Dissecting the Draghi Report

• In the natural gas subsector, the enhancement of joint purchasing is a Political Win for the EU. Of the seven measures proposed by Draghi, only three are explicitly mentioned in the Mission Letters –two of them ambiguously– and four receive no mention at all. Specifically, the latter four –moving away from spot-price purchasing (2), improving the quality of data and forecasts (5), limiting the possibility of speculative behaviours (6) and ensuring that price-formation mechanisms give a better reflection of costs (8)– are all measures that do not require investment. They are thus opportunities that can be seized upon during this legislative term.
• Most of the natural gas proposals have a medium level of European political viability (56%, five measures) and only one is a Quick Win that could be executed in the first year given its viability and urgency: facilitating access to competitive energy for industries exposed to international competition (9). Implementing this measure would, moreover, have significant effects on the competitiveness of energy-intensive industries.
• All the measures needing no investment have a medium or low importance, with the consequence that there is no Cheap Win in this subsector. By contrast, there are three Costly Wins that are related to the development of selective strategic import infrastructure (4), the decarbonisation of industry through the use of hydrogen and green gases (7) and access to competitive energy sources for industries exposed to international competition (9). Therefore, given the predominance of infrastructure in the sector and the cost of developing green technologies that are not yet profitable, the natural gas measures with the greatest impact at the European level are accompanied by a major financial outlay.

Energy: natural gas (table of analysis)

• The measure constituting a Political Win for the electricity subsector is the rationalisation of administrative processes for a more streamlined deployment of renewables, flexible infrastructure and grids (10). Even so, this measure suffers from very low European and national viability, impeding its implementation. Also prominent in this subsector are another four measures with explicit references and therefore benefitting from political will in the Commission, which require major investment.
• Four of the electricity measures are highly viable, and two of them –the encouragement of self-generation by energy-intensive users (14) and the reinforcement of system integration, storage and demand flexibility (15)– constitute Quick Wins. In contrast to the proposal identified as a Political Win, in this case there is considerable political viability both in the EU and in Spain.
• In terms of the investment needed, 44% (four) of the measures require high investment, but another 44% do not require any additional public investment. It is true that none of these is a Cheap Win, because they are not sufficiently important. By contrast, two Costly Wins for the competitiveness of the subsector are identified: the fostering of upgrades and investment in grids for the electrification of the economy (11) and the aforementioned reinforcement of system integration, storage and demand flexibility (15).

Energy: electricity proposals (tably of analysis)

• The horizontal proposals comprise fiscal measures for reducing the cost of energy (19), avoiding distortions in the Single Market (20), fostering innovation in the sector (21) and developing the governance needed for a true Energy Union (22). Only the last of these is a Political Win, while the one referring to distortions in the Single Market could be to a lesser extent (there is an ambiguous reference in the Mission Letter).
• None of the horizontal proposals is especially urgent or viable, because they involve wholesale reforms that require time and political goodwill. Even so, they all have a certain degree of political backing at the national level.
• One of the measures, the one concerning energy taxation (19), constitutes this subsector’sCheap Win. Moreover, the proposal benefits from considerable national and European political viability; despite being a measure related to fiscal policy, this may make its implementation more straightforward.

Energy: horizontal proposals (table of analysis)

• Only measure 24, regarding the diversification of supply chains for critical raw materials, seems to constitute a Political Win. The other measures are either mentioned ambiguously in the Mission Letters (two) –one of them with no need for investment, meaning that it may viewed as a second-tier Political Win– or not mentioned at all (one).
• 75% (three) of the proposals have high European viability. Prominent among these as a Quick Win is the simplification of permission-granting procedures (25), which would facilitate the development and implementation of new projects within EU borders.
• The Cheap Win in this sector is again the diversification of supply chains (24), followed by greater support for strategic projects (26), which has medium-level importance. Three of the proposals referring to the Critical Raw Materials Act (CRMA) do not require investment and only one needs substantial financing, making it a Costly Win owing to its major importance: the enhancement of domestic production, processing and recycling of critical raw materials in the EU (23).

