E.ON Public Affairs Bulletin -September

CONTENT 1 COVID – 19 UPDATES | Could there be a second wave? 2 POLITICS | New beginnings A. International B. Romania 3 ECONOMICS A. International B. Romania 4 EU AGENDA | EU Funds 5 ENERGY SECTOR 6 EDITORS’ RECOMMENDATIONS + Special Edition 7 EVENTS CALENDAR 8 APPENDIX

Public Affairs Bulletin September/2020 1. COVID – 19 UPDATES | Could there be a second wave? International Who has done the most tests? Countries across Europe are seeing a resurgence According to data collected by the European in COVID-19 cases after successfully slowing Centre for Disease Prevention and Control outbreaks early in the year. Considering that, the (ECDC) - an EU agency - the UK has conducted WHO warned that the coronavirus situation is more antigen tests (the ones you use to find out “very serious” in Europe. Covid-19 undid 25 if you currently have the virus) than any other years of global health progress in 25 weeks. European country (between March 9th – Poverty, immunization rates, education, gender September 6th). On this, the UK performed well, equality, clean water access, and more will take having done more than 16.4m tests. This is years to get back to pre-pandemic levels. better than Germany (13.3m tests) and France (8.3m tests). Some countries — such as Albania, Bulgaria, Czech Republic, Montenegro, North Macedonia Changing the perspective while looking on the — are seeing higher case numbers than earlier in bright side of this pandemic, the Foreign Policy’s the year. Moreover, Israel (goes into a three- COVID-19 Global Response Index released a week lockdown starting September 11th), report that outlines the most successful France, the UK, Poland, the Netherlands and strategies in beating the coronavirus pandemic Spain are likely dealing with the much-feared New Zealand, Senegal, Iceland, Denmark, Saudi second wave and have started taking action to Arabia. curb it. Eurofound study (April – July): Citizens' Hungary was the first country within Europe’s confidence in EU institutions has increased free movement Schengen zone that reintroduced during the pandemic but has decreased among wholesale border restrictions on September 1st national governments. On a scale from 1 to 10, (exceptions for Czech Republic, Slovakia and where 10 means full trust, the overall level of Poland tourists) - decision seen as being trust in the EU has increased from 4,6 in April to discriminatory by EU authorities. 5,1 in July. In the same time frame, respondents' confidence in their government has declined The Spanish government has ordered a partial from 4,8 to 4,6. lockdown in the capital Madrid (starting from the upcoming October 2nd) and surrounding areas In Italy and Spain, some of the EU's most badly affected by coronavirus after a rise in affected by the health crisis, the level of cases. Under the new restrictions, residents will confidence has increased most: from 4,1 to 5,2 not be allowed to leave the area unless they have in Spain, and from 4 to 5,1 in Italy. In Romania, to make an essential journey. However, Madrid's trust in the government has dropped from 3,8 to regional government says the lockdown is not legally valid. 1

3,5 points, but trust in the EU has increased from Public Affairs Bulletin 4,5 to 5,2. September/2020 Romania Good to know: The geo-spatial community in Romania has introduced Covid-19 impact charts On September 24 the European Center for on their website, and they are aggregating data Diseases Control included Romania on the sub- for various industries. group of countries with trends of high concern regarding the increased proportion of hospitalized and severe cases. In these countries, increasing or high death notification rates were already observed (as of 13 September, in Bulgaria, Croatia, Czechia, Hungary, Malta, Romania and Spain). In some local/regional areas of these countries, healthcare provision was already under pressure, with high hospital and ICU bed occupied. The COVID-19 epidemic in Romania is on an upward trend (starting mid-September), and some of the infected end up in severe conditions at intensive care stations. ATI: 1050 beds are available across the country with the necessary equipment to care for these patients. In Prahova County, local authorities announced that on September 3Oth, of the 378 patients with COVID-19, 251 are occupied. In Sibiu, the 12 places at the ATI section of the county hospital, for COVID patients, are completely occupied. In Iasi, 4 beds were available at Neurology, out of the 16 counties for Cempu patients. The minister said that in Iasi the Câlvid hospitals are almost full. In Suceava county, 3 ATU beds were available for COVID patients at the county hospital, according to data released by the prefect's institution. 2

