rather countries, will demand certain displays or certain information that need to be shared with EV drivers. Well, that's quite often it's either shared directly or via the service providers.
So there are a lot of things which are coming to the operators which will influence their work. We all need to catch up with the legislation, but also with improved and updated protocols and connections. So, yeah, I expect a lot of developments there. And I'm not sure if everything will directly be an improvement, because also to be able to say for a long time we as markets did not have maybe the right the right focus. And then you see that the EU, for example, takes the lead and says, well, we need to share data via national exit points. It simply requires that all operators need to open their network and share all the public SMI public infrastructure information towards our national exit point. And so you see these kinds of movements going on and that will have impacts on the way operators work.
Pawel: It's another wide problem and wide question. I think I will come out with one very important regulation, which I believe will soon arise. First of all, it must be stated that the regulations which regard EV charging infrastructure and mobility, must respond to the real problems which are faced currently by EV owners and CPO’s and eMSP’s and among other areas of law. I believe that especially crucial and urgent for the development of the European single market for EV charging infrastructure may be considered to the VAT directive, particularly when it comes to cross-border transactions to e-roaming. And the industry is currently confronted with very uncertainties regarding the correct interpretation of European Union, especially VAT directive and national VAT laws. Furthermore, the existing VAT regime has turned out to be a major obstacle to the development of this integrated European trudging infrastructure market, because currently there is a big issue that EV charging can be seen either as a supplier of the goods, especially electricity, or as a supplier of service in terms of VAT. This distinction is very important because the VAT directive and after that national VAT rules for six different rules for supplies of goods and supplies of services when it comes to the determination of the place where the transaction is taxable.
Of course, there are some guidelines which were issued by the European Commission in 2019 on the subject that were issued on the request of Italy and France. However, they are not transported to directive or a national law. Now, according to these guidelines, CPO should be regarded (when it comes to e-roaming) as a supplier of electricity in the meaning of this VAT directive. From the point of view of European Union Commission e-roaming (CPO) is making a supply of electricity to the eMSP, who in turn makes the supply of the same electricity to the EV driver. However, it's only the view of European Commission. It's not a hard law. Some member states don't comply with the statement. And we are having issues where it is. It is regarded as supply of services, performing services, and it's a big problem for the unification of the market. And I believe that VAT committee, which is making a new VAT directive, it should be and now is scheduled to reconvene the opinion of the commission and today will decide in this directive, either commission's guidelines are right and they will be transferred into the directive and then all the member states will and must comply with this directive. However, now there are no binding guidelines, no binding regulations, and we are having big trouble with this. This problem regarding that and its complexity led to a situation where most industry members are reluctant to offer charging services to other member states. It's a big issue and I believe it will be changed in the coming years.
When it comes to open network across Europe, what is an optimistic and realistic scenario of forming this one bit in European Union?
Michel: I'm actually quite optimistic. I mean, I want to be optimistic. But I think we are not there yet. Let me be clear about that. We are working very hard and that means the whole market: the whole ecosystem, the companies but also the governments. We are all working very hard to achieve and to support an open, better network with the right information to EV drivers, but also possibility for competition, possibility to earn money, connectivity. So that’s the combination actually that we talk about here. There are things that need to improve and that we need to solve but we are working on that. If I look at where we are now and the fact that in the past I needed eight or more different cards and tokens to charge my vehicle across Europe - now, I can do it with two.So it is definitely improving. Networks are more connected to each other. They talk to each other in different standardization bodies. Also regarding the legislation, they definitely work together more and more. By the way, and I also think that's an important actor, which was quite often forgotten, but now we work together with those organizations, which are the communities of EV drivers. Finally, that's the group we do it for. We see that we really work together there. So I'm positive that in the next year or so, together with the EU, I mean, we all talk to each other. I think that's a big achievement - we don't talk about each other, but with each other. And that's a different level. So, the only thing I hope for and it’s a bit of a concern is that not only the main countries, so not only Netherlands, France or Germany, but also the other countries. I mean, it would be great if countries like Poland, like Czech Republic, etc. could also catch up and join and participate. And I know that from the EU also with their self funding mechanisms, they focus now on those countries to support the network. So they really look at the gaps where infrastructure is not yet good enough or where more needs are to be added. That way we can really ensure that it will be a real covering network and not only from a few countries. But again, I mean, we have huge targets. We have huge challenges. The biggest challenge might be the ability to install enough charging infrastructure. I mean, don't underestimate it. If you need to install a few thousand chargers per week in countries, it's going to be a real challenge. But we’ll get there. The next step for us is looking at busses, trucks or vans that are definitely the next important things, which will also have a huge impact on the charging infrastructure.