Critical raw materials: Critical Raw Materials Act (table of analysis)

• The Political Win among the beyond-the-CRMA proposals is the development of further critical raw materials resource diplomacy (30). This has a close connection with, and could be perceived as being a precondition to, securing the Political Win of the preceding section: the diversification of supply chains (24).
• None of the measures in this section constitute a Quick Win. Only one has high viability at the European level, while being of little urgency. By contrast, 73% (eight) of the proposals have medium viability, of which six are highly or moderately urgent (55% of the total). Hence it would be advisable to work on their maturity to enhance their viability, given that they include a global EU strategy for critical raw materials (27), the development of financial solutions (29) and of joint strategies with other partners and global buyers (31).
• Despite being a sector that requires major infrastructure and consequently investment, 45% (five) of the measures put forward do not entail additional public expenditure. Notable among them are two Cheap Wins: the development of a global strategy at the EU level encompassing the entire value chain (27), and the joint strategies with other global buyers (31). Under the heading of Costly Wins, the financial solutions supporting the critical raw materials value chain (29), despite being highly necessary, involve significant additional investment input.

Critical raw materials: beyond the CRMA (table of analysis)

• Of the seven measures listed for this subsector, none constitutes a Political Win. Three of the measures are explicitly mentioned in the Mission Letters, but two need considerable investment. Two others do not require investment, but the policy mandate from the President to her new College is not clear.
• Measure 43, which recommends strengthening EU-based telecom equipment and software providers, is the only Quick Win in this subsector. There is the political appetite required at the European and national levels to see this proposal through, owing to its impact on strategic autonomy, despite the fact that it requires large-scale investment.
• There are no Cheap Wins in the digitalisation and networks subsector, given the difficulty of regulating and changing the telecoms sector, but there are three Costly Wins, accounting for 43% of the proposals and requiring significant new public investment. These include reforming the EU’s competition regulations to favour the Single Market for telecommunications (38), incentives for new infrastructure to replace outmoded versions (41) and, again, the strengthening of EU-based equipment and software providers (43).

Digitalisation: high-speed/capacity broadband (table of analysis)

• 71% (five) of the computing and AI proposals are explicitly or ambiguously mentioned in the Mission Letters sent out to the new European Commission, suggesting abundant political will in the College to put them into practice. One of them in fact constitutes a Political Win, given that it does not require any investment for the time being: the creation of an EU-wide policy and residency requirements for public administrations’ cloud services.
• All the measures with high viability at the European level are Quick Wins in computing and AI: first, the increase in computational capacity dedicated to the training of AI models and the creation of a computing capital framework for SMEs (45), and subsequently the identification of vertical AI applications of greatest priority for the EU (46). These are followed by four further measures, one of which is especially urgent: cooperation between the EU and the US to ensure access to cloud and data markets (51).
• Despite the major advances that are needed in this subsector, 57% (four) of its measures do not call for any investment (compared with 14% requiring low and 29% requiring high investment). Of these, EU-wide coordination and harmonisation of national AI sandbox regimes and the harmonised implementation of the GDPR (47) stands out as a Cheap Win. By contrast, two measures are highly important and require considerable funding: the aforementioned proposals 45 and 46.

Digitalisation: computing and AI (table of analysis)

• In semiconductors, one of the sectors critical to competitiveness and in the eye of the geopolitical storm, none of the proposed measures constitutes a Political Win. 50% (three) of the measures are explicitly included in the Mission Letters, while 67% require significant public funding.
• Two measures are Quick Wins requiring rapid action: first, the measures paving the way to the EU Semiconductor Strategy (dedicated budget, EU preference in procurement, etc) (52), and secondly, the Strategy itself (53). It is worth highlighting that two measures have medium viability and urgency (56, 57). Progress may be made on them in the months ahead to augment their viability. The viability and urgency of another two (54, 55) are somewhat limited, however, casting doubt on their potential implementation.
• As with networks, none of these measures constitutes a Cheap Win. However, two are Costly Wins, both connected to the EU Semiconductor Strategy (52 and 53). So, despite being Quick Wins, in other words requiring urgent action and with the potential of a major impact on European competitiveness, they entail considerable investment.