Public Affairs Bulletin September/2020 2. POLITICS International Switzerland referendum: Swiss voters have rejected a proposal to end an accord with the EU The US president, Donald Trump, announced on allowing the free movement of people. With all Twitter that he and Melania, had tested COVID- referendum votes counted, nearly 62% said they 19 positive shortly after saying they would go wanted to keep free movement, while 38% were into quarantine after adviser Hope Hicks against. Switzerland is not a member of the EU contracted the virus. Meanwhile, on September but has a series of interdependent treaties with 29th, the first presidential debate between Brussels which allow it to access to Europe's free President Trump and Joseph R. Biden Jr. In their trade area. first presidential debate, the two candidates insulted and interrupted one another. Boris Johnson’s Brexit plan passed the House of Commons. The legislation, which will govern Having in mind the president health, the trade between the countries that compose the upcoming debates (October 15th in Miami, UK, would allow the government to override Florida, October 22th in Nashville, Tennessee) parts of the divorce agreement with the Europe are questionable. regarding Northern Ireland. The EU is supposed to decide on September 30th how to retaliate. International concern is growing over rapidly escalating turmoil in the South Caucasus as The EU finally managed to impose sanctions on fighting between Armenia and Azerbaijan Belarus… Cyprus, which had held up the process, continues to spiral as of September 27th, agreed to stand down after European leaders threatening to draw in regional powers and said they would also punish Turkey if it continues destabilize an area that serves as an important energy drilling in contested areas of the energy corridor for global markets. Mediterranean. The EU’s delay in penalizing Belarus over its disputed August presidential A direct Turkish military intervention would election has dented its standing. mark a major turning point after the bloody fighting that continues despite calls for calm …but didn’t really solve its Turkey problem. from the international community. At the same There’s a limit to how tough Europe can be on time, an open war between Armenia and Turkey as it tries to get the country to sit down Azerbaijan would risk destabilizing the South with Greece on the drilling issue, a major source Caucasus region and involving regional powers, of tension. Ankara continues to bedevil the bloc, especially Turkey and Russia. including by dismissing joint calls from the US, France, and Russia for a cease-fire in Nagorno- Karabakh, where Azerbaijan forces are fighting with ethnic Armenians. 3

Public Affairs Bulletin September/2020 Romania four years ago (46% national vote turnout). The ruling National Liberal Party (PNL) managed to The Chamber of Deputies' plenary adopted on score important victories in traditional fiefs of September 14th an amendment to the bill on the the Social Democratic Party (PSD), doubling the modification and completion of some laws number of county council president positions it regarding the future election, according to which holds in the new configuration. Romanian electors in the diaspora will have two days - Saturday and Sunday - to vote in this The Liberals also won some new mayor positions year's parliamentary elections (December 6th). in big cities previously controlled by the PSD The law was also promulgated by the Romanian (Timișoara, Giurgiu, Constanța, Brașov). In president on September 16th. Bucharest, PNL and USR-PLUS supported the same candidate, independent Nicusor Dan, who The Romanian Constitutional Court established overthrew incumbent PSD mayor Gabriela Firea. on September 15th that there was no legal conflict between the government and the Thus, the Liberals seem to be the big winners of Parliament following the submission of a no- the local elections and USR-PLUS confirmed confidence vote in an extraordinary session, their status as the third-biggest political force in rejecting the request made by Prime Minister Romania, while PSD’s influence declined Ludovic Orban. compared to four years ago. Overall, the results are not surprising, as they confirm both the most On September 22 the Parliament plenary recent polls as well as the results of last year’s adopted the budget correction for 2020 with the elections for the European Parliament and for PSD amendment to raise the pension point by president. They are also a good indicator of what 40% instead of 14%, as proposed by the could happen in the general elections this Government. There were 242 votes for, 147 December. against and 11 abstentions. The next day, President Klaus Iohannis warned that if the Stats: budget correction approved by the Parliament comes into force, Romania would be cut about PSD 1.438 mayors (PSD had almost EUR 3 bil from EU funds. For his part, Finance 1.700 edits before the local Minister, Florin Citu, stressed out that Romania PNL elections) was in a difficult period, similar to the one before UDMR 1.237 mayors (PNL has almost the 2010 economic crisis, and an increase in PMP 1.100 mayors elected in 2016) spending could blow the country. S&P Global USR PLUS 199 mayors (the Hungarians ratings expects that with the pension increase of ProRomania had 195) 40% -- and other expansive measures -- 50 mayors Romania's fiscal deficit will exceed 10% of GDP 45 mayors in 2021 and remain close to that level over the 35mayors next two years. The local elections in Romania on September 27 brought some significant changes compared to 4