Pawel: I totally agree. I believe that we are at a great point. We are after the biggest outbreaks of pandemic. We did it. We managed to survive. We are growing. There are more and more EV users on the European streets. So I believe the worst part is behind us. I believe everything is in our hands. I also believe that the goals we have are very demanding. They demand appointing a set of regulations and targets of member states, companies, consumers in the right direction. But I believe the commission, especially European Parliament is doing a great job in adopting common standards. The standards ensure the interoperability and coordination and support for the member states and the deployment and development of electrical charging infrastructure and while this targeting infrastructure grows. Also, the number of EVs on the European streets will also grow. So I believe we did a very good job and we are on the right pathway to reach these goals. Moreover, in the near future, we may expect some new solutions and regulations which will open this electromobility market, in a world of tokens and cryptocurrencies. And I'm glad to announce that at this point Nexity, together with a partner from our Capital Group - Columbus Energy, we are introducing to the market a solution which enables the tokenization of electricity from renewable energy sources; photovoltaic. It enables its balancing and also its further resell, not only to the neighbors, but also to every interested entity, as well as the purchase of the services of companies from our capital group. So, ladies and gentlemen, I believe the future is now and we are on the right path for this.
Where to look for legal guidance when deciding to enter a new market?
Pawel: I can tell you about it in my own example, because we are expanding to other markets. And first of all, we are searching contacts with associations, which conduct and care for electromobility in other countries. We are reaching out to them, contacting them and talking with them. Very often such associations provide us with different bulletins, guidelines for starting, growing and expanding in the foreign market. So I think and I believe that's a good way to go.
Michel: Now, I agree that definitely industry bodies or organizations or branch organizations are a good starting point. I also have to admit that this is definitely one of the challenges because it is hard to find single places where you can find all the information, all regulations and legislation. Partially, it is EU regulation. Also, a lot of things like the tech issues are not even solved yet, but we got a lot of questions about it. But there are a lot of discussions going on and you can't wait to start until everything is solved and there is national legislation and regulations. And then you also have the non-directed or the non-legislation parts which are simply the agreements between parties. So what Pawel is saying is definitely good to start with organizations like EV Roaming Foundation or other organizations. Finally, if you go to a certain country and try to get in touch with those countries and do good research on it. Also legislation and these kinds of things change on a regular basis. I mean, especially if we look at all kinds of incentives, it is very hard to keep track of all that. So, you need to do it also on a national level and investigate the possibilities. Unfortunately, I can't say there is one website where you can find all the information. There are good websites. I mean, look at the European Alternative Fuel Observatory, which can definitely be a good starting point. Still you need to look on national level and also maybe on the EU level to find the lost situation.
When creating a pan-European MSP offer, do companies need to create legal structures into every country that they offer access to the charging station in order to manage VAT requirements?
Pawel: Oh, it's a little bit of a hard question to answer from the top of my head, and I believe we could provide a proper answer after checking and reading some interpretations in this regard. But I believe that the proper answer is that it depends mainly on the place of the taxation. And then I believe you don't need to meet any additional entities in the foreign country to provide your services. However, it is difficult to answer because of this VAT problem, which I mentioned earlier. And in every country, it must be checked if the roaming and roaming services are considered, services or are they considered goods. And I believe in the near future we may check the legislation in the different countries and provide you with some information on our blog.
Michel : There was the advice from a group of countries which was also something as guidance adopted by the U.S. on regulations, so to look at it as selling energy as a good but recently, Italy sent a big report with the question to reconsider it and to consider selling electricity for charging stations as a service. That can depend a lot on how you deal with that. The same as Pawel was saying, where do you deliver the energy? That's also a discussion. I mean, an operator in Poland active in Germany, where does he deliver the energy? So that's another discussion. In general what I normally advise, is that at the moment you get considerable volume, reasonable volume. The question is then what's reasonable? Having your own or legal company in a certain country can never harm when the volume is still small. It's probably too much effort, but it is a delicate discussion as Pawel was saying. Your options are waiting until the EU agrees, but then you can't do business for the next two years.
Are any directives being made that you are aware of, that will regulate the exception right for roaming partners throughout the EU? Small EMSPs are getting less chances to roam with large operators, which slows the development down.
Michel: It's a bit of an open market and I know where the question comes from because I also hear those issues and I see it. But it is a bit of a challenge. Do you also want it to be EU regulated? It's a bit of what I mentioned. I think that we have the authorities in the different countries who should definitely keep a good eye on honest and open competition and the possibilities for that. But if a certain operator is asking a large high fee to an EMSP and it can indeed be that bit maybe blocking or may be making it more difficult to enter the market for that EMSP. But there can be good reasons. I mean, if volumes are low, then it is not really strange to ask for a higher fee but these are difficult discussions. Almost on a daily or weekly basis I get those questions: can you do something about it? It is hard to do, and I think, do you want to get the EU to say “well, now we put a certain cap on it”. I mean, what's reasonable? You always get those kinds of discussions. Maybe Pawel will know something about it from a legal perspective. But we do stimulate the companies to be reasonable to each other and I think maybe branch organizations can play a role that the companies that are members of those organizations assure a kind of equal playing field. So that if you are a member, then you need to comply or apply to do all those business. I know where the question comes from, but it is hard, it's the market…
Do most member states consider electricity as a good or as a service? Are there any visible trends?
Michel: The only thing I can say, if companies are interested there is from the EU committee open information available. And that's the only thing I can say and you will see that as Pawel was saying, they also don't agree yet, but that information is available and can be shared.
Pawel: To summarize, there are those guidelines from the European Commission from 2018, according to which the supply of electricity supply is regarded as supply of goods. However, there are a few member states where it is considered a service. But I believe mostly it is considered to supply imports. But it's only a trend. Now we need to have VAT directive changes, which I believe will come out in the next few years.