Digitalisation: semiconductors (table of analysis)

• The energy-intensive industries, another of the sectors in which the competitiveness of European companies has been sharply curtailed, are the subject of 11 proposals in the Draghi Report. This will be one of the key sectors for the forthcoming Commission, as envisaged in the new Clean Industrial Deal. 36% of the proposals are explicitly referred to in the Mission Letters, while 64% are mentioned ambiguously. Of the former, only one requires no investment (Political Win), which is stimulating demand for green products with transparency and standardisation measures (65).
• Two proposals are Quick Wins in terms of the five that have high European viability: first, reinforcing the funding of the decarbonisation of energy-intensive industries, using, among others, revenue from the Emissions Trading Scheme (ETS) (62), and monitoring and improving the Carbon Border Adjustment Mechanism (CBAM) (64). Both these measures are linked to closely connected policies (CBAM being the foreign version of the European ETS system), whose effects on competitiveness with regard to foreign industries is of considerable concern to many EU actors.
• At one extreme of the energy-intensive industries sector are 36% of the proposals, which require considerable investment, and 45% at the other extreme, which can be implemented without additional capital. Among the former is a Costly Win measure, linked to proposal 9 regarding natural gas: ensuring access to competitive sources of natural gas during the transition to more decarbonised industry and to sufficient and competitive sources of green electricity and hydrogen (59). Among the latter, Cheap Wins, is increasing the coordination of EU policies impacting the sector (58) and the measure relating to the CBAM (64).

Energy-intensive industries (table of analysis)

• One of the measures that Draghi highlights in Clean Technologies involves introducing into public procurement and Contract for Difference auctions a minimum local quota for some products and components (70). This proposal is the sector’s only Political Win. Moreover, while 40% of the Clean Technology measures are explicitly mentioned in the Mission Letters, 10% are ambiguously present and 50% are not referred to at all. This seems to suggest that work remains to be done to secure a political commitment consistent with the proposed reforms.
• In terms of EU political viability, there are positive indications in the evaluation of the measures. Only one measure has low viability, while four have medium and five high viability. Of the latter, two are Quick Wins, and should be put into practice in the coming year. These are: the full and accelerated implementation of the Net-Zero Industry Act (69) and the diversification of supply sources establishing industrial partnerships with third countries (74).
• Despite the major investments required by this sector, where the EU has lost leadership compared with other countries, 60% of the measures can be achieved without additional public funding. This contrasts with the absence of many measures in the Mission Letters and encourages the idea that progress may be achieved in the future without being hampered by the financing of the proposals. Even so, none of the investment-free initiatives is particularly important at the EU level, leaving the Clean Technologies sector devoid of clear Cheap Wins. There are, however, two Costly Wins, namely the mobilisation of public and private financing for clean tech solutions (72) and the diversification of supply sources (74).

Clean technologies (table of analysis)

• 70% of the measures for the automotive sector enjoy a degree of political will, as evidenced by explicit or ambiguous mentions in the Mission Letters. Three of these do not require public investment: ensuring regulatory coherence and predictability for the automotive sector (81), standardisation (82) and the levelling of the global playing field (83). Implementing them will enable the competitiveness agenda to be underpinned at a political level.
• 60% of the measures have medium or low political viability in the EU. Of the measures with the greatest urgency, only two (50%) have high viability: again, regulatory coherence (81) and the previously unmentioned development of recharging and refuelling infrastructure (84). As well as putting the aforementioned measures into practice, there is a need to steer political effort and capital into raising the viability of measures located at a medium level.
• There is only one Cheap Win proposal (no investment and high importance) in the automotive sector, namely measure 81 concerning regulator convergence, which also stands out as a Political and Quick Win. By contrast, 40% of the measures require substantial public investments to revive the sector’s competitiveness.