Public Affairs Bulletin September/2020 *In memoriam of Ruth Bader Ginsburg (March 15, 1933, Brooklyn, New York, U.S.— September 18, 2020, Washington, D.C.) She became the second female justice of the U.S. American Civil Liberties Union during the 1970s and Supreme Court. Born in 1933 in Brooklyn, New York, was appointed to the U.S. Court of Appeals for the Bader taught at Rutgers University Law School and District of Columbia in 1980. Named to the U.S. then at Columbia University, where she became its Supreme Court in 1993 by President Bill Clinton, she first female tenured professor. She served as the continued to argue for gender equality in such cases director of the Women’s Rights Project of the as United States v. Virginia. My Own Words On the Basis of Sex (IMDb) Quote Library: Book Depository The true story of Ruth Bader “Fight for the things that you care Ginsburg, her struggles for about. But do it in a way that will lead Justice Ginsburg discusses equal rights, and the early others to join you.” gender equality, the workings of cases of a historic career that the Supreme Court, being lead to her nomination and Jewish, law and lawyers in confirmation as U.S. Supreme opera, and the value of looking Court Associate Justice. beyond US shores when interpreting the US Constitution. NPR Interviews In 2016, amid a heated election between Democrat Hillary Clinton, and eventual White House winner, Donald Trump, Ginsburg said she had no plans on retiring until she could no longer \"do the job full-steam.\" 5

Public Affairs Bulletin September/2020 3. ECONOMICS International Upcoming event: The impact of the Covid-19 pandemic and EU’s response, the EU Australia had its first recession in 30 years. recovery fund and Europe’s solidarity, energy The country saw its GDP contract by 7% for and digital transition, sustainability and the quarter ended in June, its second economic transformation, the resilience of consecutive quarterly contraction. the financial sector as well as Romania’s role in the new political and economic landscape In the second quarter of 2020, marked by will be discussed by prominent speakers quarantine measures in all Member States, during The Economist’s first virtual event on the economy contracted by 11,8% in the Romania (October 22nd, 2020). euro area and 11,4% in the EU compared to the previous quarter, while the seasonally Romania adjusted GDP fell by 14,7% in the euro area and by 13,9% in the EU. On September 21st, the Romanian capital market was included in the global index provider FTSE Of the Member States, Spain (-18,5%) Russell for emerging markets. The moment was recorded the highest GDP decrease marked by the Bucharest stock Exchange compared to the previous quarter, followed through an official opening of the trading by Croatia (-14,9%), Hungary (-14,5%), session. President Klaus Iohannis sent a Greece (-14,0%), Portugal (-13,9%) and message during the event in which he said the France (-13,8%). The smallest falls in the transition to the status of an emerging market economy were recorded in Finland (-4,5%), was not only a historic performance, but also a Lithuania (-5,5%) and Estonia (-5,6%), confirmation of the development potential of the followed by Ireland (-6,1%), Latvia (-6,5%) country's economy. Prime Minister Ludovic and Denmark (-6,9%). Orban attended a reception organized by the UK Ambassador to Bucharest Andrew Noble to The Economic Sentiment Indicator (ESI) this celebrate the event, which the premier month in the EU28 and the eurozone fell 1.4 considered a signal of confidence to the players points to reach 101.7 and 100, respectively, on the stock exchange, but also to all companies versus August, according to a press release that want to be listed on the stock exchange. by the European Commission. Meanwhile, the EU Commission also stressed that the The Romanian Government adopted on Business Climate Indicator (BCI), of which all September 25 an emergency ordinance components worsened, for the EA19 stipulating that people aged in retirement and dropped 0.34 points to -0.22 in September. with an incomplete service can buy old age. 6

The European Bank for Reconstruction and Public Affairs Bulletin Development has worsened its forecasts of September/2020 Romania's economic development in 2020 and 2021, as a result of the pandemic crisis. Romania's Ministry of Economy, Energy and According to the latest projections by the Business Environment has selected seven local international financial institution, Romania's banks (Banca Transilvania, BCR, BRD, Raiffeisen economy is expected to fall by 5% this year, Bank, OTP Bank, CEC Bank, and Banca compared to a 4% decline expected in May. Romaneasca) to help distribute the EUR 1 bln EBRD expects a 3% expansion of Romania's GDP grants to local small and medium enterprises. in 2021, as compared to a 4% advance forecast in the spring. Therefore, after a robust 4,1% CFA analysts predict a depreciation of the leu in growth in 2019, Romania is facing the recession the next 12 months, up to 4,9777 RON/EUR. in 2020. The key transmission channels are According to the document, 60% of participants lower consumption and decline in exports. expect the inflation rate to increase over the next The unemployment rate in Romania stood at 12 months, while more than 73% expect 5.4% in the second quarter of the current year, Romania's risk premium (measured by CD) to up 1.1% points from the previous quarter, and increase over the next 12 months. Over 66% the employment rate of the working age consider real estate prices in major cities to be population (15-64 years) was 65.2%, down over-valued. 0.2% points compared to the same reference period, according to data from the National As per the latest report published by BNR, on Institute of Statistics (INS), released on September 30th, the National Bank of September 25. Romania’s foreign exchange reserves stood at EUR 32,588 million, compared to EUR 35,768 million on August 31. 7

4. EU Affairs | EU Funds Public Affairs Bulletin September/2020 European Union Special European Council Summit, initially Commission President, Ursula von der Leyen planned for September 24 -25, has been used her first State of the European Union postponed (October 1-2) as President Michel speech (September 16th) to push her key themes was in quarantine. EU leaders will meet in of the EU's response to the health crisis, Brussels to discuss foreign affairs, in particular economic recovery, climate change and the relations with Turkey and the situation in the virtues of acting internationally on a range of Eastern Mediterranean. The leaders are also issues. expected to address relations with China, the Main points from von der Leyen's State of the situation in Belarus and the poisoning of Alexei Union address: Navalny. The single market, industrial policy and digital transformation are also on the agenda. • a reduction goal of 55% by 2030 on OLAF report: Romania, the country with most greenhouse emissions, significantly cases of fraud with European funds in 2019. One higher than the current target of 40%; of the ten cases solved by the European institution last year refers to RO. Italy came in • a legal proposal to support Member second with nine cases resolved, followed by States to set up a framework for Greece, Poland and Bulgaria with seven cases minimum wages. Everyone must have each. access to minimum wages either Laura Codruţa Kovesi, the head of European through collective agreements or Public Prosecutor's Office (EPPO), and the 22 EU through statutory minimum wages; prosecutors of the EPPO took their oath of office in a ceremony at the European Court of Justice • 37% of NextGenerationEU will be spent on September 28. The EPPO is the EU body directly on our European Green Deal tasked with investigating and prosecuting fraud objectives. and other crimes affecting the EU's financial interests. On September 24, the European Commission put forward a new action plan to establish a capital Romania markets union (CMU) in Europe. With the new action plan, the Commission commits to 16 new The new Start-Up Nation program aimed at actions set out to achieve three key objectives: supporting new, innovative companies could begin in November, provided that the authorities • support a green, inclusive and resilient can respect the timing of other state aid schemes economic recovery by making financing for companies, said the secretary of state in the more accessible for European Economy Ministry Liviu Rogojinaru. The main companies; objective of this initiative is to facilitate access to European non-reimbursable funds allocated for • make the EU an even safer place for individuals to save and invest long-term; 8 • integrate national capital markets into a genuine single market.