Automotive (table of analysis)

• Three of the Defence proposals may constitute Political Wins: the application of already-existing strategies and programmes for the defence industry (89), the aggregation of demand for defence assets (90) and improving the European defence industry’s access to EU funding (93). Despite this, 40% (four) of the proposals do not receive any mention at all in the Mission Letters sent to the commissioners concerned.
• The search for Quick Wins again points to the implementation of EDIS and the adoption of EDIP (89), which are already-existing strategies and programmes, and the European funding of defence industry capabilities in the EU (92). Although these measures can easily be put in motion, the high percentage of measures with a low degree of viability in this sector (50%, or five) should not be overlooked, casting doubt on their trajectory in the EU. Nor is the low viability of these measures at the national level a cause of great optimism.
• There are three Cheap Wins in Defence, two of them overlapping with those already identified as Political Wins, namely measures 89 and 90. The third Cheap Win consists in ensuring that EU competition policy enables the consolidation of the defence industry (95), and is related to defence companies’ lack of scale and the fragmentation of the single market. By contrast, potential EU funding for developing industrial capabilities (92) constitutes a Costly Win because, despite also being a Quick Win, it requires substantial investment.

Defence (table of analysis)

• In the space sector, none of Draghi’s proposals constitutes a Political Win. There are 10 in total, of which three have explicit and six ambiguous references. Of the latter, five require no investment, meaning that they could become Political Wins during the legislative term.
• Two measures are Quick Wins: improving access to funding for EU SMEs, start-ups and scale-ups(103), and the establishment of a policy framework for launchers that ensures autonomous access to space (107). However, it should be borne in mind that the first measure (103) has very little viability at the national level, which could impede its adoption
• 60% of the measures do not require investment, enabling the competitiveness of the European space sector to be improved without substantial expenditure. These include two Cheap Wins concerned with reforming the governance of European space policy to simplify it (99), and the removal of the principle whereby the European Space Agency’s investment in space programmes is determined in accordance with the financial contribution of the member states (100).

Space (table of analysis)

• Draghi puts forward nine measures for the pharmaceutical sector. A third of these are classified as Political Wins: expediting access to markets with coordinated action (111), clear guidelines on the use of AI in the sector (112) and improving business predictability through dialogue with the relevant stakeholders (114). The notable thing about the pharmaceutical sector is that all its proposals are included in the Mission Letters (89% with explicit references and 11% mentioned ambiguously). This could be the result of the post-pandemic realisation regarding the criticality of competitiveness and economic security in the healthcare sector.
• One of the proposals scores highly on importance and viability and therefore constitutes a Quick Win: maximising the impact of the EU Health Data Space (109). It is also striking that 56% (five) of the measures have high European political viability, of which three exhibit medium levels of urgency. It is foreseeable therefore that in the near future they will also come to classified as Quick Wins.
• The investment needs in the pharmaceutical sector are divided evenly: a third of the measures require substantial investment, a third moderate and another third little investment. Notable is the Cheap Win proposal mentioned already: expediting access to markets (111). This is an investment-free measure because it requires the coordination of the actors involved in issuing guidance, the establishment of prices, reimbursement and procurement. Meanwhile, the pharmaceutical Costly Win overlaps with the Quick Win regarding the EU Health Data Space (109), the implementation of which entails a major expenditure commitment.

Pharmaceutical (table of analysis)

• The Transport recommendations included in the Draghi Report encompass considerations that are common to many subsectors or segments: rail, air, roads and waterways (inland and maritime). Two Political Wins emerge from our analysis: the removal of barriers to integration and interoperability in all segments (120), and the alignment of job profiles to the green and digital transition and the provision of greater professional mobility (126). There are another two measures explicitly mentioned in the Mission Letters and linked to high public investment that should remain in view during the new legislative term, specifically the acceleration of digitalisation in transport (121), and the launch of innovation projects with public-private and cross-border partnerships (122).
• None of Draghi’s proposals suffers from low political viability in the EU (and only number 123 has low viability at the national level), which indicates their possible implementation in the future. Two of the highest rated in this area are Quick Wins and they refer to the improvement of infrastructure planning with a focus on competitiveness (118), and the removal of barriers to integration (120).
• As a sector intensive in infrastructure and consequently investment, where there is a need for progress on integration, decarbonisation and digitalisation, 67% (six) of the proposals require substantial investment (compared to 11% requiring little and 22% no investment). The investment-free measures do not have a high degree of importance, meaning that no Cheap Wins can be found in the sector, whereas there are three Costly Wins, some of them already mentioned: improvement of planning (118), mobilisation of public and private financing (119) and the introduction of mechanisms to finance decarbonisation in hard-to-abate segments (123).