the resumption of SME activity by offering 100% Public Affairs Bulletin non-reimbursable financing up to RON 200,000 September/2020 / project. sector investment needs (electricity, gas, Through the new \"Electric Up\" Program, SMEs in alternative energy, non-conventional fuels, the HoReCa field have the possibility to access a energy efficiency, innovation, cybersecurity and non-reimbursable financing of up to EUR human resources), analyzed against the 100,000 for the installation of photovoltaic European and national sources of funding panel systems and charging stations. In addition, available in the future programming period, in EON sent to the Ministry of Economy, Energy order to encourage the authorities to coordinate and Business Environment observations and the Green Deal and NECP 2021-2030 carbon proposals regarding two aspects of the \"Electric neutrality and digitalization goals with the actual Up\" Program guideline: financial resources that will be ready to support such investments. o Defining the beneficiaries of the de minimis aid scheme, 9 o Explaining some definitions and acronyms. E.ON advocated through CDR for two major objectives related to energy sector investments subject to EU Funding in the 2021-2027 programming period, to be used as arguments for the future discussions with the Romanian Government: o The Government should support future investments in natural gas as transition fuel and should draft a national strategy based on economic efficiency principle, aligned with the NECP 2021-2030 goals and backed by stable funding mechanisms accessible to all the relevant stakeholders. E.ON also highlighted the importance of maintaining the Government focus on finding the right allies at regional level - countries with a similar energy profile - to jointly advocate for the need of keeping investments in natural gas as a transition fuel on the European institutions’ agenda. o CDR Members will present to the Government a general framework of the energy

Public Affairs Bulletin September/2020 5. ENERGY SECTOR International be at least 20 times today’s installed capacity in the EU-27 (12GW). The energy transition has been talked about for many years – but now the pandemic has given The Swiss company Climeworks is building the the world an opportunity to make it happen world’s largest direct air capture and storage more quickly than we could ever have imagined; facility for converting atmospheric CO2 to if we make the right choices. Energy demand underground rock in Iceland. Audi is partnering declined by 3.8% over the first quarter of 2020 with the Zurich-based environmental startup as a result of significantly reduced and promoting future technology with the transportation, aviation, and general economic project. The facility will filter 4,000 metric tons activity, while emissions dropped by 5%. of carbon dioxide from the air and mineralize it underground. When it comes to the oil and gas industry, it is still entrenched. Despite a nascent appetite for According to TankerTrackers, Tehran (Iran) has clean energy and the unprecedented crash in oil exported nearly 1.5 million b/d of crude oil and prices, fossil fuel firms remain committed to condensate so far in September. This would be their traditional business. New exploration and the highest level of Iranian exports in a year and drilling projects are moving forward in Uganda, a half and double the estimated exports in Mozambique, California, Mexico, Alaska, and August. Since the US imposed sanctions on elsewhere. Meanwhile, some oil companies are Iran’s oil industry and exports in May 2018, the looking to offset the shrinking market for fuel by Islamic Republic has been using various tactics drumming up demand for fossil-derived plastic. to ship its crude abroad without being detected, Industry trade groups continue to spend big on including by tankers switching off transponders pro-fossil ad campaigns. or forging documents stating the oil does not originate from Iran. Energy Ministers for the eight EU Member States1 in the Baltic Sea region and Energy, Stats to remember: As of September 20th, the Commissioner Kadri Simson, have signed on concentration of carbon dioxide in the September 30 a declaration committing atmosphere was 411.12 ppm. A year ago, the themselves to closer cooperation on offshore level was 408.08 ppm. wind in the Baltic Sea. The declaration underlines the need to scale up offshore wind 10 energy capacity in the EU by 2050, estimated to 1 Denmark, Estonia, Finland, Germany, Latvia, Lithuania, Poland, and Sweden