Transport (table of analysis)

• Most of the measures to foster and encourage Innovation in the EU require public investment (43% require substantial investment, 43% some and only 14% no investment). Consequently, none of the measures constitutes a Political Win. In other words, all the proposals set out in the Mission Letters to the College of Commissioners with explicit or ambiguous references require additional investment.
• Three of the seven Innovation measures are highly politically viable at the EU level, and only one is extremely urgent: a simpler and more impactful design for the tenth EU Research and Investigation (R&I) Programme (128). There are another two measures of great urgency: the development of a regulatory ecosystem that is more favourable to innovative companies (132) and a better financing environment for disruptive innovation, start-ups and scale-ups (127). The latter has medium EU viability, making it advisable to expend effort in specifying and underpinning the reform among the European stakeholders to enhance its viability.
• The only measure that does not require additional public investment in Innovation is of little importance compared with the sector’s other proposals: shared prosperity as a fundamental enabler of EU innovation, secured by means of reducing the tax burden on low- to middle-income workers, and fostering workers’ mobility between companies (133). There is, however, a Costly Win, namely the improvement of the financing environment for innovation (127), an expensive measure when compared to the other important measures.

Innovation (table of analysis)

• Of the 12 measures put forward for Skills, 75% entail financing and 50% are absent from the European Commission’s Mission Letters. This results in only one Political Win: the improvement and harmonisation of skills certifications (136) to make them internationally recognisable. Another measure could constitute a second-tier Political Win, given that it is included ambiguously in the Mission Letters but has very low political viability at the national level and entails substantial work to secure consensus and coordination. This is the proposal to revise curriculums in the light of changing skill needs in the context of the treble transition (135).
• The EU-level viability of all the measures is positive (five high, seven medium and none low). The promotion and reform of Vocational Educational Training (VET) (139) and addressing skills shortages in critical value chains (142) are viewed as Quick Wins. Again, tackling them will be hindered by the political viability at the national level (low for VET and medium for value chains).
• Despite the investment requirements highlighted above, none of the measures constitutes a Costly Win. There are, however, two Cheap Wins that may be implemented without additional public investment, namely revising curriculums (135) and redesigning skills policies and funding programmes to give greater emphasis to such important elements as adult learning and VET and the evaluation of initiatives (137).

Skills (table of analyisis)

• Barring the issuance of a common safe asset to finance joint investment projects (154), all the Investment proposals are Political Wins. This suggests the willingness of the European Commission to implement the reforms and measures suggested by Draghi to improve European competitiveness. Despite this, only one –a European security exchange commission (150)– is highly viable at the national and EU levels, with the practical consequence that the implementation of Political Wins could take longer. Moreover, most of the Political Wins (six out of eight) enjoy Spanish support with high national viability.
• By contrast, there are no Quick Wins among the measures put forward. As already mentioned, the measures do not seem to have widespread political backing beyond the Mission Letters: 56% of the initiatives (five) have medium viability and 33% (three) have low viability. Time will therefore be required to build the political consensus needed to carry them out.
• No measure requires additional public investment, because they all entail regulatory changes or the mutualisation of funds. However, owing to the variability of their importance at the EU level, only three measures are viewed as Cheap Wins: the assessment of modifications to the Solvency II framework (149), the establishment of a European security exchange commission (150) and the assessment of the current prudential regulations (151).

Investment (table of analysis)

• Three of the Draghi proposals in the Competition area constitute Political Wins: the control of state aid for industrial policy (158), the reform and expansion of the IPCEIs (159), and the effective application of the Digital Markets Act and the Foreign Subsidies Regulation (161). This reflects the prospect of the paradigm shift evident in the EU’s competition policy that has already been foreshadowed in recent years. Moreover, another six measures (none with associated investment) are ambiguously mentioned in the Mission Letters, so there is a likelihood that they will be gradually turned into Political Wins in the years ahead.
• 40% (four) of the measures are highly viable at the EU level, of which half are also Quick Wins owing to their perceived urgency. These comprise greater consideration to be given to innovation and competition in the future decisions of DG COMP (155), and the development and inclusion of security criteria in the competition assessments (157) as reforms that can be carried out over the next 12 months with significant dividends. It is also important to bear in mind that the implementation of 40% of the Competition measures is extremely urgent.
• None of the Competition measures requires investment, because they involve regulatory changes, which yields four measures as Cheap Wins, all of them previously cited as Political or Quick Wins: proposals 155, 157, 158 and 159. Moreover, they all score highly in terms of viability at the national level. This means that by means of implementing these four, it is possible to secure significant advances over the short term without the need for major capital expenditure (public or political).

Competition policy (table of analysis)

• The Competitiveness Coordination Framework is the Political Win identified in the Draghi proposals for refocusing the work of the EU (deeming this concept to refer to the intersection between explicit presence in the Mission Letters and the absence of public investment). Also notable is the filtering of initiatives for adoption (167), which seems to be in line with President von der Leyen’s instructions to the Commissioners, although not explicitly in the Mission Letters.
• There are no Quick Wins among these proposals, because all have medium viability at the EU level. It is worth pointing out, however, that proposals 165 and 167 are highly urgent, meaning that effort needs to be devoted to developing these ideas for their timely implementation.
• The Competitiveness Coordination Framework (165) and the EU-wide inquiry into the role of national parliaments (166) are Cheap Wins that would improve the governance of the EU for implementing Draghi’s competitiveness agenda without any need for public investment. However, measure 166 has a peculiarity in the case of Spain, because reinforcing the role of the Spanish Parliament in EU policy is liable to be impeded by the scarcity of political and human resources in the Spanish Congress and Senate in this regard.

Governance: refocusing the work of the EU (table of analysis)

• Given the interinstitutional content of the governance proposals to accelerate and streamline the work of the EU, none of them constitutes a Political Win. Despite not requiring investment, these measures do not rely exclusively on the Commission, and so are not present in the Mission Letters to the College of Commissioners.
• Notable as a Quick Win is establishing an Interinstitutional Pact enabling the EU to extend the use of Article 122 of the TFUE to address crises. This Pact would include specific deadlines for activating the article and provide the European Parliament with a clearer and better-defined role in the process. It is notable that the remaining measures in this segment are viewed as neither highly urgent nor viable at the EU level.
• None of the proposals require public investment, and two of them are regarded as especially important for the EU: the extended use of qualified majority voting (168) and integration based on ‘concentric circles’ (169). These constitute Cheap Wins that, nevertheless, require very substantial investment in terms of political capital, and so should not be regarded as easily attainable.

Governance: accelerating the work of the EU (table of analysis)

• In the simplification of rules, minimising the cost of transposing the rules and enhanced enforcement of single market legislation (173), and upholding proportionality for SMEs and small mid-caps in EU law (174) constitute Political Wins. It is also notable that only one of the measures requires investment, and two more are mentioned ambiguously in the Mission Letters.
• None of the measures is a Quick Win. Two thirds (four) have medium viability at the EU level, of which two are highly urgent: the single methodology for quantifying the cost of new legislation (172), and the minimisation of the cost of transposing the rules and enforcement of single market legislation (173).
• Measures 172 and 173 are the Cheap Wins in the simplification of rules, enabling a significant impact to be made as facilitators of EU competitiveness without requiring investment. Similarly, measure 174, regarding proportionality for SMEs and mid-caps, which is of moderate importance, can also be viewed as a Cheap Win, albeit to a lesser extent.

Governance: simplifying rules (table of analysis)