Romania Public Affairs Bulletin September/2020 The Romanian Government desires the exploitation of gas resources in the Black Sea and efficiency. The project aims to transpose the will treat carefully the subject starting with Energy Efficiency Directive with subsequent December, so that there are no discussions that amendments - Directive 2012/27 / EU as would affect these projects, said, on September amended by Directive 2018/2002, as well as to 24th, Tanase Stamule, adviser on economic avoid a possible initiation of an infringement issues to the Prime Minister of the Romanian procedure by the European Commission (given Government, in the online conference \"Energy on that the Romanian authorities have committed line\". to amend Law No. 121/2014). The Ukrainian Foreign Minister highlighted on The Romanian Environmental Fund September 8th that Ukraine and Romania will Administration started the program “Energy create a joint working group to develop projects Efficient House” dedicated to individuals. The in the energy sector as per. total amount of the scheme is estimated @EUR 88.5 mil. Applicants can get up to EUR 15,000 The Ministry of Economy published on their each to invest in the energy refurbishment of website a draft law for amending and their family house (meaning 60% of the supplementing Law no. 121/2014 on energy expenses reimbursed). The total number of beneficiaries is estimated @9,000, according to the Minister of Environment. E.ON RU RO Agenda ANRE Order preparing the liberalization of the power market, starting with 1st January 2021, has been approved and published in the Official Journal. As of 1st January 2021 household customers may remain under universal service supply, with a supplier of last resort, at a competitively set universal service price and under the same contract or may switch to a competitive contract. Suppliers of last resort shall notify household customers about the liberalization of the market (whenever from 1st October to 1st December 2020) and send them the new price offer for after 1st January 2021 (by mid-December, after distribution tariffs approval). DRAFT amendments on Law 155/2020 modifying Law 123/2012 • ANRE sent feedback on ACUE’s proposed amendments, the most important 3 topics: o Windfall profit tax – they supported the elimination of the tax. ANRE’s argument is that the provision of the article introducing the windfall profit tax contradicts the Energy Law o Penalties – ANRE did not support ACUE’s amendments, meaning sanctions in absolute terms rather than relatives ones (% of turnover), neither the possibility of the offender to pay half of the minimum penalty in 15 days. ANRE referred to EU Directives that empower the Regulator (for both gas & power) to apply effective and proportionate sanctions against non-compliant energy companies. o Network connections for non HH @2,500m – ANRE did not support ACUE’ amendment to eliminate these new provisions and said that the 90 days deadline needs a more complex analysis. • ACUE prepared a letter addressed to the European Commission on this topic. 11

Public Affairs Bulletin September/2020 6. EDITORS’ RECOMMENDATIONS – US Elections We're now checking off the days, as the count-down to the US Presidential election is in full swing. From podcasts, tv series, famous political quotes, books – here’s the ultimate guide to the upcoming electoral event (November 3). Rage by Bob WOODWARD Knock Down the House – Documentary (IMDb) Rage is an A look at the people unprecedented and involved with various intimate tour de force of political campaigns new reporting on the during the 2018 U.S. Trump presidency facing congressional election. a global pandemic, economic disaster and racial unrest. Library: Amazon Quote Podcast - Can He Do That? (Spotify, Apple Podcasts) \"Elections belong to the people. It's their decision. If they decide to turn their back on the Can He Do That? is The Washington Post’s fire and burn their behinds, then they will just politics podcast, exploring the powers and have to sit on their blisters.\" limitations of the American presidency, and what happens when they're tested. Abraham Lincoln 12

Public Affairs Bulletin September/2020 7. EVENTS CALENDAR | September Sunday Monday Tuesday Wednesday Thursday Friday Saturday 6 1 2 3 45 7 13 Hungary to close 9 10 11 12 ACUE submitted borders 17 18 19 20 its proposals for 16 amendments to 8 24 25 26 Law 155 State of the 15 Union 14 The RO MPs President Klaus CCR rejected the voted for the Iohannis recalled Gov’t referral on the pension 26 Romanian no-confidence increase by ambassadors motion 40% 21 22 23 EU Foreign Affairs Council The Bucharest Stock Exchange (BVB) was promoted to the status of (Secondary) Emerging Market 27 28 29 30 Officials exit pool Romanian – Romanian local 2020 United States Local Elections elections presidential debates Armenia and Azerbaijan - fights 13

Public Affairs Bulletin September/2020 8. APPENDIX COVID-19 Data as of September 30th Indicator/Country Global Romania Germany Italy Spain France No of confirmed cases 33.714.595 127.572 287.421 311.364 748.266 542.639 No of deaths 1.008.932 4.825 9.471 35.851 31.411 31.808 31. Deaths/confirmed 3% 3.78% 3,3% 11.51% 4.2% 411 cases (%) 5,86% Source: INSP Key figures – Romania • As of end September 34.3% of all confirmed cases were registered in Bucharest, Iași, Constanța, Bacău, and Brașov. • 31% of all deaths were registered in: Bucharest, Prahova, Arad, Bihor, and Iași. • 1 in 25 confirmed cases is a medical staff • 81.1% of deaths registered with people over 60 and 59.7%of deaths were men • 95.2% of the deaths had at least one comorbidity Source: cnscbt.ro 14

Public Affairs Bulletin September/2020 2016 –The national coverage of the 2020 – The national coverage of the Presidents Presidents of County Councils of County Councils – partials results 15